<PAGE>
Registration Nos. 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. 8 X
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 X
Amendment No. 10 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 Bank Julius Baer & Co. Ltd., (New York Branch)
330 Madison Avenue
New York, New York 10017
(Name and Address of Agent for Service)
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It is proposed that this filing will become effective (check appropriate box):
__X__ immediately upon filing pursuant to paragraph (b)
_____ on (date) pursuant to paragraph (b)
_____ 60 days after filing pursuant to paragraph (a)(1)
_____ 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, 1996 was filed on December 20, 1996.
BJB INVESTMENT FUNDS
FORM N-1A
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
Part A.
Item No. Prospectus Heading
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<S> <C>
1. Cover Page Cover Page
2. Synopsis Prospectus Summary
3. Condensed Financial Financial Highlights
Information
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
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<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
Funds
PROSPECTUS
March 1, 1997
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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 The Income Fund's investment objective
OBJECTIVE is to maximize current income consistent
AND POLICIES 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 of each Fund are continuously
SHARES 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 This Prospectus sets forth concisely
INFORMATION 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, 1997, 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 Fund's transfer agent, Unified
Advisers, Inc. ('Unified'), 429 N.
Pennsylvania Street, Indianapolis,
Indiana 46204-1873. The SAI is
incorporated by reference into this
Prospectus.
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TABLE OF CONTENTS
Page
-----
Prospectus Summary...................... 4
Financial Highlights.................... 6
Investment Objectives and Policies of
the Funds............................... 8
Common Investment Strategies............ 11
Risk Factors............................ 17
Management of the Funds................. 18
How to Open an Account.................. 20
How to Purchase Shares of the Funds..... 21
How to Redeem Shares of the Funds....... 22
Page
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Exchange Privilege...................... 23
Dividends, Distributions and Taxes...... 23
Net Asset Value......................... 25
The Funds' Performance.................. 25
Custodian and Transfer Agent............ 25
Distribution and Shareholder
Servicing............................... 26
General Information..................... 27
Appendix--Description of Ratings........ 28
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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.
1
Investment Objectives and The Income Fund's investment objective is to
Policies 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, 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
December 31, 1996, the Income Fund Adviser had
assets under management of approximately $4.2
billion and the Equity Fund Adviser had assets
under management of approximately $836 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.'
2
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.'
3
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.
Shareholder Transaction Expenses
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.............................................. 1.63 %
-------
Total Fund operating expenses............................... 2.53 %***
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-------
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* 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 daily 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 2.43%.
Example: 1 year 3 years 5 years 10 years
------ ------- ------- --------
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: $ 26 $ 79 $ 135 $ 287
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.
4
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.
Shareholder Transaction Expenses
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 (after waiver)**.................. .50%
Maximum Rule 12b-1 fees........................... .25%***
Other expenses.................................... 1.71%
----
Total Fund operating expenses (after waiver)**+... 2.46%
----
----
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* A $12.00 service charge is imposed on the holders of Shares for effecting
wire transfers.
** This reflects a temporary voluntary waiver of management fees by the Equity
Fund Adviser (0.50%) which commenced on March 13, 1995 and may be
removed at any time without notice. Absent such waiver, the ratio of
management fees and total Fund operating expenses to the average
daily net assets would be 1.00% and 2.96% respectively.
*** 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 daily 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 2.37%.
Example: 1 year 3 years 5 years 10 years
------ ------- ------- --------
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: $ 25 $ 77 $ 131 $ 280
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.
5
FINANCIAL HIGHLIGHTS
BJB Global Income Fund
The following information has been audited by KPMG Peat Marwick LLP,
independent auditors, whose report thereon appears in the Income Fund's Annual
Report dated October 31, 1996. The information should be read in conjunction
with the financial statements and related notes also included in the Income
Fund's Annual Report, which is 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.
The following information is presented for Class A shares, the only class of
shares outstanding. The Fund no longer offers Class B shares.
