-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BdTsvakSKWYyD7IpJ7IULGsF6wOv1eo6UJBeLPiNHhVpdpPjqzq3FgozBTWkmf3Q tFZ1uBXOxCRCip3290PHBQ== 0000912057-96-015724.txt : 19960731 0000912057-96-015724.hdr.sgml : 19960731 ACCESSION NUMBER: 0000912057-96-015724 CONFORMED SUBMISSION TYPE: 485APOS PUBLIC DOCUMENT COUNT: 26 FILED AS OF DATE: 19960730 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: RBB FUND INC CENTRAL INDEX KEY: 0000831114 STANDARD INDUSTRIAL CLASSIFICATION: [] FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 485APOS SEC ACT: 1933 Act SEC FILE NUMBER: 033-20827 FILM NUMBER: 96600609 FILING VALUES: FORM TYPE: 485APOS SEC ACT: 1940 Act SEC FILE NUMBER: 811-05518 FILM NUMBER: 96600610 BUSINESS ADDRESS: STREET 1: 400 BELLEVUE PKWY STE 100 CITY: WILMINGTON STATE: DE ZIP: 19809 BUSINESS PHONE: 3027911791 MAIL ADDRESS: STREET 1: 103 BELLEVUE PKWY STREET 2: SUITE 152 CITY: WILMINGTON STATE: DE ZIP: 19809 FORMER COMPANY: FORMER CONFORMED NAME: FUND INC /DE/ DATE OF NAME CHANGE: 19600201 485APOS 1 485APOS As filed with the Securities and Exchange Commission on JULY 29, 1996 ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-1A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ] POST-EFFECTIVE AMENDMENT NO. 37 [X] and REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ] AMENDMENT NO. 39 [X] __________________________________ THE RBB FUND, INC. (Government Securities Portfolio: RBB Family Class; BEA International Equity Portfolio: BEA Class, BEA Investor Class and BEA Advisor Class; BEA HIGH YIELD Portfolio: BEA Class, BEA Investor Class and BEA Advisor Class; BEA Emerging Markets Equity Portfolio: BEA Class, BEA Investor Class and BEA Advisor Class; BEA U.S. Core Equity Portfolio: BEA Class; BEA U.S. Core Fixed Income Portfolio; BEA Class; BEA Global Fixed Income Portfolio: BEA Class; BEA Municipal Bond Fund Portfolio; BEA Class; BEA Balanced Fund Portfolio; BEA Class; BEA Short Duration Portfolio: BEA Class; BEA Global Telecommunications Portfolio: BEA Investor Class and BEA Advisor Class; ni Micro Cap Fund; ni Class; ni Growth Fund; ni Class; ni Growth & Value Fund; ni Class; Money Market Portfolio: RBB Family Class, Cash Preservation Class, Sansom Street Class, Bedford Class, Janney Class, Beta Class, Gamma Class, Delta Class, Epsilon Class, Zeta Class, Eta Class and Theta Class; Municipal Money Market Portfolio: RBB Family Class, Cash Preservation Class, Sansom Street Class, Bedford Class, Bradford Class, Janney Class, Beta Class, Gamma Class, Delta Class, Epsilon Class, Zeta Class, Eta Class and Theta Class; Government Obligations Money Market Portfolio: Sansom Street Class, Bedford Class, Bradford Class, Janney Class, Beta Class, Gamma Class, Delta Class, Epsilon Class, Zeta Class, Eta Class and Theta CLASS; New York Municipal Money Market Portfolio: Bedford Class, Janney Class, Beta Class, Gamma Class, Delta Class, Epsilon Class, Zeta Class, Eta Class and Theta Class) ________________________________________________________________________________ (Exact Name of Registrant as Specified in Charter) Bellevue Park Corporate Center 400 Bellevue Parkway Suite 100 Wilmington, DE 19809 (Address of Principal Executive Offices) ________________________________________ Registrant's Telephone Number: (302) 792-2555 Copies to: GARY M. GARDNER, ESQUIRE JOHN N. AKE, ESQUIRE PNC Bank, National Association Ballard Spahr Andrews & Ingersoll Broad and Chestnut Streets 1735 Market Street, 51st Floor Philadelphia, PA 19101 Philadelphia, PA 19103 (Name and Address of Agent for Service) Approximate Date of Proposed Public Offering: as soon as possible after effective date of registration statement. It is proposed that this filing will become effective (check appropriate box) immediately upon filing pursuant to paragraph (b) ----- on ____ __, 1996 pursuant to paragraph (b) ----- 60 days after filing pursuant to paragraph (a)(1) ----- on ______________ pursuant to paragraph (a)(1) ----- X 75 days after filing pursuant to paragraph (a)(2) ----- on _______________ pursuant to paragraph (a)(2) of rule 485 ----- If appropriate, check following box: _____ this post-effective amendment designates a new effective date for a previously filed post-effective amendment. ______________________________ Pursuant to Rule 24f-2 under the Investment Company Act of 1940, Registrant has elected to register an indefinite number of shares of common stock of each of the sixty-six classes registered hereby under the Securities Act of 1933. Registrant filed its notice pursuant to Rule 24f-2 for the fiscal year ended August 31, 1995 on October 26, 1995. THE RBB FUND, INC. (BEA Advisor Classes of the BEA International Equity Portfolio, BEA Emerging Markets Equity Portfolio, BEA High Yield Portfolio and BEA Global Telecommunications Portfolio) Cross Reference Sheet FORM N-1A ITEM LOCATION -------------- -------- PART A PROSPECTUS 1. Cover Page............................ Cover Page 2. Synopsis.............................. Annual Portfolio Operating Expenses 3. Financial Highlights Information...... Not Applicable 4. General Description of Registrant..... Cover Page; The Fund; Objectives and Policies 5. Management of the Fund................ Management 6. Capital Stock and Other Securities.... Cover Page; Dividends and Distributions; Shareholder Servicing; Description of Shares; Multi-Class Structure 7. Purchase of Securities Being Offered.. How to Purchase Shares; Net Asset Value 8. Redemption or Repurchase.............. How to Redeem and Exchange Privilege; Net Asset Value 9. Legal Proceedings..................... Inapplicable PART B STATEMENT OF ADDITIONAL INFORMATION 10. Cover Page............................ Cover Page 11. Table of Contents..................... Contents 12. General Information and History....... General; see Prospectus - "The Fund" 13. Investment Objectives and Policies.... Common Investment Policies; Common Investment Objectives and Policies; Supplemental Investment Objectives and Policies 14. Management of the Fund................ Directors and Officers; Investment Advisory, and Servicing Arrangements 15. Control Persons and Principal Holders of Securities......................... Miscellaneous 16. Investment Advisory and Other Services.............................. Investment Advisory and Servicing Arrangements; See Prospectus - "Management" 17. Brokerage Allocation and Other Practices............................. Portfolio Transactions 18. Capital Stock and Other Securities.... Description of Shares; Additional Information Concerning Fund Shares; See Prospectus - "Dividends and Distributions" "Description of Shares" 3 19. Purchase, Redemption and Pricing of Securities Being Offered.............. Purchase and Redemption Information; Valuation of Shares; See Prospectus - "How to Purchase Shares," "How to Redeem and Exchange Privilege" and "Shareholder Servicing" 20. Tax Status............................ Taxes; See Prospectus - "Taxes" 21. Underwriters.......................... Not Applicable 22. Calculation of Performance Data....... Performance Yield Information 23. Financial Statements.................. Not Applicable PART C OTHER INFORMATION Information required to be included in Part C is set forth under the appropriate item, so numbered in Part C of this Registration Statement. THE RBB FUND, INC. (BEA Investor Classes of the BEA International Equity Portfolio, BEA Emerging Markets Equity Portfolio, BEA High Yield Portfolio and BEA Global Telecommunications Portfolio) Cross Reference Sheet FORM N-1A ITEM LOCATION -------------- -------- PART A PROSPECTUS 1. Cover Page............................ Cover Page 2. Synopsis.............................. Annual Portfolio Operating Expenses 3. Financial Highlights Information...... Not Applicable 4. General Description of Registrant..... Cover Page; the Fund; Investment Objectives and Policies 5. Management of the Fund................ Management 6. Capital Stock and Other Securities.... Cover Page; Dividends and Distributions; Shareholder Servicing; Description of Shares; Multi-Class Structure 7. Purchase of Securities Being Offered.. How to Purchase Shares; Net Asset Value 8. Redemption or Repurchase.............. How to Redeem and Exchange Privilege; Net Asset Value 9. Legal Proceedings..................... Inapplicable PART B STATEMENT OF ADDITIONAL INFORMATION 10. Cover Page............................ Cover Page 11. Table of Contents..................... Contents 12. General Information and History....... General; See Prospectus - "The Fund" 13. Investment Objectives and Policies.... Common Investment Policies; Common Investment Objectives and Policies; Supplemental Investment Objectives and Policies 14. Management of the Fund................ Directors and Officers; Investment Advisory, and Servicing Arrangements 15. Control Persons and Principal Holders of Securities......................... Miscellaneous 16. Investment Advisory and Other Services.............................. Investment Advisory, and Servicing Arrangements; See Prospectus - "Management" 17. Brokerage Allocation and Other Practices............................. Portfolio Transactions 18. Capital Stock and Other Securities.... Additional Information Concerning Fund Shares; See Prospectus - "Dividends and Distributions"; "Description of Shares" 19. Purchase, Redemption and Pricing of Securities Being Offered.............. Purchase and Redemption Information; Valuation of Shares; See Prospectus - "How to Purchase Shares," "How to Redeem and Exchange Privilege" and "Shareholder Servicing" 20. Tax Status............................ Taxes; See Prospectus - "Taxes" 21. Underwriters.......................... Not Applicable 22. Calculation of Performance Data....... Performance and Yield Information 23. Financial Statements.................. Not Applicable PART C OTHER INFORMATION Information required to be included in Part C is set forth under the appropriate item, so numbered in Part C of this Registration Statement. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- THE BEA FAMILY OF MUTUAL FUNDS ADVISOR CLASS BEA INTERNATIONAL EQUITY PORTFOLIO BEA EMERGING MARKETS EQUITY PORTFOLIO BEA GLOBAL TELECOMMUNICATIONS PORTFOLIO BEA HIGH YIELD PORTFOLIO ---------- PROSPECTUS ---------- ___________, 1996 A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION BUT HAS NOT YET BECOME EFFECTIVE. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS (COMMUNICATION) SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. TABLE OF CONTENTS ANNUAL PORTFOLIO OPERATING EXPENSES............................................3 INVESTMENT OBJECTIVES AND POLICIES.............................................4 INVESTMENT LIMITATIONS.........................................................8 RISK FACTORS...................................................................9 MANAGEMENT....................................................................10 EXPENSES......................................................................13 HOW TO PURCHASE SHARES........................................................14 HOW TO REDEEM SHARES..........................................................15 NET ASSET VALUE...............................................................17 DIVIDENDS AND DISTRIBUTIONS...................................................18 TAXES.........................................................................18 SHAREHOLDER SERVICING.........................................................20 MULTI-CLASS STRUCTURE.........................................................20 DESCRIPTION OF SHARES.........................................................21 OTHER INFORMATION.............................................................22 BEA FAMILY OF MUTUAL FUNDS ADVISOR CLASS The Advisor Classes of the BEA Family consist of four classes of common stock of The RBB Fund, Inc. (the "Fund"), an open-end management investment company. Shares (collectively, the "Advisor Shares" or "Shares") of such classes (the "Advisor Classes" or "Classes") are offered by this Prospectus and represent interests in one of four of the investment portfolios of the Fund described in this Prospectus (collectively, the "Portfolios"). The investment objective of each Portfolio described in this Prospectus is as follows: BEA INTERNATIONAL EQUITY PORTFOLIO - to provide long-term appreciation of capital. The Portfolio will invest primarily in equity securities of non-U.S. issuers. BEA EMERGING MARKETS EQUITY PORTFOLIO - to provide long-term appreciation of capital. The Portfolio will invest primarily in equity securities in emerging country markets. BEA GLOBAL TELECOMMUNICATIONS PORTFOLIO - to provide long-term appreciation of capital. The Portfolio will invest primarily in equity securities of telecommunications companies, both foreign and domestic. BEA HIGH YIELD PORTFOLIO - to provide a high total return. The Portfolio will invest primarily in high yield fixed income securities (also known as "junk bonds") issued by corporations, governments and agencies, both domestic and foreign. The Portfolio will invest without regard to maturity or credit quality limitations. There can be, of course, no assurance that a Portfolio's investment objective will be achieved. Investments in the Portfolios involve certain risks. See "Risk Factors." THE BEA HIGH YIELD PORTFOLIO MAY INVEST ITS ASSETS WITHOUT LIMITATION IN SECURITIES WHICH MAY INCLUDE BELOW INVESTMENT-GRADE QUALITY SECURITIES COMMONLY KNOWN AS "JUNK BONDS." INVESTMENTS OF THIS TYPE ARE SUBJECT TO GREATER RISKS, INCLUDING THE RISK OF LOSS OF PRINCIPAL AND INTEREST, THAN THOSE INVOLVED WITH INVESTMENT GRADE SECURITIES. PURCHASERS SHOULD CAREFULLY ASSESS THE RISKS ASSOCIATED WITH AN INVESTMENT IN THIS PORTFOLIO. SEE "RISK FACTORS." BEA Associates ("BEA" or the "Adviser"), a U.S. investment advisory firm, will act as the investment adviser to each Portfolio. BEA emphasizes a global investment strategy and, as of September 30, 1996, acted as adviser for approximately $____ billion of assets. This Prospectus contains information that a prospective investor needs to know before investing. Please keep it for future reference. A Statement of Additional Information, dated ________ ___, 1996, has been filed with the Securities and Exchange Commission and is incorporated by reference in this Prospectus. It may be obtained free of charge from the Fund's distributor by calling (800) ___-____. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. PROSPECTUS ________ ___, 1996 2 ANNUAL PORTFOLIO OPERATING EXPENSES BEA BEA U.S. BEA Emerging Global International Markets Telecommuni- BEA Equity Equity cations High Yield Portfolio Portfolio Portfolio Portfolio --------- --------- --------- --------- Management Fees*.... .80% 1.00% 1.00% .70% 12b-1 Fees.......... .25% .25% .25% .25% Other Expenses...... . % . % . % . % --------- --------- --------- --------- Total Portfolio Operating Expenses.. ___% ____% ____% ___% * Management fees are each based on average daily net assets and are calculated daily and paid monthly. EXAMPLE An investor would pay the following expenses on a $1,000 investment in each of the Portfolios, assuming (1) a 5% annual return, and (2) redemption at the end of each time period. One Three Five Ten Year Years Years Years ---- ----- ----- ----- BEA International Equity Portfolio........ $__ $__ $__ $__ BEA Emerging Markets Equity Portfolio..... $__ $__ $__ $__ BEA Global Telecommunications Portfolio... $__ $__ N/A N/A BEA High Yield Portfolio.................. $__ $__ $__ $__ The Example in the Fee Table assumes that all dividends and distributions are reinvested and that the amounts listed under "Annual Portfolio Operating Expenses" remain the same in the years shown. THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. The Fee Table is designed to assist an investor in understanding the various costs and expenses that an investor in each of the Portfolios will bear directly or indirectly. The expense figures are restated from fees and costs of the Institutional Classes of the Portfolios as of August 31, 1996, except for BEA Global Telecommunications Portfolio, which is based on estimated expenses for the current fiscal year. Actual expenses may be greater or less than such costs and fees. 3 FINANCIAL HIGHLIGHTS Financial highlights are not available for the Advisor Classes of the Portfolios because, as of the date of this prospectus, such classes had no operating history. THE FUND The Fund is an open-end management investment company that currently operates or proposes to operate eighteen separate investment portfolios. Each of the four Classes of Shares offered by this Prospectus represents interests in one of the four Portfolios. Each Portfolio is non-diversified. The Fund was incorporated in Maryland on February 29, 1988. The Portfolios are designed primarily for investors seeking investment of funds held in an advisory or other similar capacity, which may include the investment of funds held or managed by broker-dealers, investment counselors and financial planners. Investment professionals such as those listed above may purchase Shares for discretionary or non-discretionary accounts maintained by individuals. INVESTMENT OBJECTIVES AND POLICIES The investment objective of each Portfolio may not be changed without the affirmative vote of a majority of the Portfolio's outstanding shares (as defined in the Investment Company Act of 1940, as amended (the "1940 Act")). As with other mutual funds, there can be no assurance that any Portfolio will achieve its investment objective. Because of their different investment emphases, each Portfolio should be considered as a vehicle for diversification and not as a balanced investment program. The Statement of Additional Information contains a more detailed description of the various investments and investment techniques used by the Portfolios. BEA INTERNATIONAL EQUITY PORTFOLIO The BEA International Equity Portfolio's investment objective is to seek long-term appreciation of capital. The Portfolio will invest primarily in equity securities of non-U.S. issuers. The Portfolio defines equity securities of non-U.S. issuers as securities of issuers whose principal activities are outside the United States. The Portfolio expects that its investments will be concentrated in Argentina, Australia, Austria, Brazil, Canada, Chile, Colombia, Denmark, England, Finland, France, Germany, Greece, Hong Kong, Hungary, Italy, Japan, Malaysia, Mexico, The Netherlands, New Zealand, Norway, Portugal, Singapore, South Africa, Spain, Sweden, Switzerland, Thailand and Venezuela. The Portfolio may invest in securities of issuers in Emerging Markets, as defined below under "Investment Objectives and Policies - BEA Emerging Markets Equity Portfolio," but does not expect to invest more than 40% of its total assets in securities of issuers in Emerging Markets. The Portfolio will invest in securities of issuers from at least three countries outside the United States. Under normal market conditions, the Portfolio will invest a minimum of 80% of its total assets in equity securities of non-U.S. issuers. Such equity securities include common stock and preferred stock (including convertible preferred stock); bonds, notes and debentures convertible into common or preferred stock; stock purchase warrants and rights; equity interests in trusts and partnerships; and depositary receipts of companies. 4 The Portfolio may invest up to 20% of its total assets in debt securities issued by U.S. or foreign governments or corporations, although it does not currently intend to invest more than 5% of its net assets in debt securities. The Portfolio has no limitation on the maturity or the credit quality of the debt securities in which it invests, which may include lower-quality, high yielding securities, commonly known as "junk bonds." See "Risk Factors -- Lower-Rated Securities." BEA EMERGING MARKETS EQUITY PORTFOLIO The BEA Emerging Markets Equity Portfolio's investment objective is to seek long-term appreciation of capital. The Portfolio will invest primarily in equity securities of issuers in Emerging Markets. As used in this Prospectus, an Emerging Market is any country which is generally considered to be an emerging or developing country by the World Bank and the International Finance Corporation, as well as countries that are classified by the United Nations as emerging or developing, at the time of the Portfolio's investment. The countries that will not be considered Emerging Markets include: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Italy, Japan, Luxembourg, the Netherlands, New Zealand, Norway, Spain, Switzerland, the United Kingdom and the United States. Under normal market conditions, the Portfolio will invest a minimum of 80% of its total assets in equity securities of issuers in Emerging Markets. The Portfolio will not necessarily seek to diversify investments on a geographical basis or on the basis of the level of economic development of any particular country. The Portfolio will at all times, except during defensive periods, maintain investments in at least three Emerging Markets. The Portfolio normally will not emphasize dividend or interest income in choosing securities, unless BEA believes the income will contribute to the securities' appreciation potential. An equity security of an issuer in an Emerging Market is defined as common stock and preferred stock (including convertible preferred stock); bonds, notes and debentures convertible into common or preferred stock; stock purchase warrants and rights; equity interests in trusts and partnerships; and depositary receipts of companies: (i) the principal securities trading market for which is in an Emerging Market; (ii) whose principal trading market is in any country, provided that, alone or on a consolidated basis, they derive 50% or more of their annual revenue from either goods produced, sales made or services performed in Emerging Markets; or (iii) that are organized under the laws of, and with a principal office in, an Emerging Market. Determinations as to eligibility will be made by BEA based on publicly available information and inquiries made to the companies. To the extent that the Portfolio's assets are not invested as described above, the remainder of the assets may be invested in government or corporate debt securities of Emerging Market or developed countries, although the Portfolio does not presently intend to invest more than 5% of its net assets in debt securities. Debt securities may include lower-rated debt securities (commonly known as "junk bonds"). See "Risk Factors - Lower-Rated Securities." BEA GLOBAL TELECOMMUNICATIONS PORTFOLIO The BEA Global Telecommunications Portfolio's investment objective is long term capital appreciation. The Portfolio seeks to achieve its objective by investing primarily in equity securities of telecommunications companies, both foreign and domestic. It is the policy of the Portfolio under normal market conditions to invest not less than 65% of its total assets in equity securities (including common and preferred stocks, and convertible securities and warrants to acquire such equity 5 securities) of telecommunications companies. As a Portfolio investing in global markets, at least 65% of the Portfolio's investments will be made in at least three different countries. The Portfolio considers telecommunications companies to be those which are engaged primarily in designing, developing, operating, financing, manufacturing or providing the following activities, products and services: communications equipment and services (including equipment and services for both data and voice transmission); electronic components and equipment; broadcast (including television and radio, satellite, microwave and cable television and narrow casting); computer equipment, mobile communications and cellular radio and paging; electronic mail; local and wide area networking and linkage of word and data processing systems; publishing and information systems; video and telex; and emerging technologies combining telephone, television and/or computer systems (collective "telecommunication activity"). A "telecommunications" company is an entity in which (i) at least 50% of either its revenue or earnings was derived from telecommunications activity, or (ii) at least 50% of its assets was devoted to telecommunications activity based on the company's most recent fiscal year. The remainder of the assets of the BEA Global Telecommunications Portfolio may be invested in non-equity securities or securities issued by companies that are not primarily engaged in telecommunications activities. Because the Portfolio will concentrate its investments in the telecommunications industry, its investments may be subject to greater risk and market fluctuation than a fund that has securities representing a broader range of investment alternatives. The telecommunications industry is subject to extensive governmental regulation, which could adversely affect the Portfolio's performance. The nature and scope of such regulation generally is subject to political forces and market considerations, the effect of which cannot be predicted. Telecommunications companies in both developed and emerging countries are undergoing significant change due to varying and evolving levels of governmental regulation or deregulation and other factors. As a result, competitive pressures are intense and the securities of such companies may be subject to rapid price volatility. Telecommunications regulation typically limits rates charged, returns earned, providers of services, types of services, ownership, areas served and terms for dealing with competitors and customers. Telecommunications regulation generally has tended to be less stringent for newer services than for traditional telephone service, although there can be no assurances that such newer services will not be heavily regulated in the future. Regulation may also limit the use of new technologies and hamper efficient deprecation of existing assets. If regulation limits the use of new technologies by established carriers or forces cross-subsidies, large private networks may emerge. Service providers may also be subject to regulations regarding ownership and control, providers of services, subscription rates and technical standards. Companies offering telephone services are experiencing increasing competition from cellular telephones, and the cellular telephone industry, because it has a limited operating history, faces uncertainty concerning the future of the industry and demand for cellular telephones. All telecommunications companies in both developed and emerging countries are subject to the additional risk that technological innovations will make their products and services obsolete. While telephone companies in developed countries and certain emerging countries may pay an above average dividend, the Portfolio's investment decisions are based upon capital appreciation potential rather than income considerations. 6 BEA HIGH YIELD PORTFOLIO BEA High Yield Portfolio seeks to provide high total return. The Portfolio will invest primarily in high yield fixed income securities (commonly known as "junk bonds") issued by corporations, governments and agencies, both U.S. and foreign. Under normal market conditions, the Portfolio will invest a minimum of 65% of its total assets in such high yield fixed income securities, with the remainder invested in fixed income securities which may have equity characteristics, such as convertible bonds. The Portfolio is not limited in the extent to which it can invest in junk bonds (i.e., securities rated below investment grade by recognized rating agencies or in comparable unrated securities). See "Risk Factors - Lower-Rated Securities." The portion of the Portfolio's assets invested in various countries will vary from time to time depending on BEA's assessment of market opportunities. The value of the securities held by the Portfolio, and thus the net asset value of the shares of the Portfolio, generally will vary inversely in relation to changes in prevailing interest rates. Also, the value of such securities may be affected by changes in real or perceived creditworthiness of the issuers. The Portfolio is not restricted to any maximum or minimum time to maturity in purchasing portfolio securities, and the average maturity of the Portfolio's assets will vary based upon BEA's assessment of economic and market conditions. COMMON INVESTMENT POLICIES This section describes certain investment policies that are common to each Portfolio. These policies are described in more detail in the Statement of Additional Information. TEMPORARY INVESTMENTS. For temporary purposes during periods in which BEA believes changes in economic, financial or political conditions make it advisable, each Portfolio may reduce its holdings in equity and other securities and invest up to 100% of its assets in cash or certain short-term (less than twelve months to maturity) and medium-term (not greater than five years to maturity) interest-bearing instruments or deposits of United States and foreign issuers. Such investments may include, but are not limited to, commercial paper, certificates of deposit, variable or floating rate notes, bankers' acceptances, time deposits, government securities and money market deposit accounts. See Statement of Additional Information, "Common Investment Policies - - Temporary Investments." To the extent permitted by their investment objectives and policies, the Portfolios may hold cash or cash equivalents pending investment. BORROWING. A Portfolio may borrow up to 33 1/3 percent of its total assets without obtaining shareholder approval. The Adviser intends to borrow, or to engage in reverse repurchase agreements or dollar roll transactions, only for temporary or emergency purposes. See Statement of Additional Information, "Common Investment Policies - Reverse Repurchase Agreements" and "- Borrowing." RULE 144A SECURITIES. Rule 144A securities are securities which are restricted as to resale to the general public, but which may be resold to qualified institutional buyers. Each Portfolio may invest in Rule 144A securities that BEA has determined are liquid pursuant to guidelines established by the Fund's Board of Directors. 