Registration No. 33-47507
811-6652
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
Pre-Effective Amendment No. _____
Post-Effective Amendment No. 6 X
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 X
Amendment No. 8 X
BJB INVESTMENT FUNDS
(Exact name of Registrant as Specified in Charter)
330 Madison Avenue, New York, New York 10017
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (212) 297-3600
Robert Discolo
Secretary
Bernard Spilko
c/o Julius Baer Investment Management Inc.
330 Madison Avenue
New York, New York 10017
(Name and Address of Agent for Service)
--------------------------------------------------------------------------
It is proposed that this filing will become effective (check appropriate box):
_____ immediately upon filing pursuant to paragraph (b)
_____ on (date) pursuant to paragraph (b)
_____ 60 days after filing pursuant to paragraph (a)(1)
X on March 1, 1996 pursuant to paragraph (a)(1)
_____ 75 days after filing pursuant to paragraph (a)(2)
_____ on (date) pursuant to paragraph (a)(2) of rule 485.
The Registrant has registered an indefinite amount of its shares under the
Securities Act of 1933, pursuant to Rule 24f-2 (a)(1) under the Investment
Company Act of 1940. Registrant's Rule 24f-2 Notice for the fiscal year ended
October 31, 1995 was filed on December 22, 1995.
CALCULATION OF REGISTRATION FEE UNDER
THE SECURITIES ACT OF 1933(1)
BJB GLOBAL INCOME FUND
- --------------------------------------------------------------------------------
Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
Being Being Price Per Offering Registration
Registered Registered Unit(2) Price(3) Fee
- --------------------------------------------------------------------------------
Shares of
Beneficial Interest
of BJB Global Income
Fund 1,160,080 $12.30 $290,000 $100
- --------------------------------------------------------------------------------
(1) The shares being registered as set forth in this table are in
addition to the indefinite number of shares of beneficial interest
which Registrant has registered under the Securities Act of 1933, as
amended (the "1933 Act"), pursuant to Rule 24f-2 under the
Investment Company Act of 1940, as amended (the "1940 Act"). The
Registrant's Rule 24f-2 Notice for its fiscal year ended October 31,
1995, was filed on December 22, 1995.
(2) Based on the closing price of $12.30 per share on December 19, 1995
of Registrant's BJB Global Income Fund shares, pursuant to Rule 457(d)
under the 1933 Act and Rule 24e-2(a) under the 1940 Act.
(3) In response to Rule 24e-2(b) under the 1940 Act: (1) the calculation
of the maximum aggregate offering price is made pursuant to Rule
24e-2; (2) 1,224,201 shares of beneficial interest were redeemed by
the Registrant during the fiscal year ended October 31, 1995;
(3) 107,698 of such shares have been used for reductions pursuant to
Rule 24f-2 during the current fiscal year; and (4) 1,136,503 of BJB
Global Income Fund shares are being used for reduction in this
amendment pursuant to Rule 24e-2(a).
CALCULATION OF REGISTRATION FEE UNDER
THE SECURITIES ACT OF 1933(1)
BJB INTERNATIONAL EQUITY FUND
- -------------------------------------------------------------------------------
Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
Being Being Price Per Offering Registration
Registered Registered Unit (2) Price (3) Fee
- -------------------------------------------------------------------------------
Shares of
Beneficial Interest
of BJB International
Equity Fund 390,899 $10.02 $290,000 $100
- -------------------------------------------------------------------------------
(1) The shares being registered as set forth in this table are in
addition to the indefinite number of shares of beneficial interest which
Registrant has registered under the Securities Act of 1933, as amended
(the "1933 Act"), pursuant to Rule 24f-2 under the Investment Company
Act of 1940, as amended (the "1940 Act"). The Registrant's Rule 24f-2
Notice for its fiscal year ended October 31, 1995, was filed on December
22, 1995.
(2) Based on the closing price of $10.02 per share on December 19,
1995 of Registrant's BJB International Equity Fund shares, pursuant to
Rule 457(d) under the 1933 Act and Rule 24e-2(a) under the 1940 Act.
(3) In response to Rule 24e-2(b) under the 1940 Act: (1) the
calculation of the maximum aggregate offering price is made pursuant to
Rule 24e-2; (2) 629,245 shares of beneficial interest were redeemed by
the Registrant during the fiscal year ended October 31, 1995;
(3) 267,288 of such shares have been used for reductions pursuant to
Rule 24f-2 during the current fiscal year; and (4) 361,957 of BJB
International Equity Fund shares are being used for reduction in this
amendment pursuant to Rule 24e-2(a).
BJB INVESTMENT FUNDS
FORM N-1A
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
Part A.
Item No. Prospectus Heading
- --------- -------------------
<S> <C>
1. Cover Page Cover Page
2. Synopsis Prospectus Summary
3. Condensed Financial Financial Highlights; The Funds'
Information Performance
4. General Description of Cover Page; Prospectus Summary;
Registrant Investment Objectives and
Policies of the Funds; Common
Investment Strategies; Risk
Factors; General Information
5. Management of the Fund Management of the Funds;
Investment Objectives and
Policies of the Funds;
Custodian and Transfer Agent
6. Capital Stock and Other Dividends,
Securities Distributions and Taxes; The
Funds' Performance; General
Information
7. Purchase of Securities How to Open an Account;
Being Offered How to Purchase Shares of
the Funds; How to Redeem Shares
of the Funds; Exchange
Privilege; Net Asset Value;
Distribution and Shareholder
Servicing
8. Redemption or Repurchase How to Purchase Shares of the
Funds; How to Redeem Shares of
the Funds
9. Pending Legal Proceedings Not Applicable
<CAPTION>
Part B Heading in Statement of
Item No. Additional Information
- --------- -----------------------
<S> <C>
10. Cover Page Cover Page
11. Table of Contents Contents
12. General Information Management of the Funds
and History
13. Investment Objectives Investment Objective;
and Policies Investment Policies
14. Management of the Registrant Management of the Funds
15. Control Persons and Management of the Funds
Principal Holders of Securities
16. Investment Advisory and Management of the Funds
Other Services
17. Brokerage Allocation Investment Objective;
Investment Policies
18. Capital Stock and Management of the Funds
Other Securities
19. Purchase, Redemption Additional Purchase and
and Pricing of Securities Being Redemption Information;
Offered Additional Information
Concerning Exchange Privilege
20. Tax Status Additional Information
Concerning Taxes
21. Underwriters Management of the Funds
22. Calculation of Determination of Performance
Performance Data
23. Financial Statements Financial Statements
</TABLE>
BJB Investment PROSPECTUS
Funds March 1, 1996
THE FUNDS BJB Investment Funds (the "Trust") is an
open-end management investment company that
currently offers two investment funds: BJB
Global Income Fund (the "Income Fund") and
BJB International Equity Fund (the "Equity
Fund") (individually, a "Fund" and
collectively, the "Funds"). The Income Fund
is managed by Julius Baer Investment
Management Inc. (the "Income Fund Adviser")
and the Equity Fund is managed by Bank Julius
Baer & Co., Ltd., New York branch (the "Equity
Fund Adviser") (individually, an "Adviser"
and collectively, the "Advisers"). Each Fund
has its own investment objective and policies
designed to meet different investment goals.
INVESTMENT
OBJECTIVE AND
POLICIES The Income Fund's investment objective is to
maximize current income consistent with the
protection of principal by investing in a
non-diversified portfolio of fixed income
securities of governmental, supranational and
corporate issuers denominated in various
currencies, including U.S. dollars. The Equity
Fund's investment objective is long-term
growth of capital from investing in a
diversified portfolio of common stocks of
foreign issuers of all sizes. There is no
assurance that the Funds will achieve their
respective objectives. Neither Fund purports
to offer a complete investment program to
which investors should commit all of their
investment capital.
PURCHASE OF SHARES Shares of each Fund are continuously offered
at an offering price per share equal to the
Fund's net asset value per share without any
sales charge. Each Fund currently offers Class
A shares ("the Shares"). Class B shares are
authorized but not currently offered.
Generally, the minimum initial investment in a
Fund is $2,500 and the minimum subsequent
investment in a Fund is $1,000. The minimum
initial and subsequent investment requirements
for investments through a tax-deferred
retirement plan, other than an IRA, is $500.
The minimum initial and subsequent investment
requirements for investments through an IRA
are $100.
PROSPECTUS
INFORMATION This Prospectus sets forth concisely certain
information about the Funds that prospective
investors will find helpful in making an
investment decision. Investors are encouraged
to read this Prospectus carefully and retain
it for future reference. A Statement of
Additional Information ("SAI") about the
Funds, also dated March 1, 1996, as amended or
supplemented from time to time, has been filed
with the Securities and Exchange Commission
(the "SEC"). For a free copy call
1-800-435-4659 or write to the Funds c/o
Unified Advisers, Inc. ("Unified"), 429 N.
Pennsylvania Avenue, Indianapolis,
Indiana 46204-1873. The SAI is incorporated by
reference into this Prospectus.
<TABLE>
<CAPTION>
TABLE OF CONTENTS Page Page
<S> <C> <C> <C>
Prospectus Summary . . . . . . . . . . . . . . 2 How to Redeem Shares of the Funds . . . . . 27
Financial Highlights . . . . . . . . . . . . . 7 Exchange Privilege . . . . . . . . . . . 29
Investment Objectives and Policies of the Dividends, Distributions and Taxes . . . . . 29
Funds . . . . . . . . . . . . . . . . . . . . . 11 Net Asset Value . . . . . . . . . . . . . . 30
Common Investment Strategies . . . . . . . . . 14 The Funds' Performance . . . . . . . . . . . 30
Risk Factors . . . . . . . . . . . . . . . . . 18 Custodian and Transfer Agent . . . . . . . . 31
Management of the Funds . . . . . . . . . . . 20 Distribution and Shareholder Servicing . . . 31
How to Open an Account . . . . . . . . . . . . 23 General Information . . . . . . . . . . . . 32
How to Purchase Shares of the Funds . . . . . 23 Appendix -- Description of Ratings . . . . . 33
</TABLE>
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
Shares in the Funds are not deposits or obligations of, or
guaranteed or endorsed by, any bank, and such shares are not
federally insured by the Federal Deposit Insurance Corporation, the
Federal Reserve Board or any other government agency. Shares of the
Funds involve certain investment risks, including the possible loss
of principal.
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by detailed
information appearing elsewhere in this Prospectus and the SAI.
Cross references in this summary are to headings in the Prospectus.
See "Table of Contents."
Expense Table
BJB Global Income Fund
This table illustrates all expenses and fees that an investor in
the Income Fund will incur. The expenses and fees shown are
through the Income Fund's fiscal year end.
<TABLE>
<S>
Shareholder Transaction Expenses <C> <C>
Maximum sales load imposed on purchases (as a percentage of offering
price). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None
Sales load imposed on reinvested dividends (as a percentage of offering
price). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None
Deferred sales load (as a percentage of original purchase price
or redemption proceeds, as applicable) . . . . . . . . . . . . . . . . . . . . None
Maximum redemption fees* (as a percentage of amount redeemed, if applicable) . None
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .65%
Maximum Rule 12b-1 fees . . . . . . . . . . . . . . . . . . . . . . . . . .25%**
Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.25%
Total Fund operating expenses . . . . . . . . . . . . . . . . . . . . . . 2.15%***
</TABLE>
- ---------
* A $12.00 service charge is imposed on the holders of Shares for effecting
wire transfers.
** The amount shown includes maximum amounts payable under a
Shareholder Services Plan adopted by the Income Fund, which
together with 12b-1 fees may not exceed .25% of the Income
Fund's average net assets attributable to the Shares.
See "Distribution and Shareholder Servicing" below.
*** Ratio of Total Fund Operating expenses includes indirectly
paid expenses. Excluding indirectly paid expenses, the expense
ratio would have been 2.05%.
<TABLE>
<CAPTION>
Example: 1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
A shareholder would pay the following
expenses on a $1,000 investment, assuming
(1) a 5% annual rate of return and (2)
complete redemption at the end of each
time period: $22 $67 $115 $248
</TABLE>
This table is designed to assist you in understanding the
various costs and expenses that an investor in the Income Fund
will incur, whether directly or indirectly. The example should
not be considered a representation of past or future expenses.
Actual expenses may be more or less than those shown.
BJB International Equity Fund
This table illustrates all expenses that an investor in the
Equity Fund will incur. The expenses and fees shown are through
the Equity Fund's fiscal year end.
<TABLE>
<CAPTION>
Shareholder Transaction Expenses
<S> <C>
Maximum sales load imposed on purchases (as a percentage of
offering price). . . . . . . . . . . . . . . . . . . . . . . . . . . . . None
Sales load imposed on reinvested dividends (as a percentage of
offering price). . . . . . . . . . . . . . . . . . . . . . . . . . . . . None
Deferred sales load (as a percentage of original purchase
price or redemption proceeds, as applicable) . . . . . . . . . . . . . . None
Maximum redemption fee* (as a percentage of amount redeemed, if
applicable). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None
Annual Fund Operating Expenses (as a percentage of average net
assets)
Management fees (after expense reimbursements)** . . . . . . . . . . . .50%
Maximum Rule 12b-1 fees . . . . . . . . . . . . . . . . . . . . . . . . .25%***
Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.09%
Total Fund operating expenses (after expense reimbursements)+ . . . . . 2.84%
</TABLE>
___________
* A $12.00 service charge is imposed on the holders of
Shares for effecting wire transfers.
** Absent such reimbursements, the ratio of management fees and total
Fund operating expenses to the average daily net assets would be
1.00% and 3.36% respectively. This reflects a temporary
voluntary waiver of management fees by the Equity Fund Adviser
(0.50%) which commenced on March 13, 1995.
*** The amount shown includes maximum amounts payable under a
Shareholder Services Plan adopted by the Equity Fund, which
together with 12b-1 fees may not exceed .25% of the Equity
Fund's average net assets attributable to the Shares.
See "Distribution and Shareholder Servicing" below.
+ Ratio of Total Fund Operating expenses includes indirectly paid expenses.
Excluding indirectly paid expenses the expense ratio would have
been 2.67%.
<TABLE>
<CAPTION>
Example: 1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
A shareholder would pay the following expenses on a
$1,000 investment, assuming (1) a 5% annual rate of
return and (2) complete redemption at the end of
each time period: $29 $88 $150 $317
</TABLE>
This table is designed to assist you in understanding the
various costs and expenses that an investor in the Equity Fund
will incur, whether directly or indirectly. The example should
not be considered a representation of past or future expenses.
Actual expenses may be more or less than those shown.
Investment
Objectives and
Policies The Income Fund's investment objective is to
maximize current income consistent with the
protection of principal by investing in a
non-diversified portfolio of fixed income
securities of governmental, supranational and
corporate issuers denominated in various
currencies, including U.S. dollars. Under
normal market conditions, the Income Fund
will invest substantially all of its assets
-- but no less than 65% of its assets -- in
fixed income securities, consisting of bonds,
debentures and notes.
The Equity Fund's investment objective is
long-term growth of capital from investing in
a diversified portfolio of common stocks of
foreign issuers of all sizes. Under normal
market conditions, the Equity Fund will
invest substantially all of its assets -- but
no less than 65% of its assets -- in
international equity securities. See
"Investment Objectives and Policies of the
Funds."
The Shares Shares are offered at net asset value
without a sales charge. Each Fund
pays an aggregate annual service fee and
distribution fee of .25% of the value of
average net assets of such Fund. See "How to
Purchase Shares of the Funds."
Purchase of Shares Shares may be purchased through Funds
Distributor, Inc. (the "Distributor"), the
distributor for both Funds or by mail through
Unified Advisers, Inc., each Fund's transfer
agent.
Investment Minimums Generally the minimum initial investment for
each Fund is $2,500 and a minimum
subsequent investment is $1,000. The minimum
initial and subsequent investment through a
tax-deferred retirement plan, other than an
IRA, are both $500. The minimum initial and
subsequent investment through an IRA are both
$100.
Redemption of Shares Shares may be redeemed at net asset value on
each day that the New York Stock Exchange
Inc. ("NYSE") is open for business.
Exchange Privilege Shares of one Fund may be exchanged for
shares of the other Fund, without a sales
charge. See "Exchange Privilege."
Management of the
Funds The Income Fund is managed by Julius Baer
Investment Management Inc. (the "Income Fund
Adviser"). The Equity Fund is managed by
Bank Julius Baer & Co., Ltd., New York branch
(the "Equity Fund Adviser"). The Equity Fund
Adviser also serves as servicing agent to the
Income Fund. Prior to August 5, 1994, the
Equity Fund Adviser served as sub-adviser to
the Income Fund. As of November 30, 1995,
the Income Fund Adviser had assets under
management of approximately $3.36 billion
and the Equity Fund Adviser had assets under
management of approximately $195 million.
Investors Bank & Trust Company ("Investors
Bank" or the "Administrator") serves as each
Fund's administrator. See "Management of the
Funds."
Valuation of Shares Net asset value of the Shares is quoted daily
in the financial section of various newspapers
and is also available from the Distributor.
See "Net Asset Value."
Dividends and
Distributions The Income Fund declares and pays monthly
dividends from its net investment income;
distributions of net realized short-term and
long-term capital gains, if any, are declared
and paid annually. The Equity Fund declares
and pays annual dividends from its net
investment income and annual distributions of
net realized short-term and long-term capital
gains. See "Dividends, Distributions and Taxes."
Reinvestment of
Dividends All dividends and distributions will be
reinvested automatically, unless otherwise
specified by an investor, in additional
Shares of the respective Fund at current net
asset value. See "Dividends, Distributions
and Taxes."
Risk Factors There can be no assurance that a Fund will
meet its investment objective. Each Fund's
net asset value will fluctuate, reflecting
fluctuations in the market value of its
portfolio holdings.
Investments in foreign securities involve
risks relating to political and economic
developments abroad and the differences
between the regulations to which U.S. and
foreign issuers are subject. Changes in
foreign currency exchange rates affect a
Fund's net asset value, earnings and gains
and losses realized on sales of securities.
Securities of foreign companies may be less
liquid and their prices more volatile than
those of securities of comparable U.S.
companies. Each Fund's participation in the
currency, options and futures markets
involves certain risks and transaction costs.
See "Risk Factors."
The Equity Fund may invest up to 10% of its
total assets in high yield/high risk bonds.
Investment by the Equity Fund in debt
securities of below investment grade quality
involves a high degree of risk. Such
investments are regarded as speculative by
the rating agencies. Both Funds may invest in
unrated debt, although any such investments
by the Income Fund must meet the portfolio's
credit standards. See "Investment
Objectives and Policies of the Funds -- BJB
Global Income Fund Portfolio Investments."
Unrated debt, while not necessarily of lower
quality than rated securities, may not have
as broad a market. See "Risk Factors."
FINANCIAL HIGHLIGHTS
BJB Global Income Fund
The following information for each of the years or periods in the three
year period ended October 31, 1995 and for the period from July 1, 1992 through
October 31, 1992, has been audited by KPMG Peat Marwick LLP, independent
auditors, whose report thereon appears in the Income Fund's Annual Report dated
October 31, 1995. The information should be read in conjunction with the
financial statements and related notes also included in the Income Fund's Annual
Report, which are incorporated into the SAI. Further information about the
performance of the Trust is contained in the Income Fund's Annual Report which
may be obtained by shareholders without charge by writing or calling Unified at
the address or telephone number printed on the cover page.
<TABLE>
<CAPTION>
Year Year Year Period
Ended Ended Ended Ended
10/31/95# 10/31/94# 10/31/93 10/31/92*
--------- --------- -------- ---------
<S> <C> <C> <C> <C>
For a Class A share outstanding
throughout each period.
Net Asset Value, beginning of period $l1.16 $12.28 $12.36 $12.00
Income (loss) from investment
operations:
Net investment income 0.59 0.39 0.37 0.16++
Net realized and unrealized
gain (loss) on securities 0.92 (0.81) 0.58 0.42
------ ------ ------ ------
Total income (loss) from investment
operations 1.51 (0.42) 0.95 0.58
------ ------ ------ ------
Less distributions:
Dividends from net investment
income (0.56) (0.27) (0.37) (0.16)
Distributions from net realized
capital gains -- -- (0.66) --
Distributions from capital -- (0.43) -- (0.06)
------ ------ ------ ------
Total distributions (0.56) (0.70) (1.03) (0.22)
------ ------ ------ ------
Net Asset Value, end of period $12.11 $11.16 $12.28 $12.36
====== ====== ====== ======
Total Return*** 13.90% (3.54)% 8.15% 4.86%
====== ====== ====== ======
Ratios/Supplemental Data:
Net assets, end of period
(in 000's) $17,327 $28,619 $57,682 $28,647
Ratio of net investment income to
average net assets 5.19% 3.29% 2.24% 3.95%+
Ratio of total expenses to average
net assets 2.15%## 1.66% 1.78% 1.00%+**
Portfolio turnover rate 319% 320% 291% 43%
</TABLE>
- -----------------
* The BJB Global Income Fund's Class A shares commenced operations on July 1,
1992. On November 30, 1993, the Fund commenced selling Class B shares. Those
shares in existence prior to November 30, 1993 were designated as Class A
shares.
** Annualized operating expenses before waiver of fees by the investment
adviser, sub-investment adviser and administrator were 1.75% for the period
ended October 31, 1992.
*** Total return represents aggregate total return for the periods indicated
and does not reflect any applicable sales charge.
+ Annualized.
++ Net investment income before waiver of fees by the investment adviser,
sub-investment adviser and administrator was $0.13 for the period ended
October 31, 1992.
# Per share amounts have been calculated using the monthly average share
method, which more appropriately presents the per share data for the
period since the use of the undistributed method does not accord with
results of operations.
## "Ratio of total expenses to average net assets" for the year ended October
31, 1995 includes indirectly paid expenses. Excluding indirectly paid
expenses, the expense ratio would have been 2.05% for the year ended
October 31, 1995.
<TABLE>
<CAPTION>
Period Period
Ended Ended
9/19/95** 10/31/94*
--------- ---------
<S> <C> <C>
For a Class B share outstanding throughout the period.#
Net Asset Value, beginning of period $11.16 $12.18
------ ------
Income (loss) from investment operations:
Net investment income 0.33 0.29
Net realized and unrealized gain (loss) on
securities 0.92 (0.73)
------ ------
Total income (loss) from investment operations 1.25 (0.44)
------ ------
Less distributions:
Dividends from net investment income (0.40) (0.23)
Distributions from capital -- (0.35)
------ ------
Total distributions (0.40) (0.58)
------ ------
Net Asset Value, end of period $12.01 $11.16
====== ======
Total Return*** 11.39% (3.72%)
====== ======
Ratios/Supplemental Data:
Net assets, end of period (in 000's) $ O $ 25
Ratio of net investment income to average net
assets+ 2.56% 2.56%
Ratio of total expenses to average net assets+ 2.37%## 2.38%
Portfolio turnover rate 319% 320%
</TABLE>
- ---------------
* The Income Fund commenced selling Class B shares on November 30, 1993.
** Class B shares were completely redeemed as of September 19, 1995. The
net asset value of $12.01 represents the final stated number at which
shares were redeemed on that date.
*** Total return represents aggregate total return for the periods indicated
and does not reflect any applicable sales charge.
+ Annualized.
# Per share amounts have been calculated using the monthly average share
method, which more appropriately presents the per share data for the
period since the use of the undistributed method does not accord with
results of operations.
## "Ratio of total expenses to average net assets" for the period ended
September 19, 1995 includes indirectly paid expenses. Excluding
indirectly paid expenses, the expense ratio would have been 2.28% for the
period ended September 19, 1995.
BJB International Equity Fund
The following information for each of the years or periods for the two
year period ended October 31, 1995 and the period from October 4, 1993 through
October 31, 1993 has been audited by KPMG Peat Marwick LLP, independent
auditors, whose report thereon appears in the Equity Fund's Annual Report dated
October 31, 1995. The information should be read in conjunction with the
financial statements and related notes also included in the Equity Fund's Annual
Report, which are incorporated into the SAI. Further information about the
performance of the Trust is contained in the Equity Fund's Annual Report which
may be obtained by shareholders without charge by writing or calling Unified at
the address or telephone number printed on the cover page.
<TABLE>
<CAPTION>
Year Year Period
Ended Ended Ended
10/31/95# 10/31/94 10/31/93*
--------- -------- ---------
<S> <C> <C> <C>
For a Class A share outstanding throughout
each period.
Net Asset Value, beginning of period $11.30 $13.10 $12.00
------ ------ ------
Income (loss) from investment operations:
Net investment loss (0.06)++ (0.21) (0.02)
Net (realized and unrealized) gain (loss)
on securities (1.11) (1.56) 1.12
------ ------ ------
Total income (loss) from investment
operations (1.17) (1.77) 1.10
------ ------ ------
Less distributions:
Dividends in excess of net investment
income -- (0.03) --
------ ------ ------
Net Asset Value, end of period $10.13 $11.30 $13.10
====== ====== ======
Total Return** (10.35)% (13.53)% 9.17%
====== ====== ======
Ratios/Supplemental Data:
Net assets, end of period (in 000's) $9,643 $14,831 $11,292
Ratio of net investment loss to average
net assets (0.63)% (1.26)% (3.83)%+
Ratio of total expenses to average
net assets 2.84%(b)(c) 2.16% 2.09%+
Portfolio turnover rate 116% 169% 20%
</TABLE>
- --------------
* The BJB International Equity Fund's Class A shares commenced operations on
October 4, 1993. On November 30, 1993, the Fund commenced selling Class B
shares. Those shares in existence prior to November 30, 1993 were designated
as Class A shares.
** Total return represents aggregate total return for the period indicated
and does not reflect any applicable sales charge.
+ Annualized.
++ Net investment loss before waiver of fees by the investment adviser and/or
administrator was ($0.11)for the year ended October 31, 1995.
# Per share amounts have been calculated using the monthly average share
method, which more appropriately presents the per share data for the period
since the use of the undistributed method does not accord with results of
operations.
(b) Figures are net of the expense reimbursement by the Adviser in connection
with the voluntary and involuntary expense limitation. Before expense
reimbursement, the "Ratio of total expenses to average net assets" would
have been 3.36% for the year ended October 31, 1995.
(c) "Ratio of total expenses to average net assets" for the year ended October
31, 1995 includes indirectly paid expenses. Excluding indirectly paid
expenses, the expense ratio would have been 2.67% for the year ended October
31, 1995.
<TABLE>
<CAPTION>
Period Period
Ended Ended
9/19/95**# 10/31/94*
---------- ---------
<S> <C> <C>
For a Class B share outstanding throughout
the period.
Net Asset Value, beginning of period $11.30 $13.01
------ ------
Income from investment operations: (0.03)++ (0.13)
Net investment loss
Net (realized and unrealized) loss on securities (1.02) (1.55)
------ ------
Total loss from investment operations (1.05) (1.68)
------ ------
Less distributions:
Dividends in excess of net investment income -- (0.03)
Net Asset Value, end of period $10.25 $11.30
====== ======
Total Return*** (9.29)% (12.93)%
====== ======
Ratios/Supplemental Data:
Net assets, end of period (in 000's) $ 0 $ 15
Ratio of net investment loss to average net assets+ (0.27)% (1.97)%
Ratio of total expenses to average net assets+ 2.48%(b)(c) 2.86%
Portfolio turnover rate 116% 169%
</TABLE>
- ---------------
* The Equity Fund commenced selling Class B shares on November 30, 1993.
** Class B shares were completely redeemed as of September 19, 1995. The net
asset value of $10.25 represents the final stated number at which shares
were redeemed on that date.
*** Total return represents aggregate total return for the period
indicated and does not reflect any applicable sales charge.
+ Annualized.
++ Net investment loss before waiver of fees by the investment adviser
and/or administrator was ($0.07) for the period ended September 19, 1995.
# Per share amounts have been calculated using the monthly average share
method, which more appropriately presents the per share data for the
period since the use of the undistributed method does not accord with
results of operations.
(b) Figures are net of the expense reimbursement by the Adviser in connection
with the voluntary and involuntary expense limitation. Before the expense
reimbursement, the "Ratio of total expenses to average net assets" would
have been 2.89% for the period ended September 19, 1995.
(c) "Ratio of total expenses to average net assets" for the period ended
September 19, 1995 includes indirectly paid expenses. Excluding indirectly
paid expenses, the expense ratio would have been 2.34% for the period
ended September 19, 1995.
INVESTMENT OBJECTIVES AND POLICIES OF THE FUNDS
The investment objective and general policies of each Fund are
described below. Specific investment techniques that may be
employed by the Funds are described in a separate section of
this Prospectus. See "Common Investment Strategies." Each
Fund's investment objective is a fundamental policy and may not
be amended without first obtaining the approval of a majority of
the outstanding shares of the Fund. Except for the limitations
on borrowings, the investment policies for each Fund described
in this Prospectus may be changed at any time without
shareholder consent by vote of the Board of Trustees of the
Trust, subject to the limitations contained in the Investment
Company Act of 1940, as amended (the "1940 Act"). The Funds are
subject to investment restrictions described in the SAI, some of
which are fundamental and may not be changed without shareholder
approval.
BJB Global Income Fund
General. The Income Fund is a non-diversified, open-end
mutual fund whose investment objective is to maximize current
income consistent with the protection of principal. The Income
Fund seeks to achieve its objective by investing in a
professionally managed portfolio consisting of fixed income
securities of governmental, supranational and corporate issuers
denominated in various currencies, including U.S. dollars. Such
fixed income securities consist of bonds, debentures and notes.
The Income Fund intends its portfolio to have a duration
of approximately five years. Duration takes into account the
pattern of a security's cash flow over time, including how cash
flow is affected by prepayments and changes in interest rates. In
contrast, maturity measures only the time until final payment is
due on an investment. Depending on market conditions, long-term
securities may provide an opportunity for higher income than
securities available for purchase by the Income Fund. Although a
potential for capital appreciation arises from holding securities
with these maturities, capital appreciation is not an objective of
the Income Fund. Under normal market conditions, the potential
for net asset value fluctuation increases with lengthening
maturities.
Under normal market conditions, the Income Fund will
invest substantially all of its assets -- but no less than 65% of
its assets -- in fixed income securities consisting of bonds,
debentures and notes. Issuers of these securities will be located
in at least three countries, and issuers located in any one
country (other than the United States) will not represent more
than 40% of the Income Fund's total assets. In addition, the
Income Fund will not invest 25% or more of its assets in
securities issued by any one foreign government or not more than
25% in supranational organizations as a group, its agencies,
instrumentalities or political subdivisions. For temporary
defensive purposes, including during times of international
political or economic uncertainty, the Income Fund Adviser may
determine that all of the Income Fund's investments should be made
temporarily in the United States or denominated in U.S. dollars or
the Income Fund should invest in short-term investment grade money
market obligations denominated in various currencies.
Portfolio Investments. The Income Fund may invest in a
wide variety of fixed income securities issued anywhere in the
world, including the United States. The Income Fund may purchase
debt obligations consisting of bonds, debentures and notes issued
or guaranteed by the United States or foreign governments, their
agencies, instrumentalities or political subdivisions, as well as
supranational entities organized or supported by several national
governments, such as the International Bank for Reconstruction and
Development (the "World Bank") or the European Investment Bank.
The Income Fund also may purchase debt obligations of U.S. or
foreign corporations that are issued in a currency other than U.S.
dollars. The Income Fund currently contemplates that it will
invest in obligations denominated in the currencies of a variety
of countries, consisting of Australia, Austria, Belgium, Canada,
Denmark, Finland, France, Germany, Hong Kong, Italy, Japan,
Mexico, the Netherlands, New Zealand, Portugal, Spain, Sweden,
Switzerland, the United Kingdom and the United States. The Income
Fund may invest in securities issued in multi-national currency
units, such as European Currency Units ("ECUs"), which is a
composite of the currencies of several European countries. In
order to seek to protect against a decline in value of the Income
Fund's assets due to fluctuating currency values, the Income Fund
intends to engage in certain hedging strategies, as described
under "Common Investment Strategies" below.
In selecting particular investments for the Income Fund,
the Income Fund Adviser will seek to mitigate investment risk by
limiting its investments to quality fixed income securities. The
Income Fund may not invest in governmental bonds rated at the time
of purchase below "A" by Moody's Investors Service, Inc.
("Moody's") or Standard & Poor's Ratings Group ("S&P") and may
not invest in corporate bonds rated at the time of purchase below
"Aa" by Moody's or "AA" by S&P. The Income Fund may invest in
securities with equivalent ratings from another recognized rating
agency and non-rated issues that are determined by the Income Fund
Adviser to have financial characteristics that are comparable and
that are otherwise similar in quality to the rated issues it
purchases. If a security is downgraded below the minimum rating
necessary for investment by the Income Fund, the Income Fund
intends to dispose of the security within a reasonable time
period. Investors should be aware that ratings are relative and
subjective and are not absolute standards of quality. For a
description of the rating systems of Moody's and S&P, see
the Appendix to this Prospectus.
The Income Fund Adviser will allocate investments among
securities of particular issuers on the basis of its views as to
the yield, duration, maturity, issue classification and quality
characteristics of the securities, coupled with expectations
regarding the economy, movements in the general level and term of
interest rates, currency values, political developments and
variations in the supply of funds available for investment in the
world bond market relative to the demands placed upon it. Fixed
income securities denominated in currencies other than the U.S.
dollar or in multinational currency units are evaluated on the
strength of the particular currency against the U.S. dollar as
well as on the current and expected levels of interest rates in
the country or countries. Currencies generally are evaluated on
the basis of fundamental economic criteria (e.g., relative
inflation and interest rate levels and trends, growth rate
forecasts, balance of payments status and economic policies) as
well as technical and political data. In addition to the
foregoing, the Income Fund may seek to take advantage of
differences in relative values of fixed income securities among
various countries.
The Income Fund is classified as a "non-diversified"
investment company under the 1940 Act, which means that the Income
Fund is not limited by the 1940 Act in the proportion of its
assets that may be invested in the securities of a single issuer.
The Income Fund will not purchase more than 10% of the voting
securities of any one issuer, more than 10% of the securities of
any class of any one issuer or more than 10% of the outstanding
debt securities of any one issuer, provided that this limitation
shall not apply to investments in U.S. government securities. As a
non-diversified investment company, the Income Fund may invest a
greater proportion of its assets in the obligations of a smaller
number of issuers and, as a result, may be subject to greater risk
with respect to portfolio securities.
BJB International Equity Fund
General. The Equity Fund is a diversified, open-end
mutual fund whose investment objective is long-term growth of
capital. The Equity Fund seeks to achieve its investment objective
by investing in common stocks, convertible securities and
preferred stocks of foreign issuers. The Equity Fund is permitted
to invest on a world-wide basis in companies and other
organizations of any size, regardless of country of organization
or place of principal business activity. However, the Equity Fund
normally will not invest in equity securities of U.S. issuers.
Under normal market conditions, the Equity Fund will invest
substantially all of its assets -- but not less than 65% of its
assets -- in international equity securities. Issuers of these
securities will be located in at least five different countries,
although the Equity Fund may at times invest all of its assets
in fewer than five countries. In no event, however, will the
Equity Fund invest less than 65% of its assets in fewer than
three countries. The Equity Fund anticipates that it will invest
a portion of its assets in securities of issuers located in
developing countries. The Equity Fund will not invest more than
25% of its total assets in the securities of issuers in any one
industry. The Equity Fund also may invest in debt securities of
foreign issuers, including high-risk and high-yield debt
instruments (but in no event in an amount exceeding 10% of the
Fund's total assets), when the Equity Fund Adviser believes,
based on market conditions, the financial condition of the
issuer, general market conditions and other relevant factors,
such investments offer opportunities for capital growth. For
temporary defensive purposes, including during times of
international political or economic uncertainty, the Equity Fund
Adviser may determine that all of the Equity Fund's investments
should be made temporarily in the United States or denominated
in U.S. dollars or that the Equity Fund should invest in
short-term investment grade money market obligations denominated
in various currencies.
Portfolio Investments. The Equity Fund may invest in a
wide variety of international equity securities issued anywhere in
the world, normally excluding the United States. The Equity Fund
currently contemplates that it will invest in securities
denominated in the currencies of a variety of countries,
including, but not limited to, Argentina, Australia, Austria,
Belgium, Brazil, Canada, Chile, China, Denmark, Finland, France,
Germany, Hong Kong, Indonesia, Italy, Japan, Malaysia, Mexico, the
Netherlands, New Zealand, Peru, Portugal, Singapore, Spain,
Sweden, Switzerland, Thailand, the United Kingdom and the United
States. The Equity Fund also may invest up to 10% of its total
assets in equity warrants and interest rate warrants of
international issuers. However, the Equity Fund will not invest
more than 2.0% of its net assets in warrants that are not
listed on a recognized U.S. or foreign exchange. Equity warrants
are securities that give the holder the right, but not the
obligation, to subscribe for newly created equity issues of the
issuing company or a related company at a fixed price either on a
date certain or during a set period. Interest rate warrants are
rights that are created by an issuer, typically a financial
institution, entitling the holder to purchase, in the case of a
call, or sell, in the case of a put, a specific bond issue or an
interest rate index (Bond Index) at a certain level over a fixed
time period. Interest rate warrants can typically be exercised in
the underlying instrument or settled in cash. The Equity Fund may
invest in securities issued in multi-national currency units, such
as ECUs, or American Depository Receipts ("ADRs"), which are
receipts for the shares of a foreign-based corporation held in the
vault of a U.S. bank and entitling the shareholder to all
dividends and capital gains. The Equity Fund may invest in ADRs
through "sponsored" or "unsponsored" facilities. A sponsored
facility is established jointly by the issuer of the underlying
security and a depositary, whereas a depositary may establish an
unsponsored facility without participation by the issuer of the
deposited security. Holders of unsponsored depositary receipts
generally bear all the costs of such facilities and the depositary
of an unsponsored facility frequently is under no obligation to
distribute shareholder communications received from the issuer of
the deposited security or to pass through voting rights to the
holders of such receipts in respect of the deposited securities.
In order to seek to protect against a decline in value of the
Equity Fund's assets due to fluctuating currency rates, the Equity
Fund intends to engage in certain hedging strategies, as described
under "Common Investment Strategies" below.
The Equity Fund will invest substantially all of its assets in
equity securities when the Equity Fund Adviser believes that the
relevant market environment favors profitable investing in those
securities. Equity investments are selected in industries and
companies that the Equity Fund Adviser believes are experiencing
favorable demand for their products and services, and which
operate in a favorable regulatory and competitive climate. The
Equity Fund Adviser's analysis and selection process focuses on
growth potential; investment income is not a consideration. In
addition, factors such as expected levels of inflation,
government policies influencing business conditions, the outlook
for currency relationships and prospects for economic growth
among countries, regions or geographic areas may warrant
consideration in selecting foreign equity securities. The Equity
Fund intends to invest in marketable securities that are
not restricted as to public sale. Most of the purchases and
sales of securities by the Equity Fund will be effected in the
primary trading market for the securities. The primary trading
market for a given security generally is located in the country
in which the issuer has its principal office. While no
assurances can be given as to the specific issuers of the equity
securities in which the Fund will invest, the Fund intends to
seek out the securities of large well-established issuers.
However, the Equity Fund will invest in the equity securities of
smaller emerging growth companies when the Equity Fund Adviser
believes that such investments represent a beneficial investment
opportunity for the Fund.
Although the Equity Fund normally invests primarily in
equity securities, it may increase its cash or non-equity position
when the Equity Fund Adviser is unable to locate investment
opportunities with desirable risk/reward characteristics. The Equity
Fund may invest in preferred stocks that are not convertible into
common stock; government securities, corporate bonds and debentures,
including high-risk and high-yield debt instruments (but in no event
in an amount exceeding 10% of the Fund's total assets), high-grade
commercial paper, certificates of deposit or other debt securities
when the Equity Fund Adviser perceives an opportunity for capital
growth from such securities or so that the Equity Fund may receive a
return on idle cash. The Equity Fund also may invest up to 5% of its
total assets in gold bullion and coins, which, unlike investments in
many securities, earn no investment income. Since a market exists
for such investments, the Equity Fund Adviser believes gold bullion
and coins should be considered a liquid investment. The Equity Fund
intends to limit its investments in debt securities to securities of
U.S. companies, the United States government, foreign governments,
domestic or foreign governmental entities and supranational
organizations such as the European Economic Community and the World
Bank. When the Equity Fund invests in such securities, investment
income may increase and may constitute a large portion of the return
of the Fund but the Equity Fund should not expect to participate in
market advances or declines to the extent that it would if it
remained fully invested in equity securities.
The Equity Fund is classified as a "diversified" investment
company under the 1940 Act, which means that the Equity Fund is
limited by the 1940 Act in the proportion of its assets that may
be invested in the securities of a single issuer. Under the 1940
Act, a diversified fund may not purchase a security of any
issuer (except cash items and U.S. government securities) if (a)
it would cause the fund to own more than 10% of the outstanding
voting securities of that issuer or (b) if it would cause the
fund's holdings of that issuer to amount to more than 5% of the
fund's total assets (as applied to 75% of the fund's total
assets). The Equity Fund also intends to comply with the
diversification requirements imposed by the Internal Revenue
Code of 1986, as amended ("the Code") for qualification as a regulated
investment company. The Equity Fund will not purchase more than
10% of the voting securities of any one issuer, more than 10% of
the securities of any class of any one issuer or more than 10%
of the outstanding debt securities of any one issuer, provided
that this limitation shall not apply to investments in U.S.
government securities.
Investment Limitations
Each Fund may invest up to 15% of its total assets in securities
with contractual or other restrictions on resale and other
instruments that are not readily marketable, including (1)
repurchase agreements with maturities greater than seven days
and (2) time deposits maturing in more than seven calendar days.
Determinations of the liquidity of a Fund's investments are made
by the Board of Trustees. In addition, up to 5% of a Fund's
total assets may be invested in the securities of issuers which
have been in continuous operation for less than three years. A
Fund may borrow from banks for temporary or emergency purposes
in an amount up to 30% of its total assets and may pledge its
assets to the same extent in connection with these borrowings.
Whenever bank borrowings exceed 5% of the value of a Fund's
total assets, the Fund will not make any additional investments.
COMMON INVESTMENT STRATEGIES
In attempting to achieve their investment objectives, the Funds
may engage in a variety of investment strategies.
Convertible Securities and Bonds with Warrants Attached
Each Fund may invest in fixed income obligations convertible
into equity securities and bonds issued as a unit with warrants.
Convertible securities in which a Fund may invest, comprised of
both convertible debt and convertible preferred stock, may be
converted at either a stated price or at a stated rate into
underlying shares of common stock. Because of this feature,
convertible securities enable an investor to benefit from
increases in the market price of the underlying common stock.
Convertible securities provide higher yields than the underlying
equity securities, but generally offer lower yields than
non-convertible securities of similar quality. The value of
convertible securities fluctuates in relation to changes in
interest rates like bonds, and, in addition, fluctuates in
relation to the underlying common stock. Each Fund does not
intend to retain in its portfolio the common stock received upon
conversion of a convertible security or exercise of a warrant
and will sell it as promptly as it can and in a manner which it
believes will reduce the risk to the Fund of a loss in
connection with the sale. Each Fund does not intend to retain in
its portfolio any warrant acquired as a unit with bonds if it
begins to trade separately from the related bond.
Money Market Investments
Each Fund may invest up to 20% of its total assets in short-term
money investment grade market obligations. In addition, on
occasion, a Fund's Adviser may deem it advisable to adopt a
temporary defensive posture by investing a larger percentage of
its assets in short-term money market obligations. These
short-term instruments, which may be denominated in various
currencies, consist of obligations of foreign governments, their
agencies or instrumentalities; obligations of foreign and U.S.
banks; and commercial paper of corporations that, at the time of
purchase, have a class of debt securities outstanding that is
rated A-2 or higher by S&P or Prime-2 or higher by Moody's or is
determined by a Fund's Adviser to be of equivalent quality. Any
short-term obligation rated A-1 or A-2 by S&P, Prime-1 or
Prime-2 by Moody's, the equivalent from another rating service
or, if unrated, in the opinion of a Fund's Adviser determined to
be an issue of comparable quality, will be a permitted
investment. For temporary defensive purposes, including during
times of international political or economic uncertainty, each
Fund could also invest without limit in securities denominated
in U.S. dollars through investment in obligations issued or
guaranteed by the United States government, its agencies or
instrumentalities ("U.S. government securities") (including
repurchase agreements with respect to such securities).
U.S. Government Securities
The U.S. government securities in which each Fund may invest
consist of: direct obligations of the United States Treasury
(such as Treasury bills, Treasury notes and Treasury bonds), and
obligations issued by U.S. government agencies and
instrumentalities, including instruments that are supported by
the full faith and credit of the United States (such as
securities of the Government National Mortgage Association);
instruments that are supported by the right of the issuer to
borrow from the United States Treasury (such as securities of
Federal Home Loan Banks); and instruments that are supported by
the credit of the instrumentality (such as securities of the
Federal National Mortgage Association and the Federal Home Loan
Mortgage Corporation).
Portfolio Transactions and Turnover Rate
The Income Fund Adviser will actively manage the Income Fund to
increase investment income. For example, a security may be sold
and another with similar investment characteristics purchased to
take advantage of a temporary disparity in the normal yield
relationship between the two securities. This investment
approach and use of certain of the investment strategies
described below may result in a high portfolio turnover rate.
The Income Fund may experience portfolio turnover of 250% or
higher as a result of these investment strategies. The Equity
Fund does not intend to seek profits through short-term trading.
However, certain investment policies followed by the Equity Fund
may result in frequent shifts among its investments and could
result in portfolio turnover rates as high as 500%. It is a
policy of the SEC that a portfolio turnover rate of 500% is
inappropriate for a fund whose investment objective is long-term
appreciation and that a portfolio turnover rate of 100% is more
appropriate for a fund with such an investment objective. High
portfolio turnover rates will result in greater dealer markups
or underwriting commissions as well as generating additional
transaction costs. Each Fund will not consider portfolio
turnover rate a limiting factor in making investment decisions
consistent with its investment objective and policies.
Currency Hedging Transactions
Each Fund's Adviser intends to seek to limit losses
through the use of currency forward contracts, currency and
interest rate futures contracts and options on such futures
contracts and options on currencies. These strategies will be used
for hedging purposes only and not for speculation. Each Fund may
hedge its risk of changes in currency exchange rates by hedging up
to 100% of its total portfolio in currency hedging transactions.
Currency and Interest Rate Futures Contracts and Options on
Futures
A foreign currency futures contract provides for the
future sale by one party and the purchase by the other party of a
certain amount of a specified foreign currency at a specified
price, date, time and place. Interest rate futures contracts are
standardized contracts traded on commodity exchanges involving an
obligation to purchase or sell a predetermined amount of debt
security at a fixed date and price. An option on a futures
contract gives the purchaser the right, in return for the premium
paid, to assume a position in a futures contract at a specified
exercise price at any time prior to the expiration date of the
option. When deemed advisable by its Adviser, each Fund may enter
into currency futures contracts, interest rate futures contracts
or related options that are traded on U.S. or foreign exchanges.
The Equity Fund also may enter into options contracts relating
to gold bullion. Such investments by a Fund will be made solely
for the purpose of hedging against the effects of changes in the
value of its portfolio securities due to anticipated changes in
interest rates, currency values and market conditions and when the
transactions are economically appropriate to the reduction of
risks inherent in the management of a Fund. A Fund may not enter
into futures contracts and options on futures contracts that are
not considered "bona fide" hedges under regulations of the
Commodity Futures Trading Commission. With respect to each long
position in a futures contract or option thereon, the underlying
commodity value of such contract always will be covered by cash
and cash equivalents set aside plus accrued profits held at a
Fund's custodian or a corresponding chart position.
Currency Exchange Transactions and Options on Foreign Currencies
Each Fund may engage in currency exchange transactions and
purchase put and call options on foreign currencies. Each Fund
will conduct its currency exchange transactions either on a spot
(i.e., cash) basis at the rate prevailing in the currency
exchange market or through entering into forward contracts to
purchase or sell currencies. A forward currency contract
involves an obligation to purchase or sell a specific currency
at a future date, which may be any fixed number of days from the
date of the contract agreed upon by the parties, at a price set
at the time of the contract. These contracts are entered into in
the interbank market conducted directly between currency traders
(usually large U.S. or foreign commercial banks) and their
customers. The Funds may enter into a forward contract in the
following two circumstances:
(1) When a Fund purchases a foreign currency denominated
security for settlement in the near future, it may immediately
purchase in the forward market the foreign currency needed to
pay for and settle the transaction.
(2) When a Fund's Adviser believes that the currency of a
specific country may deteriorate against another currency, a
Fund may enter into a forward contract to sell the less
attractive currency and buy the more attractive one. The amount
in question could be more or less than the value of a Fund's
securities denominated in the less attractive currency. While
such actions are intended to protect the Funds from adverse
currency movements, there is a risk that the currency movements
involved will not be properly anticipated. Use of this currency
hedging technique may also be limited by management's need to
protect the U.S. tax status of the Funds as regulated investment
companies.
To support its obligation when a Fund enters into a
forward contract to buy or sell currencies, such Fund will either
deposit with its custodian in a segregated account cash or other
high-grade liquid debt obligations having a value at least equal
to its obligation or continue to own or have the right to sell or
acquire, respectively the currency subject to the forward
contract.
An option on a foreign currency, which may be entered
into on a U.S. or foreign exchange or in the over-the-counter
market, gives the purchaser, in return for a premium, the right to
sell, in the case of a put, and buy, in the case of a call, the
underlying currency at a specified price during the term of the
option.
Each Fund may also invest in instruments offered by brokers that
combine forward contracts, options and securities in order to
reduce foreign currency exposure.
Covered Option Writing
Each Fund may write options to generate current income or
as hedges to reduce investment risk. Each Fund may write put and
call options on up to 25% of the net asset value of the securities
in its portfolio and will realize fees (referred to as
"premiums") for granting the rights evidenced by the options. A
put option embodies the right of its purchaser to compel the
writer of the option to purchase from the option holder an
underlying security at a specified price at any time during the
option period. In contrast, a call option embodies the right of
its purchaser to compel the writer of the option to sell to the
option holder an underlying security at a specified price at any
time during the option period. Thus, the purchaser of a put option
written by a Fund has the right to compel such Fund to purchase
from it the underlying security at the agreed-upon price for a
specified time period, while the purchaser of a call option
written by a Fund has the right to purchase from such Fund the
underlying security owned by the Fund at the agreed-upon price for
a specified time period.
Upon the exercise of a put option written by a Fund, such
Fund may suffer an economic loss equal to the difference between
the price at which the Fund is required to purchase the underlying
security and its market value at the time of the option exercise,
less the premium received for writing the option. Upon the
exercise of a call option written by a Fund, such Fund may suffer
an economic loss equal to the excess of the security's market
value at the time of the option's exercise over the Fund's
acquisition cost of the security, less the premium received for
writing the option.
The Funds will write only covered options. Accordingly,
whenever a Fund writes a call option it will continue to own or
have the present right to acquire the underlying security for as
long as it remains obligated as the writer of the option. To
support its obligation to purchase the underlying security if a
put option is exercised, a Fund will either (1) deposit with its
custodian in a segregated account cash, U.S. government securities
or other high-grade liquid debt obligations having a value at
least equal to the exercise price of the underlying securities or
(2) continue to own an equivalent number of puts of the same
"series" (that is, puts on the same underlying security having
the same exercise prices and expiration dates as those written by
the Fund), or an equivalent number of puts of the same "class"
(that is, puts on the same underlying security) with exercise
prices greater than those that it has written (or, if the exercise
prices of the puts it holds are less than the exercise prices of
those it has written, it will deposit the difference with its
custodian in a segregated account).
Each Fund may engage in a closing purchase transaction to
realize a profit, to prevent an underlying security from being
called or put or, in the case of a call option, to unfreeze an
underlying security (thereby permitting its sale or the writing of
a new option on the security prior to the outstanding option's
expiration). To effect a closing purchase transaction, a Fund
would purchase, prior to the holder's exercise of an option that a
Fund has written, an option of the same series as that on which
such Fund desires to terminate its obligation. The obligation of a
Fund under an option that it has written would be terminated by a
closing purchase transaction, but the Fund would not be deemed to
own an option as the result of the transaction. There can be no
assurance that a Fund will be able to effect closing purchase
transactions at a time when it wishes to do so. To facilitate
closing purchase transactions, however, the Fund will write
options only if a secondary market for the option exists on a
recognized securities exchange or in the over-the-counter market.
Option writing for the Funds may be limited by position and
exercise limits established by securities exchanges and the
National Association of Securities Dealers, Inc. Furthermore, a
Fund may, at times, have to limit its option writing in order to
qualify as a regulated investment company under the Code. Each
Fund may enter into options transactions as hedges to reduce
investment risk, generally by making an investment expected to
move in the opposite direction of a portfolio position. A hedge is
designed to offset a loss on a portfolio position with a gain on
the hedge position. The Funds bear the risk that the prices of the
securities being hedged will not move in the same amount as the
hedge. Each Fund will engage in hedging transactions only when
deemed advisable by its Adviser. Successful use by a Fund of
options will depend on its Adviser's ability to correctly predict
movements in the direction of the security or currency underlying
the option used as a hedge. Losses incurred in hedging
transactions and the costs of these transactions will affect a
Fund's performance.
Purchasing Put and Call Options on Securities
Each Fund may purchase put and call options that are
traded on foreign as well as U.S. exchanges and in the
over-the-counter market. A Fund may utilize up to 2% of its assets
to purchase put options on portfolio securities and may do so at
or about the same time that they purchase the underlying security
or at a later time. By buying a put, a Fund limits its risk of
loss from a decline in the market value of the security until the
put expires. Any appreciation in the value of and yield otherwise
available from the underlying security, however, will be
partially offset by the amount of the premium paid for the put
option and any related transaction costs. A Fund may utilize up
to 2% of its assets to purchase call options on portfolio
securities. Call options may be purchased by a Fund in order to
acquire the underlying securities for the Fund at a price that
avoids any additional cost that would result from a substantial
increase in the market value of a security. A Fund also may
purchase call options to increase its return to investors at a
time when the call is expected to increase in value due to
anticipated appreciation of the underlying security.
Prior to their expirations, put and call options may be
sold in closing sale transactions (sales by a Fund, prior to the
exercise of options that it has purchased, of options of the same
series), and profit or loss from the sale will depend on whether
the amount received is more or less than the premium paid for the
option plus the related transaction costs. If an option purchased
is not sold or exercised when it has remaining value, or if the
market price of the underlying security remains equal to or
greater than the exercise price, in the case of a put, or remains
equal to or below the exercise price, in the case of a call,
during the life of the option, the option will expire worthless
and a Fund will lose the premium paid for the option.