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, PERIOD
---------------------------------------------- ENDED
1996 1995# 1994# 1993 10/31/92*
-------- --------- --------- -------- ---------
<S> <C> <C> <C> <C> <C>
Net Asset Value, beginning of period............................... $ 12.11 $ 11.16 $ 12.28 $ 12.36 $ 12.00
-------- --------- --------- -------- ---------
Income (Loss) from investment operations:
Net investment income............................................ 0.59 0.59 0.39 0.37 0.16**
Net realized and unrealized gain (loss) on securities............ 0.36 0.92 (0.81) 0.58 0.42
-------- --------- --------- -------- ---------
Total income (loss) from investment operations................ 0.95 1.51 (0.42) 0.95 0.58
Less Distributions:
Dividends from net investment income............................... (1.05) (0.56) (0.27) (0.37) (0.16)
Distributions from net realized gains.............................. -- -- -- (0.66) --
Distributions from Capital (Note 1)................................ -- -- (0.43) -- (0.06)
-------- --------- --------- -------- ---------
Total distributions........................................... (1.05) (0.56) (0.70) (1.03) (0.22)
-------- --------- --------- -------- ---------
Net Asset Value, end of period..................................... $ 12.01 $ 12.11 $ 11.16 $ 12.28 $ 12.36
-------- --------- --------- -------- ---------
-------- --------- --------- -------- ---------
Total Return***.................................................... 8.25% 13.90% (3.54)% 8.15% 4.86%
-------- --------- --------- -------- ---------
-------- --------- --------- -------- ---------
Ratios/Supplemental Data:
Net assets, end of period (in 000's)............................... $ 14,584 $17,327 $28,619 $ 57,682 $28,647
Ratio of net investment income to average net assets............... 4.71% 5.19% 3.29% 2.24% 3.95%+
Ratio of total expenses to average net assets...................... 2.53%## 2.15%## 1.66% 1.78% 1.00%+**
Portfolio turnover rate............................................ 219% 319% 320% 291% 43%
</TABLE>
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* The BJB Global Income Fund commenced operations on July 1, 1992.
** Net investment income per share and ratio of total expenses
to average net assets before waiver of fees by the investment adviser,
sub-investment adviser or administrator were $0.13 and 1.75%, respectively.
*** Represents total return for each period indicated and does not reflect any
applicable sales charge.
+ Annualized.
# Per share amounts have been calculated using the monthly average share
method.
## Includes indirectly paid expenses. Excluding indirectly paid expenses, the
ratio of total expenses to average net assets would have been 2.43% and
2.05% for the years ended October 31, 1996 and 1995 respectively.
6
BJB International Equity Fund
The following information has been audited by KPMG Peat Marwick LLP,
independent auditors, whose report thereon appears in the Equity Fund's Annual
Report dated October 31, 1996. The information should be read in conjunction
with the financial statements and related notes also included in the Equity
Fund's Annual Report, which is 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.
The following information is presented for Class A shares, the only class of
shares outstanding. The Fund no longer offers Class B shares.
7
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, Period
-------------------------------------- Ended
1996 1995# 1994 10/31/93*
-------- --------- -------- ---------
<S> <C> <C> <C> <C>
Net Asset Value, beginning of period................................ $ 10.13 $ 11.30 $ 13.10 $ 12.00
-------- --------- -------- ---------
Income from investment operations:
Net investment loss++............................................. (0.02) (0.06) (0.21) (0.02)
Net realized and unrealized gain (loss) on securities.......... 1.32 (1.11) (1.56) 1.12
-------- --------- -------- ---------
Total income (loss) from investment operations................. 1.30 (1.17) (1.77) 1.10
-------- --------- -------- ---------
Less distributions:
In excess of net investment income.................................. -- -- (0.03) --
-------- --------- -------- ---------
Net Asset Value, end of period...................................... $ 11.43 $ 10.13 $ 11.30 $ 13.10
-------- --------- -------- ---------
-------- --------- -------- ---------
Total Return **..................................................... 12.73% (10.35)% (13.53)% 9.17%
-------- --------- -------- ---------
-------- --------- -------- ---------
Ratios/Supplemental Data:
Net assets, end of period (in 000's)................................ $ 19,161 $ 9,643 $ 14,831 $11,292
Ratio of net investment loss to average net assets.................. (0.58)% (0.63)% (1.26)% (3.83)%+
Ratio of total expenses to average net assets....................... 2.46%(a)(c) 2.84%(b)(c) 2.16% 2.09%+
Portfolio turnover rate............................................. 67% 116% 169% 20%
Average brokerage commission rate................................... $0.00464 N/A N/A N/A
</TABLE>
- ------------------------------
* The BJB International Equity Fund commenced operations on October 4, 1993.
** Represents total return for each period indicated and does not
reflect any applicable sales charge.
+ Annualized.
++ Net investment loss before waiver of fees by the investment adviser was
($0.05) and ($0.11) for the years ended October 31, 1996 and 1995,
respectively.
# Per share amounts have been calculated using the monthly average share
method.
(a) Figure is net of the voluntary expense waiver by the Adviser. Excluding
this waiver, the ratio of total expenses to average net assets would
have been 2.96%.
(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%.