7 INVESTMENT COMPANIES. Each Portfolio may invest in securities issued by other investment companies within the limit prescribed by the 1940 Act. As a shareholder of another investment company, each Portfolio would bear, along with other shareholders, its pro rata portion of the other investment company's expenses, including advisory fees. These expenses would be in addition to the advisory and other expenses that a Portfolio bears directly in connection with its own operations. PORTFOLIO TURNOVER. BEA will effect portfolio transactions in each Portfolio without regard to holding period, if, in its judgment, such transactions are advisable in light of general market, economic or financial conditions. The BEA International, Emerging Markets Equity and Global Telecommunications Portfolios anticipate that their annual portfolio turnover rate should not exceed 100% under normal conditions. However, it is impossible to predict portfolio turnover rates. The portfolio turnover rate for BEA High Yield Portfolio is anticipated to exceed 100%. The anticipated portfolio turnover rate for BEA High Yield Portfolio is greater than that of many other investment companies. A higher than normal portfolio turnover rate may affect the degree to which a Portfolio's net asset value fluctuates. Higher portfolio turnover rates are likely to result in comparatively greater brokerage commissions. In addition, short-term gains realized from portfolio transactions are taxable to shareholders as ordinary income. The amount of portfolio activity will not be a limiting factor when making portfolio decisions. See Statement of Additional Information, "Portfolio Transactions" and "Taxes." CURRENCY HEDGING. BEA may seek to hedge against a decline in value of a Portfolio's non-dollar denominated portfolio securities resulting from currency devaluations or fluctuations. Unless the BEA Portfolios engage in currency hedging transactions, they will be subject to the risk of changes in relation to the U.S. dollar of the value of the foreign currencies in which their assets are denominated. These Portfolios may also seek to protect, during the period prior to its remittance, the value of the amount of interest, dividends and net realized capital gains received or to be received in a local currency that it intends to remit out of a foreign country by investing in high-quality short-term U.S. dollar-denominated debt securities of such country and/or participating in the forward currency market for the purchase of U.S. dollars in the country. There can be no guarantee that suitable U.S. dollar-denominated investments will be available at the time BEA wishes to use them to hedge amounts to be remitted. The Statement of Additional Information contains additional investment policies and strategies that are common to the Portfolios. INVESTMENT LIMITATIONS Each Portfolio is subject to the following fundamental investment limitation, which may not be changed with respect to a Portfolio except upon the affirmative vote of the holders of a majority of that Portfolio's outstanding Shares. A complete list of the Portfolios' fundamental investment limitations is set forth in the Statement of Additional Information under "Investment Limitations." Each Portfolio may not: Borrow money or issue senior securities, except that each Portfolio may borrow from institutions and enter into reverse repurchase agreements and dollar rolls for temporary purposes in amounts up to one-third of the value of its total assets at the time of such borrowing; or mortgage, pledge or hypothecate any assets, except in connection with any such borrowing and then in amounts 8 not in excess of one-third of the value of the Portfolio's total assets at the time of such borrowing. Each Portfolio will not purchase securities while its aggregate borrowings (including reverse repurchase agreements, dollar rolls and borrowings from banks) in excess of 5% of its total assets are outstanding. Securities held in escrow or separate accounts in connection with the Portfolio's investment practices are not considered to be borrowings or deemed to be pledged for purposes of this limitation. RISK FACTORS FOREIGN SECURITIES. Investing in the securities of non-U.S. issuers involves opportunities and risks that are different from investing in the securities of U.S. issuers. The risks associated with investing in securities of non-U.S. issuers are generally heightened for investments in securities of issuers in Emerging Markets. Because foreign securities generally are denominated and pay dividends or interest in foreign currencies, and the Portfolios may hold from time to time various foreign currencies pending their investment in foreign securities or their conversion into U.S. dollars, the value of the Portfolios' assets as measured in U.S. dollars may be affected favorably or unfavorably by changes in exchange rates. In addition, investors should realize that the value of the Portfolios' investments may be adversely affected by changes in political or social conditions, diplomatic relations, confiscatory taxation, expropriation, limitation on the removal of funds or assets, or imposition of (or change in) exchange control regulations in those foreign nations. In addition, changes in government administrations or economic or monetary policies in the U.S. or abroad could result in appreciation or depreciation of portfolio securities and could favorably or adversely affect the Portfolios' operations. Furthermore, the economies of individual foreign nations may differ from that of the United States, whether favorably or unfavorably, in areas such as growth of gross national product, rate of inflation, capital reinvestment, resource self-sufficiency and balance of payments position. Any foreign investments made by the Portfolios must be made in compliance with U.S. and foreign currency restrictions and tax laws restricting the amounts and types of foreign investments. In general, less information is publicly available with respect to foreign issuers than is available with respect to U.S. companies. Most foreign companies are also not subject to the uniform accounting and financial reporting requirements applicable to issuers in the United States. The Portfolios' foreign investments may be less liquid and their prices may be more volatile than comparable investments in securities in U.S. companies. Expenses relating to foreign investments are higher than those relating to domestic securities. In addition, there is generally less government supervision and regulation of securities exchanges, brokers and issuers in foreign countries than in the United States. LOWER-RATED SECURITIES. The widespread expansion of government, consumer and corporate debt within the economy has made the corporate sector, especially cyclically sensitive industries, more vulnerable to economic downturns or increased interest rates. Because lower-rated debt securities involve issuers with weaker credit fundamentals (such as debt-to-equity ratios, interest charge coverage, earnings history and the like), an economic downturn, or increases in interest rates, could severely disrupt the market for lower-rated debt securities and adversely affect the value of outstanding debt securities and the ability of the issuers to repay principal and interest. 9 Lower-rated debt securities (commonly known as "junk bonds") possess speculative characteristics and are subject to greater market fluctuations and risk of lost income and principal than higher-rated debt securities for a variety of reasons. The markets for and prices of lower-rated debt securities have been found to be less sensitive to interest rate changes than higher-rated investments, but more sensitive to adverse economic changes or individual corporate developments. Also, during an economic downturn or substantial period of rising interest rates, highly leveraged issuers may experience financial stress which would adversely affect their ability to service their principal and interest payment obligations, to meet projected business goals and to obtain additional financing. If the issuer of a debt security owned by a Portfolio defaulted, the Portfolio could incur additional expenses in seeking recovery with no guaranty of recovery. In addition, periods of economic uncertainty and changes can be expected to result in increased volatility of market prices of lower-rated debt securities and a Portfolio's net asset value. Lower-rated debt securities also present risks based on payment expectations. For example, lower-rated debt securities may contain redemption or call provisions. If an issuer exercises these provisions in a declining interest rate market, a Portfolio would have to replace the security with a lower yielding security, resulting in a decreased return for investors. Conversely, a lower-rated debt security's value will decrease in a rising interest rate market, as will the value of a Portfolio's assets. If a Portfolio experiences unexpected net redemptions, this may force it to sell its lower-rated debt securities, without regard to their investment merits, thereby decreasing the asset base upon which a Portfolio's expenses can be spread and possibly reducing a Portfolio's rate of return. In addition, to the extent that there is no established retail secondary market, there may be thin trading of lower-rated debt securities, and this may have an impact on both BEA's ability to value accurately lower-rated debt securities and the Portfolio's assets, as judgment plays a greater role when reliable objective data are unavailable, and to dispose of the debt securities. Adverse publicity and investor perceptions, whether or not based on fundamental analysis, may decrease the value and liquidity of lower-rated debt securities, especially in a thinly traded market. MANAGEMENT BOARD OF DIRECTORS The business and affairs of the Fund and each investment portfolio are managed under the direction of the Fund's Board of Directors. INVESTMENT ADVISER BEA serves as the investment adviser for each of the Portfolios pursuant to investment advisory agreements (the "Advisory Agreements"). BEA is a general partnership organized under the laws of the State of New York and, together with its predecessor firms, has been engaged in the investment advisory business for over 50 years. BEA's principal offices are located at One Citicorp Center, 153 East 53rd Street, New York, New York 10022. Credit Suisse Capital Corporation ("CS Capital") is an 80% partner and CS Advisors Corp., a New York Corporation which is a wholly-owned subsidiary of CS Capital, is a 20% partner in BEA. CS Capital is a wholly-owned subsidiary of Credit Suisse Investment Corporation, which is a wholly-owned subsidiary of Credit Suisse, the largest Swiss bank, which in turn is a subsidiary of CS Holding, a Swiss corporation. BEA is registered as an investment adviser under the Investment Advisers Act of 1940, as amended. 10 BEA is a diversified asset manager, handling global equity, balanced, fixed income and derivative securities accounts for private individuals, as well as corporate pension and profit-sharing plans, state pension funds, union funds, endowments and other charitable institutions. As of September 30, 1996, BEA managed approximately $____ billion in assets. As an investment adviser, BEA emphasizes a global investment strategy. BEA currently acts as investment adviser for thirteen investment companies registered under the Investment Company Act, and as sub-adviser to certain portfolios of six other registered investment companies. BEA also acts as investment adviser for forty-two offshore funds, twenty-two of which are equity funds and twenty of which are debt funds. BEA has sole investment discretion for the Portfolios and will make all decisions affecting assets of each Portfolio under the supervision of the Fund's Board of Directors and in accordance with the Portfolios' stated policies. BEA will select investments for each of the Portfolios and will place purchase and sale orders on behalf of each of the Portfolios. BEA is also responsible for providing to the Portfolios' and the Fund's service providers prompt and accurate data with respect to the Portfolios' transactions and the valuation of portfolio securities. The day-to-day portfolio management of BEA International Equity, BEA Emerging Markets Equity and BEA Global Telecommunications Portfolios is the responsibility of the BEA International Equities Management Team. The Team consists of the following investment professionals: Emilio Bassini (Executive Director), Stephen M. Swift (Managing Director), Steven D. Bleiberg (Senior Vice President), Richard Watt (Senior Vice President), William P. Sterling (Managing Director), Ian Borsook (Vice President), and Stephen R. Waite (Vice President). Mr. Bassini and Mr. Bleiberg have, on an individual basis, been engaged as investment professionals with BEA for more than five years. Mr. Swift joined BEA in 1995, prior to which he spent three years at Credit Suisse Asset Management in London, where he was Head of Global Equities and portfolio manager for the CS Tiger Fund. For the previous 15 years he was with Wardley Investment Services, a Hong Kong-based subsidiary of the Hong Kong and Shanghai Bank. Mr. Watt joined BEA in 1995, prior to which he was head of emerging markets investments and research at Gartmore Investment Limited in London. Prior to 1992, he was a director of Kleinwort Benson International Investment in London and was a portfolio manager with Lorithan Regional Council, a public pension plan sponsor in Scotland. Mr. Sterling joined BEA in 1995, prior to which he was head of International Economics at Merrill Lynch & Company. Mr. Borsook joined BEA in 1995, prior to which he was a manager of global economic indicators and Vice President at Merrill Lynch & Company. Mr. Waite joined BEA in 1995, prior to which he was Vice President and Senior European Economist for Merrill Lynch & Company in London. Prior to May 1992 he was an economic consultant to Capital Group in Los Angeles. The day-to-day portfolio management of the BEA High Yield Portfolio is the responsibility of the BEA Fixed Income Management Team. The Team consists of the following investment professionals: Robert Moore (Executive Director), Gregg Diliberto (Managing Director), Richard Lindquist (Managing Director), Misia Dudley (Senior Vice President), Mark Silverstein (Senior Vice President), Robert Justich (Senior Vice President), Marianne Rossi (Vice President), William P. Sterling (Managing Director), Ian Borsook (Vice President), and Stephen R. Waite (Vice President). Messrs. Moore, Diliberto and Silverstein have, on an individual basis, been engaged as investment professionals with BEA for more than five years. Mr. Lindquist, Ms. Dudley and Ms. Rossi joined BEA in 1995 as a result of BEA's acquisition of CS First Boston Investment Management. Prior to joining CS First Boston, Mr. Lindquist and Ms. Rossi were with Prudential Insurance Company of 11 America. Prior to joining CS First Boston, Ms. Dudley was with Stockbridge Partners, and prior to that had spent five years with E.F. Hutton. Mr. Justich joined BEA in 1995, prior to which he worked at Merrill Lynch and as a Manager of Financial Services with Arthur Young & Company. For the services provided and expenses assumed by it, BEA is entitled to receive the following fees, computed daily and payable monthly based on a Portfolio's average daily net assets: PORTFOLIO ANNUAL RATE - --------- ----------- BEA International Equity. . . . . . . .80% of the average daily net assets* BEA Emerging Markets Equity . . . . . 1.00% of the average daily net assets* BEA Global Telecommunications . . . . 1.00% of the average daily net assets* BEA High Yield. . . . . . . . . . . . .70% of the average daily net assets * This fee is higher than that paid by most investment companies, although the fees are within the range of fees of investment companies with similar investment objectives. For the period ended August 31, 1996, the Fund paid BEA investment advisory fees, on annualized basis, with respect to the BEA International Equity, BEA Emerging Markets Equity and BEA High Yield Portfolios .__%, .__% and .__%, respectively, of the average net assets of the respective Portfolios, and BEA waived, approximately .__%, .__% and .__%, respectively, of the average net assets of each such Portfolio. BEA may, at its discretion, from time to time agree to waive voluntarily all or any portion of its advisory fee for any Portfolio. The Advisory Agreements provide that BEA shall not be liable for any error of judgment or mistake of law or for any loss suffered by the Fund in connection with the matters to which the Advisory Agreement relates and shall be indemnified for any losses and claims in connection with any claim relating thereto, except liability resulting from willful misfeasance, bad faith or gross negligence on BEA's part in the performance of its duties or from reckless disregard of its obligations and duties under the Advisory Agreement. BEA has agreed to reimburse each Portfolio for the amount, if any, by which the total operating and management expenses of such Portfolio for any fiscal year exceed the most restrictive state blue sky expense limitation in effect from time to time, to the extent required by such limitation. BEA may assume additional expenses of a Portfolio from time to time. In certain circumstances, BEA may assume such expenses on the condition that it is reimbursed by the Portfolio for such amounts prior to the end of a fiscal year. In such event, the reimbursement of such amounts will have the effect of increasing a Portfolio's expense ratio and of decreasing return to investors. ADMINISTRATORS PFPC Inc. ("PFPC"), an indirect, wholly-owned subsidiary of PNC Bank Corp., serves as administrator for the Portfolios. As administrator, PFPC will provide various services to each Portfolio, including determining each of the Portfolio's net asset value, providing all accounting services for the Portfolios and generally assisting in all aspects of each Portfolio's operations. As compensation for administrative services, the Fund will pay PFPC a fee calculated at the annual rate of .125% of each Portfolio's average daily net assets. PFPC has its principal offices at 400 Bellevue Parkway, Wilmington, Delaware 19809. The Fund employs 12 BEA as co-administrator. As co-administrator, BEA provides shareholder liaison services to the Fund, including responding to shareholder inquiries and providing information on shareholder account. As compensation, the Fund pays to BEA a fee calculated at an annual rate of .05% of each Portfolio's average daily net assets. DISTRIBUTOR Counsellors Securities Inc. ("Counsellors Securities"), serves as the Fund's distributor. Counsellors Securities is located at 466 Lexington Avenue, New York, New York 10017-3147. Counsellors Securities receives a fee at an annual rate equal to .25% of the Portfolio's average daily net assets for distribution services, pursuant to a distribution agreement between Counsellor's Securities and the Fund in accordance with a distribution plan (the "12b-1 Plan") adopted by the Fund pursuant to Rule 12b-1 under the 1940 Act. Amounts paid to Counsellors Securities under the Fund's 12b-1 Plan may be used by Counsellors Securities to cover expenses that are related to (i) the sale of Advisor Shares of the Portfolios, (ii) ongoing servicing and/or maintenance of the accounts of shareholders of the Portfolio, and (iii) sub-transfer agency services, subaccounting services or administrative services related to the sale of the Advisor Shares of the Portfolios, all as set forth in the Fund's 12b-1 Plan. Payments under the 12b-1 Plan are not tied exclusively to the distribution expenses actually incurred. Counsellors Securities may delegate some or all of these functions to a Service Organization. See "Shareholder Servicing." The Fund's Board of Directors will evaluate the appropriateness of the 12b-1 Plan on a continuing basis and in doing so will consider all relevant factors, including expenses borne by Counsellors Securities and amounts received under the 12b-1 Plan. TRANSFER AGENT Boston Financial Data Services, Inc. ("BFDS") serves as Transfer Agent for the Portfolios. BFDS's address is Two Heritage Drive, Quincy, MA, 02171. CUSTODIAN Brown Brothers Harriman & Co. serves as custodian for the Portfolios. The 1940 Act and the rules and regulations adopted thereunder permit a Portfolio to maintain its securities and cash in the custody of certain eligible banks and securities depositories. In compliance with such rules and regulations, a Portfolio's portfolio of securities and cash, when invested in securities of foreign issuers, may be held by eligible foreign subcustodians appointed by the custodian. EXPENSES The expenses of each Portfolio are deducted from its total income before dividends are paid. These expenses include, but are not limited to, fees paid to the investment adviser, distributor, administrator and co-administrator and fees and expenses of officers and directors who are not affiliated with the Portfolio's investment adviser or distributor, taxes, interest, legal fees, custodian fees, auditing fees, brokerage fees and commissions, certain of the fees and expenses of registering and qualifying the Portfolios and the Shares for distribution under Federal and state securities laws, expenses of preparing prospectuses and statements of additional information and of printing and distributing prospectuses and statements of additional information annually to existing shareholders, the expense of reports to shareholders, shareholders' meetings and proxy solicitations, fidelity bond 13 and directors and officers liability insurance premiums, the expense of using independent pricing services and other expenses which are not expressly assumed by the Adviser under its investment advisory agreement with respect to a Portfolio. Any general expenses of the Fund that are not readily identifiable as belonging to a particular investment portfolio of the Fund will be allocated among all investment portfolios of the Fund based upon the relative net assets of the investment portfolios at the time such expenses are incurred. Transfer agency expenses, expenses of preparation, printing and distributing prospectuses, statements of additional information, proxy statements and reports to shareholders, registration fees and other costs identified as belonging to a particular class, are allocated to such class. HOW TO PURCHASE SHARES BEA Advisor Shares are available for investment by individual investors ("Individuals") and through investment professionals such as broker-dealers, financial planners and other financial intermediaries ("Intermediaries"). The Fund reserves the right to make Advisor Shares available to other investors in the future. The minimum initial investment is $_____. The minimum subsequent investment is $_____. Shares of the Portfolios may be purchased either by mail, or with special advance instructions, by wire. If an Individual or Intermediary desires to purchase Shares by mail, a check or money order made payable to "The RBB Fund, Inc." in U.S. currency should be sent along with a completed account application to Counsellors Securities, the Fund's distributor, at the address set forth above. Checks payable to the Individual or Intermediary and endorsed to the Fund will not be accepted as payment and will be returned. If payment is received by check in proper form on or before 4:00 p.m. (Eastern time) on a day that a Portfolio calculates its net asset value (a "business day") the purchase will be made at the Potfolio's net asset value calculated at the end of that day. If payment is received after 4:00 p.m., the purchase will be effected at the Portfolio's net asset value determined for the next business day after payment has been received. Checks or money orders that are not in proper form or that are not accompanied or preceeded by a complete application will be returned to sender. Shares purchased by check are entitled to receive dividends and distributions beginning the day after payment has been received. Checks for investments in more than one Portfolio should be accompanied by a breakdown of amount to be invested in the Portfolios. If a check used for purchase does not clear, the Portfolios will cancel the purchase and the Individual or Intermediary may be liable for losses and fees incurred. For a description of the manner of calculating a Portfolio's net asset value, see "Net Asset Value." Individuals and Itermediaries may also purchase Advisor Shares by telephoning BEA Advisor Portfolios and sending payment by wire. After telphoning (800)___-____ for instructions, an Individual or Intermediary should then wire federal funds to Counsellors Securities using the following wire address: Orders by wire will not be accepted until a completed account application has been received in proper form, and an account number has been established. If a telephone order is received by the close of regular trading on the New York Stock Exchange (the "NYSE") (currently 4:00 p.m., Eastern time) AND payment by wire is received on the same day in proper form in accordance with instructions set forth above, the shares will be priced according to the net asset value of the Fund on that day and are entitled to dividends and distributions beginning on that day. If payment by wire is received in proper form by the close of the NYSE without a prior telephone order, the purchase will be priced according to the net asset value of the Fund on that day and is entitled to dividends and distributions beginning on that day. However, if a wire received in proper form is not preceded by a telephone order AND is received after the close of regular trading on the NYSE, the payment will be held uninvested until the order is effected at the close of business on the next day that the Fund calculates its net asset value (a "business day"). Payment for orders that are not accepted will be returned to the institution after prompt inquiry. Certain organizations that have entered into 14 agreements with the Fund or its agent may enter confirmed purchase orders on behalf of customers, with payment to follow no later than the Fund's pricing on the following business day. If payment is not received by such time, the organization could be held liable for resulting losses or fees incurred. After a shareholder has made an initial investment, additional shares may be purchased at any time in the manner outlined above. Payments for initial and subsequent investments should be preceded by an order placed with the Fund or its agent and should clearly indicate the shareholder's account number. In the interest of economy and convenience, physical certificates representing shares in the Fund are not normally issued. The Fund understands that some broker-dealers (other than Counsellors Securities), financial planners and other Intermediaries may impose certain conditions on their clients that invest in the Fund, which are in addition to or different than those described in this Prospectus, and, to the extent permitted by applicable regulatory authority, may charge their clients direct fees. Certain features of the Fund may be modified in these programs and administrative charges may be imposed for the services rendered. Therefore, a client or customer should contact the organization acting on his behalf concerning the fees (if any) charged in connection with a purchase or redemption of Fund shares and should read this Prospectus in light of the terms governing his accounts with the organization. Each Intermediary separately determines the rules applicable to its customers investing in the Fund, including minimum initial and subsequent investment requirements and the procedures to be followed to effect purchases, redemptions and exchanges of Advisor Shares. Orders for the purchase of Advisor Shares through an Intermediary are placed with the Intermediary by its customers. The Intermediary is responsible for the prompt transmission of the order to the Fund. HOW TO REDEEM SHARES GENERAL A shareholder may redeem (sell) shares on any day that the Fund's net asset value is calculated (see "Net Asset Value" below). Shareholders may redeem Advisor Shares by calling BEA Advisor Funds at (800) __________ between 9:00 a.m. and 4:00 p.m. (Eastern time) on any Business Day. A shareholder making a telephone withdrawal should state (i) the name of the Portfolio, (ii) the account number of the Portfolio, (iii) the name of the shareholder appearing on the Portfolio's records, (iv) the amount to be withdrawn and (v) the name of the person requesting the redemption. Requests for the redemption (or exchange) of Advisor Shares are placed with an Intermediary by its customers. The Intermediary is responsible for the prompt transmission of its customers' requests to the Fund or its agent. After receipt of the redemption request, the redemption proceeds will, at the option of the shareholder, be paid by check and mailed to the shareholder of record or be wired to the shareholder's bank as indicated in the account application previously filled out by the shareholder. The Fund does not currently impose a service charge for effecting wire transfers but the Fund reserves the right to do so in the future. During periods of significant economic or market change, telephone redemptions may be difficult to implement. If a shareholder is unable to contact BEA Advisor Portfolios by telephone, the shareholder may deliver the redemption request to BEA Advisor Portfolios by mail at ____________________. If a redemption order is received prior to the close of regular trading on the NYSE, the redemption order will be effected at the net asset value per share as determined on that day. If a redemption order is received after the close of regular trading on the NYSE, the redemption order will be effected at the net asset value as next determined. Redemption proceeds will normally be 15 mailed or wired to a shareholder on the next business day following the date a redemption order is effected. If, however, in the judgment of BEA, immediate payment would adversely affect the Fund, the Fund reserves the right to pay the redemption proceeds within seven days after the redemption order is effected. Furthermore, the Fund may suspend the right of redemption or postpone the date of payment upon redemption (as well as suspend or postpone the recordation of an exchange of shares) for such periods as are permitted under the 1940 Act. The proceeds paid upon redemption may be more or less than the amount invested depending upon a share's net asset value at the time of redemption. If a shareholder redeems all the shares in his account, all dividends and distributions declared up to and including the date of redemption are paid along with the proceeds of the redemption. If the Shares to be redeemed have been recently purchased by check, the Fund's transfer agent may delay mailing a redemption check, which may be a period of up to 15 days from the date of purchase, pending a determination that the check has cleared. A request for redemption must be signed by all persons in whose names the Shares are registered or by an authorized party. Signatures must conform exactly to the account registration. If the proceeds of the redemption would exceed $10,000, or if the proceeds are not to be paid to the record owner at the record address, or if the shareholder is a corporation, partnership, trust or fiduciary, signature(s) must be guaranteed by a bank, broker-dealer, credit union, national securities exchange, savings association or any other organization which qualifies as an "eligible guarantor institution" as that term is defined in rules adopted by the Securities and Exchange Commission. In some cases, however, other documents may be necessary. INVOLUNTARY REDEMPTION The Fund reserves the right to redeem an account in any Portfolio of a shareholder at any time the net asset value of the account in such Portfolio falls below $500 as the result of a redemption request. Shareholders will be notified in writing that the value of their account in a Portfolio is less than $500 and will be allowed 30 days to make additional investments before the redemption is processed. EXCHANGE PRIVILEGE An Individual or Intermediary may exchange Advisor Shares of a Portfolio for Advisor Shares of any other BEA Advisor Portfolio at their respective net asset values. Exchanges may be effected in the manner described under "Redemption of Shares" above. If an exchange request is received by BEA Advisor Portfolios prior to 4:00 p.m. (Eastern time), the exchange will be made at each Portfolio's net asset value determined on the same business day. The exchange privilege may be modified or terminated at any time upon 60 days' notice to shareholders. The exchange privilege is available to shareholders residing in any state in which the Advisor Shares being acquired may legally be sold. When a shareholder effects an exchange of shares, the exchange is treated for federal income tax purposes as a redemption. Therefore, the shareholder may realize a taxable gain or loss in connection with the exchange. For further information regarding the exchange privilege, the shareholder should contact BEA Advisor Portfolios at (800) __________. No 16 exchange fee is currently imposed on exchanges, although the Fund reserves the right to impose a $5.00 administrative fee for each exchange. Shareholders are automatically provided with