Short Sales Against the Box
Each Fund may make short sales of its portfolio holdings
if, at times when a short position is open, a Fund owns the
security sold short or owns debt securities convertible or
exchangeable into the security sold short. Short sales of this
kind are referred to as short sales "against the box." The
broker-dealer that executes a short sale generally invests cash
proceeds of the sale until they are paid to a Fund. Arrangements
may be made with the broker-dealer to obtain a portion of the
interest earned by the broker on the investment of short sale
proceeds. Each Fund will segregate the security sold short or
convertible or exchangeable debt securities in a special account
with its custodian. Not more than 10% of a Fund's net assets
(taken at current value) may be held as collateral for such sales
at any one time.
Securities of Other Investment Companies
Each Fund may invest in securities of other investment
companies to the extent permitted under the 1940 Act. Presently,
under the 1940 Act, a fund is permitted to hold securities of
another investment company in amounts which (a) do not exceed 3%
of the total outstanding voting stock of such company, (b) do not
exceed 5% of the value of a fund's total assets and (c) when added
to all other investment company securities held by such fund, do
not exceed 10% of the value of the fund's total assets. Investors
should note that investment by a Fund in the securities of other
investment companies would involve the payment of duplicative fees
(once with the Fund and again with the investment company in which
the Fund invests). Each Fund does not intend to invest more than
5% of its total assets in the securities of other investment
companies.
Repurchase Agreements
Each Fund may enter into repurchase agreements on
portfolio securities with member banks of the Federal Reserve
System and certain non-bank dealers. Repurchase agreements are
contracts under which the buyer of a security simultaneously
commits to resell the security to the seller at an agreed-upon
price and date. Under the terms of a typical repurchase agreement,
a Fund would acquire an underlying security for a relatively short
period (usually not more than one week) subject to an obligation
of the seller to repurchase, and the Fund to resell, the
obligation at an agreed-upon price and time, thereby determining
the yield during the Fund's holding period. This arrangement
results in a fixed rate of return that is not subject to market
fluctuations during such Fund's holding period. The value of the
underlying securities will at all times be at least equal to the
total amount of the purchase obligation, including interest. The
Fund bears a risk of loss in the event that the other party to a
repurchase agreement defaults on its obligations or becomes
bankrupt and the Fund is delayed or prevented from exercising its
right to dispose of the collateral securities, including the risk
of a possible decline in the value of the underlying securities
during the period while the Fund seeks to assert this right. The
Advisers, acting under the supervision of the Trust's Board of
Trustees, monitor the creditworthiness of those bank and non-bank
dealers with which the Funds enter into repurchase agreements to
evaluate this risk. A repurchase agreement is considered to be a
loan under the 1940 Act. Under normal market conditions, a Fund
may invest up to 20% of its total assets in repurchase agreements,
although, for temporary defensive purposes, a Fund may invest in
these agreements without limit.
When-Issued Securities and Delayed Delivery Transactions
Each Fund may utilize up to 20% of its total assets to
purchase securities on a when-issued basis and purchase or sell
securities on a delayed-delivery basis. In these transactions,
payment for and delivery of the securities occurs beyond the
regular settlement dates, normally within 30-45 days after the
transaction. A Fund will not enter into a when-issued or
delayed-delivery transaction for the purpose of leverage,
although, to the extent the Fund is fully invested, these
transactions will have the same effect on net asset value per
share as leverage. A Fund may, however, sell the right to acquire
a when-issued security prior to its acquisition or dispose of its
right to deliver or receive securities in a delayed-delivery
transaction if its Adviser deems it advantageous to do so. The
payment obligation and the interest rate that will be received in
when-issued and delayed-delivery transactions are fixed at the
time the buyer enters into the commitment. Due to fluctuations in
the value of securities purchased or sold on a when-issued or
delayed-delivery basis, the yields obtained on such securities may
be higher or lower than the yields available in the market on the
dates when the investments are actually delivered to the buyers. A
Fund will not accrue income with respect to a debt security it has
purchased on a when-issued or delayed-delivery basis prior to its
stated delivery date but will continue to accrue income on a
delayed-delivery security it has sold. When-issued securities may
include securities purchased on a "when, as and if issued" basis
under which the issuance of the security depends on the occurrence
of a subsequent event, such as approval of a merger, corporate
reorganization or debt restructuring. A Fund will establish a
segregated account with its custodian consisting of cash, U.S.
government securities or other liquid high-grade debt obligations
in an amount equal to the amount of its when-issued and
delayed-delivery purchase commitments, and will segregate the
securities underlying commitments to sell securities for delayed
delivery. Placing securities rather than cash in the segregated
account may have a leveraging effect on a Fund's net assets.
Rule 144A Securities
Each Fund may purchase securities that are not registered
under the Securities Act of 1933, as amended (the "1933 Act"),
but that can be sold to "qualified institutional buyers" in
accordance with the requirements stated in Rule 144A under the
1933 Act ("Rule 144A Securities"). A Rule 144A Security may be
considered illiquid and therefore subject to a Fund's 15%
limitation on the purchase of illiquid securities, unless the
Trust's Board of Trustees determines on an ongoing basis that an
adequate trading market exists for the security. This investment
practice could have the effect of increasing the level of
illiquidity in a Fund to the extent that qualified institutional
buyers become uninterested for a time in purchasing Rule 144A
Securities. The Board of Trustees may adopt guidelines and
delegate to the Advisers the daily function of determining and
monitoring liquidity of Rule 144A Securities, although the Board
of Trustees will retain ultimate responsibility for any
determination regarding liquidity. The Board of Trustees will
consider all factors in determining the liquidity of Rule 144A
Securities. The Board of Trustees will carefully monitor any
investments by the Funds in Rule 144A Securities.
Lending Portfolio Securities
Each Fund is authorized to lend securities it holds to
brokers, dealers and other financial organizations. Loans of a
Fund's securities may not exceed 33 1/3% of the Fund's net assets.
A Fund's loans of securities will be collateralized by cash,
letters of credit or U.S. government securities that will be
maintained at all times in a segregated account with such Fund's
custodian in an amount at least equal to the current market value
of the loaned securities. From time to time, a Fund may pay a part
of the interest earned from the investment collateral received for
securities loaned to the borrower and/or a third party that is
unaffiliated with the Fund and that is acting as a "finder."
By lending its portfolio securities, a Fund can increase
its income by continuing to receive interest on the loaned
securities, by investing the cash collateral in short-term
instruments or by obtaining yield in the form of interest paid by
the borrower when U.S. government securities are used as
collateral. A Fund will adhere to the following conditions
whenever it lends its securities: (1) the Fund must receive at
least 100% cash collateral or equivalent securities from the
borrower, which securities will be maintained by daily
marking-to-market; (2) the borrower must increase the collateral
whenever the market value of the securities loaned rises above the
level of the collateral; (3) the Fund must be able to terminate
the loan at any time; (4) the Fund must receive reasonable
interest on the loan, as well as any dividends, interest or other
distributions on the loaned securities, and any increase in market
value; (5) the Fund may pay only reasonable custodian fees in
connection with the loan; and (6) voting rights on the loaned
securities may pass to the borrower except that, if a material
event adversely affecting the investment in the loaned securities
occurs, the Fund must terminate the loan and regain the right to
vote the securities.
RISK FACTORS
Because of certain investment strategies which the Funds
may employ, investment in the Funds involves certain risks which
could affect the Funds' performance.
Foreign Securities
There are certain risks involved in investing in
securities of companies and governments of foreign nations that
are in addition to the usual risks inherent in U.S. investments.
These risks include those resulting from fluctuations in currency
exchange rates, devaluation of currencies, future adverse
political and economic developments and the possible imposition of
currency exchange blockages or from other foreign governmental
laws or restrictions. Changes in foreign currency exchange rates
may affect the value of a Fund's assets, the value of dividends
and interest earned, gains and losses realized on the sale of
securities and net investment income and gains to be distributed
to shareholders by such Fund. In addition, many of the securities
held by the Funds will not be registered with, nor the issuers
thereof be subject to reporting requirements of, the SEC.
Accordingly, there may be less publicly available information
about the securities and about the foreign company or government
issuing them than is available about a U.S. company or U.S.
government entity. Foreign issuers are not subject to uniform
financial reporting standards, practices and requirements
comparable to those applicable to U.S. issuers. Furthermore, with
respect to some foreign countries, there is the possibility of
expropriation, nationalization or confiscatory taxation,
limitations on the removal of funds or other assets of the Funds,
including the withholding of dividends, political or social
instability or domestic developments that could affect U.S.
investments in those countries. Moreover, individual foreign
economies may differ favorably or unfavorably from the U.S.
economy in such respects as growth of gross national product, rate
of inflation, capital investment, resource self-sufficiency and
balance of payments positions. The Funds may invest in securities
of foreign governments (or agencies or instrumentalities thereof),
and many, if not all, of the foregoing considerations apply to
such investments as well. Finally, securities of some foreign
issuers are less liquid and their prices are more volatile than
securities of comparable U.S. issuers, and certain foreign
countries are known to experience long delays between the trade
and settlement dates of securities purchased or sold.
Foreign securities may be subject to foreign government
taxes that would reduce the net return on such securities, and the
Funds may be affected unfavorably by exchange control regulations.
Investment in foreign securities will also result in higher
expenses due to the cost of converting foreign currency into U.S.
dollars, the payment of fixed brokerage commissions on foreign
exchanges and the expense of maintaining securities with foreign
custodians.
Futures and Options
The use of futures, options and forward contracts exposes
the Funds to additional investment risks and transaction costs. If
a Fund's Adviser seeks to protect a Fund against potential adverse
movements in the securities, foreign currency or interest rate
markets using these instruments, and such markets do not move in a
direction adverse to that Fund, the Fund could be left in a less
favorable position than if such strategies had not been used.
Risks inherent in the use of futures, options and forward
contracts include (1) the risk that interest rates, securities
prices and currency markets will not move in the directions
anticipated; (2) imperfect correlation between the price of
futures, options and forward contracts and movements in the prices
of the securities or currencies being hedged; (3) the fact that
skills needed to use these strategies are different from those
needed to select portfolio securities; (4) the possible absence of
a liquid secondary market for any particular instrument at any
particular time; and (5) the possible need to defer closing out
certain hedged positions to avoid adverse tax consequences. See
"Common Investment Strategies" for further information on the use
of futures and options.
High-Yield/High-Risk Bonds
The Equity Fund may invest up to 10% of its total assets
in high-yield/high-risk bonds. Lower rated bonds involve a higher
degree of credit risk, the risk that the issuer will not make
interest or principal payments when due. Such bonds may have
predominantly speculative characteristics. In the event of an
unanticipated default, the Fund would experience a reduction in
its income and could expect a decline in the market value of the
securities so affected. More careful analysis of the financial
condition of each issuer of lower grade securities is therefore
necessary. During an economic downturn or substantial period of
rising interest rates, highly leveraged issuers may experience
financial stress which would adversely affect their ability to
service their principal and interest payment obligations, to meet
projected business goals and to obtain additional financing.
The market prices of lower grade securities are generally
less sensitive to interest rate changes than higher rated
investments, but more sensitive to adverse economic or political
changes or, in the case of corporate issuers, individual corporate
developments. Periods of economic or political uncertainty and
change can be expected to result in volatility of prices of these
securities. Lower rated securities may also have less liquid
markets than higher rated securities, and their liquidity as well
as their value may be adversely affected by adverse economic
conditions. Adverse publicity and investor perceptions as well as
new or proposed laws may also have a negative impact on the market
for high-yield/high-risk bonds.
Both Funds may invest in unrated debt instruments of
foreign and domestic issuers. Unrated debt, while not necessarily
of lower quality than rated securities, may not have as broad a
market. Sovereign debt of foreign governments is generally rated
by country. Because these ratings do not take into account
individual factors relevant to each issue and may not be updated
regularly, a Fund's Adviser may treat such securities as unrated
debt. See the Appendix for a description of bond rating
categories.
Fixed Income Investing
The performance of the debt component of a Fund's
portfolio depends primarily on interest rate changes, the average
weighted maturity of the portfolio and the quality of the
securities held. The debt component of a Fund's portfolio will
tend to decrease in value when interest rates rise and increase
when interest rates fall. Generally, shorter term securities are
less sensitive to interest rate changes, but longer term
securities offer higher yields. A Fund's share price and yield
will also depend, in part, on the quality of its investments.
While U.S. government securities are generally of high quality,
government securities that are not backed by the full faith and
credit of the United States and other debt securities may be
affected by changes in the creditworthiness of the issuer of the
security. The extent that such changes are reflected in a Fund's
share price will depend on the extent of the Fund's investment in
such securities.
MANAGEMENT OF THE FUNDS
Board of Trustees
Overall responsibility for management and supervision of
the Trust and the Funds rests with the Board of Trustees. The
Trustees approve all significant agreements between the Trust and
the persons and companies that furnish services to the Trust or
the Funds, including agreements with its distributor, custodian,
transfer agent, investment adviser and administrator. The
day-to-day operations of each Fund is delegated to its Adviser.
The SAI contains background information regarding each of the
Trustees and executive officers of the Trust.
Advisers
Julius Baer Investment Management Inc. serves as the investment
adviser to the Income Fund. The Income Fund Adviser is a wholly
owned subsidiary of Julius Baer Securities Inc., a registered
broker-dealer and investment adviser, which in turn is a wholly
owned subsidiary of Baer Holding Ltd. The Income Fund Adviser
has been registered as an investment adviser under the
Investment Advisers Act of 1940 since April 1, 1983. Bank Julius
Baer & Co., Ltd., New York branch ("BJB"), serves as the
investment adviser to the Equity Fund. The Equity Fund Adviser
also provides the Equity Fund with certain administrative and
shareholder services that are not provided by the Administrator.
See "Servicing Agent" below. The Equity Fund Adviser, which is
an affiliate of the Income Fund Adviser, is the New York branch
of a Swiss bank that has over 50 years experience in
international portfolio management. The Equity Fund Adviser also
serves as servicing agent to the Income Fund (the "Servicing
Agent"). As of November 30, 1995, the Income Fund
Adviser had assets under management of approximately $3.36 billion
and the Equity Fund Adviser had assets under management of
approximately $195 million. The principal executive offices of
each Adviser are located at 330 Madison Avenue, New York, New York
10017.
Subject to the supervision and direction of the Trust's
Board of Trustees, a Fund's Adviser manages a Fund in accordance
with the Fund's stated investment objective and policies, makes
investment decisions for a Fund, places orders to purchase and
sell securities on behalf of each Fund and employs professional
portfolio managers. For the services provided, the Income Fund
pays its Adviser a quarterly fee calculated at an annual rate of
.65 of 1.00% of the Fund's average daily net assets, out of which
the Income Fund Adviser pays the fee payable to the Servicing
Agent in an amount equal to .15 of 1.00% of the Fund's average
daily net assets. For the fiscal year ended October 31, 1995,
the compensation paid to the Income Fund Adviser was .65% of
the Income Fund's average net assets. For services provided, the
Equity Fund pays its Adviser a quarterly fee calculated at an
annual rate of 1.00% of the Fund's average daily net assets. For
the fiscal year ended October 31, 1995, the compensation paid to
the Equity Fund Adviser was 1.00% of the Equity Fund's average
net assets. The Equity Fund Adviser has voluntarily agreed to
waive temporarily 50% of its fee. The advisory fees paid by
the Equity Fund are higher than those paid by most other mutual
funds, but are not higher than those paid by many other
international equity funds.
A Fund's Adviser, or Servicing Agent in the case of the Income
Fund, may utilize a portion of its fees to pay
broker-dealers, banks and other institutions for
non-distribution services that these entities provide to their
customers that invest in a Fund, such as aggregating and
processing purchase and redemption requests for Fund shares,
providing sub-accounting services, providing information to
customers about the status of their accounts and responding to
customers inquiries about a Fund. The agreements between each
Fund and its Adviser, or Servicing Agent, in the case of the
Income Fund, provide that the Adviser and Servicing Agent, in
the case of the Income Fund, will each reimburse the relevant
Fund to the extent certain expenses that are described in the
SAI exceed applicable state expense limitations in the proportion
that the fee retained by it bears to total management fees. The
Advisers, the Servicing Agent and Investors Bank, the
administrator of each Fund, may voluntarily waive a portion of
their fees from time to time, and temporary limits on a Fund's
expenses may at times be imposed.
Servicing Agent
The Servicing Agent provides the Income Fund with certain
administrative and shareholder services that are not provided by
the Administrator, subject to the supervision and direction of
the Board of Trustees. The Servicing Agent provides a variety of
services, including furnishing certain internal executive and
administrative services, providing office space, responding to
shareholder inquiries, acting as liaison between the Income Fund
and the Fund's various service providers, furnishing certain
corporate secretarial services, which include assisting in the
preparation of materials for meetings of the Board of Trustees,
coordinating the preparation of proxy statements and annual and
semi-annual reports, assisting in the preparation of tax returns
and generally assisting in monitoring and developing compliance
procedures for the Income Fund. For providing these services to
the Income Fund, the Servicing Agent is paid, out of fees
payable to the Income Fund Adviser, a quarterly fee calculated
at an annual rate of .15 of 1.00% of the Income Fund's average
daily net assets.
Portfolio Managers
Avril Griffiths, Vice President of the Trust, is
primarily responsible for management of the Income Fund's assets.
Ms. Griffiths had been a Senior Fixed Income Portfolio Manager of
the Income Fund Adviser since November 1992. Prior to joining the
Income Fund Adviser, she was Vice President/Senior Fixed Income
Portfolio Manager at Citibank Asset Management from September
1987.
Richard Pell, Chief Investment Officer and First
Vice President of the Equity Fund Adviser since January 1995,
has been primarily responsible for management of the Equity
Fund's assets since March 1995. Prior to joining the Equity
Fund Adviser, he was Vice President and head of Global
Fixed-Income at Bankers Trust Company. He was a Vice President
at Mitchell Hutchins Institutional Investors from 1988 to 1990.
Rudolph-Riad Younes, CFP, Vice President and senior equity
portfolio manager of the Equity Fund Adviser since September
1993, has been co-managing the Fund with Mr. Pell since April
1995. Prior to joining the Equity Fund Adviser, he was an
Associate Director at Swiss Bank Portfolio Management
International from 1991 to 1993.
The management discussion and analysis and additional
performance information regarding the Income Fund and the Equity
Fund during the fiscal year ended October 31, 1995 is
included in the Annual Report dated October 31, 1995. A copy
of the Annual Report for the Trust may be obtained upon request
without charge by writing or calling the Trust at the address or
phone number listed on page one of this Prospectus.
Administrator
The Administrator, Investors Bank & Trust Company ("Investors
Bank" or the "Administrator") located at 89 South Street,
Boston, MA 02111, serves pursuant to an administration
agreement (the "Administration Agreement") with the Funds.
Investors Bank also serves as the custodian and accounting agent
of the Funds (see "Custodian and Transfer Agent"). For the above-listed
administrative and custodial services, including fund accounting
and net asset value services, the Funds pay Investors Bank an
aggregate monthly fee computed at the annual rate of .12 of
1.00% for the first $500 million in assets, and .08 of 1.00% for
assets over $500 million, subject to monthly minimums.
Pursuant to the Administration Agreement, Investors Bank
performs the following services on behalf of the Funds: (a)
maintain corporate office space; (b) furnish internal executive
and administrative and clerical services; (c) furnish corporate
secretarial services including the preparation and distribution of
Board materials; (d) prepare shareholder and other reports as
required by the Funds; (e) prepare and file documents as required
by federal, state or other applicable laws; (f) coordinate the
preparation and filing of tax returns; and (g) certain other
services as detailed in the Administration Agreement.
Distributor
The Distributor, Funds Distributor, Inc. ("FDI"), is a
wholly-owned subsidiary of FDI Distribution Services, Inc., a
provider of mutual fund administration services, which in turn is
a wholly-owned subsidiary of FDI Holdings Inc. The parent company
of FDI Holdings Inc. is Boston Institutional Group, Inc. The
principal executive offices of FDI are located at One Exchange
Place, Boston, Massachusetts 02109. The Distributor is registered
with the SEC as a broker-dealer under the Securities Exchange Act
of 1934 and is a member of NASD.
HOW TO OPEN AN ACCOUNT
In order to invest in the Funds, an investor must first
complete and sign an account application, which accompanies this
Prospectus. An investor may also obtain an account application by
calling 1-800-435-4659 or by writing to Unified at:
Unified Advisers, Inc.
P.O. Box 6110
Indianapolis, Indiana 46206-6110
Attention: BJB Investment Funds
Completed and signed account applications may be mailed to
Unified at the above address.
Retirement Plans. For information about investing in the
Funds through a tax-deferred retirement plan, such as an
Individual Retirement Account ("IRA"), self-employed retirement
plan ("H.R.10"), a Simplified Employee Pension IRA ("SEP-IRA")
or a profit sharing and money purchase plan, an investor should
telephone the Distributor at 1-800-362-2863 or write to Unified at
the address set forth above. Investors should consult their own
tax advisers about the establishment of retirement plans.
HOW TO PURCHASE SHARES OF THE FUNDS
General
Orders received before 4:00 p.m., Eastern Time, on any
Business Day will be executed at the public offering price for
the Shares determined that day. A "Business Day" is any day,
Monday through Friday, on which the NYSE is open for business.
Generally, the minimum initial investment for each Fund is $2,500
and the minimum for additional purchases for each Fund is $1,000.
The minimum initial and subsequent investment requirements for
investments made through a tax-deferred retirement plan, other
than an IRA, is $500. The minimum initial and subsequent
investment requirements for investments through an IRA is $100.
All purchase orders will be executed at the public offering price
next determined after the purchase order is received. The Funds
and the Distributor reserve the right to reject any purchase
order.
Purchases Through Brokers
Shares of the Funds may be purchased through
broker/dealers with which the Distributor has entered into dealer
agreements. Orders received by such broker/dealers before 4:00
p.m., Eastern Time, on a Business Day will be effected that day
provided that such order is transmitted to Unified prior to its
close of business on such day. The broker/dealer will be
responsible for forwarding the investor's order to Unified so that
it will be received prior to such time. After an initial
investment is made and a shareholder account is established
through a broker/dealer, at the investor's option, subsequent
purchases may be made directly through Unified.
Brokers that do not have dealer agreements with the Distributor
also may offer to place orders for the purchase of shares.
Purchases made through such brokers will be effected at the
public offering price next determined after the order is
received by Unified. Such a broker may charge the investor a
transaction fee as determined by the broker. That fee
may be avoided if shares are purchased through a broker/dealer
that has a dealer agreement with the Distributor or through
Unified.
Purchases Through the Transfer Agent or Distributor
Investors may purchase shares and open an account directly
through Unified by completing and signing the Account
Application which accompanies this Prospectus. Investors should
mail to the Transfer Agent the completed Account Application
with a check to cover the purchase in accordance with the
instructions provided under "How to Open An Account." Purchases will be
executed at the public offering price next determined after Unified has
received the Account Application and check. Subsequent investments do not need
to be accompanied by an application.
Investors also may purchase shares of the Funds through
the Distributor by bank wire. Investors may purchase shares in
this manner by telephoning the Distributor at 1-800-362-2863. Bank
wire purchases will be effected at the next determined public
offering price after the bank wire is received. Accordingly, a
bank wire received by 4:00 p.m., Eastern Time, on a Business Day
will be effected that day. A wire investment is considered
received when Unified is notified that the bank wire has been
credited to the relevant Fund. The investor is responsible for
providing prior telephonic notice to the Distributor that a bank
wire is being sent. An investor's bank may charge a service fee
for wiring money to the Funds. After the Distributor receives a
telephone order, an investor should then wire federal funds to:
Investors Bank & Trust Company (ABA #0110 01438;
Income Fund DDA No. 000003601)
Equity Fund DDA No. 000003605)
[Name of Fund]
Boston, MA 02111
For: BJB Investment Funds
Account of: [investor's name and address]
Purchasing Shares
Each Fund's public offering price per share is equal to
the net asset value per share (see "Net Asset Value").
Automatic Investment Plan
Investors may purchase Shares of a Fund through the BJB
Investment Funds Automatic Investment Plan. Under this Plan, an
amount specified by the shareholder of $100 or more on a monthly
or quarterly basis will be sent to Unified from the investor's
bank for investment in the specified Fund. Participants in the
Automatic Investment Plan should not elect to receive dividends or
other distributions from that Fund in cash. To participate in the
Automatic Investment Plan, investors should complete the
appropriate portion of the Supplemental Application which
accompanies this Prospectus. Investors should contact their
brokers or the Distributor for more information.
Certificates
In the interest of economy and convenience, physical
certificates representing a Fund's shares will not be issued
unless an investor submits a written request to Unified or unless
the investor's broker requests that Unified provide certificates.
Shares of a Fund are recorded on a register by Unified, and
shareholders who do not elect to receive certificates have the
same rights of ownership as if certificates had been issued to
them. Redemptions and exchanges by shareholders who hold
certificates may take longer to effect than similar transactions
involving non-certificated shares because the physical delivery
and processing of properly executed certificates is required.
Accordingly, the Funds strongly recommend that shareholders do not
request issuance of certificates.
HOW TO REDEEM SHARES OF THE FUNDS
An investor in a Fund may redeem (sell) shares on any day
that the Fund's net asset value is calculated (see "Net Asset
Value" below).
Shares of the Funds may either be redeemed by mail or
telephone.
BY MAIL. If an investor desires to redeem shares by mail,
a written request for redemption should be sent to Unified at the
address indicated above under "How to Open an Account." An investor
should be sure that the redemption request identifies the Fund from
which the redemption is to be made, the dollar amount to be redeemed
and the investor's account number. In order to change the bank
account designated to receive the redemption proceeds, the investor
must send a written request with signature guarantee to Unified. Each
mail redemption request must be signed by the registered owner
exactly as the shares are registered.
BY TELEPHONE. An investor may redeem his or her shares by
telephone by calling at 1-800-435-4659 between 9:00 a.m. and 4:00
p.m., Eastern time, on any day on which a Fund's net asset value
is calculated. An investor making a telephone withdrawal should
state (1) the name of the Fund from which the redemption is to be
made, (2) the account number of the investor, (3) the name of the
investor appearing on the Fund's records, (4) the amount to be
withdrawn and (5) the name of the person requesting the
redemption. Although it is conceivable that an investor's ability
to effect telephone exchanges or redemptions may be impaired by an
exceptionally large volume of telephone transactions, the Funds
believe that they have made ample provisions to meet the
requirements of investors even during periods of extreme market
volatility. If, however, the investor is unable to reach Unified
by telephone, the investor should submit a written redemption
request as explained above. None of the Trust, the Funds or
Unified will be responsible for the authenticity of telephone
instructions for the purchase, redemption or exchange of shares
where such instructions are reasonably believed to be genuine.
Accordingly, the shareholder will bear the risk of loss. The Funds
will attempt to confirm that telephone instructions are genuine
and will use such procedures as are considered reasonable,
including recording the telephone instructions. To the extent the
Funds fail to use reasonable procedures to verify the genuineness
of telephone instructions, they or their service providers may be
liable for such instructions that prove to be fraudulent or
unauthorized.
GENERAL. After receipt of the redemption request by mail,
the redemption proceeds will, at the option of the investor, be
paid by check and mailed to the investor of record or be wired to
the investor's bank as indicated in the Account Application
previously filled out by the investor. After receipt of the
redemption request by telephone, the redemption proceeds will be
wired to the investor's bank as indicated in the Account
Application previously filled out by the investor. During periods
of significant economic or market change, telephone redemptions
may be difficult to implement. Although the Funds will redeem
shares purchased by check before the check has cleared, payment of
the redemption proceeds will be delayed until such check has
cleared, which may take up to ten days from the purchase date.
If a redemption order is received prior to the close of
regular trading on the NYSE, the redemption order will be effected
at the net asset value per share as next determined on that day.
If a redemption order is received after the close of regular
trading on the NYSE, the redemption order will be effected at net
asset value as next determined. Redemption proceeds will normally
be mailed or wired to an investor on the day following the date a
redemption order is effected. If, however, in the judgment of a
Fund's Adviser, immediate payment would adversely affect a Fund,
the Fund reserves the right to pay the redemption proceeds within
seven days after the redemption order is effected. Furthermore, a
Fund may suspend the right of redemption or postpone the day of
payment upon redemption for such periods as are permitted under
the 1940 Act.
A $12.00 service charge is imposed on shareholders for
effecting wire transfers. No redemption fees are imposed on any
redemption of Shares of the Funds.
The proceeds paid upon redemption may be more or less
than the amount invested depending upon a share's net asset value
at the time of redemption. If an investor redeems all the shares
in his or her account, all dividends and distributions declared up
to and including the date of redemption are paid along with the
proceeds of the redemption.
If an investor would like to keep his or her account in
a Fund open, he or she should maintain at least $1,000 in it. If
the account in a Fund falls below this level due to redemptions,
the Fund may close it. Prior to any redemption, the Funds will
give an investor 60 days notice to make an additional investment.
EXCHANGE PRIVILEGE
Shares of one Fund may be exchanged for Shares in the
other Fund, to the extent that shares are offered for sale in the
shareholder's state of residence. No sales charge is imposed for
this privilege.
The exchange of shares of one Fund for shares of another Fund is
treated for federal income tax purposes as a sale of the shares
given in exchange by the shareholders. Therefore, an exchanging
shareholder may realize a taxable gain or loss in connection
with an exchange.
Shareholders exercising the exchange privilege should
review the current Prospectus of the Funds carefully prior to
making an exchange. The Trust reserves the right to reject any
exchange request. The exchange privilege may be modified or
terminated at any time after 60 days' written notice to
shareholders. For further information regarding the exchange
privilege or to obtain a current Prospectus, investors should
contact the Trust at the telephone number or address listed in
this Prospectus.
DIVIDENDS, DISTRIBUTIONS AND TAXES
Dividends and Distributions
Each Fund distributes, or will distribute, substantially
all of its net investment income and capital gains to shareholders
each year. Net investment income includes interest accrued on a
Fund's portfolio securities for the applicable period less
amortization of market premium and applicable expenses for such
period. The Income Fund declares and pays monthly dividends from
its net investment income; distributions of net realized
short-term and long-term capital gains are declared annually. The
Equity Fund declares and pays annually dividends from its net
investment income and distributions of net realized short-term and
long-term capital gains. Unless an investor instructs a Fund to
pay dividends or distributions in cash, dividends and
distributions will automatically be reinvested in additional
Shares of such Fund at net asset value. Net investment income
earned on weekends and when the NYSE is not open will be computed
as of the next business day. The election to receive dividends in
cash may be made on the account application or, subsequently, by
writing to Unified at the address set forth under "How to Open an
Account in the Funds."
Taxes
Each Fund intends to qualify each year as a "regulated
investment company" within the meaning of the Code. Each Fund, if
it qualifies as a regulated investment company, may be subject to
a 4% non-deductible excise tax measured with respect to certain
undistributed amounts of ordinary income and capital gain. The
Funds expect to pay such additional dividends and to make such
additional distributions as are necessary to avoid the application
of this tax.
Dividends paid from net investment income and
distributions derived from net realized short-term capital gains
are taxable to investors as ordinary income whether received in
cash or reinvested in additional Fund Shares. Distributions
derived from net realized long-term capital gains will be taxable
to investors as long-term capital gains, regardless of how long
investors have held Fund Shares or whether such distributions are
received in cash or reinvested in Fund Shares. As a general rule,
an investor's gain or loss on a sale or redemption of his or her
Fund Sshares will be a long-term capital gain or loss if he or she
has held the shares for more than one year and will be a
short-term capital gain or loss if he or she has held the shares
for one year or less. A Fund's dividends and distributions
generally will not qualify for the dividends-received deduction
for corporations. Investors should consult their own tax advisers
in this regard.
Dividends and interest received by a Fund may be subject
to withholding and other taxes imposed by foreign countries.
However, tax conventions between certain countries and the United
States may reduce or eliminate such taxes. Investors should
consult their own tax advisers in this regard.
If a Fund qualifies as a regulated investment company,
then if certain distribution requirements are satisfied and
more than 50% of the Fund's total assets at the close of its
taxable year consist of stock or securities of foreign
corporations, the Fund may elect for U.S. income tax purposes to
treat any foreign income taxes paid by it that can be treated as
income taxes under U.S. income tax principles as paid by its
shareholders. A Fund may qualify for and make this election in
some, but not necessarily all, of its taxable years. If a Fund
were to make an election, shareholders of the Fund would be
required to treat an amount equal to their pro rata portions of
the applicable foreign income taxes as taxable income for federal
income tax purposes and could treat an amount equal to their pro
rata portions of such foreign income taxes as a federal income tax
deduction or as a foreign tax credit against their federal income
taxes. Shortly after any year for which it makes such an election,
the Fund will report to its shareholders, in writing, the amount
per share of such foreign income tax that must be included in each
shareholder's gross income and the amount which will be available
for the deduction or credit. No deduction for foreign taxes may be
claimed by a shareholder who does not itemize deductions. Certain
limitations will be imposed on the extent to which the credit (but
not the deduction) for foreign taxes may be claimed. Investors
should consult their own tax advisers in this regard.
A redemption of Fund Shares may result in taxable gain or
loss to the redeeming shareholder, depending upon whether the
redemption proceeds are more or less than the shareholder's
adjusted basis for the redeemed Shares. An exchange of one Fund's
shares for shares of the other Fund generally will have similar
tax consequences. In addition, if Fund shares are purchased
within 30 days of redeeming other Fund shares at a loss, the loss
will not be deductible and instead will increase the basis of the
newly purchased shares or be recharacterized.
Statements as to the tax status of each investor's
dividends are mailed annually. Each investor will also receive, if
appropriate, various written notices after the close of each
Fund's prior taxable year with respect to certain dividends and
distributions which were received from the Fund during the Fund's
prior taxable year. Investors should consult their tax advisers
with specific reference to their own tax situations, including
their state and local tax liabilities.
NET ASSET VALUE
Each Fund's net asset value per share is calculated on
each day, Monday through Friday, except days on which the NYSE is
closed. The NYSE currently is scheduled to be closed on New Year's
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving and Christmas, and on the preceding Friday
or subsequent Monday when one of these holidays falls on a
Saturday or Sunday, respectively. The net asset value per share of
the Funds generally changes each day.
The net asset value per share of a Fund is determined as
of the close of regular trading on the NYSE and is computed by
dividing the value of the Fund's net assets by the total number of
its shares outstanding. Generally, the Funds' investments are
valued at market value or, in the absence of a quoted market value
with respect to any portfolio securities, at fair value as
determined by or under the direction of the Board of Trustees.
Portfolio securities that are primarily traded on foreign
exchanges are generally valued at the closing values of such
securities on their respective exchanges preceding the calculation
of a Fund's net asset value, except that when an occurrence
subsequent to the time a value was so established is likely to
have changed such value, then the fair market value of those
securities will be determined by consideration of other factors by
or under the direction of the Board of Trustees or its delegates.
Securities listed on a U.S. securities exchange (including
securities traded through the National Market System) will be
valued on the basis of the last sale on the date on which the
valuation is made or, if there were no sales during the day, at the
mean of the current quoted bid and asked prices. Other U.S.
over-the-counter securities and securities listed or traded on
certain foreign stock exchanges whose operations are similar to the
U.S. over-the-counter market are valued on the basis of the bid price
at the close of business on each day. Option or futures contracts
will be valued at the last sale price at 4:15 p.m., Eastern time, on
the date on which the valuation is made, as quoted on the primary
exchange or board of trade on which the option or futures contract is
traded, or in the absence of sales, at the mean between the last bid
and asked prices. Unless the Board of Trustees determines that using
this valuation method would not reflect the investments' value,
short-term investments that mature in 60 days or less are valued on
the basis of amortized cost, which involves valuing a portfolio
instrument at its cost initially and thereafter assuming a constant
amortization to maturity of any discount or premium, regardless of
the impact of fluctuating interest rates on the market value of the
instrument. Further information regarding the Funds' valuation
policies is contained in the SAI.
THE FUNDS' PERFORMANCE
Yield
From time to time, the Income Fund may advertise its
yield over various periods of time. The yield of the Fund refers
to net investment income generated by the Fund over a specified
thirty-day period, which is then annualized. That is, the amount
of net investment income generated by the Fund during that
thirty-day period is assumed to be generated monthly over a
12-month period and is shown as a percentage of the investment.
Total Return
From time to time, the Funds may advertise their average
annual total return. Average annual total return figures show the
average percentage change in value of an investment in a Fund from
the beginning of the measuring period to the end of the measuring
period. The figures reflect changes in the price of a Fund's
shares assuming that any income dividends and/or capital gain
distributions made by the Fund during the period were reinvested
in shares of the Fund. Average annual total return will be shown
for recent one-, five- and ten-year periods, and may be shown for
other periods as well (such as from commencement of the Fund's
operations or on a year-to-date or quarterly basis). When
considering average annual total return figures for periods longer
than one year, it is important to note that a Fund's average
annual total return for one year in the period might have been
greater or less than the average for the entire period. When
considering average annual total return figures for periods
shorter than one year, investors should bear in mind that such
return may not be representative of a Fund's return over a longer
market cycle. The Funds may also advertise aggregate total return
figures for various periods, representing the cumulative change in
value of an investment in the Funds for the specific period (again
reflecting changes in each Fund's share prices and assuming
reinvestment of dividends and distributions). Aggregate and
average annual total returns may be shown by means of schedules,
charts or graphs, and may indicate various components of total
return (i.e., change in value of initial investment, income
dividends and capital gain distributions).
Investors should note that yield and total return figures
are based on historical earnings and are not intended to indicate
future performance. The SAI describes the method used to determine
the Funds' performance. Current yield and total return figures may
be obtained by calling Unified at 1-800-435-4659.
In reports or other communications to investors or in
advertising material, the Funds may describe general economic and
market conditions affecting the Funds and may compare their
performance with (1) that of other mutual funds as listed in the
rankings prepared by Lipper Analytical Services, Inc. or similar
investment services that monitor the performance of mutual funds
or (2) appropriate indices of investment securities. The Funds may
also include evaluations of the Funds published by nationally
recognized ranking services and by financial publications that are
nationally recognized, such as Barron's, Business Week, Changing
Times, Financial Times, Forbes, Fortune, Institutional Investor,
The International Herald Tribune, Money, Inc., Morningstar, Inc.,
The New York Times, The Wall Street Journal and USA Today.
CUSTODIAN AND TRANSFER AGENT
Investors Bank is located at 89 South Street, Boston, MA
02111, and serves as custodian and accounting agent of each Fund.
Unified, a wholly owned subsidiary of Unified Holdings Inc.
located at 429 N. Pennsylvania Avenue, Indianapolis, Indiana
46206-1873, serves as each Fund's transfer agent.
DISTRIBUTION AND SHAREHOLDER SERVICING
Each Fund offers shares through certain financial
institutions, including broker-dealers (such as the Distributor),
investment advisers, banks, trust companies and other financial
institutions acting in an agency capacity on behalf of their
customer accounts ("Service Organizations"), which have entered
into distribution agreements or shareholder servicing agreements
("Agreements") with the Fund.
Under the Agreements, Service Organizations agree to
perform certain distribution, shareholder servicing,
administrative and accounting services for their clients and
customers ("Customers") who are beneficial owners of Fund shares.
Distribution services would be marketing or other services in
connection with the promotion and sale of shares. Other services
that may be provided by Service Organizations include (1)
aggregating and processing purchase and redemption requests from
Customers and placing net purchase and redemption orders with
Unified, (2) processing dividend payments from a Fund on behalf of
Customers and (3) providing sub-accounting with respect to Fund
shares beneficially owned by Customers or the information to a
Fund necessary for sub-accounting. The Trust's Board of Trustees
has approved a Distribution Plan under Rule 12b-1 with respect to
the Shares of each Fund under the 1940 Act pursuant to which a
Fund may expend an aggregate amount on an annual basis not to
exceed .25% of the value of the Fund's average daily net assets
attributable to the Shares for services provided under the
Distribution Plan. The Board of Trustees has also approved a
Shareholder Services Plan, which is not governed by Rule 12b-1,
with respect to the Shares of each Fund that permits a Fund to pay
an annual amount not to exceed .25% of the value of the Fund's
average net assets attributable to the Shares for services
provided under the Shareholder Services Plan. The maximum
aggregate amount payable annually under the Distribution Plan and
the Shareholder Services Plan with respect to the Shares of each
Fund is .25% of the Fund's average net assets attributable to the
Shares. The services to be provided under the Plans are
substantially the same, except that under the Distribution Plan
and the related distribution agreements the Service Organization
provides distribution services in connection with the promotion or
sale of shares while no such services are provided under the
Shareholder Services Plan and the related shareholder servicing
agreements.
GENERAL INFORMATION
The Trust was organized on April 30, 1992 under the laws
of the Commonwealth of Massachusetts as a Massachusetts business
trust. On September 16, 1993, the Trust changed its name from BJB
Global Income Fund to BJB Investment Funds.
When matters are submitted for shareholder vote,
shareholders of each Fund will have one vote for each full share
owned and a proportionate, fractional vote for any fractional
share held. Generally, shares of the Trust vote by individual Fund
on all matters except (a) matters affecting only the interests of
one Fund, in which case only shares of the affected Fund would be
entitled to vote or (b) when the 1940 Act requires that shares of
the Funds be voted in the aggregate. There will normally be no
meetings of investors for the purpose of electing Trustees unless
and until such time as less than a majority of the Trustees
holding office have been elected by investors. Any Trustee may be
removed from office upon the vote of shareholders holding at least
a majority of the Trust's outstanding shares at a meeting called
for that purpose. A meeting will be called for the purpose of
voting on the removal of a Trustee at the written request of
holders of 10% of the Trust's outstanding shares. The Trust will
assist shareholders in communicating with other shareholders.
The Trust will send to investors in a Fund a semi-annual
report and an annual report including audited financial statements
and schedules for that Fund, each of which includes a list of the
investment securities held by the Fund.
- ------------------------------------------------------------------
No person has been authorized to give any information or to make
any representations other than those contained in this
Prospectus, the SAI or the Trust's official sales literature in
connection with the offering of shares of the Funds and if given
or made such other information or representations must not be
relied upon as having been authorized by the Trust. This
Prospectus does not constitute an offer of Shares in any state
in which or to any person to whom, such offer may not lawfully be
made.
- ------------------------------------------------------------------
APPENDIX -- DESCRIPTION OF RATINGS
Commercial Paper Ratings
Standard and Poor's Ratings Group Commercial Paper Ratings
A 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. Ratings are graded into several
categories, ranging from "A-1" for the highest quality
obligations to "D" for the lowest.
A-1 - This highest category indicates that the degree of safety
regarding timely payment is strong. Those issues determined to
possess extremely strong safety characteristics are denoted with
a plus (+) sign designation.
A-2 - Capacity for timely payment on issues with this
designation is satisfactory. However, the relative degree of
safety is not as high as for issues designated "A-1".
Moody's Investors Service's Commercial Paper Ratings
Prime-1 - Issuers (or related supporting institutions) rated
"Prime-1" 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
structures 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 related supporting institutions) rated
"Prime-2" 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, will be more
subject to variation. Capitalization characteristics, while
still appropriate, may be more affected by external conditions.
Ample alternative liquidity is maintained.
Corporate Bond Ratings
The following summarizes the ratings used by S&P for corporate
bonds:
AAA -- This is the highest rating assigned by S&P to a debt
obligation and indicates an extremely strong capacity to pay
interest and repay principal.
AA -- Bonds rated "AA" also qualify as high quality debt
obligations. Capacity to pay interest and
repay principal is very strong and differs from AAA issues only
in small degree.
A -- Bonds rated "A" have a strong capacity to pay interest and
repay principal although they are somewhat more susceptible to
the adverse effects of changes in circumstances and economic
conditions than debt in higher-rated categories.
BBB -- Bonds rated "BBB" are regarded as having an adequate
capacity to pay interest and repay principal. Whereas they
normally exhibit adequate protection parameters, adverse
economic conditions or changing circumstances are more likely to
lead to a weakened capacity to pay interest and repay principal
for bonds in this category than for bonds in higher rated
categories.
BB, B, CCC, CC and C-- Bonds rated "BB", "B", "CCC", "CC" and
"C" are regarded, on balance, as predominantly speculative with
respect to the issuer's capacity to pay interest and repay
principal in accordance with the terms of the obligation. BB
indicates the lowest degree of speculation and C the highest
degree of speculation. While such bonds will likely have some
quality and protective characteristics, these are outweighed by
large uncertainties or major risk exposures to adverse
conditions
CI - Bonds rated "CI" are income bonds on which no interest is
being paid.
To provide more detailed indications of credit quality,
the ratings set forth above may be modified by the addition of a
plus or minus sign to show relative standing within the major
rating categories.
The following summarizes the ratings used by Moody's for
corporate bonds:
Aaa -- Bonds that are rated "Aaa" are judged to be of the best
quality and carry the smallest degree of investment risk. Interest
payments are protected by a large or 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 that are rated "Aa" 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 that are rated "A" 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 that are rated "Baa" are considered to be medium
grade obligations, that is, they are neither highly protected
nor poorly secured. Interest payment 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. These bonds lack outstanding investment
characteristics and may have speculative characteristics as
well.
Ba -- Bonds that are rated "Ba" are judged to have speculative
elements; their future cannot be considered as well assured.
Often the protection of interest and principal payments may be
very moderate and thereby not well safeguarded during both good
and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B -- Bonds that are rated "B" generally lack characteristics of
desirable investments. Assurance of interest and principal
payments or of maintenance of other terms of the contract over
any long period of time may be small.
Caa -- Bonds that are rated "Caa" are of poor standing. These
issues may be in default or present elements of danger may exist
with respect to principal or interest.
Ca -- Bonds that are rated "Ca" represent obligations that are
speculative in a high degree. Such issues are often in default
or have other marked shortcomings.
C -- Bonds that are rated "C" are the lowest rated class of
bonds, and issues so rated can be regarded as having extremely
poor prospects of ever attaining any real investment standing.
Moody's applies numerical modifiers (1, 2 and 3) with respect to
the bonds rated "Aa" through "B." The modifier 1 indicates
that the bond being rated ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking;
and the modifier 3 indicates that the bond ranks in the lower
end of its generic rating category.
STATEMENT OF ADDITIONAL INFORMATION
March 1, 1996
BJB INVESTMENT FUNDS
89 South Street
Boston, Massachusetts 02111
For information, call (800) 435-4659
Contents
<TABLE>
<S> <C>
Investment Objective (see in Prospectus under "Investment Objectives Page
and Policies of the Funds") 2
Investment Policies (see in Prospectus under "Investment Objectives
and Policies of the Funds") 2
Management of the Funds (see in Prospectus under "Management of the Funds") 19
Additional Purchase and Redemption Information (see in Prospectus under "How
to Open an Account in the Funds." "How to Purchase
Shares in the Funds" and "How to Redeem Shares in the Funds") 27
Additional Information Concerning Exchange Privilege (see in Prospectus
"Exchange Privilege") 28
Additional Information Concerning Taxes (see in Prospectus under
"Dividends, Distributions and Taxes") 28
Determination of Performance (see in Prospectus under "The Funds' Performance") 29
Independent Auditors 32
Counsel 32
Financial Statements 32
</TABLE>
This Statement of Additional Information is meant to be read in
conjunction with the current Prospectus dated March 1, 1996 of BJB Global Income
Fund (the "Income Fund") and BJB International Equity Fund (the "Equity Fund")
(individually, a "Fund" and collectively, the "Funds") of the BJB Investment
Funds (the "Trust") and is incorporated by reference in its entirety into that
Prospectus. Because this Statement of Additional Information is not itself a
prospectus, no investment in shares of the Funds should be made solely upon the
information contained herein. Copies of the Prospectus and information regarding
each Fund's current performance or the status of shareholder accounts may be
obtained by calling 1-800-435-4659 or by writing to Unified Advisers, Inc.
("Unified"), each Fund's transfer agent, 429 N. Pennsylvania Avenue,
Indianapolis, Indiana 46204-1873.
INVESTMENT OBJECTIVE
BJB Global Income Fund
The investment objective of the Income Fund is to maximize current
income consistent with the protection of principal. The Income Fund will pursue
its objective by investing in fixed income securities of governmental,
supranational and corporate issuers denominated in various currencies, including
U.S. dollars. There can be no assurance that the investment objective of the
Income Fund will be achieved.
Bonds issued by the United States government have declined as a
percentage of the total government bonds outstanding and currently represent
less than one-half of such amount. In addition, from time to time, the yields
and returns available from certain foreign government obligations have exceeded
those available from U.S. government obligations. In light of these factors, an
investment in the Income Fund provides investors with an opportunity to
participate in non-U.S. fixed-income markets, which the Income Fund's investment
adviser believes may result in an investor's fixed-income holdings being less
volatile in certain market environments than if such holdings were composed
exclusively of U.S. issuers. The Income Fund is also designed for investors who
seek yields higher than those currently available from U.S. money market funds,
although there can be no assurance that the Income Fund's yield will exceed
money market yields. However, the Income Fund is not designed for investors that
are not able to bear the additional risks associated with the Income Fund's
extensive holdings in foreign fixed-income securities.
BJB International Equity Fund
The investment objective of the Equity Fund is to seek long-term growth
of capital. The Equity Fund will pursue its objective by investing in a
diversified portfolio of common stocks of foreign issuers of all sizes. The
Equity Fund normally invests in issuers from at least five different countries.
There can be no assurance that the investment objective of the Equity Fund will
be achieved.
Realization of income is not a significant investment consideration and
any income realized on the Equity Fund's investments will be incidental to its
primary objective. The Equity Fund is not suitable for investors that are not
able to bear the additional risks associated with the Equity Fund's extensive
holdings in foreign equity securities. The Equity Fund is also not designed as a
short-term trading vehicle and should not be relied upon for short-term
financial needs.
INVESTMENT POLICIES
The Prospectus discusses the investment objectives of the Funds and the
policies employed to achieve those objectives. This section contains
supplemental information concerning the investment policies and strategies the
Funds may utilize.
Additional Information on Investment Practices
Foreign Investments. Investors should recognize that investing in
foreign companies involves certain considerations, including those discussed
below, which are not typically associated with investing in U.S. issuers. Since
the Funds will be investing substantially in securities denominated in
currencies other than the U.S. dollar, and since the Funds may temporarily hold
funds in bank deposits or other money market investments denominated in foreign
currencies, the Funds may be affected favorably or unfavorably by exchange
control regulations or changes in the exchange rate between such currencies and
the dollar. A change in the value of a foreign currency relative to the U.S.
dollar will result in a corresponding change in the dollar value of a Fund's
assets denominated in that foreign currency. Changes in foreign currency
exchange rates may also affect the value of dividends and interest earned, gains
and losses realized on the sale of securities and net investment income and
gains, if any, to be distributed to shareholders by the Funds.
The rate of exchange between the U.S. dollar and other currencies is
determined by the forces of supply and demand in the foreign exchange markets.
Changes in the exchange rate may result over time from the interaction of many
factors directly or indirectly affecting economic and political conditions in
the United States and a particular foreign country, including economic and
political developments in other countries. Of particular importance are rates of
inflation, interest rate levels, the balance of payments and the extent of
government surpluses or deficits in the United States and the particular foreign
country, all of which are in turn sensitive to the monetary, fiscal and trade
policies pursued by the governments of the United States and other foreign
countries important to international trade and finance. Governmental
intervention may also play a significant role. National governments rarely
voluntarily allow their currencies to float freely in response to economic
forces. Sovereign governments use a variety of techniques, such as intervention
by a country's central bank or imposition of regulatory controls or taxes, to
affect the exchange rates of their currencies.
Many of the securities held by the Funds will not be registered with,
nor the issuers thereof be subject to reporting requirements of, the Securities
and Exchange Commission (the "SEC"). Accordingly, there may be less publicly
available information about the securities and about the foreign company or
government issuing them than is available about a domestic company or government
entity. Foreign issuers are generally not subject to uniform financial reporting
standards, practices and requirements comparable to those applicable to U.S.
issuers. In addition, with respect to some foreign countries, there is the
possibility of expropriation or confiscatory taxation, limitations on the
removal of funds or other assets of the Funds, political or social instability,
or domestic developments which could affect U.S. investments in those countries.
Moreover, individual foreign economies may differ favorably or unfavorably from
the U.S. economy in such respects as growth of gross national product, rate of
inflation, capital reinvestment, resource self-sufficiency and balance of
payment positions. The Funds may invest in securities of foreign governments (or
agencies or instrumentalities thereof), and many, if not all, of the foregoing
considerations apply to such investments as well.
Securities of some foreign companies are less liquid and their prices
are more volatile than securities of comparable domestic companies. Certain
foreign countries are known to experience long delays between the trade and
settlement dates of securities purchased or sold. Due to the increased exposure
to the Funds of market and foreign exchange fluctuations brought about by such
delays, and due to the corresponding negative impact on Fund liquidity, the
Funds will avoid investing in countries which are known to experience settlement
delays which may expose the Funds to unreasonable risk of loss.
The interest payable on each Fund's foreign securities may be subject
to foreign withholding taxes, and while investors may be able to claim some
credit or deductions for such taxes with respect to their allocated shares of
such foreign tax payments, the general effect of these taxes will be to reduce
the Fund's income. Additionally, the operating expenses of the Fund, such as
custodial costs, valuation costs and communication costs, as well as the rate of
the investment advisory fees, are higher than those costs incurred by
investment companies investing exclusively in U.S. securities, but are not
higher than those paid by many other international funds.
Each Fund will not invest more than 25% or more of its assets in the
securities of supranational entities.
Futures Activities. The Funds may enter into futures contracts for the
purchase and sale of fixed income securities or foreign currencies and purchase
or write related options that are traded on foreign as well as U.S. exchanges.
These investments may be made solely for the purpose of hedging against changes
in the value of its portfolio securities due to anticipated changes in interest
rates, currency values and/or market conditions when the transactions are
economically appropriate to the reduction of risks inherent in the management of
the Funds and not for purposes of speculation. The ability of the Funds to trade
in futures contracts may be limited by the requirements of the Internal Revenue
Code of 1986, as amended (the "Code"), applicable to regulated investment
companies.
Futures Contracts. A futures contract for the purchase or sale of fixed
income securities provides for the future sale by one party and the purchase by
the other party of a certain amount of a specific debt instrument at a specified
price, date, time and place. A foreign currency futures contract provides for
the future sale by one party and the purchase by the other party of a certain
amount of a specified foreign currency at a specified price, date, time and
place.
Entering into a futures contract enables a Fund to seek to protect its
assets from fluctuations in value without necessarily buying or selling the
assets. A Fund may not enter into futures transactions, other than those
considered to be "bona fide" hedging by the Commodity Futures Trading
Commission, if the sum of the amount of initial margin deposits on its existing
futures contracts and premiums paid for unexpired options would exceed 5% of the
fair market value of such Fund's total assets, after taking into account
unrealized profits and unrealized losses on commodity contracts into which it
has entered. A Fund will not use leverage when it enters into long futures or
options contracts and for each such long position such Fund will deposit cash or
cash equivalents, such as U.S. government securities or high grade debt
obligations, having a value equal to the underlying commodity value of the
contract as collateral with its custodian in a segregated account.