(c) Includes indirectly paid expenses. Excluding indirectly paid expenses the
ratio of total expenses to average net assets would have been 2.37% and
2.67% for the years ended October 31, 1996 and 1995, respectively.
8
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, including, but not limited to, Australia, Austria, Belgium, Canada,
Czech Republic, Denmark, Finland, France, Germany, Greece, Hong Kong,
Indonesia, Italy, Japan, Mexico, the Netherlands, New Zealand, Poland,
Portugal, South Africa, 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 Rating Service, a division of McGraw-Hill
Companies ('S&P') and may not invest in
9
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
10
currencies of a variety of countries, including, but not limited to, Argentina,
Australia, Austria, Belgium, Brazil, Canada, Chile, China, Czech Republic,
Denmark, Egypt, Finland, France, Germany, Hong Kong, Israel, Italy, Japan,
Malaysia, Mauritius, Mexico, the Netherlands, New Zealand, Pakistan, Peru,
Poland, 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 certain date 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, American Depository Receipts ("ADRs"), Global
Depository Receipts ("GDRs") or European Depository Receipts ("EDRs")
(collectively, "Depository Receipts"). ADRs are receipts, typically issued by a
U.S. bank or trust company, which evidence ownership of underlying securities
issued by a foreign corporation. GDRs may be traded in any public or private
securities market and may represent securities held by institutions located
anywhere in the world. EDRs are receipts issued in Europe which evidence a
similar ownership arrangement. Generally, ADRs, in registered form, are designed
for use in the U.S. securities markets and EDRs, in bearer form, are designed
for use in European securities markets. The Equity Fund may invest in Depository
Receipts through 'sponsored' or 'unsponsored' facilities if issues of such
Depository Receipts are available and are consistent with the Equity Funds
investment objective. A sponsored facility is established jointly by the issuer
of the underlying security and a depository, whereas a depository may establish
an unsponsored facility without participation by the issuer of the deposited
security. Holders of unsponsored Depository Receipts generally bear all the
costs of such facilities and the depository 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.
11
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 pursuant to
procedures adopted 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 investment
grade money 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
12
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
13
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 or
other liquid obligations 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 liquid 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
14
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
liquid 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
15
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
16
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 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.
17
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.
18
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 are 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 majority owned subsidiary of
Julius Baer Securities Inc., a registered broker-dealer and investment adviser,
which in turn is a wholly owned subsidiary of Julius Baer Holding Ltd. The
Income Fund Adviser has been registered as an investment adviser under the
Investment
19
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
December 31, 1996, the Income Fund Adviser had assets under management of
approximately $4.2 billion and the Equity Fund Adviser had assets under
management of approximately $836 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, 1996, 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, 1996, the compensation paid to
the Equity Fund Adviser was 0.50% of the Equity Fund's average daily net assets.
The Equity Fund Adviser has voluntarily agreed to temporarily waive 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 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 has 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.
20
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, CFA, 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, 1996 is included in the Annual Report dated October 31, 1996.
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 60 State
Street, 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.
21
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]
22
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 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 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.
23
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.
24
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.'
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 Shares 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.
25
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 Day and Christmas Day, 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
26
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 Street,
Indianapolis, Indiana 46204-1873, 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 daily 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 daily 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.
27
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.
28
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.
29
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.
30
- --------------------------------------------------------------------------------
PROSPECTUS
[LOGO]
BJB
Global
Income
Fund
BJB
International
Equity
Fund
BJB Investment Funds
Account Application Please Print or Type
- --------------------------------------------------------------------------------
1. ACCOUNT REGISTRATION
Name(s) in which account is to be registered:
Individual _________________________________________________________________
Social Security Number _____________________________________________________
Joint Owner ________________________________________________________________
(If Joint Tenancy, use Social Security Number of first Joint Tenant
shown.)
OR Uniform Transfer to Minor: _________________________________________________
Custodian Name (one custodian only)
Under the ______________________________ Uniform Transfer to Minors Act or
similar act.
State
Custodian for ______________________________________________________________
Minor's Name (one minor only)
Minor's Social Security Number _____________________________________________
OR q Trust q Corporation q Other ____________________________________________
(please specify)
Trust/Corporate Name _______________________________________________________
Trust Date ______________ Taxpayer Identification Number __________________
Additional forms, such as a Corporate Resolution, may be required. Call
1-800-435-4659 for information.
- --------------------------------------------------------------------------------
2. MAILING ADDRESS
Address for reports and statements:
____________________________________________________________________________
Street Address Apt.