telephone exchange privileges when opening an account, unless they indicate on the Application that they do not wish to use this privilege. To add a telephone exchange feature to an existing account that previously did not provide for this option, a Telephone Exchange Authorization Form must be filed with BFDS. This form is available from BFDS. Once this election has been made, the shareholder may simply contact BFDS by telephone to request the exchange (800)___-____. The Fund will employ reasonable procedures to confirm that instructions communicated by telephone are genuine, and if the Fund does not employ such procedures, it may be liable for any losses due to unauthorized or fraudulent telephone instructions. Neither the Fund nor BFDS will be liable for any loss, liability, cost or expense for following the Fund's telephone transaction procedures described below or for following instructions communicated by telephone that it reasonably believes to be genuine. The Fund's telephone transaction procedures include the following measures: (1) requiring the appropriate telephone transaction privilege forms; (2) requiring the caller to provide the names of the account owners, the account social security number and name of the Portfolio, all of which must match the Fund's records; (3) requiring the Fund's service representative to complete a telephone transaction form, listing all of the above caller identification information; (4) permitting exchanges only if the two account registrations are identical; (5) requiring that redemption proceeds be sent only by check to the account owners of record at the address of record, or by wire only to the owners of record at the bank account of record; (6) sending a written confirmation for each telephone transaction to the owners of record at the address of record within five (5) business days of the call; and (7) maintaining tapes of telephone transactions for six months, if the Fund elects to record shareholder telephone transactions. If the exchanging shareholder does not currently own Shares of the Portfolio whose Shares are being acquired, a new account will be established with the same registration, dividend and capital gain options and authorized dealer of record as the account from which shares are exchanged, unless otherwise specified in writing by the shareholder with all signatures guaranteed by an eligible guarantor institution. If any amount remains in the account from which the exchange is being made, such amount must not drop below the minimum account value required by the Portfolio. NET ASSET VALUE The net asset value for each Portfolio is determined daily as of the close of regular trading on the NYSE on each Business Day. The net asset value of a Portfolio is calculated by adding the value of all its securities to cash and other assets, deducting its actual and accrued liabilities and dividing by the total number of its Shares outstanding. DIVIDENDS AND DISTRIBUTIONS The Fund will distribute substantially all of the net realized capital gains, if any, of each of the Portfolios to each Portfolio's shareholders annually. The Fund will distribute all net investment income, if any, for the BEA International Equity, BEA Emerging Markets Equity and BEA Global Telecommunications Portfolios annually. The Fund will distribute net investment income for the BEA 17 High Yield Portfolio at least quarterly. All distributions will be reinvested in the form of additional full and fractional Shares of the relevant Portfolio unless a shareholder elects otherwise. If a shareholder desires to have distributions paid out rather than reinvested, the shareholder should notify BFDS in writing. TAXES GENERAL The following discussion is only a brief summary of some of the important tax considerations generally affecting the Portfolios and their shareholders and is not intended as a substitute for careful tax planning. Accordingly, investors in the Portfolios should consult their tax advisers with specific reference to their own tax situation. Each Portfolio will elect to be taxed as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). So long as a Portfolio qualifies for this tax treatment, such Portfolio will be relieved of Federal income tax on amounts distributed to shareholders, but shareholders, unless otherwise exempt, will pay income or capital gains taxes on amounts so distributed (except distributions that are treated as a return of capital or that are designated as exempt interest dividends) regardless of whether such distributions are paid in cash or reinvested in additional Shares. Distributions out of the "net capital gain" (the excess of net long-term capital gain over net short-term capital loss), if any, of a Portfolio will be taxed to shareholders as long-term capital gain regardless of the length of time a shareholder has held his Shares or whether such gain was reflected in the price paid for the Shares. All other distributions, to the extent they are taxable, are taxed to shareholders as ordinary income. The current nominal maximum marginal rate on ordinary income for individuals, trusts and estates is generally 39.6%. However, the maximum rate imposed on net capital gain of such taxpayers is 28%. Corporate taxpayers are taxed at the same rates on both ordinary income and capital gains. Transactions in foreign currencies, forward contracts, options and futures contracts (including options and futures contracts on foreign currencies) will be subject to special provisions of the Code that, among other things, may affect the character (i.e., ordinary or capital) of gains or losses realized by a Portfolio, accelerate the recognition of income by a Portfolio and defer a Portfolio's losses. Exchange control regulations may restrict repatriations of investment income and capital or of the proceeds of sales of securities by investors such as the Portfolios. In addition, certain investments (such as zero coupon securities and shares of so-called "passive foreign investment companies" or "PFICS") may cause a Portfolio to recognize income without the receipt of cash. Each of these circumstances, whether separately or in combination, may limit a Portfolio's ability to pay sufficient dividends and to make sufficient distributions to satisfy the Subchapter M and excise tax distributions requirements. The Fund will send written notices to shareholders annually regarding the tax status of distributions made by each Portfolio. Dividends declared in October, November or December of any year payable to shareholders of record on a specified date in such a month will be deemed to have been received by the shareholders on December 31, provided such dividends are paid during 18 January of the following year. Each Portfolio intends to make sufficient actual or deemed distributions prior to the end of each calendar year to avoid liability for Federal excise tax. Investors should be careful to consider the tax implications of buying Shares just prior to a distribution. The price of shares purchased at that time will reflect the amount of the forthcoming distribution. Those investors purchasing just prior to a distribution will nevertheless be taxed on the entire amount of the distribution received. Shareholders who exchange Shares representing interests in one Portfolio for Shares representing interests in another Portfolio will generally recognize capital gain or loss for Federal income tax purposes. Under certain provisions of the Code, some shareholders may be subject to a 31% "backup" withholding tax on reportable dividends, capital gains distributions and redemption payments. Shareholders who are nonresident alien individuals, foreign trusts or estates, foreign corporations or foreign partnerships may be subject to different U.S. Federal income tax treatment. An investment in one Portfolio is not intended to constitute a balanced investment program. FOREIGN INCOME TAXES Investment income received by the Portfolios from sources within foreign countries may be subject to foreign income taxes withheld at the source. The United States has entered into tax treaties with many foreign countries which entitle the Portfolios to a reduced rate of, or exemption from, taxes on such income. It is impossible to determine the effective rate of foreign tax in advance since the amount of each Portfolio's assets to be invested in various countries is not known. If more than 50% of the value of a Portfolio's total assets at the close of each taxable year consists of the stock or securities of foreign corporations, such Portfolio will be eligible to elect to "pass through" to the Fund's shareholders the amount of foreign income taxes paid by each Portfolio (the "Foreign Tax Election"). Pursuant to the Foreign Tax Election, shareholders will be required (i) to include in gross income, even though not actually received, their respective pro-rata shares of the foreign income taxes paid by the Portfolio that are attributable to any distributions they receive; and (ii) either to deduct their pro-rata share of foreign taxes in computing their taxable income, or to use it (subject to various Code limitations) as a foreign tax credit against U.S. Federal income tax (but not both). In determining the source and character of distributions received from a Portfolio for the purpose of the foreign tax credit limitation rules of the Code, shareholders will be required to treat allocable portions of a Portfolio's distributions as foreign source income. No deduction for foreign taxes may be claimed by a shareholder who does not itemize deductions. 19 MISCELLANEOUS CONSIDERATIONS; EFFECT OF FUTURE LEGISLATION Future legislative or administrative changes or court decisions may materially affect the tax consequences of investing in one or more Portfolios of the Fund. Shareholders are also urged to consult their tax advisers concerning the application of state and local income taxes to investments in the Fund which may differ from the Federal income tax consequences described above. SHAREHOLDER SERVICING The Fund is authorized to offer Advisor Shares to Intermediaries whose clients or customers ("Customers") are beneficial owners of Advisor Shares. Those Intermediaries may enter into service agreements ("Agreements") related to the sale of the Advisor Shares with Counsellors Securities pursuant to a Distribution Plan, as described below. Pursuant to the terms of an Agreement, the Intermediary agrees to perform certain distribution, shareholder servicing, administrative and accounting services for its Customers. Distribution services would be marketing or other services in connection with the promotion and sale of Advisor Shares. Shareholder services that may be provided include responding to Customer inquiries, providing information on Customer investments and providing other shareholder liaison services. Administrative and accounting services related to the sale of the Advisor Shares may include (i) aggregating and processing purchase and redemption requests from Customers and placing net purchase and redemption orders with the Fund's transfer agent, (ii) processing dividend payments from the Fund on behalf of Customers and (iii) providing sub-accounting relating to the sale of Advisor Shares beneficially owned by Customers or the information to the Fund necessary for subaccounting. The Board of Directors of the Fund has approved a Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the 1940 Act under which Counsellors Securities may pay each participating Intermediary a negotiated fee on an annual basis not to exceed .25% of the value of the average daily net assets of its Customers invested in the Advisor Shares. The Fund may, in the future, enter into additional Agreements with Intermediaries. The Board of Directors of RBB will evaluate the appropriateness of the Plan on a continuing basis. MULTI-CLASS STRUCTURE The Fund offers other classes of shares of the Portfolios which are offered directly to institutional investors and financial institutions pursuant to separate prospectuses. Shares of each class represent equal pro rata interests in the Portfolios and accrue dividends and calculate net asset value and performance quotations in the same manner. The Fund quotes performance of the Institutional and Investor Shares separately from Advisor Shares. Because of different fees paid by the Advisor Shares, the total return on such shares can be expected, at any time, to be different than the total return on Institutional and Investor Shares. Information concerning these other classes may be obtained by calling [BEA/Counsellors Securities/BFDS] at 1-800-___-____. 20 DESCRIPTION OF SHARES The Fund has authorized capital of thirty billion shares of Common Stock, $.001 par value per share, of which 12.35 billion shares are currently classified into 67 different classes of Common Stock (as described in the Statement of Additional Information). THIS PROSPECTUS AND THE STATEMENT OF ADDITIONAL INFORMATION INCORPORATED HEREIN RELATE PRIMARILY TO THE BEA ADVISOR CLASSES REPRESENTING AN INTEREST IN THE BEA INTERNATIONAL EQUITY, BEA EMERGING MARKETS EQUITY, BEA GLOBAL TELECOMMUNICATIONS AND BEA HIGH YIELD PORTFOLIOS AND DESCRIBE ONLY THE INVESTMENT OBJECTIVE AND POLICIES, OPERATIONS, CONTRACTS AND OTHER MATTERS RELATING TO SUCH CLASSES. Each share that represents an interest in a Portfolio has an equal proportionate interest in the assets belonging to such Portfolio with each other share that represents an interest in such Portfolio. Shares of the Fund do not have preemptive or conversion rights. When issued for payment as described in this Prospectus, Shares will be fully paid and non-assessable. This Prospectus combines offering information with respect to four Portfolios; there is a possibility that one Portfolio might become liable for any misstatement, inaccuracy, or incomplete disclosure in the Prospectus concerning another Portfolio. The Fund currently does not intend to hold annual meetings of shareholders except as required by the 1940 Act or other applicable law. The law under certain circumstances provides shareholders with the right to call for a meeting of shareholders to consider the removal of one or more directors. To the extent required by law, the Fund will assist in shareholder communication in such matters. Holders of shares of each of the Portfolios will vote in the aggregate and not by class on all matters, except where otherwise required by law. Furthermore, shareholders of all investment portfolios of the Fund will vote in the aggregate and not by portfolio except as otherwise required by law or when the Board of Directors determines that the matter to be voted upon affects only the interests of the shareholders of a particular investment portfolio. (See the Statement of Additional Information under "Additional Information Concerning Fund Shares" for examples of when the 1940 Act requires voting by investment portfolio or by class.) Shareholders of the Fund are entitled to one vote for each full share held (irrespective of class or portfolio) and fractional votes for fractional shares held. Voting rights are not cumulative and, accordingly, the holders of more than 50% of the aggregate shares of Common Stock of the Fund may elect all of the directors. As of July 23, 1996, to the Fund's knowledge, no person held of record or beneficially 25% or more of the outstanding shares of all classes of the Fund. 21 OTHER INFORMATION REPORTS AND INQUIRIES Shareholders of a Portfolio will receive unaudited semi-annual reports describing the Portfolio's investment operations and annual financial statements audited by independent accountants. Shareholder inquiries should be addressed to BFDS, the Fund's transfer agent. PERFORMANCE INFORMATION From time to time, each of the Portfolios may advertise its performance, including comparisons to other mutual funds with similar investment objectives and to stock or other relevant indices. All such advertisements will show the average annual total return over one, five and ten year periods or, if such periods have not yet elapsed, shorter periods corresponding to the life of a Portfolio. Such total return quotations will be computed by finding the compounded average annual total return for each time period that would equate the assumed initial investment of $1,000 to the ending redeemable value, net of any redemption and other fees, according to a required standardized calculation. The standard calculation is required by the SEC to provide consistency and comparability in investment company advertising. The Portfolios may also from time to time include in such advertising an aggregate total return figure or a total return figure that is not calculated according to the standardized formula in order to compare more accurately a Portfolio's performance with other measures of investment return. For example, a Portfolio's total return may be compared with data published by Lipper Analytical Services, Inc., CDA Investment Technologies, Inc., Mutual Fund Forecaster, Morningstar, Inc. or Weisenberger Investment Company Service, or with the performance of the Standard & Poor's 500 Stock Index, Standard & Poor's MidCap 400 Index, Moody's Bond Survey Bond Index, Wilshire 5000 Index, Lehman Brothers Bond Indexes, Consumer Price Index, Bond Buyer's 20-Bond Index, Dow Jones Industrial Average, national publications such as Money, Forbes, Barron's, the Wall Street Journal or the New York Times or publications of a local or regional nature, and other industry publications. From time to time, the BEA High Yield Portfolio may also advertise its "30-day yield." The yield refers to the income generated by an investment in the Portfolio over the 30-day period identified in the advertisement, and is computed by dividing the net investment income per share during the period by the maximum public offering price per share of the last day of the period. This income is "annualized" by assuming that the amount of income is generated each month over a one-year period and is compounded semi-annually. The annualized income is then shown as a percentage of the net asset value. The yield on Shares of the Portfolio will fluctuate and is not necessarily representative of future results. Shareholders should remember that yield is generally a function of portfolio quality and maturity, type of instrument, operating expenses and market conditions. Any fees charged by Intermediaries directly to their customers in connection with investments in the Portfolio are not reflected in the yields on the Portfolio's Shares, and such fees, if charged, will reduce the actual return received by shareholders on their investments. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS OR IN THE 22 PORTFOLIOS' STATEMENT OF ADDITIONAL INFORMATION INCORPORATED HEREIN BY REFERENCE, IN CONNECTION WITH THE OFFERING MADE BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND OR ITS DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE FUND OR BY THE DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE. 23 THE BEA FAMILY OF MUTUAL FUNDS ADVISOR CLASS BEA International Equity Portfolio BEA Emerging Markets Equity Portfolio BEA Global Telecommunications Portfolio BEA High Yield Portfolio (Investment Portfolios of The RBB Fund, Inc.) STATEMENT OF ADDITIONAL INFORMATION This Statement of Additional Information provides supplementary information pertaining to shares of four classes (the "Advisor Shares" or the "Shares") representing interests in four investment portfolios (the "Portfolios") of The RBB Fund, Inc. (the "Fund"): BEA International Equity Portfolio, BEA Emerging Markets Equity Portfolio, BEA Global Telecommunications Portfolio and BEA High Yield Portfolio (collectively, the "Portfolios"). This Statement of Additional Information is not a prospectus, and should be read only in conjunction with the Prospectus of the Fund relating to the Portfolios, dated ________ __, 1996 (the "Prospectus"). A copy of the Prospectus may be obtained from the Fund's distributor by calling toll-free (800) 888-9723. This Statement of Additional Information is dated ________ __, 1996. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY representations not contained in this Statement of Additional Information in connection with the offering made by the Prospectus and, if given or made, such information or representations must not be relied upon as having been authorized by the Fund or its distributor. The Statement of Additional Information does not constitute an offering by the Fund or by the distributor in any jurisdiction in which such offering may not lawfully be made. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION BUT HAS NOT YET BECOME EFFECTIVE. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS STATEMENT OF ADDITIONAL INFORMATION SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO THE REGISTRATION OR QUALIFICATION OF THE SECURITIES LAWS OF ANY SUCH STATE. CONTENTS Prospectus Page Page ---- ---------- General ............................................. 2 8 Common Investment Policies -- All Portfolios ........ 2 8 Supplemental Investment Objectives and Policies -- BEA International Equity, BEA Emerging Markets Equity and BEA Global Telecommunications Portfolios......................................... 22 19 Investment Limitations .............................. 22 22 Risk Factors ........................................ 25 23 Directors and Officers .............................. 28 N/A Investment Advisory and Servicing Arrangements....... 30 26 Portfolio Transactions .............................. 34 29 Purchase and Redemption Information ................. 36 30 Valuation of Shares ................................. 37 32 Performance and Yield Information.................... 38 36 Taxes ............................................... 41 33 Additional Information Concerning Fund Shares........ 50 35 Miscellaneous ....................................... 53 35 Appendix ............................................ A-1 N/A Financial Statements ................................ N/A N/A GENERAL The RBB Fund, Inc. (the "Fund") is an open-end management investment company currently operating or proposing to operate eighteen separate investment portfolios. The Fund was organized as a Maryland corporation on February 29, 1988. Unless otherwise indicated, the following investment policies may be changed by the Board of Directors without an affirmative vote of shareholders. Capitalized terms used herein and not otherwise defined have the same meanings as are given to such terms in the Prospectus. COMMON INVESTMENT POLICIES -- ALL PORTFOLIOS The following supplements the information contained in the Prospectus concerning the investment objectives and policies of, and techniques used by, the Portfolios. NON-DIVERSIFIED STATUS. Each Portfolio is classified as non-diversified within the meaning of the Investment Company Act, which means that each Portfolio is not limited by such Act in the proportion of its assets that it may invest in securities of a single issuer. Each Portfolio's investments will be limited, however, in order to qualify as a "regulated investment company" for purposes of the Internal Revenue Code of 1986, as amended. See "Taxes." To qualify, each Portfolio will comply with certain requirements, including limiting its investments so that at the close of each quarter of the taxable year (i) not more than 25% of the market value of each Portfolio's total assets will be invested in the securities of a single issuer, and (ii) with respect to 50% of the market value of its total assets, not more than 5% of the market value of each Portfolio's total assets will be invested in the securities of a single issuer and each Portfolio will not own more than 10% of the outstanding voting securities of a single issuer. To the extent that each Portfolio assumes large positions in the securities of a small number of issuers, each Portfolio's return may fluctuate to a greater extent than that of a diversified company as a result of changes in the financial condition or in the market's assessment of the issuers. TEMPORARY INVESTMENTS. The short-term and medium-term debt securities in which a Portfolio may invest for temporary and defensive purposes consist of: (a) obligations of the United States or foreign governments, their respective agencies or instrumentalities; (b) bank deposits and bank obligations (including certificates of deposit, time deposits and bankers' acceptances) of U.S. or foreign banks denominated in any currency; (c) floating rate securities and other instruments denominated in any currency issued by international development agencies; (d) finance company and corporate commercial paper and other short-term corporate debt obligations of U.S. and foreign corporations; and (e) repurchase agreements with banks and broker-dealers with respect to such securities. 2 REPURCHASE AGREEMENTS. Each Portfolio may agree to purchase securities from a bank or recognized securities dealer and simultaneously commit to resell the securities to the bank or dealer at an agreed-upon date and price reflecting a market rate of interest unrelated to the coupon rate or maturity of the purchased securities ("repurchase agreements"). Such Portfolio would maintain custody of the underlying securities prior to their repurchase; thus, the obligation of the bank or dealer to pay the repurchase price on the date agreed to would be, in effect, secured by such securities. If the value of such securities were less than the repurchase price, plus interest, the other party to the agreement would be required to provide additional collateral so that at all times the collateral is at least equal to the repurchase price plus accrued interest. Default by or bankruptcy of a seller would expose a Portfolio to possible loss because of adverse market action, expenses and/or delays in connection with the disposition of the underlying obligations. The Adviser will consider the creditworthiness of a seller in determining whether to have a Portfolio enter into a repurchase agreement. There are no percentage limits on a Portfolio's ability to enter into repurchase agreements. Each Portfolio will not invest more than 15% of its assets in repurchase agreements maturing in more than seven (7) days. Repurchase agreements are considered to be loans by the Portfolio under the Investment Company Act of 1940 (the "Investment Company Act" or the "1940 Act"). REVERSE REPURCHASE AGREEMENTS AND DOLLAR ROLLS. Each Portfolio may enter into reverse repurchase agreements with respect to portfolio securities for temporary purposes (such as to obtain cash to meet redemption requests when the liquidation of portfolio securities is deemed disadvantageous or inconvenient by the Adviser). Reverse repurchase agreements involve the sale of securities held by a Portfolio pursuant to such Portfolio's agreement to repurchase them at a mutually agreed upon date, price and rate of interest. At the time a Portfolio enters into a reverse repurchase agreement, it will establish and maintain a segregated account with an approved custodian containing cash or liquid high-grade debt securities having a value not less than the repurchase price (including accrued interest). The assets contained in the segregated account will be marked-to-market daily and additional assets will be placed in such account on any day in which the assets fall below the repurchase price (plus accrued interest). A Portfolio's liquidity and ability to manage its assets might be affected when it sets aside cash or portfolio securities to cover such commitments. Reverse repurchase agreements involve the risk that the market value of the securities retained in lieu of sale may decline below the price of the securities a Portfolio has sold but is obligated to repurchase. In the event the buyer of securities under a reverse repurchase agreement files for bankruptcy or becomes insolvent, such buyer or its trustee or receiver may receive an extension of time to determine whether to enforce a Portfolio's obligation to repurchase the securities, and a Portfolio's use of the proceeds of the reverse repurchase agreement may effectively be restricted pending such decision. Each Portfolio also may enter into "dollar rolls," in which it sells fixed income securities for delivery in the current month and simultaneously contract to repurchase substantially similar (same type, coupon 3 and maturity) securities on a specified future date. During the roll period, a Portfolio would forgo principal and interest paid on such securities. A Portfolio would be compensated by the difference between the current sales price and the forward price for the future purchase, as well as by the interest earned on the cash proceeds of the initial sale. Reverse repurchase agreements are considered to be borrowings under the Investment Company Act. WHEN-ISSUED SECURITIES, DELAYED DELIVERY TRANSACTIONS AND FORWARD COMMITMENTS. Each Portfolio may purchase securities on a when-issued basis, and it may purchase or sell securities for delayed delivery or on a forward commitment basis. These transactions occur when securities are purchased or sold by a Portfolio with payment and delivery taking place in the future to secure what is considered an advantageous yield and price to a Portfolio at the time of entering into the transaction. Although the Portfolios have not established a limit on the percentage of its assets that may be committed in connection with such transactions, it will maintain a segregated account with its custodian of cash, cash equivalents, U.S. Government securities or other high grade liquid debt securities denominated in U.S. dollars or non-U.S. currencies in an aggregate amount equal to the amount of its commitment in connection with such purchase transactions. The assets contained in the segregated account will be marked-to-market daily and additional assets will be placed in such account on any day in which assets fall below the amount of its commitment. Each Portfolio's liquidity and ability to manage its assets might be affected when it sets aside cash or portfolio securities to cover such commitments. When a Portfolio engages in when-issued transactions, it relies on the seller to consummate the trade. Failure of the seller to do so may result in the Portfolio incurring a loss or missing an opportunity to obtain a price considered to be advantageous. When-issued and forward commitment transactions involve the risk that the price or yield obtained in a transaction may be less favorable than the price or yield available in the market when the securities delivery takes place. The Portfolio currently anticipates that when-issued securities will not exceed 25% of its total assets. Each Portfolio does not intend to engage in when-issued purchases and forward commitments for speculative purposes but only in furtherance of their investment objectives. STANDBY COMMITMENT AGREEMENTS. Each Portfolio may from time to time enter into standby commitment agreements. Such agreements commit such Portfolio, for a stated period of time, to purchase a stated amount of a fixed income security which may be issued and sold to the Portfolio at the option of the issuer. The price and coupon of the security is fixed at the time of the commitment. At the time of entering into the agreement a Portfolio is paid a commitment fee, regardless of whether or not the security is ultimately issued. A Portfolio will enter into such agreements only for the purpose of investing in the security underlying the commitment at a yield and price that is considered advantageous to a Portfolio. Each Portfolio will not enter into a standby commitment with a remaining term in excess of 45 days and it will limit its investment in such commitments so that the aggregate purchase price of the securities subject to such commitments, together with the value of portfolio securities subject to legal restrictions on