The purpose of entering into a futures contract is to protect a Fund
from fluctuations in value of its portfolio securities without its necessarily
buying or selling the securities. Of course, since the value of portfolio
securities will far exceed the value of the futures contracts sold by a Fund, an
increase in the value of the futures contracts could only mitigate but not
totally offset the decline in the value of such Fund's assets. No consideration
is paid or received by a Fund upon entering into a futures contract. Upon
entering into a futures contract, a Fund will be required to deposit in a
segregated account with its custodian an amount of cash or cash equivalents,
such as U.S. government securities or high-grade debt obligations, equal to a
portion of the contract amount. This amount is known as "initial margin" and is
in the nature of a performance bond or good faith deposit on the contract which
is returned to such Fund upon termination of the futures contract, assuming all
contractual obligations have been satisfied. The broker will have access to
amounts in the margin account if the Fund fails to meet its contractual
obligations. Subsequent payments, known as "variation margin," to and from the
broker, will be made daily as the price of the securities underlying the futures
contract fluctuates, making the long and short positions in the futures contract
more or less valuable, a process known as "marking-to-market." At any time prior
to the expiration of a futures contract, a Fund may elect to close the position
by taking an opposite position, which will operate to terminate such Fund's
existing position in the contract.
There are several risks in connection with the use of futures contracts
as a hedging device. Successful use of futures contracts is subject to the
ability of Julius Baer Investment Management Inc. (the "Income Fund Adviser"),
the Income Fund's investment adviser, or Bank Julius Baer & Co., Ltd., New York
branch (the "Equity Fund Adviser"), the Equity Fund's investment adviser
(individually, an "Adviser" and collectively, the "Advisers"), to predict
correctly movements in the price of the securities or currencies and the
direction of the stock indices underlying the particular hedge. These
predictions and, thus, the use of futures contracts involve skills and
techniques that are different from those involved in the management of the
portfolio securities being hedged. In addition, there can be no assurance that
there will be a correlation between movements in the price of the underlying
securities or currencies and movements in the price of the securities which are
the subject of the hedge. A decision concerning whether, when and how to hedge
involves the exercise of skill and judgment and even a well-conceived hedge may
be unsuccessful to some degree because of unexpected market behavior or trends
in interest rates.
Positions in futures contracts and options on futures contracts may be
closed out only on the exchange on which they were entered into (or through a
linked exchange). No secondary market for such contracts exists. Although the
Funds intend to enter into futures contracts only if there is an active market
for such contracts, there is no assurance that an active market will exist for
the contracts at any particular time. Most futures exchanges limit the amount of
fluctuation permitted in futures contract prices during a single trading day.
Once the daily limit has been reached in a particular contract, no trades may be
made that day at a price beyond that limit. It is possible that futures contract
prices could move to the daily limit for several consecutive trading days with
little or no trading, thereby preventing prompt liquidation of futures positions
and subjecting the Funds to substantial losses. In such event, and in the event
of adverse price movements, a Fund would be required to make daily cash payments
of variation margin. In such circumstances, an increase in the value of the
portion of such Fund's securities being hedged, 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 being hedged will, in
fact, correlate with the price movements in a futures contract and thus provide
an offset to losses on the futures contract.
If a Fund has hedged against the possibility of an event adversely
affecting the value of securities held in its portfolio and that event does not
occur, such Fund will lose part or all of the benefit of the increased value of
securities which it has hedged because it will have offsetting losses in its
futures positions. Losses incurred in hedging transactions and the costs of
these transactions will affect a Fund's performance. In addition, in such
situations, if a Fund had insufficient cash, it might have to sell securities to
meet daily variation margin requirements at a time when it would be
disadvantageous to do so. These sales of securities could, but will not
necessarily, be at increased prices which reflect the change in interest rates
or currency values, as the case may be.
Options on Futures Contracts. The Funds may purchase and write put and
call options on interest rate and foreign currency futures contracts that are
traded on a U.S. exchange or board of trade as a hedge against changes in
interest rates and market conditions, and may enter into closing transactions
with respect to such options to terminate existing positions. There is no
guarantee that such closing transactions can be effected.
An option on an interest rate futures contract, as contrasted with the
direct investment in such a contract, gives the purchaser the right, in return
for the premium paid, to assume a position in a fixed income security futures
contract at a specified exercise price at any time prior to the expiration date
of the option. An option on a foreign currency futures contract, as contrasted
with the direct investment in the contract, gives the purchaser the right, but
not the obligation, to assume a long or short position in the relevant
underlying currency at a predetermined exercise price at a time in the future.
Upon exercise of an option, the delivery of the futures position by the writer
of the option to the holder of the option will be accompanied by delivery of the
accumulated balance in the writer's futures margin account, which represents the
amount by which the market price of the futures contract exceeds, in the case of
a call, or is less than, in the case of a put, the exercise price of the option
on the futures contract. The potential loss related to the purchase of an option
on futures contracts is limited to the premium paid for the option (plus
transaction costs). Because the value of the option is fixed at the point of
sale, there are no daily cash payments to reflect changes in the value of the
underlying contract; however, the value of the option does change daily and that
change would be reflected in the net asset value of the Funds.
There are several risks relating to options on futures contracts. The
ability to establish and close out positions on such options will be subject to
the existence of a liquid market. In addition, the purchase of put or call
options will be based upon predictions as to anticipated trends in interest
rates and securities markets by a Fund's Adviser, which could prove to be
incorrect. Even if those expectations were correct, there may be an imperfect
correlation between the change in the value of the options and of the portfolio
securities hedged.
Currency Hedging Transactions. The value in U.S. dollars of the assets
of the Funds that are invested in foreign securities may be affected favorably
or unfavorably by changes in foreign currency exchange rates and exchange
control regulations, and the Funds may incur costs in connection with
conversions between various currencies. The Funds, therefore, intend to engage
in currency hedging transactions to protect against uncertainty in the level of
future exchange rates. Income received from such transactions could be used to
pay a Fund's expenses and would increase an investor's total return. The Funds
will conduct foreign currency transactions either on a spot (i.e., cash) basis
at the spot rate prevailing in the foreign currency market or through forward
foreign exchange contracts to purchase or sell currency. The Funds also are
authorized to purchase and sell listed foreign currency options and options on
foreign currency futures for hedging purposes. The Funds' activities in foreign
currency hedging transactions will be limited by certain tax restrictions.
The following is a description of the hedging instruments the Funds may
utilize with respect to foreign currency exchange rate fluctuation risks.
Forward Currency Contracts. A forward currency contract involves an
obligation to purchase or sell a specific currency at a future date, which may
be any fixed number of days from the date of the contract agreed upon by the
parties, at a price set at the time of the contract. A Fund's dealings in
forward currency exchange will be limited to hedging involving either specific
transactions or portfolio positions. Transaction hedging is the purchase or sale
of forward currency with respect to specific receivables or payables of a Fund
generally accruing in connection with the purchase or sale of its portfolio
securities. Position hedging is the sale of forward currency with respect to
portfolio security positions denominated or quoted in that currency or in
another currency in which portfolio securities are denominated, the movements of
which tend to correlate to the movement in the currency sold forward (the
"hedged currency"). A Fund may not position hedge with respect to a particular
currency to an extent greater than the aggregate market value (at the time of
making such sale) of the securities held in its portfolio denominated or quoted
in or currently convertible into that particular currency or the hedged
currency. If a Fund enters into a position hedging transaction, cash or liquid
high-grade debt securities will be placed in a segregated account in an amount
equal to the value of that Fund's total assets committed to the consummation of
the forward contract or the Fund will own the currency subject to the hedge, or
the right to buy or sell it as the case may be. If the value of the securities
placed in the segregated account declines, additional cash or securities will be
placed in the account so that the value of the account will equal the amount of
such Fund's commitment with respect to the contract. Hedging transactions may be
made from any foreign currency into U.S. dollars or into other appropriate
currencies.
At or before the maturity of a forward contract, a Fund may either sell
a portfolio security and take delivery of the currency, or retain the security
and offset its contractual obligation to deliver the currency by purchasing a
second contract pursuant to which such Fund will obtain, on the same maturity
date, the same amount of the currency that it is obligated to deliver. If a Fund
retains the portfolio security and engages in an offsetting transaction, the
Fund, at the time of execution of the offsetting transaction, will incur a gain
or a loss to the extent that movement has occurred in forward contract prices.
Should forward prices decline during the period between a Fund's entering into a
forward contract for the sale of a currency and the date it enters into an
offsetting contract for the purchase of the currency, the Fund will realize a
gain to the extent the price of the currency it has agreed to sell exceeds the
price of the currency it has agreed to purchase. Should forward prices increase,
the Fund will suffer a loss to the extent the price of the currency it has
agreed to purchase exceeds the price of the currency it has agreed to sell.
The cost to a Fund of engaging in currency transactions varies with
factors such as the currency involved, the length of the contract period and the
market conditions then prevailing. Because transactions in currency exchange are
usually conducted on a principal basis, no fees or commissions are involved. The
use of forward currency contracts does not eliminate fluctuations in the
underlying prices of the securities, but it does establish a rate of exchange
that can be achieved in the future. In addition, although forward currency
contracts limit the risk of loss due to a decline in the value of the hedged
currency, at the same time, they limit any potential gain that might result
should the value of the currency increase.
If a devaluation is generally anticipated, a Fund may not be able to
contract to sell the currency at a price above the devaluation level it
anticipates. In light of the requirements that the Funds must meet to qualify as
regulated investment companies under the Code for a given year, the Funds
currently intend to limit their gross income from currency transactions to less
than 10% of gross income for that taxable year.
Foreign Currency Options. The Funds may purchase put and call options
on foreign currencies for the purpose of hedging against changes in future
currency exchange rates. Foreign currency options generally have three, six and
nine month expiration cycles. Put options convey the right to sell the
underlying currency at a price which is anticipated to be higher than the spot
price of the currency at the time the option expires. Call options convey the
right to buy the underlying currency at a price which is expected to be lower
than the spot price of the currency at the time the option expires.
A Fund may use foreign currency options under the same circumstances
that it could use forward currency exchange transactions. A decline in the
dollar value of a foreign currency in which a Fund's securities are denominated,
for example, will reduce the dollar value of the securities, even if their value
in the foreign currency remains constant. In order to protect against such
diminution in the value of securities it holds, a Fund may purchase put options
on the foreign currency. If the value of the currency does decline, such Fund
will have the right to sell the currency for a fixed amount in dollars and will
thereby offset, in whole or in part, the adverse effect on its securities that
otherwise would have resulted. Conversely, if a rise in the dollar value of a
currency in which securities to be acquired are denominated is projected,
thereby potentially increasing the cost of the securities, a Fund may purchase
call options on the particular currency. The purchase of these options could
offset, at least partially, the effects of the adverse movements in exchange
rates. The benefit to a Fund derived from purchases of foreign currency options,
like the benefit derived from other types of options, will be reduced by the
amount of the premium and related transaction costs. In addition, if currency
exchange rates do not move in the direction or to the extent anticipated, a Fund
could sustain losses on transactions in foreign currency options that would
require it to forego a portion or all of the benefits of advantageous changes in
the rates.
Foreign Currency Futures and Related Options. The Funds may enter into
currency futures contracts to purchase and sell currencies. They also may
purchase options on currency futures. Foreign currency futures are similar to
forward currency contracts, except that they are traded on commodities exchanges
and are standardized as to contract size and delivery date. In investing in such
transactions, a Fund would incur brokerage costs and would be required to make
and maintain certain "margin" deposits. A Fund also would be required to
segregate assets or otherwise cover, as described above, the futures contracts
requiring the purchase of foreign currencies. These limitations are described
more fully above under the heading "Futures Activities." Most currency futures
call for payment or delivery in U.S. dollars.
Options on foreign currency futures entitle a Fund, in return for the
premium paid, to assume a position in an underlying foreign currency futures
contract. An option on a foreign currency futures contract, in contrast to a
direct investment in the contract, gives the purchaser the right, but not the
obligation, to assume a long or short position in the relevant underlying
currency at a predetermined price at a time in the future.
Currency futures and related options are subject to the risks of other
types of futures activities, as described above. In addition, while the value of
currency futures and options on futures can be expected to correlate with
exchange rates, it will not reflect other factors that may affect the value of a
Fund's investments. A currency hedge, for example, should protect a
Yen-denominated security against a decline in the Yen, but will not protect a
Fund against price decline if the issuer's creditworthiness deteriorates.
Because the value of a Fund's investments denominated in foreign currency will
change in response to many factors other than exchange rates, it may not be
possible to match the amount of currency futures contracts to the value of the
Fund's investments denominated in that currency over time.
A more detailed discussion of futures contracts and options on futures
contracts, including the risks associated with such transactions and certain
limitations on the percentage of assets that may be used in such transactions,
can be found above under the heading "Futures Activities."
Options on Securities. In order to hedge against adverse market shifts,
a Fund may utilize up to 2% of its total assets to purchase put options on
securities and an additional 2% of its total assets to purchase call options on
securities, in each case that are traded on foreign as well as U.S. exchanges or
in the over-the-counter market. In addition, a Fund may write covered call
options and put options on up to 25% of the net asset value of the securities in
its portfolio. A Fund realizes fees (referred to as "premiums") for granting the
rights evidenced by the call options it has written. A put option embodies the
right of its purchaser to compel the writer of the option to purchase from the
option holder an underlying security at a specified price at any time during the
option period. In contrast, a call option embodies the right of its purchaser to
compel the writer of the option to sell to the option holder an underlying
security at a specified price at any time during the option period. Thus, the
purchaser of a call option written by a Fund has the right to purchase from such
Fund the underlying security owned by the Fund at the agreed-upon price for a
specified time period. A Fund may write only covered call options. Accordingly,
whenever a Fund writes a call option it will continue to own or have the present
right to acquire the underlying security without additional consideration for as
long as it remains obligated as the writer of the option.
The principal reason for writing covered call options on a security is
to attempt to realize, through the receipt of premiums, a greater return than
would be realized on the securities alone. In return for a premium, a Fund as
the writer of a covered call option forfeits the right to any appreciation in
the value of the underlying security above the strike price for the life of the
option (or until a closing purchase transaction can be effected). Nevertheless,
a Fund as the call writer retains the risk of a decline in the price of the
underlying security. The size of the premiums that a Fund may receive may be
adversely affected as new or existing institutions, including other investment
companies, engage in or increase their option-writing activities.
Options written by a Fund will normally have expiration dates between
one and nine months from the date written. The exercise price of the options may
be below, equal to or above the market values of the underlying securities at
the times the options are written. In the case of call options, these exercise
prices are referred to as "in-the-money," "at-the-money" and "out-of-the-money,"
respectively. A Fund may write (a) in-the-money call options when its Adviser
expects that the price of the underlying security will remain flat or decline
moderately during the option period, (b) at-the-money call options when its
Adviser expects that the price of the underlying security will remain flat or
advance moderately during the option period and (c) out-of-the-money call
options when its Adviser expects that the premiums received from writing the
call option plus the appreciation in market price of the underlying security up
to the exercise price will be greater than the appreciation in the price of the
underlying security alone. In any of the preceding situations, if the market
price of the underlying security declines and the security is sold at this lower
price, the amount of any realized loss will be offset wholly or in part by the
premium received.
So long as the obligation of a Fund as the writer of an option
continues, such Fund may be assigned an exercise notice by the broker-dealer
through which the option was sold, requiring the Fund to deliver the underlying
security against payment of the exercise price. This obligation terminates when
the option expires or the Fund effects a closing purchase transaction. A Fund
can no longer effect a closing purchase transaction with respect to an option
once it has been assigned an exercise notice. To secure its obligation to
deliver the underlying security when it writes a call option, a Fund will be
required to deposit in escrow the underlying security or other assets in
accordance with the rules of the Options Clearing Corporation (the "Clearing
Corporation") and of the securities exchange on which the option is written.
An option position may be closed out only where there exists a
secondary market for an option of the same series on a recognized securities
exchange or in the over-the-counter market. The Funds may purchase and write
options on securities on U.S. and foreign securities exchanges or in the
over-the-counter market.
A Fund may realize a profit or loss upon entering into a closing
transaction. In cases where a Fund has written an option, it will realize a
profit if the cost of the closing purchase transaction is less than the premium
received upon writing the original option and will incur a loss if the cost of
the closing purchase transaction exceeds the premium received upon writing the
original option. Similarly, when a Fund has purchased an option and engages in a
closing sale transaction, whether such Fund realizes a profit or loss will
depend upon whether the amount received in the closing sale transaction is more
or less than the premium the Fund initially paid for the original option plus
the related transaction costs.
Although a Fund will generally purchase or write only those options for
which its Adviser believes there is an active secondary market so as to
facilitate closing transactions, there is no assurance that sufficient trading
interest will exist to create a liquid secondary market on a securities exchange
for any particular option or at any particular time, and for some options no
such secondary market may exist. A liquid secondary market in an option may
cease to exist for a variety of reasons. In the past, for example, higher than
anticipated trading activity or order flow or other unforeseen events have at
times rendered certain of the facilities of the Clearing Corporation and various
securities exchanges inadequate and resulted in the institution of special
procedures, such as trading rotations, restrictions on certain types of orders
or trading halts or suspensions in one or more options. There can be no
assurance that similar events, or events that may otherwise interfere with the
timely execution of customers' orders, will not recur. In such event, it might
not be possible to effect closing transactions in particular options. Moreover,
a Fund's ability to terminate options positions established in the
over-the-counter market may be more limited than for exchange-traded options and
also may involve the risk that securities dealers participating in
over-the-counter transactions would fail to meet their obligations to a Fund.
Each Fund, however, intends to purchase over-the-counter options only from
dealers whose debt securities, as determined by its Adviser, are considered to
be investment grade. If, as a covered call option writer, a Fund is unable to
effect a closing purchase transaction in a secondary market, it will not be able
to sell the underlying security until the option expires or it delivers the
underlying security upon exercise. In either case, a Fund would continue to be
at market risk on the security and could face higher transaction costs,
including brokerage commissions.
Securities exchanges generally have established limitations governing
the maximum number of calls and puts of each class which may be held or written,
or exercised within certain time periods, by an investor or group of investors
acting in concert (regardless of whether the options are written on the same or
different securities exchanges or are held, written or exercised in one or more
accounts or through one or more brokers). It is possible that the Funds and
other clients of the Advisers and certain of its affiliates may be considered to
be such a group. A securities exchange may order the liquidation of positions
found to be in violation of these limits and it may impose certain other
sanctions. Dollar amount limits apply to U.S. government securities. These
limits may restrict the number of options a Fund will be able to purchase on a
particular security.
In the case of options written by a Fund that are deemed covered by
virtue of such Fund's holding convertible or exchangeable preferred stock or
debt securities, the time required to convert or exchange and obtain physical
delivery of the underlying common stock with respect to which the Fund has
written options may exceed the time within which the Fund must make delivery in
accordance with an exercise notice. In these instances, a Fund may purchase or
temporarily borrow the underlying securities for purposes of physical delivery.
By so doing, a Fund will not bear any market risk, since the Fund will have the
absolute right to receive from the issuer of the underlying security an equal
number of shares to replace the borrowed stock, but a Fund may incur additional
transaction costs or interest expenses in connection with any such purchase or
borrowing.
Additional risks exist with respect to certain of the U.S. government
securities for which a Fund may write covered call options. If a Fund writes
covered call options on mortgage-backed securities, the mortgage-backed
securities that it holds as cover may, because of scheduled amortization or
unscheduled prepayments, cease to be sufficient cover. If this occurs, a Fund
will compensate for the decline in the value of the cover by purchasing an
appropriate additional amount of mortgage-backed securities.
In addition to writing covered options for other purposes, a Fund may
enter into options transactions as hedges to reduce investment risk, generally
by making an investment expected to move in the opposite direction of a
portfolio position. A hedge is designed to offset a loss on a portfolio position
with a gain on the hedged position; at the same time, however, a properly
correlated hedge will result in a gain on the portfolio position being offset by
a loss on the hedged position. A Fund bears the risk that the prices of the
securities being hedged will not move in the same amount as the hedge. A Fund
will engage in hedging transactions only when deemed advisable by its Adviser.
Successful use by a Fund of options will be subject to its Adviser's ability to
predict correctly movements in the direction of the securities underlying the
option used as a hedge. Losses incurred in hedging transactions and the costs of
these transactions will affect a Fund's performance.
Options on Gold. For hedging purposes, the Equity Fund may purchase put
and call options on gold and write covered call options on gold in an amount
which, when added to its assets committed to margin and premiums for gold
futures contracts and related options, does not exceed 5% of the Equity Fund's
net assets. The Equity Fund will only enter into gold options that are traded on
a regulated domestic commodities exchange or foreign commodities exchanges
approved for this purpose by the Commodity Futures Trading Commission.
Short Sales "Against the Box." In a short sale, a Fund sells a borrowed
security and has a corresponding obligation to the lender to return the
identical security. A Fund may engage in short sales if at the time of the short
sale such Fund owns or has the right to obtain an equal amount of the security
being sold short. This investment technique is known as a short sale "against
the box."
In a short sale, the seller does not immediately deliver the securities
sold and is said to have a short position in those securities until delivery
occurs. If a Fund engages in a short sale, the collateral for the short position
will be maintained by such Fund's custodian or qualified sub-custodian. While
the short sale is open, a Fund will maintain in a segregated account an amount
of securities equal in kind and amount to the securities sold short or
securities convertible into or exchangeable for such equivalent securities.
These securities constitute such Fund's long position. Not more than 10% of a
Fund's net assets (taken at current value) may be held as collateral for such
short sales at any one time.
The Funds do not intend to engage in short sales against the box for
investment purposes. A Fund may, however, make a short sale as a hedge, when it
believes that the price of a security may decline, causing a decline in the
value of a security owned by the Fund (or a security convertible or exchangeable
for such security), or when a Fund wants to sell the security at an attractive
current price, but also wishes to defer recognition of gain or loss for federal
income tax purposes and for purposes of satisfying certain tests applicable to
regulated investment companies under the Code. In such case, any future losses
in a Fund's long position should be offset by a gain in the short position and,
conversely, any gain in the long position should be reduced by a loss in the
short position. The extent to which such gains or losses are reduced will depend
upon the amount of the security sold short relative to the amount a Fund owns.
There will be certain additional transaction costs associated with short sales
against the box, but the Funds will endeavor to offset these costs with the
income from the investment of the cash proceeds of short sales.
U.S. Government Securities. The Funds may invest in debt obligations of
varying maturities issued or guaranteed by the United States government, its
agencies or instrumentalities ("U.S. government securities"). Direct obligations
of the U.S. Treasury include a variety of securities that differ in their
interest rates, maturities and dates of issuance. U.S. government securities
also include securities issued or guaranteed by the Federal Housing
Administration, Farmers Home Loan Administration, Export-Import Bank of the
United States, Small Business Administration, Government National Mortgage
Association, General Services Administration, Central Bank for Cooperatives,
Federal Farm Credit Banks, Federal Home Loan Banks, Federal Home Loan Mortgage
Corporation, Federal Intermediate Credit Banks, Federal Land Banks, Federal
National Mortgage Association, Maritime Administration, Tennessee Valley
Authority, District of Columbia Armory Board and Student Loan Marketing
Association. The Funds also may invest in instruments that are supported by the
right of the issuer to borrow from the United States Treasury and instruments
that are supported by the credit of the instrumentality. Because the United
States government is not obligated by law to provide support to an
instrumentality it sponsors, a Fund will invest in obligations issued by such an
instrumentality only if its Adviser determines that the credit risk with respect
to the instrumentality does not make its securities unsuitable for investment by
the Fund.
Securities of Other Investment Companies. The Funds may invest in
securities of other investment companies to the extent permitted under the
Investment Company Act of 1940, as amended (the "1940 Act"). Presently, under
the 1940 Act, a fund is permitted to hold securities of another investment
company in amounts which (a) do not exceed 3% of the total outstanding voting
stock of such company, (b) do not exceed 5% of the value of the Fund's total
assets and (c) when added to all other investment company securities held by the
Fund, do not exceed 10% of the value of the Fund's total assets. However, a Fund
does not intend to invest more than 5% of its assets in the securities of other
investment companies.
Repurchase Agreements. A Fund may engage in repurchase agreement
transactions by investing up to 20% of its total assets with respect to any
securities in which it invests. A Fund will enter into repurchase agreements
with member banks of the Federal Reserve System or certain non-bank dealers.
Repurchase agreements are contracts under which the buyer of a security
simultaneously commits to resell the security to the seller at an agreed-upon
price and date. Under each repurchase agreement, the selling institution will be
required to maintain the value of the securities subject to the repurchase
agreement at not less than their repurchase price. Repurchase agreements involve
certain risks in the event of default or insolvency of the other party,
including possible delays or restrictions upon a Fund's ability to dispose of
the underlying securities.
When-Issued Securities and Delayed Delivery Transactions. A Fund may
utilize up to 20% of its total assets to purchase securities on a "when-issued"
basis or purchase or sell securities for delayed delivery (i.e., payment or
delivery occur beyond the normal settlement date at a stated price and yield).
When-issued transactions normally settle within 30-45 days. A Fund will enter
into a when-issued transaction for the purpose of acquiring portfolio securities
and not for the purpose of leverage, but may sell the securities before the
settlement date if its Adviser deems it advantageous to do so. The payment
obligation and the interest rate that will be received on when-issued securities
are fixed at the time the buyer enters into the commitment. Due to fluctuations
in the value of securities purchased or sold on a when-issued or
delayed-delivery basis, the yields obtained on such securities may be higher or
lower than the yields available in the market on the dates when the investments
are actually delivered to the buyers.
When a Fund agrees to purchase when-issued or delayed-delivery
securities, its custodian will set aside cash, U.S. government securities or
high-grade debt obligations equal to the amount of the commitment in a separate
account. Normally, the custodian will set aside portfolio securities to satisfy
a purchase commitment, and in such a case a Fund may be required subsequently to
place additional assets in the separate account in order to ensure that the
value of the account remains equal to the amount of the Fund's commitment. It
may be expected that a Fund's net assets will fluctuate to a greater degree when
it sets aside portfolio securities to cover such purchase commitments than when
it sets aside cash. When a Fund engages in when-issued or delayed-delivery
transactions, it relies on the other party to consummate the trade. Failure of
the seller to do so may result in a Fund incurring a loss or missing an
opportunity to obtain a price considered to be advantageous.
Convertible Securities. Convertible securities in which a Fund may
invest, including both convertible debt and convertible preferred stock, may be
converted at either a stated price or stated rate into underlying shares of
common stock. Because of this feature, convertible securities enable an investor
to benefit from increases in the market price of the underlying common stock.
Convertible securities provide higher yields than the underlying equity
securities, but generally offer lower yields than non-convertible securities of
similar quality. Like bonds, the value of convertible securities fluctuates in
relation to changes in interest rates and, in addition, fluctuates in relation
to the underlying common stock.
International Warrants. The Equity Fund may invest up to 10% of its
total assets in warrants of international issuers. The Equity Fund's holdings of
warrants will consist of equity warrants, index warrants, covered warrants,
interest rate warrants and long term options of, or relating to, international
issuers. Warrants are securities that give the holder the right, but not the
obligation, to subscribe for newly created equity issues (consisting of common
and preferred stock, convertible preferred stock and warrants that themselves
are only convertible into common, preferred or convertible preferred stock) of
the issuing company or a related company at a fixed price either on a date
certain or during a set period. The equity issue underlying an equity warrant is
outstanding at the time the equity warrant is issued or is issued together with
the warrant. At the time the Equity Fund acquires an equity warrant convertible
into a warrant, the terms and conditions under which the warrant received upon
conversion can be exercised will have been determined; the warrant received upon
conversion will only be convertible into a common, preferred or convertible
preferred stock.
Equity warrants are generally issued in conjunction with an issue of
bonds or shares, although they also may be issued as part of a rights issue or
scrip issue. When issued with bonds or shares, they usually trade separately
from the bonds or shares after issuance. The Equity Fund will not buy bonds with
warrants attached. Most warrants trade in the same currency as the underlying
stock ("domestic warrants"), but also may be traded in different currency
("euro-warrants"). Equity warrants are traded on a number of European exchanges,
principally in France, Germany, Japan, Netherlands, Switzerland and the United
Kingdom, and in over-the-counter markets. Since there is a readily available
market for these securities, the Equity Fund Adviser believes that international
warrants should be considered a liquid investment.
Index warrants are rights created by an issuer, typically a financial
institution, entitling the holder to purchase, in the case of a call, or sell,
in the case of a put, an equity index at a certain level over a fixed period of
time. Index warrant transactions settle in cash.
Covered warrants are rights created by an issuer, typically a financial
institution, normally entitling the holder to purchase from the issuer of the
covered warrant outstanding securities of another company (or in some cases a
basket of securities), which issuance may or may not have been authorized by the
issuer or issuers of the securities underlying the covered warrants. In most
cases, the holder of the covered warrant is entitled on its exercise to delivery
of the underlying security, but in some cases the entitlement of the holder is
to be paid in cash the difference between the value of the underlying security
on the date of exercise and the strike price. The securities in respect of which
covered warrants are issued are usually common stock, although they may entitle
the holder to acquire warrants to acquire common stock. Covered warrants may be
fully covered or partially covered. In the case of a fully covered warrant, the
issuer of the warrant will beneficially own all of the underlying securities or
will itself own warrants (which are typically issued by the issuer of the
underlying securities in a separate transaction) to acquire the securities. The
underlying securities or warrants are, in some cases, held by another member of
the issuer's group or by a custodian or other fiduciary for the holders of the
covered warrants.
Interest rate warrants are rights that are created by an issuer,
typically a financial institution, entitling the holder to purchase, in the case
of a call, or sell, in the case of a put, a specific bond issue or an interest
rate index (Bond Index) at a certain level over a fixed time period. Interest
rate warrants can typically be exercised in the underlying instrument or settle
in cash.
Long term options operate much like covered warrants. Like covered
warrants, long term options are call options created by an issuer, typically a
financial institution, entitling the holder to purchase from the issuer
outstanding securities of another issuer. Long term options have an initial
period of one year or more, but generally have terms between three and five
years. At present long term options are traded only in the Netherlands, where a
distinct market does not exist. Unlike U.S. options, long term European options
do not settle through a clearing corporation that guarantees the performance of
the counterparty. Instead, they are traded on an exchange and subject to the
exchange's trading regulations.
The Equity Fund will acquire only covered warrants, index warrants,
interest rate warrants and long term options issued by entities deemed to be
creditworthy by its Adviser, who will monitor the creditworthiness of such
issuers on an on-going basis. Investment in these instruments involves the risk
that the issuer of the instrument may default on its obligation to deliver the
underlying security or warrants to acquire the underlying security (or cash in
lieu thereof). To reduce this risk, the Equity Fund will limit its holdings of
covered warrants, index warrants, interest rate warrants and long term options
to those issued by entities that either have a class of outstanding debt
securities that is rated investment grade or higher by a recognized rating
service or otherwise are considered by its Adviser to have the capacity to meet
their obligations to the Equity Fund.
Other Investment Limitations
The investment limitations numbered 1 through 11 have been adopted by
the Trust with respect to each Fund as fundamental policies and may not be
changed with respect to a Fund without the affirmative vote of the holders of a
majority of the Fund's outstanding shares. Such majority is defined as the
lesser of (a) 67% or more of the shares present at the meeting, if the holders
of more than 50% of the outstanding shares of the Fund are present or
represented by proxy, or (b) more than 50% of the outstanding shares. Investment
limitations 12 through 15 may be changed by a vote of the Board of Trustees at
any time.
A Fund may not:
1. Borrow money or issue senior securities except that a Fund may
borrow from banks for temporary or emergency purposes, and not for leveraging,
and then in amounts not in excess of 30% of the value of the Fund's total assets
at the time of such borrowing; or mortgage, pledge or hypothecate any assets
except in connection with any bank borrowing and in amounts not in excess of the
lesser of the dollar amounts borrowed or 10% of the value of the Fund's total
assets at the time of such borrowing. Whenever such borrowings exceed 5% of the
value of the Fund's total assets, the Fund will not make any investments
(including roll-overs). For purposes of this restriction, (a) the deposit of
assets in escrow in connection with the purchase of securities on a when-issued
or delayed-delivery basis and (b) collateral arrangements with respect to
options, futures or forward currency contracts will not be deemed to be
borrowings or pledges of the Fund's assets.
2. 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 issuers conducting their principal business activities in the same
industry; provided that there shall be no limit on the purchase of U.S.
government securities.
3. Make loans, except that the Fund may purchase or hold publicly
distributed fixed income securities, lend portfolio securities in an amount not
exceeding 33-1/3% of the Fund's net assets and enter into repurchase agreements.
4. Underwrite any issue of securities except to the extent that the
investment in restricted securities and the purchase of fixed income securities
directly from the issuer thereof in accordance with the Fund's investment
objective, policies and limitations may be deemed to be underwriting.
5. Purchase or sell real estate, real estate investment trust
securities, commodities or commodity contracts, or invest in real estate limited
partnerships, oil, gas or mineral exploration or development programs or oil,
gas and mineral leases, except that the Fund may invest in (a) fixed income
securities secured by real estate, mortgages or interests therein, (b)
securities of companies that invest in or sponsor oil, gas or mineral
exploration or development programs and (c) futures contracts and related
options and options on currencies. The entry into forward foreign currency
exchange contracts is not and shall not be deemed to involve investing in
commodities.
6. Make short sales of securities or maintain a short position, except
that the Fund may maintain short positions in forward currency contracts,
options and futures contracts and make short sales "against the box."
7. Purchase, write or sell puts, calls, straddles, spreads or
combinations thereof, except that the Fund may (a) purchase or write options on
securities, indices and currencies and (b) purchase or write options on futures
contracts.
8. Purchase securities of other investment companies except in
connection with a merger, consolidation, acquisition, reorganization or offer of
exchange, or as otherwise permitted under the 1940 Act.
9. Purchase more than 10% of the voting securities of any one issuer,
more than 10% of the securities of any class of any one issuer or more than 10%
of the outstanding debt securities of any one issuer; provided that this
limitation shall not apply to investments in U.S. government securities.
10. Purchase securities on margin, except that the Fund may obtain any
short-term credits necessary for the clearance of purchases and sales of
securities. For purposes of this restriction, the maintenance of margin in
connection with options, forward contracts and futures contracts or related
options will not be deemed to be a purchase of securities on margin.
11. Invest more than 15% of the value of the Fund's total assets in
securities which may be illiquid because of legal or contractual restrictions on
resale or securities for which there are no readily available market quotations.
For purposes of this limitation, (a) repurchase agreements with maturities
greater than seven days and (b) time deposits maturing in more than seven
calendar days shall be considered illiquid.
12. Purchase any security if as a result the Fund would then have more
than 5% of its total assets invested in securities of companies (including
predecessors) that have been in continuous operation for fewer than three years.
13. Purchase or retain securities of any company if, to the knowledge
of the Fund, any of the Fund's officers or Trustees or any officer or director
of its Adviser individually owns more than 1/2 of 1% of the outstanding
securities of such company and together they own beneficially more than 5% of
the securities.
14. Invest in warrants (other than warrants acquired by the Fund as
part of a unit or attached to securities at the time of purchase) if, as a
result, the investments (valued at the lower of cost or market) would exceed 5%
of the value of each Fund's net assets (10% in the case of the Equity Fund) of
which not more than 2% of each Fund's net assets may be invested in warrants not
listed on a recognized U.S. or foreign stock exchange.
15. Invest in oil, gas or mineral leases.
A Fund may make commitments more restrictive than the restrictions
listed above so as to permit the sale of Fund shares in certain states. Should a
Fund determine that any such commitment is no longer in the best interest of the
Fund and its shareholders, such Fund will revoke the commitment by terminating
the sale of Fund shares in the state involved. If a percentage restriction is
adhered to at the time of an investment, a later increase or decrease in the
percentage of assets resulting from a change in the values of portfolio
securities or in the amount of the Fund's assets will not constitute a violation
of such restriction.
Portfolio Valuation
The Prospectus discusses the time at which the net asset value of the
Funds is determined for purposes of sales and redemptions. The following is a
description of the procedures used by the Funds in valuing their assets.
Because of the need to obtain prices as of the close of trading on
various exchanges throughout the world, the calculation of a Fund's net asset
value may not take place contemporaneously with the determination of the prices
of certain of its portfolio securities used in such calculation. A security
which is listed or traded on more than one exchange is valued at the quotation
on the exchange determined to be the primary market for such security. All
assets and liabilities initially expressed in foreign currency values will be
converted into U.S. dollar values at the mean between the bid and offered
quotations of such currencies against U.S. dollars as last quoted by any
recognized dealer. If such quotations are not available, the rate of exchange
will be determined in good faith by the Board of Trustees. In carrying out the
Board's valuation policies Investors Bank & Trust Company, as each Fund's
accounting agent, may consult with an independent pricing service retained by
the Fund.
Securities listed on a U.S. securities exchange (including securities
traded through the National Market System) or on a foreign securities exchange
will be valued on the basis of the closing value on the date on which the
valuation is made or, in the absence of sales, at the mean between the closing
bid and asked prices. U.S. over-the-counter securities and securities listed or
traded on certain foreign stock exchanges whose operations are similar to the
U.S. over-the-counter market will be valued on the basis of the bid price at the
close of business on each day, or, if market quotations for those securities are
not readily available, at fair value, as determined by or under the direction of
the Board of Trustees. Securities listed on a national securities exchange will
be valued on the basis of the last sale on the date on which the valuation is
made or, in the absence of sales, at the mean between the closing bid and asked
prices. The valuation of fixed income securities held by a Fund (other than U.S.
government securities and short-term investments) is made by the Administrator
after consultation with an independent pricing service (the "Pricing Service")
approved by the Board of Trustees. When, in the judgment of the Pricing Service,
quoted bid prices for investments are readily available and are representative
of the bid side of the market, these investments are valued at the mean between
the quoted bid prices and asked prices. Investments for which, in the judgment
of the Pricing Service, there is no readily obtainable market quotation are
carried at fair value as determined by the Pricing Service. For the most part,
such investments are liquid and may be readily sold. Notwithstanding the above,
the Pricing Service may employ electronic data processing techniques and/or a
matrix system to determine valuations. The procedures of the Pricing Service are
reviewed periodically by the officers of a Fund under the general supervision
and responsibility of the Board of Trustees, which may replace any such Pricing
Service at any time. Short-term obligations with maturities of 60 days or less
are valued at amortized cost, which constitutes fair value as determined by the
Board of Trustees. Amortized cost involves valuing an instrument at its original
cost to the Fund and thereafter assuming a constant amortization to maturity of
any discount or premium, regardless of the impact of fluctuating interest rates
on the market value of the instrument. All other securities and other assets of
a Fund will be valued at their fair value as determined in good faith by the
Board of Trustees.
Portfolio Transactions
Each Fund's Adviser is responsible for establishing, reviewing and,
where necessary, modifying a Fund's investment program to achieve its investment
objective. Purchases and sales of newly-issued portfolio securities are usually
principal transactions without brokerage commissions effected directly with the
issuer or with an underwriter acting as principal. Other purchases and sales may
be effected on a securities exchange or over-the-counter, depending on where it
appears that the best price or execution will be obtained. The purchase price
paid by a Fund to underwriters of newly issued securities usually includes a
concession paid by the issuer to the underwriter, and purchases of securities
from dealers, acting as either principals or agents in the after market, are
normally executed at a price between the bid and asked price, which includes a
dealer's mark-up or mark-down. Transactions on U.S. stock exchanges and some
foreign stock exchanges involve the payment of negotiated brokerage commissions.
On exchanges on which commissions are negotiated, the cost of transactions may
vary among different brokers. On most foreign exchanges, commissions are
generally fixed. There is generally no stated commission in the case of
securities traded in domestic or foreign over-the-counter markets, but the price
of securities traded in over-the-counter markets includes an undisclosed
commission or mark-up. U.S. government securities are generally purchased from
underwriters or dealers, although certain newly-issued U.S. government
securities may be purchased directly from the United States Treasury or from the
issuing agency or instrumentality.
Each Fund's Adviser will select specific portfolio investments and
effect transactions for the Funds. An Adviser seeks to obtain the best net price
and the most favorable execution of orders. In evaluating prices and executions,
an Adviser will consider the factors it deems relevant, which may include the
breadth of the market in the security, the price of the security, the financial
condition and execution capability of a broker or dealer and the reasonableness
of the commission, if any, for the specific transaction and on a continuing
basis. In addition, to the extent that the execution and price offered by more
than one broker or dealer are comparable, an Adviser may, in its discretion,
effect transactions in portfolio securities with dealers who provide brokerage
and research services (as those terms are defined in Section 28(e) of the
Securities Exchange Act of 1934) to a Fund and/or other accounts over which an
Adviser exercises investment discretion. Research and other services received
may be useful to an Adviser in serving both the Fund and its other clients and,
conversely, research or other services obtained by the placement of business of
other clients may be useful to the Adviser in carrying out its obligations to a
Fund. The fee to each Adviser under its advisory agreement with a Fund is not
reduced by reason of its receiving any brokerage and research services.
Investment decisions for a Fund concerning specific portfolio
securities are made independently from those for other clients advised by its
Adviser. Such other investment clients may invest in the same securities as a
Fund. When purchases or sales of the same security are made at substantially the
same time on behalf of such other clients, transactions are averaged as to price
and available investments allocated as to amount, in a manner which a Fund's
Adviser believes to be equitable to each client, including the Fund. In some
instances, this investment procedure may adversely affect the price paid or
received by a Fund or the size of the position obtained or sold for a Fund. To
the extent permitted by law, each Fund's Adviser may aggregate the securities to
be sold or purchased for a Fund with those to be sold or purchased for such
other investment clients in order to obtain best execution.
Any portfolio transaction for a Fund may be executed through Funds
Distributor Inc., the Fund's distributor (the "Distributor"), or Julius Baer
Securities Inc., the parent company of the Advisers, or any of their affiliates
if, in its Adviser's judgment, the use of such entity is likely to result in
price and execution at least as favorable as those of other qualified brokers,
and if, in the transaction, such entity charges a Fund a commission rate
consistent with those charged by such entity to comparable unaffiliated
customers in similar transactions. For the fiscal years ended October 31, 1995
and October 31, 1994, the Equity Fund paid $2,518 and $2,227, respectively, in
brokerage commissions to BJB-Frankfurt and BJB-Zurich, affiliates of the Adviser
or 2.6% and .77% of the total brokerage commissions paid. BJB-Frankfurt and
BJB-Zurich executed 6.7% and .78% of the aggregate dollar amount of transactions
involving commissions during the fiscal years ended October 31, 1995 and October
31, 1994, respectively. For the fiscal years ended October 31, 1995 and
October 31, 1994 and the fiscal period from October 4, 1993 (commencement of
operations) through October 31, 1993, the Equity Fund paid total brokerage
commissions of $95,165, $284,732 and $59,793, respectively. For the fiscal years
ended October 31, 1995 and October 31, 1994, the Income Fund paid total
brokerage commissions of $0 and $4,683, respectively. For the fiscal year ended
October 31, 1993 and for the fiscal period from July 1, 1992 (commencement of
operations) through October 31, 1992 the Income Fund paid no brokerage
commissions.
In no instance will portfolio securities be purchased from or sold to
the Advisers, the Distributor or any affiliated person of such companies.
A Fund may participate, if and when practicable, in bidding for the
purchase of securities for its portfolio directly from an issuer in order to
take advantage of the lower purchase price available to members of such a group.
A Fund will engage in this practice, however, only when its Adviser, in its sole
discretion, believes such practice to be otherwise in such Fund's interest.
Portfolio Turnover
Each Fund does not intend to seek profits through short-term trading,
but the rate of turnover will not be a limiting factor when the Fund deems it
desirable to sell or purchase securities. A Fund's portfolio turnover rate is
calculated by dividing the lesser of purchases or sales of its portfolio
securities for the year by the monthly average value of the portfolio
securities. Securities with remaining maturities of one year or less at the date
of acquisition are excluded from the calculation.
Certain practices that may be employed by a Fund could result in high
portfolio turnover. For example, options on securities may be sold in
anticipation of a decline in the price of the underlying security (market
decline) or purchased in anticipation of a rise in the price of the underlying
security (market rise) and later sold. For each of the two fiscal years ended
October 31, 1995, the Income Fund's portfolio turnover rate was 319% and 320%,
respectively. For each of the two fiscal years ended October 31, 1995, the
Equity Fund's portfolio turnover rate was 116% and 169%, respectively.
MANAGEMENT OF THE FUNDS
Board of Trustees
The names of the Trust's Trustees and executive officers , their
addresses, ages, principal occupations during the past five years and other
affiliations are set forth below.
<TABLE>
<S> <C> <C>
Harvey B. Kaplan* Trustee Controller (Chief Financial Officer),
80 Voice Road Easter Unlimited, Inc. since May 1990;
Carle Place, New York 11514 prior to May 1990, Treasurer (Chief
Age: 58 Financial Officer), Buddy L. Corp.
Robert S. Matthews Trustee Partner of Matthews & Co.
331 Madison Avenue (certified public accountants).
8th Floor
New York, New York 10017
Age: 52
Gerard J.M. Vlak Trustee Retired; 1988-1991 Regional
1523 Monticello Drive Manager of Amsterdam-Rotterdam
Gladwyne, PA 19035 Bank, New York.
Age: 62
Peter J. Widmer** Trustee Chairman of Julius Baer Investment
Julius Baer Investment Management, Inc.; Member of
Management Inc. Management Committee of Baer
330 Madison Avenue Holding Ltd.; since 1990, Chairman of
New York, New York 10017 Limited, Julius Baer Investments
Age: 58 London, and Infidar Investment
Advisory Ltd.
Peter Wolfram Trustee Partner in the law firm of
101 Park Avenue Kelley Drye & Warren.
New York, New York 10178
Age: 42
David E. Bodner President Executive Vice President, North
Bank Julius Baer & Co., Ltd. America, of Bank Julius Baer & Co.
330 Madison Avenue Ltd., New York branch;
New York, New York 10017 President and Director of Baer
Age: 61 American Banking Corporation;
Chairman of the Board of
Julius Baer Securities Inc. Chairman
of the Board of The European
Warrant Fund, Inc.
Jay Dirnberger Vice President Managing Director of Julius Baer
Julius Baer Investment Investment Management Inc.; Vice
Management Inc. President of Julius Baer Securities Inc.
330 Madison Avenue
New York, New York 10017
Age: 51
Rudolph-Riad Younes Vice President Vice President of Bank Julius Baer and
Bank Julius Baer & Co., Ltd. Co., Ltd. New York branch, since 1993.
330 Madison Avenue Prior to 1993, Associate Director
New York, New York 10017 Portfolio Management International,
Age: 34 Swiss Bank Corp. since 1991.
Bernard Spilko Chief Financial Senior Vice President of Bank Julius
Bank Julius Baer & Co., Ltd. Officer Baer & Co., Ltd., New York branch;
330 Madison Avenue Director and Managing Director of
New York, New York 10017 Julius Baer Securities Inc.; Director of
Age: 54 Baer American Banking Corporation;
Director and President of The European
Warrant Fund, Inc.
Avril Griffiths Vice President Portfolio Manager of the Income Fund;
Julius Baer Investment prior to August 1994, Senior Fixed
Management Inc. Income Portfolio Manager of Julius
Bevis Marks House Baer Investment Management, Inc.;
Bevis Marks London prior to November 1992, Vice
EC3A-7NE President/Senior Fixed Income Portfolio
Age:49 Manager at Citibank Asset Management.
Paul J. Jasinski Assistant Treasurer Managing Director, Investors Bank &
Investors Bank & Trust Company Trust Company, since 1990; Vice
89 South Street President, Bank of New England,
Boston, MA 02111 July 1985 - 1990.
Age: 48
Paul E. Fries Assistant Treasurer Account Manager, Investors Bank &
Investors Bank & Trust Company Trust Company, since 1994; Director
89 South Street of Internal Audit, 1991-1994, Investors
Boston, MA 02111 Bank; Audit Senior, Deloitte & Touche's
Age: 31 Financial Services Industry Practice Group,
1989-1991.
Robert Discolo Secretary Vice President of Bank Julius Baer &
Bank Julius Baer & Co., Ltd. Co., Ltd., New York branch, and Julius
330 Madison Avenue Baer Securities Inc.; Chief Financial
New York, New York 10017 Officer and Secretary of The European
Age: 34 Warrant Fund, Inc.; prior to July 1991,
Assistant Controller (Partnerships) of
Merrill Lynch & Co.
George M. Boyd Assistant Secretary Director, Mutual Fund Administration -
Investors Bank & Trust Company Legal and Regulatory, Investors Bank &
89 South Street Trust Company since July 1995;
Boston, MA 02111 Counsel, The Shareholder Services
Age: 51 Group, First Data Corporation March -
July 1995; Vice President and Counsel,
440 Financial Group of Worcester, Inc.,
Allmerica Financial January 1992 -
March 1995; Vice President, Secretary
and General Counsel, Carnegie Capital
Management Company 1986 - January 1992.
Susan C. Mosher Assistant Secretary Director, Investors Bank & Trust
Investors Bank & Trust Company Company since 1995; Associate
89 South Street Counsel, 440 Financial Group of
Boston, MA 02111 Worcester, Inc. 1993-1995; Associate
Age: 41 and Partner Gallagher, Callahan and
Gartrell, P.A., 1987-1992.
</TABLE>
- -------------
* Trustee who has a discretionary account with Julius Baer
Securities (less than $50,000).
** A Trustee who is an interested person of the Trust within the
meaning of the 1940 Act.
No director, officer or employee of the Adviser, Servicing Agent, the
Distributor, Administrator, or any parent or subsidiary thereof receives any
compensation from the Funds for serving as an officer or Trustee. The Trust
intends to pay each of its Trustees who is not a director, officer or employee
of the Advisers, Servicing Agent, the Distributor or the Administrator or any
affiliate thereof an annual fee of $5,000 plus $250 for each Board of Trustees
meeting attended and reimburse them for travel and out-of-pocket expenses. For
the fiscal year ended October 31, 1995, such fees and expenses totaled
approximately $ 11,300 for the Trust. As of November 30, 1995, the Trustees and
officers of the Trust as a group owned less than 1% of the Trust's total shares
outstanding. As of November 30, 1995, the following individuals or entities
beneficially owned more than 5% of the outstanding shares of the Funds:
<TABLE>
<CAPTION>
Income Fund:
Name and Address of Amount of Percent of
Owner Shares Owned Shares Owned
<S> <C> <C>
Dauphin Deposit Bank & Trust Co. 230,643.92 16.68%
(beneficial owner)
Financial Services Group
213 Market Street
Harrisburg, PA 17101
Robert L. Freedman and Ann L. Freedman 70,592.28 5.11%
(beneficial owners)
114 East 72nd Street
New York, NY 10021
Harry Frisch and Lilo Frisch 99,554.28 7.20%
(beneficial owner)
P.O. Box 41430
Jacksonville, FL 32203
Robert C. Wetenhall 72,225.45 5.22%
(beneficial owner)
c/o Mc Coonell, Wetenhall and Co.
375 Park Avenue
New York, NY 10152
<CAPTION>
Equity Fund:
Name and Address of Amount of Percent of
Owner Shares Owned Shares Owned
<S> <C> <C>
Bank Julius Baer Zurich 307,614.39 32.79%
(beneficial owner)
Bahnhofstrasse 36
P.O. Box 8010
Zurich, Switzerland
Martin Gardner 50,561.92 5.39%
(beneficial owner)
6100 S. Gramercy Place
Los Angeles, CA 90047
Premier Total Return Fund 68,587.11 7.31%
(beneficial owner)
P.O. Box 662
c/o CITCO Building
Roadtown, Tortola
British Virgin Islands
Sierra Trust 128,940.76 13.74%
(beneficial owner)
(JBBT as Trustee)
P.O. Box 1100
Grand Cayman, Grand Cayman Islands
</TABLE>
Investment Advisers and Administrator
Julius Baer Investment Management Inc. serves as the investment adviser
to the Income Fund. Bank Julius Baer & Co., Ltd., New York branch, serves as the
investment adviser to the Equity Fund. Bank Julius Baer & Co., Ltd., New York
branch, (the "Servicing Agent") also serves as administrative services agent to
the Income Fund. Prior to August 5, 1994, Bank Julius Baer & Co., Ltd. also
served as subadviser (the "Subadviser") to the Income Fund. Investors Bank &
Trust Company (the "Administrator") serves as administrator to each Fund. The
Advisers, the Servicing Agent and the Administrator each serve pursuant to
separate written agreements (the "Advisory Agreement," the "Servicing Agent
Agreement" and the "Administration Agreement," respectively). The services
provided by, and the fees payable to, each Adviser under the Advisory Agreement,
the Servicing Agent under the Servicing Agent Agreement and the Administrator
under the Administration Agreement are described in the Prospectus. Investors
Bank & Trust Company became Administrator for each Fund on January 30, 1995;
prior to January 30, 1995, The Shareholder Services Group served as
Administrator. For each of the three fiscal years ended October 31, 1995 and for
the fiscal period from July 1, 1992 through October 31, 1992, the Income Fund
incurred $130,501, $329,765, $267,710 and $62,628, respectively, in advisory and
subadvisory fees. For the fiscal period from July 1, 1992 through October 31,
1992, the Adviser and Subadviser voluntarily waived their fees with respect to
the Income Fund. For each of the two fiscal years ended October 31, 1995 and for
the fiscal period from October 4, 1993 through October 31, 1993, the Equity Fund
incurred $93,521, $222,018 and $5,705 respectively, in advisory fees. For the
fiscal year ended October 31, 1995, the Income Fund incurred $105,564 in
administration and custodian fees. For each of the two fiscal years ended
October 31, 1994 and for the fiscal period ended October 31, 1992, the Income
Fund incurred $156,709, $131,732 and $33,333, respectively, in administration
fees. For the fiscal period from July 1, 1992 though October 31, 1992 the
Administrator voluntarily waived fees in the amount of $8,333. For the fiscal
year ended October 31, 1995, the Equity Fund incurred $81,483 in administration
and custodian fees. For the fiscal year ended October 31, 1994 and the fiscal
period from October 4, 1993 though October 31, 1993, the Equity Fund incurred
$106,393 and $1,826, respectively, in administration fees.
The Advisers have agreed that if, in any fiscal year, the expenses
borne by a Fund exceed applicable expense limitations imposed by the securities
regulations of any state in which shares of a Fund are registered or qualified
for sale to the public, each of them would reduce the fees paid to them by such
Fund to the extent required by such regulations in the proportion that the fee
it retains bears to total management fees. Unless otherwise required by law,
such fee reduction would be accrued and paid on a monthly basis. The most
restrictive annual expense limitation applicable to each Fund is 2.5% of the
first $30 million of the average net assets of the Fund, 2% of the next $70
million of the average net assets of the Fund and 1.5% of the remaining average
net assets of the Fund. For the fiscal period ended October 31, 1995, expense
reimbursements totaled .52% of average net assets which reflects a voluntary fee
waiver by the Equity Adviser with respect to the Equity Fund of 40% of its
1.00% annual advisory fee, in addition to a mandatory waiver of .12% to comply
with a state securities regulation.