____________________________________________________________________________
City State Zip Code
Telephone Number ___________________________________________________________
Non Resident Alien: q No q Yes _________________________________________
- --------------------------------------------------------------------------------
3. FUND SELECTION AND INITIAL INVESTMENT
With as little as $2,500, you can invest in the BJB Investment Funds. Please
be sure to read the current Prospectus carefully before investing or sending
money. You may request an additional Prospectus by calling 1-800-435-4659.
Investment Amount
BJB Global Income Fund $ ____________________________________
BJB International Equity Fund $ ____________________________________
Total Amount Invested: $ ____________________________________
q By check (Payable to the BJB Investment Funds or the Fund in which you are
investing.)
q By wire (Call 1-800-435-4659 for wire instructions.) _____________________
(Account number assigned by Bank from which
assets were wired.)
- --------------------------------------------------------------------------------
4. DIVIDENDS AND CAPITAL GAINS
(Check one - If none checked 'A' will be assigned.)
q A. Reinvest dividends and capital gains in additional Fund shares.
q B. Pay dividends in cash, reinvest capital gains in additional Fund
shares.
q C. Pay dividends and capital gains in cash.
- --------------------------------------------------------------------------------
5. TELEPHONE EXCHANGES AND REDEMPTIONS
Unless indicated below, I hereby authorize Unified Advisers, Inc.
('Unified'), BJB Investment Funds' Transfer Agent, to accept and act upon
telephone instructions regarding exchange and redemption transactions for my
account(s).
q I DO NOT want shares in my account(s) to be exchanged or redeemed by
telephone.
For more information, please refer to the current Prospectus.
- --------------------------------------------------------------------------------
6. WIRE REDEMPTION PRIVILEGE (OPTIONAL)
q Wire redemptions permit proceeds of redemption requests initiated by
telephone or letter to be transmitted via Fed Wire to Fed member banks.
Account of ________________________________________________________________
Name(s) on account
Name of person(s) able to act on behalf of account ________________________
(i.e., corporation, spouse, etc.)
Bank Name _________________________________________________________________
Bank Address ______________________________________________________________
Street
_______________________________________________________________
City State Zip Code
Bank Account Number _______________________________________________________
(specify Checking or Savings)
ABA Routing Number ________________________________________________________
- --------------------------------------------------------------------------------
7. AUTOMATIC INVESTMENT PLAN
q Please send me the necessary authorization form for the Automatic
Investment Plan, where my money can automatically be invested in my
account on a regular basis.
- --------------------------------------------------------------------------------
8. AUTHORIZATIONS, CERTIFICATIONS AND SIGNATURES
AUTHORIZATION
By signing this Application, I(we) certify that I(we) have full right,
power, authority, and legal capacity to purchase shares of the Fund and
affirm that I(we) have received a current Prospectus and agree to be bound
by its terms and understand the investment objectives and policies stated
therein and that all representations contained in this Application and any
representations accompanying this Application pursuant to regulatory
authority of any State are true.
I(We) agree not to hold Unified or BJB Investment Funds responsible for
acting under the powers I(we) have given them. I(We) also agree that all
account registration information I(we) have given Unified will remain the
same unless I(we) tell Unified otherwise in writing that includes a
signature guarantee. I(We) also agree that this Application applies to any
BJB Investment Funds into which I(we) may exchange.
Shares of the Funds are not bank deposits and are not insured or guaranteed
by the FDIC.
TAXPAYER IDENTIFICATION
I(We) certify under penalties of perjury that:
(1) the social security number or taxpayer identification number shown in
Part 1 is correct and may be used for any custodial or trust account
opened for me(us) by BJB Investment Funds, and
(2) I(We) am(are) not subject to backup withholding because the Internal
Revenue Service ('IRS') (a) has not notified me(us) that I(we) am(are),
as a result of failure to report all interest or dividends, or (b) has
notified me(us) that I(we) am(are) no longer subject to backup
withholding. The certifications in this paragraph are required from all
non-exempt persons under the Federal income tax law.
q Check here if you are subject to backup withholding or have not received a
notice from the IRS advising you that backup withholding has been
terminated.
AUTHORIZATION:
____________________________________________________________________________
Signature of Owner Date Title (if signing for corporation, trusts, etc.)
____________________________________________________________________________
Signature of Joint Owner Date Title (Secretary, Co-Trustee,
etc.)
- --------------------------------------------------------------------------------
9. FOR DEALER USE ONLY
We hereby authorize Unified to act as our agent in connection with
transactions authorized by this Application.