resale, will not exceed 4 10% of its assets taken at the time of acquisition of such commitment or security. Such Portfolio will at all times maintain a segregated account with its custodian of cash, cash equivalents, U.S. Government securities or other high grade liquid debt securities denominated in U.S. dollars or non-U.S. currencies in an aggregate amount equal to the purchase price of the securities underlying the commitment. The assets contained in the segregated account will be marked-to-market daily and additional assets will be placed in such account on any day in which assets fall below the amount of the purchase price. A Portfolio's liquidity and ability to manage its assets might be affected when it sets aside cash or portfolio securities to cover such commitments. There can be no assurance that the securities subject to a standby commitment will be issued and the value of the security, if issued, on the delivery date may be more or less than its purchase price. Because the issuance of the security underlying the commitment is at the option of the issuer, a Portfolio may bear the risk of a decline in the value of such security and may not benefit from an appreciation in the value of the security during the commitment period. The purchase of a security subject to a standby commitment agreement and the related commitment fee will be recorded on the date on which the security can reasonably be expected to be issued, and the value of the security will be adjusted by the amount of the commitment fee. In the event the security is not issued, the commitment fee will be recorded as income on the expiration date of the standby commitment. ILLIQUID SECURITIES. Each Portfolio may not invest more than 10% of its net assets in illiquid securities (including repurchase agreements which have a maturity of longer than seven days), including securities that are illiquid by virtue of the absence of a readily available market or legal or contractual restrictions on resale. The term "illiquid securities" for this purpose means securities that cannot be disposed of within seven days in the ordinary course of business at approximately the amount at which the Portfolio has valued the securities. Such securities may include, among other things, loan participations and assignments, options purchased in the over-the-counter markets, repurchase agreements maturing in more than seven days, structured notes and restricted securities other than Rule 144A securities that BEA has determined are liquid pursuant to guidelines established by the Fund's Board of Directors. Because of the absence of any liquid trading market currently for these investments, a Portfolio may take longer to liquidate these positions than would be the case for publicly traded securities. Although these securities may be resold in privately negotiated transactions, the prices realized on such sales could be less than those originally paid by a Portfolio. Securities that have legal or contractual restrictions on resale but have a readily available market are not considered illiquid for purposes of this limitation. BEA will monitor the liquidity of restricted securities in each Portfolio's portfolio and report periodically on such decisions to the Board of Directors of the Fund. Where there are no readily available market quotations, the security shall be valued at fair 5 value as determined in good faith by the Board of Directors of the Fund. The Board has adopted a policy that the Portfolios will not purchase private placements (i.e. restricted securities other than Rule 144A securities). With respect to each Portfolio, repurchase agreements subject to demand are deemed to have a maturity equal to the notice period. Historically, illiquid securities have included securities subject to contractual or legal restrictions on resale because they have not been registered under the Securities Act of 1933, as amended (the "Securities Act"), securities which are otherwise not readily marketable and repurchase agreements having a maturity of longer than seven days. Securities which have not been registered under the Securities Act are referred to as private placements or restricted securities and are purchased directly from the issuer or in the secondary market. The Board has adopted a policy that the Portfolios will not purchase private placements (i.e., restricted securities other than Rule 144A securities). Mutual funds do not typically hold a significant amount of these restricted or other illiquid securities because of the potential for delays on resale and uncertainty in valuation. Limitations on resale may have an adverse effect on the marketability of portfolio securities and a mutual fund might be unable to dispose of restricted or other illiquid securities promptly or at reasonable prices and might thereby experience difficulty satisfying redemptions within seven days. A mutual fund might also have to register such restricted securities in order to dispose of them resulting in additional expense and delay. Adverse market conditions could impede such a public offering of securities. In recent years, however, a large institutional market has developed for certain securities that are not registered under the Securities Act including repurchase agreements, commercial paper, foreign securities, municipal securities and corporate bonds and notes. Institutional investors depend on an efficient institutional market in which the unregistered security can be readily resold or on an issuer's ability to honor a demand for repayment. The fact that there are contractual or legal restrictions on resale to the general public or to certain institutions may not be indicative of the liquidity of such investments. The SEC has recently adopted Rule 144A which allows for a broader institutional trading market for securities otherwise subject to restriction on resale to the general public. Rule 144A establishes a "safe harbor" from the registration requirements of the Securities Act for resales of certain securities to qualified institutional buyers. The Adviser anticipates that the market for certain restricted securities such as institutional commercial paper will expand further as a result of this new regulation and the development of automated systems for the trading, clearance and settlement of unregistered securities of domestic and foreign issuers, such as the PORTAL System sponsored by the National Association of Securities Dealers, Inc. The Adviser will monitor the liquidity of restricted securities in a Portfolio under the supervision of the Board of Directors. In reaching liquidity decisions, the Adviser may consider, INTER ALIA, the following 6 factors: (1) the unregistered nature of the security; (2) the frequency of trades and quotes for the security; (3) the number of dealers wishing to purchase or sell the security and the number of other potential purchasers; (4) dealer undertakings to make a market in the security and (5) the nature of the security and the nature of the marketplace trades (e.g., the time needed to dispose of the security, the method of soliciting offers and the mechanics of the transfer). SECURITIES OF UNSEASONED ISSUERS. Each Portfolio will not invest in securities of unseasoned issuers, including equity securities of unseasoned issuers which are not readily marketable, if the aggregate investment in such securities would exceed 5% of such Portfolio's net assets. The term "unseasoned" refers to issuers which, together with their predecessors, have been in operation for less than three years. LENDING OF PORTFOLIO SECURITIES. To increase income on its investments, a Portfolio may lend its portfolio securities with an aggregate value of up to 30% of its total assets to broker/dealers and other institutional investors. Although each Portfolio does not currently intend to do so, it may lend its portfolio securities on a short or long term basis to broker-dealers or institutional investors that the Adviser deems qualified, but only when the borrower maintains with a Portfolio's custodian, collateral either in cash or money market instruments, in an amount at least equal to the market value of the securities loaned, plus accrued interest and dividends, determined on a daily basis and adjusted accordingly. Collateral for such loans may include cash, securities of the U.S. Government or its agencies or instrumentalities or an irrevocable letter of credit issued by a bank which is deemed creditworthy by the Adviser. In determining whether to lend securities to a particular broker-dealer or institutional investor, the Adviser will consider, and during the period of the loan will monitor, all relevant facts and circumstances, including the creditworthiness of the borrower. Such loans would involve risks of delay in receiving additional collateral in the event the value of the collateral decreased below the value of the securities loaned or of delay in recovering the securities loaned or even the loss of rights in the collateral should the borrower of the securities fail financially. Default by or bankruptcy of a borrower would expose the Portfolios to possible loss because of adverse market action, expenses and/or delays in connection with the disposition of the underlying securities. BORROWING. Each Portfolio may borrow up to 33 1/3 percent of its total assets. The Adviser intends to borrow only for temporary or emergency purposes, including to meet portfolio redemption requests so as to permit the orderly disposition of portfolio securities, or to facilitate settlement transactions on portfolio securities. Additional investments will not be made when borrowings exceed 5% of a Portfolio's total assets. Although the principal of such borrowings will be fixed, a Portfolio's assets may change in value during the time the borrowing is outstanding. Each Portfolio expects that some of its borrowings may be made on a secured basis. In such situations, either the custodian will segregate the pledged assets for the 7 benefit of the lender or arrangements will be made with a suitable subcustodian, which may include the lender. U.S. GOVERNMENT SECURITIES. The U.S. government securities in which a Portfolio may invest include direct obligations of the U.S. Treasury (such as Treasury bills, notes and bonds) and obligations issued by U.S. government agencies and instrumentalities, including securities that are supported by the full faith and credit of the United States and securities that are supported primarily or solely by the creditworthiness of the issuer (such as securities of the Federal Home Loan Banks, the Student Loan Marketing Association and the Tennessee Valley Authority). FOREIGN DEBT SECURITIES. The returns on foreign debt securities reflect interest rates and other market conditions prevailing in those countries and the effect of gains and losses in the denominated currencies against the U.S. dollar, which have had a substantial impact on investment in foreign fixed income securities. The relative performance of various countries' fixed income markets historically has reflected wide variations relating to the unique characteristics of each country's economy. Year-to-year fluctuations in certain markets have been significant, and negative returns have been experienced in various markets from time to time. The foreign government securities in which the Portfolios may invest generally consist of obligations issued or backed by national, state or provincial governments or similar political subdivisions or central banks in foreign countries. Foreign government securities also include debt obligations of supranational entities, which include international organizations designated, or backed by governmental entities to promote economic reconstruction or development, international banking institutions and related government agencies. Examples include the International Bank for Reconstruction and Development (the "World Bank"), the European Coal and Steel Community, the Asian Development Bank and the InterAmerican Development Bank. Foreign government securities also include debt securities of "quasi-governmental agencies" and debt securities denominated in multinational currency units of an issuer (including supranational issuers). Debt securities of quasi-governmental agencies are issued by entities owned by either a national, state or equivalent government or are obligations of a political unit that is not backed by the national government's full faith and credit and general taxing powers. An example of a multinational currency unit is the European Currency Unit ("ECU"). An ECU represents specified amounts of the currencies of certain member states of the European Economic Community. The specific amounts of currencies comprising the ECU may be adjusted by the Council of Ministers of the European Community to reflect changes in relative values of the underlying currencies. BRADY BONDS. Each Portfolio may invest in so-called "Brady Bonds," which have recently been issued by Costa Rica, Mexico, Uruguay and Venezuela and which may be issued by other Latin American countries. Brady Bonds are issued as part of a debt restructuring in which the bonds are issued 8 in exchange for cash and certain of the country's outstanding commercial bank loans. Investors should recognize that Brady Bonds have been issued only recently, and accordingly, they do not have a long payment history. Brady Bonds may be collateralized or uncollateralized, are issued in various currencies (primarily the U.S. dollar) and are actively traded in the over-the-counter ("OTC") secondary market for debt of Latin American issuers. LOAN PARTICIPATIONS AND ASSIGNMENTS. Each Portfolio may invest in fixed and floating rate loans ("Loans") arranged through private negotiations between a foreign government and one or more financial institutions ("Lenders"). The majority of the Portfolio's investments in Loans in Latin America are expected to be in the form of participations in Loans ("Participations") and assignments of portions of Loans from third parties ("Assignments"). Participations typically will result in each Portfolio having a contractual relationship only with the Lender, not with the borrower. Each Portfolio will have the right to receive payments of principal, interest and any fees to which it is entitled only from the Lender selling the Participation and only upon receipt by the Lender of the payments from the borrower. In connection with purchasing Participations, the Portfolios generally will have no right to enforce compliance by the borrower with the terms of the loan agreement relating to the Loan ("Loan Agreement"), nor any rights of set-off against the borrower, and the Portfolio may not directly benefit from any collateral supporting the Loan in which it has purchased the Participation. As a result, the Portfolios will assume the credit risk of both the borrower and the Lender that is selling the Participation. In the event of the insolvency of the Lender selling a Participation, the Portfolios may be treated as a general creditor of the Lender and may not benefit from any set-off between the Lender and the borrower. The Portfolios will acquire Participations only if the Lender interpositioned between the Portfolios and the borrower is determined by BEA to be creditworthy. Each Portfolio currently anticipates that it will not invest more than 5% of its total assets in Loan Participations and Assignments. CONVERTIBLE SECURITIES. BEA International Equity and BEA Emerging Markets Equity Portfolios may invest up to 20% of their total assets in convertible securities, and BEA High Yield and BEA Global Telecommunications Portfolios may invest up to 35% of their total assets in convertible securities. A convertible security is a bond, debenture, note, preferred stock or other security that may be converted into or exchanged for a prescribed amount of common stock of the same or a different issuer within a particular period of time at a specified price or formula. A convertible security entitles the holder to receive interest paid or accrued on debt or the dividend paid on preferred stock until the convertible security matures or is redeemed, converted or exchanged. Before conversion, convertible securities have characteristics similar to nonconvertible debt securities in that they ordinarily provide a stable stream of income with generally higher yields than those of common stocks of the same or similar issuers. Convertible securities rank senior to common stock in a corporation's capital structure but are usually subordinated to comparable nonconvertible securities. While no securities investment is completely without risk, 9 investments in convertible securities generally entail less risk than the corporation's common stock, although the extent to which such risk is reduced depends in large measure upon the degree to which the convertible security sells above its value as a fixed income security. Convertible securities have unique investment characteristics in that they generally (1) have higher yields than common stocks, but lower yields than comparable non-convertible securities, (2) are less subject to fluctuation in value than the underlying stock since they have fixed income characteristics and (3) provide the potential for capital appreciation if the market price of the underlying common stock increases. Most convertible securities currently are issued by U.S. companies, although a substantial Eurodollar convertible securities market has developed, and the markets for convertible securities denominated in local currencies are increasing. The value of a convertible security is a function of its "investment value" (determined by its yield in comparison with the yields of other securities of comparable maturity and quality that do not have a conversion privilege) and its "conversion value" (the security's worth, at market value, if converted into the underlying common stock). The investment value of a convertible security is influenced by changes in interest rates, with investment value declining as interest rates increase and increasing as interest rates decline. The credit standing of the issuer and other factors also may have an effect on the convertible security's investment value. The conversion value of a convertible security is determined by the market price of the underlying common stock. If the conversion value is low relative to the investment value, the price of the convertible security is governed principally by its investment value. Generally the conversion value decreases as the convertible security approaches maturity. To the extent the market price of the underlying common stock approaches or exceeds the conversion price, the price of the convertible security will be increasingly influenced by its conversion value. A convertible security generally will sell at a premium over its conversion value by the extent to which investors place value on the right to acquire the underlying common stock while holding a fixed income security. The Portfolios have no current intention of converting any convertible securities it may own into equity or holding them as equity upon conversion, although it may do so for temporary purposes. A convertible security might be subject to redemption at the option of the issuer at a price established in the convertible security's governing instrument. If a convertible security held by the Portfolio is called for redemption, the Portfolio will be required to permit the issuer to redeem the security, convert it into the underlying common stock or sell it to a third party. MORTGAGE-BACKED SECURITIES. BEA International Equity Portfolio and BEA Emerging Markets Equity Portfolio may invest up to 20% of their total assets in mortgage-backed securities and BEA High Yield Portfolio may invest up to 100% of its total assets in mortgage-backed securities, such as those issued by the Government National Mortgage Association ("GNMA"), the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation or 10 certain foreign issuers, as well as by private issuers such as commercial investment banks, savings and loan institutions, mortgage bankers and private mortgage insurance companies. Mortgage-backed securities represent direct or indirect participations in, or are secured by and payable from, mortgage loans secured by real property. The mortgages backing these securities include, among other mortgage instruments, conventional 30-year fixed rate mortgages, 15-year fixed rate mortgages, graduated payment mortgages and adjustable rate mortgages. The government or the issuing agency typically guarantees the payment of interest and principal of these securities. However, the guarantees do not extend to the securities' yield or value, which are likely to vary inversely with fluctuations in interest rates, nor do the guarantees extend to the yield or value of the Portfolio's shares. These securities generally are "pass-through" instruments, through which the holders receive a share of all interest and principal payments from the mortgages underlying the securities, net of certain fees. Yields on pass-through securities are typically quoted by investment dealers and vendors based on the maturity of the underlying instruments and the associated average life assumption. The average life of pass-through pools varies with the maturities of the underlying mortgage loans. A pool's term may be shortened by unscheduled or early payments of principal on the underlying mortgages. The occurrence of mortgage prepayments is affected by various factors, including the level of interest rates, general economic conditions, the location, scheduled maturity and age of the mortgage and other social and demographic conditions. Because prepayment rates of individual pools vary widely, it is not possible to predict accurately the average life of a particular pool. For pools of fixed rate 30-year mortgages, a common industry practice in the U.S. has been to assume that prepayments will result in a 12-year average life. At present, pools, particularly those with loans with other maturities or different characteristics, are priced on an assumption of average life determined for each pool. Although certain mortgage-related securities are guaranteed by a third party or are otherwise similarly secured, the market value of the security, which may fluctuate, is not so secured. If the Portfolios purchase a mortgage-related security at a premium, that portion may be lost if there is a decline in the market value of the security whether resulting from increases in interest rates or prepayment of the underlying mortgage collateral. As with other interest-bearing securities, the prices of such securities are inversely affected by changes in interest rates. However, though the value of a mortgage-related security may decline when interest rates rise, the converse is not necessarily true because in periods of declining interest rates mortgages underlying securities are prone to prepayment. In periods of falling interest rates, the rate of prepayment tends to increase, thereby shortening the actual average life of a pool of mortgage-related securities. Conversely, in periods of rising rates the rate of prepayment tends to decrease, thereby lengthening the actual average life of the pool. However, these effects may not be present, or may differ in degree, if the mortgage loans in the pools have adjustable interest rates or other special payment terms, such as a prepayment charge. Actual prepayment experience may cause 11 the yield of mortgage-backed securities to differ from the assumed average life yield. Reinvestment of prepayments may occur at higher or lower interest rates than the original investment, thus affecting a Portfolio's yield. For this and other reasons, a mortgage-related security's stated maturity may be shortened by an unscheduled prepayment on underlying mortgages and, therefore, it is not possible to predict accurately the security's return to the Portfolios. Mortgage-related securities provide regular payments consisting of interest and principal. No assurance can be given as to the return the Portfolios will receive when these amounts are reinvested. The rate of interest on mortgage-backed securities is lower than the interest rates paid on the mortgages included in the underlying pool due to the annual fees paid to the servicer of the mortgage pool for passing through monthly payments to certificate holders and to any guarantor, such as GNMA, and due to any yield retained by the issuer. Actual yield to the holder may vary from the coupon rate, even if adjustable, if the mortgage-backed securities are purchased or traded in the secondary market at a premium or discount. In addition, there is normally some delay between the time the issuer receives mortgage payments from the servicer and the time the issuer makes the payments on the mortgage-backed securities, and this delay reduces the effective yield to the holder of such securities. COLLATERALIZED MORTGAGE OBLIGATIONS. The Portfolios may also purchase collateralized mortgage obligations ("CMOs") issued by a U.S. Government instrumentality which are backed by a portfolio of mortgages or mortgage-backed securities. The issuer's obligations to make interest and principal payments is secured by the underlying portfolio of mortgages or mortgage-backed securities. These securities may be considered mortgage derivatives. The Portfolios may only invest in CMOs issued by FHLMC, FNMA or other agencies of the U.S. Government or instrumentalities established or sponsored by the U.S. Government. CMOs provide an investor with a specified interest in the cash flow of a pool of underlying mortgages or other mortgage-related securities. Issuers of CMOs frequently elect to be taxed as pass-through entities known as real estate mortgage investment conduits ("REMICs"). CMOs are issued in multiple classes, each with a specified fixed or floating interest rate and a final distribution date. Coupons can be fixed or variable. If variable, they can move with or in the reverse direction of interest rates. The coupon changes could be a multiple of the actual rate change and there may be limitations on what the coupon can be. Cash flows of pools can also be divided into a principal only class and an interest only class. In this case the principal only class ("PO") will only receive principal cash flows from the pool. All interest cash flows go to the interest only class. The relative payment rights of the various CMO classes may be structured in many ways either sequentially, or by other rules of priority. Generally, payments of principal are applied to the CMO classes in the order of their respective stated maturities, so that no principal payments will be made on a CMO class until all other classes having an earlier stated maturity date are paid in full. Sometimes, however, CMO classes are "parallel pay," i.e. payments of 12 principal are made to two or more classes concurrently. CMOs may exhibit more or less price volatility and interest rate risk than other types of mortgaged-related obligations. The CMO structure returns principal to investors sequentially, rather than according to the pro rata method of a pass-through. In the traditional CMO structure, all classes (called tranches) receive interest at a stated rate, but only one class at a time received principal. All principal payments received on the underlying mortgages or securities are first paid to the "fastest pay" tranche. After this tranche is retired, the next tranche in the sequence becomes the exclusive recipient of principal payments. This sequential process continues until the last tranche is retired. In the event of sufficient early repayments on the underlying mortgages, the "fastest-pay" tranche generally will be retired prior to its maturity. Thus the early retirement of a particular tranche of a CMO held by a Portfolio would have the same effect as the prepayment of mortgages underlying a mortgage-backed pass-through security as described above. ASSET-BACKED SECURITIES. Each Portfolio may invest in asset-backed securities, which represent participations in, or are secured by and payable from, assets such as motor vehicle installment sales, installment loan contracts, leases of various types of real and personal property and receivables from revolving credit (credit card) agreements. The Portfolios may also invest in other types of asset-backed securities that may be available in the future. Such assets are securitized through the use of trusts and special purpose corporations. Payments or distributions of principal and interest may be guaranteed up to certain amounts and for a certain time period by a letter of credit or a pool insurance policy issued by a financial institution unaffiliated with the trust or corporation. The estimated life of an asset-backed security varies with the prepayment experience with respect to the underlying debt instruments. The rate of such prepayments, and hence the life of the asset-backed security, will be primarily a function of current market rates, although other economic and demographic factors will be involved. In certain circumstances, asset-backed securities may be considered illiquid securities subject to the percentage limitations described above. Asset-backed securities are considered an industry for industry concentration purposes, and the Portfolios will therefore not purchase any asset-backed securities which would cause 25% or more of a Portfolio's total assets at the time of purchase to be invested in asset-backed securities. Asset-backed securities present certain risks that are not presented by other securities in which the Portfolio may invest. Automobile receivables generally are secured by automobiles. Most issuers of automobile receivables permit the loan servicers to retain possession of the underlying obligations. If the servicer were to sell these obligations to another party, there is a risk that the purchaser would acquire an interest superior to that of the holders of the asset-backed securities. In addition, because of the large number of vehicles involved in a typical issuance and technical requirements under state laws, the trustee for the holders of the automobile 13 receivables may not have a proper security interest in the underlying automobiles. Therefore, there is the possibility that recoveries on repossessed collateral may not, in some cases, be available to support payments on these securities. Credit card receivables are generally unsecured, and the debtors are entitled to the protection of a number of state and federal consumer credit laws, many of which give such debtors the right to set off certain amounts owed on the credit cards, thereby reducing the balance due. Because asset-backed securities are relatively new, the market experience in these securities is limited, and the market's ability to sustain liquidity through all phases of the market cycle has not been tested. ZERO COUPON SECURITIES. Each Portfolio may invest in "zero coupon" U.S. Treasury, foreign government and U.S. and foreign corporate debt securities, which are bills, notes and bonds that have been stripped of their unmatured interest coupons and receipts or certificates representing interests in such stripped debt obligations and coupons. A Portfolio currently anticipates that zero coupon securities will not exceed 20% of its total assets. A zero coupon security pays no interest to its holder prior to maturity. Accordingly, such securities usually trade at a deep discount from their face or par value and will be subject to greater fluctuations of market value in response to changing interest rates than debt obligations of comparable maturities that make current distributions of interest. A Portfolio anticipates that it will not normally hold zero coupon securities to maturity. Federal tax law requires that a holder of a zero coupon security accrue a