Organization of the Trust
The Trust was organized on April 30, 1992 as an unincorporated business
trust under the laws of The Commonwealth of Massachusetts pursuant to a Master
Trust Agreement dated April 30, 1992 (the "Trust Agreement"). Under the Trust
Agreement, the Trustees have authority to issue an unlimited number of shares of
beneficial interest, par value $.001 per share. When matters are submitted for
shareholder vote, each shareholder will have one vote for each share owned and
proportionate, fractional votes for fractional shares held. There will normally
be no meeting of shareholders for the purpose of electing Trustees unless and
until such time as less than a majority of the Trustees holding office have been
elected by shareholders. The Trustees will call a meeting for any purpose upon
the written request of shareholders holding at least 10% of the Trust's
outstanding shares.
Shares do not have cumulative voting rights, which means that holders
of more than 50% of the shares voting for the election of Trustees can elect all
Trustees. Shareholders generally vote by Fund, except with respect to the
election of Trustees and the selection of independent public accountants. Shares
are transferable but have no preemptive, conversion or subscription rights.
Massachusetts law provides that shareholders could, under certain
circumstances, be held personally liable for the obligations of the Trust. The
Trust Agreement disclaims shareholder liability for acts or obligations of the
Trust, however, and requires that notice of the disclaimer be given in each
agreement, obligation or instrument entered into or executed by the Trust or a
Trustee. The Trust Agreement provides for indemnification from the Trust's
property for all losses and expenses of any shareholder held personally liable
for the obligations of the Trust. Thus, the risk of a shareholder incurring
financial loss on account of shareholder liability is limited to circumstances
in which the Trust would be unable to meet its obligations, a possibility that
the Trust's management believes is remote. Upon payment of any liability
incurred by the Trust, the shareholder paying the liability will be entitled to
reimbursement from the general assets of the Trust. The Trustees intend to
conduct the operations of the Trust in such a way so as to avoid, as far as
possible, ultimate liability of the shareholders for liabilities of the Trust.
Custodian and Transfer Agent
As described in the Prospectus, Investors Bank & Trust Company
("Investors Bank") is custodian of each Fund's assets pursuant to a custodian
agreement (the "Custodian Agreement"). Under the Custodian Agreement, Investors
Bank (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) makes
receipts and 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 Board of
Trustees concerning each Fund's operations. Investors Bank is authorized to
select one or more foreign or domestic banks or trust companies to serve as
sub-custodian on behalf of a Fund, subject to the approval of the Board of
Trustees. The assets of the Trust are held under bank custodianship in
accordance with the 1940 Act.
Unified has agreed to serve as the Trust's transfer and dividend
disbursing agent pursuant to a Transfer Agency Agreement, under which Unified
(a) issues and redeems shares of the Trust, (b) addresses and mails all
communications by the Trust to record owners of Trust shares, including reports
to shareholders, dividend and distribution notices and proxy material for its
meetings of shareholders, (c) maintains shareholder accounts and, if requested,
sub-accounts and (d) makes periodic reports to the Board of Trustees concerning
the Funds' operations.
Distribution and Shareholder Servicing Arrangements
The Trust intends to enter into distribution agreements or shareholder
servicing agreements ("Agreements") with certain financial institutions
("Servicing Organizations") to perform certain distribution, shareholder
servicing, administrative and accounting services for their customers
("Customers") who are beneficial owners of shares of the Funds.
A Service Organization may charge a Customer one or more of the
following types of fees, as agreed upon by the Service Organization and the
Customer, with respect to the cash management or other services provided by the
Service Organization: (1) account fees (a fixed amount per month or per year);
(2) transaction fees (a fixed amount per transaction processed); (3)
compensating balance requirements (a minimum dollar amount a Customer must
maintain in order to obtain the services offered); or (4) account maintenance
fees (a periodic charge based upon the percentage of assets in the account or of
the dividend paid on those assets). A Customer of a Service Organization should
read the Prospectus and Statement of Additional Information in conjunction with
the service agreement and other literature describing the services and related
fees that will be provided by the Service Organization to its Customers prior to
any purchase of shares. No preference will be shown in the selection of Fund
portfolio investments for the instruments of Service Organizations.
There are currently unresolved issues with respect to existing laws
and regulations relating to the permissible activities of banks and trust
companies, including the extent to which certain Service Organizations may
perform shareholder and administrative services. A judicial or administrative
decision or interpretation with respect to those laws and regulations, as well
as future changes in such laws and regulations, could prevent certain Service
Organizations from performing these services or from receiving payments for
performing these services. In addition, state securities law on this issue may
differ from the interpretation of federal law expressed herein and banks and
financial institutions may be required to register as dealers pursuant to state
law. If a Service Organization were prohibited from performing these services,
it is expected that all arrangements between the Trust and the Service
Organization would be terminated and that Customers of the Service Organization
who seek to invest in the Trust would have to purchase and redeem shares
directly through the Distributor or Unified.
The Agreements will be governed by a Distribution Plan or a
Shareholder Services Plan (the "Plans"). The Plans require that the Board of
Trustees receive, at least quarterly, written reports of amounts expended under
the Plans and the purpose for which such expenditures were made. A Plan will
continue in effect for so long as its continuance is specifically approved at
least annually by the Board of Trustees, including a majority of the Trustees
who are not interested persons of the Trust and who have no direct or indirect
financial interest in the operation of the Plan. Any material amendment of the
Plans would require the approval of the Trustees in the manner described above.
A Plan may be terminated at any time, without penalty, by vote of a majority of
the Trustees or by a vote of a majority of the outstanding voting shares of the
Trust that have invested pursuant to the Plan. For the fiscal years ended
October 31, 1995, the Income Fund paid $50,114 for Class A shares in
distribution fees. For the fiscal year ended October 31, 1995, the Income
Fund paid $231 for Class B shares in distribution fees. For the fiscal year
ended October 31, 1995, such payments included $50,345 for compensation to
sales personnel. For the fiscal year ended October 31, 1995, the Equity Fund
paid $23,382 for Class A shares and $113 for Class B shares in distribution
fees. For the fiscal year ended October 31, 1995, such payments included
compensation to sales personnel of approximately $23,495.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Information on how to purchase and redeem shares and how such shares
are priced is included in the Prospectus.
Under the 1940 Act, the Funds may suspend the right of 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 the NYSE is restricted, or
during which (as determined by the SEC) an emergency exists as a result of which
disposal or valuation of portfolio securities is not reasonably practicable, or
for such other periods as the SEC may permit.
If the Board of Trustees determines that conditions exist which make
payment of redemption proceeds wholly in cash unwise or undesirable, the Funds
may make payment wholly or partly in securities or other property. If a
redemption is paid wholly or partly in securities or other property, a
shareholder would incur transaction costs in disposing of the redemption
proceeds.
ADDITIONAL INFORMATION CONCERNING EXCHANGE PRIVILEGE
Shares of one Fund may be exchanged for Shares of the other Fund to the
extent such Shares are offered for sale in the shareholder's state of
residence. Shareholders may exchange their Shares on the basis of relative net
asset value at the time of exchange. No exchange fee is charged for this
privilege, provided that the registration remains identical.
The exchange privilege enables shareholders to acquire shares in a Fund
with different investment objectives when they believe that a shift between
Funds is an appropriate investment decision. This privilege is available to all
shareholders resident in any state in which Fund shares being acquired may be
legally sold. Prior to any exchange, the shareholder should obtain and review a
copy of the current Prospectus of the Funds.
Upon receipt of proper instructions and all necessary supporting
documents, shares submitted for exchange are redeemed at the then-current net
asset value; the proceeds are immediately invested, at the price as determined
above, in shares of the Fund being acquired. The Trust reserves the right to
reject any exchange request. The exchange privilege may be modified or
terminated at any time after notice to shareholders.
ADDITIONAL INFORMATION CONCERNING TAXES
Each Fund has qualified, and intends to qualify each year, as a
"regulated investment company" under the Code. Provided that a Fund (a) is a
regulated investment company and (b) distributes to its shareholders at least
90% of the sum of its taxable net investment income and net realized short-term
capital gains, the Fund will not be subject to federal income tax to the extent
its taxable net investment income and its net realized long-term and short-term
capital gains are distributed to its shareholders. Each Fund, if it qualifies
as a regulated investment company, will be subject to a 4% non-deductible excise
tax measured with respect to certain undistributed amounts of ordinary income
and capital gains.
To qualify as a regulated investment company a Fund must, among other
things, derive less than 30% of its gross income in each taxable year from the
sale or other disposition of, among other things, stock or securities held for
less than three months. Legislation currently pending before the United States
Congress would repeal the requirement that a regulated investment company must
derive less than 30% of its gross income from the sale or other disposition of
stock or securities that are held for less than three months. However, it is
impossible to predict whether this legislation will become law and, if it is so
enacted, what form it will eventually take.
A Fund's 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 of gains and losses realized by a Fund (i.e.,
may affect whether gains or losses are ordinary or capital), accelerate
recognition of income to a Fund and defer Fund losses. These rules could
therefore affect the character, amount and timing of distributions to
shareholders. These provisions also (a) will require a Fund to mark-to-market
certain types of the positions in its portfolio (i.e., treat them as if they
were closed out), and (b) may cause a Fund to recognize income without receiving
cash with which to pay dividends or make distributions in amounts necessary to
satisfy the 90% and 98% distribution requirements for avoiding income and excise
taxes, respectively, that are described in the preceding paragraph. Each Fund
will monitor its transactions, will make the appropriate tax elections and will
make the appropriate entries in its books and records when it acquires any
foreign currency, forward contract, option, futures contract or hedged
investment in order to mitigate the effect of these rules and prevent
disqualification of the Fund as a regulated investment company.
Net realized long-term capital gains will be distributed as described
in the Prospectus. Such distributions ("capital gain dividends"), if any, will
be taxable to a shareholder as long-term capital gains, regardless of how long a
shareholder has held shares. If, however, a shareholder receives a capital gain
dividend with respect to any share and if such share is held by the shareholder
for six months or less, then any loss on the sale or redemption of such share
that is less than or equal to the amount of the capital gain dividend will be
treated as a long-term capital loss.
If a shareholder fails to furnish a correct taxpayer identification
number, fails to report fully dividend or interest income or fails to certify
that he or she has provided a correct taxpayer identification number and that he
or she is not subject to backup withholding, then the shareholder may be subject
to a 31% "backup withholding tax" with respect to (a) dividends and
distributions and (b) the proceeds of any redemptions of Fund shares. An
individual's taxpayer identification number is his or her social security
number. The 31% "backup withholding tax" is not an additional tax and may be
credited against a taxpayer's regular federal income tax liability.
The foregoing is only a summary of certain tax considerations generally
affecting the Funds and shareholders, and is not intended as a substitute for
careful tax planning. Shareholders are urged to consult their tax advisers with
specific reference to their own tax situations, including their state and local
tax liabilities.
DETERMINATION OF PERFORMANCE
From time to time, the Trust may quote a Fund's performance in
advertisements or in reports and other communications to shareholders.
Yield
The Income Fund's yield figure is calculated according to a formula
prescribed by the SEC. The formula can be expressed as follows:
6
Yield=2[(a-b + 1) -1]
---
cd
Where:
a = dividends and interest earned during the
period.
b = expenses accrued for the period (net of
reimbursements).
c = the average daily number of shares
outstanding during the period that were
entitled to receive dividends.
d = the maximum offering price per share on
the last day of the period.
For the purpose of determining the interest earned (variable "a" in the
formula) on debt obligations that were purchased by the Income Fund at a
discount or premium, the formula generally calls for amortization of the
discount or premium; the amortization schedule will be adjusted monthly to
reflect changes in the market values of the debt obligations. The 30 day yield
for Shares of the Income Fund for the period ended October 31, 1995 was 4.42%.
Investors should recognize that in periods of declining interest rates,
the Income Fund's yield will tend to be somewhat higher than prevailing market
rates, and in periods of rising interest rates the Fund's yield will tend to be
somewhat lower. In addition, when interest rates are falling, the inflow of net
new money to the Income Fund from the continuous sale of its shares will likely
be invested in portfolio instruments producing lower yields than the balance of
its portfolio of securities, thereby reducing the current yield of the Fund. In
periods of rising interest rates, the opposite can be expected to occur.
Average Annual Total Return
"Average annual total return" figures are computed according to
a formula prescribed by the SEC. The formula can be expressed
as follows:
n
P(1+T) = ERV
Where: P = a hypothetical initial payment of $1,000.
T = average annual total return.
n = number of years.
ERV = Ending Redeemable Value of a
hypothetical $1,000 investment made at
the beginning of a 1-, 5- or 10-year
periods at the end of the 1-, 5- or
10-year period (or fractional portion
thereof), assuming reinvestment of all
dividends and distributions.
The Income Fund's average annual total returns for Shares for the one
year period ended October 31, 1995 and for the period beginning July 1, 1992
through October 31, 1995 were 13.90% and 6.80%, respectively. These
percentages do not include sales charges.* Including sales charges, the Income
Fund's Average Annual Total Returns for the one year period ended October 31,
1995 and for the period beginning July 1, 1992 through October 31, 1995 were
9.35% and 5.50%, respectively.
The Equity Fund's average annual total returns without sales charges*
for Shares for the one year period ended October 31, 1995 and for the period
beginning October 4, 1993 through October 31, 1995 were (10.35)% and (7.73%),
respectively. Including sales charges, the Equity Fund's Average Annual Total
Returns for the one year period ended October 31, 1995 and for the period
beginning October 4, 1993 through October 31, 1995 were (13.94)% and (9.53)%,
respectively.
Average Annual Total Returns for the Income Fund and the Equity Fund
reflect fee waivers. If fees were not waived for the period beginning July 1,
1992 through October 31, 1995 the average annual total returns would have been
lower.
*Front-end sales charges applied to the sale of Class A shares until
September 28, 1995, the effective date of the Board of Trustees vote to
eliminate these charges.
Each Fund's performance will vary from time to time depending upon
market conditions, the composition of the Fund's portfolio and its operating
expenses. As described above, total return is based on historical earnings and
is not intended to indicate future performance. Consequently, any given
performance quotation should not be considered as representative of a Fund's
performance for any specified period in the future. Performance information may
be useful as a basis for comparison with other investment alternatives.
However, a Fund's performance will fluctuate, unlike certain bank deposits or
other investments which pay a fixed yield for a stated period of time.
Aggregate Total Return
"Aggregate total return" figures represent the cumulative change in the
value of an investment for the specified period and are computed by the
following formula:
ERV-P
-----
P
Where: P = a hypothetical initial payment of $10,000.
ERV = Ending Redeemable Value of a hypothetical $10,000
investment made at the beginning of a 1-, 5- or
10-year period at the end of the 1-, 5- or
10-year period (or fractional portion thereof),
assuming reinvestment of all dividends and
distributions.
The Income Fund's aggregate total return without sales charges* for
Shares for the one year period ended October 31, 1995 and for the period
beginning July 1, 1992 through October 31, 1995 was 13.90% and 24.60%,
respectively. Including sales charges, the Income Fund's aggregate total return
for the one year period ended October 31, 1995 and for the period beginning July
1, 1993 through October 31, 1995 were 9.35% and 19.62%, respectively. The
Equity Fund's aggregate total return without sales charges* for Shares for the
one year period ended October 31, 1995 and for the period beginning October 4,
1993 through October 31, 1995 was (10.35)% and (15.38)%, respectively.
Including sales charges, the Equity Fund's aggregate total return for the one
year period ended October 31, 1995 and for the period October 4, 1993 through
October 3, 1995 were (13.94)% and (18.76)%, respectively.
*Front-end sales charges applied to the sale of Class A shares until September
28, 1995, the effective date of the Board of Trustees vote to eliminate these
charges.
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP, independent auditors, 99 High Street, Boston,
Massachusetts 02110, serve as auditors of the Trust. KPMG Peat Marwick LLP
performed an annual audit of the Funds' financial statements.
COUNSEL
Baker & McKenzie serves as counsel for the Trust and from time to time
provides advice to the Advisers.
FINANCIAL STATEMENTS
The Financial Statements contained in the Trust's Annual Report to
Shareholders for the fiscal year ended October 31, 1995 accompany this Statement
of Additional Information ("SAI"). Copies of the Trust's 1995 Annual Report
may be obtained by calling the Trust at the telephone number on the first page
of the SAI.
BJB INVESTMENT FUNDS
BJB GLOBAL INCOME FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1995
(PERCENTAGE OF NET ASSETS)
<TABLE>
<CAPTION>
MARKET
FACE VALUE
CURRENCY VALUE (NOTE 1)
- --------- ------------- -----------
<S> <C> <C> <C>
FOREIGN GOVERNMENT BONDS -- 51.5%
FRANCE -- 11.0%
French Treasury Bill:
FRF 1,658,000 4.750% due 04/12/1999............................................................. $ 323,131
4,000,000 7.000% due 10/12/2000............................................................. 832,387
1,100,000 Government of France (STRIP),
0.000% due 10/25/2019............................................................. 32,427
3,330,000 Government of France (B-TAN),
8.000% due 05/12/1998............................................................. 710,686
-----------
1,898,631
-----------
ITALY -- 9.3%
Government of Italy:
ITL 1,480,000,000 8.500% due 08/01/1999............................................................. 855,421
500,000,000 9.500% due 12/01/1999............................................................. 297,252
USD 500,000 Republic of Italy (Global),
6.875% due 09/27/2023............................................................. 460,000
-----------
1,612,673
-----------
GERMANY -- 7.3%
Deutschland BundesRepublic:
DEM 566,000 7.375% due 01/03/2005............................................................. 425,996
497,000 6.000% due 06/20/2016............................................................. 309,368
849,000 6.250% due 01/04/2024............................................................. 532,998
-----------
1,268,362
-----------
NETHERLANDS -- 6.4%
Government of Netherlands:
NLG 400,000 7.750% due 03/01/2005............................................................. 275,639
1,277,000 7.000% due 06/15/2005............................................................. 837,374
-----------
1,113,013
-----------
</TABLE>
See Notes to Financial Statements.
BJB INVESTMENT FUNDS
BJB GLOBAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
OCTOBER 31, 1995
(PERCENTAGE OF NET ASSETS)
<TABLE>
<CAPTION>
MARKET
FACE VALUE
CURRENCY VALUE (NOTE 1)
- --------- ------------- -----------
FOREIGN GOVERNMENT BONDS -- CONTINUED
<S> <C> <C> <C>
UNITED KINGDOM -- 8.1%
United Kingdom Gilts:
GBP 364,000 9.500% due 10/25/2004 (Conversion)................................................ $ 632,533
270,000 6.750% due 11/26/2004 (Treasury).................................................. 393,012
216,000 9.500% due 04/18/2005 (Conversion)................................................ 375,242
-----------
1,400,787
-----------
DENMARK -- 3.9%
DKK 3,900,000 Kingdom of Denmark,
7.000% due 12/15/2004............................................................. 676,010
-----------
SPAIN -- 3.5%
ESP 69,500,000 Government of Spain,
12.250% due 03/25/2000............................................................ 601,948
-----------
AUSTRALIA -- 2.0%
AUD 500,000 Government of Australia,
7.5% due 07/15/2005............................................................... 350,783
-----------
TOTAL FOREIGN GOVERNMENT BONDS (COST $8,650,208).................................. 8,922,207
-----------
FOREIGN CORPORATE BONDS -- 6.4%
FRANCE -- 4.4%
CAD 1,000,000 Banque National de Paris,
8.750% due 07/29/2002............................................................. 763,068
-----------
MULTINATIONAL -- 2.0%
USD 300,000 International Bank for Reconstruction & Development,
9.000% due 06/29/2004............................................................. 349,125
-----------
TOTAL FOREIGN CORPORATE BONDS (COST $1,093,121)................................... 1,112,193
-----------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 11.3%
Federal National Mortgage Association:
USD 1,000,000 5.300% due 12/10/1998............................................................. 982,500
USD 1,000,000 6.250% due 08/12/2003............................................................. 981,250
-----------
TOTAL U.S. GOVERNMENT AGENCY OBLIGATIONS (COST $1,817,308)........................ 1,963,750
-----------
</TABLE>
See Notes to Financial Statements.
BJB INVESTMENT FUNDS
BJB GLOBAL INCOME FUND
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
OCTOBER 31, 1995
(PERCENTAGE OF NET ASSETS)
<TABLE>
<CAPTION>
MARKET
FACE VALUE
CURRENCY VALUE (NOTE 1)
- --------- ------------- -----------
U.S. TREASURY OBLIGATIONS -- 21.1%
<S> <C> <C> <C>
USD 625,000 U.S. Treasury Bond,
7.625% due 02/15/2025............................................................. $ 725,644
U.S. Treasury Notes:
USD 800,000 5.875% due 07/31/1997............................................................. 803,072
USD 500,000 7.125% due 02/29/2000............................................................. 524,765
USD 500,000 5.500% due 04/15/2000............................................................. 495,030
USD 1,100,000 5.875% due 06/30/2000............................................................. 1,103,267
-----------
TOTAL U.S. TREASURY OBLIGATIONS (COST $3,553,205)................................. 3,651,778
-----------
U.S. CORPORATE BONDS -- 7.7%
USD 350,000 Ford Motor Credit Co.,
6.250% due 11/08/2000............................................................. 348,907
USD 250,000 Prudential Plc,
7.125% due 08/16/2005............................................................. 256,563
USD 700,000 SmithKline Beecham--Euro Medium Term Note,
7.375% due 11/10/1997............................................................. 717,500
-----------
TOTAL U.S. CORPORATE BONDS (COST $1,320,680)...................................... 1,322,970
-----------
TOTAL INVESTMENTS -- 98.0% (COST $16,434,522)*.............................................................. 16,972,898
OTHER ASSETS AND LIABILITIES (NET) -- 2.0%.................................................................. 353,739
-----------
NET ASSETS -- 100.0%........................................................................................ $17,326,637
-----------
-----------
</TABLE>
- ------------------
* Aggregate cost for federal tax purposes is $16,470,479.
GLOSSARY OF CURRENCIES
AUD -- Australian Dollar FRF --
CAD -- Canadian Dollar GBP --
DEM -- German Deutsche Mark ITL --
DKK -- Danish Krone NLG --
ESP -- Spanish Peseta USD --
French Franc
Great Britain Pound Sterling
Italian Lira
Netherland Guilder
United States Dollar
See Notes to Financial Statements.
BJB INVESTMENT FUNDS
BJB GLOBAL INCOME FUND
SCHEDULE OF FORWARD FOREIGN EXCHANGE CONTRACTS
OCTOBER 31, 1995
FORWARD FOREIGN EXCHANGE CONTRACTS TO SELL
<TABLE>
<CAPTION>
CONTRACTS TO DELIVER
--------------------
EXPIRATION LOCAL VALUE IN IN EXCHANGE NET UNREALIZED
DATE CURRENCY USD FOR USD DEPRECIATION
- ---------- -------------------- -------- ----------- --------------
<S> <C> <C> <C> <C>
11/13/95 DKK 2,879,000 526,587 521,700 $ (4,887)
11/16/95 DEM 800,000 568,279 562,984 (5,295)
11/17/95 DEM 600,000 426,231 423,131 (3,100)
11/20/95 DEM 610,000 433,401 432,318 (1,083)
11/20/95 NLG 775,000 491,181 487,437 (3,744)
11/20/95 NLG 610,000 386,606 385,673 (933)
01/12/96 FRF 4,028,836 823,771 805,252 (18,519)
--------------
Net Unrealized Depreciation of Forward Foreign
Exchange Contracts............................................. $(37,561)
--------------
--------------
</TABLE>
See Notes to Financial Statements.
BJB INVESTMENT FUNDS
BJB INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1995
(PERCENTAGE OF NET ASSETS)
<TABLE>
<CAPTION>
MARKET
SHARE VALUE
DESCRIPTION AMOUNT (NOTE 1)
- --------------------------------------------------------------------------------------- --------- ----------
<S> <C> <C>
COMMON STOCKS -- 89.1%
AUSTRALIA-2.5%
Australia & New Zealand Bank Group..................................................... 23,000 $ 96,412
Lend Lease............................................................................. 45 626
The News Corporation Ltd............................................................... 19,064 96,186
Western Manufacturing Corp Holding Ltd*................................................ 7,500 48,130
----------
241,354
----------
AUSTRIA-1.4%
Flughafen Wien AG...................................................................... 1,200 77,025
Mayr-Melnhof*.......................................................................... 1,000 58,334
----------
135,359
----------
BELGIUM-2.3%
Electrabel............................................................................. 350 78,530
Petrofina SA........................................................................... 200 62,824
Solvay Et Cie, Class A................................................................. 150 75,854
----------
217,208
----------
BRAZIL-2.2%
Cia Cervejaria Brahma.................................................................. 250,000 91,751
Telecomunicacoes Brasileiras........................................................... 3,000 120,563
----------
212,314
----------
CANADA-1.5%
Barrick Gold Corp...................................................................... 3,000 69,375
Seagrams Co. Ltd....................................................................... 2,200 79,475
----------
148,850
----------
DENMARK-0.8%
Tele Danmark, Class B.................................................................. 1,500 78,182
----------
FINLAND-3.8%
Nokia (ORD)............................................................................ 3,000 171,634
Repola................................................................................. 6,000 116,118
Valmet, Class A........................................................................ 3,000 83,345
----------
371,097
----------
</TABLE>
See Notes to Financial Statements.
BJB INVESTMENT FUNDS
BJB INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
OCTOBER 31, 1995
(PERCENTAGE OF NET ASSETS)
<TABLE>
<CAPTION>
MARKET
SHARE VALUE
DESCRIPTION AMOUNT (NOTE 1)
- --------------------------------------------------------------------------------------- --------- ----------
COMMON STOCKS -- CONTINUED
<S> <C> <C>
FRANCE-5.4%
Alcatel Alsthom........................................................................ 700 $ 59,843
Compagnie Financiere de Paribas........................................................ 82 4,516
Comptoirs Modernes..................................................................... 250 80,352
Credit Local de France................................................................. 900 71,322
Imetal................................................................................. 700 82,543
Lafarge Coppee......................................................................... 990 65,686
Michelin, Class B (REGD)............................................................... 2,000 80,864
SGS-Thomson Microelectronics*.......................................................... 1,600 73,863
----------
518,989
----------
GERMANY-7.0%
Allianz AG Holdings.................................................................... 3 5,547
Altana Ind-Aktien...................................................................... 100 58,095
BASF AG................................................................................ 200 43,864
BMW AG................................................................................. 100 53,588
Commerzbank AG......................................................................... 350 80,935
Kaufhof AG............................................................................. 150 51,317
Merck KGAA*............................................................................ 4,000 166,939
Sap.................................................................................... 500 79,211
Siemens AG............................................................................. 100 52,381
Veba AG................................................................................ 2,000 82,036
----------
673,913
----------
HONG KONG-2.6%
First Pacific Co....................................................................... 50,000 57,555
Henderson Investment Ltd............................................................... 115,000 93,704
Swire Pacific Ltd, Class A............................................................. 13,000 97,519
----------
248,778
----------
INDIA-0.9%
Morgan Stanley India Fund.............................................................. 9,400 82,250
----------
IRELAND-1.7%
Bank of Ireland........................................................................ 14,347 95,277
Smurfit (Jefferson).................................................................... 24,000 66,444
----------
161,721
----------
</TABLE>
See Notes to Financial Statements.
BJB INVESTMENT FUNDS
BJB INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
OCTOBER 31, 1995
(PERCENTAGE OF NET ASSETS)
<TABLE>
<CAPTION>
MARKET
SHARE VALUE
DESCRIPTION AMOUNT (NOTE 1)
- --------------------------------------------------------------------------------------- --------- ----------
COMMON STOCKS -- CONTINUED
<S> <C> <C>
ITALY-2.7%
Benetton............................................................................... 6,000 $ 62,150
Fiat SPA............................................................................... 25,000 81,488
Telecom Italia Mobile*................................................................. 35,000 58,932
Telicom Italia SPA (ORD)............................................................... 35,000 53,679
----------
256,249
----------
JAPAN-18.9%
Canon Inc.............................................................................. 6,000 102,684
Fanuc Company.......................................................................... 4,000 173,292
Hitachi Ltd............................................................................ 10,000 102,684
Honda Motor Co Ltd..................................................................... 6,000 104,445
Jusco Co............................................................................... 5,000 117,354
Komatsu Ltd............................................................................ 22,000 172,119
Kurita Water Industries................................................................ 4,000 111,486
Nintendo Corp.......................................................................... 1,500 110,312
Nippon Telegraph & Telephone Corp...................................................... 14 114,870
Nissan Motors.......................................................................... 25,000 168,696
Rohm Corp.............................................................................. 2,000 120,874
Sankyo Co Ltd.......................................................................... 5,000 110,019
Toshiba Corporation.................................................................... 42,000 304,357
----------
1,813,192
----------
MEXICO-0.5%
Grupo Posadas SA, Class L*............................................................. 180,000 52,800
----------
NETHERLANDS-4.2%
Baan Company NV*....................................................................... 1,200 51,279
Heineken NV............................................................................ 600 106,356
International Nederlanden Group........................................................ 1,500 89,358
KLM Royal Dutch*....................................................................... 2,560 84,437
Philips Gloeilampen Gem Bezit.......................................................... 2,000 77,235
----------
408,665
----------
</TABLE>
See Notes to Financial Statements.
BJB INVESTMENT FUNDS
BJB INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
OCTOBER 31, 1995
(PERCENTAGE OF NET ASSETS)
<TABLE>
<CAPTION>
MARKET
SHARE VALUE
DESCRIPTION AMOUNT (NOTE 1)
- --------------------------------------------------------------------------------------- --------- ----------
COMMON STOCKS -- CONTINUED
<S> <C> <C>
NEW ZEALAND-1.8%
Carter Holt Harvey Ltd................................................................. 24,000 $ 57,349
Lion Nathan............................................................................ 27,000 61,310
Telecom New Zealand.................................................................... 14,000 58,128
----------
176,787
----------
NORWAY-1.7%
Christiania Bank Og Kreditk............................................................ 40,000 93,008
Norsk Hydro............................................................................ 1,800 71,584
----------
164,592
----------
PHILIPPINES-0.5%
San Miguel Corporation, Class B (ORD).................................................. 15,000 49,596
----------
PORTUGAL-0.8%
Banco Commercial Portuguese (REGD)..................................................... 6,000 81,381
----------
SINGAPORE-0.6%
First Capital Corporation.............................................................. 20,000 54,069
----------
SOUTH KOREA-2.7%
Korea Electric Power--ADR.............................................................. 5,000 122,500
Korea Fund............................................................................. 6,250 135,156
----------
257,656
----------
SPAIN-3.5%
Banco Popular Espanola................................................................. 500 79,379
Empresa Nacional de Electricidad....................................................... 1,500 74,549
Repsol SA.............................................................................. 2,000 59,688
Telefonica de Espana (ORD)............................................................. 10,000 126,090
----------
339,706
----------
SWEDEN-2.9%
Asea, Class A.......................................................................... 700 70,063
Astra AB, Class A...................................................................... 2,000 73,449
Ericsson Ab B.......................................................................... 3,600 76,399
Ericsson Lm-B New*..................................................................... 360 7,640
SKF AB B............................................................................... 3,000 56,893
----------
284,444
----------
</TABLE>
See Notes to Financial Statements.
BJB INVESTMENT FUNDS
BJB INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
OCTOBER 31, 1995
(PERCENTAGE OF NET ASSETS)
<TABLE>
<CAPTION>
MARKET
SHARE VALUE
DESCRIPTION AMOUNT (NOTE 1)
- --------------------------------------------------------------------------------------- --------- ----------
COMMON STOCKS -- CONTINUED
<S> <C> <C>
SWITZERLAND-5.9%
Holderbank Financiere Glarus, Class B*................................................. 100 $ 80,243
Nestle SA (REGD)....................................................................... 190 198,935
Roche Holdings AG...................................................................... 10 127,579
Winterthur (REGD)...................................................................... 250 164,313
----------
571,070
----------
THAILAND-2.2%
Krung Thai Bank Ltd (Foreign).......................................................... 30,000 119,213
National Finance & Securities.......................................................... 20,000 92,589
----------
211,802
----------
UNITED KINGDOM-8.1%
3I Group Plc (ORD)..................................................................... 10,000 64,667
British Aerospace Plc (ORD)............................................................ 7,000 78,470
British Airways Plc (ORD).............................................................. 10,000 71,940
British Petroleum Co Plc (ORD)......................................................... 10,081 74,196
British Sky Broadcasting Plc (ORD)..................................................... 15,000 89,648
Granada Group Plc (ORD)................................................................ 7,000 74,762
Lloyds Bank Plc (ORD).................................................................. 8,098 99,677
Siebe Plc (ORD)........................................................................ 7,083 84,272
Telewest Communications Plc (ORD)*..................................................... 25,000 69,964
Tesco Plc (ORD)........................................................................ 15,000 71,150
----------
778,746
----------
TOTAL COMMON STOCKS (COST $8,412,636).................................................. 8,590,770
----------
</TABLE>
See Notes to Financial Statements.
BJB INVESTMENT FUNDS
BJB INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
OCTOBER 31, 1995
(PERCENTAGE OF NET ASSETS)
<TABLE>
<CAPTION>
MARKET
PAR/SHARE VALUE
DESCRIPTION AMOUNT (NOTE 1)
- --------------------------------------------------------------------------------------- --------- ----------
<S> <C> <C>
WARRANTS -- 0.1%
HONG KONG
Henderson Investment Ltd, expires 3/31/96*............................................. 37,000 $ 211
----------
SWITZERLAND
Holderbank Financiere Glarus, expires 12/20/95*........................................ 500 572
----------
THAILAND
National Finance & Securities, expires 11/15/99*....................................... 20,000 11,921
----------
TOTAL WARRANTS (COST $0)............................................................... 12,704
----------
CORPORATE CONVERTIBLE BOND--0.2%
SWITZERLAND
Winterthur -- (Virgin Island)......................................2.50% 12/31/98 CHF 15,360 15,981
----------
TOTAL CORPORATE CONVERTIBLE BOND (COST $13,199)........................................ 15,981
----------
TOTAL INVESTMENTS -- 89.4% (COST $8,425,835)**......................................... 8,619,455
OTHER ASSETS AND LIABILITIES (NET) -- 10.6%............................................ 1,023,859
----------
NET ASSETS -- 100%..................................................................... $9,643,314
----------
----------
</TABLE>
- ------------------
PORTFOLIO FOOTNOTES:
ADR American Depository Receipt
ORD Ordinary Shares
REGD Registered Shares
* Non-income producing security.
** Aggregate cost for Federal income tax purposes was $8,428,047.
GLOSSARY OF CURRENCIES
JPY -- Japanese Yen
CHF -- Swiss Franc
USD -- United States Dollar
See Notes to Financial Statements.
BJB INVESTMENT FUNDS
BJB INTERNATIONAL EQUITY FUND
PORTFOLIO OF INVESTMENTS--INDUSTRY SECTOR (UNAUDITED)
OCTOBER 31, 1995
(PERCENTAGE OF NET ASSETS)
At October 31, 1995, sector diversification of the Portfolio was as follows:
<TABLE>
<CAPTION>
MARKET
% OF NET VALUE
ASSETS (NOTE 1)
-------- ----------
<S> <C> <C>
INDUSTRY SECTOR:
Electronics................................................................................... 10.8% $1,043,740
Communications................................................................................ 9.8 947,547
Banking....................................................................................... 9.5 910,478
Transportation................................................................................ 7.2 696,508
Food and Beverage............................................................................. 6.2 597,263
Utilities..................................................................................... 5.9 568,684
Health........................................................................................ 5.8 560,444
Construction.................................................................................. 5.6 542,784
Finance....................................................................................... 5.0 484,939
Retail Trade.................................................................................. 5.0 479,639
Paper and Forest Products..................................................................... 3.4 324,241
Equipment..................................................................................... 3.3 319,718
Metals and Mining............................................................................. 3.2 308,282
Other......................................................................................... 2.3 221,798
Insurance..................................................................................... 1.9 185,841
Chemicals..................................................................................... 1.7 166,939
Diversified................................................................................... 1.2 111,624
Publishing.................................................................................... 1.0 96,186
Lodging....................................................................................... 0.6 52,800
-------- ----------
TOTAL INVESTMENTS............................................................................... 89.4 8,619,455
OTHER ASSETS AND LIABILITIES (NET).............................................................. 10.6 1,023,859
-------- ----------
NET ASSETS...................................................................................... 100% $9,643,314
-------- ----------
-------- ----------
</TABLE>
See Notes to Financial Statements.
BJB INVESTMENT FUNDS
BJB INTERNATIONAL EQUITY FUND
SCHEDULE OF FORWARD FOREIGN EXCHANGE CONTRACTS
OCTOBER 31, 1995
FORWARD FOREIGN EXCHANGE CONTRACTS TO BUY
<TABLE>
<CAPTION>
CONTRACTS TO RECEIVE
---------------------
EXPIRATION LOCAL VALUE IN IN EXCHANGE NET UNREALIZED
DATE CURRENCY USD FOR USD (DEPRECIATION)
- ---------- --------------------- --------- ----------- --------------
<S> <C> <C> <C> <C>
11/02/95 JPY 74,209,223 725,960 726,473 $ (513)
--------------
</TABLE>
FORWARD FOREIGN EXCHANGE CONTRACTS TO SELL
<TABLE>
<CAPTION>
CONTRACTS TO DELIVER
---------------------
EXPIRATION LOCAL VALUE IN IN EXCHANGE NET UNREALIZED
DATE CURRENCY USD FOR USD APPRECIATION
- ---------- --------------------- --------- ----------- --------------
<S> <C> <C> <C> <C>
11/02/95 JPY 74,209,223 725,960 749,894 $ 23,934
--------------
Net Unrealized Appreciation of Forward Foreign Exchange Contracts................ $ 23,421
--------------
--------------
</TABLE>
See Notes to Financial Statements.
BJB INVESTMENT FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
OCTOBER 31, 1995
<TABLE>
<CAPTION>
BJB BJB
GLOBAL INCOME INTERNATIONAL EQUITY
FUND FUND
------------- --------------------
<S> <C> <C>
ASSETS:
Investments in securities, at value (Cost $16,434,522 and $8,425,835,
respectively).................................................................... $16,972,898 $ 8,619,455
Cash and foreign currency, at value (Cost $743,539 and $1,098,182, respectively).... 743,539 1,099,321
Receivables:
Investments sold................................................................. 411,336 --
Interest and dividends........................................................... 433,186 11,885
Tax reclaim...................................................................... -- 17,003
Net unrealized appreciation of forward foreign exchange contracts................ -- 23,421
Miscellaneous.................................................................... -- 20,704
Other Assets:
Unamortized organization costs (Note 6).......................................... 37,676 15,289
Prepaid expense.................................................................. 11,830 5,224
------------- --------------------
Total Assets..................................................................... 18,610,465 9,812,302
------------- --------------------
LIABILITIES:
Payables:
Investments purchased............................................................ 1,097,275 94,425
Investment advisory fee payable (Note 2)......................................... 28,529 11,909
Custody and administration fee payable........................................... 58,873 35,422
Distribution and shareholder servicing fees payable (Note 3)..................... 11,356 5,556
Net unrealized depreciation of forward foreign exchange contracts................ 37,561 --
Accrued expenses and other payables.............................................. 50,234 21,676
------------- --------------------
Total Liabilities................................................................ 1,283,828 168,988
------------- --------------------
NET ASSETS............................................................................ $17,326,637 $ 9,643,314
------------- --------------------
------------- --------------------
NET ASSETS CONSIST OF:
Undistributed net investment income.............................................. $ 672,807 $ (48,428)
Accumulated net realized loss on investments sold, forward foreign exchange
contracts and foreign currency transactions..................................... (1,506,423) (4,735,181)
Net unrealized appreciation on investments, forward foreign exchange contracts,
foreign currency transactions and net other assets.............................. 508,223 218,298
Par value........................................................................ 1,431 952
Paid in capital in excess of par value........................................... 17,650,599 14,207,673
------------- --------------------
NET ASSETS............................................................................ $17,326,637 $ 9,643,314
------------- --------------------
------------- --------------------
SHARES OUTSTANDING.................................................................... 1,430,581 952,390
------------- --------------------
------------- --------------------
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE........................................ $ 12.11 $ 10.13
------------- --------------------
------------- --------------------
</TABLE>
See Notes to Financial Statements.
BJB INVESTMENT FUNDS
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1995
<TABLE>
<CAPTION>
BJB BJB
GLOBAL INCOME INTERNATIONAL EQUITY
FUND FUND
------------- --------------------
<S> <C> <C>
INVESTMENT INCOME (LOSS):
Interest............................................................................ $ 1,452,007 $ 12,264
Dividends+.......................................................................... -- 179,223
------------- --------------------
1,452,007 191,487
EXPENSES:
Investment advisory fee (Note 2).................................................... 130,501 93,521
Custody and administration fees..................................................... 105,564 81,483
Distribution and shareholder servicing fees (Note 3)
Class A.......................................................................... 50,114 23,382
Class B.......................................................................... 231 113
Transfer agent fees................................................................. 31,439 35,345
Shareholder reports................................................................. 29,148 18,760
Auditing fees....................................................................... 21,400 14,500
Legal fees.......................................................................... 18,120 12,189
Amortization of organization costs (Note 6)......................................... 22,697 5,552
Insurance premium expense........................................................... 17,393 7,875
Trustees' fees and expenses (Note 2)................................................ 4,256 7,044
Registration and filing fees........................................................ 732 14,952
Reimbursement from investment advisor (Note 2)...................................... -- (48,264)
------------- --------------------
Total Gross Expenses............................................................. 431,595 266,452
Less: Fees paid indirectly (Note 2).............................................. (20,723) (16,447)
------------- --------------------
Net Expenses..................................................................... 410,872 250,005
------------- --------------------
NET INVESTMENT INCOME (LOSS).......................................................... 1,041,135 (58,518)
------------- --------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTES 1 AND 4):
Realized gain (loss) on:
Security transactions++.......................................................... 906,994 (1,850,818)
Forward foreign exchange contracts............................................... 224,831 (273,608)
Foreign currency transactions.................................................... (201,403) 55,172
------------- --------------------
Net realized gain (loss) on investments........................................ 930,422 (2,069,254)
------------- --------------------
Net change in unrealized appreciation (depreciation) of:
Securities....................................................................... 492,835 339,469
Forward foreign exchange contracts............................................... (37,516) 170,466
Currencies and net other assets.................................................. (15,816) (30,492)
------------- --------------------
Net change in unrealized appreciation (depreciation) of investments............ 439,503 479,443
------------- --------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS................................ 1,369,925 (1,589,811)
------------- --------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS....................... $ 2,411,060 $ (1,648,329)
------------- --------------------
------------- --------------------
</TABLE>
- ------------------
+ Net of foreign withholding tax of $26,756 for the Equity Fund.
++ Net of foreign capital gains withholding tax of $18,317 for the Equity Fund.
See Notes to Financial Statements.
BJB INVESTMENT FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED OCTOBER 31, 1995
<TABLE>
<CAPTION>
BJB BJB
GLOBAL INCOME INTERNATIONAL EQUITY
FUND FUND
------------- --------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income (loss).......................................................... $ 1,041,135 $ (58,518)
Net realized gain (loss) on securities, forward foreign exchange contracts and foreign
currency transactions............................................................... 930,422 (2,069,254)
Net change in unrealized appreciation of securities, forward foreign exchange
contracts, foreign currency and net other assets.................................... 439,503 479,443
------------- -----------
Net increase (decrease) in net assets resulting from operations....................... 2,411,060 (1,648,329)
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income:
Class A shares................................................................... (950,161) --
Class B shares................................................................... (903) --
FUND SHARE TRANSACTIONS:
Net increase (decrease) from Fund share transactions (Note 5):
Class A shares................................................................... (12,750,548) (3,540,598)
Class B shares................................................................... (26,996) (13,361)
------------- -----------
Net decrease in net assets.......................................................... (11,317,548) (5,202,288)
NET ASSETS:
Beginning of period................................................................... 28,644,185 14,845,602
------------- -----------
End of period (including undistributed net investment income/(distributions in excess
of net investment income) of $672,807 and $(48,428), respectively).................. $17,326,637 $9,643,314
------------- -----------
------------- -----------
</TABLE>
See Notes to Financial Statements.
BJB INVESTMENT FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED OCTOBER 31, 1994
<TABLE>
<CAPTION>
BJB BJB
GLOBAL INCOME INTERNATIONAL EQUITY
FUND FUND
------------- --------------------
<S> <C> <C>
DECREASE IN NET ASSETS FROM OPERATIONS:
Net investment income (loss).......................................................... $ 1,667,845 $ (279,543)
Net realized loss on securities, forward foreign exchange contracts and foreign
currency transactions............................................................... (4,194,338) (3,653,744)
Net unrealized appreciation (depreciation) of securities, forward foreign exchange
contracts, foreign currency and net other assets.................................... 5,766 (1,125,235)
------------- --------------------
Net decrease in net assets resulting from operations.................................. (2,520,727) (5,058,522)
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income:
Class A shares................................................................... (929,096) --
Class B shares................................................................... (160) --
Excess of net investment income:
Class A shares................................................................... -- (39,853)
Class B shares................................................................... -- (35)
Capital (Note 1):
Class A shares................................................................... (2,195,555) (44)
Class B shares................................................................... (377) --
FUND SHARE TRANSACTIONS:
Net increase (decrease) from Fund share transactions (Note 5):
Class A shares................................................................... (23,416,935) 8,636,152
Class B shares................................................................... 25,426 15,685
------------- --------------------
Net increase (decrease) in net assets............................................... (29,037,424) 3,553,383
NET ASSETS:
Beginning of year..................................................................... 57,681,609 11,292,219
------------- --------------------
End of year (including (distributions in excess of net investment
income)/undistributed net investment income of ($1,697) and $146,420,
respectively)....................................................................... $28,644,185 $ 14,845,602
------------- --------------------
------------- --------------------
</TABLE>
See Notes to Financial Statements.
BJB INVESTMENT FUNDS
BJB GLOBAL INCOME FUND
FINANCIAL HIGHLIGHTS
FOR A CLASS A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
YEAR YEAR YEAR PERIOD
ENDED ENDED ENDED ENDED
10/31/95# 10/31/94# 10/31/93 10/31/92*
--------- --------- -------- ---------
<S> <C> <C> <C> <C>
Net Asset Value, beginning of period......................................... $ 11.16 $ 12.28 $ 12.36 $ 12.00
--------- --------- -------- ---------
Income (Loss) from investment operations:
Net investment income++.................................................... 0.59 0.39 0.37 0.16
Net realized and unrealized gain (loss) on securities...................... 0.92 (0.81) 0.58 0.42
--------- --------- -------- ---------
Total income (loss) from investment operations.......................... 1.51 (0.42) 0.95 0.58
Less Distributions:
Dividends from net investment income......................................... (0.56) (0.27) (0.37) (0.16)
Distributions from net realized capital gains................................ -- -- (0.66) --
Distributions from Capital (Note 1).......................................... -- (0.43) -- (0.06)
--------- --------- -------- ---------
Total distributions..................................................... (0.56) (0.70) (1.03) (0.22)
--------- --------- -------- ---------
Net Asset Value, end of period............................................... $ 12.11 $ 11.16 $ 12.28 $ 12.36
--------- --------- -------- ---------
--------- --------- -------- ---------
Total Return ***............................................................. 13.90% (3.54)% 8.15% 4.86%
--------- --------- -------- ---------
--------- --------- -------- ---------
Ratios/Supplemental Data:
Net assets, end of period (in 000's)......................................... $17,327 $28,619 $ 57,682 $28,647
Ratio of net investment income to average net assets......................... 5.19% 3.29% 2.24% 3.95%+
Ratio of total expenses to average net assets**.............................. 2.15%## 1.66% 1.78% 1.00%+
Portfolio turnover rate...................................................... 319% 320% 291% 43%
</TABLE>
- ------------------------------
<TABLE>
<S> <C>
* The BJB Global Income Fund commenced operations on July 1, 1992. On November 30, 1993, the Fund commenced selling
Class B shares. Those shares in existence prior to November 30, 1993 were designated as Class A shares.
** Annualized operating expenses before waiver of fees by the investment adviser, sub-investment adviser or
administrator was 1.75% for the period ended October 31, 1992.
*** Total return represents aggregate total return for the periods indicated and does not reflect any applicable sales
charge.
+ Annualized.
++ Net investment income before waiver of fees by the investment adviser, sub-investment adviser or administrator was
$0.13 for the period ended October 31, 1992.
# Per share amounts have been calculated using the monthly average share method, which more appropriately presents the
per share data for the period since the use of the undistributed method does not accord with results of operations.
## 'Ratio of total expenses to average net assets' for the year ended October 31, 1995 includes indirectly paid
expenses. Excluding indirectly paid expenses the expense ratio would have been 2.05% for the year ended October 31,
1995.
</TABLE>
See Notes to Financial Statements.
BJB INVESTMENT FUNDS
BJB GLOBAL INCOME FUND
FINANCIAL HIGHLIGHTS
FOR A CLASS B SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
PERIOD PERIOD
ENDED ENDED
9/19/95** 10/31/94*
--------- ---------
<S> <C> <C>
Net Asset Value, beginning of period..................................................... $ 11.16 $ 12.18
--------- ---------
Income (Loss) from investment operations:
Net Investment income#................................................................. 0.33 0.29
Net realized and unrealized gain (loss) on securities.................................. 0.92 (0.73)
--------- ---------
Total income (loss) from investment operations.................................... 1.25 (0.44)
--------- ---------
Less Distributions:
Dividends from net investment income..................................................... (0.40) (0.23)
Distributions from Capital (Note 1) -- (0.35)
--------- ---------
Total distributions............................................................... (0.40) (0.58)
--------- ---------
Net Asset Value, end of period........................................................... $ 12.01 $ 11.16
--------- ---------
--------- ---------
Total Return***.......................................................................... 11.39% (3.72)%
--------- ---------
--------- ---------
Ratios/Supplemental Data:
Net assets, end of period (in 000's)..................................................... $ 0 $ 25
Ratio of net investment income to average net assets+.................................... 2.56% 2.56%
Ratio of total expenses to average net assets+........................................... 2.37%## 2.38%
Portfolio turnover rate.................................................................. 319% 320%
</TABLE>
- ------------------
<TABLE>
<S> <C>
* The BJB Global Income Fund commenced selling Class B shares on November 30, 1993.
** Class B shares were completely redeemed as of September 19, 1995. The net asset value of $12.01 represents the final
stated number at which shares were redeemed on that date.
*** Total return represents aggregate total return for the periods indicated and does not reflect any applicable sales
charge.
+ Annualized.
# Per share amounts have been calculated using the monthly average share method, which more appropriately presents the
per share data for the period since the use of the undistributed income method does not accord with results of
operations.
## 'Ratio of total expenses to average net assets' for the period ended September 19, 1995 includes indirectly paid
expenses. Excluding indirectly paid expenses the expense ratio would have been 2.28% for the period ended September
19, 1995.
</TABLE>
See Notes to Financial Statements.
BJB INVESTMENT FUNDS
BJB INTERNATIONAL EQUITY FUND
FINANCIAL HIGHLIGHTS
FOR A CLASS A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
YEAR YEAR PERIOD
ENDED ENDED ENDED
10/31/95# 10/31/94 10/31/93*
--------- -------- ---------
<S> <C> <C> <C>
Net Asset Value, beginning of period................................................ $ 11.30 $ 13.10 $ 12.00
--------- -------- ---------
Income from investment operations:
Net investment loss............................................................... (0.06)++ (0.21) (0.02)
Net realized and unrealized gain (loss) on securities............................. (1.11) (1.56) 1.12
--------- -------- ---------
Total income (loss) from investment operations................................. (1.17) (1.77) 1.10
--------- -------- ---------
Less distributions:
In excess of net investment income.................................................. -- (0.03) --
--------- -------- ---------
Net Asset Value, end of period...................................................... $ 10.13 $ 11.30 $ 13.10
--------- -------- ---------
--------- -------- ---------
Total Return**...................................................................... (10.35)% (13.53)% 9.17%
--------- -------- ---------
--------- -------- ---------
Ratios/Supplemental Data:
Net assets, end of period (in 000's)................................................ $ 9,643 $ 14,831 $11,292
Ratio of net investment loss to average net assets.................................. (0.63)% (1.26)% (3.83)%+
Ratio of total expenses to average net assets....................................... 2.84%(b)(c) 2.16% 2.09%+
Portfolio turnover rate............................................................. 116% 169% 20%
</TABLE>
- ------------------
<TABLE>
<S> <C>
* The BJB International Equity Fund commenced operations on October 4, 1993. On November 30, 1993, the Fund commenced
selling Class B shares. Those shares in existence prior to November 30, 1993 were designated as Class A shares.
** Total return represents aggregate total return for the periods indicated and does not reflect any applicable sales
charge.
+ Annualized
++ Net investment loss before waiver of fees by the investment adviser and/or administrator was ($0.11) for the year
ended October 31, 1995.
# Per share amounts have been calculated using the monthly average share method, which more appropriately presents the
per share data for the period since the use of the undistributed method does not accord with results of operations.
(b) Figures are net of the expense reimbursement by the Adviser in connection with the voluntary and involuntary expense
limitation. Before the expense reimbursement the 'Ratio of total expenses to average net assets' would have been
3.36% for the year ended October 31, 1995.
(c) 'Ratio of total expenses to average net assets' for the year ended October 31, 1995 includes indirectly paid
expenses. Excluding indirectly paid expenses the expense ratio would have been 2.67% for the year ended October 31,
1995.
</TABLE>
See Notes to Financial Statements.
BJB INVESTMENT FUNDS
BJB INTERNATIONAL EQUITY FUND
FINANCIAL HIGHLIGHTS
FOR A CLASS B SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
PERIOD PERIOD
ENDED ENDED
9/19/95**# 10/31/94*
---------- ---------
<S> <C> <C>
Net Asset Value, beginning of period......................................................... $11.30 $ 13.01
---------- ---------
Income from investment operations:
Net investment loss........................................................................ (0.03)++ (0.13)
Net realized and unrealized gain (loss) on securities...................................... (1.02) (1.55)
---------- ---------
Total loss from investment operations................................................... (1.05) (1.68)
---------- ---------
Less Distributions:
In excess of net investment income........................................................... -- (0.03)
---------- ---------
Net Asset Value, end of period............................................................... $10.25 $ 11.30
---------- ---------
---------- ---------
Total Return***.............................................................................. (9.29)% (12.93)%
---------- ---------
---------- ---------
Ratios/Supplemental Data:
Net assets, end of period (in 000's)......................................................... $ 0 $ 15
Ratio of net investment loss to average net assets+.......................................... (0.27)% (1.97)%
Ratio of total expenses to average net assets+............................................... 2.48%(b)(c) 2.86%
Portfolio turnover rate...................................................................... 116% 169%
</TABLE>
- ------------------
<TABLE>
<S> <C>
* The BJB International Equity Fund commenced selling Class B shares on November 30, 1993.