____________________________________________________________________________
Dealer's Name
____________________________________________________________________________
Main Office Address - Street
____________________________________________________________________________
City State Zip Code
____________________________________________________________________________
Representative's Name
____________________________________________________________________________
Branch #
____________________________________________________________________________
Rep #
____________________________________________________________________________
Branch Address - Street
____________________________________________________________________________
City State Zip Code
____________________________________________________________________________
Telephone Number
____________________________________________________________________________
Authorized Signature of Dealer
____________________________________________________________________________
Title
Mail Completed Application to: BJB Investment Funds, P.O. Box 6110,
Indianapolis, IN 46206-6110
STATEMENT OF ADDITIONAL INFORMATION
March 1, 1997
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") 26
Additional Information Concerning Exchange Privilege (see in Prospectus
"Exchange Privilege") 26
Additional Information Concerning Taxes (see in Prospectus under
"Dividends, Distributions and Taxes") 26
Determination of Performance (see in Prospectus under "The Funds' Performance") 27
Independent Auditors 29
Counsel 30
Financial Statements 30
</TABLE>
This Statement of Additional Information is meant to be read in
conjunction with the current Prospectus dated March 1, 1997 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 Street,
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. 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
other liquid obligations, having a value equal to the underlying commodity
value of the
contract as collateral with its custodian or approved futures commission
merchant ("FCM") 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 or approved FCM an amount of cash or other
liquid 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
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,
including its administrator. 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 or other liquid 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 ("Investors Bank"),
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 last three fiscal years ended
October 31, 1996, the Equity Fund paid $2,445, $2,518 and $2,227,
respectively, in brokerage commissions to BJB-Frankfurt and BJB-Zurich,
affiliates of the Adviser or 3.7%, 2.6% and .77% of the total brokerage
commissions paid. BJB-Frankfurt and BJB-Zurich executed 7.3%, 6.7% and .78% of
the aggregate dollar amount of transactions involving commissions during the
last three fiscal years ended October 31, 1996, respectively. For the last
three fiscal years ended October 31, 1996, the Equity Fund paid total brokerage
commissions of $66,653, $95,165 and $284,732, respectively. For the last three
fiscal years ended October 31, 1996, the Income Fund paid total brokerage
commissions of $0, $0 and $4,683, respectively.
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, 1996, the Income Fund's portfolio turnover rate was 219% and 319%,
respectively. For each of the two fiscal years ended October 31, 1996, the
Equity Fund's portfolio turnover rate was 67%, and 116%, 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: 59 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: 53
Gerard J.M. Vlak Trustee Retired; 1988-1991 Regional
1523 Monticello Drive Manager of Amsterdam-Rotterdam
Gladwyne, PA 19035 Bank, New York.
Age: 63
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: 59 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: 43
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: 62 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: 52
Richard C. Pell Vice President First Vice President & Chief Investment
Bank Julius Baer & Co., Ltd. Officer of Bank Julius Baer & Co., Ltd.
330 Madison Avenue New York Branch, since 1995. Prior to 1995,
New York, New York 10017 Vice President and Head Global Fixed Income,
Age: 42 Bankers Trust Co., New York.
Rudolph-Riad Younes Vice President Vice President of Bank Julius Baer &
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: 35 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: 55 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: 50 Manager at Citibank Asset Management.
Michael K. Quain Assistant Treasurer Vice President of Bank Julius Baer &
Bank Julius Baer & Co., Ltd. Co., Ltd., New York Branch and
330 Madison Avenue Julius Baer Securities Inc., since
New York, New York 10017 1985; Assistant Treasurer of the
Age: 39 European Warrant Fund, Inc.
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: 50
Donna M. McCarthy Assistant Treasurer Director, Investors Bank & Trust
Investors Bank & Trust Company Company, since 1994; Manager,
89 South Street Business Assurance, Coopers & Lybrand,
Boston, MA 02111 1988-1994.
Age: 30
Robert Discolo Secretary First 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.
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: 42 and Partner, Gallagher, Callahan and
Gartrell, P.A., 1986-1992.
</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.
Messrs. Matthews, Vlak and Wolfram are members of the Audit Committee
of the Board of Trustees. The Audit Committee advises the Board with respect to
accounting, auditing and financial matters affecting the Funds. Messrs.
Matthews, Vlak and Wolfram are members of the Nominating Committee of the Board
of Trustees. The Nominating Committee selects and nominates candidates for
election to the Board as "non-interested" Trustees.
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, 1996, such fees and expenses totaled
approximately $24,400 for the Trust. As of February 13, 1997, the Trustees and
officers of the Trust as a group owned less than 1% of the Trust's total shares
outstanding. As of February 13, 1997, 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. 162,344.437 12.65%
(beneficial owner)
c/o Bank Julius Baer & Co., Ltd.