portion of the discount at which the security was purchased as income each year, even though the holder receives no interest payment on the security during the year. STRUCTURED NOTES. The Portfolios may invest in structured notes. The distinguishing feature of a structured note is that the amount of interest and/or principal payable on the notes is based on the performance of a benchmark asset or market other than fixed-income securities or interest rates. Examples of a benchmark include stock prices, currency exchange rates and physical commodity prices. Investing in a structured note allows a Portfolio to gain exposure to the benchmark market while fixing the maximum loss that the Portfolio may experience in the event that the market does not perform as expected. The performance tie can be a straight relationship or leveraged, although BEA generally will not use leverage in its structured note strategies. Normally, these bonds are issued by U.S. government agencies and investment banks arrange the structuring. Depending on the terms of the note, the Portfolio may forego all or part of the interest and principal that would be payable on a comparable conventional note; the Portfolio's loss cannot exceed this foregone interest and/or principal. An investment in a structured note involves risks similar to those associated with a direct investment in the benchmark asset. Structured notes will be treated as illiquid securities for investment limitation purposes. NON-INVESTMENT GRADE FIXED INCOME SECURITIES. When and if available, fixed income securities may be purchased by a Portfolio at a discount from face value. From time to time a Portfolio may purchase 14 securities in default with respect to the paying of principal and/or interest at the time acquired if, in the opinion of BEA, such securities have the potential for future capital appreciation. Debt securities purchased by the Portfolios may bear fixed, fixed and contingent or variable rates of interest and may involve equity features such as conversion or exchange rights or warrants for the acquisition of stock of the same or a different issuer; participations based on revenues, sales or profits, or the purchase of common stock in a unit transaction (where corporate debt securities and common stock are offered as a unit). Conversion of certain debt securities may reduce net income per share and net asset value per share. The occurrence of any income dilution of previously outstanding shares of common stock when debt securities are converted will depend upon whether a Portfolio can, from the investments made with the proceeds of the debt securities, earn an amount per share issuable upon conversion at least equal to the amount earned with respect to shares of common stock outstanding prior to conversion. If debt securities are converted at a time when the net asset value per share of common stock is greater than the conversion price, the conversion will result in a decrease or dilution in then current net asset value per share of common stock. The value of the lower rated fixed income securities that the Portfolios purchase may fluctuate more than the value of higher rated debt securities. These lower rated fixed income securities generally tend to reflect short-term corporate and market developments to a greater extent than higher rated securities which react primarily to fluctuations in the general level of interest rates. Changes in the value of securities subsequent to their acquisition will not affect cash income or yields to maturity to a Portfolio but will be reflected in the net asset value of a Portfolio's shares. The Portfolios attempt to reduce risk through credit analysis and attention to current developments and trends in both the economy and financial markets. There can be no assurance that such attempts will be successful. Lower-rated debt securities may include zero coupon securities or pay-in-kind securities. A zero coupon security bears no interest but is issued at a discount from its value at maturity. When held to maturity, its entire return equals the difference between its issue price and its maturity value. Pay-in-kind securities typically do not provide for cash interest payments but instead provide for the issuance of additional debt securities of the issuer in the face amount of the interest payment amount due in lieu of a cash payment. The market prices of both of these securities are affected to a greater extent by interest rate changes and thereby tend to be more volatile than securities which pay interest periodically and in cash. There are also special considerations associated with investing in lower-rated debt securities structured as zero coupon or pay-in-kind securities. For example, a Portfolio must include the interest ("original issue discount") on these securities in determining the amount of its required distributions to shareholders for federal income tax and federal excise tax purposes, even though it receives no cash interest until the security's 15 maturity or payment date. Therefore, in order to satisfy these distribution requirements, a Portfolio may have to sell some of its assets without regard to their investment merit to obtain cash to distribute to shareholders. These actions may occur under disadvantageous circumstances and are likely to reduce a Portfolio's assets and may thereby increase its expense ratio and decrease its rate of return. For additional information concerning these tax considerations, see "Taxes" below. From time to time, a Portfolio may also purchase securities not paying interest at the time acquired if, in the opinion of the Portfolio's Adviser, such securities have the potential for future income or capital appreciation. FORWARD CURRENCY CONTRACTS. Each Portfolio may use forward currency contracts to protect against uncertainty in the level of future exchange rates. The Portfolio may enter into forward currency contracts with respect to specific transactions. For example, when a portfolio anticipates the receipt in a foreign currency of interest payments on a security that it holds, a portfolio may desire to "lock-in" the U.S. dollar price of the security or the U.S. dollar equivalent of such payment, as the case may be, by entering into a forward contract for the purchase or sale, for a fixed amount of U.S. dollars, of the amount of foreign currency involved in the underlying transaction. A Portfolio will thereby be able to protect itself against a possible loss resulting from an adverse change in the relationship between the currency exchange rates during the period between the date on which the security is purchased or sold, or on which the payment is declared, and the date on which such payments are made or received. The precise matching of the forward contract amounts and the value of the securities involved will not generally be possible because the future value of such securities in foreign currencies will change as a consequence of market movements in the value of those securities between the date the forward contract is entered into and the date it matures. Accordingly, it may be necessary for a Portfolio to purchase additional foreign currency on the spot (i.e., cash) market (and bear the expense of such purchase) if the market value of the security is less than the amount of foreign currency the Portfolio is obligated to deliver and if a decision is made to sell the security and make delivery of the foreign currency. Conversely, it may be necessary to sell on the spot market some of the foreign currency received upon the sale of a Portfolio security if its market value exceeds the amount of foreign currency a Portfolio is obligated to deliver. The projection of short-term currency market movements is extremely difficult, and the successful execution of a short-term hedging strategy is highly uncertain. Forward contracts involve the risk that anticipated currency movements will not be accurately predicted, causing a Portfolio to sustain losses on these contracts and transaction costs. A Portfolio may enter into a forward contract and maintain a net exposure on such contract only if (1) the consummation of the contract would not obligate a Portfolio to deliver an amount of foreign currency in excess of the value of a Portfolio's portfolio securities or other assets denominated in that currency or (2) a Portfolio maintains cash, government securities or liquid, high-grade debt securities in a segregated account in an amount not less than the value of a Portfolio's 16 total assets committed to the consummation of the contract which value must be marked to market daily. A Portfolio will comply with guidelines established by the SEC with respect to coverage of forward contracts entered into by mutual funds and, if such guidelines so require, will set aside cash, U.S. government securities or liquid, high-grade debt securities in a segregated account with its custodian in the amount prescribed. Under normal circumstances, consideration of the prospect for currency parities will be incorporated into the longer term investment decisions made with regard to overall diversification strategies. However, the Adviser believes that it is important to have the flexibility to enter into such forward contracts when it determines that the best interests of a Portfolio will be served. At or before the maturity date of a forward contract requiring a portfolio to sell a currency, the Portfolios may either sell a portfolio security and use the sale proceeds to make delivery of the currency or retain the security and offset its contractual obligation to deliver the currency by purchasing a second contract pursuant to which the Portfolio will obtain, on the same maturity date, the same amount of the currency that it is obligated to deliver. Similarly, the Portfolios may close out a forward contract requiring it to purchase a specified currency by entering into a second contract entitling it to sell the same amount of the same currency on the maturity date of the first contract. A Portfolio would realize a gain or loss as a result of entering into such an offsetting forward currency contract under either circumstance to the extent the exchange rate or rates between the currencies involved moved between the execution dates of the first contract and the offsetting contract. The cost to a Portfolio of engaging in forward currency contracts will vary with factors such as the currencies involved, the length of the contract period and the market conditions then prevailing. Because forward currency contracts are usually entered into on a principal basis, no fees or commissions are involved. The use of forward currency contracts will not eliminate fluctuations in the prices of the underlying securities a Portfolio owns or intends to acquire, but it will fix a rate of exchange in advance. In addition, although forward currency contracts limit the risk of loss due to a decline in the value of the hedged currencies, at the same time they limit any potential gain that might result should the value of the currencies increase. Moreover, investors should be aware that dollar-denominated securities may not be available in some or all foreign countries, that the forward currency market for the purchase of U.S. dollars in many foreign countries is not highly developed and that in certain countries no forward market for foreign currencies currently exists or that such market may be closed to investment by a Portfolio. Although a Portfolio will value its assets daily in terms of U.S. dollars, it does not intend to convert its holdings of foreign currencies into U.S. dollars on a daily basis. The Portfolios may convert foreign currency from time to time, and investors should be aware of the costs of currency conversion. Although foreign exchange dealers do not charge a fee for conversion, they do realize a profit based on the difference between the 17 prices at which they are buying and selling various currencies. Thus, a dealer may offer to sell a foreign currency to a Portfolio at one rate, while offering a lesser rate of exchange should a Portfolio desire to resell that currency to the dealer. OPTIONS AND FUTURES CONTRACTS. The Portfolios may write covered call options, buy put options, buy call options and write put options, without limitation except as noted in this paragraph. Such options may relate to particular securities or to various indexes and may or may not be listed on a national securities exchange and issued by the Options Clearing Corporation. The Portfolios may also invest in futures contracts and options on futures contracts (index futures contracts or interest rate futures contracts, as applicable) for hedging purposes (including currency hedging) or for other purposes so long as aggregate initial margins and premiums required for non-hedging positions do not exceed 5% of its net assets, after taking into account any unrealized profits and losses on any such contracts it has entered into. Options trading is a highly specialized activity which entails greater than ordinary investment risks. A call option for a particular security gives the purchaser of the option the right to buy, and a writer the obligation to sell, the underlying security at the stated exercise price at any time prior to the expiration of the option, regardless of the market price of the security. The premium paid to the writer is in consideration for undertaking the obligations under the option contract. A put option for a particular security gives the purchaser the right to sell the underlying security at the stated exercise price at any time prior to the expiration date of the option, regardless of the market price of the security. In contrast to an option on a particular security, an option on an index provides the holder with the right to make or receive a cash settlement upon exercise of the option. The amount of this settlement will be equal to the difference between the closing price of the index at the time of exercise and the exercise price of the option expressed in dollars, times a specified multiple. The Portfolios will engage in unlisted over-the-counter options only with broker/dealers deemed creditworthy by the Adviser. Closing transactions in certain options are usually effected directly with the same broker/dealer that effected the original option transaction. The Portfolios bear the risk that the broker/dealer will fail to meet its obligations. There is no assurance that the Portfolios will be able to close an unlisted option position. Furthermore, unlisted options are not subject to the protections afforded purchasers of listed options by the Options Clearing Corporation, which performs the obligations of its members who fail to do so in connection with the purchase or sale of options. To enter into a futures contract, the Portfolios must make a deposit of initial margin with its custodian in a segregated account in the name of its futures broker. Subsequent payments to or from the broker, called variation margin, will be made on a daily basis as the price of the underlying security 18 or index fluctuates, making the long and short positions in the futures contracts more or less valuable. The risks related to the use of options and futures contracts include: (i) the correlation between movements in the market price of a portfolio's investments (held or intended for purchase) being hedged and in the price of the futures contract or option may be imperfect; (ii) possible lack of a liquid secondary market for closing out options or futures positions; (iii) the need for additional portfolio management skills and techniques; and (iv) losses due to unanticipated market movements. Successful use of options and futures by the Portfolios is subject to the Adviser's ability to correctly predict movements in the direction of the market. For example, if a Portfolio uses future contracts as a hedge against the possibility of a decline in the market adversely affecting securities held by it and securities prices increase instead, such Portfolio will lose part or all of the benefit of the increased value of its securities which it has hedged because it will have approximately equal offsetting losses in its futures positions. The risk of loss in trading futures contracts in some strategies can be substantial, due both to the low margin deposits required, and the extremely high degree of leverage involved in futures pricing. As a result, a relatively small price movement in a futures contract may result in immediate and substantial loss or gain to the investor. Thus, a purchase or sale of a futures contract may result in losses or gains in excess of the amount invested in the contract. These instruments and techniques are discussed in greater detail below. FUTURES CONTRACTS. When a Portfolio purchases a futures contract, it agrees to purchase a specified underlying instrument at a specified future date. When a Portfolio sells a futures contract, it agrees to sell the underlying instrument at a specified future date. The price at which the purchase and sale will take place is fixed when a Portfolio enters into the contract. The underlying instrument may be a specified type of security, such as U.S. Treasury bonds or notes. The majority of futures contracts are closed out by entering into an offsetting purchase or sale transaction in the same contract on the exchange where they are traded, rather than being held for the life of the contract. Futures contracts are closed out at their current prices, which may result in a gain or loss. If a Portfolio holds a futures contract until the delivery date, it will be required to complete the purchase and sale contemplated by the contract. In the case of futures contracts on securities, the purchaser generally must deliver the agreed-upon purchase price in cash, and the seller must deliver securities that meet the specified characteristics of the contract. A Portfolio may purchase futures contracts as an alternative to purchasing actual securities. For example, if a Portfolio intended to purchase bonds but had not yet done so, it could purchase a futures contract in order to lock in current bond prices while deciding on particular 19 investments. This strategy is sometimes known as an anticipatory hedge. Alternatively, a Portfolio could purchase a futures contract if it had cash and short-term securities on hand that it wished to invest in longer-term securities, but at the same time that Portfolio wished to maintain a highly liquid position in order to be prepared to meet redemption requests or other obligations. In these strategies a Portfolio would use futures contracts to attempt to achieve an overall return -- whether positive or negative -- similar to the return from longer-term securities, while taking advantage of potentially greater liquidity that futures contracts may offer. Although a Portfolio would hold cash and liquid debt securities in a segregated account with a value sufficient to cover its open futures obligations, the segregated assets would be available to a Portfolio immediately upon closing out the futures position, while settlement of securities transactions can take several days. However, because the Portfolio's cash that would otherwise have been invested in higher-yielding bonds would be held uninvested or invested in short-term securities so long as the futures position remains open, the Portfolio's return would involve a smaller amount of interest income and potentially a greater amount of capital gain or loss. A Portfolio may sell futures contracts to hedge its other investments against changes in value, or as an alternative to sales of securities. For example, if the investment adviser anticipated a decline in bond prices, but did not wish to sell bonds owned by a Portfolio, it could sell a futures contract in order to lock in a current sale price. If prices subsequently fell, the future contract's value would be expected to rise and offset all or a portion of the loss in the bonds that Portfolio had hedged. Of course, if prices subsequently rose, the futures contract's value could be expected to fall and offset all or a portion of the benefit of the Portfolio. In this type of strategy, the Portfolio's return will tend to involve a larger component of interest income, because the Portfolio will remain invested in longer-term securities rather than selling them and investing the proceeds in short-term securities which generally provide lower yields. FUTURES MARGIN PAYMENTS. The purchaser or seller of a futures contract is not required to deliver or pay for the underlying instrument unless the contract is held until the delivery date. However, both the purchaser and seller are required to deposit "initial margin" with a futures broker (known as a futures commission merchant, or FCM), when the contract is entered into. Initial margin deposits are equal to a percentage of the contract's value, as set by the exchange where the contract is traded, and may be maintained in cash or high quality liquid securities. If the value of either party's position declines, that party will be required to make additional "variation margin" payments to settle the change in value on a daily basis. The party that has a gain may be entitled to receive all or a portion of this amount. Initial and variation margin payments are similar to good faith deposits or performance bonds, unlike margin extended by a securities broker, and initial and variation margin payments do not constitute purchasing securities on margin for purposes of the Portfolio's investment limitations. In the event of the bankruptcy of an FCM that holds margin on behalf of a Portfolio, that Portfolio may be entitled to return of margin owed 20 to it only in proportion to the amount received by the FCM's other customers. The investment adviser will attempt to minimize this risk by careful monitoring of the creditworthiness of the FCMs with which a Portfolio does business. CORRELATION OF PRICE CHANGES. The prices of futures contracts depend primarily on the value of their underlying instruments. Because there are a limited number of types of futures contracts, it is likely that the standardized futures contracts available to a Portfolio will not match that Portfolio's current or anticipated investments. Futures prices can also diverge from the prices of their underlying instruments, even if the underlying instruments match the Portfolio's investments well. Futures prices are affected by such factors as current and anticipated short-term interest rates, changes in volatility of the underlying instrument, and the time remaining until expiration of the contract, which may not affect security prices the same way. Imperfect correlation between a Portfolio's investments and its futures positions may also result from differing levels of demand in the futures markets and the securities markets, from structural differences in how futures and securities are traded, or from imposition of daily price fluctuation limits for futures contracts. A Portfolio may purchase or sell futures contracts with a greater or lesser value than the securities it wishes to hedge or intends to purchase in order to attempt to compensate for differences in historical volatility between the futures contract and the securities, although this may not be successful in all cases. If price changes in a Portfolio's futures positions are poorly correlated with its other investments, its futures positions may fail to produce anticipated gains or result in losses that are not offset by the gains in that Portfolio's other investments. LIQUIDITY OF FUTURES CONTRACTS. Because futures contracts are generally settled within a day from the date they are closed out, compared with a settlement period of seven days for some types of securities, the futures markets can provide liquidity superior to the securities markets in many cases. Nevertheless, there is no assurance a liquid secondary market will exist for any particular futures contract at any particular time. In addition, futures exchanges may establish daily price fluctuation limits for futures contracts, and may halt trading if a contract's price moves upward or downward more than the limit in a given day. On volatile trading days when the price fluctuation limit is reached, it may be impossible for a Portfolio to enter into new positions or close out existing positions. If the secondary market for a futures contract is not liquid because of price fluctuation limits or otherwise, it would prevent prompt liquidation of unfavorable futures positions, and potentially could require a Portfolio to continue to hold a futures position until the delivery date regardless of changes in its value. As a result, a Portfolio's access to other assets held to cover its futures positions could also be impaired. PURCHASING PUT OPTIONS. By purchasing a put option, a Portfolio obtains the right (but not the obligation) to sell the option's underlying instrument at a fixed strike price. The option may give a Portfolio the right 21 to sell only on the option's expiration date, or may be exercisable at any time up to and including that date. In return for this right, a Portfolio pays the current market price for the option (known as the option premium). The option's underlying instrument may be a security, or a futures contract. A Portfolio may terminate its position in a put option it has purchased by allowing it to expire or by exercising the option. If the option is allowed to expire, the Portfolio will lose the entire premium it paid. If the Portfolio exercises the option, it completes the sale of the underlying instrument at the strike price. If the Portfolio exercises a put option on a futures contract, it assumes a seller's position in the underlying futures contract. Purchasing an option on a futures contract does not require the Portfolio to make futures margin payments unless it exercises the option. A Portfolio may also terminate a put option position by closing it out in the secondary market at its current price, if a liquid secondary market exists. Put options may be used by a Portfolio to hedge securities it owns, in a manner similar to selling futures contracts, by locking in a minimum price at which the Portfolio can sell. If security prices fall, the value of the put option would be expected to rise and offset all or a portion of the Portfolio's resulting losses. The put thus acts as hedge against a fall in the price of such securities. However, all other things being equal (including securities prices) option premiums tend to decrease over time as the expiration date nears. Therefore, because of the cost of the option in the form of the premium (and transaction costs), a Portfolio would expect to suffer a loss in the put option if prices do not decline sufficiently to offset the deterioration in the value of the option premium. This potential loss represents the cost of the hedge against a fall in prices. At the same time, because the maximum a Portfolio has at risk is the cost of the option, purchasing put options does not eliminate the potential for the Portfolio to profit from an increase in the value of the securities hedged to the same extent as selling a futures contract. PURCHASING CALL OPTIONS. The features of call options are essentially the same as those of put options, except that the purchaser of a call option obtains the right to purchase, rather than sell, the underlying instrument at the option's strike price (call options on futures contracts are settled by purchasing the underlying futures contract). By purchasing a call option, a Portfolio would attempt to participate in potential price increases of the underlying instrument, with results similar to those obtainable from purchasing a futures contract, but with risk limited to the cost of the option if security prices fell. At the same time, a Portfolio can expect to suffer a loss if security prices do not rise sufficiently to offset the cost of the option. The Portfolios may purchase call options in connection with "closing purchase transactions." A Portfolio may terminate its position in a call option by entering into a closing purchase transaction. A closing purchase transaction is the purchase of a call option on the same security with the same exercise price and call period as the option previously written 22 by the Portfolio. If a Portfolio is unable to enter into a closing purchase transaction, a Portfolio may be required to hold a security that it might otherwise have sold to protect against depreciation. WRITING PUT OPTIONS. When a Portfolio writes a put option, it takes the opposite side of the transaction from the option's purchaser. In return for receipt of the premium, a Portfolio assumes the obligation to pay the strike price for the option's underlying instrument if the other party to the option chooses to exercise it. When writing an option on a futures contract the Portfolio will be required to make margin payments to an FCM as described above for futures contracts. A Portfolio may seek to terminate its position in a put option it writes before exercise by closing out the option in the secondary market at its current price. If the secondary market is not liquid for an option the Portfolio has written, however, the Portfolio must continue to be prepared to pay the strike price while the option is outstanding, regardless of price changes, and must continue to set aside assets to cover its position. A Portfolio may write put options as an alternative to purchasing actual securities. If security prices rise, the Portfolio would expect to profit from a written put option, although its gain would be limited to the amount of the premium it received. If security prices remain the same over time, it is likely that the Portfolio will also profit, because it should be able to close out the option at a lower price. If security prices fall, the Portfolio would expect to suffer a loss. This loss should be less than the loss the Portfolio would have experienced from purchasing the underlying instrument directly, however, because the premium received for writing the option should mitigate the effects of the decline. As with other futures and options strategies used as alternatives for purchasing securities, the Portfolio's return from writing put options generally will involve a smaller amount of interest income than purchasing longer-term securities directly, because the Portfolio's cash will be invested in shorter-term securities which usually offer lower yields. WRITING CALL OPTIONS. Writing a call option obligates a Portfolio to sell or deliver the option's underlying instrument, in return for the strike price, upon exercise of the option. The characteristics of writing call options are similar to those of writing put options, as described above, except that writing covered call options generally is a profitable strategy if prices remain the same or fall. Through receipt of the option premium, the Portfolio would seek to mitigate the effects of a price decline. At the same time, because a Portfolio would have to be prepared to deliver the underlying instrument in return for the strike price, even if its current value is greater, the Portfolio would give up some ability to participate in security price increases when writing call options. COMBINED OPTION POSITIONS. A Portfolio may purchase and write options in combination with each other to adjust the risk and return characteristics of the overall position. For example, a Portfolio may purchase a put option and write a call option on the same underlying 23 instrument, in order to construct a combined position whose risk and return characteristics are similar to selling a futures contract. Another possible combined position would involve writing a call option at one strike price and buying a call option at a lower price, in order to reduce the risk of the written call option in the event of a substantial