** Class B shares were completely redeemed as of September 19, 1995. The net asset value of $10.25 represents the final
stated number at which shares were redeemed on that date.
*** Total return represents aggregate total return for the periods indicated and does not reflect any applicable sales
charge.
+ Annualized
++ Net investment loss before waiver of fees by the investment adviser and/or administrator was ($0.07) for the period
ended September 19, 1995.
# Per share amounts have been calculated using the monthly average share method, which more appropriately presents the
per share data for the period since the use of the undistributed method does not accord with results of operations.
(b) Figures are net of the expense reimbursement by the Adviser in connection with the voluntary and involuntary expense
limitation. Before the expense reimbursement the 'Ratio of total expenses to average net assets' would have been
2.89% for the period ended September 19, 1995.
(c) 'Ratio of total expenses to average net assets' for the period ended September 19, 1995 includes indirectly paid
expenses. Excluding indirectly paid expenses the expense ratio would have been 2.34% for the period ended September
19, 1995.
</TABLE>
See Notes to Financial Statements.
BJB INVESTMENT FUNDS
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
BJB Investment Funds (the 'Trust') is registered with the Securities and
Exchange Commission under the Investment Company Act of 1940, as amended (the
'1940 Act'), as an open-end management investment company that currently offers
two investment funds: BJB Global Income Fund (the 'Income Fund') and BJB
International Equity Fund (the 'Equity Fund') (individually, a 'Fund' and
collectively, the 'Funds'). The Trust was organized as a Massachusetts business
trust under the laws of the Commonwealth of Massachusetts on April 30, 1992. The
Income Fund commenced operations on July 1, 1992 and the Equity Fund commenced
operations on October 4, 1993.
Each Fund offered two classes of shares, Class A and Class B, to the
general public until September 19, 1995, when the Class B shares of each Fund
were completely redeemed. The Funds have discontinued for an indefinite period
of time the marketing and sale of Class B shares. In addition, effective
September 28, 1995, the Global Income Fund and the International Equity Fund
eliminated all front-end and contingent deferred sales charges previously
imposed on Class A and Class B shares, respectively, of the Funds. Prior to
these changes, Class A shares sold with a front-end sales charge and Class B
shares sold subject to a potential contingent deferred sales charge. Both
classes of shares had identical rights and privileges except with respect to the
effect of the respective sales charges on each class, if any, the distribution
and/or service fees borne by each class, expenses allocable exclusively to each
class, voting rights on matters affecting a single class and the exchange
privilege of each class. The following is a summary of significant accounting
policies consistently followed by the Funds in the preparation of their
financial statements.
Portfolio valuation: Generally, each Fund's investments are valued at
market value or, in the absence of a market value, at fair value as determined
by or under the direction of the Trust's Board of Trustees. A security which is
traded primarily on a United States or foreign stock exchange is valued at the
last sale price on that exchange or, if there were no sales during the day, at
the mean of the current quoted bid and asked prices. Portfolio securities which
are traded primarily on foreign securities exchanges are generally valued at the
preceding closing values of such securities on their respective exchanges,
except that when an occurrence subsequent to the time that a value was so
established is likely to have changed such value, then the fair value of those
securities will be determined by consideration of other factors by or under the
direction of the Trust's Board of Trustees or its delegates. Debt securities
(other than government securities and short-term obligations) are valued by
independent pricing services approved by the Trust's Board of Trustees.
Investments in government securities (other than short-term securities) are
valued at the mean of the quoted bid and asked prices in the over-the-counter
market. Short-term investments that mature in 60 days or less are valued at
amortized cost.
Repurchase agreements: The Funds may engage in repurchase agreement
transactions. Under the terms of a typical repurchase agreement, a Fund takes
possession of an underlying debt obligation subject to an obligation of the
seller to repurchase, and the Fund to resell, the obligation at an agreed-upon
price and time, thereby determining the yield during the Fund's holding period.
This arrangement results in a fixed rate of return that is not subject to market
fluctuations during a Fund's holding period. The value of the collateral at all
times is equal to at least 100% of the total amount of the repurchase
obligations, including interest. In the event of counterparty default, the Fund
has the right to use the collateral to offset losses incurred. There is
potential loss to a Fund in the event the Fund is delayed or prevented from
exercising its rights to dispose of the collateral securities, including the
risk of a possible decline in the value of the underlying securities during the
period while the Fund seeks to assert its rights. The Funds' investment adviser,
acting under the supervision of the Board of Trustees, reviews the value of the
collateral and the creditworthiness of those banks and dealers with which the
Funds enter into repurchase agreements to evaluate potential risks.
Foreign currency: The books and records of the Funds are maintained in
United States (U.S.) dollars. Foreign currencies, investments and other assets
and liabilities are translated into U.S. dollars at the exchange rates
prevailing at the end of the period, and purchases and sales of investment
securities, income and expenses are translated on the respective dates of such
transactions. Unrealized gains or losses on investments which result from
changes in foreign currencies have been included in the net unrealized
appreciation (depreciation) of investments. Net realized currency gains and
losses include foreign currency gains and losses between
BJB INVESTMENT FUNDS
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
trade date and settlement date on investment securities transactions, foreign
currency transactions and the difference between the amounts of interest and
dividends recorded on the books of the Funds and the amount actually received.
The portion of foreign currency gains and losses related to fluctuations in
exchange rates between the purchase trade date and sale trade date is included
in realized gains and losses on security transactions.
Forward foreign currency contracts: Forward foreign currency contracts are
valued at the forward rate and are marked-to-market daily. The change in market
value is recorded by the Funds as an unrealized gain or loss. When the contract
is closed, the Fund records a realized gain or loss equal to the difference
between the value of the contract at the time it was opened and the value at the
time it was closed.
The use of forward foreign currency contracts does not eliminate
fluctuations in the underlying prices of the Fund's portfolio securities, but it
does establish a rate of exchange that can be achieved in the future. Although
forward foreign currency contracts limit the risk of loss due to a decline in
the value of the currency holdings, they also limit any potential gain that
might result should the value of the currency increase. In addition, the Fund
could be exposed to risks if the counterparties to the contracts are unable to
meet the terms of their contracts.
Option contracts: Purchase of put and call options are recorded as an
investment, the value of which is marked-to-market daily. When a purchased
option expires, the Fund will realize a loss equal to the premium paid. When the
Fund enters into a closing sale transaction, the Fund will realize a gain or
loss depending on whether the sales proceeds from the closing sale transaction
are greater or less than the premium paid. When a Fund exercises a put option,
it will realize a gain or loss from the sale of the underlying security and the
proceeds from such sale will be decreased by the premium originally paid. When a
Fund exercises a call option, the cost of the security which the Fund purchases
upon exercise will be increased by the premium originally paid.
When a Fund writes a call option or a put option, an amount equal to the
premium received by a Fund is recorded as a liability, the value of which is
marked-to-market daily. When a written option expires, a Fund realizes a gain
equal to the amount of the premium received. When a Fund enters into a closing
purchase transaction the Fund realizes a gain (or loss if the cost of the
closing purchase transaction exceeds the premium received when the option was
sold) without regard to any unrealized gain or loss on the underlying security,
and the liability related to such option is eliminated. When a call option is
exercised, a Fund realizes a gain or loss from the sale of the underlying
security and the proceeds from such sale are increased by the premium originally
received. When a put option is exercised, the amount of the premium originally
received will reduce the cost of the security that a Fund purchased upon
exercise.
Unlike options on specific securities, all settlements of options on stock
indices are in cash and gains or losses depend on general movements in the
stocks included in the index rather than price movements on a particular stock.
There is no physical delivery of securities.
The risk associated with purchasing options is limited to the premium
originally paid. The risk in writing a call option is a Fund may forego the
opportunity of profit if the market price of the underlying security increases
and the option is exercised. The risk in writing a put option is that a Fund may
incur a loss if the market price of the underlying security decreases and the
option is exercised. There is also the risk a Fund may not be able to enter into
a closing transaction because of an illiquid secondary market. In addition, the
Fund could be exposed to risks if the counterparties to the transactions are
unable to meet the terms of the contracts.
Securities transactions and investment income: Securities transactions are
recorded as of the trade date. Realized gains and losses from securities
transactions are recorded on the identified cost basis. Interest income is
recorded on the accrual basis. Dividend income is recorded on the ex-dividend
date.
Dividends and distribution to shareholders: Distributions to shareholders
are recorded on the ex-dividend date. Each Fund intends to distribute annually
to its shareholders substantially all of its investment company taxable income.
The Income Fund declares and pays monthly dividends from its net investment
income. The Equity Fund intends to declare and pay annually dividends from its
net investment income. Both Funds will determine annually whether to distribute
any net realized long-term capital gains in excess of net
BJB INVESTMENT FUNDS
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
realized short-term capital losses; however, each Fund currently expects to
distribute any excess annually to its shareholders. Additional distributions of
net investment income and capital gains may be made at the discretion of the
Board of Trustees to avoid the application of the excise tax imposed under
Section 4982 of the Internal Revenue Code of 1986 for certain undistributed
amounts. Income distributions and capital gain distributions on a Fund and class
level are determined in accordance with income tax regulations which may differ
from generally accepted accounting principles. These differences are primarily
due to differing treatments of income and gains on various investment securities
held by a Fund, timing differences and differing characterization of
distributions made by a Fund as a whole. Permanent differences incurred during
the year ended October 31, 1995 resulting from differences in book and tax
accounting have been reclassified at year-end to undistributed net investment
income, accumulated net realized loss, and paid-in capital as follows:
<TABLE>
<CAPTION>
INCREASE/(DECREASE)
IN UNDISTRIBUTED INCREASE/(DECREASE) DECREASE
NET INVESTMENT IN ACCUMULATED IN PAID-IN
INCOME REALIZED LOSS CAPITAL
------------------- ------------------- ----------
<S> <C> <C> <C>
Income Fund.......................................................... $ 584,433 $ 118,603 $ (703,036)
Equity Fund.......................................................... (136,330) 236,755 (100,425)
</TABLE>
Federal income taxes: The Trust intends that each Fund separately qualify
as a regulated investment company for U.S. Federal income tax purposes.
Accordingly, the Funds do not anticipate that any income taxes will be paid. It
is expected that certain capital gains earned by the Funds and certain dividends
and interest received by the Funds will be subject to foreign withholding taxes.
2. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS
Julius Baer Investment Management Inc. ('Julius Baer Investment
Management') serves as the Income Fund's investment adviser pursuant to an
investment advisory agreement. The Income Fund pays Julius Baer Investment
Management a quarterly fee for its investment advisory services calculated at an
annual rate of 0.65% of the Income Fund's average daily net assets. Bank Julius
Baer & Co., Ltd.--New York Branch ('Bank Julius Baer') serves as the Income
Fund's servicing agent pursuant to a servicing agent agreement with Julius Baer
Investment Management. Out of its advisory fee, Julius Baer Investment
Management pays Bank Julius Baer a quarterly fee calculated at an annual rate of
0.15% of the Income Fund's average daily net assets.
Bank Julius Baer serves as the Equity Fund's investment adviser pursuant to
an investment advisory agreement. The Equity Fund pays Bank Julius Baer a
quarterly fee for its investment advisory services calculated at an annual rate
of 1.00% of the Equity Fund's average daily net assets. Beginning March 13,
1995, the adviser agreed to waive 0.50% of its fee.
The Advisers have agreed that if, in any fiscal year, the expenses borne by
a Fund exceed applicable expense limitations imposed by the securities
regulations of any state in which shares of a Fund are registered or qualified
for sale to the public, each of them would reduce the fees paid to them by such
Fund to the extent required by such regulations in the proportion that the fee
it retains bears to total management fees. The most restrictive annual expense
limit applicable limits each Fund's allowable operating expenses (excluding
interest, taxes, a portion of a Fund's 12b-1 distribution fees, a portion of a
Fund's custodian expenses attributable to investments in foreign securities,
brokerage commissions and extraordinary expenses) to 2.5% of the first $30
million of the average net assets of the Fund, 2% of the next $70 million of the
average net assets of the Fund and 1.5% of the remaining average net assets of
the Fund. For the year ended October 31, 1995, Bank Julius Baer was entitled to
management fees of $93,521 from the Equity Fund. Of these fees, Bank Julius Baer
waived $48,264.
No director, officer or employee of Julius Baer Investment Management, Bank
Julius Baer or any affiliates of those entities received any compensation from
the Trust for serving as an officer or Trustee of the Funds. The Funds pay each
of the Trustees who is not a director, officer or employee of Julius Baer
Investment Management, Bank Julius Baer or any affiliate thereof an annual fee
of $5,000 plus $250 for each Board of Trustees meeting attended. In addition,
the Funds reimburse these Trustees for travel and out-of-pocket expenses
incurred in connection with the Board of Trustees meetings.
BJB INVESTMENT FUNDS
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
The Funds have entered into an expense offset arrangement as part of its
custody agreement with Investors Bank & Trust. Under this arrangement, the
Funds' custody fees are reduced when the Funds maintain cash on deposit at the
custodian. For the year ended October 31, 1995, the Income Fund incurred net
custody fees in the amount of $84,841, after receiving a credit of $20,723,
pursuant to the expense offset arrangement, resulting in a total expense of
$105,564. For the year ended October 31, 1995, the Equity Fund incurred net
custody fees in the amount of $65,036, after receiving a credit of $16,447,
pursuant to the expense offset arrangement, resulting in a total expense of
$81,483. The assets deposited with Investors Bank & Trust under the expense
offset arrangement could have been invested in an income-producing asset.
For the year ended October 31, 1995, the Funds incurred total brokerage
commissions of $95,165 of which $2,518 in total was paid to Bank Julius Baer,
Frankfurt and Bank Julius Baer, Zurich (affiliates of the Adviser).
3. DISTRIBUTION AND SHAREHOLDER SERVICING PLAN
The Trust has adopted a Shareholder Services and Distribution Plan (the
'Plans') pursuant to Rule 12b-1 of the 1940 Act with respect to each class of
shares of the Funds. Under the Plans, the Funds compensate certain financial
institutions, including Funds Distributor Inc., for certain distribution,
shareholder servicing, administrative and accounting services for their clients
and customers who are beneficial owners of each of the Funds' shares. With
respect to Class A shares of each Fund, a Fund may expend an aggregate amount on
an annual basis not to exceed 0.25% of the value of the average daily net assets
of that class. For the year ended October 31, 1995 the Income Fund and Equity
Fund incurred $50,114 and $23,382, respectively, in service and distribution
fees for Class A shares. With respect to Class B shares of each Fund, a Fund
could expend an aggregate amount on an annual basis not to exceed 0.75% of the
value of the average daily net assets for that class. The Trust also approved a
shareholder services plan, with respect to Class B Shares of each Fund. With
respect to Class B Shares of each Fund, the Funds could expend an aggregate
amount on an annual basis not to exceed 0.25% of the value of the average daily
net assets for that class. For the period ended September 19, 1995, the Income
Fund and Equity Fund incurred $231 and $113, respectively, in service and
distribution fees for Class B shares.
Under their terms, the Plans shall remain in effect from year to year,
provided such continuance is approved annually by a vote of a majority of the
Trustees and a majority of those Trustees who are not 'interested persons' of
the Trust and who have no direct or indirect financial interest in the operation
of the Plans or in any agreement related to the Plans.
4. PURCHASES AND SALES OF SECURITIES
Cost of purchases and proceeds from sales of securities, excluding U.S.
government securities and short-term investments, during the year ended October
31, 1995, were as follows:
<TABLE>
<CAPTION>
COST OF PROCEEDS
PURCHASES FROM SALES
----------- -----------
<S> <C> <C>
Income Fund................................................................................. $49,120,400 $57,347,461
Equity Fund................................................................................. 10,023,398 13,002,211
</TABLE>
Cost of purchases and proceeds from sales of long-term U.S. government
securities, excluding short-term investments, during the year ended October 31,
1995, were $10,520,840 and $9,592,418, respectively for the Income Fund.
At October 31, 1995, aggregate gross unrealized appreciation for all
securities in which there was an excess of value over tax cost, and aggregate
gross unrealized depreciation for all securities in which there was an excess of
tax cost over value was:
<TABLE>
<CAPTION>
UNREALIZED UNREALIZED
APPRECIATION DEPRECIATION
------------ ------------
<S> <C> <C>
Income Fund................................................................................... $513,940 $ 11,521
Equity Fund................................................................................... 647,987 456,579
</TABLE>
BJB INVESTMENT FUNDS
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
5. SHARES OF BENEFICIAL INTEREST
The Trust may issue an unlimited number of shares of beneficial interest of
each Fund, with a par value of $.001 per share. Changes in shares of beneficial
interest on the Income Fund and the Equity Fund which are divided into Class A
shares and Class B shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED 10/31/95 YEAR ENDED 10/31/94
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Income Fund Class A shares:
Sold.............................................................. 58,447 $ 652,663 2,493,634 $ 30,076,574
Issued as reinvestment of dividends............................... 49,173 566,530 183,678 2,181,133
Redeemed.......................................................... (1,241,882) (13,969,741) (4,809,613) (55,674,642)
---------- ------------ ---------- ------------
Net decrease...................................................... (1,134,262) $(12,750,548) (2,132,301) $(23,416,935)
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
</TABLE>
<TABLE>
<CAPTION>
PERIOD ENDED 9/19/95** PERIOD ENDED 10/31/94*
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Income Fund Class B shares:
Sold.............................................................. -- -- 3,097 $ 35,024
Issued as reinvestment of dividends............................... 78 $ 901 25 281
Redeemed.......................................................... (2,319) (27,897) (881) (9,879)
---------- ------------ ---------- ------------
Net increase (decrease)........................................... (2,241) $ (26,996) 2,241 $ 25,426
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED 10/31/95 YEAR ENDED 10/31/94
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Equity Fund Class A shares:
Sold.............................................................. 267,288 $ 2,763,238 2,632,331 $ 36,577,636
Issued as reinvestment of dividends............................... -- -- 237 2,703
Redeemed.......................................................... (627,941) (6,303,836) (2,181,597) (27,944,187)
---------- ------------ ---------- ------------
Net increase (decrease)........................................... (360,653) $ (3,540,598) 450,971 $ 8,636,152
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
</TABLE>
<TABLE>
<CAPTION>
PERIOD ENDED 9/19/95** PERIOD ENDED 10/31/94*
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Equity Fund Class B shares:
Sold.............................................................. -- -- 3,021 $ 34,976
Issued as reinvestment of dividends............................... -- -- 1 11
Redeemed.......................................................... (1,304) $ (13,361) (1,718) (19,302)
---------- ------------ ---------- ------------
Net increase (decrease)........................................... (1,304) $ (13,361) 1,304 $ 15,685
---------- ------------ ---------- ------------
---------- ------------ ---------- ------------
</TABLE>
- ------------------
* The Income Fund and Equity Fund commenced selling Class B shares on November
30, 1993.
** The Income Fund's and Equity Fund's Class B shares were completely redeemed
as of September 19, 1995.
BJB INVESTMENT FUNDS
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
6. ORGANIZATIONAL COSTS
All costs in connection with the organization of the Funds, including the
fees and expenses of registering and qualifying their shares for distribution
under federal and state securities regulations, are being amortized on the
straight-line method over a period of sixty months from July 1, 1992, the date
that the Income Fund commenced operations, and from October 4, 1993, the date
the Equity Fund commenced operations. In the event that any of the initial
shares of the Funds are redeemed during such amortization period, the Funds will
be reimbursed for any unamortized costs in the same proportion as the number of
initial shares outstanding bears to the total numbers of shares outstanding at
the time of redemption.
7. FOREIGN SECURITIES
Investing in securities of foreign companies and foreign governments
involves special risks and considerations not typically associated with
investing in U.S. companies and the United States government. These risks
include revaluation of currencies and future adverse political and economic
developments. Moreover, securities of many foreign companies and foreign
governments and their markets may be less liquid and their prices more volatile
than those of securities of comparable U.S. companies and the United States
government.
8. CAPITAL LOSS CARRYFORWARD
At October 31, 1995, the Funds had the following available capital loss
carryforwards:
<TABLE>
<CAPTION>
EXPIRING IN EXPIRING IN EXPIRING IN
2001 2002 2003
----------- ----------- -----------
<S> <C> <C> <C>
Income Fund........................................................................ $-- $ 1,470,465 $ --
Equity Fund........................................................................ 83,928 2,818,754 1,830,291
</TABLE>
BJB INVESTMENT FUNDS
INDEPENDENT AUDITORS' REPORT
BJB GLOBAL INCOME FUND
AND BJB INTERNATIONAL EQUITY FUND
- --------------------------------------------------------------------------------
The Board of Trustees
BJB Investment Funds
We have audited the accompanying statements of assets and liabilities of
the BJB Global Income Fund and BJB International Equity Fund, portfolios of the
BJB Investment Funds, including the portfolios of investments and schedules of
forward foreign exchange contracts as of October 31, 1995, and the related
statements of operations for the year then ended, and the statements of changes
in net assets for each of the years in the two-year period ended October 31,
1995, and the financial highlights for each of the years or periods in the
three-year period ended October 31, 1995, and for the period from July 1, 1992
(commencement of operations) to October 31, 1992, for the BJB Global Income
Fund, and the financial highlights for each of the years or periods in the
two-year period ended October 31, 1995, and for the period from October 4, 1993
(commencement of operations) to October 31, 1993 for the BJB International
Equity Fund. These financial statements and financial highlights are the
responsibility of the Funds' management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1995 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of the
BJB Global Income Fund and BJB International Equity Fund as of October 31, 1995,
the results of their operations, the changes in their net assets and the
financial highlights for each of the years or periods referred to in the first
paragraph above in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Boston, Massachusetts
December 8, 1995
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
Included in Part A:
Financial Highlights
Included in Part B:
Financial Statements for the fiscal year ended October
31, 1995 for BJB Global Income Fund and BJB International
Equity Fund are incorporated into the Annual Report of
BJB Investment Funds
Portfolio of Investments
Schedule of Forward Foreign Exchange Contracts
Statements of Assets and Liabilities
Statements of Operations
Statements of Changes in Net Assets for the Periods
Ended October 31, 1995, October 31, 1994 and
October 31, 1993
Notes to Financial Statements
Independent Auditors' Report
<TABLE>
<CAPTION>
(b) Exhibits
<S> <C>
All references are to the Registrant's registration statement
on Form N-1A as filed with the Securities and Exchange
Commission ("SEC") on May 1, 1992 (File Nos. 33-47507 and
811-6652) (the "Registration Statement").
1 (a) Registrant's Master Trust Agreement dated April 30, 1992, is
filed herein.
(b) Amendment to Master Trust Agreement dated June 22, 1992, is
filed herein.
(c) Amendment to Master Trust Agreement dated September 16, 1993,
is filed herein.
(d) Amendment to Master Trust Agreement dated January 26, 1995,
is filed herein.
2 Registrant's By-Laws dated April 30, 1992, are filed herein.
3 Not applicable.
4 Not applicable.
5 (a) Investment Advisory Agreement between the Registrant and Bank Julius Baer & Co., Ltd., New York branch on
behalf of BJB International Equity Fund dated October 4, 1993, is filed herein.
(b) Amended and Restated Investment Advisory Agreement between the Registrant and Julius Baer Investment
Management Inc. on behalf of BJB Global Income Fund dated October 4, 1993, is filed herein.
6 (a) Distribution Agreement between the Registrant and Funds Distributor, Inc. dated June 30, 1992,
is incorporated by reference to Post-Effective Amendment No. 2 as filed with the SEC on August 4, 1993
("Post-Effective Amendment No. 2").
(b) Amended Distribution Agreement between the Registrant and Funds Distributor, Inc. dated April 13, 1994, is
incorporated by reference to Post-Effective Amendment No. 5 as filed with the SEC on January 11, 1995
("Post-Effective Amendment No. 5").
7 Not applicable.
8 (a) Custody Agreement between the Registrant and Boston Safe Deposit and Trust
Company dated June 23, 1992, is incorporated by reference to Post-Effective Amendment No. 2.
(b) Amended and Restated Custody Agreement between the Registrant and Boston Safe Deposit and Trust Company dated
October 4, 1993, is incorporated by reference to Post-Effective Amendment No. 4 as filed with the SEC on June 3,
1993. ("Post-Effective Amendment No. 4").
(c) Form of Sub-Custody Agreement is incorporated by reference to Pre-Effective Amendment No. 2 as filed with the SEC
on June 22, 1992. ("Pre-Effective Amendment No. 2").
(d) Custody Agreement between the Registrant and Investors Bank & Trust Company dated January 30, 1995,
is filed herein.
9 (a) Servicing Agent Agreement between the Registrant and Bank Julius Baer & Co., Ltd., New York branch
dated August 5, 1994, is incorporated by reference to Post-Effective Amendment No. 5.
(b) Transfer Agency Agreement between the Registrant and Unified Advisers, Inc. dated May 2, 1994, is incorporated by
reference to Post-Effective Amendment No. 4.
(c) Administration Agreement between the Registrant and The Boston Company Advisors, Inc. ("Boston
Advisors") dated June 23, 1992, is incorporated by reference to Post-Effective Amendment No. 2.
(d) Administration Agreement between the Registrant and Boston Advisors dated October 4, 1993, is
incorporated by reference to Post-Effective Amendment No. 4.
(e) Amended and Restated Administration Agreement between the Registrant and Boston Advisors dated October 4, 1993, is
incorporated by reference to Post-Effective Amendment No. 4.
(f) Consent to Assignment of the Amended and Restated Administration Agreement between Boston Advisors and the
Registrant in connection with BJB Global Income Fund and the Administration Agreement between Boston Advisors
and the Registrant in connection with BJB International Equity Fund dated October 4, 1994, is incorporated
by reference to Post-Effective Amendment No. 5.
(g) Amendment to Administration Agreement between the Registrant and Boston Advisors in connection with BJB
International Equity Fund dated July 18, 1994, is incorporated by reference to Post-Effective Amendment No. 5.
(h) Amendment to Amended and Restated Administration Agreement between the Registrant and Boston Advisors in
connection with BJB Global Income Fund dated July 18, 1994, is incorporated by reference to Post-Effective
Amendment No. 5.
(i) Administration Fee Agreement among the Registrant, Boston Advisors and Boston Safe Deposit and Trust Company dated
May 1, 1994, is incorporated by reference to Post-Effective Amendment No. 5.
(j) Administration Agreement between the Registrant and Investors Bank & Trust Company dated January 30, 1995, is
filed herein.
(k) New Account Application is incorporated by reference to Post-Effective Amendment No.3 as filed with the SEC on
October 4, 1993 ("Post-Effective Amendment No. 3").
(l) New Account Application with Unified Advisers, Inc. is incorporated by reference to Post-Effective Amendment No.
4.
(m) Automatic Investment Plan Application is incorporated by reference to Post-Effective Amendment No. 3.
10 Legal opinion is incorporated by reference to Rule 24f-2 Notice as filed with the SEC on December 22, 1995.
11 Consent of Independent Accountants is filed herein.
12 Not applicable.
13 Purchase Agreement is incorporated by reference to Post-Effective Amendment No. 2.
14 Not applicable.
15 (a) Distribution Plan between the Registrant and Funds Distributor, Inc. dated October 4, 1993, is incorporated by
reference to Post-Effective Amendment No. 4.
(b) Shareholder Services Plan dated October 4, 1993, is incorporated by reference to Post-Effective Amendment No. 4.
(c) Shareholder Servicing Agreement between the Registrant and Julius Baer Investment Management Inc. dated
October 4, 1993, is incorporated by reference to Post-Effective Amendment No. 4.
16 Computation of performance quotations for BJB Global Income Fund is incorporated by reference to
Post-Effective Amendment No. 1 as filed with the SEC on May 20, 1992. Computation of performance quotations
for BJB International Equity Fund is incorporated by reference to Post-Effective Amendment No. 4.
17 Financial Data Schedule dated October 31, 1995, is filed herein.
18 Multiclass Plan Pursuant to Rule 18f-3 under the Investment Company Act of 1940 for BJB Investment Funds
dated December 14, 1995, is filed herein.
19 Powers of Attorney dated December 26, 1995, are filed herein.
</TABLE>
Item 25. Persons Controlled by or Under Common Control with
Registrant
None
Item 26. Number of Holders of Securities
(1) (2)
Title of Class Number of Record Holders
as of December 1, 1995
Beneficial Interest, Class A Shares
par value $.001 per
share
BJB Global Income Fund 39
BJB International Equity Fund 12
Item 27. Indemnification
The response to this item is incorporated by reference to the Registration
Statement.
Item 28. Business and Other Connections of Investment Adviser and
Servicing Agent
Julius Baer Investment Management Inc. (the "Income Fund Adviser")
acts as investment adviser to BJB Global Income Fund. The Income Fund Adviser is
a wholly owned subsidiary of Julius Baer Securities Inc., a registered
broker-dealer and investment adviser, which in turn is a wholly owned subsidiary
of Baer Holding Ltd. Directly and through Julius Baer Securities Inc., the
Income Fund Adviser provides investment management services to a wide variety of
individual and institutional clients, including registered investment companies.
The Income Fund Adviser is also an affiliate of Bank Julius Baer & Co., Ltd.,
which is acting as servicing agent to BJB Global Income Fund. The list required
by this Item 28 of officers and directors of the Adviser together with
information as to their other business, profession, vocation or employment of a
substantial nature during the past two years, is incorporated by reference to
Schedules A and D of Form ADV filed by the Income Fund Adviser (SEC File No.
801-18766).
Bank Julius Baer & Co., Ltd., New York branch (the "Equity Fund
Adviser") serves as the investment adviser to BJB International Equity Fund. The
Equity Fund Adviser also provides BJB International Equity Fund with certain
administrative and shareholder services that are not provided by the
Administrator and acts as servicing agent to BJB Global Income Fund. An
affiliate of the Income Fund Adviser, the Equity Fund Adviser is a Swiss bank
that has over 50 years experience in international portfolio management. A list
of officers and directors of the Equity Fund Adviser as of December 1, 1995,
is set forth below. The address of the following individuals is 330 Madison
Avenue, New York, New York.
Local Advisory Board: John R. Petty (Chairman), Richard A. Debs, Alessandro E.
Fusina, David Hershberg, Hans C. Mautner. Senior Advisor: Herbert R. Silverman.
Management Committee: David E. Bodner (Branch Manager), Peter Wild (Deputy
Branch Manager), Philip T. Ciriello, E. Gary Lespinasse, Urs G. Schwytter,
Bernard Spilko. Legal Counsel: Francoise Birholz. Money Market/Foreign
Exchange/Precious Metals: Peter Wild, Jurg Hunziker, Andrew Schnydrig, Walter J.
Simon, Oskar Weiss, Andrew Aeschbach, Daniel Geiser, Harlan Matusow, Donna
Seferian. Private Banking: Urs G. Schwytter, Richard C. Pell, Jeanette Attina,
Nuri Benturk, John H. S. Boys, Jonas Janson, Willem Oost-Lievense, Karl
Wellner, Rudolf-Riad Younes. Investment Services/Compliance/Human Resources:
Bernard Spilko, Edward A. Clapp, Robert Discolo, Sharon E. Teufel. Credit:
Joachim Straehle, Tanya Rozina. Accounting/Control/Risk Management: Philip
T. Ciriello, Keith D. Christopher, Gary Goldschmidt, Larry Millman, Louis
Sala. Operations and Systems Group: E. Gary Lespinasse, Robert P. Catalano,
Conno Gallo, Ashley Richards.
Item 29. Principal Underwriter
Funds Distributor Inc. ("Funds Distributor") is a wholly-owned
subsidiary of FDI Distribution Services, Inc., which in turn is a wholly-owned
subsidiary of FDI Holdings Inc., the parent company of which is Boston
Institutional Group, Inc. Funds Distributor currently acts as distributor
for BEA Investment Funds, Inc., Foreign Fund, Inc., Fremont Mutual Funds,
H.T. Insight Funds Trust, The Munder Funds Trust, The Munder Funds, Inc.,
The PanAgora Funds, Sierra Trust Funds, St. Clair Money Market Fund,
Skyline Funds and Waterhouse Investors Cash Managers Fund.
Funds Distributor is registered with the Securities and Exchange
Commission as a broker-dealer and is a member firm of the NASD. Funds
Distributor is located at One Exchange Place, Boston, Massachusetts 02109. The
information required by this Item 29 with respect to each director and officer
of Funds Distributor is incorporated by reference to Schedule A of Form BD
filed by Funds Distributor pursuant to the Securities Exchange Act of 1934 (SEC
File No. 8-20518).
Item 30. Location of Accounts and Records
(1) BJB Investment Funds
c/o Julius Baer
Investment Management Inc.
330 Madison Avenue
New York, New York 10017
(2) Investors Bank & Trust Company
89 South Street
Boston, Massachusetts 02111
(records relating to its functions as
administrator)
(3) Investors Bank & Trust Company
89 South Street
Boston, Massachusetts 02111
(records relating to its functions as custodian)
(4) Funds Distributor, Inc.
One Exchange Place
Boston, Massachusetts 02109
(records relating to its functions as
distributor)
(5) Unified Advisers, Inc.
429 North Pennsylvania Avenue
Indianapolis, Indiana 46204
(records relating to its functions as transfer
agent)
(6) Julius Baer Investment Management Inc.
330 Madison Avenue
New York, New York 10017
(records relating to its functions as investment
adviser)
(7) Bank Julius Baer & Co., Ltd., New York branch
330 Madison Avenue
New York, New York 10017
(records relating to its functions as investment
adviser, and servicing agent)
Item 31. Management Services
Not applicable.
Item 32. Undertakings
(a) Registrant hereby undertakes to call a meeting of shareholders
for the purposes of voting upon the question of removal of a trustee, if
requested to do so by the holders of at least 10% of the Fund's outstanding
shares, and will assist the shareholders in communicating with other
shareholders.
(b) Registrant hereby undertakes to furnish to each person to whom
a Prospectus of the Registrant is delivered a copy of the Registrant's latest
annual report to shareholders, upon request and without charge.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended, the
Registrant has duly caused this Amendment to the Registration
Statement to be signed on its behalf by the undersigned, thereto
duly authorized, in the City of New York, and State of New York
on the 26th day of December, 1995.
BJB INVESTMENT FUNDS
(Registrant)
/s/ David E. Bodner
By: ______________________
David E. Bodner
President (Chief Executive Officer)
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Amendment to the Registration Statement has been
signed below by the following persons in the capacities and on
the date(s) indicated.
Signature Title Date
- --------- ----- ----
/s/ David E. Bodner President December 26, 1995
- --------------------- (Chief Executive Officer)
David E. Bodner
/s/Bernard Spilko December 26, 1995
- --------------------- Chief Financial Officer
Bernard Spilko
/s/ Harvey B. Kaplan December 26, 1995
- --------------------- Trustee
Harvey B. Kaplan
/s/ Robert S. Matthews December 26, 1995
- ---------------------- Trustee
Robert S. Matthews
/s/ Gerard J.M. Vlak December 26, 1995
- --------------------- Trustee
Gerard J.M. Vlak
- --------------------- Trustee
Peter J. Widmer
/s/ Peter Wolfram December 26, 1995
- --------------------- Trustee
Peter Wolfram
EXHIBIT INDEX
<TABLE>
<CAPTION>
Item
- ----
Page
- ----
<S> <C>
1 (a) Registrant's Master Trust Agreement dated April 30, 1992.
1 (b) Amendment to Master Trust Agreement dated June 22, 1992.
1 (c) Amendment to Master Trust Agreement dated September 16, 1993.
1 (d) Amendment to Master Trust Agreement dated January 26, 1995.
2 Registrant's By-Laws dated April 30, 1992.
5 (a) Investment Advisory Agreement between the Registrant and Bank Julius
Baer & Co., Ltd. on behalf of BJB International Equity Fund dated
October 4, 1993.
5 (b) Amended and Restated Investment Advisory Agreement between
the Registrant and Bank Julius Baer Investment Management Inc. on
behalf of BJB Global Income Fund dated October 4, 1993.
8 (d) Custody Agreement between the Registrant and Investors Bank & Trust
Company dated January 30, 1995.
9 (j) Administration Agreement between the Registrant and Investors Bank &
Trust Company dated January 30, 1995.
11 Consent of Independent Accountants.
17 Financial Data Schedule dated October 31, 1995.
18 Multiclass Plan Pursuant to Rule 18f-3 under the Investment Company
Act of 1940 for BJB Investment Funds dated December 14, 1995.
19 Powers of Attorney dated December 26, 1995.
</TABLE>
<PAGE>
BJB GLOBAL INCOME FUND
MASTER TRUST AGREEMENT
April 30, 1992
<PAGE>
BJB GLOBAL INCOME FUND
CROSS-REFERENCE SHEET
Pursuant to CMR 109.00:
109.03 (a) Name of organization or trust:
BJB GLOBAL INCOME FUND
(b) Date of organization:
April 30, 1992
(c) Names and addresses of the trustees:
Francis J. McNamara, III
One Exchange Place
Boston, MA 02109
Lee D. Augsburger
One Exchange Place
Boston, MA 02109
(d) Original signatures of all trustees:
See page 26.
(e) Principal place of business:
One Exchange Place
Boston, MA 02109
(f) Statement that beneficial interest is
divided into transferable certificates of
participation or shares;
See Section 4.1, pages 10-11.
(g) Ability to merge:
See Section 7.2, page 24.
<PAGE>
BJB GLOBAL INCOME FUND
MASTER TRUST AGREEMENT
ARTICLE I. NAME AND DEFINITIONS
Section 1.1 Name 2
Section 1.2 Definitions 2
a) "Trust" 2
b) "Trustees" 2
c) "Shares" 2
d) "Series" 2
e) "Shareholder" 2
f) "1940 Act" 2
g) "Commission" 2
h) "Declaration of Trust" 2
i) "By-Laws" 2
ARTICLE II. PURPOSE OF THE TRUST 2
ARTICLE III. THE TRUSTEES 3
Section 3.1 Number, Designation, Election, Term, etc. 3
a) Initial Trustees 3
b) Number 3
c) Election and Term 3
d) Resignation and Retirement 3
e) Removal 3
f) Vacancies 4
g) Effect of Death, Resignation, etc. 4
h) No Accounting 4
i) Retirement Policy 4
j) Trustees Emeritus 5
Section 3.2 Powers of Trustees 5
a) Investments 6
b) Disposition of Assets 6
c) Ownership Powers 6
d) Subscription 6
e) Form of Holding 6
f) Reorganization, etc. 6
g) Voting Trusts, etc. 7
h) Compromise 7
i) Partnerships, etc. 7
j) Borrowing and Security 7
k) Guarantees, etc. 7
l) Insurance 7
m) Pensions, etc. 7
(i)
<PAGE>
Section 3.3 Certain Contracts 8
a) Advisory 8
b) Administration 8
c) Distribution 8
d) Custodian and Depository 8
e) Transfer and Dividend 9
Disbursing Agency
f) Shareholder Servicing 9
g) Accounting 9
Section 3.4 Payment of Trust Expenses and Compensation
of Trustees 10
Section 3.5 Ownership of Assets of the Trust 10
ARTICLE IV. SHARES 10
Section 4.1 Description of Shares 10
Section 4.2 Establishment and Designation of
Sub-Trusts 11
a) Assets Belonging to Sub-Trusts 12
b) Liabilities Belonging to 12
Sub-Trusts
c) Dividends 13
d) Liquidation 13
e) Voting 13
f) Redemption by Shareholder 14
g) Redemption by Trust 14
h) Net Asset Value 14
i) Transfer 15
j) Equality 15
k) Fractions 15
l) Conversion of Rights 15
Section 4.3 Ownership of Shares 15
Section 4.4 Investment in the Trust 16
Section 4.5 No Pre-emptive Rights 16
Section 4.6 Status of Shares and Limitation of 16
Personal Liability
ARTICLE V. SHAREHOLDERS' VOTING POWERS AND MEETINGS 17
Section 5.1 Voting Powers 17
Section 5.2 Meetings 17
Section 5.3 Record Dates 18
(ii)
<PAGE>
Section 5.4 Quorum and Required Vote 18
Section 5.5 Action by Written Consent 18
Section 5.6 Inspection of Records 19
Section 5.7 Additional Provisions 19
Section 5.8 Shareholder Communications 19
ARTICLE VI. LIMITATION OF LIABILITY; INDEMNIFICATION 20
Section 6.1 Trustees, Shareholders, etc. Not
Personally Liable; Notice 20
Section 6.2 Trustee's Good Faith Action; Expert 20
Advice; No Bond of Surety
Section 6.3 Indemnification of Shareholders 21
Section 6.4 Indemnification of Trustees, Officers, etc. 21
Section 6.5 Compromise Payment 22
Section 6.6 Indemnification Not Exclusive, etc. 23
Section 6.7 Liability of Third Persons Dealing with 23
Trustees
ARTICLE VII. MISCELLANEOUS 23
Section 7.1 Duration and Termination of Trust 23
Section 7.2 Reorganization 24
Section 7.3 Amendments 24
Section 7.4 Resident Agent 25
Section 7.5 Filing of Copies; References; Headings 25
Section 7.6 Applicable Law 25
(iii)
<PAGE>
BJB GLOBAL INCOME FUND
MASTER TRUST AGREEMENT
AGREEMENT AND DECLARATION OF TRUST made at Boston, Massachusetts this
30th day of April, 1992, by the Trustees hereunder, and by the holders of
shares of beneficial interest to be issued hereunder as hereinafter
provided.
WITNESSETH
WHEREAS this Trust has been formed to carry on the business of an
investment company; and
WHEREAS this Trust is authorized to issue its shares of beneficial
interest in separate series, each separate series to be a Sub-Trust
hereunder, all in accordance with the provisions hereinafter set forth; and
WHEREAS the Trustees have agreed to manage all property coming into
their hands as trustees of a Massachusetts business trust in accordance
with the provisions hereinafter set forth.
NOW, THEREFORE, the Trustees hereby declare that they will hold all
cash, securities and other assets which they may from time to time acquire
in any manner as Trustees hereunder IN TRUST to manage and dispose of the
same upon the following terms and conditions for the benefit of the holders
from time to time of shares of beneficial interest in this Trust or
Sub-Trusts created hereunder as hereinafter set forth.
<PAGE>
ARTICLE I
NAME AND DEFINITIONS
Section 1.1 Name. This Trust shall be known as "BJB Global Income
Fund" and the Trustees shall conduct the business of the Trust under that
name or any other name or names as they may from time to time determine.
Section 1.2 Definitions. Whenever used herein, unless otherwise
required by the context or specifically provided:
(a) The "Trust" refers to the Massachusetts business trust established
by this Trust Agreement, as amended from time to time, inclusive of each
and every Sub-Trust established hereunder;
(b) "Trustees" refers to the Trustees of the Trust and of each
Sub-Trust hereunder named herein or elected in accordance with Article III;
(c) "Shares" refers to the transferable units of interest into which
the beneficial interest in the Trust and each Sub-Trust of the Trust (as
the context may require) shall be divided from time to time;
(d) "Series" refers to Series of Shares established and designated
under or in accordance with the provisions of Article IV, each of which
Series shall be a Sub-Trust of the Trust;
(e) "Shareholder" means a record owner of Shares;
(f) The "1940 Act" refers to the Investment Company Act of 1940 and
the Rules and Regulations thereunder, all as amended from time to time;
(g) The term "Commission" shall have the meaning given it in the 1940
Act;
(h) "Declaration of Trust" shall mean this Agreement and Declaration
of Trust as amended or restated from time to time; and
(i) "By-Laws" shall mean the By-Laws of the Trust as amended from time
to time.
ARTICLE II
PURPOSE OF TRUST
The purpose of the Trust is to operate as an investment company and to
offer Shareholders of the Trust and each Sub-Trust of the Trust one or more
investment programs primarily in securities and debt instruments.
-2-
<PAGE>
ARTICLE III
THE TRUSTEES
Section 3.1 Number, Designation, Election, Term, etc.
(a) Initial Trustees. Upon the execution of this Declaration of Trust
or a counterpart hereof or some other writing in which he accepts such
Trusteeship and agrees to the provisions hereof, each of Francis J.
McNamara, III and Lee D. Augsburger, shall become a Trustee hereof and of
each Sub-Trust hereunder.
(b) Number. The Trustees serving as such, whether named above or
hereafter becoming a Trustee may increase or decrease (to not less than
two) the number of Trustees, to a number other than the number theretofore
determined. No decrease in the number of Trustees shall have the effect
of removing any Trustee from office prior to the expiration of his term,
but the number of Trustees may be decreased in conjunction with the
removal of a Trustee pursuant to subsection (e) of this Section 3.1.
(c) Election and Term. The Trustees shall be elected by the
Shareholders of the Trust at the first meeting of Shareholders following
the initial public offering of shares of the Trust. Each Trustee, whether
named above or hereafter becoming a Trustee, shall serve as a Trustee of
the Trust and of each Sub-Trust hereunder during the lifetime of this Trust
and until its termination as hereinafter provided except as such Trustee
sooner dies, resigns or is removed. Subject to Section 16(a) of the 1940
Act, the Trustees may elect their own successors and may, pursuant to
Section 3.1(f) hereof, appoint Trustees to fill vacancies.
(d) Resignation and Retirement. Any Trustee may resign his trust or
retire as a Trustee, by written instrument signed by him and delivered to
the other Trustees or to any officer of the Trust, and such resignation or
retirement shall take effect upon such delivery or upon such later date as
is specified in such instrument and shall be effective as to the Trust and
as each Sub-Trust hereunder.
(e) Removal. Any Trustee may be removed with or without cause at any
time: (i) by written instrument, signed by at least two-thirds of the
number of Trustees prior to such removal, specifying the date upon which
such removal shall become effective; or (ii) by vote of Shareholders
holding not less than two-thirds of the Shares then outstanding, cast in
person or by proxy at any meeting called for the purpose; or (iii) by a
written declaration signed by Shareholders holding not less than two-thirds
of the Shares then outstanding and filed with the Trust's Custodian. Any
such removal shall be effective as to the Trust and each Sub-Trust
hereunder.
-3-
<PAGE>
(f) Vacancies. Any vacancy or anticipated vacancy resulting from any
reason, including without limitation the death, resignation, retirement,
removal or incapacity of any of the Trustees, or resulting from an increase
in the number of Trustees by the other Trustees may (but so long as there
are at least two remaining Trustees, need not unless required by the 1940
Act) be filled by a majority of the remaining Trustees, subject to the
provisions of Section 16(a) of the 1940 Act, through the appointment in
writing of such other person as such remaining Trustees in their discretion
shall determine and such appointment shall be effective upon the written
acceptance of the person named therein to serve as a Trustee and agreement
by such person to be bound by the provisions of this Declaration of Trust,
except that any such appointment in anticipation of a vacancy to occur by
reason of retirement, resignation or increase in number of Trustees to be
effective at a later date shall become effective only at or after the
effective date of said retirement, resignation or increase in number of
Trustees. As soon as any Trustee so appointed shall have accepted such
appointment and shall have agreed in writing to be bound by this
Declaration of Trust and the appointment is effective, the Trust estate
shall vest in the new Trustee, together with the continuing Trustees,
without any further act or conveyance.
(g) Effect of Death, Resignation, etc. The death, resignation,
retirement, removal or incapacity of the Trustees, or any one of them,
shall not operate to annul or terminate the Trust or any Sub-Trust
hereunder or to revoke or terminate any existing agency or contract created
or entered into pursuant to the terms of this Declaration of Trust.
(h) No Accounting. Except to the extent required by the 1940 Act or
under circumstances which would justify his or her removal for cause, no
person ceasing to be a Trustee as a result of his or her death,
resignation, retirement, removal or incapacity (nor the estate of any such
person) shall be required to make an accounting to the Shareholders or
remaining Trustees upon such cessation.
(i) Retirement Policy. Except for those individuals who (a) are
Trustees as of the date that the Commission declares the Trust's initial
Registration Statement on Form N-1A effective or (b) were members of the
Board of Directors or Trustees of an investment company having an
investment adviser or principal underwriter under common control with the
Trust's investment adviser or principal underwriter immediately prior to
such investment company's combination with the Trust by merger, acquisition
of assets or similar transaction, and of which Trustees may continue to be
nominated as Trustees and to serve as Trustees if elected or appointed in
accordance with Section 3.1 (c) of this Article III, an individual who has
reached the age of seventy-two (72) years may not be elected, re-elected or
appointed to serve as a Trustee.
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(j) Trustees Emeritus. An individual who has served as a Trustee for
minimum of five years (5) and who retires voluntarily or who may not stand
for re-election because of age may be designated by the remaining Trustees
as a Trustee Emeritus.
An individual designated as a Trustee Emeritus may, upon his or her
request, be permitted to attend meetings of the Trustees and to receive all
materials sent to active Trustees. A Trustee Emeritus shall not have voting
rights at meetings of the Trustees and shall not be under a duty to manage
or direct the business and affairs of the Trust. A Trustee Emeritus shall
not be deemed to stand in a fiduciary relation to the Trust and shall not
be responsible to discharge the duties of a Trustee or to exercise that
diligence, care or skill which a Trustee would ordinarily be required to
exercise under the laws of the Commonwealth of Massachusetts; provided,
however, that a Trustee Emeritus may be held liable to the Trust for any
action amounting to bad faith, willful misconduct or gross negligence,
disclosure of any confidential information of the Trust or appropriation of
any opportunity of the Trust.
A stipend, the amount to be determined by the Trustees from time to
time, which shall not exceed the basis upon which Trustees of the Trust are
compensated, shall be paid to each Trustee Emeritus. A Trustee Emeritus
shall be indemnified to the full extent that an officer or Trustee of the
Trust may be indemnified under any provision of this Declaration of Trust
or the By-Laws.
Section
3.2. Powers of Trustees. Subject to the provisions of this
Declaration of Trust, the business of the Trust shall be managed by the
Trustees, and they shall have all powers necessary or convenient to carry
out that responsibility and the purpose of the Trust. Without limiting the
foregoing, the Trustees may adopt By-Laws not inconsistent with this
Declaration of Trust providing for the conduct of the business and affairs
of the Trust and may amend and repeal them to the extent that such By-Laws
do not reserve that right to the Shareholders; they may from time to time
in accordance with the provisions of Section 4.1 hereof establish
Sub-Trusts, each such Sub-Trust to operate as a separate and distinct
investment medium and with separately defined investment objectives and
policies and distinct investment purpose; they may as they consider
appropriate elect and remove officers and appoint and terminate agents and
consultants and hire and terminate employees, any one or more of the
foregoing of whom may be a Trustee, and may provide for the compensation of
all of the foregoing; they may appoint from their own number, and
terminate, any one or more committees consisting of two or more Trustees,
including without implied limitation an executive committee, which may,
when the Trustees are not in session and subject to the 1940 Act, exercise
some or all of the power and authority of the Trustees as the Trustees may
determine; in accordance with Section 3.3 they may employ one or more
advisers, administrators, distributor, depositories and custodians and may
authorize any depository or custodian to employ subcustodians or agents and
to deposit all or any part of such assets in a system or systems for the
central handling of securities and debt instruments, retain transfer,
dividend, accounting or Shareholder servicing agents or any of the
foregoing, provide for the distribution of Shares by the Trust
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through one or more distributors, principal underwriters or otherwise, set
record dates or times for the determination of Shareholders or various of
them with respect to various matters; they may compensate or provide for
the compensation of the Trustees, officers, advisers, administrators,
custodians, other agents, consultants and employees of the Trust or the
Trustees on such terms as they deem appropriate; and in general they may
delegate to any officer of the Trust, to any committee of the Trustees and
to any employee, adviser, administrator, distributor, depository,
custodian, transfer and dividend disbursing agent, or any other agent or
consultant of the Trust, such authority, powers, functions and duties as
they consider desirable or appropriate for the conduct of the business and
affairs of the Trust, including without implied limitation the power and
authority to act in the name of the Trust and of the Trustees, to sign
documents and to act as attorney-in-fact for the Trustees.
Without limiting the foregoing and to the extent not inconsistent with
the 1940 Act or other applicable law, the Trustees shall have power and
authority for and on behalf of the Trust and each separate Sub-Trust
established hereunder:
(a) Investments. To invest and reinvest cash and other property and to
hold cash or other property uninvested without in any event being bound or
limited by any present or future law or custom in regard to investments by
trustees;
(b) Disposition of Assets. To sell, exchange, lend, pledge, mortgage,
hypothecate, write options on and lease any or all of the assets of the
Trust;
(c) Ownership Powers. To vote or give assent, or exercise any rights
of ownership, with respect to stock or other securities, debt instruments
or property; and to execute and deliver proxies or powers of attorney to
such person or persons as the Trustees shall deem proper, granting to such
person or persons such power and discretion with relation to securities,
debt instruments or property as the Trustees shall deem proper;
(d) Subscription. To exercise powers and rights of subscription or
otherwise which in any manner arise out of ownership of securities or debt
instruments;
(e) Form of Holding. To hold any security, debt instrument or property
in a form not indicating any trust, whether in bearer, unregistered or
other negotiable form, or in the name of the Trustees or of the Trust or of
any Sub-Trust or in the name of a custodian, subcustodian or other
depository or a nominee or nominees or otherwise;
(f) Reorganization, etc. To consent to or participate in any plan for
the reorganization, consolidation or merger of any corporation or issuer,
any security or debt instrument of which is or was held in the Trust; to
consent to any contract, lease, mortgage, purchase or sale of property by
such corporation or issuer; and to pay calls or subscriptions with respect
to any security or debt instrument held in the Trust;
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(g) Voting Trusts, etc. To join with other holders of any securities
or debt instruments in acting through a committee, depository, voting trustee
or otherwise, and in that connection to deposit any security or debt
instrument with, or transfer any security or debt instrument to, any
committee, depository or trustee, and to delegate to them such power and
authority with relation to any security or debt instrument (whether or not
so deposited or transferred) as the Trustees shall deem proper, and to
agree to pay, and to pay, such portion of the expenses and compensation of
such committee, depository or trustee as the Trustees shall deem proper;
(h) Compromise. To compromise, arbitrate or otherwise adjust claims in
favor of or against the Trust or any Sub-Trust of any matter in
controversy, including but not limited to claims for taxes;
(i) Partnerships, etc. To enter into joint ventures, general or
limited partnerships and any other combinations or associations;
(j) Borrowing and Security. To borrow funds and to mortgage and pledge
the assets of the Trust or any part thereof to secure obligations arising
in connection with such borrowing;
(k) Guarantees, etc. To endorse or guarantee the payment of any notes
or other obligations of any person; to make contracts of guaranty or
suretyship, or otherwise assume liability for payment thereof; and to
mortgage and pledge the Trust property or any part thereof to secure any of
or all such obligations;
(l) Insurance. To purchase and pay for entirely out of Trust property
such insurance as they may deem necessary or appropriate for the conduct of
the business, including, without limitation, insurance policies insuring
the assets of the Trust and payment of distributions and principal on its
portfolio investments, and insurance policies insuring the Shareholders,
Trustees, officers, employees, agents, consultants, investment advisers,
managers, administrators, distributors, principal underwriters or
independent contractors, or any thereof (or any person connected
therewith), of the Trust individually against all claims and liabilities of
every nature arising by reason of holding, being or having held any such
office or position, or by reason of any action alleged to have been taken
or omitted by any such person in any such capacity, including any action
taken or omitted that may be determined to constitute negligence, whether
or not the Trust would have the power to indemnify such person against such
liability; and
(m) Pensions, etc. To pay pensions for faithful service, as deemed
appropriate by the Trustees, and to adopt, establish and carry out pension,
profit-sharing, share bonus, share purchase, savings, thrift and other
retirement, incentive and benefit plans, trusts and provisions, including
the purchasing of life insurance and annuity contracts as a means of
providing such retirement and other benefits, for any or all of the
Trustees, officers, employees and agents of the Trust.