330 Madison Avenue
New York, New York 10017
Harry Frisch and Lilo Frisch 109,866.771 8.56%
(beneficial owners)
c/o Bank Julius Baer & Co., Ltd.
330 Madison Avenue
New York, New York 10017
Hans Moench 89,124.885 6.95%
(beneficial owner)
c/o Bank Julius Baer & Co., Ltd.
330 Madison Avenue
New York, New York 10017
Robert C. Wetenhall 79,707.032 6.21%
(beneficial owner)
c/o Bank Julius Baer & Co., Ltd.
330 Madison Avenue
New York, New York 10017
Robert L. Freedman and Ann L. Freedman 77,904.696 6.07%
(beneficial owners)
c/o Bank Julius Baer & Co., Ltd.
330 Madison Avenue
New York, New York 10017
Marc & Debora Tascher 67,513.151 5.26%
(beneficial owners)
c/o Bank Julius Baer & Co., Ltd.
330 Madison Avenue
New York, New York 10017
</TABLE>
<TABLE>
<CAPTION>
Equity Fund:
Name and Address of Amount of Percent of
Owner Shares Owned Shares Owned
<S> <C> <C>
Bank Julius Baer Zurich 520,341.628 24.95%
(beneficial owner)
Bahnhofstrasse 36
P.O. Box 8010
Zurich, Switzerland
Galbari Investments N.V 429,380.994 20.59%
c/o Bank Julius Baer & Co., Ltd.
330 Madison Avenue
New York, New York 10017
Sierra Trust 128,940.757 6.18%
(beneficial owner)
c/o Bank Julius Baer & Co., Ltd.
330 Madison Avenue
New York, New York 10017
</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
(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 became Administrator for each Fund on January 30, 1995; prior to January
30, 1995, The Shareholder Services Group served as Administrator.
For the last three fiscal years ended October 31, 1996, the Funds have paid the
following amounts as investment advisory fees pursuant to each Advisory
Agreement:
Global Income Fund Gross Waiver Net
Year Ended 10/31/96 $101,220 $ -- $101,220
Year Ended 10/31/95 130,501 -- 130,501
Year Ended 10/31/94 329,765 -- 329,765
International Equity Fund
Year Ended 10/31/96 $117,362 $ 58,681 $ 58,681
Year Ended 10/31/95 93,521 48,264 45,257
Year Ended 10/31/94 222,018 -- 222,018
For the last three fiscal years ended October 31, 1996, the Funds have paid the
following amounts as administrative services fees pursuant to each
Administration Agreement and Servicing Agent Agreement:
Global Income Fund
Year Ended 10/31/96 $91,541
Year Ended 10/31/95 84,841
Year Ended 10/31/94 156,709
International Equity Fund
Year Ended 10/31/96 $93,311
Year Ended 10/31/95 65,036
Year Ended 10/31/94 106,393
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 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 year ended
October 31, 1996, the Income Fund paid $38,391 in distribution fees. For the
fiscal year ended October 31, 1996, the Equity Fund paid $29,340 in distribution
fees. All such distribution fees were paid as compensation to sales personnel.
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, 1996 was 4.40%.
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 return for the one year period
ended October 31, 1996 and for the period beginning July 1, 1992* through
October 31, 1996 was 8.25% and 7.14%, respectively.
The Equity Fund's average annual total return for the one year
period ended October 31, 1996 and for the period beginning October 4, 1993*
through October 31, 1996 was 12.73% and (1.52)%, respectively.
*Inception of the Fund.
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 for the one year period
ended October 31, 1996 and for the period beginning July 1, 1992* through
October 31, 1996 was 8.25% and 34.88%, respectively. The Equity Fund's aggregate
total return for the one year period ended October 31, 1996 and for the period
beginning October 4, 1993* through October 31, 1996 was 12.73% and (4.60)%,
respectively.
*Inception of the Fund.
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, 1996 are incorporated
by reference into this Statement of Additional Information ("SAI").
Copies of the Trust's 1996 Annual Report may be obtained by calling
the Trust at the telephone number on the first page of the SAI.
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, 1996 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, 1996 and October 31, 1995
Financial Highlights
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
incorporated by reference to Post-Effective Amendment No. 6 as
filed with the SEC via EDGAR on December 29, 1995
("Post-Effective Amendment No. 6").
(b) Amendment to Master Trust Agreement dated June 22, 1992, is
incorporated by reference to Post-Effective Amendment No. 6.
(c) Amendment to Master Trust Agreement dated September 16, 1993,
is incorporated by reference to Post-Effective Amendment
No. 6.
(d) Amendment to Master Trust Agreement dated January 26, 1995,
is incorporated by reference to Post-Effective Amendment No. 6.