price increase. Because combined options positions involve multiple trades, they result in higher transaction costs and may be more difficult to open and close out. RISKS OF OPTIONS TRANSACTIONS. Options are subject to risks similar to those described above with respect to futures contracts, including the risk of imperfect correlation between the option and a Portfolio's other investments and the risk that there might not be a liquid secondary market for the option. In the case of options on futures contracts, there is also a risk of imperfect correlation between the option and the underlying futures contract. Options are also subject to the risks of an illiquid secondary market, particularly in strategies involving writing options, which a Portfolio cannot terminate by exercise. In general, options whose strike prices are close to their underlying instruments' current value will have the highest trading volume, while options whose strike prices are further away may be less liquid. The liquidity of options may also be affected if options exchanges impose trading halts, particularly when markets are volatile. ASSET COVERAGE FOR FUTURES AND OPTIONS POSITIONS. A Portfolio will not use leverage in its options and futures strategies. Such investments will be made for hedging purposes only. A Portfolio will hold securities or other options or futures positions whose values are expected to offset its obligations under the hedge strategies. A Portfolio will not enter into an option or futures position that exposes the Portfolio to an obligation to another party unless it owns either (i) an offsetting position in securities or other options or futures contracts or (ii) cash, receivables and short-term debt securities with a value sufficient to cover its potential obligations. A Portfolio will comply with guidelines established by the SEC with respect to coverage of options and futures strategies by mutual funds, and if the guidelines so require will set aside cash and high grade liquid debt securities in a segregated account with its custodian bank in the amount prescribed. Securities held in a segregated account cannot be sold while the futures or option strategy is outstanding, unless they are replaced with similar securities. As a result, there is a possibility that segregation of a large percentage of the Portfolio's assets could impede portfolio management or the Portfolio's ability to meet redemption requests or other current obligations. LIMITATIONS ON FUTURES AND OPTIONS TRANSACTIONS. The Fund on behalf of the Portfolios has filed a notice of eligibility for exclusion from the definition of the term "commodity pool operator" with the Commodity Futures Trading Commission ("CFTC") and the National Futures Association, which regulate trading in the futures markets. Pursuant to Section 4.5 of the regulations under the Commodity Exchange Act, the notice of eligibility includes the representation that the Portfolios will not enter into any commodity futures contract or option on a commodity futures contract if, as a 24 result, the sum of initial margin deposits on commodity futures contracts and related commodity options and premiums paid for options on commodity futures contracts the Portfolio has purchased, after taking into account unrealized profits and losses on such contracts, would exceed 5% of a Portfolio's total assets. The Portfolios' limitations on investments in futures contracts and its policies regarding futures contracts and the Portfolios' limitations on investments in options and their policies regarding options discussed above in this Statement of Additional Information, are not fundamental policies and may be changed as regulatory agencies permit. Various exchanges and regulatory authorities have recently undertaken reviews of options and futures trading in light of market volatility. Among the possible actions that have been presented are proposals to adopt new or more stringent daily price fluctuation limits for futures or options transactions, and proposals to increase the margin requirements for various types of strategies. It is impossible to predict what actions, if any, will result from these reviews at this time. SHORT SALES "AGAINST THE BOX." In a short sale, a Portfolio sells a borrowed security and has a corresponding obligation to the lender to return the identical security. Each Portfolio may engage in short sales if at the time of the short sale it owns or has the right to obtain, at no additional cost, an equal amount of the security being sold short. This investment technique is known as a short sale "against the box." In a short sale, a seller does not immediately deliver the securities sold and is said to have a short position in those securities until delivery occurs. If a Portfolio engages in a short sale, the collateral for the short position will be maintained by the Portfolio's custodian or a qualified sub-custodian. While the short sale is open, the Portfolio will maintain in a segregated account an amount of securities equal in kind and amount to the securities sold short or securities convertible into or exchangeable for such equivalent securities. These securities constitute the Portfolio's long position. A Portfolio may, however, make a short sale as a hedge, when it believes that the price of a security may decline, causing a decline in the value of a security owned by the Portfolio (or a security convertible or exchangeable for such security), or when the Portfolio wants to sell the security at an attractive current price, but also wishes to defer recognition of gain or loss for federal income tax purposes and for purposes of satisfying certain tests applicable to regulated investment companies under the Internal Revenue Code. In such case, any future losses in the Portfolio's long position should be reduced by a gain in the short position. Conversely, any gain in the long position should be reduced by a loss in the short position. The extent to which such gains or losses are reduced will depend upon the amount of the security sold short relative to the amount the Portfolio owns. There will be certain additional transaction costs associated with short sales against the box, but the Portfolio will endeavor to offset these costs with the income from the investment of the cash proceeds of short sales. 25 SECTION 4(2) PAPER. "Section 4(2) paper" is commercial paper which is issued in reliance on the "private placement" exemption from registration which is afforded by Section 4(2) of the Securities Act of 1933. Section 4(2) paper is restricted as to disposition under the Federal securities laws and is generally sold to institutional investors such as the Fund which agree that they are purchasing the paper for investment and not with a view to public distribution. Any resale by the purchaser must be in an exempt transaction. Section 4(2) paper normally is resold to other institutional investors through or with the assistance of investment dealers who make a market in the Section 4(2) paper, thereby providing liquidity. See "Illiquid Securities" above. SUPPLEMENTAL INVESTMENT OBJECTIVES AND POLICIES -- BEA INTERNATIONAL EQUITY, BEA EMERGING MARKETS EQUITY AND BEA GLOBAL TELECOMMUNICATIONS PORTFOLIOS RIGHTS OFFERINGS AND PURCHASE WARRANTS. Rights offerings and purchase warrants are privileges issued by a corporation which enable the owner to subscribe to and purchase a specified number of shares of the corporation at a specified price during a specified period of time. Subscription rights normally have a short lifespan to expiration. The purchase of rights or warrants involves the risk that a Portfolio could lose the purchase value of a right or warrant if the right to subscribe to additional shares is not executed prior to the rights and warrants expiration. Also, the purchase of rights and/or warrants involves the risk that the effective price paid for the right and/or warrant added to the subscription price of the related security may exceed the value of the subscribed security's market price such as when there is no movement in the level of the underlying security. INVESTMENT LIMITATIONS Each Portfolio has adopted the following fundamental investment limitations which may not be changed without the affirmative vote of the holders of a majority of the Portfolio's outstanding Shares (as defined in Section 2(a)(42) of the Investment Company Act). Each Portfolio may not: 1. Borrow money, except from banks, and only if after such borrowing there is asset coverage of at least 300% for all borrowings of the Portfolio; or mortgage, pledge or hypothecate any of its assets except in connection with any such borrowing and in amounts not in excess of the lesser of the dollar amounts borrowed or 33 1/3% of the value of the Portfolio's total assets at the time of such borrowing; (For the purpose of this restriction, collateral arrangements with respect to, if applicable, the writing of options, and futures contracts, options on futures contracts, forward currency contracts and collateral arrangements with respect to initial and variation margin are not deemed to be a pledge of assets and neither such arrangements nor the purchase or sale of futures or related options are deemed 26 to be the issuance of a senior security for purposes of Investment Limitation No. 2); 2. Issue any senior securities, except as permitted under the Investment Company Act; 3. Act as an underwriter of securities within the meaning of the Securities Act of 1933 except insofar as it might be deemed to be an underwriter upon disposition of certain portfolio securities acquired within the limitation on purchases of restricted securities; 4. Purchase or sell real estate (including real estate limited partnership interests), provided that a Portfolio may invest in securities secured by real estate or interests therein or issued by companies that invest in real estate or interests therein; 5. Purchase or sell commodities or commodity contracts, except that a Portfolio may deal in forward foreign exchange between currencies of the different countries in which it may invest and purchase and sell stock index and currency options, stock index futures, financial futures and currency futures contracts and related options on such futures; 6. Make loans, except through loans of portfolio instruments and repurchase agreements, provided that for purposes of this restriction the acquisition of bonds, debentures or other debt instruments or interests therein and investment in government obligations, Loan Participations and Assignments, short-term commercial paper, certificates of deposit and bankers' acceptances shall not be deemed to be the making of a loan; and 7. Except for BEA Global Telecommunications Portfolio, purchase any securities which would cause 25% or more of the value of the Portfolio's total assets at the time of purchase to be invested in the securities of one or more issuers conducting their principal business activities in the same industry, provided that (a) there is no limitation with respect to (i) instruments issued or guaranteed by the United States, any state, territory or possession of the United States, the District of Columbia or any of their authorities, agencies, instrumentalities or political subdivisions, and (ii) repurchase agreements secured by the instruments described in clause (i); (b) wholly-owned finance companies will be considered to be in the industries of their parents if their activities are primarily related to financing the activities of the parents; and (c) utilities will be divided according to their services, for example, gas, gas transmission, electric and gas, electric and telephone will each be considered a separate industry. In addition to the fundamental investment limitations specified above, a Portfolio may not: 1. Make investments for the purpose of exercising control or management. Investments by a Portfolio in wholly-owned investment entities created under the laws of certain countries will not be deemed 27 the making of investments for the purpose of exercising control or management; 2. Purchase securities on margin, except for short-term credits necessary for clearance of portfolio transactions, and except that a Portfolio may make margin deposits in connection with its use of options, futures contracts, options on futures contracts and forward contracts; 3. Purchase or sell interests in mineral leases, oil, gas or other mineral exploration or development programs, except that a Portfolio may invest in securities issued by companies that engage in oil, gas or other mineral exploration or development activities; and 4. Purchase or retain the securities of any issuer, if those individual officers and directors of the Fund, the Adviser or any subsidiary thereof each owning beneficially more than 1/2 of 1% of the securities of such issuer own in the aggregate more than 5% of the securities of such issuer. The policies set forth above are not fundamental and thus may be changed by the Fund's Board of Directors without a vote of the shareholders. In order to permit the sale of the Portfolios in certain states, the Fund on behalf of a Portfolio has undertaken to adhere to the following investment policies, each of which may be changed without shareholder approval: (1) That the dollar amount of short sales at any one time shall not exceed 25% of the net equity of a Portfolio, and the value of securities of any one issuer in which a Portfolio is short may not exceed the lesser of 2.0% of the value of a Portfolio's net assets or 2.0% of the securities of any class of any issuer. Short sales may be made only in those securities which are fully listed on a national securities exchange. This provision does not include the sale of securities if the Portfolio contemporaneously owns or has the right to obtain securities equivalent in kind and amount to those sold, i.e., short sales against the box. (2) That the investment in warrants, valued at the lower of cost or market, may not exceed 5.0% of the value of a Portfolio's net assets. Included within that amount, but not to exceed 2.0% of the value of a Portfolio's net assets, may be warrants which are not listed on the New York or American Stock Exchange. Warrants acquired by a Portfolio in units or attached to securities may be deemed to be without value. Except for the percentage restrictions applicable to the borrowing of money, if a percentage restriction is adhered to at the time of investment, a later increase or decrease in percentage resulting from a change in market 28 values of portfolio securities or amount of total or net assets will not be considered a violation of any of the foregoing restrictions. In order to permit the sale of shares of a Portfolio in certain states, a Portfolio may make commitments more restrictive than the investment policies and limitations above. If a Portfolio determines that any such commitment is no longer in its best interests, it will revoke the commitment by terminating sales of its shares in the state involved. In addition, a Portfolio may be subject to investment restrictions imposed by countries in which it invests directly or indirectly. Securities held by a Portfolio generally may not be purchased from, sold or loaned to the Adviser or its affiliates or any of their directors, officers or employees, acting as principal, unless pursuant to a rule or exemptive order under the Investment Company Act. 29 RISK FACTORS FOREIGN SECURITIES. Investments in foreign securities are subject to certain risks, discussed below. POLITICAL, ECONOMIC AND MARKET FACTORS. Investments in foreign securities involve risks relating to political and economic developments abroad, as well as those that result from the differences between the regulations to which U.S. and foreign issuers are subject. These risks may include expropriation, confiscatory taxation, withholding taxes on dividends and interest, limitations on the use or transfer of a Portfolio's assets and political or social instability or diplomatic developments. Moreover, individual foreign economies may differ favorably or unfavorably from the U.S. economy in such respects as growth of gross national product, rate of inflation, capital reinvestment, resource self-sufficiency and balance of payments positions. Securities of many foreign issuers may be less liquid, and their prices may be more volatile, than those of securities of comparable U.S. issuers. Brokerage commissions, custodial services and other costs relating to investment in foreign securities markets are generally more expensive than in the United States. Such markets have different clearance and settlement procedures and in certain markets there have been times when settlements have been unable to keep pace with the volume of securities transactions, making it difficult to conduct such transactions. There is generally less government supervision and regulation of exchanges, brokers and issuers in foreign securities markets than there is in the United States. In addition, substantial limitations may exist in certain countries with respect to the Portfolios' ability to repatriate investment income, capital or the proceeds of sales of securities by foreign investors. The Portfolios could be adversely affected by delays in, or a refusal to grant, any required government approval for repatriation of capital, as well as by the application to the Portfolios of any restrictions on investments. REPORTING STANDARDS. Most of the foreign securities held by the Portfolios will not be registered with the SEC, nor will the issuers thereof be subject to SEC or other U.S. reporting requirements. Accordingly, there will be less publicly available information concerning foreign issuers of securities held by the Portfolio than will be available concerning U.S. companies. Foreign companies, and in particular, companies in emerging markets, are not generally subject to uniform accounting, auditing and financial reporting standards or to other regulatory requirements comparable to those applicable to U.S. companies. EXCHANGE RATE FLUCTUATIONS. Because foreign securities ordinarily will be denominated in currencies other than the U.S. dollar, changes in foreign currency exchange rates will affect a Portfolio's net asset value, the value of interest and dividends earned, gains and losses realized on the sale of securities and net investment income and capital gain, if any, to be distributed to shareholders by a Portfolio. If the value of a foreign currency rises against the U.S. dollar, the value of a Portfolio's assets denominated 30 in that currency will increase; conversely, if the value of a foreign currency declines against the U.S. dollar, the value of a Portfolio's assets denominated in that currency will decrease. The exchange rates between the U.S. dollar and other currencies are determined by supply and demand in the currency exchange markets, international balances of payments, government intervention, speculation and other economic and political conditions. INVESTMENT CONTROLS. In certain countries that currently prohibit direct foreign investment in the securities of their companies, indirect foreign investment in the securities of companies listed and traded on the stock exchanges in these countries is permitted through investment funds which have been specifically authorized. The BEA Portfolios may invest in these investment funds and registered investment companies subject to the provisions of the 1940 Act. If these Portfolios invest in such investment companies, they will each bear their proportionate share of the costs incurred by such companies, including investment advisory fees. CLEARANCE AND SETTLEMENT PROCEDURES. Delays in clearance and settlement could result in temporary periods when assets of a Portfolio are uninvested and no return is earned thereon. The inability of a Portfolio to make intended security purchases due to settlement problems could cause a Portfolio to miss attractive investment opportunities. Inability to dispose of a portfolio security due to settlement problems could result either in losses to a Portfolio due to subsequent declines in the value of such portfolio security or, if a Portfolio has entered into a contract to sell the security, could result in possible liability to the purchaser. OPERATING EXPENSES. The costs attributable to foreign investing that a Portfolio must bear frequently are higher than those attributable to domestic investing. For example, the cost of maintaining custody of foreign securities exceeds custodian costs for domestic securities. Investment income on certain foreign securities in which a Portfolio may invest may be subject to foreign withholding or other taxes that could reduce the return on those securities. Tax treaties between the United States and foreign countries, however, may reduce or eliminate the amount of foreign tax to which a Portfolio would be subject. LOWER- OR NON-RATED CRITERIA FOR DEBT SECURITIES. The BEA High Yield Portfolio has established no rating criteria for the debt securities in which it may invest. Issuers of low rated or non-rated securities ("high yield" securities, commonly known as "junk bonds") may be highly leveraged and may not have available to them more traditional methods of financing. Therefore, the risks associated with acquiring the securities of such issuers generally is greater than is the case with higher rated securities. For example, during an economic downturn or a sustained period of rising interest rates, issuers of high yield securities may be more likely to experience financial stress, especially if such issuers are highly leveraged. During such periods, such issuers may not have sufficient revenues to meet their interest payment obligations. The issuer's ability to service its debt obligations also may be adversely affected by specific issuer developments, or 31 the issuer's inability to meet specific projected business forecasts, or the unavailability of additional financing. The risk of loss due to default by the issuer is significantly greater for the holders of lower-rated securities because such securities may be unsecured and may be subordinated to other creditors of the issuer. Lower-rated securities frequently have call or redemption features which would permit an issuer to repurchase the security from the Portfolio. If a call were exercised by the issuer during a period of declining interest rates, the Portfolio likely would have to replace such called security with a lower yielding security, thus decreasing the net investment income to the Portfolio and dividends to shareholders. The Portfolio may have difficulty disposing of certain lower-rated securities because there may be a thin trading market for such securities. The secondary trading market for high yield securities is generally not as liquid as the secondary market for higher rated securities. Reduced secondary market liquidity may have an adverse impact on market price and the Portfolio's ability to dispose of particular issues when necessary to meet the Portfolio's liquidity needs or in response to a specific economic event such as a deterioration in the creditworthiness of the issuer. Adverse publicity and investor perceptions, which may not be based on fundamental analysis, also may decrease the value and liquidity of lower-rated securities, particularly in a thinly traded market. Factors adversely affecting the market value of lower-rated securities are likely to adversely affect the Portfolio's net asset value. In addition, the Portfolio may incur additional expenses to the extent it is required to seek recovery upon a default on a portfolio holding or participate in the restructuring of the obligation. Current laws may have an impact on the market for lower-rated debt securities. The Financial Institutions Reform, Recovery and Enforcement Act of 1989 required federally insured savings associations to divest substantially all their holdings of lower-rated debt securities by July 1, 1994 and prohibits such savings associations from acquiring lower-rated debt securities, except through certain qualified affiliates. Finally, there are risks involved in applying credit ratings as a method for evaluating lower-rated debt securities. For example, credit ratings evaluate the safety of principal and interest payments, not the market risks involved in lower-rated debt securities. Since credit rating agencies may fail to change the credit ratings in a timely manner to reflect subsequent events, BEA will monitor the issuers of lower-rated debt securities in the Portfolio to determine if the issuers will have sufficient cash flow and profits to meet required principal and interest payments, and to assure the debt securities' liquidity so the Portfolio can meet redemption requests. BEA will not necessarily dispose of a portfolio security when its ratings have been changed. 32 SOVEREIGN DEBT. Investments in Sovereign Debt involve special risks. The issuer of the debt or the governmental authorities that control the repayment of the debt may be unable or unwilling to repay principal or interest when due in accordance with the terms of such debt, and the Portfolio may have limited legal recourse in the event of a default. Sovereign Debt differs from debt obligations issued by private entities in that, generally, remedies for defaults must be pursued in the courts of the defaulting party. Legal recourse is therefore somewhat limited. Political conditions, especially a sovereign entity's willingness to meet the terms of its debt obligations, are of considerable significance. Also, there can be no assurance that the holders of commercial bank loans to the same sovereign entity may not contest payments to the holders of Sovereign Debt in the event of default under commercial bank loan agreements. A sovereign debtor's willingness or ability to repay principal and pay interest in a timely manner may be affected by, among other factors, its cash flow situation, the extent of its foreign reserves, the availability of sufficient foreign exchange on the date a payment is due, the relative size of the debt service burden to the economy as a whole, the sovereign debtor's policy toward principal international lenders and the political constraints to which a sovereign debtor may be subject. Increased protectionism on the part of a country's trading partners, or political changes in those countries, could also adversely affect its exports. Such events could diminish a country's trade account surplus, if any, or the credit standing of a particular local government or agency. The occurrence of political, social or diplomatic changes in one or more of the countries issuing Sovereign Debt could adversely affect a Portfolio's investments. Political changes or a deterioration of a country's domestic economy or balance of trade may affect the willingness of countries to service their Sovereign Debt. While the Adviser intends to manage the Portfolios in a manner that will minimize the exposure to such risks, there can be no assurance that adverse political changes will not cause a Portfolio to suffer a loss of interest or principal on any of its holdings. Investors should also be aware that certain Sovereign Debt instruments in which a Portfolio may invest involve great risk. Sovereign Debt issued by issuers in many Emerging Markets generally is deemed to be the equivalent in terms of quality to securities rated below investment grade by Moody's and S&P. Such securities are regarded as predominantly speculative with respect to the issuer's capacity to pay interest and repay principal in accordance with the terms of the obligations and involve major risk exposure to adverse conditions. Some of such Sovereign Debt, which may not be paying interest currently or may be in payment default, may be comparable to securities rated D by S&P or C by Moody's. A Portfolio may have difficulty disposing of certain Sovereign Debt obligations because there may be a limited trading market for such securities. Because there is no liquid secondary market for many of these securities, a Portfolio anticipates that such securities could be sold only to a limited number of dealers or institutional investors. The lack of a liquid secondary market may have an adverse impact on the market price of such securities and a Portfolio's ability to dispose of particular issues when necessary to meet a Portfolio's liquidity needs or in 33 response to a specific economic event, such as a deterioration in the creditworthiness of the issuer. The lack of a liquid secondary market for certain securities also may make it more difficult for a Portfolio to obtain accurate market quotations for purposes of valuing a Portfolio's portfolio and calculating its net asset value. When and if available, fixed income securities may be purchased by a Portfolio at a discount from face value. However, a Portfolio does not intend to hold such securities to maturity for the purpose of achieving potential capital gains, unless current yields on these securities remain attractive. From time to time a Portfolio may purchase securities not paying interest at the time acquired if, in the opinion of the Adviser, such securities have the potential for future income or capital appreciation. DIRECTORS AND OFFICERS The directors and executive officers of the Fund, their business addresses and principal occupations during the past five years are: Principal Occupation Name, Address and Age Position with Fund During Past Five Years - --------------------- ------------------ ---------------------- Arnold M. Reichman - 48* Director Since 1986, Managing 466 Lexington Avenue Director and Assistant New York, NY 10017 Secretary, E. M. Warburg, Pincus & Co., Inc.; Since 1990, Chief Executive Officer and since 1991, Secretary, Counsellors Securities, Inc; Officer of various investment companies advised by Warburg, Pincus Counsellors, Inc. Robert Sablowsky - 58** Director Since 1985, Executive 14 Wall Street Vice President of New York, NY 10005 Gruntal & Co., Inc., Director, Gruntal & Co., Inc. and Gruntal Financial Corp. Francis J. McKay - 60 Director Since 1963, Executive 7701 Burholme Avenue Vice President, Fox Chase Philadelphia, PA 1911 Cancer Center (Biomedical research and medical care.) 34 Marvin E. Sternberg -62 Director Since 1974, Chairman, 937 Mt. Pleasant Road Director and President, Bryn Mawr, PA 19010 Moyco Industries, Inc. (manufacturer of dental supplies and precision coated abrasives); Since 1968, Director and President, Mart MMM, Inc. (formerly Montgomeryville Merchandise Mart Inc.) and Mart PMM, Inc. (formerly Pennsauken Merchandise Mart, Inc.) (Shopping Centers); and Since 1975, Director and Executive Vice President, Cellucap Mfg. Co., Inc. (manufacturer of disposable headwear). Julian A. Brodsky -63 Director Director, Vice Chairman 1969 Comcast Corporation to present, Comcast 1234 Market Street Corporation (cable television 16th Floor and communications); Director, Philadelphia, PA 19107-3723 Comcast Cablevision of Philadelphia (cable television communications) and Nextel (wireless communications). Donald van Roden - 72 Director Self-employed 1200 Old Mill Lane businessman. Wyomissing, PA 19610 From February 1980 to March 1987, Vice Chairman, Smith Kline Beckman Corporation (pharmaceuticals); Director, AAA Mid-Atlantic (auto service); Director, Keystone Insurance Co. Edward J. Roach - 72 President and Certified Public Accountant; Bellevue Park Treasurer Vice Chairman of the Corporate Center of the Board, Fox Chase 400 Bellevue Parkway Cancer Center; Vice President Wilmington, DE 19809 and Trustee, Pennsylvania School for the Deaf; Trustee, Immaculata College; Vice President and Treasurer of various investment companies advised by PNC Institutional Management Corporation. 