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Except as otherwise provided by the 1940 Act or other applicable law,
this Declaration of Trust or the By-Laws, any action to be taken by the
Trustees on behalf of the Trust or any Sub-Trust may be taken by a majority
of the Trustees present at a meeting of Trustees (a quorum, consisting of at
least a majority of the Trustees then in office, being present), within or
without Massachusetts, including any meeting held by means of a conference
telephone or other communications equipment by means of which all persons
participating in the meeting can hear each other at the same time and
participation by such means shall constitute presence in person at a
meeting, or by written consents of a majority of the Trustees then in
office (or such larger or different number as may be required by the 1940
Act or other applicable law).
Section 3.3 Certain Contracts. Subject to compliance with the
provisions of the 1940 Act, but notwithstanding any limitations of present
and future law or custom in regard to delegation of powers by trustees
generally, the Trustees may, at any time and from time to time and without
limiting the generality of their powers and authority otherwise set forth
herein, enter into one or more contracts with any one or more corporations,
trusts, associations, partnerships, limited partnerships, other types of
organizations or individuals ("Contracting Party") to provide for the
performance and assumption of some or all of the following services, duties
and responsibilities to, for or on behalf of the Trust and/or any Sub-Trust
and/or the Trustees, and to provide for the performance and assumption of
such other services, duties and responsibilities in addition to those set
forth below as the Trustees may determine appropriate:
(a) Advisory. Subject to the general supervision of the Trustees and
in conformity with the stated policy of the Trustees with respect to the
investments of the Trust or of the assets belonging to any Sub-Trust of the
Trust (as that phrase is defined in subsection (a) of Section 4.2), to
manage such investments and assets, make investment decisions with respect
thereto and to place purchase and sale orders for portfolio transactions
relating to such investments and assets;
(b) Administration. Subject to the general supervision of the Trustees
and in conformity with any policies of the Trustees with respect to the
operations of the Trust and each Sub-Trust, to supervise all or any part of
the operations of the Trust and each Sub-Trust and to provide all or any
part of the administrative and clerical personnel, office space and office
equipment and services appropriate for the efficient administration and
operations of the Trust and each Sub-Trust;
(c) Distribution. To distribute the Shares of the Trust and each
Sub-Trust, to be principal underwriter of such Shares, and/or to act as
agent of the Trust and each Sub-Trust in the sale of Shares and the
acceptance or rejection of orders for the purchase of Shares;
(d) Custodian and Depository. To act as depository for and to maintain
custody of the property of the Trust and each Sub-Trust and accounting
records in connection therewith;
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(e) Transfer and Dividend Disbursing Agency. To maintain records of
the ownership of outstanding Shares, the issuance and redemption and the
transfer thereof, and to disburse any dividends declared by the Trustees
and in accordance with the policies of the Trustees and/or the instructions
of any particular Shareholder to reinvest any such dividends;
(f) Shareholder Servicing. To provide service with respect to the
relationship of the Trust and its Shareholders, records with respect to
Shareholders and their Shares and similar matters; and
(g) Accounting. To handle all or any part of the accounting
responsibilities, whether with respect to the Trust's properties,
Shareholders or otherwise.
The same person may be the Contracting Party for some or all of the
services, duties and responsibilities to, for and of the Trust and/or the
Trustees, and the contracts with respect thereto may contain such terms
interpretive of or in addition to the delineation of the services, duties
and responsibilities provided for, including provisions that are not
inconsistent with the 1940 Act relating to the standard of duty of and the
rights to indemnification of the Contracting Party and others, as the
Trustees may determine. Nothing herein shall preclude, prevent or limit the
Trust or a Contracting Party from entering into sub-contractual
arrangements relative to any of the matters referred to in Sections 3.3(a)
through (g) hereof.
The fact that:
(i) any of the Shareholders, Trustees or officers of the Trust is a
shareholder, director, officer, partner, trustee, employee, manager,
adviser, principal underwriter or distributor or agent of or for any
Contracting Party, or of or for any parent or affiliate of any Contracting
Party, or that the Contracting Party or any parent or affiliate thereof is
a Shareholder or has an interest in the Trust or any Sub-Trust, or that
(ii) any Contracting Party may have a contract providing for the
rendering of any similar services to one or more other corporations,
trusts, associations, partnerships, limited partnerships or other
organizations, or have other business or interests,
shall not affect the validity of any contract for the performance and assumption
of services, duties and responsibilities to, for or of the Trust or any
Sub-Trust and/or the Trustees or disqualify any Shareholder, Trustee or officer
of the Trust from voting upon or executing the same or create any liability or
accountability to the Trust, any Sub-Trust or its Shareholders, provided that in
the case of any relationship or interest referred to in the preceding clause (i)
on the part of any Trustee or officer of the Trust either (x) the material facts
as to such relationship or interest have been disclosed to or are known by the
Trustees not having any such relationship or
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interest and the contract involved is approved in good faith by a majority
of such Trustees not having any such relationship or interest (even though
such unrelated or disinterested Trustees are less than a quorum of all of
the Trustees), (y) the material facts as to such relationship or interest
and as to the contract have been disclosed to or are known by the
Shareholders entitled to vote thereon and the contract involved is
specifically approved in good faith by vote of the Shareholders or (z) the
specific contract involved is fair to the Trust as of the time it is
authorized, approved or ratified by the Trustees or by the Shareholders.
Section 3.4 Payment of Trust Expenses and Compensation of Trustees.
The Trustees are authorized to pay or to cause to be paid out of the
principal or income of the Trust or any Sub-Trust, or partly out of
principal and partly out of income, and to charge or allocate the same to,
between or among such one or more of the Sub-Trusts that may be established
and designated pursuant to Article IV, as the Trustees deem fair, all
expenses, fees, charges, taxes and liabilities incurred or arising in
connection with the Trust or any Sub-Trust, or in connection with the
management thereof, including, but not limited to, the Trustees'
compensation and such expenses and charges for the services of the Trust's
officers, employees, investment adviser, administrator, distributor,
principal underwriter, auditor, counsel, depository, custodian, transfer
agent, dividend disbursing agent, accounting agent, shareholder servicing
agent, and such other agents, consultants, and independent contractors and
such other expenses and charges as the Trustees may deem necessary or
proper to incur. Without limiting the generality of any other provision
hereof, the Trustees shall be entitled to reasonable compensation from the
Trust for their services as Trustees and may fix the amount of such
compensation.
Section 3.5 Ownership of Assets of the Trust. Title to all of the
assets of the Trust shall at all times be considered as vested in the
Trustees.
ARTICLE IV
SHARES
Section 4.1 Description of Shares. The beneficial interest in the
Trust shall be divided into Shares, all without par value and of one class,
but the Trustees shall have the authority from time to time to divide the
class of Shares into two or more Series of Shares (each of which Series of
Shares shall be a separate and distinct Sub-Trust of the Trust, including
without limitation those Sub-Trusts specifically established and designated
in Section 4.2), as they deem necessary or desirable. Each Sub-Trust shall
be deemed to be a separate trust established under, and subject to the
terms of, this Declaration of Trust. The Trustees shall have exclusive
power without the requirement of shareholder approval to establish and
designate such separate and distinct Sub-Trusts, and to fix and determine
the relative rights and preferences as between the shares of the separate
Sub-Trusts as to right of redemption and the price, terms and manner of
redemption, special and relative rights as to dividends and other
distributions and on liquidation, sinking or purchase
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fund provisions, conversion rights and conditions under which the several
Sub-Trusts shall have separate voting rights or no voting rights.
The number of authorized Shares and the number of Shares of each
Sub-Trust that may be issued is unlimited, and the Trustees may issue
Shares of any Sub-Trust for such consideration and on such terms as they
may determine (or for no consideration if pursuant to a Share dividend or
split-up), all without action or approval of the Shareholders. All Shares
when so issued on the terms determined by the Trustees shall be fully paid
and non-assessable (but may be subject to mandatory contribution back to
the Trust as provided in subsection (h) of Section 4.2). The Trustees may
classify or reclassify any unissued Shares or any Shares previously issued
and reacquired of any Sub-Trust into one or more Sub-Trusts that may be
established and designated from time to time. The Trustees may hold as
treasury Shares, reissue for such consideration and on such terms as they
may determine, or cancel, at their discretion from time to time, any Shares
of any Sub-Trust as reacquired by the Trust.
The Trustees may from time to time close the transfer books or
establish record dates and times for the purposes of determining the
holders of Shares entitled to be treated as such, to the extent provided or
referred to in Section 5.3.
The establishment and designation of any Sub-Trust in addition to that
established and designated in Section 4.2 shall be effective upon the
execution by a majority of the then Trustees of an instrument setting forth
such establishment and designation and the relative rights and preferences
of the Shares of such Sub-Trust or as otherwise provided in such
instrument. At any time that there are no Shares outstanding of any
particular Sub-Trust previously established and designated, the Trustees
may by an instrument executed by a majority of their number abolish that
Sub-Trust and the establishment and designation thereof. Each instrument
referred to in this paragraph shall have the status of an amendment to this
Declaration of Trust.
Any Trustee, officer or other agent of the Trust, and any organization
in which any such person is interested, may acquire, own, hold and dispose
of Shares of any Sub-Trust of the Trust to the same extent as if such
person were not a Trustee, officer or other agent of the Trust; and the
Trust may issue and sell or cause to be issued and sold and may purchase
Shares of any Sub-Trust from any such person or any such organization
subject only to the general limitations, restrictions or other provisions
applicable to the sale or purchase of Shares of such Sub-Trust generally.
Section 4.2 Establishment and Designation of Sub-Trusts. Without
limiting the authority of the Trustees set forth in Section 4.1 to
establish and designate any further Sub-Trusts, the Trustees hereby
establish and designate one Sub-Trust: the "BJB Global Income Fund."
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The Fund and any Shares of any further Sub-Trusts that may from time
to time be established and designated by the Trustees shall (unless the
Trustees otherwise determine with respect to some further Sub-Trust at the
time of establishing and designating the same) have the following relative
rights and preferences:
(a) Assets Belonging to Sub-Trusts. All consideration received by the
Trust for the issue or sale of Shares of a particular Sub-Trust, together
with all assets in which such consideration is invested or reinvested, all
income, earnings, profits and proceeds thereof, including any proceeds
derived from the sale, exchange or liquidation of such assets, and any
funds or payments derived from any reinvestment of such proceeds in
whatever form the same may be, shall be held by the Trustees in trust for
the benefit of the holders of Shares of that Sub-Trust, shall irrevocably
belong to that Sub-Trust for all purpose and shall be so recorded upon the
books of account of the Trust. Such consideration, assets, income,
earnings, profits and proceeds thereof, including any proceeds derived from
the sale, exchange or liquidation of such assets, and any funds or payments
derived from any reinvestment of such proceeds, in whatever form the same
may be, together with any General Items allocated to that Sub-Trust as
provided in the following sentence, are herein referred to as "assets
belonging to" that Sub-Trust. In the event that there are any assets,
income, earnings, profits and proceeds thereof, funds or payments which are
not readily identifiable as belonging to any particular Sub-Trust
(collectively "General Items"), the Trustees shall allocate such General
Items to and among any one or more of the Sub-Trusts established and
designated from time to time in such manner and on such basis as they, in
their sole discretion, deem fair and equitable; and any General Items so
allocated to a particular Sub-Trust shall belong to that Sub-Trust. Each
such allocation by the Trustees shall be conclusive and binding upon the
Shareholders of all Sub-Trusts for all purposes.
(b) Liabilities Belonging to Sub-Trusts. The assets belonging to each
particular Sub-Trust shall be charged with the liabilities in respect of
that Sub-Trust and all expenses, costs, charges and reserves attributable
to that Sub-Trust, and any general liabilities, expenses, costs, charges or
reserves of the Trust which are not readily identifiable as belonging to
any particular Sub-Trust shall be allocated and charged by the Trustees to
and among any one or more of the Sub-Trusts established and designated from
time to time in such manner and on such basis as the Trustees in their sole
discretion deem fair and equitable. The liabilities, expenses, costs,
charges and reserves allocated and so charged to a Sub-Trust are herein
referred to as "liabilities belonging to" that Sub-Trust. Each allocation of
liabilities, expenses, costs, charges and reserves by the Trustees shall be
conclusive and binding upon the Shareholders of all Sub-Trusts for all
purposes. Any creditor of any Sub-Trust may look only to the assets of that
Sub-Trust to satisfy such creditor's debt.
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The Trustees shall have full discretion, to the extent not
inconsistent with the 1940 Act, to determine which items shall be treated
as income and which items as capital; and each such determination and
allocation shall be conclusive and binding upon the Shareholders.
(c) Dividends. Dividends and distributions on Shares of a particular
Sub-Trust may be paid with such frequency as the Trustees may determine,
which may be daily or otherwise pursuant to a standing resolution or
resolutions adopted only once or with such frequency as the Trustees may
determine, to the holders of Shares of that Sub-Trust, from such of the
income and capital gains, accrued or realized, from the assets belonging to
that Sub-Trust, as the Trustees may determine, after providing for actual
and accrued liabilities belonging to that Sub-Trust. All dividends and
distributions on Shares of a particular Sub-Trust shall be distributed pro
rata to the holders of Shares of that Sub-Trust in proportion to the number
of Shares of that Sub-Trust held by such holders at the date and time of
record established for the payment of such dividends or distributions,
except that in connection with any dividend or distribution program or
procedure the Trustees may determine that no dividend or distribution shall
be payable on Shares as to which the Shareholder's purchase order and/or
payment have not been received by the time or times established by the
Trustees under such program or procedure. Such dividends and distributions
may be made in cash or Shares of that Sub-Trust or a combination thereof as
determined by the Trustees or pursuant to any program that the Trustees may
have in effect at the time for the election by each Shareholder of the mode
of the making of such dividend or distribution to that Shareholder. Any
such dividend or distribution paid in Shares will be paid at the net asset
value thereof as determined in accordance with subsection (h) of Section
4.2.
(d) Liquidation. In the event of the liquidation or dissolution of the
Trust, the Shareholders of each Sub-Trust that has been established and
designated shall be entitled to receive, when and as declared by the
Trustees, the excess of the assets belonging to that Sub-Trust over the
liabilities belonging to that Sub-Trust. The assets so distributable to the
Shareholders of any particular Sub-Trust shall be distributed among such
Shareholders in proportion to the number of Shares of that Sub-Trust held
by them and recorded on the books of the Trust. The liquidation of any
particular Sub-Trust may be authorized by vote of a majority of the
Trustees then in office subject to the approval of a majority of the
outstanding voting Shares of that Sub-Trust, as defined in the 1940 Act.
(e) Voting. On each matter submitted to a vote of the Shareholders,
each holder of a Share of each Sub-Trust shall be entitled to one vote for
each whole Share and to a proportionate fractional vote for each fractional
Share standing in his name on the books of the Trust. The Trustees shall
cause each matter required or permitted to be voted upon at a meeting or by
written consent of Shareholders to be submitted to a vote of all classes of
outstanding Shares entitled to vote thereon (irrespective of class), unless
the 1940 Act or other applicable laws or regulations require that the
actions of the Shareholders be taken by a
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separate vote of one or more classes, or the Trustees determine that any
matter to be submitted to a vote of Shareholders affects only the rights or
interests of one or more (but not all) classes of outstanding Shares, in
which case only the Shareholders of the class or classes so affected shall
be entitled to vote thereon.
(f) Redemption by Shareholder. Each holder of Shares of a particular
Sub-Trust shall have the right at such times as may be permitted by the
Trust, but no less frequently than once each week, to require the Trust to
redeem all or any part of his Shares of that Sub-Trust at a redemption
price equal to the net asset value per Share of that Sub-Trust next
determined in accordance with subsection (h) of this Section 4.2 after the
Shares are properly tendered for redemption. Payment of the redemption
price shall be in cash; provided, however, that if the Trustees determine,
which determination shall be conclusive, that conditions exist which make
payment wholly in cash unwise or undesirable, the Trust may make payment
wholly or partly in securities or other assets belonging to the Sub-Trust
of which the Shares being redeemed are part at the value of such securities
or assets used in such determination of net asset value.
Notwithstanding the foregoing, the Trust may postpone payment of the
redemption price and may suspend the right of the holders of Shares of any
Sub-Trust to require the Trust to redeem Shares of that Sub-Trust during
any period or at any time when and to the extent permissible under the 1940
Act.
(g) Redemption by Trust. Each Share of each Sub-Trust that has been
established and designated is subject to redemption by the Trust at the
redemption price which would be applicable if such Share was then being
redeemed by the Shareholder pursuant to subsection (f) of this Section 4.2:
(a) at any time, if the Trustees determine in their sole discretion that
failure to so redeem may have materially adverse consequences to the
holders of the Shares of the Trust or any Sub-Trust thereof or (b) upon
such other conditions as may from time to time be determined by the
Trustees and set forth in the then current Prospectus of the Trust with
respect to maintenance of Shareholder accounts of a minimum amount. Upon
such redemption the holders of the Shares so redeemed shall have no further
right with respect thereto other than to receive payment of such redemption
price.
(h) Net Asset Value. The net asset value per Share of any Sub-Trust
shall be the quotient obtained by dividing the value of the net assets of
that Sub-Trust (being the value of the assets belonging to that Sub-Trust
less the liabilities belonging to that Sub-Trust) by the total number of
Shares of that Sub-Trust outstanding, all determined in accordance with the
methods and procedures, including without limitation those with respect to
rounding, established by the Trustees from time to time.
The Trustees may determine to maintain the net asset value per Share
of any Sub-Trust at a designated constant dollar amount and in connection
therewith may adopt procedures not inconsistent with the 1940 Act for the
continuing declarations of income attributable to that Sub-Trust as
dividends payable in additional Shares of that Sub-Trust at the designated
constant dollar amount
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and for the handling of any losses attributable to that Sub-Trust. Such
procedures may provide that in the event of any loss each Shareholder shall
be deemed to have contributed to the capital of the Trust attributable to
that Sub-Trust his pro rata portion of the total number of Shares required
to be cancelled in order to permit the net asset value per Share of that
Sub-Trust to be maintained, after reflecting such loss, at the designated
constant dollar amount. Each Shareholder of the Trust shall be deemed to
have agreed, by his or her investment in any Sub-Trust with respect to
which the Trustees shall have adopted any such procedure, to make the
contribution referred to in the preceding sentence in the event of any such
loss.
(i) Transfer. All Shares of each particular Sub-Trust shall be
transferable, but transfers of Shares of a particular Sub-Trust will be
recorded on the Share transfer records of the Trust applicable to that
Sub-Trust only at such times as Shareholders shall have the right to
require the Trust to redeem Shares of that Sub-Trust and at such other
times as may be permitted by the Trustees.
(j) Equality. All Shares of each particular Sub-Trust shall represent
an equal proportionate interest in the assets belonging to that Sub-Trust
(subject to the liabilities belonging to that Sub-Trust), and each Share of
any particular Sub-Trust shall be equal to each other Share of that
Sub-Trust; but the provisions of this sentence shall not restrict any
distinctions permissible under subsection (c) of this Section 4.2 that may
exist with respect to dividends and distributions on Shares of the same
Sub-Trust. The Trustees may from time to time divide or combine the Shares
of any particular Sub-Trust into a greater or lesser number of Shares of
that Sub-Trust without thereby changing the proportionate beneficial
interest in the assets belonging to that Sub-Trust or in any way affecting
the rights of Shares of any other Sub-Trust.
(k) Fractions. Any fractional Share of any Sub-Trust, if any such
fractional Share is outstanding, shall carry proportionately all of the
rights and obligations of a whole Share of that Sub-Trust, including rights
and obligations with respect to voting, receipt of dividends and
distributions, redemption of Shares and liquidation of the Trust.
(l) Conversion Rights. Subject to compliance with the requirements of
the 1940 Act, the Trustees shall have the authority to provide that holders
of Shares of any Sub-Trust shall have the right to convert said Shares into
Shares of one or more other Sub-Trusts in accordance with such requirements
and procedures as may be established by the Trustees.
Section 4.3 Ownership of Shares. The ownership of Shares shall be
recorded on the books of the Trust or of a transfer or similar agent for
the Trust, which books shall be maintained separately for the Shares of
each Sub-Trust that has been established and designated. No certificates
certifying the ownership of Shares need be issued except as the Trustees
may otherwise determine from time to time. The Trustees may make such rules
as they consider appropriate for the issuance of Shares certificates, the
use of facsimile signatures, the transfer of Shares and similar matters.
The record books
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of the Trust as kept by the Trust or any transfer or similar agent, as the
case may be, shall be conclusive as to who are the Shareholders and as to
the number of Shares of each Sub-Trust held from time to time by each such
Shareholder.
Section 4.4 Investments in the Trust. The Trustees may accept
investments in the Trust and each Sub-Trust thereof from such persons and
on such terms and for such consideration, not inconsistent with the
provisions of the 1940 Act, as they from time to time authorize. The
Trustees may authorize any distributor, principal underwriter, custodian,
transfer agent or other person to accept orders for the purchase of Shares
that conform to such authorized terms and to reject any purchase orders for
Shares whether or not conforming to such authorized terms.
Section 4.5 No Pre-emptive Rights. Shareholders shall have no
pre-emptive or other right to subscribe to any additional Shares or other
securities issued by the Trust.
Section 4.6 Status of Shares and Limitation of Personal Liability.
Shares shall be deemed to be personal property giving only the rights
provided in this instrument. Every Shareholder by virtue of having become a
Shareholder shall be held to have expressly assented and agreed to the
terms hereof and to have become a party hereto. The death of a Shareholder
during the continuance of the Trust shall not operate to terminate the
Trust or any Sub-Trust thereof or entitle the representative of any
deceased Shareholder to an accounting or to take any action in court or
elsewhere against the Trust or the Trustees, but only to the rights of said
decedent under this Trust. Ownership of Shares shall not entitle the
Shareholder to any title in or to the whole or any part of the Trust
property or right to call for a partition or division of the same or for an
accounting, nor shall the ownership of Shares constitute the Shareholders
partners. Neither the Trust nor the Trustees, nor any officer, employee or
agent of the Trust shall have any power to bind personally any Shareholder,
nor except as specifically provided herein to call upon any Shareholder for
the payment of any sum of money or assessment whatsoever other than such as
the Shareholder may at any time personally agree to pay.
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ARTICLE V
SHAREHOLDERS' VOTING POWERS AND MEETINGS
Section 5.1 Voting Powers. The Shareholders shall have power to vote
only (i) for the election or removal of Trustees as provided in Section
3.1, (ii) with respect to any contract with a Contracting Party as provided
in Section 3.3 as to which Shareholder approval is required by the 1940
Act, (iii) with respect to any termination or reorganization of the Trust
or any Sub-Trust to the extent and as provided in Sections 7.1 and 7.2,
(iv) with respect to any amendment of this Declaration of Trust to the
extent and as provided in Section 7.3, (v) to the same extent as the
stockholders of a Massachusetts business corporation as to whether or not a
court action, proceeding or claim should or should not be brought or
maintained derivatively or as a class action on behalf of the Trust or any
Sub-Trust thereof or the Shareholders (provided, however, that a
shareholder of a particular Sub-Trust shall not be entitled to a derivative
or class action on behalf of any other Sub-Trust (or shareholder of any
other Sub-Trust) of the Trust) and (vi) with respect to such additional
matters relating to the Trust as may be required by the 1940 Act, this
Declaration of Trust, the By-Laws or any registration of the Trust with the
Commission (or any successor agency) or any state, or as the Trustees may
consider necessary or desirable. There shall be no cumulative voting in the
election of Trustees. Shares may be voted in person or by proxy. A proxy
with respect to Shares held in the name of two or more persons shall be
valid if executed by any one of them unless at or prior to exercise of the
proxy the Trust receives a specific written notice to the contrary from any
one of them. A proxy purporting to be executed by or on behalf of a
Shareholder shall be deemed valid unless challenged at or prior to its
exercise and the burden of proving invalidity shall rest on the challenger.
Until Shares are issued, the Trustees may exercise all rights of
Shareholders and may take any action required by law, this Declaration of
Trust or the By-Laws to be taken by Shareholders.
Section 5.2 Meetings. Meetings of Shareholders may be called by the
Trustees from time to time for the purpose of taking action upon any matter
requiring the vote or authority of the Shareholders as herein provided or
upon any other matter deemed by the Trustees to be necessary or desirable.
Written notice of any meeting of Shareholders shall be given or caused to
be given by the Trustees by mailing such notice at least seven days before
such meeting, postage prepaid, stating the time, place and purpose of the
meeting, to each Shareholder at the Shareholder's address as it appears on
the records of the Trust.
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The Trustees shall promptly call and give notice of a meeting of
Shareholders for the purpose of voting upon removal of any Trustee of the
Trust when requested to do so in writing by Shareholders holding not less
than 10% of the Shares then outstanding. If the Trustees fail to call or
give notice of any meeting of Shareholders for a period of 30 days after
written application by Shareholders holding at least 10% of the Shares then
outstanding requesting a meeting be called for any other purpose requiring
action by the Shareholders as provided herein or in the By-Laws, then
Shareholders holding at least 10% of the Shares then outstanding may call
and give notice of such meeting, and thereupon the meeting shall be held in
the manner provided for herein in case of call thereof by the Trustees.
Section 5.3 Record Dates. For the purpose of determining the
Shareholders who are entitled to vote or act at any meeting or any
adjournment thereof, or who are entitled to participate in any dividend or
distribution, or for the purpose of any other action, the Trustees may from
time to time close the transfer books for such period, not exceeding 30
days (except at or in connection with the termination of the Trust), as the
Trustees may determine; or without closing the transfer books the Trustees
may fix a date and time not more than 60 days prior to the date of any
meeting of Shareholders or other action as the date and time of record for
the determination of Shareholders entitled to vote at such meeting or any
adjournment thereof or to be treated as Shareholders of record for purposes
of such other action, and any shareholder who was a Shareholder at the date
and time so fixed shall be entitled to vote at such meeting or any
adjournment thereof or to be treated as a Shareholder of record for
purposes of such other action, even though he has since that date and time
disposed of his Shares, and no Shareholder becoming such after that date
and time shall be so entitled to vote at such meeting or any adjournment
thereof or to be treated as a Shareholder of record for purposes of such
other action.
Section 5.4 Quorum and Required Vote. A majority of the Shares
entitled to vote shall be a quorum for the transaction of business at a
Shareholders' meeting, but any lesser number shall be sufficient for
adjournments. Any adjourned session or sessions may be held within a
reasonable time after the date set for the original meeting without the
necessity of further notice. A majority of the Shares voted, at a meeting
at which a quorum is present, shall decide any questions and a plurality
shall elect a Trustee, except when a different vote is required or
permitted by any provision of the 1940 Act or other applicable law or by
this Declaration of Trust or the By-Laws.
Section 5.5 Action by Written Consent. Subject to the provisions of
the 1940 Act and other applicable law, any action taken by Shareholders may
be taken without a meeting if a
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majority of Shareholders entitled to vote on the matter (or such larger
proportion thereof as shall be required by the 1940 Act or by any express
provision of this Declaration of Trust or the By-Laws) consent to the
action in writing and such written consents are filed with the records of
the meetings of Shareholders. Such consent shall be treated for all
purposes as a vote taken at a meeting of Shareholders.
Section 5.6 Inspection of Records. The records of the Trust shall be
open to inspection by Shareholders to the same extent as is permitted
stockholders of a Massachusetts business corporation under the
Massachusetts Business Corporation Law.
Section 5.7 Additional Provisions. The By-Laws may include further
provisions for Shareholders' votes and meetings and related matters not
inconsistent with the provisions hereof.
Section 5.8 Shareholder Communications. Whenever ten or more
Shareholders of record who have been such for at least six months preceding
the date of application, and who hold in the aggregate either Shares having
a net asset value of at least $25,000 or at least 1% of the outstanding
Shares, whichever is less, shall apply to the Trustees in writing, stating
that they wish to communicate with other Shareholders with a view to
obtaining signatures to a request for a Shareholder meeting and accompanied
by a form of communication and request which they wish to transmit, the
Trustees shall within five business days after receipt of such application
either (i) afford to such applicants access to a list of the names and
addresses of all Shareholders as recorded on the books of the Trust or (ii)
inform such applicants as to the approximate number of Shareholders of
record, and the approximate cost of mailing to them the proposed
communication and form of request.
If the Trustees elect to follow the course specified in item (ii)
above, the Trustees, upon the written request of such applications,
accompanied by a tender of the material to be mailed and of the reasonable
expense of mailing, shall, with reasonable promptness, mail such material
to all Shareholders of record at their addresses as recorded on the books
unless within five business days after such tender the Trustees shall mail
to such applicants and file with the Commission, together with a copy of
the material to be mailed, a written statement signed by at least a
majority of the Trustees to the effect that in their opinion either such
material contains untrue statements of fact or omits to state facts
necessary to make the statements contained therein not misleading, or would
be in violation of applicable law, and specifying the basis of such
opinion. The Trustees shall thereafter comply with the requirements of the
1940 Act.
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ARTICLE VI
LIMITATION OF LIABILITY; INDEMNIFICATION
Section 6.1 Trustees, Shareholders, etc. Not Personally Liable;
Notice. All persons extending credit to, contracting with or having any
claim against the Trust shall look only to the assets of the Sub-Trust with
which such person dealt for payment under such credit, contract or claim;
and neither the Shareholders of any Sub-Trust nor the Trustees nor any of
the Trust's officers, employees or agents, whether past, present or future,
nor any other Sub-Trust shall be personally liable therefor. Every note,
bond, contract, instrument, certificate or undertaking and every other act
or thing whatsoever executed or done by or on behalf of the Trust, any
Sub-Trust or the Trustees or any of them in connection with the Trust shall
be conclusively deemed to have been executed or done only by or for the
Trust (or the Sub-Trust) or the Trustees and not personally. Nothing in
this Declaration of Trust shall protect any Trustee or officer against any
liability to the Trust or the Shareholders to which such Trustee or officer
would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the
conduct of the office of Trustee or of such officer.
Every note, bond, contract, instrument, certificate or undertaking
made or issued by the Trustees or by any officers or officer shall give
notice that this Declaration of Trust is on file with the Secretary of the
Commonwealth of Massachusetts and shall recite to the effect that the same
was executed or made by or on behalf of the Trust or by them as Trustees or
Trustee or as officers or officer and not individually and that the
obligations of such instrument are not binding upon any of them or the
Shareholders individually but are binding only upon the assets and property
of the Trust, or the particular Sub-Trust in question, as the case may be,
but the omission thereof shall not operate to bind any Trustees or Trustee
or officers or officer or Shareholders or Shareholder individually.
Section 6.2 Trustee's Good Faith Action; Expert Advice; No Bond or
Surety. The exercise by the Trustees of their powers and discretions
hereunder shall be binding upon everyone interested. A Trustee shall be
liable for his own willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of the office of
Trustee, and for nothing else, and shall not be liable for errors of
judgment or mistakes of fact or law. Subject to the foregoing, (i) the
Trustees shall not be responsible or liable in any event for any neglect or
wrongdoing of any officer, agent, employee, consultant, adviser,
administrator, distributor or principal underwriter, custodian or transfer,
dividend disbursing, shareholder servicing or accounting agent of the
Trust, nor shall any Trustee be
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responsible for the act or omission of any other Trustee; (ii) the Trustees
may take advice of counsel or other experts with respect to the meaning and
operation of this Declaration of Trust and their duties as Trustees, and
shall be under no liability for any act or omission in accordance with
such advice or for failing to follow such advice; and (iii) in discharging
their duties, the Trustees, when acting in good faith, shall be entitled to
rely upon the books of account of the Trust and upon written reports made
to the Trustees by any officer appointed by them, any independent public
accountant and (with respect to the subject matter of the contract
involved) any officer, partner or responsible employee of a Contracting
Party appointed by the Trustees pursuant to Section 3.3. The Trustees as
such shall not be required to give any bond or surety or any other security
for the performance of their duties.
Section 6.3 Indemnification of Shareholders. In case any Shareholder
(or former Shareholder) of any Sub-Trust of the Trust shall be charged or
held to be personally liable for any obligation or liability of the Trust
solely by reason of being or having been a Shareholder and not because of
such Shareholder's acts or omissions or for some other reason, said
Sub-Trust (upon proper and timely request by the Shareholder) shall assume
the defense against such charge and satisfy any judgment thereon, and the
Shareholder or former Shareholder (or his or her heirs, executors,
administrators or other legal representatives or in the case of a
corporation or other entity, its corporate or other general successor)
shall be entitled out of the assets of said Sub-Trust estate to be held
harmless from and indemnified against all loss and expense arising from
such liability.
Section 6.4 Indemnification of Trustees, Officers, etc. The Trust
shall indemnify (from the assets of the Sub-Trust or Sub-Trusts in
question) each of its Trustees and officers (including persons who serve at
the Trust's request as directors, officers or trustees of another
organization in which the Trust has any interest as a shareholder, creditor
or otherwise (hereinafter referred to as a "Covered Person")) against all
liabilities, including but not limited to amounts paid in satisfaction of
judgments, in compromise or as fines and penalties, and expenses, including
reasonable accountants' and counsel fees, incurred by any Covered Person in
connection with the defense or disposition of any action, suit or other
proceeding, whether civil or criminal, before any court or administrative
or legislative body, in which such Covered Person may be or may have been
involved as a party or otherwise or with which such person may be or may
have been threatened, while in office or thereafter, by reason of being or
having been such a Trustee or officer, director or trustee, except with
respect to any matter as to which it has been determined that such Covered
Person (i) did not act in good faith in the reasonable belief that such
Covered Person's action was in or not opposed to the
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best interests of the Trust or (ii) had acted with willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of such Covered Person's office (either and both of the conduct
described in (i) and (ii) being referred to hereafter as "Disabling
Conduct"). A determination that the Covered Person is entitled to
indemnification may be made by (i) a final decision on the merits by a
court or other body before whom the proceeding was brought that the person
to be indemnified was not liable by reason of Disabling Conduct, (ii)
dismissal of a court action or an administrative proceeding against a
Covered Person for insufficiency of evidence of Disabling Conduct or (iii)
a reasonable determination, based upon a review of the facts, that the
indemnitee was not liable by reason of Disabling Conduct by (a) a vote of a
majority of a quorum of Trustees who are neither "interested persons" of
the Trust as defined in Section 2(a)(19) of the 1940 Act nor parties to the
proceeding or (b) an independent legal counsel in a written opinion.
Expenses, including accountants' and counsel fees so incurred by any such
Covered Person (but excluding amounts paid in satisfaction of judgments, in
compromise or as fines or penalties), may be paid from time to time by the
Sub-Trust in question in advance of the final disposition of any such
action, suit or proceeding, provided that the Covered Person shall have
undertaken to repay the amounts so paid to the Sub-Trust in question if it
is ultimately determined that indemnification of such expenses is not
authorized under this Article VI and (i) the Covered Person shall have
provided security for such undertaking, (ii) the Trust shall be insured
against losses arising by reason of any lawful advances or (iii) a majority
of a quorum of the disinterested Trustees who are not parties to the
proceeding, or an independent legal counsel in a written opinion, shall
have determined, based on a review of readily available facts (as opposed
to a full trial-type inquiry), that there is reason to believe that the
Covered Person ultimately will be found entitled to indemnification.
Section 6.5 Compromise Payment. As to any matter disposed of by a
compromise payment by any such Covered Person referred to in Section 6.4,
pursuant to a consent decree or otherwise, no such indemnification either
for said payment or for any other expenses shall be provided unless such
indemnification shall be approved (i) by a majority of the disinterested
Trustees who are not a party to the proceeding or (ii) by an independent
legal counsel in a written opinion. Approval by the Trustees pursuant to
clause (i) or by independent legal counsel pursuant to clause (ii) shall
not prevent the recovery from any Covered Person of any amount paid to such
Covered Person in accordance with any of such clauses as indemnification if
such Covered Person is subsequently adjudicated by a court of competent
jurisdiction not to have acted in good faith in the reasonable belief that
such Covered Person's action was in or not opposed to the best
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interests of the Trust or to have been liable to the Trust or its
Shareholders by reason of willful misfeasance, bad faith, gross negligence
or reckless disregard of the duties involved in the conduct of such Covered
Person's office.
Section 6.6 Indemnification Not Exclusive, etc. The right of
indemnification provided by this Article VI shall not be exclusive of or
affect any other rights to which any such Covered Person may be entitled.
As used in this Article VI, "Covered Person" shall include such person's
heirs, executors and administrators, an "interested Covered Person" is one
against whom the action, suit or other proceeding in question or another
action, suit or other proceeding on the same or similar grounds is then or
has been pending or threatened, and a "disinterested" person is a person
against whom none of such actions, suits or other proceedings or another
action, suit or other proceeding on the same or similar grounds is then or
has been pending or threatened. Nothing contained in this article shall
affect any rights to indemnification to which personnel of the Trust, other
than Trustees and officers, and other persons may be entitled by contract
or otherwise under law, nor the power of the Trust to purchase and maintain
liability insurance on behalf of any such person.
Section 6.7 Liability of Third Persons Dealing with Trustees. No
person dealing with the Trustees shall be bound to make any inquiry
concerning the validity of any transaction made or to be made by the
Trustees or to see to the application of any payments made or property
transferred to the Trust or upon its order.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Duration and Termination of Trust. Unless terminated as
provided herein, the Trust shall continue without limitation of time and,
without limiting the generality of the foregoing, no change, alteration or
modification with respect to any Sub-Trust shall operate to terminate the
Trust. The Trust may be terminated at any time by a majority of the
Trustees then in office subject to a favorable vote of a majority of the
outstanding voting securities, as defined in the 1940 Act, Shares of each
Sub-Trust voting separately by Sub-Trust.
Upon termination, after paying or otherwise providing for all charges,
taxes, expenses and liabilities, whether due or accrued or anticipated as
may be determined by the Trustees, the Trust shall in accordance with such
procedures as the Trustees consider appropriate reduce the remaining assets
to distributable form in cash, securities or other property, or any
combination thereof, and distribute the proceeds to the Shareholders, in
conformity with the provisions of subsection (d) of Section 4.2.
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Section 7.2 Reorganization. The Trust may merge or consolidate with
any other corporation, partnership, association, trust or other
organization and the Trustees may sell, convey, and transfer the assets of
the Trust, or the assets belonging to any one or more Sub-Trusts, to
another trust, partnership, association or corporation organized under the
laws of any state of the United States, or to the Trust to be held as
assets belonging to another Sub-Trust, in exchange for cash, shares or
other securities (including, in the case of a transfer to another Sub-Trust
of the Trust, Shares of such other Sub-Trust) with such transfer being made
subject to, or with the assumption by the transferee of, the liabilities
belonging to each Sub-Trust the assets of which are so transferred;
provided, however, that no assets belonging to any particular Sub-Trust
shall be so transferred unless the terms of such transfer shall have first
been approved at a meeting called for the purpose by the affirmative vote
of the holders of a majority of the outstanding voting Shares, as defined
in the 1940 Act, of that Sub-Trust. Any such consolidation or merger shall
require approval by the affirmative vote of the holders of a majority of
the outstanding voting Shares, as defined in the 1940 Act, of the Trust (or
each Sub-Trust affected thereby, as the case may be), except that such
affirmative vote of the holders of Shares shall not be required if the
Trust (or Sub-Trust affected thereby, as the case may be) shall be the
survivor of such consolidation or merger.
Section 7.3 Amendments. All rights granted to the Shareholders under
this Declaration of Trust are granted subject to the reservation of the
right to amend this Declaration of Trust as herein provided, except that no
amendment shall repeal the limitations on personal liability of any
Shareholder or Trustee or repeal the prohibition of assessment upon the
Shareholders without the express consent of each Shareholder or Trustee
involved. Subject to the foregoing, the provisions of this Declaration of
Trust (whether or not related to the rights of Shareholders) may be amended
at any time, so long as such amendment does not adversely affect the rights
of any Shareholder with respect to which such amendment is or purports to be
applicable and so long as such amendment is not in contravention of
applicable law, including the 1940 Act, by an instrument in writing signed
by a majority of the then Trustees (or by an officer of the Trust pursuant
to the vote of a majority of such Trustees). Any amendment to this
Declaration of Trust that adversely affects the rights of Shareholders may
be adopted at any time by an instrument in writing signed by a majority of
the then Trustees (or by an officer of the Trust pursuant to a vote of a
majority of such Trustees) when authorized to do so by the vote in
accordance with subsection (e) of Section 4.2 of Shareholders holding a
majority of the Shares entitled to vote. Subject to the foregoing, any such
amendment shall be effective
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as provided in the instrument containing the terms of such amendment or, if
there is no provision therein with respect to effectiveness, upon the
execution of such instrument and of a certificate (which may be a part of
such instrument) executed by a Trustee or officer of the Trust to the
effect that such amendment has been duly adopted.
Section 7.4 Resident Agent. The Trust may appoint and maintain a
resident agent in the Commonwealth of Massachusetts.
Section 7.5 Filing of Copies; References; Headings. The original or a
copy of this instrument and of each amendment hereto shall be kept at the
office of the Trust where it may be inspected by any Shareholder. A copy of
this instrument and of each amendment hereto shall be filed by the Trust
with the Secretary of the Commonwealth of Massachusetts and with the Boston
City Clerk, as well as any other governmental office where such filing may
from time to time be required, but the failure to make any such filing
shall not impair the effectiveness of this instrument or any such
amendment. Anyone dealing with the Trust may rely on a certificate by an
officer of the Trust as to whether or not any such amendments have been
made, as to the identities of the Trustees and officers, and as to any
matters in connection with the Trust hereunder; and, with the same effect
as if it were the original, may rely on a copy certified by an officer of
the Trust to be a copy of this instrument or of any such amendments. In
this instrument and in any such amendment, references to this instrument,
and all expressions like "herein", "hereof" and "hereunder" shall be deemed
to refer to this instrument as a whole as the same may be amended or
affected by any such amendments. The masculine gender shall include the
feminine and neuter genders. Headings are placed herein for convenience of
reference only and shall not be taken as a part hereof or control or affect
the meaning, construction or effect of this instrument. This instrument may
be executed in any number of counterparts each of which shall be deemed an
original.
Section 7.6 Applicable Law. This Declaration of Trust is made in the
Commonwealth of Massachusetts, and it is created under and is to be
governed by and construed and administered according to the laws of said
Commonwealth, including the Massachusetts Business Corporation Law as the
same may be amended from time to time, to which reference is made with the
intention that matters not specifically covered herein or as to which an
ambiguity may exist shall be resolved as if the Trust were a business
corporation organized in Massachusetts, but the reference to said Business
Corporation Law is not intended to give the Trust, the Trustees, the
Shareholders or any other person any right, power, authority or
responsibility available only to or in connection with an entity organized
in corporate form. The Trust shall be of the type referred to in Section 1
of Chapter 182 of the Massachusetts General Laws and of the type commonly
called a Massachusetts business trust and, without limiting the provisions
hereof, the Trust may exercise all powers which are ordinarily exercised by
such a trust.
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IN WITNESS WHEREOF, the undersigned have hereunto set their hands and
seals in the City of Boston, Massachusetts for themselves and their
assigns, as of the day and year first above written.
/s/ Lee D. Augsburger
-------------------------------
Lee D. Augsburger
as Trustee and not individually
/s/ Francis J. McNamara, III
-------------------------------
Francis J. McNamara, III
as Trustee and not individually
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BJB GLOBAL INCOME FUND
AMENDMENT NO. 1 TO MASTER TRUST AGREEMENT
(Amending Par Value Status of Shares of Beneficial Interest.)
The undersigned, Assistant Secretary of BJB Global Income Fund (the "Fund"),
does hereby certify that pursuant to Article VII, Section 7.3 of the Master
Trust Agreement of the Fund, dated April 30, 1992, the following votes were duly
adopted by at least a majority of Trustees of the Fund at a meeting duly called
and held on June 19, 1992:
VOTED: That the Shares of beneficial interest of the Fund as described in
Article IV, Section 4.1, shall have a par value of $.001 per Share; and
FURTHER
VOTED: That the first sentence of Section 4.1 be deleted in its entirety and
the folowing substituted in lieu thereof: "The beneficial interest in
the Trust shall be divided into Shares, all with a par value of $.001
and of one class, but the Trustees shall have the authority from time
to time to divide the class of Shares into two or more Series of Shares
(each of which Series of Shares shall be a separate and distinct
Sub-Trust of the Trust, including without limitation those Sub-Trusts
specifically established and designated in Section 4.2), as they deem
necessary or desirable."; and
FURTHER
VOTED: That the proper officers of the Fund be, and each of them hereby is,
authorized and empowered to execute all instruments and documents and
to take all actions as they or any one of them in his or her sole
discretion deems necessary and appropriate to carry out the intents and
purposes of the foregoing vote.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 22th day
of June, 1992.
/s/ Lee D. Augsburger
----------------------
Lee D. Augsburger
Assistant Secretary
BJB GLOBAL INCOME FUND
AMENDMENT NO. 2 TO THE MASTER TRUST AGREEMENT
(Change of Name of the Fund and Designation of Additional Sub-Trust)
The undersigned, Assistant Secretary of BJB Global Income Fund (the
"Fund"), does hereby certify that pursuant to Article I, Section 1.1 and
Article VII, Section 7.3 of the Master Trust Agreement dated April 30,
1992, the following votes were duly adopted by the Board of Trustees at a
Regular Meeting of the Board held on September 15, 1993:
VOTED: That the name of the Fund previously established and designated
pursuant to the Fund's Master Trust Agreement be modified and amended
as set forth below:
Current Name: Name as Amended:
------------- ----------------
BJB Global Income Fund BJB Investment Funds
;and further
VOTED: That the master Trust Agreement is hereby amended so as to establish and
designate a new Sub-Trust of the Trust, such Sub-Trust to be known as
"BJB International Equity Fund", and that the number of shares of such
Sub-Trust which the Trust is authorized to issue is an unlimited number
of shares of beneficial interest, all without par value, with the shares
of such Sub-Trust having such relative rights and preferences as set
forth in the Master Trust Agreement for separate Sub-Trusts; and further
VOTED: That the appropriate officers of the Fund be, and each hereby is,
authorized to execute and file any notices required to be filed
reflecting the foregoing changes; to execute amendments to the Fund's
Master Trust Agreement and By-Laws reflecting the foregoing change; and
to execute and file all requisite certificates, documents and
instruments and to take such other actions required to cause said
amendment to become effective and to pay all requisite fees and expenses
incident thereto.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 16th
day of September, 1993.
/s/ Lee D. Augsburger
----------------------------
Lee D. Augsburger
Assistant Secretary
<PAGE>
BJB INVESTMENT FUNDS
AMENDMENT NO. 3 TO MASTER TRUST AGREEMENT
Amendment No. 3 to the Master Trust Agreement dated April 30, 1992, as
amended, made at Boston, Massachusetts, this 26th day of January, 1995.
WITNESSETH:
WHEREAS, Section 7.3 of the Master Trust Agreement dated April 30, 1992, as
amended (the "Agreement"), of BJB Income Fund (the "Trust") provides that the
Agreement may be amended at any time, as long as such amendment does not
adversely affect the rights of any shareholder and so long as such amendment is
not in contravention of applicable law, including the Investment Company Act of
1940, as amended, by an instrument in writing, signed by an officer of the Trust
pursuant to a vote of a majority of the Trustees of the Trust; and
WHEREAS, at a meeting of the Board of Trustees of the Trust held on
September 15, 1993 a majority of the Trustees voted to amend the Agreement to
permit the issuance of classes of shares of any series of the Trust; and
WHEREAS, at a meeting of the Board of Trustees of the Trust held on
September 15, 1993 a majority of the Trustees voted: (i) to establish two
classes of shares of BJB Global Income Fund (the "Income Fund"), to be
designated as Class A and Class B shares; (ii) to redesignate the then
authorized, issued and outstanding shares of beneficial interest of the Income
Fund as Class A shares, without changing in any manner the preferences,
conversion or other rights, voting powers, restrictions, limitations as to
dividends, qualifications or terms or conditions of redemption thereof; and
(iii) to establish two classes of shares of BJB International Equity Fund (the
"Equity Fund"), to be designated as Class A and Class B shares.
NOW, THEREFORE, the undersigned, the duly elected and acting Secretary of
the Trust, pursuant to the authorization described above, hereby declares that,
effective as of September 15, 1993, the Agreement is amended as follows:
1. The Trustees may authorize the issuance of classes of shares of any
Series, each such class to have such different dividend, liquidation, voting and
conversion and other rights as the Trustees may determine.
2. Two classes of shares of the Income Fund are established and designated
as Class A and Class B shares, and the authorized, issued and outstanding shares
of beneficial interest of the Income Fund as of September 15, 1993 are
redesignated as Class A shares, without changing in any manner the preferences,
conversion or other rights, voting powers, restrictions, limitations as to
dividends, qualifications or terms or conditions of redemption thereof.
<PAGE>
3. Two classes of shares of the Equity Fund are established and designated
as Class A and Class B shares.
4. All consideration received by the Income Fund or the Equity Fund (each,
a "Fund") for the issue or sale of Class A and Class B shares shall be invested
and reinvested with the consideration received by the Fund for the issue and
sale of all other shares of beneficial interest in the Fund then or thereafter
designated together with all income, earnings, profits and proceeds thereof,
including any proceeds derived from the sale, exchange or liquidation thereof,
any funds or payments derived from any reinvestment of such proceeds in whatever
form the same may be, and any general assets of the Fund allocated to Class A
shares, Class B shares or such other classes of shares, by the Board of Trustees
in accordance with the Agreement, and each share shall share equally with each
such other share in such consideration and other assets, income, earnings,
profits and proceeds thereof, and any assets derived from any reinvestment of
such proceeds in whatever form.
5. Each share of Class A and Class B of the Income Fund or the Equity Fund
shall have, upon its issuance, all of the preferences, conversion and other
rights, voting powers, restrictions, limitations as to dividends, qualifications
and terms and conditions of redemption currently accorded each other share of
beneficial interest in the Fund then or thereafter designated, including that
each Class A and Class B share shall be charged equally with each other share in
the Fund then or thereafter designated (irrespective of whether said share has
been designated as part of a series of said class and, if so designated,
irrespective of the particular series designation) with the epxenses and
liabilities of the Fund in respect of Class A shares and Class B shares or such
other shares and in respect of any general expenses and liabilities of the Fund
allocated to Class A shares, Class B shares or such other shares by the Board of
Trustees in accordance with the Agreement; provided, however, that to the
extent permitted by rule or order of the Securities and Exchange Commission or
any successor governmental authority:
(a) Each class of shares of a Fund shall bear the expenses and liabilities
relating to any agreements or arrangements entered into by or on
behalf of the Fund pursuant to which an organization or other person
agrees to provide services with respect to such class but not with
respect to other classes of the Fund as well as any other expenses and
liabilities directly attributable to such class which the Board of
Trustees determines should be borne solely by such class; and
(b) On any matter that pertains to the agreements, arrangements, expenses
or liabilities described in clause (a) above (or to any plan or other
document adopted by a Fund relating to said agreements, arrangements,
expenses and liabilities) and is submitted to a vote of shareholders
of the Fund, only such class of shares shall be entitled to vote,
except that: (i) if said matter affects shares of beneficial interest
in the Fund other than such class, such other affected shares in the
Fund shall also be entitled to vote, and in such case,
2
<PAGE>
shares shall be voted in the aggregate together with such other
affected shares and not by class or series, except where otherwise
required by law or permitted by the Board of Trustees and (ii) if said
matter does not affect another class of shares, shares of said class
shall not be entitled to vote (except where otherwise required by law
or permitted by the Board of Trustees).
IN WITNESS WHEREOF, the undersigned has hereby set her hand and seal as of
the date first set forth above.
/s/ Patricia L. Bickimer
-------------------------------
Name: Patricia L. Bickimer
Title: Secretary
3
BY-LAWS
OF
BJB GLOBAL INCOME FUND
APRIL 30, 1992
ARTICLE 1
Agreement and Declaration of Trust and Principal Office
1.1 Agreement and Declaration of Trust. These By-Laws
shall be subject to the Master Trust Agreement, as from time to
time in effect (the "Master Trust Agreement"), of BJB Global Income
Fund, the Massachusetts business trust established by the Master
Trust Agreement (the "Trust").
1.2 Principal Office of the Trust. The principal office
of the Trust shall be located at One Exchange Place, Boston,
Massachusetts 02109.
ARTICLE 2
Meetings of Trustees
2.1 Regular Meetings. Regular meetings of the Trustees
may be held without call or notice at such places and at such times
as the Trustees may from time to time determine, provided that
notice of the first regular meeting following any such
determination shall be given to absent Trustees.
2.2 Special Meetings. Special meetings of the Trustees
may be held at any time and at any place designated in the call of
the meeting when called by the Chairman of the Trustees, the
President or the Treasurer or by two or more Trustees, sufficient
notice thereof being given to each Trustee by the Secretary or an
Assistant Secretary or by the officer of the Trustees calling the
meeting.
2.3 Notice. It shall be sufficient notice to a Trustee of
a special meeting to send notice by mail at least forty-eight hours
or by telegram at least twenty-four hours before the meeting
addressed to the Trustee at his or her usual or last known business
or residence address or to give notice to him or her in person or
by telephone at least twenty-four hours before the meeting. Notice
of a meeting need not be given to any Trustee if a written waiver
of notice, executed by him or her before or after the meeting, is
filed with the records of the meeting, or to any Trustee who
attends the meeting without protesting prior thereto or at its
commencement the lack of notice to him or her. Neither notice of
a meeting nor a waiver of a notice need specify the purpose of the
meeting.
2.4 Quorum. At any meeting of the Trustees a majority of
the Trustees then in office shall constitute a quorum. Any meeting
may be adjourned from time to time by a majority of the votes cast
upon the question, whether or not a quorum is present, and the
meeting may be held as adjourned without further notice.