2 Registrant's By-Laws dated April 30, 1992, are incorporated
by reference to Post-Effective Amendment No. 6.
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 incorporated by reference to Post-Effective
Amendment No. 6.
(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 incorporated by reference to Post-
Effective Amendment No. 6.
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 Custody Agreement between the Registrant and Investors Bank & Trust Company dated January 30, 1995,
is incorporated by reference to Post-Effective Amendment No. 6.
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 as filed with the SEC on June 3, 1993 ("Post-Effective Amendment
No. 4").
(c) Administration Agreement between the Registrant and Investors Bank & Trust Company dated January 30, 1995, is
incorporated by reference to Post-Effective Amendment No. 6.
(d) 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").
(e) New Account Application with Unified Advisers, Inc. is incorporated by reference to Post-Effective Amendment No.
4.
(f) 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 via EDGAR on December 20,
1996.
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.
18 Multiclass Plan Pursuant to Rule 18f-3 under the Investment Company Act of 1940 for BJB Investment Funds
dated December 14, 1995, is incorporated by reference to Post-Effective Amendment No. 6.
19 Powers of Attorney dated December 26, 1995, are incorporated by reference to Post-Effective Amendment No. 6.
27 Financial Data Schedules dated October 31, 1996, 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)
<TABLE>
<CAPTION>
Title of Class Number of Record Holders
as of February 19, 1997
<S> <C>
Beneficial Interest, Shares
par value $.001 per
share
BJB Global Income Fund 36
BJB International Equity Fund 19
</TABLE>
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 majority owned subsidiary of Julius Baer Securities Inc., a registered
broker-dealer and investment adviser, which in turn is a wholly owned subsidiary
of Julius 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 February 1, 1997,
is set forth below. The address of the following individuals is 330 Madison
Avenue, New York, New York.
LOCAL ADVISORY BOARD: Richard A. Debs, Alessandro E. Fusina, David
Hershberg, Hans C. Mautner. NORTH AMERICA: David E. Bodner. MANAGEMENT
COMMITTEE: James L. Schlagheck (Branch Manager), Peter Wild (Deputy Branch
Manager), Philip T. Ciriello, Balz Eggimann, E. Gary Lespinasse, Urs G.
Schwytter, Bernard Spilko. LEGAL COUNSEL: Francoise M. Birnholz. COMPLIANCE
OFFICER: Edward A. Clapp. MONEY MARKET/FOREIGN EXCHANGE/PRECIOUS METALS: Peter
Wild, Jurg Hunziker, Walter J. Simon, Oskar Weiss, Daniel Geiser, Rene Meyer,
Donna Seferian, Renato Strauss. PRIVATE BANKING: Urs G. Schwytter, Balz
Eggimann, Richard C. Pell, Jeanette Attina, Nuri Benturk, John H.S. Boys, Denise
Downey, Maria Lipton, Peter Embiricos, Josef A. Huber, Jonas Janson, Markus
Linke, Rudolf-Riad Younes. INVESTMENT SERVICES/INSTITUTIONAL SALES/HUMAN
RESOURCES: Bernard Spilko, Robert T. Discolo, Sharon E. Teufel. CREDIT:
Joachim Straehle, Tanya Rozina .ACCOUNTING/CONTROL/RISK MANAGEMENT: Philip T.
Ciriello, Gary Goldschmidt, Larry Millman, Keith D. Christopher. OPERATIONS
AND SYSTEMS GROUP: E. Gary Lespinasse, Ashley Richards, Cono Gallo.
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 Foreign Webs Index 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 among others.
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 60 State Street, 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 Bank Julius Baer & Co. Ltd, New York Branch
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 and custodian)
(3) Funds Distributor, Inc.
60 State Street
Boston, Massachusetts 02109
(records relating to its functions as
distributor)
(4) Unified Advisers, Inc.
429 North Pennsylvania Street
Indianapolis, Indiana 46204
(records relating to its functions as transfer
agent)
(5) Julius Baer Investment Management Inc.
330 Madison Avenue
New York, New York 10017
(records relating to its functions as investment
adviser)
(6) 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 certifies
that it meets all of the requirements for effectiveness of this Post-Effective
Amendment to the Registration Statement pursuant to Rule 485(b) under the
Securities Act of 1933, as amended, and has duly caused this Post-Effective
Amendment to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, and State of
New York, on the 24th day of February, 1997.