35 Principal Occupation Name and Address Position with Fund During Past Five Years - --------------------- ------------------ ---------------------- Morgan R. Jones - 56 Secretary Chairman of the law firm of 1100 PNB Bank Building Drinker Biddle & Reath, Broad and Chestnut Streets Philadelphia, Pennsylvania; Philadelphia, PA 19107 Director, Rocking Horse Child Care Centers of America, Inc. - ------------------ * Mr. Reichman is an "interested person" of the Fund as that term is defined in the 1940 Act by virtue of his position with Counsellors Securities Inc., the Fund's distributor. ** Mr. Sablowsky is an "interested person" of the Fund as that term is defined in the 1940 Act by virtue of his position with Gruntal & Co., Inc., a broker-dealer. Messrs. McKay, Sternberg and Brodsky are members of the Audit Committee of the Board of Directors. The Audit Committee, among other things, reviews results of the annual audit and recommends to the Fund the firm to be selected as independent auditors. Messrs. Reichman, McKay and van Roden are members of the Executive Committee of the Board of Directors. The Executive Committee may generally carry on and manage the business of the Fund when the Board of Directors is not in session. Messrs. McKay, Sternberg, Brodsky and van Roden are members of the Nominating Committee of the Board of Directors. The Nominating Committee recommends to the Board annually all persons to be nominated as directors of the Fund. The Fund pays directors who are not "affiliated persons" (as that term is defined in the 1940 Act) of any Investment Adviser of sub-advisor of the Fund or the Distributor $9,500 annually and $700 per meeting of the Board or any committee thereof that is not held in conjunction with a Board meeting. Such Directors are reimbursed for any expenses incurred in attending meetings of the Board of Directors or any committee thereof. The Chairman (currently Donald von Roden) receives an additional $5,000 for his services. For the year ended August 31, 1996, each of the following members of the Board of Directors received compensation from the Fund in the following amounts: Julian A. Brodsky in the aggregate amount of $_____; Francis J. McKay in the aggregate amount of $______; Marvin E. Sternberg in the aggregate amount of $______; Donald van Roden in the aggregate amount of $______. On October 24, 1990 the Fund adopted, as a participating employer, the Fund Office Retirement Profit-Sharing Plan and Trust Agreement, a retirement plan for employees (currently Edward J. Roach) pursuant to which the Fund will contribute on a monthly basis amounts equal to 10% of the monthly compensation of each eligible employee. By virtue of the services performed by the Fund's advisers, custodians, administrators and distributor, the Fund itself requires only one part-time employee. No officer, director or employee of BEA or the Distributor currently receives any compensation from the Fund. 36 INVESTMENT ADVISORY AND SERVICING ARRANGEMENTS ADVISORY AGREEMENTS. BEA Associates renders advisory and administrative services to each of the Portfolios pursuant to Investment Advisory Agreements. The Advisory Agreements relating to the Portfolios are dated September 16, 1992 for the BEA International Equity, BEA Emerging Markets Equity and BEA High Yield Portfolios, dated July 10, 1996 for the BEA Global Telecommunications Portfolio. Such advisory agreements are hereinafter collectively referred to as the "Advisory Contracts." BEA Associates is a diversified asset manager, handling global equity, balanced, fixed income and derivative securities accounts for private individuals, as well as corporate pension and profit-sharing plans, state pension funds, union funds, endowments and other charitable institutions. As of September 30, 1996, BEA Associates managed approximately $_____ billion in assets. CS Capital, BEA's ultimate parent, is a wholly-owned subsidiary of Credit Suisse Investment Corporation, which is a wholly-owned subsidiary of Credit Suisse, the second largest Swiss bank, which in turn is subsidiary of CS Holding, a Swiss corporation. BEA Associates is registered as an investment adviser under the Investment Advisers Act of 1940, as amended. As an investment adviser, BEA emphasizes a global investment strategy. BEA currently acts as investment adviser for thirteen investment companies registered under the Investment Company Act. They are: Alpha Government Securities Portfolio, BEA Strategic Income Fund, Inc., BEA Income Fund, Inc., BEA Short Duration Portfolio, The Brazilian Equity Fund, Inc., The Chile Fund, Inc., The Emerging Markets Infrastructure Fund, Inc., The Emerging Markets Telecommunications Fund, Inc., The First Israel Fund, Inc., The Indonesia Fund, Inc., The Latin America Equity Fund, Inc., The Latin America Investment Fund, Inc., and The Portugal Fund, Inc. In addition, BEA acts as sub-adviser to certain portfolios of six other registered investment companies: Frank Russell Investment Company (Fixed Income III Fund and Multistrategy Bond Fund), Oppenheimer (LifeSpan Balanced Portfolio, LifeSpan Income Portfolio and LifeSpan Growth Portfolio), Panorama (LifeSpan Balanced Account, LifeSpan Capital Appreciation Account and LifeSpan Diversified Income Account), SEI Institutional Managed Trust (High Yield Bond Portfolio), WNL Series Trust (BEA Growth and Income Fund), Touchstone International Equity Fund and Touchstone Variable Annuity International Equity Portfolio. BEA also acts as investment adviser for forty-two offshore funds, twenty-two of which are equity funds and twenty of which are debt funds. BEA Associates has sole investment discretion for the Portfolios and will make all decisions affecting assets in the Portfolios under the supervision of the Fund's Board of Directors and in accordance with each Portfolio's stated policies. BEA Associates will select investments for the Portfolios and will place purchase and sale orders on behalf of the Portfolios. For its services to the BEA International Equity, BEA Emerging Markets Equity, BEA Global Telecommunications and BEA High Yield Portfolios, BEA Associates will be paid (before any voluntary waivers or reimbursements) a 37 monthly fee computed at an annual rate of .80%, 1.00%, 1.00% and .70% of average daily net assets, respectively. For the year ended August 31, 1996, BEA waived advisory fees with respect to the BEA International Equity, BEA Emerging Markets Equity, BEA Global Telecommunications and BEA High Yield Portfolios in the amount of $___, $______, $______ and $______, respectively. During the same period, BEA received advisory fees (after waivers) in the amount of $_________, $_________, $______ and $_______, respectively. As required by various state regulations, BEA Associates will reimburse the Fund or the Portfolio affected (as applicable) if and to the extent that the aggregate operating expenses of the Fund or the Portfolio affected exceed applicable state limits for the fiscal year, to the extent required by such state regulations. Currently, the most restrictive of such applicable limits is believed to be 2-1/2% of the first $30 million of average annual net assets, 2% of the next $70 million of average annual net assets and 1 1/2% of the remaining average annual net assets. Certain expenses, such as brokerage commissions, taxes, interest and extraordinary items, are excluded from this limitation. Whether such expense limitations apply to the Fund as a whole or to each Portfolio on an individual basis depends upon the particular regulations of such states. Each Portfolio bears all of its own expenses not specifically assumed by the Adviser. General expenses of the Fund not readily identifiable as belonging to a Portfolio of the Fund are allocated among all investment Portfolios by or under the direction of the Fund's Board of Directors in such manner as the Board determines to be fair and equitable. Expenses borne by a Portfolio include, but are not limited to, the following (or a Portfolio's share of the following): (a) the cost (including brokerage commissions) of securities purchased or sold by a Portfolio and any losses incurred in connection therewith; (b) fees payable to and expenses incurred on behalf of a Portfolio by BEA Associates; (c) expenses of organizing the Fund that are not attributable to a class of the Fund; (d) certain of the filing fees and expenses relating to the registration and qualification of the Fund and a Portfolio's shares under Federal and/or state securities laws and maintaining such registrations and qualifications; (e) fees and salaries payable to the Fund's directors and officers; (f) taxes (including any income or franchise taxes) and governmental fees; (g) costs of any liability and other insurance or fidelity bonds; (h) any costs, expenses or losses arising out of a liability of or claim for damages or other relief asserted against the Fund or a Portfolio for violation of any law; (i) legal, accounting and auditing expenses, including legal fees of special counsel for the independent directors; (j) charges of custodians and other agents; (k) expenses of setting in type and printing prospectuses, statements of additional information and supplements thereto for existing shareholders, reports, statements, and confirmations to shareholders and proxy material that are not attributable to a class; (l) costs of mailing prospectuses, statements of additional information and supplements thereto to existing shareholders, as well as reports to shareholders and proxy material that are not attributable to a 38 class; (m) any extraordinary expenses; (n) fees, voluntary assessments and other expenses incurred in connection with membership in investment company organizations; (o) costs of mailing and tabulating proxies and costs of shareholders' and directors' meetings; (p) costs of PFPC's use of independent pricing services to value a Portfolio's securities; and (q) the cost of investment company literature and other publications provided by the Fund to its directors and officers. Transfer agency expenses, expenses of preparation, printing and mailing prospectuses, statements of additional information, proxy statements and reports to shareholders, organizational expenses and registration fees and other costs identified as belonging to a particular class of the Fund are allocated to such class. Under the Advisory Contracts, BEA Associates will not be liable for any error of judgment or mistake of law or for any loss suffered by the Fund or a Portfolio in connection with the performance of the Advisory Contracts, and shall be indemnified for any losses and expenses in connection with any claim relating thereto, except a loss resulting from willful misfeasance, bad faith or gross negligence on the part of BEA Associates in the performance of its duties or reckless disregard by it of its obligations and duties under the Advisory Contracts. The Advisory Contracts were approved on July 10, 1996, by vote of the Fund's Board of Directors, including a majority of those directors who are not parties to the Advisory Contracts or interested persons (as defined in the 1940 Act) of such parties. The Advisory Contracts were approved by each Portfolio's initial shareholder. Each Advisory Contract is terminable by vote of the Fund's Board of Directors or by the holders of a majority of the outstanding voting securities of the relevant Portfolio, at any time without penalty, on 60 days' written notice to BEA Associates. Each of the Advisory Contracts may also be terminated by BEA Associates on 60 days' written notice to the Fund. Each of the Advisory Contracts terminates automatically in the event of assignment thereof. CUSTODIAN AND TRANSFER AGENCY AGREEMENTS. Brown Brothers Harriman & Co. ("BBH") acts as the custodian for the Portfolios and also acts as the custodian for the Portfolios' foreign securities pursuant to a Custodian Agreement (the "Custodian Agreement"). Under the Custodian Agreement, BBH (a) maintains a separate account or accounts in the name of each Portfolio, (b) holds and transfers portfolio securities on account of each Portfolio, (c) accepts receipts and makes disbursements of money on behalf of each Portfolio, (d) collects and receives all income and other payments and distributions on account of each Portfolio's portfolio securities, and (e) makes periodic reports to the Fund's Board of Directors concerning each Portfolio's operations. BBH is authorized to select one or more banks or trust companies to serve as sub-custodian on behalf of the Fund, provided that BBH remains responsible for the performance of all its duties under the Custodian Agreement and holds the Fund harmless from the negligent acts and omissions of any sub-custodian. For its services to the Fund under the Custodian Agreement, BBH receives a fee which is calculated based upon each Portfolio's 39 average daily gross assets, exclusive of transaction charges and out-of-pocket expenses, which are also charged to the Fund. Boston Financial Data Services, Inc. ("BFDS"), an affiliate of State Street Bank and Trust Company, serves as the transfer and dividend disbursing agent for the Advisor Classes pursuant to a Transfer Agency Agreement (the "Transfer Agency Agreement"), under which BFDS (a) issues and redeems shares of each of the Advisor Classes, (b) addresses and mails all communications by each Portfolio to record owners of shares of each such Class, including reports to shareholders, dividend and distribution notices and proxy materials for its meetings of shareholders, (c) maintains shareholder accounts and, if requested, sub-accounts and (d) makes periodic reports to the Fund's Board of Directors concerning the operations of each Advisor Class. For its services to the Fund under the Transfer Agency Agreement, BFDS receives a fee on a per transaction basis. ADMINISTRATION AGREEMENTS. PFPC Inc., an indirect, wholly owned subsidiary of PNC Bank Corp., serves as administrator to the Portfolios pursuant to an Administration and Accounting Services Agreement dated July 10, 1996 (the "PFPC Administration Agreement"). PFPC has agreed to calculate the Portfolios' net asset values, provide all accounting services for the Portfolios, and assist in related aspects of the Portfolios' operations. The PFPC Administration Agreement provides that PFPC shall not be liable for any error of judgment or mistake of law or any loss suffered by the Fund or the Portfolios in connection with the performance of the agreement, except a loss resulting from willful misfeasance, bad faith or negligence, or reckless disregard of its duties and obligations thereunder. In consideration for providing services pursuant to the PFPC Administration Agreement, PFPC receives a fee calculated at an annual rate of .125% of each Portfolio's average daily net assets, with a minimum annual fee of $_______. BEA serves as co-administrator to the Portfolios pursuant to Co-Administration Agreements dated July 10, 1996 (the "BEA Co-Administration Agreements"). BEA has agreed to provide shareholder liaison services to the Portfolios including responding to shareholder inquiries and providing information on shareholder accounts. The BEA Co-Administration Agreements provide that BEA shall not be liable for any error of judgment or mistake of law or any loss suffered by the Fund or the Portfolios in connection with the performace of the agreement, except a loss resulting from willful misfeasance, bad faith or negligence, or reckless disregard of its duties and obligations thereunder. In consideration for providing services pursuant to the BEA Co-Administration Agreements, BEA receives a fee calculated at an annual rate of .05% of each of the Portfolios' average daily net assets. DISTRIBUTION AND SHAREHOLDER SERVICING The Portfolios have each entered into Distribution Agreements with Counsellors Securities pursuant to their Distribution Plans (the "12b-1 Plans") under Rule 12b-1 of the 1940 Act. In consideration for Services (as defined below), the Distribution Agreement provides that the Portfolios will 40 each pay Counsellors Securities a fee calculated at an annual rate of .25% of the respective average daily net assets of the Advisor Shares of the Portfolios. Services performed by Counsellors Securities include (a) the sale of the Advisor Shares, as set forth in the 12b-1 Plans ("Selling Services"), (b) ongoing servicing and/or maintenance of the accounts of shareholders of the Portfolios, as set forth in the 12b-1 Plans ("Shareholder Services"), and (c) sub-transfer agency services, subaccounting services or administrative services, as set forth in the 12b-1 Plans ("Administrative Services") and including, without limitation, (i) payments reflecting an allocation of overhead and other office expenses of Counsellors Securities related to providing Services; (ii) payments made to, and reimbursement of expenses of, persons who provide support services in connection with the distribution of the Advisor Shares including, but not limited to, office space and equipment, telephone facilities, answering routine inquiries regarding the Portfolios, and providing any other Shareholder Services; (iii) payments made to compensate selected dealers or other authorized persons for providing any Services; (iv) costs relating to the formulation and implementation of marketing and promotional activities, including, but not limited to, direct mail promotions and television, radio, newspaper, magazine and other mass media advertising, and related travel and entertainment expenses; (v) costs of printing and distributing prospectuses, statements of additional information and reports of the Portfolios to prospective shareholders of the Portfolios; and (vi) costs involved in obtaining whatever information, analyses and reports with respect to marketing and promotional activities that Counsellors Securities may, from time to time, deem advisable. PORTFOLIO TRANSACTIONS Subject to policies established by the Board of Directors, BEA Associates is responsible for the execution of portfolio transactions and the allocation of brokerage transactions for the Portfolios. In executing portfolio transactions, BEA Associates seeks to obtain the best net results for a Portfolio, taking into account such factors as the price (including the applicable brokerage commission or dealer spread), size of the order, difficulty of execution and operational facilities of the firm involved. While BEA Associates generally seeks reasonably competitive commission rates, payment of the lowest commission or spread is not necessarily consistent with obtaining the best results in particular transactions. Portfolio transactions for the Portfolios may be effected on domestic or foreign securities exchanges. In transactions for securities not actively traded on a domestic or foreign securities exchange, a Portfolio will deal directly with the dealers who make a market in the securities involved, except in those circumstances where better prices and execution are available elsewhere. Such dealers usually are acting as principal for their own account. On occasion, securities may be purchased directly from the issuer. Such portfolio securities are generally traded on a net basis and do not normally involve brokerage commissions. Securities firms may receive brokerage commissions on certain portfolio transactions, including options, futures and options on futures transactions and the purchase and sale of underlying securities upon exercise of options. The Portfolios have no obligation to deal with any broker in the execution of transactions in portfolio securities. The Portfolios may use affiliates of Credit Suisse in connection with the purchase or sale of securities in accordance with rules or exemptive orders adopted by the Securities and Exchange Commission (the "SEC") when BEA believes that the charge for the transaction does not exceed usual and customary levels. Commission rates for brokerage transactions on foreign stock exchanges are generally fixed. The reasonableness of any negotiated 40 commission paid by the Portfolios will be evaluated on the basis of the difficulty involved in execution, the time taken to conclude the transaction, the extent of the broker's commitment, if any, of its own capital and the amount involved in the transaction. It should be noted that commission rates in U.S. Markets are negotiated. In the case of over-the-counter issues, there is generally no stated commission, but the price usually includes an undisclosed commission or markup, and the Portfolio will normally deal with the principal market makers unless it can obtain better terms elsewhere. No Portfolio has any obligation to deal with any broker or group of brokers in the execution of portfolio transactions. BEA Associates may, consistent with the interests of a Portfolio and subject to the approval of the Board of Directors, select brokers on the basis of the research, statistical and pricing services they provide to a Portfolio and other clients of BEA Associates. Information and research received from such brokers will be in addition to, and not in lieu of, the services required to be performed by BEA Associates under his respective contracts. A commission paid to such brokers may be higher than that which another qualified broker would have charged for effecting the same transaction, provided that BEA Associates, as applicable, determines in good faith that such commission is reasonable in terms either of the transaction or the overall responsibility of BEA Associates to a Portfolio and its other clients and that the total commissions paid by a Portfolio will be reasonable in relation to the benefits to a Portfolio over the long-term. Corporate debt and U.S. Government securities are generally traded on the over-the-counter market on a "net" basis without a stated commission, through dealers acting for their own account and not as brokers. The Portfolios will primarily engage in transactions with these dealers or deal directly with the issuer unless a better price or execution could be obtained by using a broker. Prices paid to a dealer in debt securities will generally include a "spread," which is the difference between the prices at which the dealer is willing to purchase and sell the specific security at the time, and includes the dealer's normal profit. BEA Associates may seek to obtain an undertaking from issuers of commercial paper or dealers selling commercial paper to consider the repurchase of such securities from a Portfolio prior to their maturity at their original cost plus interest (sometimes adjusted to reflect the actual maturity of the securities), if it believes that a Portfolio's anticipated need for liquidity makes such action desirable. Any such repurchase prior to maturity reduces the possibility that a Portfolio would incur a capital loss in liquidating commercial paper (for which there is no established market), especially if interest rates have risen since acquisition of the particular commercial paper. Investment decisions for each Portfolio and for other investment accounts managed by BEA Associates are made independently of each other in the 41 light of differing conditions. However, the same investment decision may be made for two or more of such accounts. In such cases, simultaneous transactions are inevitable. Purchases or sales are then averaged as to price and allocated as to amount according to a formula deemed equitable to each such account. While in some cases this practice could have a detrimental effect upon the price or value of the security as far as a Portfolio is concerned, in other cases it is believed to be beneficial to a Portfolio. A Portfolio will not purchase securities during the existence of any underwriting or selling group relating to such security of which BEA Associates or any affiliated person (as defined in the 1940 Act) thereof is a member except pursuant to procedures adopted by the Fund's Board of Directors pursuant to Rule 10f-3 under the 1940 Act. Among other things, these procedures, which will be reviewed by the Fund's directors as deemed necessary and appropriate require that the commission paid in connection with such a purchase be reasonable and fair, that the purchase be at not more than the public offering price prior to the end of the first business day after the date of the public offer, and that BEA Associates not participate in or benefit from the sale to a Portfolio. In no instance will portfolio securities be purchased from or sold to the Distributor or BEA Associates or any affiliated person of the foregoing entities except as permitted by SEC exemptive order or by applicable law. During the year ended August 31, 1996, BEA International Equity Portfolio paid $_________ of brokerage commissions, BEA Emerging Markets Equity Portfolio paid $_______ of brokerage commissions and for each other Portfolio no brokerage commissions were paid during such period. BEA International Equity, BEA Emerging Markets Equity and BEA Global Telecommunications Portfolios expect that their annual Portfolio turnover rate should not exceed 100% under normal market conditions. BEA High Yield Portfolio anticipates that its portfolio turnover may exceed 100%. A high rate of portfolio turnover involves correspondingly greater brokerage commission expenses and other transaction costs, which must be borne directly by a Portfolio. Federal income tax laws may restrict the extent to which a Portfolio may engage in short term trading of securities. See "Taxes". Each of the Portfolios anticipates that its annual portfolio turnover rate will vary from year to year. The portfolio turnover rate is calculated by dividing the lesser of a Portfolio's annual sales or purchases of portfolio securities (exclusive of purchases or sales of securities whose maturities at the time of acquisition were one year or less) by the monthly average value of the securities in the Portfolio during the year. The Portfolios have the benefit of an exemptive order issued by the SEC under the 1940 Act authorizing the Portfolios and other investment companies advised by BEA to acquire jointly securities issued in private placements, subject to the terms and conditions of the order. The Board of the Fund has adopted a policy that the Portfolios will not purchase private placements (i.e. restricted securities other than Rule 144A securities). 42 PURCHASE AND REDEMPTION INFORMATION The Fund reserves the right, if conditions exist which make cash payments undesirable, to honor any request for redemption of a Portfolio's shares by making payment in whole or in part in securities chosen by the Fund and valued in the same way as they would be valued for purposes of computing a Portfolio's net asset value. If payment is made in securities, a shareholder may incur transaction costs in converting these securities into cash. Investors will also be required to bear certain transaction costs associated with Redemptions-In-Kind. The Fund has elected, however, to be governed by Rule 18f-1 under the Investment Company Act so that a Portfolio is obligated to redeem its shares solely in cash up to the lesser of $250,000 or 1% of its net asset value during any 90-day period for any one shareholder of a Portfolio. Under the Investment Company Act, a Portfolio may suspend the right to redemption or postpone the date of payment upon redemption for any period during which the New York Stock Exchange, Inc. (the "NYSE") is closed (other than customary weekend and holiday closings), or during which trading on said Exchange is restricted, or during which (as determined by the SEC by rule or regulation) an emergency exists as a result of which disposal or valuation of Portfolio securities is not reasonably practicable, or for such other periods as the SEC may permit. (A Portfolio may also suspend or postpone the recordation of the transfer of its shares upon the occurrence of any of the foregoing conditions.) Recently the staff of the SEC has recommended that the SEC consider recommending to the United States Congress that the Investment Company Act be amended to permit so-called "Interval Funds". Such Interval Funds may be structured to permit redemptions less frequently than daily. In the event that the SEC administratively or Congress legislatively permits the creation of such Interval Funds, the Portfolios may consider appropriate changes in their structures to conform with such provisions and to recognize the nature of the markets in foreign securities. VALUATION OF SHARES The net asset value per share of each Portfolio is calculated separately as of the close of regular trading of the NYSE on each Business Day. "Business Day" means each weekday when the NYSE is open. Currently, the NYSE is closed on New Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence Day (observed), Labor Day, Thanksgiving Day and Christmas Day (observed). Securities which are listed on stock exchanges, whether U.S. or foreign are valued at the last sale price on the day the securities are valued or, lacking any sales on such day, at the mean of the bid and asked prices available prior to the valuation. Portfolio securities primarily traded in foreign markets may be traded in such markets on days which are not Business Days. Because net asset value per share of each Portfolio is determined only 43 on Business Days, the net asset value of shares of a Portfolio may be significantly affected on days when an investor does not have access to the Portfolio. If on any Business Day a foreign securities exchange or foreign market is closed, the securities traded on such exchange or in such market will be valued at the last sale price reported on the previous business day of such foreign exchange or market. In cases where securities are traded on more than one exchange, the securities are generally valued on the exchange designated by the Board of Directors or its delegates as the primary market. Securities traded in the over-the-counter market and listed on the National Association of Securities Dealers Automatic Quotation System ("NASDAQ") are valued at the last trade price listed on the NASDAQ at 4:00 p.m.; securities listed on NASDAQ for which there were no sales on that day and other over-the-counter securities are valued at the mean of the bid and asked prices available prior to valuation. Securities for which market quotations are not readily available are valued at fair value as determined in good faith by or under the direction of the Fund's Board of Directors. The amortized cost method of valuation may also be used with respect to debt obligations with sixty days or less remaining to maturity. Any assets which are denominated in a foreign currency are converted into U.S. dollars at the prevailing market rates for purposes of calculating net asset value. Foreign currency exchange rates are generally determined prior to the close of the NYSE. Occasionally, events affecting the value of foreign securities and such exchange rates occur between the time at which they are determined and the close of the NYSE, which events will not be reflected in a computation of the Portfolio's net asset value. If events materially affecting the value of such securities or assets or currency exchange rates occurred during such time period, the securities or assets would be valued at their fair value as determined in good faith by or under the direction of the Board of Directors. The foreign currency exchange transactions of a Portfolio conducted on a spot basis will be valued at the spot rate for purchasing or selling currency prevailing on the foreign exchange market. Under normal market conditions this rate differs from the prevailing exchange rate by an amount generally less than one-tenth of one percent due to the costs of converting from one currency to another. In determining the approximate market value of portfolio investments, the Fund may employ outside organizations, which may use a matrix or formula method that takes into consideration market indices, matrices, yield curves and other specific adjustments. This may result in the securities being valued at a price different from the price that would have been determined had the matrix or formula method not been used. All cash, receivables and current payables are carried on the Fund's books at their face value. Other assets, if any, are valued at fair value as determined in good faith by the Fund's Board of Directors. 