2.5 Participation by Telephone. One or more of the
Trustees or of any committee of the Trustees may participate in a
meeting thereof by means of a conference telephone or similar
communications equipment allowing all persons participating in the
meeting to hear each other at the same time. Participation by such
means shall constitute presence in person at a meeting.
ARTICLE 3
Officers
3.1 Enumeration; Qualification. The officers of the Trust
shall be a Chairman of the Trustees, a President, a Treasurer, a
Secretary and such other officers, including Vice Presidents, if
any, as the Trustees from time to time may in their discretion
elect. The Trust may also have such agents as the Trustees from
time to time in their discretion may appoint. The Chairman of the
Trustees shall be a Trustee and may but need not be a shareholder;
and any other officer may be but none need be a Trustee or
shareholder. Any two or more offices may be held by the same
person.
3.2 Election. The Chairman of the Trustees, the
President, the Treasurer and the Secretary shall be elected
annually by the Trustees. Other officers, if any, may be elected
or appointed by the Trustees at any time. Vacancies in any office
may be filled at any time.
3.3 Tenure. The Chairman of the Trustees, the President,
the Treasurer and the Secretary shall hold office until their
respective successors are chosen and qualified, or in each case
until he or she sooner dies, resigns, is removed or becomes
disqualified. Each other officer shall hold office and each agent
shall retain authority at the pleasure of the Trustees.
3.4 Powers. Subject to the other provisions of these
By-Laws, each officer shall have, in addition to the duties and
powers herein and in the Master Trust Agreement set forth, such
duties and powers as are commonly incident to the office occupied
by him or her as if the Trust were organized as a Massachusetts
business corporation and such other duties and powers as the
Trustees may from time to time designate.
3.5 Chairman; President. Unless the Trustees otherwise
provide, the Chairman of the Trustees, or, if there is none, or in
the absence of chairman, the President shall preside at all
meetings of the shareholders and of the Trustees. The Chairman
shall be the chief executive officer.
3.6 Treasurer. The Treasurer shall be the chief financial
and accounting officer of the Trust, and shall, subject to the
provisions of the Master Trust Agreement and to any arrangement
made by the Trustees with a custodian, investment adviser or
manager, or transfer, shareholder servicing or similar agent, be in
charge of the valuable papers, books of account and accounting
records of the Trust, and shall have such other duties and powers
as may be designated from time to time by the Trustees or by the
President.
3.7 Secretary. The Secretary shall record all proceedings
of the shareholders and the Trustees in books to be kept therefor,
which books or a copy thereof shall be kept at the principal office
of the Trust. In the absence of the Secretary from any meeting of
the shareholders or Trustees, an assistant secretary, or if there
be none or if he or she is absent, a temporary secretary chosen at
such meeting shall record the proceedings thereof in the aforesaid
books.
3.8 Resignations and Removals. Any Trustee or officer may
resign at any time by written instrument signed by him or her and
delivered to the Chairman, the President or the Secretary or to a
meeting of the Trustees. Such resignation shall be effective upon
receipt unless specified to be effective at some other time. The
Trustees may remove any officer elected by them with or without
cause. Except to the extent expressly provided in a written
agreement with the Trust; no Trustee or officer resigning and no
officer removed shall have any right to any compensation for any
period following his or her resignation or removal.
ARTICLE 4
Committees
4.1 General. The Trustees, by vote of a majority of the
Trustees then in office, may elect from their number an Executive
Committee or other committees and may delegate thereof some or all
of their powers except those which by law, by the Master Trust
Agreement, or by these By-Laws may not be delegated. Except as the
Trustees may otherwise determine, any such committee may make rules
for the conduct or in such rules, its business shall be conducted
so far as possible in the same manner as is provided by these
By-Laws for the Trustees themselves. All members of such
committees shall hold such office at the pleasure of the
Trustees. The Trustees may abolish any such committee at any
time. Any committee to which the Trustees delegate any of their
power or duties shall keep records of its meetings, and shall
report its action to the Trustees. The Trustees shall have power
to rescind any action of any committee, but no such rescission
shall have retroactive effect.
ARTICLE 5
Reports
5.1 General. The Trustees and officers shall render
reports at the time and in the manner required by the Master Trust
Agreement or any applicable law. Officers and Committees shall
render such additional reports as they may deed desirable or as may
from time to time be required by the Trustees.
ARTICLE 6
Seal
6.1 General. The seal of the Trust shall consist of a
flat-faced die with the word "Massachusetts", together with the
name of the Trust and the year of its organization, cut or engraved
thereon, but, unless otherwise required by the Trustees, the seal
shall not be necessary to be placed on, and its absence shall not
impair the validity of, any document, instrument or other paper
executed and delivered by or on behalf of the Trust.
ARTICLE 7
Execution of Papers
7.1 General. Except as the Trustees may generally or in
particular cases authorize the execution thereof in some other
manner, all deeds, leases, contracts, notes and other obligations
made by the Trustees shall be signed by the President, any Vice
President or the Treasurer and need not bear the seal of the Trust.
ARTICLE 8
Issuance of Share Certificates
8.1 Share Certificates. In lieu of issuing certificates
for shares, the Trustees or the transfer agent may either issue
receipts therefor or may keep accounts upon the books of the Trust
for the record holders of such shares, who shall in either case
be deemed, for all purpose hereunder, to be the holders of
certificates for such shares as if they had accepted such
certificates and shall be held to have expressly assented and
agreed to the terms hereof.
The Trustees may at any time authorize the issuance of
share certificates. In that event, each shareholder shall be
entitled to a certificate stating the number of shares owned by him
or her, in such form as shall be prescribed from time to time by
the Trustees. Such certificate shall be signed by the President or
a Vice-President and by the Treasurer or Assistant Treasurer.
Such signatures may be facsimiles if the certificate is signed by a
transfer agent, or by a registrar, other that a Trustee, officer or
employee of the Trust. In case any officer who has signed or whose
facsimile signature has been placed on such certificate shall cease
to be such officer before such certificate is issued, it may be
issued by the Trust with the same effect as it he were such officer
at the time of its issue.
8.2 Loss of Certificates. In case of the alleged loss or
destruction or the mutilation of a share certificate, a duplicate
certificate may be issued in place thereof, upon such terms as the
Trustees shall prescribe.
8.3 Issuance of New Certificate to Pledgee. A pledgee of
shares transferred as collateral security shall be entitled to a
new certificate if the instrument of transfer substantially
describes the debt or duty that is intended to be secured thereby.
Such new certificate shall express on its face that it is held as
collateral security, and the name of the pledgor shall be stated
thereon, who alone shall be liable as a shareholder, and entitled
to vote thereon.
8.4 Discontinuance of Issuance of Certificates. The
Trustees may at any time discontinue the issuance of share
certificates and may, by written notice to each shareholder,
require the surrender of shares certificates to the Trust for
cancellation. Such surrender and cancellation shall not affect the
ownership of shares in the Trust.
ARTICLE 9
Custodian
9.1 General. The Trust shall at all times employ a bank
or trust company having a capital, surplus and undivided profits of
at least Two Million Dollars ($2,000,000) as Custodian of the
capital assets of the Trust. The Custodian shall be compensated
for its services by the Trust and upon such basis as shall be
agreed upon from time to time between the Trust and the Custodian.
ARTICLE 10
Dealings with Trustees and Officers
Any Trustee, officer or other agent of the Trust may
acquire, own and dispose of shares of the Trust to the same extent
as if he or she were not a trustee, officer or agent; and the
Trustees may accept subscriptions to shares or repurchase shares
from any firm or company in which he or she is interested.
ARTICLE 11
Shareholders
11.1 Meetings. A meeting of the shareholders of the Trust
shall be held whenever called by the Trustees and whenever election
of a Trustee or Trustees by shareholders is required by the
provisions of section 16(a) of the Investment Company Act of 1940
for that purpose. The Trustees shall promptly call and give notice
of a meeting of shareholders for the purpose of voting upon removal
of any Trustees of the Trust when requested to do so in writing by
shareholders holding not less than 10% of the shares then
outstanding. Meetings of shareholders for any other purpose shall
also be called by the Trustees when requested in writing by
shareholders holding at least 10% of the shares then outstanding,
or if the Trustees shall fail to call or give notice of any meeting
of shareholders for a period of 30 days after such application,
then shareholders holding at least 10% of the shares then
outstanding may call and give notice of such meeting.
11. Record Dates. For the purpose of determining the
shareholders who are entitled to vote or act at a meeting or any
adjournment thereof, or who are entitled to receive payment of any
dividend or of any other distribution, the Trustees may from time
to time fix a time, which shall be not more than 60 days before the
date of any meeting of shareholders or the date for the payment of
any dividend or of any other distribution, as the record date for
determining the shareholders having the right to notice of and to
vote at such meeting and any adjournment thereof or the right to
receive such dividend or distribution, and in such case only
shareholders of record on such record date shall have such right,
notwithstanding any transfer of shares on the books of the Trust
after the record date; or without fixing such record date the
Trustees may for any such purposes close the register or transfer
books for all or any part of such period.
ARTICLE 12
Amendments to the By-Laws
12.1 General. These By-Laws may be amended or repealed, in
whole or in part, by a majority of the Trustees then in office at
any meeting of the Trustees, or by one or more writings signed by
such a majority.
ARTICLE 13
Declaration of Trust
The Master Trust Agreement establishing BJB Global Income
Fund, dated April 30, 1992, a copy of which, together with all
amendments thereto, is on file in the office of the Secretary of
The Commonwealth of Massachusetts, provides that the name BJB
Global Income Fund refers to the Trustees under the Master Trust
Agreement collectively as Trustees, but not as individuals or
personally; and no Trustee, shareholder, officer, employee or agent
of BJB Global Income Fund shall be held to any personal liability,
nor shall resort be had to their private property, for the
satisfaction of any obligation or claim or otherwise, in connection
with the future affairs of BJB Global Income Fund, but the Trust
Estate only shall be liable.
<PAGE>
INVESTMENT ADVISORY AGREEMENT
October 4, 1993
Bank Julius Baer & Co., Ltd.
330 Madison Avenue
New York, New York 10017
Dear Sirs:
BJB Investment Funds (the "Trust"), a business trust organized under
the law of The Commonwealth of Massachusetts, herewith confirms its
agreement with Bank Julius Baer & Co., Ltd., New York branch (the
"Adviser"), regarding investment advisory services to be provided by the
Adviser in connection with the Trust's BJB International Equity Fund (the
"Fund") as follows:
1. Investment Description; Appointment
The Trust desires to employ the Fund's capital by investing and
reinvesting in investments of the kind and in accordance with the
limitations specified in the Trust's Master Trust Agreement, as the same
may from time to time be amended, and in its Registration Statement as
from time to time in effect, and in such manner and to such extent as may
from time to time be approved by the Board of Trustees of the Trust.
Copies of the Trust's Registration Statement and Master Trust Agreement
have been or will be submitted to the Adviser. The Trust agrees to provide
copies of all amendments to the Trust's Registration Statement and Master
Trust Agreement to the Adviser on an on-going basis. The Trust desires to
employ and hereby appoints the Adviser to act as investment adviser and
servicing agent to the Fund. The Adviser accepts the appointment and
agrees to furnish the services described herein for the compensation set
forth below.
2. Services as Investment Adviser
Subject to the supervision and direction of the Board of Trustees of
the Trust, the Adviser will (a) act in accordance with the Trust's Master
Trust Agreement, the Investment Company Act of 1940 and the Investment
Advisors Act of 1940, as the same from time to time be amended, (b) manage
the Fund's assets in accordance with its investment objective and policies
as stated in the Trust's Registration Statement as from time to time in
effect, (c) make investment decisions and exercise voting rights in
respect of portfolio securities for the Fund and (d) place purchase and
sale orders on behalf of the Fund. In providing these services, the
Adviser will provide investment research and supervision of the Fund's
investments and conduct a continual program of investment, evaluation and,
if appropriate, sale and reinvestment of the Fund's assets. In addition,
the Adviser will furnish the Fund with
<PAGE>
whatever statistical information the Fund may reasonably request with respect
to the securities that the Fund may hold or contemplate purchasing.
3. Services as Servicing Agent.
Subject to the supervision and direction of the Board of Trustees of
the Trust, The Adviser undertakes to perform the following administrative
and shareholder services to the extent that no other party is obligated to
perform them on behalf of the Fund:
(a) Furnishing certain internal executive and administrative
services; responding to shareholder inquiries; and providing stationery
and office supplies in connection with the foregoing;
(b) Providing the Fund with office space (which may be in The
Adviser's own offices);
(c) Furnishing certain corporate secretarial services, including
assisting in the preparation of materials for meetings of the Board of
Trustees;
(d) Coordinating and preparation of proxy statements and annual
and semi-annual reports to the Fund's shareholders;
(e) Assisting in the preparation of the Fund's tax returns;
(f) Assisting in monitoring and developing compliance procedures
for the Fund which will include, among other matters, procedures for
monitoring compliance with the Fund's investment objective, policies,
restrictions, tax matters and applicable laws and regulations;
(g) Acting as liaison between the Fund and the Fund's
independent public accountants, counsel, custodian or custodians,
administrator and transfer and dividend-paying agent and registrar, 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; and
(h) Furnishing to the Board of Trustees quarterly written
reports which set out the amounts expended under the Distribution and
Shareholder Services Plans and the purposes for which those expenditures
were made.
In performing all services under this Agreement, The Adviser shall
act in conformity with applicable law, the Trust's Master Trust Agreement
and By-Laws, and all amendments thereto, and the investment objective,
investment policies and other practices and policies set forth in the
Trust's Registration Statement, as such Registration Statement and
practices and policies may be amended from time to time.
-2-
<PAGE>
4. Brokerage
In executing transactions for the Fund and selecting brokers or
dealers, the Adviser will use its best efforts to seek the best overall
terms available. In assessing the best overall terms available for any
Fund transaction, the Adviser will consider all factors it deems relevant
including, but not limited to, breadth of the market in the security, the
price of the security, the financial condition and execution capability of
the broker or dealer and the reasonableness of any commission for the
specific transaction on a continuing basis. In selecting brokers or
dealers to execute a particular transaction and in evaluating the best
overall terms available, the Adviser may consider the brokerage and
research services (as those terms are defined in Section 28(e) of the
Securities Exchange Act of 1934) provided to the Trust and/or other
accounts over which the Adviser or an affiliate exercises investment
discretion.
5. Information Provided to the Trust
The Adviser will use its best efforts to keep the Trust informed of
developments materially affecting the Fund, and will, on its own
initiative, furnish the Trust from time to time whatever information the
Adviser believes is appropriate for this purpose.
6. Standard of Care
The Adviser shall exercise its best judgment in rendering the
services described in paragraphs 2, 3, 4 and 5 above. The Adviser 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 herein shall be deemed to protect
or purport to protect the Adviser against any liability to the Fund or its
shareholders to which the Adviser would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence on its part in the
performance of its duties from reckless disregard by it of its obligations
and duties under this Agreement ("disabling conduct"). The Fund will
indemnify the 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 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 person
to be indemnified 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 person to be indemnified was not liable by
reason of disabling conduct by (a) the vote of a majority of a quorum of
non-party trustees who are not "interested persons" of the Trust or (b) an
independent legal counsel in a written opinion.
-3-
<PAGE>
7. Compensation
(a) In consideration of the services rendered pursuant to this
Agreement, the Fund will pay the Adviser after the end of each calendar
quarter thereafter a fee for the previous quarter calculated at an annual
rate of 1.00% of the Fund's average daily net assets. The fee for the
period from the date Post-Effective Amendment No. 3 is declared effective
by the Securities and Exchange Commission to the end of the first calendar
quarter during which such Post-Effective Amendment is declared effective
shall be pro-rated according to the proportion that such period bears to
the full quarterly period.
(b) Upon any termination of this Agreement before the end of a
quarter, the fee for such part of that quarter shall be prorated according
to the proportion that such period bears to the full quarterly period and
shall be payable upon the date of termination of this Agreement. For the
purpose of determining fees payable to the Adviser, the value of the Fund's
net assets shall be computed at the times and in the manner specified in
the Trust's Registration Statement as from time to time in effect.
8. Expenses
The Adviser will bear all expenses in connection with the performance
of its services under this Agreement, including compensation of and office
space for its officers and employees connected with investment and
economic research, trading and investment management and administration of
the Fund, as well as the fees of all Trustees of the Trust who are
affiliated with the Adviser or any of its affiliates. The Fund will bear
certain other expenses to be incurred in its operation, including:
organizational expenses; taxes, interest, brokerage costs and
commissions; fees of Trustees of the Trust who are not officers,
directors, or employees of the Adviser, the Fund's distributor or
administrator or any of their affiliates; Securities and Exchange
Commission fees; state Blue Sky qualification fees; charges of the
custodian, any subcustodians, and transfer and dividend-paying agents;
insurance premiums; outside auditing, pricing and legal expenses; costs of
maintenance of the Trust's existence; costs attributable to investor
services, including, without limitation, telephone and personnel
expenses; costs of printing stock certificates; 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 of the shareholders of the Fund and
of the officers or Board of Trustees of the Trust; membership fees in
trade associations; litigation and other extraordinary or non-recurring
expenses. In addition, the Fund will pay distribution fees pursuant to a
Distribution Plan adopted under Rule 12b-1 of the Investment Company Act
of 1940, as amended, and pursuant to a Shareholder Services Plan.
9. Reimbursement to the Fund
If in any fiscal year the aggregate expenses of the Fund (including
fees pursuant to this Agreement and the Fund's sub-advisory agreement, but
excluding distribution fees, interest, taxes, brokerage and, if permitted
by state securities commissions, extraordinary expenses) exceed the
expense limitation of any state having jurisdiction over the Fund, the
Adviser will
-4-
<PAGE>
reimburse the Fund for such excess expenses in the same proportion as
its fees under this Agreement bear to the combined fees for investment
advice and sub-investment advice. The Adviser's expense reimbursement
obligation will be limited to the amount of its fees received pursuant
to this Agreement. Such expense reimbursement, if any, will be
estimated, reconciled and paid on a monthly basis.
10. Services to Other Companies or Accounts
The Trust understands that the Adviser now acts, will continue to
act, or may in the future act, as investment adviser to fiduciary and
other managed accounts or as investment adviser to one or more other
investment companies, and the Trust has no objection to the Adviser so
acting, provided that whenever the Fund and one or more other accounts or
investment companies advised by the Adviser have available funds for
investment, investments suitable and appropriate for each will be
allocated in accordance with procedures believed to be equitable to each
entity. Similarly, opportunities to sell securities will be allocated in
an equitable manner. The Trust recognizes that in some cases this
procedure may adversely affect the size of the position that may be
acquired or disposed of for the Fund. In addition, the Trust understands
that the persons employed by the Adviser to assist in the performance of
the Adviser's duties hereunder will not devote their full time to such
service and nothing contained herein shall be deemed to limit or restrict
the right of the Adviser or any affiliate of the Adviser to engage in and
devote time and attention to other businesses or to render services of
whatever kind or nature.
11. Term of Agreement
This Agreement shall become effective as of the date the Fund
commences its investment operations and shall continue for an initial
two-year term and shall continue thereafter so long as such continuance is
specifically approved at least annually by (i) the Board of Trustees of
the Trust or (ii) a vote of a "majority" (as defined in the Investment
Company Act of 1940, as amended) of the Fund's outstanding voting
securities, provided that in either event the continuance is also approved
by a majority of the Board of Trustees who are not "interested persons"
(as defined in said Act) 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 Trustees of the Trust or by vote of holders of a majority
of the Fund's shares, or upon 60 days' written notice, by the Adviser.
This Agreement will also terminate automatically in the event of its
assignment (as defined in said Act).
12. Representation by the Trust
The Trust represents that copy of its Master Trust Agreement, dated
April 30, 1992 together with all amendments thereto, is on file in the
office of the Secretary of The Commonwealth of Massachusetts.
-5-
<PAGE>
13. Limitation of Liability
It is expressly agreed that the obligations of the Trust hereunder
shall not be binding upon any of the Trustees, shareholders, nominees,
officers, agents or employees of the Trust, personally, but bind only the
trust property of the Fund, as provided in the Master Trust Agreement of
the Trust. The execution and delivery of this Agreement have been
authorized by the Trustees and the sole shareholder of Fund shares and
signed by an authorized officer of the Trust, acting as such, and neither
such authorization by such Trustees and shareholder nor such execution and
delivery by such officer shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but
shall bind only the trust property of the Fund as provided in its Master
Trust Agreement. The obligations of this Agreement shall be binding only
upon the assets and property of the Fund and not upon the assets and
property of any other sub-trust of the Trust.
14. Miscellaneous
If the Adviser ceases to act as investment adviser to the Fund, the
Trust agrees that, at the request of the Adviser, the Trust's license to
use "BJB" or any variation thereof indicating a connection to the Adviser
will terminate and that the Trust will take all necessary action to change
the names of the Trust and the Fund to names that do not include "BJB" or
any such variation.
15. Entire Agreement
This Agreement constitutes the entire agreement between the parties
hereto.
16. 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.
* * * * *
-6-
<PAGE>
If the foregoing accurately sets forth our agreement, kindly indicate
your acceptance hereof by signing and returning the enclosed copy hereof.
Very truly yours,
BJB INVESTMENT FUNDS
By: /s/ David E. Bodner
----------------------------
Name: David E. Bodner
Title: President
Accepted:
BANK JULIUS BAER & CO., LTD.
By: /s/ Peter Wild
----------------------------
Name: Peter Wild
Title: Sr. Vice President
By: /s/ John Morris
----------------------------
Name: John Morris
Title: Sr. Vice President
-7-
AMENDED AND RESTATED
INVESTMENT ADVISORY AGREEMENT
October 4, 1993
Julius Baer Investment Management Inc.
330 Madison Avenue
New York, New York 10017
Dear Sirs:
BJB Investment Funds (the "Trust"), a business trust organized under the
law of The Commonwealth of Massachusetts, entered into an investment advisory
agreement with Julius Baer Investment Management Inc. (the "Adviser"), a
corporation organized under the laws of the state of Delaware, on June 23, 1992.
The Trust herewith confirms its agreement with the Adviser to amend and restate
such agreement in its entirety regarding investment advisory services to be
provided by the Adviser in connection with the Trust's BJB Global Income Fund
(the "Fund") as follows:
1. Investment Description; Appointment
The Trust desires to employ the Fund's capital by investing and reinvesting
in investments of the kind and in accordance with the limitations specified in
the Trust's Master Trust Agreement, as the same may from time to time be
amended, and in its Registration Statement as from time to time in effect, and
in such manner and to such extent as may from time to time be approved by the
Board of Trustees of the Trust. Copies of the Trust's Registration Statement
and Master Trust Agreement have been or will be submitted to the Adviser. The
Trust agrees to provide copies of all amendments to the Trust's Registration
Statement and Master Trust Agreement to the Adviser on an on-going basis. The
Trust desires to employ and hereby appoints the Adviser to act as investment
adviser to the Fund. The Adviser accepts the appointment and agrees to furnish
the services described herein for the compensation set forth below.
2. Services as Investment Adviser
Subject to the supervision and direction of the Board of Trustees of the
Trust, the Adviser will (a) act in accordance with the Trust's Master Trust
Agreement, the Investment Company Act of 1940 and the Investment Advisors Act
of 1940, as the same from time to time be amended, (b) manage the Fund's assets
in accordance with its investment objective and policies as stated in the
Trust's Registration Statement as from time to time in effect, (c) make
investment decisions and exercise voting rights in respect of portfolio
securities for the Fund and (d) place purchase and sale orders on behalf of the
Fund. In providing these services, the Adviser will provide investment
research and supervision of the Fund's investments and conduct a continual
program of investment, evaluation and, if appropriate, sale and reinvestment
of the Fund's assets. In addition,
the Adviser will furnish the Fund with whatever statistical information the Fund
may reasonably request with respect to the securities that the Fund may hold or
contemplate purchasing.
3. Brokerage
In executing transactions for the Fund and selecting brokers or dealers,
the Adviser will use its best efforts to seek the best overall terms available.
In assessing the best overall terms available for any Fund transaction, the
Adviser will consider all factors it deems relevant including, but not limited
to, breadth of the market in the security, the price of the security, the
financial condition and execution capability of the broker or dealer and the
reasonableness of any commission for the specific transaction on a continuing
basis. In selecting brokers or dealers to execute a particular transaction and
in evaluating the best overall terms available, the Adviser may consider the
brokerage and research services (as those terms are defined in Section 28(e) of
the Securities Exchange Act of 1934) provided to the Trust and/or other
accounts over which the Adviser or an affiliate exercises investment
discretion.
4. Information Provided to the Trust
The Adviser will use its best efforts to keep the Trust informed of
developments materially affecting the Fund, and will, on its own initiative,
furnish the Trust from time to time whatever information the Adviser believes
is appropriate for this purpose.
5. Standard of Care
The Adviser shall exercise its best judgment in rendering the services
described in paragraphs 2, 3 and 4 above. The Adviser 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 herein shall be deemed to protect or purport to protect the Adviser
against any liability to the Fund or its shareholders to which the Adviser
would otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence on its part in the performance of its duties from reckless disregard
by it of its obligations and duties under this Agreement ("disabling conduct").
The Fund will indemnify the 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 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 person to be indemnified 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
person to be indemnified was not liable by reason of disabling conduct by (a)
the vote of a majority of a quorum of non-party trustees who are not
"interested persons" of the Trust or (b) an independent legal counsel in a
written opinion.
-2-
6. Compensation
(a) In consideration of the services rendered pursuant to this Agreement,
the Fund will pay the Adviser after the end of each calendar quarter a fee for
the previous quarter calculated at an annual rate of .65 of 1.00% of the Fund's
average daily net assets. The Adviser shall pay to Bank Julius Baer & Co., Ltd.
(the "Sub-Adviser and Servicing Agent") or any successor thereto the fees
required under the agreement between such entity and the Adviser (the
"Sub-Advisory Agreement") In the event that the Sub-Advisory Agreement is
terminated, the Adviser shall be responsible for furnishing to the Fund the
services required to be performed under the Sub-Advisory Agreement or arranging
for a successor entity to provide such services on terms and conditions
acceptable to the Trust and subject to the requirements of the Investment
Company Act of 1940, as amended.
(b) Upon any termination of this Agreement before the end of a quarter, the
fee for such part of that quarter shall be prorated according to the proportion
that such period bears to the full quarterly period and shall be payable upon
the date of termination of this Agreement. For the purpose of determining fees
payable to the Adviser, the value of the Fund's net assets shall be computed at
the times and in the manner specified in the Trust's Registration Statement as
from time to time in effect.
7. Expenses
The Adviser will bear all expenses in connection with the performance of
its services under this Agreement, including compensation of and office space
for its officers and employees connected with investment and economic
research, trading and investment management and administration of the Fund, as
well as the fees of all Trustees of the Trust who are affiliated with the
Adviser or any of its affiliates. The Fund will bear certain other expenses to
be incurred in its operation, including: organizational expenses; taxes,
interest, brokerage costs and commissions; fees of Trustees of the Trust who
are not officers, directors, or employees of the Adviser, the Sub-Adviser and
Servicing Agent, the Fund's distributor or administrator or any of their
affiliates; Securities and Exchange Commission fees; state Blue Sky
qualification fees; charges of the custodian, any subcustodians, and transfer
and dividend-paying agents; insurance premiums; outside auditing, pricing and
legal expenses; costs of maintenance of the Trust's existence; costs
attributable to investor services, including, without limitation, telephone and
personnel expenses; costs of printing stock certificates; 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 of the shareholders of the Fund and of the
officers or Board of Trustees of the Trust; membership fees in trade
associations; litigation and other extraordinary or non-recurring expenses. In
addition, the Fund will pay distribution fees pursuant to a Distribution Plan
adopted under Rule 12b-1 of the Investment Company Act of 1940, as amended, and
pursuant to a Shareholder Services Plan.
-3-
8. Reimbursement to the Fund
If in any fiscal year the aggregate expenses of the Fund (including fees
pursuant to this Agreement and the Fund's sub-advisory agreement, but excluding
distribution fees, interest, taxes, brokerage and, if permitted by state
securities commissions, extraordinary expenses) exceed the expense limitation
of any state having jurisdiction over the Fund, the Adviser will reimburse the
Fund for such excess expenses in the same proportion as its fees under this
Agreement bear to the combined fees for investment advice and sub-investment
advice. The Adviser's expense reimbursement obligation will be limited to the
amount of its fees received pursuant to this Agreement. Such expense
reimbursement, if any, will be estimated, reconciled and paid on a monthly
basis.
9. Services to Other Companies or Accounts
The Trust understands that the Adviser now acts, will continue to act, or
may in the future act, as investment adviser to fiduciary and other managed
accounts or as investment adviser to one or more other investment companies,
and the Trust has no objection to the Adviser so acting, provided that whenever
the Fund and one or more other accounts or investment companies advised by the
Adviser have available funds for investment, investments suitable and
appropriate for each will be allocated in accordance with procedures believed
to be equitable to each entity. Similarly, opportunities to sell securities
will be allocated in an equitable manner. The Trust recognizes that in some
cases this procedure may adversely affect the size of the position that may be
acquired or disposed of for the Fund. In addition, the Trust understands that
the persons employed by the Adviser to assist in the performance of the
Adviser's duties hereunder will not devote their full time to such service and
nothing contained herein shall be deemed to limit or restrict the right of the
Adviser or any affiliate of the Adviser to engage in and devote time and
attention to other businesses or to render services of whatever kind or nature.
10. Term of Agreement
This Agreement shall become effective as of the date first written above
and shall continue for an initial one-year term and shall continue thereafter
so long as such continuance is specifically approved at least annually by (i)
the Board of Trustees of the Trust or (ii) a vote of a "majority" (as defined
in the Investment Company Act of 1940, as amended) of the Fund's outstanding
voting securities, provided that in either event the continuance is also
approved by a majority of the Board of Trustees who are not "interested
persons" (as defined in said Act) 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 Trustees of the Trust or by vote of holders of a majority of the
Fund's shares, or upon 60 days' written notice, by the Adviser. This Agreement
will also terminate automatically in the event of its assignment (as defined
in said Act).
-4-
11. Representation by the Trust
The Trust represents that copy of its Master Trust Agreement, dated April
30, 1992 together with all amendments thereto, is on file in the office of the
Secretary of The Commonwealth of Massachusetts.
12. Limitation of Liability
It is expressly agreed that the obligations of the Trust hereunder shall
not be binding upon any of the Trustees, shareholders, nominees, officers,
agents or employees of the Trust, personally, but bind only the trust property
of the Fund, as provided in the Master Trust Agreement of the Trust. The
execution and delivery of this Agreement have been authorized by the Trustees
and the sole shareholder of Fund shares and signed by an authorized officer of
the Trust, acting as such, and neither such authorization by such Trustees and
shareholder nor such execution and delivery by such officer shall be deemed to
have been made by any of them individually or to impose any liability on any of
them personally, but shall bind only the trust property of the Fund as provided
in its Master Trust Agreement. The obligations of this Agreement shall be
binding only upon the assets and property of the Fund and not upon the assets
and property of any other sub-trust of the Trust.
13. Miscellaneous
If both the Adviser and the Sub-Adviser and Servicing Agent cease to act as
investment advisers to the Fund, the Trust agrees that, at the request of
either of them, the Trust's license to use "BJB" or any variation thereof
indicating a connection to either of those entities will terminate and that the
Trust will take all necessary action to change the names of the Trust and the
Fund to names that do not include "BJB" or any such variation.
14. Entire Agreement
This Agreement constitutes the entire agreement between the parties
hereto.
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.
* * * * *
-5-
If the foregoing accurately sets forth our agreement, kindly indicate your
acceptance hereof by signing and returning the enclosed copy hereof.
Very truly yours,
BJB INVESTMENT FUNDS
By: /s/ Bernard Spilko
--------------------------------
Name: Bernard Spilko
Title: CFO
Accepted:
JULIUS BAER INVESTMENT MANAGEMENT INC.
By: /s/ Jay Dirnberger
--------------------------------
Name: Jay Dirnberger
Title: Managing Director
(8/94)
Custody & Fund Accounting
CUSTODIAN AGREEMENT
Between
BJB INVESTMENT FUNDS
and
INVESTORS BANK & TRUST COMPANY
TABLE OF CONTENTS
Page
1. Bank Appointed Custodian .................................... 1
2. Definitions.................................................. 1
2.1 Authorized Person.......................... 1
2.2 Security................................... 1
2.3 Portfolio Security......................... 1
2.4 Officers' Certificate...................... 2
2.5 Book-Entry System.......................... 2
2.6 Depository................................. 2
2.7 Proper Instructions........................ 2
3. Separate Accounts............................................ 2
4. Certification as to Authorized Persons....................... 3
5. Custody of Cash.............................................. 3
5.1 Purchase of Securities..................... 3
5.2 Redemptions................................ 3
5.3 Distributions and Expenses of Fund......... 3
5.4 Payment in Respect of Securities........... 4
5.5 Repayment of Loans......................... 4
5.6 Repayment of Cash.......................... 4
5.7 Foreign Exchange Transactions.............. 4
5.8 Other Authorized Payments.................. 4
5.9 Termination................................ 4
6. Securities................................................... 4
6.1 Segregation and Registration............... 4
6.2 Voting and Proxies......................... 5
6.3 Book-Entry System.......................... 5
6.4 Use of a Depository........................ 6
6.5 Use of Book-Entry System for Commercial
Paper...................................... 7
6.6 Use of Immobilization Programs............. 8
6.7 Eurodollar CDs............................. 8
6.8 Options and Futures Transactions........... 8
(a) Puts and Calls Traded on Securities
Exchanges, NASDAQ or
Over-the-Counter.................. 8
(b) Puts, Calls, and Futures Traded
on Commodities Exchanges........ 9
6.9 Segregated Account......................... 9
6.10 Interest Bearing Call or Time Deposits..... 11
6.11 Transfer of Securities..................... 11
7. Redemptions.................................................. 13
8. Merger, Dissolution, etc., of Fund........................... 13
9. Actions of Bank Without Prior Authorization.................. 13
10. Collections and Defaults..................................... 14
11. Maintenance of Records and Accounting Services............... 14
12. Fund Evaluation.............................................. 14
13. Concerning the Bank.......................................... 15
13.1 Performance of Duties and Standard of Care.. 15
13.2 Agents and Subcustodians with Respect to
Property of the Fund Held in the United
States.................................... 16
13.3 Duties of the Bank with Respect to Property
Held Outside of the United States......... 16
13.4 Insurance.................................. 19
13.5 Fees and Expenses of Bank................. 19
13.6 Advances by Bank.......................... 20
14. Termination................................................... 20
15. Confidentiality............................................... 21
16. Notices....................................................... 21
17. Amendments.................................................... 22
18. Parties....................................................... 22
19. Liabilities of Officers and Trustees.......................... 22
20. Governing Law................................................. 22
21. Counterparts.................................................. 22
CUSTODIAN AGREEMENT
AGREEMENT made as of this 30th day of January, 1995, between BJB INVESTMENT
FUNDS, a Massachusetts business trust (the "Fund") and INVESTORS BANK & TRUST
COMPANY (the "Bank").
The Fund, an open-end management investment company, desires to place and
maintain all of its portfolio securities and cash in the custody of the Bank.
The Bank has at least the minimum qualifications required by Section 17(f)(1) of
the Investment Company Act of 1940 (the "1940 Act") to act as custodian of the
portfolio securities and cash of the Fund, and has indicated its willingness to
so act, subject to the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained herein, the parties hereto agree as follows:
1. Bank Appointed Custodian. The Fund hereby appoints the Bank as
custodian of its portfolio securities and cash delivered to the Bank as
hereinafter described and the Bank agrees to act as such upon the terms and
conditions hereinafter set forth.
2. Definitions. Whenever used herein, the terms listed below will have
the following meaning:
2.1 Authorized Person. Authorized Person will mean any of the
persons duly authorized to give Proper Instructions or otherwise act on behalf
of the Fund by appropriate resolution of its Board of Trustees (the "Board"),
and set forth in a certificate as required by Section 4 hereof.
2.2 Security. The term security as used herein will have the same
meaning as when such term is used in the Securities Act of 1933, as amended,
including, without limitation, any note, stock, treasury stock, bond,
debenture, evidence of indebtedness, certificate of interest or participation
in any profit sharing agreement, collateral-trust certificate, preorganization
certificate or subscription, transferable share, investment contract,
voting-trust certificate, certificate of deposit for a security, fractional
undivided interest in oil, gas, or other mineral rights, any put, call,
straddle, option, or privilege on any security, certificate of deposit, or
group or index of securities (including any interest therein or based on the
value thereof), or any put, call, straddle, option, or privilege entered into
on a national securities exchange relating to a foreign currency, or, in
general, any interest or instrument commonly known as a "security", or any
certificate of interest or participation in, temporary or interim certificate
for, receipt for, guarantee of, or warrant or right to subscribe to, or option
contract to purchase or sell any of the foregoing, and futures, forward
contracts and options thereon.
2.3 Portfolio Security. Portfolio Security will mean any security
owned by the Fund.
2.4 Officers' Certificate. Officers' Certificate will mean,
unless otherwise indicated, any request, direction, instruction, or
certification in writing signed by any two Authorized Persons of the Fund.
2.5 Book-Entry System. Book-Entry System shall mean the Federal
Reserve-Treasury Department Book Entry System for United States government,
instrumentality and agency securities operated by the Federal Reserve Bank,
its successor or successors and its nominee or nominees.
2.6 Depository. Depository shall mean The Depository Trust Company
("DTC"), a clearing agency registered with the Securities and Exchange
Commission under Section 17A of the Securities Exchange Act of 1934 ("Exchange
Act"), its successor or successors and its nominee or nominees. The term
"Depository" shall further mean and include any other person authorized to act
as a depository under the 1940 Act, its successor or successors and its
nominee or nominees, specifically identified in a certified copy of a
resolution of the Board.
2.7 Proper Instructions. Proper Instructions shall mean (i)
instructions regarding the purchase or sale of Portfolio Securities, and
payments and deliveries in connection therewith, given by an Authorized Person
as shall have been designated in an Officers' Certificate, such instructions
to be given in such form and manner as the Bank and the Fund shall agree upon
from time to time, and (ii) instructions (which may be continuing
instructions) regarding other matters signed or initialed by such one or more
persons from time to time designated in an Officers' Certificate as having
been authorized by the Board. Oral instructions will be considered Proper
Instructions if the Bank reasonably believes them to have been given by a
person authorized to give such instructions with respect to the transaction
involved. The Fund shall cause all oral instructions to be promptly confirmed
in writing. The Bank shall act upon and comply with any subsequent Proper
Instruction which modifies a prior instruction and the sole obligation of the
Bank with respect to any follow-up or confirmatory instruction shall be to
make reasonable efforts to detect any discrepancy between the original
instruction and such confirmation and to report such discrepancy to the Fund.
The Fund shall be responsible, at the Fund's expense, for taking any action,
including any reprocessing, necessary to correct any such discrepancy or
error, and to the extent such action requires the Bank to act the Fund shall
give the Bank specific Proper Instructions as to the action required. Upon
receipt of an Officers' Certificate as to the authorization by the Board
accompanied by a detailed description of procedures approved by the Fund,
Proper Instructions may include communication effected directly between
electro-mechanical or electronic devices provided that the Board and the Bank
are satisfied that such procedures afford adequate safeguards for the Fund's
assets.
3. Separate Accounts. If the Fund has more than one series or portfolio,
the Bank will segregate the assets of each series or portfolio to which this
Agreement relates into a separate account for each such series or portfolio
containing the assets of such series or portfolio (and all investment earnings
thereon).
4. Certification as to Authorized Persons. The Secretary or Assistant
Secretary of the Fund will at all times maintain on file with the Bank his or
her certification to the Bank, in such form as may be acceptable to the Bank,
of (i) the names and signatures of the Authorized Persons and (ii) the names
of the Board, it being understood that upon the occurrence of any change in
the information set forth in the most recent certification on file (including
without limitation any person named in the most recent certification who is no
longer an Authorized Person as designated therein), the Secretary or Assistant
Secretary of the Fund, will sign a new or amended certification setting forth
the change and the new, additional or omitted names or signatures. The Bank
will be entitled to rely and act upon any Officers' Certificate given to it by
the Fund which has been signed by Authorized Persons named in the most recent
certification.
5. Custody of Cash. As custodian for the Fund, the Bank will open and
maintain a separate account or accounts in the name of the Fund or in the name
of the Bank, as Custodian of the Fund, and will deposit to the account of the
Fund all of the cash of the Fund, except for cash held by a subcustodian
appointed pursuant to Section 13.2 hereof, including borrowed funds, delivered
to the Bank, subject only to draft or order by the Bank acting pursuant to the
terms of this Agreement. Upon receipt by the Bank of Proper Instructions
(which may be continuing instructions) or in the case of payments for
redemptions and repurchases of outstanding shares of common stock of the Fund,
notification from the Fund's transfer agent as provided in Section 7,
requesting such payment, designating the payee or the account or accounts to
which the Bank will release funds for deposit, and stating that it is for a
purpose permitted under the terms of this Section 5, specifying the applicable
subsection, the Bank will make payments of cash held for the accounts of the
Fund, insofar as funds are available for that purpose, only as permitted in
subsections 5.1-5.9 below.
5.1 Purchase of Securities. Upon the purchase of securities for the
Fund, against contemporaneous receipt of such securities by the Bank or,
against delivery of such securities to the Bank in accordance with generally
accepted settlement practices and customs in the jurisdiction or market in
which the transaction occurs, registered in the name of the Fund or in the
name of, or properly endorsed and in form for transfer to, the Bank, or a
nominee of the Bank, or receipt for the account of the Bank pursuant to the
provisions of Section 6 below, each such payment to be made at the purchase
price shown on a broker's confirmation (or transaction report in the case of
Book Entry Paper) of purchase of the securities received by the Bank before
such payment is made, as confirmed in the Proper Instructions received by the
Bank before such payment is made.
5.2 Redemptions. In such amount as may be necessary for the
repurchase or redemption of common shares of the Fund offered for repurchase
or redemption in accordance with Section 7 of this Agreement.
5.3 Distributions and Expenses of Fund. For the payment on the
account of the Fund of dividends or other distributions to shareholders as may
from time to time be declared by the Board, interest, taxes, management or
supervisory fees, distribution fees, fees of the Bank for its services
hereunder and reimbursement of the expenses and liabilities of the Bank as
provided hereunder, fees of any transfer agent, fees for legal, accounting,
and auditing services, or other operating expenses of the Fund.
5.4 Payment in Respect of Securities. For payments in connection
with the conversion, exchange or surrender of Portfolio Securities or
securities subscribed to by the Fund held by or to be delivered to the Bank.
5.5 Repayment of Loans. To repay loans of money made to the Fund,
but, in the case of final payment, only upon redelivery to the Bank of any
Portfolio Securities pledged or hypothecated therefor and upon surrender of
documents evidencing the loan;
5.6 Repayment of Cash. To repay the cash delivered to the Fund for
the purpose of collateralizing the obligation to return to the Fund
certificates borrowed from the Fund representing Portfolio Securities, but
only upon redelivery to the Bank of such borrowed certificates.
5.7 Foreign Exchange Transactions. For payments in connection with
foreign exchange contracts or options to purchase and sell foreign currencies
for spot and future delivery which may be entered into by the Bank on behalf
of the Fund upon the receipt of Proper Instructions, such Proper Instructions
to specify the currency broker or banking institution (which may be the Bank,
or any other subcustodian or agent hereunder, acting as principal) with which
the contract or option is made, and the Bank shall have no duty with respect
to the selection of such currency brokers or banking institutions with which
the Fund deals or for their failure to comply with the terms of any contract
or option.
5.8 Other Authorized Payments. For other authorized transactions of
the Fund, or other obligations of the Fund incurred for proper Fund purposes;
provided that before making any such payment the Bank will also receive a
certified copy of a resolution of the Board signed by an Authorized Person
(other than the Person certifying such resolution) and certified by its
Secretary or Assistant Secretary, naming the person or persons to whom such
payment is to be made, and either describing the transaction for which payment
is to be made and declaring it to be an authorized transaction of the Fund, or
specifying the amount of the obligation for which payment is to be made,
setting forth the purpose for which such obligation was incurred and declaring
such purpose to be a proper corporate purpose.
5.9 Termination. upon the termination of this Agreement as
hereinafter set forth pursuant to Section 8 and Section 14 of this Agreement.
6. Securities.
6.1 Segregation and Registration. Except as otherwise provided
herein, and except for securities to be delivered to any subcustodian
appointed pursuant to Section 13.2 hereof, the Bank as custodian, will receive
and hold pursuant to the provisions hereof, in a separate account or accounts
and physically segregated at all times from those of other persons, any and
all Portfolio Securities which may now or hereafter be delivered to it by or
for the account of the Fund. All such Portfolio Securities will be held or
disposed of by the Bank for, and subject at all times to, the instructions of
the Fund pursuant to the terms of this Agreement. Subject to the specific
provisions herein relating to Portfolio Securities that are not physically
held by the Bank, the Bank will register all Portfolio Securities (unless
otherwise directed by Proper Instructions or an Officers' Certificate), in the
name of a registered nominee of the Bank as defined in the Internal Revenue
Code and any Regulations of the Treasury Department issued thereunder, and
will execute and deliver all such certificates in connection therewith as may
be required by such laws or regulations or under the laws of any state.
The Fund will from time to time furnish to the Bank appropriate
instruments to enable it to hold or deliver in proper form for transfer, or to
register in the name of its registered nominee, any Portfolio Securities which
may from time to time be registered in the name of the Fund.
6.2 Voting and Proxies. Neither the Bank nor any nominee of the Bank
will vote any of the Portfolio Securities held hereunder, except in accordance
with Proper Instructions or an Officers' Certificate. The Bank will execute
and deliver, or cause to be executed and delivered, to the Fund all notices,
proxies and proxy soliciting materials with respect to such Securities, such
proxies to be executed by the registered holder of such Securities (if
registered otherwise than in the name of the Fund), but without indicating the
manner in which such proxies are to be voted.
6.3 Book-Entry System. Provided (i) the Bank has received a
certified copy of a resolution of the Board specifically approving deposits of
Fund assets in the Book-Entry System, and (ii) for any subsequent changes to
such arrangements following such approval, the Board has reviewed and approved
the arrangement and has not delivered an Officer's Certificate to the Bank
indicating that the Board has withdrawn its approval:
(a) The Bank may keep Portfolio Securities in the Book-Entry
System provided that such Portfolio Securities are represented in an account
("Account") of the Bank (or its agent) in such System which shall not include
any assets of the Bank (or such agent) other than assets held as a fiduciary,
custodian, or otherwise for customers;
(b) The records of the Bank (and any such agent) with respect to
the Fund's participation in the Book-Entry System through the Bank (or any such
agent) will identify by book entry Portfolio Securities which are included with
other securities deposited in the Account and shall at all times during the
regular business hours of the Bank (or such agent) be open for inspection by
duly authorized officers, employees or agents of the Fund. Where securities are
transferred to the Fund's account, the Bank shall also, by book entry or
otherwise, identify as belonging to the Fund a quantity of securities in
fungible bulk of securities (i) registered in the name of the Bank or its
nominee, or (ii) shown on the Bank's account on the books of the Federal Reserve
Bank;
(c) The Bank (or its agent) shall pay for securities purchased
for the account of the Fund or shall pay cash collateral against the return of
Portfolio Securities loaned by the Fund upon (i) receipt of advice from the
Book-Entry System that such Securities have been transferred to the Account, and
(ii) the making of an entry on the records of the Bank (or its agent) to reflect
such payment and transfer for the account of the Fund. The Bank (or its agent)
shall transfer securities sold or loaned for the account of the Fund upon
(i) receipt of advice from the Book-Entry System that payment
for securities sold or payment of the initial cash collateral against the
delivery of securities loaned by the Fund has been transferred to the Account;
and
(ii) the making of an entry on the records of the Bank (or its
agent) to reflect such transfer and payment for the account of the Fund. Copies
of all advices from the Book-Entry System of transfers of securities for the
account of the Fund shall identify the Fund, be maintained for the Fund by the
Bank and shall be provided to the Fund at its request. The Bank shall send the
Fund a confirmation, as defined by Rule 17f-4 of the 1940 Act, of any transfers
to or from the account of the Fund;
(d) The Bank will promptly provide the Fund with any report
obtained by the Bank or its agent on the Book-Entry System's accounting system,
internal accounting control and procedures for safeguarding securities deposited
in the Book-Entry System;
(e) The Bank shall be liable to the Fund for any loss or damage to
the Fund resulting from use of the Book-Entry System by reason of any
negligence, willful misfeasance or bad faith of the Bank or any of its agents or
of any of its or their employees or from any reckless disregard by the Bank or
any such agent of its duty to use its best efforts to enforce such rights as it
may have against the Book-Entry System; at the election of the Fund, it shall be
entitled to be subrogated for the Bank in any claim against the Book-Entry
System or any other person which the Bank or its agent may have as a consequence
of any such loss or damage if and to the extent that the Fund has not been made
whole for any loss or damage;
6.4 Use of a Depository. Provided (i) the Bank has received a certified
copy of a resolution of the Board specifically approving deposits in DTC or
other such Depository and (ii) for any subsequent changes to such arrangements
following such approval, the Board has reviewed and approved the arrangement and
has not delivered an Officer's Certificate to the Bank indicating that the Board
has withdrawn its approval:
(a) The Bank may use a Depository to hold, receive, exchange,
release, lend, deliver and otherwise deal with Portfolio Securities including
stock dividends, rights and other items of like nature, and to receive and remit
to the Bank on behalf of the Fund all income and other payments thereon and to
take all steps necessary and proper in connection with the collection thereof;
(b) Registration of Portfolio Securities may be made in the
name of any nominee or nominees used by such Depository;
(c) Payment for securities purchased and sold may be made through
the clearing medium employed by such Depository for transactions of participants
acting through it. Upon any purchase of Portfolio Securities, payment will be
made only upon delivery of the securities to or for the account of the Fund and
the Fund shall pay cash collateral against the return of Portfolio Securities
loaned by the Fund only upon delivery of the Securities to or for the account of
the Fund; and upon any sale of Portfolio Securities, delivery of the Securities
will be made only against payment thereof or, in the event Portfolio Securities
are loaned, delivery of Securities will be made only against receipt of the
initial cash collateral to or for the account of the Fund; and
(d) The Bank shall be liable to the Fund for any loss or damage to
the Fund resulting from use of a Depository by reason of any negligence, willful
misfeasance or bad faith of the Bank or its employees or from any reckless
disregard by the Bank of its duty to use its best efforts to enforce such rights
as it may have against a Depository. In this connection, the Bank shall use its
best efforts to ensure that:
(i) The Depository obtains replacement of any certificated
Portfolio Security deposited with it in the event such Security is lost,
destroyed, wrongfully taken or otherwise not available to be returned to the
Bank upon its request;
(ii) Any proxy materials received by a Depository with respect
to Portfolio Securities deposited with such Depository are forwarded immediately
to the Bank for prompt transmittal to the Fund;
(iii) Such Depository immediately forwards to the Bank
confirmation of any purchase or sale of Portfolio Securities and of the
appropriate book entry made by such Depository to the Fund's account;
(iv) Such Depository prepares and delivers to the Bank such
records with respect to the performance of the Bank's obligations and duties
hereunder as may be necessary for the Fund to comply with the recordkeeping
requirements of Section 31(a) of the 1940 Act and Rule 31(a) thereunder; and
(v) Such Depository delivers to the Bank and the Fund all
internal accounting control reports, whether or not audited by an independent
public accountant, as well as such other reports as the Fund may reasonably
request in order to verify the Portfolio Securities held by such Depository.
6.5 Use of Book-Entry System for Commercial Paper. Provided (i) the
Bank has received a certified copy of a resolution of the Board specifically
approving participation in a system maintained by the Bank for the holding of
commercial paper in book-entry form ("Book-Entry Paper") and (ii) for each year
following such approval the Board has received and approved the arrangements,
upon receipt of Proper Instructions and upon receipt of confirmation from an
Issuer (as defined below) that the Fund has purchased such Issuer's Book-entry
Paper, the Bank shall issue and hold in book-entry form, on behalf of the Fund,
commercial paper issued by issuers with whom the Bank has entered into a
book-entry agreement (the "Issuers"). In maintaining its Book-entry Paper
System, the Bank agrees that:
(a) the Bank will maintain all Book-Entry Paper held by the Fund
in an account of the Bank that includes only assets held by it for customers;
(b) the records of the Bank with respect to the Fund's purchase of
Book-entry Paper through the Bank will identify, by book-entry, Commercial Paper
belonging to the Fund which is included in the Book-entry Paper System and shall
at all times during the regular business hours of the Bank be open for
inspection by duly authorized officers, employees or agents of the Fund;
(c) the Bank shall pay for Book-Entry Paper purchased for the
account of the Fund upon contemporaneous (i) receipt of advice from the Issuer
that such sale of Book-Entry Paper has been effected, and (ii) the making of an
entry on the records of the Bank to reflect such payment and transfer for the
account of the Fund;
(d) the Bank shall cancel such Book-Entry Paper obligation upon
the maturity thereof upon contemporaneous (i) receipt of advice that payment for
such Book-Entry Paper has been transferred to the Fund, and (ii) the making of
an entry on the records of the Bank to reflect such payment for the account of
the Fund;
(e) the Bank shall transmit to the Fund a transaction journal
confirming each transaction in Book-Entry Paper for the account of the Fund on
the next business day following the transaction; and
(f) the Bank will send to the Fund such reports on its system of
internal accounting control with respect to the Book-Entry Paper System as the
Fund may reasonably request from time to time.
6.6 Use of Immobilization Programs. Provided (i) the Bank has
received a certified copy of a resolution of the Board specifically approving
the maintenance of Portfolio Securities in an immobilization program operated by
a bank which meets the requirements of Section 26(a)(1) of the 1940 Act, and
(ii) for each year following such approval the Board has reviewed and approved
the arrangement and has not delivered an Officer's Certificate to the Bank
indicating that the Board has withdrawn its approval, the Bank shall enter into
such immobilization program with such bank acting as a subcustodian hereunder.
6.7 Eurodollar CDs. Any Portfolio Securities which are Eurodollar
CDs may be physically held by the European branch of the U.S. banking
institution that is the issuer of such Eurodollar CD (a "European Branch"),
provided that such Securities are identified on the books of the Bank as
belonging to the Fund and that the books of the Bank identify the European
Branch holding such Securities. Notwithstanding any other provision of this
Agreement to the contrary, except as stated in the first sentence of this
subsection 6.7, the Bank shall be under no other duty with respect to such
Eurodollar CDs belonging to the Fund, and shall have no liability to the Fund or
its shareholders with respect to the actions, inactions, whether negligent or
otherwise of such European Branch in connection with such Eurodollar CDs, except
for any loss or damage to the Fund resulting from the Bank's own negligence,
willful misfeasance or bad faith in the performance of its duties hereunder.