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 Post-Effective Amendment to the Registration Statement has been
signed below by the following persons in the capacities and on the date
indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ David E. Bodner President February 24, 1997
- --------------------- (Chief Executive Officer)
David E. Bodner
/s/Bernard Spilko February 24, 1997
- --------------------- Chief Financial Officer
Bernard Spilko
/s/ Harvey B. Kaplan February 24, 1997
- --------------------- Trustee
Harvey B. Kaplan
/s/ Robert S. Matthews February 24, 1997
- ---------------------- Trustee
Robert S. Matthews
/s/ Gerard J.M. Vlak February 24, 1997
- --------------------- Trustee
Gerard J.M. Vlak
/s/ Peter J. Widmer
- --------------------- Trustee February 24, 1997
Peter J. Widmer
/s/ Peter Wolfram February 24, 1997
- --------------------- Trustee
Peter Wolfram
</TABLE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Item
- ----
Page
- ----
<S> <C>
11 Consent of Independent Accountants.
27 Financial Data Schedules dated October 31, 1996.
</TABLE>
<PAGE>
Exhibit 11
CONSENT OF INDEPENDENT ACCOUNTANTS
The Board of Trustees
BJB Investment Funds
We consent to the use of our report dated December 6, 1996 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 included herein.
KPMG Peat Marwick LLP
Boston, Massachusetts
February 26, 1997
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
This schedule contains summary financial information extracted from form N-sar
for the period ended October 31,1996 and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 1
<NAME> BJB Global Income Fund
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 13,192,070
<INVESTMENTS-AT-VALUE> 14,316,950
<RECEIVABLES> 743,490
<ASSETS-OTHER> 23,975
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 15,084,415
<PAYABLE-FOR-SECURITIES> 350,710
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 149,473
<TOTAL-LIABILITIES> 500,183
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 15,122,410
<SHARES-COMMON-STOCK> 1,214,595
<SHARES-COMMON-PRIOR> 1,430,581
<ACCUMULATED-NII-CURRENT> 140,813
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1,068,574)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 389,583
<NET-ASSETS> 14,584,232
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,110,683
<OTHER-INCOME> 0
<EXPENSES-NET> 377,999
<NET-INVESTMENT-INCOME> 732,684
<REALIZED-GAINS-CURRENT> 570,123
<APPREC-INCREASE-CURRENT> (118,640)
<NET-CHANGE-FROM-OPS> 1,184,167
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,396,952
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 137,746
<NUMBER-OF-SHARES-REDEEMED> 426,171
<SHARES-REINVESTED> 72,439
<NET-CHANGE-IN-ASSETS> (2,742,405)
<ACCUMULATED-NII-PRIOR> 672,807
<ACCUMULATED-GAINS-PRIOR> (1,506,423)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 101,220
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 394,002
<AVERAGE-NET-ASSETS> 15,564,733
<PER-SHARE-NAV-BEGIN> 12.11
<PER-SHARE-NII> 0.59
<PER-SHARE-GAIN-APPREC> 0.36
<PER-SHARE-DIVIDEND> (1.05)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.01
<EXPENSE-RATIO> 2.53
<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 NSAR
for the period ended October 31,1996 and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<SERIES>
<NUMBER> 2
<NAME> BJB International Equity Fund
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 15,220,700
<INVESTMENTS-AT-VALUE> 21,299,554
<RECEIVABLES> 416,023
<ASSETS-OTHER> 114,466
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 21,830,043
<PAYABLE-FOR-SECURITIES> 2,451,464
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 217,392
<TOTAL-LIABILITIES> 2,668,856
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 22,427,105
<SHARES-COMMON-STOCK> 1,677,125
<SHARES-COMMON-PRIOR> 952,390
<ACCUMULATED-NII-CURRENT> (891)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (4,562,409)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,297,382
<NET-ASSETS> 19,161,187
<DIVIDEND-INCOME> 192,320
<INTEREST-INCOME> 18,122
<OTHER-INCOME> 0
<EXPENSES-NET> 278,313
<NET-INVESTMENT-INCOME> (67,871)
<REALIZED-GAINS-CURRENT> 288,180
<APPREC-INCREASE-CURRENT> 1,079,084
<NET-CHANGE-FROM-OPS> 1,299,393
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 929,622
<NUMBER-OF-SHARES-REDEEMED> (204,887)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 9,517,873
<ACCUMULATED-NII-PRIOR> (48,428)
<ACCUMULATED-GAINS-PRIOR> (4,735,181)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 117,362
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 288,521
<AVERAGE-NET-ASSETS> 11,730,812
<PER-SHARE-NAV-BEGIN> 10.13
<PER-SHARE-NII> (0.02)
<PER-SHARE-GAIN-APPREC> 1.32
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.43
<EXPENSE-RATIO> 2.46
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