6.8 Options and Futures Transactions.
(a) Puts and Calls Traded on Securities Exchanges, NASDAQ or
Over-the-Counter.
1. The Bank shall take action as to put options ("puts") and
call options ("calls") purchased or sold (written) by the Fund regarding escrow
or other arrangements (i) in accordance with the provisions of any agreement
entered into upon receipt of Proper Instructions between the Bank, any
broker-dealer registered under the Exchange Act and a member of the National
Association of Securities Dealers, Inc. (the "NASD"), and, if necessary, the
Fund relating to the compliance with the rules of the Options Clearing
Corporation and of any registered national securities exchange, or of any
similar organization or organizations.
2. Unless another agreement requires it to do so, the Bank
shall be under no duty or obligation to see that the Fund has deposited or is
maintaining adequate margin, if required, with any broker in connection with any
option, nor shall the Bank be under duty or obligation to present such option to
the broker for exercise unless it receives Proper Instructions from the Fund.
The Bank shall have no responsibility for the legality of any put or call
purchased or sold on behalf of the Fund, the propriety of any such purchase or
sale, or the adequacy of any collateral delivered to a broker in connection with
an option or deposited to or withdrawn from a Segregated Account (as defined in
subsection 6.9 below). The Bank specifically, but not by way of limitation,
shall not be under any duty or obligation to: (i) periodically check or notify
the Fund that the amount of such collateral held by a broker or held in a
Segregated Account is sufficient to protect such broker of the Fund against any
loss; (ii) effect the return of any collateral delivered to a broker; or (iii)
advise the Fund that any option it holds, has or is about to expire. Such duties
or obligations shall be the sole responsibility of the Fund.
(b) Puts, Calls and Futures Traded on Commodities Exchanges
1. The Bank shall take action as to puts, calls and futures
contracts ("Futures") purchased or sold by the Fund in accordance with the
provisions of any agreement among the Fund, the Bank and a Futures Commission
Merchant registered under the Commodity Exchange Act, relating to compliance
with the rules of the Commodity Futures Trading Commission and/or any Contract
Market, or any similar organization or organizations, regarding account deposits
in connection with transactions by the Fund.
2. The responsibilities and liabilities of the Bank as to
futures, puts and calls traded on commodities exchanges, any Futures Commission
Merchant account and the Segregated Account shall be limited as set forth in
subparagraph (a)(2) of this Section 6.8 as if such subparagraph referred to
Futures Commission Merchants rather than brokers, and Futures and puts and calls
thereon instead of options.
6.9 Segregated Account. The Bank shall upon receipt of Proper
Instructions establish and maintain a Segregated Account or Accounts for and on
behalf of the Fund, into which Account or Accounts may be transferred upon
receipt of Proper Instructions cash and/or Portfolio Securities:
(a) in accordance with the provisions of any agreement among the
Fund, the Bank and a broker-dealer registered under the Exchange Act and a
member of the NASD or any Futures Commission Merchant registered under the
Commodity Exchange Act, relating to compliance with the rules of the Options
Clearing Corporation and of any registered national securities exchange or the
Commodity Futures Trading Commission or any registered Contract Market, or of
any similar organizations regarding escrow or other arrangements in connection
with transactions by the Fund;
(b) for the purpose of segregating cash or securities in
connection with options purchased or written by the Fund or commodity futures
purchased or written by the Fund;
(c) for the deposit of liquid assets, such as cash, U.S.
Government securities or other high grade debt obligations, having a market
value (marked to market on a daily basis) at all times equal to not less than
the aggregate purchase price due on the settlement dates of all the Fund's then
outstanding forward commitment or "when-issued" agreements relating to the
purchase of Portfolio Securities and all the Fund's then outstanding commitments
under reverse repurchase agreements entered into with broker-dealer firms;
(d) for the deposit of any Portfolio Securities which the
Fund has agreed to sell on a forward commitment basis, all in accordance with
Investment Company Act Release No. 10666;
(e) for the purposes of compliance by the Fund with the
procedures required by Investment Company Act Release No. 10666, or any
subsequent release or releases of the Securities and Exchange Commission
relating to the maintenance of Segregated Accounts by registered investment
companies;
(f) for other proper corporate purposes, but only, in the case of
this clause (f), upon receipt of, in addition to Proper Instructions, a
certified copy of a resolution of the Board, or of the Executive Committee
signed by an officer of the Fund and certified by the Secretary or an Assistant
Secretary, setting forth the purpose or purposes of such Segregated Account and
declaring such purposes to be proper corporate purposes.
(g) Assets may be withdrawn from the Segregated Account
pursuant to Proper Instructions only
(i) in accordance with the provisions of any agreements
referenced in (a) or (b) above;
(ii) for sale or delivery to meet the Fund's obligations
under outstanding firm commitment or when-issued agreements for
the purchase of Portfolio Securities and under reverse repurchase
agreements;
(iii) for exchange for other liquid assets of equal or
greater value deposited in the Segregated Account;
(iv) to the extent that the Fund's outstanding forward
commitment or when-issued agreements for the purchase of portfolio
securities or reverse repurchase agreements are sold to other
parties or the Fund's obligations thereunder are met from assets
of the Fund other than those in the Segregated Account; or
(v) for delivery upon settlement of a forward commitment
agreement for the sale of Portfolio Securities.
6.10 Interest Bearing Call or Time Deposits. The Bank shall, upon
receipt of Proper Instructions relating to the purchase by the Fund of
interest-bearing fixed-term and call deposits, transfer cash, by wire or
otherwise, in such amounts and to such bank or banks as shall be indicated in
such Proper Instructions. The Bank shall include in its records with respect to
the assets of the Fund appropriate notation as to the amount of each such
deposit, the banking institution with which such deposit is made (the "Deposit
Bank"), and shall retain such forms of advice or receipt evidencing the deposit,
if any, as may be forwarded to the Bank by the Deposit Bank. Such deposits shall
be deemed Portfolio Securities of the Fund and the responsibility of the Bank
therefore shall be the same as and no greater than the Bank's responsibility in
respect of other Portfolio Securities of the Fund.
6.11 Transfer of Securities. The Bank will transfer, exchange, deliver
or release Portfolio Securities held by it hereunder, insofar as such Securities
are available for such purpose, provided that before making any transfer,
exchange, delivery or release under this Section the Bank will receive Proper
Instructions requesting such transfer, exchange or delivery stating that it is
for a purpose permitted under the terms of this Section 6.11, specifying the
applicable subsection, or describing the purpose of the transaction with
sufficient particularity to permit the Bank to ascertain the applicable
subsection, only
(a) upon sales of Portfolio Securities for the account of the
Fund, against contemporaneous receipt by the Bank of payment therefor in full,
or, against payment to the Bank in accordance with generally accepted settlement
practices and customs in the jurisdiction or market in which the transaction
occurs, each such payment to be in the amount of the sale price shown in a
broker's confirmation of sale of the Portfolio Securities received by the Bank
before such payment is made, as confirmed in the Proper Instructions received by
the Bank before such payment is made;
(b) in exchange for or upon conversion into other securities alone
or other securities and cash pursuant to any plan of merger, consolidation,
reorganization, share split-up, change in par value, recapitalization or
readjustment or otherwise, upon exercise of subscription, purchase or sale or
other similar rights represented by such Portfolio Securities, or for the
purpose of tendering shares in the event of a tender offer therefor, provided
however that in the event of an offer of exchange, tender offer, or other
exercise of rights requiring the physical tender or delivery of Portfolio
Securities, the Bank shall have no liability for failure to so tender in a
timely manner unless such Proper Instructions are received by the Bank at least
two business days prior to the date required for tender, and unless the Bank (or
its agent or subcustodian hereunder) has actual possession of such Security at
least two business days prior to the date of tender;
(c) upon conversion of Portfolio Securities pursuant to their
terms into other securities;
(d) for the purpose of redeeming in kind shares of the Fund
upon authorization from the Fund;
(e) in the case of option contracts owned by the Fund, for
presentation to the endorsing broker;
(f) when such Portfolio Securities are called, redeemed or
retired or otherwise become payable;
(g) for the purpose of effectuating the pledge of Portfolio
Securities held by the Bank in order to collateralize loans made to the Fund
by any bank, including the Bank; provided, however, that such Portfolio
Securities will be released only upon payment to the Bank for the account of
the Fund of the moneys borrowed, except that in cases where additional
collateral is required to secure a borrowing already made, and such fact is
made to appear in the Proper Instructions, further Portfolio Securities may be
released for that purpose without any such payment. In the event that any such
pledged Portfolio Securities are held by the Bank, they will be so held for
the account of the lender, and after notice to the Fund from the lender in
accordance with the normal procedures of the lender, that an event of
deficiency or default on the loan has occurred, the Bank may deliver such
pledged Portfolio Securities to or for the account of the lender;
(h) for the purpose of releasing certificates representing
Portfolio Securities, against contemporaneous receipt by the Bank of the fair
market value of such security, as set forth in the Proper Instructions
received by the Bank before such payment is made;
(i) for the purpose of delivering securities lent by the Fund
to a bank or broker dealer, but only against receipt in accordance with street
delivery custom except as otherwise provided herein, of adequate collateral as
agreed upon from time to time by the Fund and the Bank, and upon receipt of
payment in connection with any repurchase agreement relating to such
securities entered into by the Fund;
(j) for other authorized transactions of the Fund or for other
proper corporate purposes; provided that before making such transfer, the Bank
will also receive a certified copy of resolutions of the Board, signed by an
authorized officer of the Fund (other than the officer certifying such
resolution) and certified by its Secretary or Assistant Secretary, specifying
the Portfolio Securities to be delivered, setting forth the transaction in or
purpose for which such delivery is to be made, declaring such transaction to
be an authorized transaction of the Fund or such purpose to be a proper
corporate purpose, and naming the person or persons to whom delivery of such
securities shall be made; and
(k) upon termination of this Agreement as hereinafter set
forth pursuant to Section 8 and Section 14 of this Agreement.
As to any deliveries made by the Bank pursuant to subsections (a), (b),
(c), (e), (f), (g), (h) and (i) securities or cash receivable in exchange
therefor shall be delivered to the Bank.
7. Redemptions. In the case of payment of assets of the Fund held by
the Bank in connection with redemptions and repurchases by the Fund of
outstanding common shares, the Bank will rely on notification by the Fund's
transfer agent of receipt of a request for redemption and certificates, if
issued, in proper form for redemption before such payment is made. Payment shall
be made in accordance with the Declaration of Trust (the "Declaration") and
By-laws of the Fund, from assets available for said purpose.
8. Merger, Dissolution, etc. of Fund. In the case of the following
transactions, not in the ordinary course of business, namely, the merger of the
Fund into or the consolidation of the Fund with another investment company, the
sale by the Fund of all, or substantially all, of its assets to another
investment company, or the liquidation or dissolution of the Fund and
distribution of its assets, the Bank will deliver the Portfolio Securities held
by it under this Agreement and disburse cash only upon the order of the Fund set
forth in an Officers' Certificate, accompanied by a certified copy of a
resolution of the Board authorizing any of the foregoing transactions. Upon
completion of such delivery and disbursement and the payment of the fees,
disbursements and expenses of the Bank, this Agreement will terminate.
9. Actions of Bank Without Prior Authorization.
Notwithstanding anything herein to the contrary, unless and until the Bank
receives an Officers' Certificate to the contrary, it will without prior
authorization or instruction of the Fund or the transfer agent:
9.1 Endorse for collection and collect on behalf of and in the
name of the Fund all checks, drafts, or other negotiable or transferable
instruments or other orders for the payment of money received by it for the
account of the Fund and hold for the account of the Fund all income, dividends,
interest and other payments or distribution of cash with respect to the
Portfolio Securities held thereunder;
9.2 Present for payment all coupons and other income items held by
it for the account of the Fund which call for payment upon presentation and hold
the cash received by it upon such payment for the account of the Fund;
9.3 Receive and hold for the account of the Fund all securities
received as a distribution on Portfolio Securities as a result of a stock
dividend, share split-up, reorganization, recapitalization, merger,
consolidation, readjustment, distribution of rights and similar securities
issued with respect to any Portfolio Securities held by it hereunder.
9.4 Execute as agent on behalf of the Fund all necessary ownership
and other certificates and affidavits required by the Internal Revenue Code or
the regulations of the Treasury Department issued thereunder, or by the laws of
any state, now or hereafter in effect, inserting the Fund's name on such
certificates as the owner of the securities covered thereby, to the extent it
may lawfully do so and as may be required to obtain payment in respect thereof.
The Bank will execute and deliver such certificates in connection with Portfolio
Securities delivered to it or by it under this Agreement as may be required
under the provisions of the Internal Revenue Code and any Regulations of the
Treasury Department issued thereunder, or under the laws of any state;
9.5 Present for payment all Portfolio Securities which are called,
redeemed, retired or otherwise become payable, and hold cash received by it upon
payment for the account of the Fund; and
9.6 Exchange interim receipts or temporary securities for
definitive securities.
10. Collections and Defaults. The Bank will use all reasonable efforts to
collect any funds which may to its knowledge become collectible arising from
Portfolio Securities, including dividends, interest and other income, and to
transmit to the Fund notice actually received by it of any call for redemption,
offer of exchange, right of subscription, reorganization or other proceedings
affecting such Securities. If Portfolio Securities upon which such income is
payable are in default or payment is refused after due demand or presentation,
the Bank will notify the Fund in writing of any default or refusal to pay within
two business days from the day on which it receives knowledge of such default or
refusal. In addition, the Bank will send the Fund a written report once each
month showing any income on any Portfolio Security held by it which is more than
ten days overdue on the date of such report and which has not previously been
reported.
11. Maintenance of Records and Accounting Services. The Bank will maintain
records with respect to transactions for which the Bank is responsible pursuant
to the terms and conditions of this Agreement, and in compliance with the
applicable rules and regulations of the 1940 Act and will furnish the Fund daily
with a statement of condition of the Fund. The Bank will furnish to the Fund at
the end of every month, and at the close of each quarter of the Fund's fiscal
year, a list of the Portfolio Securities and the aggregate amount of cash held
by it for the Fund. The books and records of the Bank pertaining to its actions
under this Agreement and reports by the Bank or its independent accountants
concerning its accounting system, procedures for safeguarding securities and
internal accounting controls will be open to inspection and audit at reasonable
times by officers of or auditors employed by the Fund and will be preserved by
the Bank in the manner and in accordance with the applicable rules and
regulations under the 1940 Act.
The Bank shall keep the books of account and render statements or copies
from time to time as reasonably requested by the Treasurer or any executive
officer of the Fund.
The Bank shall assist generally in the preparation of reports to
shareholders and others, audits of accounts, and other ministerial matters of
like nature.
12. Fund Evaluation. The Bank shall compute and, unless otherwise directed
by the Board, determine as of the close of business on the New York Stock
Exchange on each day on which said Exchange is open for unrestricted trading and
as of such other hours, if any, as may be authorized by the Board the net asset
value and the public offering price of a share of capital stock of the Fund,
such determination to be made in accordance with the provisions of the
Declaration and By-laws of the Fund and Prospectus and Statement of Additional
Information relating to the Fund, as they may from time to time be amended, and
any applicable resolutions of the Board at the time in force and applicable; and
promptly to notify the Fund, the proper exchange and the NASD or such other
persons as the Fund may request of the results of such computation and
determination. In computing the net asset value hereunder, the Bank may rely in
good faith upon information furnished to it by any Authorized Person in respect
of (i) the manner of accrual of the liabilities of the Fund and in respect of
liabilities of the Fund not appearing on its books of account kept by the Bank,
(ii) reserves, if any, authorized by the Board or that no such reserves have
been authorized, (iii) the source of the quotations to be used in computing the
net asset value, (iv) the value to be assigned to any security for which no
price quotations are available, and (v) the method of computation of the public
offering price on the basis of the net asset value of the shares, and the Bank
shall not be responsible for any loss occasioned by such reliance or for any
good faith reliance on any quotations received from a source pursuant to (iii)
above.
13. Concerning the Bank..
13.1 Performance of Duties and Standard of Care.
In performing its duties hereunder and any other duties listed on any
Schedule hereto, if any, the Bank will be entitled to receive and act upon the
advice of independent counsel of its own selection, which may be counsel for the
Fund, and will be without liability for any action taken or thing done or
omitted to be done in accordance with this Agreement in good faith in conformity
with such advice. In the performance of its duties hereunder, the Bank will be
protected and not be liable, and will be indemnified and held harmless for any
action taken or omitted to be taken by it in good faith reliance upon the terms
of this Agreement, any Officers' Certificate, Proper Instructions, resolution of
the Board, telegram, notice, request, certificate or other instrument reasonably
believed by the Bank to be genuine and for any other loss to the Fund except in
the case of its negligence, willful misfeasance or bad faith in the performance
of its duties or reckless disregard of its obligations and duties hereunder.
The Bank will be under no duty or obligation to inquire into and will not
be liable for:
(a) the validity of the issue of any Portfolio Securities
purchased by or for the Fund, the legality of the purchases thereof or the
propriety of the price incurred therefor;
(b) the legality of any sale of any Portfolio Securities
by or for the Fund or the propriety of the amount for which the same are
sold;
(c) the legality of an issue or sale of any common shares of the
Fund or the sufficiency of the amount to be received therefor;
(d) the legality of the repurchase of any common shares of the
Fund or the propriety of the amount to be paid therefor;
(e) the legality of the declaration of any dividend by the Fund
or the legality of the distribution of any Portfolio Securities as payment in
kind of such dividend; and
(f) any property or moneys of the Fund unless and until received
by it, and any such property or moneys delivered or paid by it pursuant to the
terms hereof.
Moreover, the Bank will not be under any duty or obligation to ascertain
whether any Portfolio Securities at any time delivered to or held by it for the
account of the Fund are such as may properly be held by the Fund under the
provisions of its Declaration, By-laws, any federal or state statutes or any
rule or regulation of any governmental agency.
Notwithstanding anything in this Agreement to the contrary, in no event
shall the Bank be liable hereunder or to any third party:
(a) for any losses or damages of any kind resulting from acts of
God, earthquakes, fires, floods, storms or other disturbances of nature,
epidemics, strikes, riots, nationalization, expropriation, currency
restrictions, acts of war, civil war or terrorism, insurrection, nuclear fusion,
fission or radiation, the interruption, loss or malfunction of utilities,
transportation, or computers (hardware or software) and computer facilities, the
unavailability of energy sources and other similar happenings or events except
as results from the Bank's own gross negligence; or
(b) for special, punitive or consequential damages arising from
the provision of services hereunder, even if the Bank has been advised of the
possibility of such damages.
13.2 Agents and Subcustodians with Respect to Property of the Fund Held
in the United States. The Bank may employ agents in the performance of its
duties hereunder and shall be responsible for the acts and omissions of such
agents as if performed by the Bank hereunder.
Upon receipt of Proper Instructions, the Bank may employ certain
subcustodians, provided that any such subcustodian meets at least the minimum
qualifications required by Section 17(f)(1) of the 1940 Act to act as a
custodian of the Fund's assets with respect to property of the Fund held in the
United States. The Bank shall have no liability to the Fund or any other person
by reason of any act or omission of such subcustodian and the Fund shall
indemnify the Bank and hold it harmless from and against any and all actions,
suits and claims, arising directly or indirectly out of the performance of such
subcustodian. Upon request of the Bank, the Fund shall assume the entire defense
of any action, suit, or claim subject to the foregoing indemnity. The Fund shall
pay all fees and expenses of such subcustodian.
13.3 Duties of the Bank with Respect to Property of the Fund
Held Outside of the United States.
(a) Appointment of Foreign Sub-Custodians. The Fund hereby
authorizes and instructs the Bank to employ as sub-custodians for the Fund's
Portfolio Securities and other assets maintained outside the United States the
foreign banking institutions and foreign securities depositories designated on
the Schedule attached hereto (each, a "Selected Foreign Sub-Custodian"). Upon
receipt of Proper Instructions, together with a certified resolution of the
Fund's Board of Trustees, the Bank and the Fund may agree to designate
additional foreign banking institutions and foreign securities depositories to
act as Selected Foreign Sub-Custodians hereunder. Upon receipt of Proper
Instructions, the Fund may instruct the Bank to cease the employment of any one
or more such Selected Foreign Sub-Custodians for maintaining custody of the
Fund's assets, and the Bank shall so cease to employ such sub-custodian as soon
as alternate custodial arrangements have been implemented.
(b) Foreign Securities Depositories. Except as may otherwise be
agreed upon in writing by the Bank and the Fund, assets of the Fund shall be
maintained in foreign securities depositories only through arrangements
implemented by the foreign banking institutions serving as Selected Foreign
Sub-Custodians pursuant to the terms hereof. Where possible, such arrangements
shall include entry into agreements containing the provisions set forth in
subparagraph (d) hereof. Notwithstanding the foregoing, except as may
otherwise be agreed upon in writing by the Bank and the Fund, the Fund
authorizes the deposit in Euro-clear, the securities clearance and depository
facilities operated by Morgan Guaranty Trust Company of New York in Brussels,
Belgium, of Foreign Portfolio Securities eligible for deposit therein and to
utilize such securities depository in connection with settlements of purchases
and sales of securities and deliveries and returns of securities, until
notified to the contrary pursuant to subparagraph (a) hereunder.
(c) Segregation of Securities. The Bank shall identify on its
books as belonging to the Fund the Foreign Portfolio Securities held by each
Selected Foreign Sub-Custodian. Each agreement pursuant to which the Bank
employs a foreign banking institution shall require that such institution
establish a custody account for the Bank and hold in that account, Foreign
Portfolio Securities and other assets of the Fund, and, in the event that such
institution deposits Foreign Portfolio Securities in a foreign securities
depository, that it shall identify on its books as belonging to the Bank the
securities so deposited.
(d) Agreements with Foreign Banking Institutions. Each of the
agreements pursuant to which a foreign banking institution holds assets of the
Fund (each, a "Foreign Sub-Custodian Agreement") shall be substantially in the
form previously made available to the Fund and shall provide that: (a) the
Fund's assets will not be subject to any right, charge, security interest,
lien or claim of any kind in favor of the foreign banking institution or its
creditors or agent, except a claim of payment for their safe custody or
administration (including, without limitation, any fees or taxes payable upon
transfers or reregistration of securities); (b) beneficial ownership of the
Fund's assets will be freely transferable without the payment of money or
value other than for custody or administration (including, without limitation,
any fees or taxes payable upon transfers or reregistration of securities); (c)
adequate records will be maintained identifying the assets as belonging to
Bank; (d) officers of or auditors employed by, or other representatives of the
Bank, including to the extent permitted under applicable law, the independent
public accountants for the Fund, will be given access to the books and records
of the foreign banking institution relating to its actions under its agreement
with the Bank; and (e) assets of the Fund held by the Selected Foreign
Sub-Custodian will be subject only to the instructions of the Bank or its
agents.
(e) Access of Independent Accountants of the Fund. Upon request
of the Fund, the Bank will use its best efforts to arrange for the independent
accountants of the Fund to be afforded access to the books and records of any
foreign banking institution employed as a Selected Foreign Sub-Custodian
insofar as such books and records relate to the performance of such foreign
banking institution under its Foreign Sub-Custodian Agreement.
(f) Reports by Bank. The Bank will supply to the Fund from time
to time, as mutually agreed upon, statements in respect of the securities and
other assets of the Fund held by Selected Foreign Sub-Custodians, including
but not limited to an identification of entities having possession of the
Foreign Portfolio Securities and other assets of the Fund.
(g) Transactions in Foreign Custody Account. Transactions with
respect to the assets of the Fund held by a Selected Foreign Sub-Custodian
shall be effected pursuant to Proper Instructions from the Fund to the Bank
and shall be effected in accordance with the applicable Foreign Sub-Custodian
Agreement. If at any time any Foreign Portfolio Securities shall be registered
in the name of the nominee of the Selected Foreign Sub-Custodian, the Fund
agrees to hold any such nominee harmless from any liability by reason of the
registration of such securities in the name of such nominee.
Notwithstanding any provision of this Agreement to the contrary,
settlement and payment for Foreign Portfolio Securities received for the
account of the Fund and delivery of Foreign Portfolio Securities maintained
for the account of the Fund may be effected in accordance with the customary
established securities trading or securities processing practices and
procedures in the jurisdiction or market in which the transaction occurs,
including, without limitation, delivering securities to the purchaser thereof
or to a dealer therefor (or an agent for such purchaser or dealer) against a
receipt with the expectation of receiving later payment for such securities
from such purchaser or dealer.
In connection with any action to be taken with respect to the
Foreign Portfolio Securities held hereunder, including, without limitation,
the exercise of any voting rights, subscription rights, redemption rights,
exchange rights, conversion rights or tender rights, or any other action in
connection with any other right, interest or privilege with respect to such
Securities (collectively, the "Rights"), the Bank shall promptly transmit to
the Fund such information in connection therewith as is made available to the
Bank by the Foreign Sub-Custodian, and shall promptly forward to the
applicable Foreign Sub-Custodian any instructions, forms or certifications
with respect to such Rights, and any instructions relating to the actions to
be taken in connection therewith, as the Bank shall receive from the Fund
pursuant to Proper Instructions. Notwithstanding the foregoing, the Bank shall
have no further duty or obligation with respect to such Rights, including,
without limitation, the determination of whether the Fund is entitled to
participate in such Rights under applicable U.S. and foreign laws, or the
determination of whether any action proposed to be taken with respect to such
Rights by the Fund or by the applicable Foreign Sub-Custodian will comply with
all applicable terms and conditions of any such Rights or any applicable laws
or regulations, or market practices within the market in which such action is
to be taken or omitted.
(h) Liability of Selected Foreign Sub-Custodians. Each Foreign
Sub-Custodian Agreement with a foreign banking institution shall require the
institution to exercise reasonable care in the performance of its duties and
to indemnify, and hold harmless, the Bank and each Fund from and against
certain losses, damages, costs, expenses, liabilities or claims arising out of
or in connection with the institution's performance of such obligations, all
as set forth in the applicable Foreign Sub-Custodian Agreement. The Fund
acknowledges that the Bank, as a participant in Euro-clear, is subject to the
Terms and Conditions Governing the Euro-Clear System, a copy of which has been
made available to the Fund. The Fund acknowledges that pursuant to such Terms
and Conditions, Morgan Guaranty Brussels shall have the sole right to exercise
or assert any and all rights or claims in respect of actions or omissions of,
or the bankruptcy or insolvency of, any other depository, clearance system or
custodian utilized by Euro-clear in connection with the Fund's securities and
other assets.
(i) Liability of Bank. The Bank shall have no more or less
responsibility or liability on account of the acts or omissions of any
Selected Foreign Sub-Custodian employed hereunder than any such Selected
Foreign Sub-Custodian has to the Bank and, without limiting the foregoing, the
Bank shall not be liable for any loss, damage, cost, expense, liability or
claim resulting from nationalization, expropriation, currency restrictions, or
acts of war or terrorism, political risk (including, but not limited to,
exchange control restrictions, confiscation, insurrection, civil strife or
armed hostilities) other losses due to Acts of God, nuclear incident or any
loss where the Selected Foreign Sub-Custodian has otherwise exercised
reasonable care.
(j) Monitoring Responsibilities. The Bank shall furnish
annually to the Fund, information concerning the Selected Foreign
Sub-Custodians employed hereunder for use by the Fund in evaluating such
Selected Foreign Sub-Custodians to ensure compliance with the requirements of
Rule 17f-5 of the Act. In addition, the Bank will promptly inform the Fund in
the event that the Bank is notified by a Selected Foreign Sub-Custodian that
there appears to be a substantial likelihood that its shareholders' equity
will decline below $200 million (U.S. dollars or the equivalent thereof) or
that its shareholders' equity has declined below $200 million (in each case
computed in accordance with generally accepted U.S. accounting principles) or
any other capital adequacy test applicable to it by exemptive order, or if the
Bank has actual knowledge of any material loss of the assets of the Fund held
by a Foreign Sub-Custodian.
(k) Tax Law. The Bank shall have no responsibility or liability
for any obligations now or hereafter imposed on the Fund or the Bank as
custodian of the Fund by the tax laws of any jurisdiction, and it shall be the
responsibility of the Fund to notify the Bank of the obligations imposed on
the Fund or the Bank as the custodian of the Fund by the tax law of any
non-U.S. jurisdiction, including responsibility for withholding and other
taxes, assessments or other governmental charges, certifications and
governmental reporting. The sole responsibility of the Custodian with regard
to such tax law shall be to use reasonable efforts to assist the Fund with
respect to any claim for exemption or refund under the tax law of
jurisdictions for which the Fund has provided such information.
13.4 Insurance. The Bank shall use the same care with respect to the
safekeeping of Portfolio Securities and cash of the Fund held by it as it uses
in respect of its own similar property but it need not maintain any special
insurance for the benefit of the Fund.
13.5. Fees and Expenses of Bank. The Fund will pay or reimburse the
Bank from time to time for any transfer taxes payable upon transfer of Portfolio
Securities made hereunder, and for all necessary proper disbursements, expenses
and charges made or incurred by the Bank in the performance of this Agreement
(including any duties listed on any Schedule hereto, if any) including any
indemnities for any loss, liabilities or expense to the Bank as provided above.
For the services rendered by the Bank hereunder, the Fund will pay to the Bank
such compensation or fees at such rate and at such times as shall be agreed upon
in writing by the parties from time to time. The Bank will also be entitled to
reimbursement by the Fund for all reasonable expenses incurred in conjunction
with termination of this Agreement by the Fund.
13.6 Advances by Bank. The Bank may, in its sole discretion, advance
funds on behalf of the Fund to make any payment permitted by this Agreement upon
receipt of any proper authorization required by this Agreement for such payments
by the Fund. Should such a payment or payments, with advanced funds, result in
an overdraft (due to insufficiencies of the Fund's account with the Bank, or for
any other reason) this Agreement deems any such overdraft or related
indebtedness, a loan made by the Bank to the Fund payable on demand and bearing
interest at the current rate charged by the Bank for such loans unless the Fund
shall provide the Bank with agreed upon compensating balances. The Fund agrees
that the Bank shall have a continuing lien and security interest to the extent
of any overdraft or indebtedness, in and to any property at any time held by it
for the Fund's benefit or in which the Fund has an interest and which is then in
the Bank's possession or control (or in the possession or control of any third
party acting on the Bank's behalf). The Fund authorizes the Bank, in its sole
discretion, at any time to charge any overdraft or indebtedness, together with
interest due thereon against any balance of account standing to the credit of
the Fund on the Bank's books.
14. Termination.
14.1 This Agreement may be terminated at any time without penalty upon
sixty days written notice delivered by either party to the other by means of
registered mail, and upon the expiration of such sixty days this Agreement will
terminate; provided, however, that the effective date of such termination may be
postponed to a date not more than ninety days from the date of delivery of such
notice (i) by the Bank in order to prepare for the transfer by the Bank of all
of the assets of the Fund held hereunder, and (ii) by the Fund in order to give
the Fund an opportunity to make suitable arrangements for a successor custodian.
At any time after the termination of this Agreement, the Fund will, at its
request, have access to the records of the Bank relating to the performance of
its duties as custodian.
14.2 In the event of the termination of this Agreement, the Bank will
immediately upon receipt or transmittal, as the case may be, of notice of
termination, commence and prosecute diligently to completion the transfer of all
cash and the delivery of all Portfolio Securities duly endorsed and all records
maintained under Section 11 to the successor custodian when appointed by the
Fund. The obligation of the Bank to deliver and transfer over the assets of the
Fund held by it directly to such successor custodian will commence as soon as
such successor is appointed and will continue until completed as aforesaid. If
the Fund does not select a successor custodian within ninety (90) days from the
date of delivery of notice of termination the Bank may, subject to the
provisions of subsection (14.3), deliver the Portfolio Securities and cash of
the Fund held by the Bank to a bank or trust company of its own selection which
meets the requirements of Section 17(f)(1) of the 1940 Act and has a reported
capital, surplus and undivided profits aggregating not less than $2,000,000, to
be held as the property of the Fund under terms similar to those on which they
were held by the Bank, whereupon such bank or trust company so selected by the
Bank will become the successor custodian of such assets of the Fund with the
same effect as though selected by the Board.
14.3 Prior to the expiration of ninety (90) days after notice of
termination has been given, the Fund may furnish the Bank with an order of the
Fund advising that a successor custodian cannot be found willing and able to act
upon reasonable and customary terms and that there has been submitted to the
shareholders of the Fund the question of whether the Fund will be liquidated or
will function without a custodian for the assets of the Fund held by the Bank.
In that event the Bank will deliver the Portfolio Securities and cash of the
Fund held by it, subject as aforesaid, in accordance with one of such
alternatives which may be approved by the requisite vote of shareholders, upon
receipt by the Bank of a copy of the minutes of the meeting of shareholders at
which action was taken, certified by the Fund's Secretary and an opinion of
counsel to the Fund in form and content satisfactory to the Bank.
15. Confidentiality. Both parties hereto agree than any non-public
information obtained hereunder concerning the other party is confidential and
may not be disclosed to any other person without the consent of the other party,
except as may be required by applicable law or at the request of a governmental
agency. The parties further agree that a breach of this provision would
irreparably damage the other party and accordingly agree that each of them is
entitled, without bond or other security, to an injunction or injunctions to
prevent breaches of this provision.
16. Notices. Any notice or other instrument in writing authorized or
required by this Agreement to be given to either party hereto will be
sufficiently given if addressed to such party and mailed or delivered to it at
its office at the address set forth below; namely:
(a) In the case of notices sent to the Fund to:
BJB Investment Funds
c/o Bank Julius Baer
330 Madison Avenue
New York, NY 10017
Attention: Robert Discolo
(b) In the case of notices sent to the Bank to:
Investors Bank & Trust Company
89 South Street
Boston, Massachusetts 02111
Attention: Thomas Sheehan
or at such other place as such party may from time to time designate in
writing.
17. Amendments. This Agreement may not be altered or amended,
except by an instrument in writing, executed by both parties, and in the case
of the Fund, such alteration or amendment will be authorized and approved
by its Board.
18. Parties. This Agreement will be binding upon and shall inure to
the benefit of the parties hereto and their respective successors and assigns;
provided, however, that this Agreement will not be assignable by the Fund
without the written consent of the Bank or by the Bank without the written
consent of the Fund, authorized and approved by its Board; and provided
further that termination proceedings pursuant to Section 14 hereof will not be
deemed to be an assignment within the meaning of this provision.
19. Liabilities of Officers and Trustees. This Agreement has been
executed on behalf of the Fund by the undersigned officer of the Fund solely
in such officer's capacity as an officer of the Fund. The obligations of this
Agreement shall be binding on the assets and property of the Fund only and
shall not be binding upon any trustee, officer or shareholder of the Fund
individually.
20. Governing Law. This Agreement and all performance hereunder
will be governed by the laws of the Commonwealth of Massachusetts.
21. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original, but such
counterparts shall, together, constitute only one instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first written above.
BJB Investment Funds
By: /s/ Bernard Spilko
--------------------------
Name: Bernard Spilko
Title: CFO
ATTEST:
/s/ Robert Discolo
- -----------------------------
Investors Bank & Trust Company
By: /s/ Kevin J. Sheehan
--------------------------
Name: Kevin J. Sheehan
Title: President
ATTEST:
- -----------------------------
DATE:
----------------------
(7/94)
ADMINISTRATION AGREEMENT
BETWEEN
BJB INVESTMENT FUNDS
and
INVESTORS BANK & TRUST COMPANY
ADMINISTRATION AGREEMENT
THIS ADMINISTRATION AGREEMENT is made as of January 30, 1995
by and between BJB INVESTMENT FUNDS, a business trust (the
"Fund"), and INVESTORS BANK & TRUST COMPANY, a Massachusetts
trust company ("Investors Bank").
WHEREAS, the Fund is registered as an open-end management
investment company under the Investment Company Act of 1940, as
amended (the "1940 Act") consisting of two separate portfolios;
and
WHEREAS, the Fund desires to retain Investors Bank to render
certain administrative services to the Fund and Investors Bank
is willing to render such services;
WITNESSETH:
NOW, THEREFORE, in consideration of the mutual covenants herein
set forth, it is agreed between the parties hereto as follows:
1. Appointment. The Fund hereby appoints Investors Bank to
act as Administrator of the Fund on the terms set forth in this
Agreement. Investors Bank accepts such appointment and agrees
to render the services herein set forth for the compensation
herein provided.
2. Delivery of Documents. The Fund has furnished Investors
Bank with copies properly certified or authenticated of each of
the following:
(a) Resolutions of the Fund's Board of Trustees authorizing
the appointment of Investors Bank to provide certain
administrative services to the Fund and approving this Agreement;
(b) The Fund's Declaration of Trust filed with the state of
Massachusetts on September 16, 1993 and all amendments thereto
(the "Declaration");
(c) The Fund's by-laws and all amendments thereto (the
"By-Laws");
(d) The Fund's agreements with all service providers which
include any investment advisory agreements, sub-investment
advisory agreements, custody agreements, distribution agreements
and transfer agency agreements (collectively, the "Agreements");
(e) The Fund's most recent Registration Statement on Form N-1A
(the "Registration Statement") under the Securities Act of 1933
and under the 1940 Act and all amendments thereto; and
(f) The Fund's most recent prospectus and statement of
additional information (the "Prospectus"); and
(g) Such other certificates, documents or opinions as may
mutually be deemed necessary or appropriate for Investors Bank
in the proper performance of its duties hereunder.
The Fund will immediately furnish Investors Bank with copies,
properly certified or authenticated, of all amendments of or
supplements to the foregoing. Furthermore, the Fund will notify
Investors Bank as soon as possible of any matter materially
affecting the performance of Investors Bank of its services
under this Agreement.
3. Duties of Administrator. Subject to the supervision and
direction of the Board of Trustees of the Fund, Investors Bank,
as Administrator, will assist in supervising various aspects of
the Fund's administrative operations and undertakes to perform
the following specific services:
(a) Maintaining office facilities (which may be in the offices
of Investors Bank or a corporate affiliate);
(b) Furnishing internal executive and administrative
services and clerical services;
(c) Furnishing corporate secretarial services including
preparation and distribution of materials for Board of Trustees
meetings;
(d) Accumulating information for and, subject to approval by
the Fund's treasurer and legal counsel, coordination of the
preparation, filing, printing and dissemination of reports to
the Fund's shareholders of record and the SEC including, but not
necessarily limited to, post-effective amendments to the Fund's
registration statement, annual reports, semiannual reports, Form
N-SAR, 24f-2 notices and proxy material;
(e) Participating in the preparation and filing of various
reports or other documents required by federal, state and other
applicable laws and regulations, other than those filed or
required to be filed by the Fund's investment adviser or
transfer agent;
(f) Coordinating the preparation and filing of the Fund's tax
returns;
(g) Other services as may be detailed as an appendix to this
Agreement.
In performing all services under this Agreement, Investors Bank
shall act in conformity with Fund's Declaration and By-Laws and
the 1940 Act, as the same may be amended from time to time; and
the investment objectives, investment policies and other
practices and policies set forth in the Fund's Registration
Statement, as the same may be amended from time to time.
Notwithstanding any item discussed herein, Investors Bank has no
discretion over the Fund's assets or choice of investments and
cannot be held liable for any problem relating to such
investments.
4. Fees and Expenses.
(a) For the services to be rendered and the facilities to be
furnished by Investors Bank, as provided for in this Agreement,
the Fund will compensate Investors Bank in accordance with the
fee schedule attached hereto. Such fees do not include
out-of-pocket disbursements (as delineated on the fee schedule
or other expenses with the prior approval of the Fund's
management) of the Administrator for which the Administrator
shall be entitled to bill separately.
(b) Investors Bank shall not be required to pay any expenses
incurred by the Fund.
5. Limitation of Liability.
(a) Investors Bank, its directors, officers, employees and
agents 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 performance of its obligations and duties under this
Agreement, except a loss resulting from willful misfeasance, bad
faith or gross negligence in the performance of such obligations
and duties, or by reason of its reckless disregard thereof. The
Fund will indemnify Investors Bank, its directors, officers,
employees and agents against and hold it and them 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 the willful
misfeasance, bad faith or gross negligence of Investors Bank in
the performance of such obligations and duties or by reason of
its reckless disregard thereof.
(b) Investors Bank may apply to the Fund at any time for
instructions and may consult counsel for the Fund, or its own
counsel, and with accountants and other experts with respect to
any matter arising in connection with its duties hereunder, and
Investors Bank shall not be liable or accountable for any action
taken or omitted by it in good faith in accordance with such
instruction, or with the opinion of such counsel, accountants,
or other experts. Investors Bank shall be protected in acting
upon any document, certificate or instrument which it reasonably
believes to be genuine and to be signed or presented by the
proper person or persons. Investors Bank shall not be held to
have notice of any change of authority of any officers,
employees, or agents of the Fund until receipt of written notice
thereof has been received from the Fund.
(c) This Agreement has been executed on behalf of the Fund by
the undersigned officer of the Fund solely in such officer's
capacity as an officer of the Fund. The obligations of this
Agreement shall be binding on the assets and property of the
Fund only and shall not be binding upon any Trustee, officer or
shareholder of the Fund individually.
6. Termination of Agreement.
(a) This Agreement shall become effective on the date hereof
and shall remain in force unless terminated pursuant to the
provisions of subsection (b) of this Section 6, provided
however that Section 5 shall survive the termination of the
Agreement.
(b) This Agreement may be terminated at any time without
payment of any penalty, upon 60 days written notice, by vote of
the holders of a majority of the outstanding voting securities
of the Fund, or by vote of a majority of the Board of Trustees
of the Fund, or by Investors Bank.
7. Miscellaneous.
(a) Any notice or other instrument authorized or required by
this Agreement to be given in writing to the Fund or Investors
Bank shall be sufficiently given if addressed to that party and
received by it at its office set forth below or at such other
place as it may from time to time designate in writing.
To the Fund: BJB Investment Series
c/o Bank Julius Baer
330 Madison Avenue
New York, NY 10017
Attention: Robert Discolo
To Investors Bank: Investors Bank & Trust Company
89 South Street
Boston, MA 02111
Attention: Thomas Sheehan
(b) This Agreement shall extend to and shall be binding upon
the parties hereto and their respective successors and assigns;
provided, however, that this Agreement shall not be assignable
without the written consent of the other party.
(c) This Agreement shall be construed in accordance with the
laws of the Commonwealth of Massachusetts.
(d) This Agreement may be executed in any number of
counterparts each of which shall be deemed to be an original and
which collectively shall be deemed to constitute only one
instrument.
(e) The captions of 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.
8. Confidentiality. All books, records, information and
data pertaining to the business of the other party which are
exchanged or received pursuant to the negotiation or the
carrying out of this Agreement shall remain confidential, and
shall not be voluntarily disclosed to any other person, except
as may be required in the performance of duties hereunder or as
otherwise required by law.
9. Use of Name. The Fund shall not use the name of Investors
Bank or any of its affiliates in any prospectus, sales
literature or other material relating to the Fund in a manner
not approved by Investors Bank prior thereto in writing;
provided however, that the approval of Investors Bank shall not
be required for any use of its name which merely refers in
accurate and factual terms to its appointment hereunder or which
is required by the Securities and Exchange Commission or any
state securities authority or any other appropriate regulatory,
governmental or judicial authority; provided further, that in no
event shall such approval be unreasonably withheld or delayed.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be duly executed and delivered by their duly
authorized officers as of the date first written above.
BJB Investment Funds
By: /s/ Bernard Spilko
-------------------------
Name: Bernard Spilko
Title: CFO
ATTEST:
/s/ Robert Discolo
- -------------------------
INVESTORS BANK & TRUST COMPANY
By: /s/ Kevin J. Sheehan
-------------------------
Name: Kevin J. Sheehan
Title: President
ATTEST:
- -------------------------
Date:
-------------------
Exhibit 11
CONSENT OF INDEPENDENT ACCOUNTANTS
The Board of Trustees
BJB Investment Funds
We consent to the use of our report dated December 8, 1995 incorporated
herein by reference and to the references to our firm under the
captions "FINANCIAL HIGHLIGHTS" in the prospectus and "INDEPENDENT
AUDITORS" in the statement of additional information.
KPMG Peat Marwick LLP
Boston, Massachusetts
December 27, 1995
BJB INVESTMENT FUNDS
Rule 18f-3 Plan
Rule 18f-3
Pursuant to Rule 18f-3 ("Rule 18f-3") of the Investment Company Act of 1940,
as amended (the "Act"), an open end investment company whose shares are
registered on Form N-1A may issue more than one class of voting stock
(hereinafter referred to as "shares"), provided that such multiple classes of
shares differ either in the manner of distribution, or in services they provide
to shareholders, or both. BJB Investment Funds (the "Trust"), a registered
open-end investment management company whose shares are registered on Form N-1A,
consisting of the BJB International Equity Fund and the BJB Global Income Fund
and any future fund or series created by the Trust or the Trust's investment
advisers, Bank Julius Baer & Co., Ltd., New York branch and Julius Baer
Investment Management Inc. or their affiliates (collectively, the "Funds"), may
offer to shareholders multiple classes of shares in the Funds in accordance with
the Rule 18f-3 and this Rule 18f-3 Plan (or as amended) as described herein,
upon approval of the Board of Trustees of the Trust.
Authorized Classes
Each Fund may issue two classes of shares - the Class A and the Class B
shares (collectively, the "Classes" and individually, a "Class"). Class A shares
will be offered with a front-end sales load and a 0.25% 12b-1/shareholder
servicing fee. Class B shares will be offered with a deferred sales load and a
1.00% 12b-1/shareholder servicing fee.
The Classes of shares issued by any Fund will be identical in all respects
except for Class designation, allocation of certain expenses directly related to
the distribution and/or service arrangement for a Class, and voting rights with
respect to the 12b-1 Plan. Shares of both Classes will represent interests in
the same investment portfolio therefore, each Class is subject to the same
investment objectives, policies and limitations.
Class Expenses
Each Class of shares shall bear expenses, not including advisory or
custodial fees or other expenses related to the management of the Fund's
assets, that are directly attributable to the kind or degree of services
rendered to that Class ("Class Expenses"). Class Expenses, including the
investment advisory fee or the fee of other service providers, may be waived
or reimbursed by the Fund's investment adviser, underwriter or any other
provider of services to the Fund.
Exchanges and Conversion Privileges
None of the Funds may offer exchange and conversion features between the
Classes unless otherwise approved by the Board of Trustees of the Trust.
POWER OF ATTORNEY
The undersigned, hereby constitutes and appoints Steven Howard,
Scott MacLeod, Paul J. Jasinski and George M. Boyd, and each of
them singly, my true and lawful attorneys, with full power to
them and each of them, to sign for me, and in my name and in any
and all capacities, any and all amendments, including
post-effective amendments, to the Registration Statement on Form
N-1A of BJB INVESTMENT FUNDS and to file the same with all
exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said
attorneys and each of them, acting alone, full power and
authority to do and perform each and every act and thing
requisite or necessary to be done in the premises, as fully to
all intents and purposes as he might or could do in person,
hereby ratifying and confirming all that said attorneys or any
of them may lawfully do or cause to be done by virtue hereof.
WITNESS my hand on the date set forth below.
Signature Title Date
/s/ David E. Bodner
___________________ President 12/26/95
David E. Bodner (Chief Executive Officer)
POWER OF ATTORNEY
The undersigned, hereby constitutes and appoints Steven Howard,
Scott MacLeod, Paul J. Jasinski and George M. Boyd, and each of
them singly, my true and lawful attorneys, with full power to
them and each of them, to sign for me, and in my name and in any
and all capacities, any and all amendments, including
post-effective amendments, to the Registration Statement on Form
N-1A of BJB INVESTMENT FUNDS and to file the same with all
exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said
attorneys and each of them, acting alone, full power and
authority to do and perform each and every act and thing
requisite or necessary to be done in the premises, as fully to
all intents and purposes as he might or could do in person,
hereby ratifying and confirming all that said attorneys or any
of them may lawfully do or cause to be done by virtue hereof.
WITNESS my hand on the date set forth below.
Signature Title Date
/s/ Bernard Spilko
___________________ Chief Financial Officer 12/26/95
Bernard Spilko
POWER OF ATTORNEY
The undersigned, hereby constitutes and appoints Steven Howard,
Scott MacLeod, Paul J. Jasinski and George M. Boyd, and each of
them singly, my true and lawful attorneys, with full power to
them and each of them, to sign for me, and in my name and in any
and all capacities, any and all amendments, including
post-effective amendments, to the Registration Statement on Form
N-1A of BJB INVESTMENT FUNDS and to file the same with all
exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said
attorneys and each of them, acting alone, full power and
authority to do and perform each and every act and thing
requisite or necessary to be done in the premises, as fully to
all intents and purposes as he might or could do in person,
hereby ratifying and confirming all that said attorneys or any
of them may lawfully do or cause to be done by virtue hereof.
WITNESS my hand on the date set forth below.
Signature Title Date
/s/ Robert S. Matthews
___________________ Trustee 12/26/95
Robert S. Matthews
POWER OF ATTORNEY
The undersigned, hereby constitutes and appoints Steven Howard,
Scott MacLeod, Paul J. Jasinski and George M. Boyd, and each of
them singly, my true and lawful attorneys, with full power to
them and each of them, to sign for me, and in my name and in any
and all capacities, any and all amendments, including
post-effective amendments, to the Registration Statement on Form
N-1A of BJB INVESTMENT FUNDS and to file the same with all
exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said
attorneys and each of them, acting alone, full power and
authority to do and perform each and every act and thing
requisite or necessary to be done in the premises, as fully to
all intents and purposes as he might or could do in person,
hereby ratifying and confirming all that said attorneys or any
of them may lawfully do or cause to be done by virtue hereof.
WITNESS my hand on the date set forth below.
Signature Title Date
/s/ Gerard J.M. Vlak
___________________ Trustee 12/26/95
Gerard J.M. Vlak
POWER OF ATTORNEY
The undersigned, hereby constitutes and appoints Steven Howard,
Scott MacLeod, Paul J. Jasinski and George M. Boyd, and each of
them singly, my true and lawful attorneys, with full power to
them and each of them, to sign for me, and in my name and in any
and all capacities, any and all amendments, including
post-effective amendments, to the Registration Statement on Form
N-1A of BJB INVESTMENT FUNDS and to file the same with all
exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said
attorneys and each of them, acting alone, full power and
authority to do and perform each and every act and thing
requisite or necessary to be done in the premises, as fully to
all intents and purposes as he might or could do in person,
hereby ratifying and confirming all that said attorneys or any
of them may lawfully do or cause to be done by virtue hereof.
WITNESS my hand on the date set forth below.
Signature Title Date
/s/ Peter Wolfram
___________________ Trustee 12/26/95
Peter Wolfram
POWER OF ATTORNEY
The undersigned, hereby constitutes and appoints Steven Howard,
Scott MacLeod, Paul J. Jasinski and George M. Boyd, and each of
them singly, my true and lawful attorneys, with full power to
them and each of them, to sign for me, and in my name and in any
and all capacities, any and all amendments, including
post-effective amendments, to the Registration Statement on Form
N-1A of BJB INVESTMENT FUNDS and to file the same with all
exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said
attorneys and each of them, acting alone, full power and
authority to do and perform each and every act and thing
requisite or necessary to be done in the premises, as fully to
all intents and purposes as he might or could do in person,
hereby ratifying and confirming all that said attorneys or any
of them may lawfully do or cause to be done by virtue hereof.
WITNESS my hand on the date set forth below.
Signature Title Date
/s/ Harvey B. Kaplan
____________________ Trustee 12/26/95
Harvey B. Kaplan
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from form
N-SAR for the period ended October 31, 1995 and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 1
<NAME> BJB GLOBAL INCOME FUND Class A
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 16434522
<INVESTMENTS-AT-VALUE> 16972898
<RECEIVABLES> 844522
<ASSETS-OTHER> 49506
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 18610465
<PAYABLE-FOR-SECURITIES> 1097275
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 186553
<TOTAL-LIABILITIES> 1283828
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 17652030
<SHARES-COMMON-STOCK> 1430581
<SHARES-COMMON-PRIOR> 2564843
<ACCUMULATED-NII-CURRENT> 672807
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (1506423)
<ACCUM-APPREC-OR-DEPREC> 508223
<NET-ASSETS> 17326637
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1452007
<OTHER-INCOME> 0
<EXPENSES-NET> 410872
<NET-INVESTMENT-INCOME> 1041135
<REALIZED-GAINS-CURRENT> 930422
<APPREC-INCREASE-CURRENT> 439503
<NET-CHANGE-FROM-OPS> 2411060
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 950161
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 58447
<NUMBER-OF-SHARES-REDEEMED> 1241882
<SHARES-REINVESTED> 49173
<NET-CHANGE-IN-ASSETS> (11317548)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> (1697)
<OVERDIST-NET-GAINS-PRIOR> (2555448)
<GROSS-ADVISORY-FEES> 130501
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 431595
<AVERAGE-NET-ASSETS> 20053647
<PER-SHARE-NAV-BEGIN> 11.16
<PER-SHARE-NII> .59
<PER-SHARE-GAIN-APPREC> 0.92
<PER-SHARE-DIVIDEND> .56
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.11
<EXPENSE-RATIO> 2.15
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from form
N-SAR for the period ended October 31, 1995 and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 2
<NAME> BJB INTERNATIONAL EQUITY FUND Class A
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 8425835
<INVESTMENTS-AT-VALUE> 8619455
<RECEIVABLES> 73013
<ASSETS-OTHER> 20513
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 9812302
<PAYABLE-FOR-SECURITIES> 94425
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 74563
<TOTAL-LIABILITIES> 168988
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 14208625
<SHARES-COMMON-STOCK> 952390
<SHARES-COMMON-PRIOR> 1313043
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (48428)
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (4735181)
<ACCUM-APPREC-OR-DEPREC> 218298
<NET-ASSETS> 9643314
<DIVIDEND-INCOME> 179223
<INTEREST-INCOME> 12264
<OTHER-INCOME> 0
<EXPENSES-NET> 250005
<NET-INVESTMENT-INCOME> (58518)
<REALIZED-GAINS-CURRENT> (2069254)
<APPREC-INCREASE-CURRENT> 479443
<NET-CHANGE-FROM-OPS> (1648329)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 267288
<NUMBER-OF-SHARES-REDEEMED> 627941
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (5202288)
<ACCUMULATED-NII-PRIOR> 146420
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (2902682)
<GROSS-ADVISORY-FEES> 93521
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 266452
<AVERAGE-NET-ASSETS> 9355286
<PER-SHARE-NAV-BEGIN> 11.30
<PER-SHARE-NII> (.06)
<PER-SHARE-GAIN-APPREC> (1.11)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.13
<EXPENSE-RATIO> 2.84
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