44 PERFORMANCE AND YIELD INFORMATION TOTAL RETURN. For purposes of quoting and comparing the performance of the Portfolios to that of other mutual funds and to stock or other relevant indices in advertisements or in reports to shareholders, performance may be stated in terms of total return. Under the rules of the Securities and Exchange Commission, funds advertising performance must include total return quotes calculated according to the following formula: P(1 + T)(n) = ERV Where: P = a hypothetical initial payment of $1,000 T = average annual total return n = number of years (1, 5 or 10) ERV = ending redeemable value at the end of the 1, 5 or 10 year periods (or fractional portion thereof) of a hypothetical $1,000 payment made at the beginning of the 1, 5 or 10 year periods. Under the foregoing formula, the time periods used in advertising will be based on rolling calendar quarters, updated to the last day of the most recent quarter prior to submission of the advertisement for publication, and will cover one, five and ten year periods or a shorter period dating from the effectiveness of the Fund's registration statement. In calculating the ending redeemable value, the maximum sales load is deducted from the initial $1,000 payment and all dividends and distributions by the Fund are assumed to have been reinvested at net asset value, as described in the Prospectus, on the reinvestment dates during the period. Total return, or "T" in the formula above, is computed by finding the average annual compounded rates of return over the 1, 5 and 10 year periods (or fractional portion thereof) that would equate the initial amount invested to the ending redeemable value. Any sales loads that might in the future be made applicable at the time to reinvestments would be included as would any recurring account charges that might be imposed by the Fund. The Portfolios may also from time to time include in such advertising an aggregate total return figure or a total return figure that is not calculated according to the formula set forth above in order to compare more accurately a Portfolio's performance with other measures of investment return. For example, in comparing a Portfolio's total return with data published by Lipper Analytical Services, Inc., CDA Investment Technologies, Inc. or Weisenberger Investment Company Service, or with the performance of the Standard & Poor's 500 Stock Index or the Dow Jones Industrial Average, as appropriate, a Portfolio may calculate its aggregate and/or average annual total return for the specified periods of time by assuming the investment of $10,000 in Portfolio shares and assuming the reinvestment of each dividend or other distribution at net asset value on the reinvestment date. The Portfolio does not, for these purposes, deduct from the initial value invested any 45 amount representing sales charges. The Portfolio will, however, disclose the maximum sales charge and will also disclose that the performance data do not reflect sales charges and that inclusion of sales charges would reduce the performance quoted. Such alternative total return information will be given no greater prominence in such advertising than the information prescribed under SEC rules, and all advertisements containing performance data will include a legend disclosing that such performance data represent past performance and that the investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Calculated according to the SEC rules for the period beginning on the commencement of operations and ended August 31, 1996, the average annual total return for the BEA International Equity Portfolio (commencing October 1, 1992) was ____% (annualized), BEA Emerging Markets Equity Portfolio (commencing February 1, 1993) was ____% (annualized) and BEA High Yield Portfolio (commencing March 1, 1993) was ____$ (annualized). For the same period, the aggregate total return for the Portfolios was _____%, _____% and _____%, respectively. Calculated according to the non-standardized computation for the period beginning on the commencement of operations of each of the BEA International Equity and BEA Emerging Markets Equity Portfolios and ending on August 31, 1996, the average annual total return for the Portfolios was ____% and ____%, respectively. The aggregate total return for the Portfolios calculated according to the non-standardized computation for the period beginning on the commencement of operations of each of the Portfolios and ending August 31, 1996 was _____% and _____%, respectively. YIELD. Certain Portfolios may also advertise their yield. Under the rules of the SEC, a Portfolio advertising yield must calculate yield using the following formula: YIELD = 2[(A-B +1)(6) - 1] --- cd Where: a = dividends and interest earned during the period. b = expenses accrued for the period (net of reimbursement). c = the average daily number of shares outstanding during the period that were entitled to receive dividends. d = the maximum offering price per share on the last day of the period. Under the foregoing formula, yield is computed by compounding semi-annually, the net investment income per share earned during a 30 day period divided by the maximum offering price per share on the last day of the 46 period. For the purpose of determining the interest earned (variable "a" in the formula) on debt obligations that were purchased by a Portfolio at a discount or premium, the formula generally calls for amortization of the discount or premium; the amortization schedule will be adjusted monthly to reflect changes in the market values of the debt obligations. Yield may fluctuate daily and does not provide a basis for determining future yields. Because the yields will fluctuate, they cannot be compared with yields on savings account or other investment alternatives that provide an agreed to or guaranteed fixed yield for a stated period of time. However, yield information may be useful to an investor considering temporary investments in money market instruments. In comparing the yield of one money market fund to another, consideration should be given to each fund's investment policies, including the types of investments made, lengths of maturities of the portfolio securities, the method used by each fund to compute the yield (methods may differ) and whether there are any special account charges which may reduce the effective yield. The yields on certain obligations are dependent on a variety of factors, including general money market conditions, conditions in the particular market for the obligation, the financial condition of the issuer, the size of the offering, the maturity of the obligation and the ratings of the issue. The ratings of Moody's Investors Service and Standard & Poor's Corporation represent their respective opinions as to the quality of the obligations they undertake to rate. Ratings, however, are general and are not absolute standards of quality. Consequently, obligations with the same rating, maturity and interest rate may have different market prices. In addition, subsequent to its purchase by a Portfolio, an issue may cease to be rated or may have its rating reduced below the minimum required for purchase. In such an event, the Portfolio's investment adviser will consider whether the Portfolio should continue to hold the obligation. TAXES GENERAL TAX CONSEQUENCES TO THE FUND AND ITS SHAREHOLDERS. The following is only a summary of certain additional tax considerations generally affecting the Portfolios and their shareholders that are not described in the Fund's Prospectus. No attempt is made to present a detailed explanation of the tax treatment of the Portfolios or their shareholders, and the discussion in this Statement of Additional Information and in the Prospectus is not intended as a substitute for careful tax planning. Investors are urged to consult their tax advisers with specific reference to their own tax situation. Each Portfolio has elected to be taxed as a regulated investment company under Part I of Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). As a regulated investment company, each Portfolio is exempt from Federal income tax on its net investment income and realized capital gains which it distributes to shareholders, provided that it (a) distributes an amount equal to the sum of (i) at least 90% of its investment 47 company taxable income (net taxable investment income and the excess of net short-term capital gain over net long-term capital loss), if any, for the year and (ii) at least 90% of its net tax-exempt interest income, if any, for the year (the "Distribution Requirement"), and (b) satisfies certain other requirements of the Code that are described below. Distributions of investment company taxable income and net tax-exempt interest income made during the taxable year or, under specified circumstances, within twelve months after the close of the taxable year will satisfy the Distribution Requirement. The Distribution Requirement for any year may be waived if a regulated investment company establishes to the satisfaction of the Internal Revenue Service that it is unable to satisfy the Distribution Requirement by reason of distributions previously made for the purpose of avoiding liability for Federal excise tax (discussed below). In addition to satisfaction of the Distribution Requirement each Portfolio must derive at least 90% of its gross income from dividends, interest, certain payments with respect to securities loans and gains from the sale or other disposition of stock or securities or foreign currencies, or from other income derived with respect to its business of investing in such stock, securities, or currencies (the "Income Requirement") and derive less than 30% of its gross income from the sale or other disposition of any of the following investments, if such investments were held for less than three months: (a) stock or securities (as defined in Section 2(a)(36) of the 1940 Act); (b) options, futures, or forward contracts (other than options, futures or forward contracts on foreign currencies); and (c) foreign currencies (or options, futures or forward contracts on foreign currencies) but only if such currencies (or options, futures or forward contracts) are not directly related to the regulated investment company's principal business of investing in stock or securities (or in options and futures with respect to stocks or securities) (the "Short-Short Gain Test"). Interest (including accrued original issue discount, "accrued market discount") received by a Portfolio at maturity or on disposition of a security held for less than three months will not be treated as gross income derived from the sale or other disposition of such security for purposes of the Short-Short Gain Test. However, any other income which is attributable to realized market appreciation will be treated as gross income from the sale or other disposition of securities for this purpose. Future Treasury regulations may provide that currency gains that are not "directly related" to a Portfolio's principal business of investing in stock or securities (or in options or futures with respect to stock or securities) will not satisfy the Income Requirements. Income derived by a regulated investment company from a partnership or trust (including a foreign entity that is classified as a partnership or trust for U.S. federal income tax purposes) will satisfy the Income Requirement only to the extent such income is attributable to items of income of the partnership or trust that would satisfy the Income Requirement if they were realized by a regulated investment company in the same manner as realized by the partnership or trust. In addition to the foregoing requirements, at the close of each quarter of its taxable year, at least 50% of the value of each Portfolio's 48 assets must consist of cash and cash items, U.S. Government securities, securities of other regulated investment companies, and securities of other issuers (as to which the Portfolio has not invested more than 5% of the value of its total assets in securities of such issuer and as to which the Portfolio does not hold more than 10% of the outstanding voting securities of such issuer), and no more than 25% of the value of each Portfolio's total assets may be invested in the securities of any one issuer (other than U.S. Government securities and securities of other regulated investment companies), or in two or more issuers which such Portfolio controls and which are engaged in the same or similar trades or businesses (the "Asset Diversification Requirement"). The Internal Revenue Service has taken the position, in informal rulings issued to other taxpayers, that the issuer of a repurchase agreement is the bank or dealer from which securities are purchased. A Portfolio will not enter into repurchase agreements with any one bank or dealer if entering into such agreements would, under the informal position expressed by the Internal Revenue Service, cause it to fail to satisfy the Asset Diversification Requirement. Distributions of investment company taxable income will be taxable (subject to the possible allowance of the dividend received deduction described below) to shareholders as ordinary income, regardless of whether such distributions are paid in cash or are reinvested in shares. Shareholders receiving any distribution from the Fund in the form of additional shares will be treated as receiving a taxable distribution in an amount equal to the fair market value of the shares received, determined as of the reinvestment date. Each Portfolio intends to distribute to shareholders its excess of net long-term capital gain over net short-term capital loss ("net capital gain"), if any, for each taxable year. Such gain is distributed as a capital gain dividend and is taxable to shareholders as long-term capital gain, regardless of the length of time the shareholder has held his shares, whether such gain was recognized by the Portfolio prior to the date on which a shareholder acquired shares of the Portfolio and whether the distribution was paid in cash or reinvested in shares. The aggregate amount of distributions designated by any Portfolio as capital gain dividends may not exceed the net capital gain of such Portfolio for any taxable year, determined by excluding any net long-term capital loss attributable to transactions occurring after October 31 of such year and by treating any such loss as if it arose on the first day of the following taxable year. Such distributions will be designated as capital gain dividends in a written notice mailed by the Fund to shareholders not later than 60 days after the close of each Portfolio's respective taxable year. In the case of corporate shareholders, distributions (other than capital gain dividends) of a Portfolio for any taxable year will qualify for the 70% dividends received deduction, only to the extent of the gross amount of "qualifying dividends" received by such Portfolio for the year. Generally, a dividend will be treated as a "qualifying dividend" only if it 49 has been received from a domestic corporation. However, if a Portfolio owns at least 10 percent of the stock (by vote and value) of certain foreign corporations with U.S. source income, then a portion of the dividends paid by such foreign corporations may constitute "qualifying dividends". A dividend received by a taxpayer will not be treated as a "qualifying dividend" if (1) it has been received with respect to any share of stock that the taxpayer has held for 45 days (90 days in the case of certain preferred stock) or less (excluding any day more than 45 days (or 90 days in the case of certain preferred stock) after the date on which the stock becomes ex-dividend), or (2) to the extent that the taxpayer is under an obligation (pursuant to a short sale or otherwise) to make related payments with respect to positions in substantially similar or related property. The Fund will designate the portion, if any, of the distribution made by a Portfolio that qualifies for the dividends received deduction in a written notice mailed by the Fund to shareholders not later than 60 days after the close of the Portfolio's taxable year. Investors should note that recent legislative changes made to the Code have increased the significance of the distinction between capital gain and ordinary income distributions for some individual investors. Under this legislation, the maximum marginal rate on ordinary income for individuals, trusts and estates has nominally been increased only from 28% to 31%. However, due to the phase-out of personal exemptions and the enactment of limitations on itemized deductions for individual taxpayers whose adjusted gross income exceeds certain threshold amounts that depend on the taxpayer's filing status, the actual maximum marginal rate may be significantly greater. By contrast, the maximum rate on the net capital gain of individuals, trusts and estates remains 28%. Capital gains and ordinary income of corporate taxpayers will continue to be taxed at a nominal maximum rate of 34% (an effective marginal rate of 39% applies in the case of corporations having taxable income between $100,000 and $335,000). Investors should be aware that any loss realized upon the sale, exchange or redemption of shares held for six months or less will be treated as a long-term capital loss to the extent any capital gain dividends have been paid with respect to such shares. Corporate taxpayers may be liable for alternative minimum tax, which is imposed at the rate of 20% of "alternative minimum taxable income" (less, in the case of corporate shareholders with "alternative minimum taxable income" of less than $310,000, the applicable "exemption amount"), in lieu of the regular corporate income tax. "Alternative minimum taxable income" is equal to "taxable income" (as determined for corporate income regular tax purposes) with certain adjustments. Although corporate taxpayers in determining "alternative minimum taxable income" are allowed to exclude exempt interest dividends (other than exempt interest dividends derived from certain private activity bonds ("AMT Preference Dividends"), as explained in the Prospectus) and to utilize the 70% dividends received deduction at the first level of computation, the Code requires (as a second computational step) that "alternative minimum taxable income" be increased by 75% of the excess of "adjusted current earnings" over other "alternative minimum taxable income." 50 Corporate shareholders will have to take into account (1) all exempt interest dividends and (2) the full amount of all dividends from a Portfolio that are treated as "qualifying dividends" for purposes of the dividends received deduction in determining their "adjusted current earnings." As much as 75% of any exempt interest dividend and 82.5% of any "qualifying dividend" received by a corporate shareholder could, as a consequence, be subject to alternative minimum tax. Exempt interest dividends received by such a corporate shareholder may accordingly be subject to alternative minimum tax at an effective rate of 15%. Corporate investors should also note that the Superfund Amendments and Reauthorization Act of 1986 imposes an environmental tax on corporate taxpayers of 0.14% of the excess of "alternative minimum taxable income" (with certain modifications) over $2,000,000 for taxable years beginning after 1986 and before 1996, regardless of whether such taxpayers are liable for alternative minimum tax. If for any taxable year any Portfolio does not qualify as a regulated investment company, all of its taxable income will be subject to tax at regular corporate rates without any deduction for distributions to shareholders, and all distributions will be taxable as ordinary dividends to the extent of such Portfolio's current and accumulated earning and profits. Such distributions will be eligible for the dividends received deduction in the case of corporate shareholders. Investors should be aware that any loss realized on a sale of shares of a Portfolio will be disallowed to the extent an investor repurchases shares of the same Portfolio within a period of 61 days (beginning 30 days before and ending 30 days after the day of disposition of the shares). Dividends paid by a Portfolio in the form of shares within the 61-day period would be treated as a purchase for this purpose. The Code imposes a non-deductible 4% excise tax on regulated investment companies that do not distribute with respect to each calendar year an amount equal to 98% of their ordinary income for the calendar year plus 98% of their capital gain net income for the 1-year period ending on October 31 of such calendar year. The balance of such income must be distributed during the next calendar year. For the foregoing purposes, a company is treated as having distributed any amount on which it is subject to income tax for any taxable year ending in such calendar year. Because each Portfolio intends to distribute all of its taxable income currently, no Portfolio anticipates incurring any liability for this excise tax. However, investors should note that a Portfolio may in certain circumstances be required to liquidate investments in order to make sufficient distributions to avoid excise tax liability. The Fund will be required in certain cases to withhold and remit to the United States Treasury 31% of dividends paid to any shareholder (1) who has provided either an incorrect tax identification number or no number at all, (2) who is subject to backup withholding by the Internal Revenue Service for failure to report the receipt of interest or dividend income properly, or 51 (3) who has failed to certify to the Fund that he is not subject to backup withholding or that he is an "exempt recipient." The foregoing general discussion of Federal income tax consequences is based on the Code and the regulations issued thereunder as in effect on the date of this Statement of Additional Information. Future legislative or administrative changes or court decisions may significantly change the conclusions expressed herein, and any such changes or decisions may have a retroactive effect with respect to the transactions contemplated herein. Although each Portfolio expects to qualify as a "regulated investment company" and to be relieved of all or substantially all Federal income taxes, depending upon the extent of its activities in states and localities in which its offices are maintained, in which its agents or independent contractors are located or in which it is otherwise deemed to be conducting business, each Portfolio may be subject to the tax laws of such states or localities. Certain states exempt from state income taxation dividends paid by a regulated investment company that are derived from interest on U.S. Government obligations. Each Portfolio will accordingly inform its shareholders annually of the percentage, if any, of its ordinary dividends that is derived from interest on U.S. Government obligations. Shareholders should consult with their tax advisers as to the availability and extent of any applicable state income tax exemption. SPECIAL TAX CONSIDERATIONS. The following discussion relates to the particular Federal income tax consequences of the investment policies of the Portfolios. The ability of the Portfolios to engage in options, short sale and futures activities will be somewhat limited by the requirements for their continued qualification as regulated investment companies under the Code, in particular the Distribution Requirement, the Short-Short Gain Test and the Asset Diversification Requirement. STRADDLES. The options transactions that the Portfolios enter into may result in "straddles" for Federal income tax purposes. The straddle rules of the Code may affect the character of gains and losses realized by the Portfolios. In addition, losses realized by the Portfolios on positions that are part of a straddle may be deferred under the straddle rules, rather than being taken into account in calculating the investment company taxable income and net capital gain of the Portfolios for the taxable year in which such losses are realized. Losses realized prior to October 31 of any year may be similarly deferred under the straddle rules in determining the "required distribution" that the Portfolios must make in order to avoid Federal excise tax. Furthermore, in determining their investment company taxable income and ordinary income, the Portfolios may be required to capitalize, rather than deduct currently, any interest expense on indebtedness incurred or continued to purchase or carry any positions that are part of a straddle. The tax 52 consequences to the Portfolios of holding straddle positions may be further affected by various elections provided under the Code and Treasury regulations, but at the present time the Portfolios are uncertain which (if any) of these elections they will make. Because only a few regulations implementing the straddle rules have been promulgated by the U.S. Treasury, the tax consequences to the Portfolios of engaging in options transactions are not entirely clear. Nevertheless, it is evident that application of the straddle rules may substantially increase or decrease the amount which must be distributed to shareholders in satisfaction of the Distribution Requirement (or to avoid Federal excise tax liability) for any taxable year in comparison to a fund that did not engage in options transactions. For purposes of the Short-Short Gain Test, current Treasury regulations provide that (except to the extent that the short sale rules discussed below would otherwise apply) the straddle rules will have no effect on the holding period of any straddle position. However, the U.S. Treasury has announced that it is continuing to study the application of the straddle rules for this purpose. OPTIONS AND SECTION 1256 CONTRACTS. The writer of a covered put or call option generally does not recognize income upon receipt of the option premium. If the option expires unexercised or is closed on an exchange, the writer generally recognizes short-term capital gain. If the option is exercised, the premium is included in the consideration received by the writer in determining the capital gain or loss recognized in the resultant sale. However, certain options transactions that the Portfolios enter into, as well as futures transactions and transactions in forward foreign currency contracts that are traded in the interbank market entered into by the Portfolios, will be subject to special tax treatment as "Section 1256 contracts." Section 1256 contracts are treated as if they are sold for their fair market value on the last business day of the taxable year (i.e., marked-to-market), regardless of whether a taxpayer's obligations (or rights) under such contracts have terminated (by delivery, exercise, entering into a closing transaction or otherwise) as of such date. Any gain or loss recognized as a consequence of the year-end marking-to-market of Section 1256 contracts is combined (after application of the straddle rules that are described above) with any other gain or loss that was previously recognized upon the termination of Section 1256 contracts during that taxable year. The net amount of such gain or loss for the entire taxable year is generally treated as 60% long-term capital gain or loss and 40% short-term capital gain or loss, except in the case of marked-to-market forward foreign currency contracts for which such gain or loss is treated as ordinary income or loss. Such short-term capital gain (and, in the case of marked-to-market forward foreign currency contracts, such ordinary income) would be included in determining the investment company taxable income of the relevant Portfolio for purposes of the Distribution Requirement, even if it were wholly attributable to the year-end marking-to-market of Section 1256 contracts that the relevant Portfolio continued to hold. Investors should also note that Section 1256 contracts will be treated as having been sold on October 31 in calculating the "required distribution" that a Portfolio must make to avoid Federal excise tax liability. 53 Each of the Portfolios may elect not to have the year-end marking-to-market rule apply to Section 1256 contracts that are part of a "mixed straddle" with other investments of such Portfolio that are not Section 1256 contracts (the "Mixed Straddle Election"). It is unclear under present law how certain gain that the Portfolios may derive from trading in Section 1256 contracts for which a Mixed Straddle Election is not made will be treated for purposes of the "Short-Short Gain Test." The Portfolios may seek a ruling from the Internal Revenue Service in order to resolve this issue. FOREIGN CURRENCY TRANSACTIONS. In general, gains from "foreign currencies" and from foreign currency options, foreign currency futures and forward foreign exchange contracts relating to investments in stock, securities or foreign currencies will be qualifying income for purposes of determining whether the Portfolio qualifies as a RIC. It is currently unclear, however, who will be treated as the issuer of a foreign currency instrument or how foreign currency options, futures or forward foreign currency contracts will be valued for purposes of the Asset Diversification Requirement. A Portfolio may request a private letter ruling from the Internal Revenue Service for guidance on some or all of these issues. Under Code Section 988 special rules are provided for certain transactions in a foreign currency other than the taxpayer's functional currency (i.e., unless certain special rules apply, currencies other than the U.S. dollar). In general, foreign currency gains or losses from certain forward contracts, from futures contracts that are not "regulated futures contracts", and from unlisted options will be treated as ordinary income or loss. In certain circumstances where the transaction is not undertaken as part of a straddle, a Portfolio may elect capital gain or loss treatment for such transactions. Alternatively, a Portfolio may elect ordinary income or loss treatment for transactions in futures contracts and options on foreign currency that would otherwise produce capital gain or loss. In general gains or losses from a foreign currency transaction subject to Code Section 988 will increase or decrease the amount of the Portfolio's investment company taxable income available to be distributed to shareholders as ordinary income, rather than increasing or decreasing the amount of the Portfolio's net capital gain. Additionally, if losses from a foreign currency transaction subject to Code Section 988 exceed other investment company taxable income during a taxable year, a Portfolio will not be able to make any ordinary dividend distributions, and any distributions made before the losses were realized but in the same taxable year would be recharacterized as a return of capital to shareholders, thereby reducing each shareholder's basis in his Shares. PASSIVE FOREIGN INVESTMENT COMPANIES. If a Portfolio acquires shares in certain foreign investment entities, called "passive foreign investment companies" ("PFIC"), such Portfolio may be subject to "deferred" Federal income tax on a portion of any "excess distribution" received with respect to such shares or on a portion of any gain recognized upon a disposition of such shares, notwithstanding the distribution of such income to the shareholders of such Portfolio. Additional charges in the nature of interest may also be imposed on a Portfolio in respect of such deferred taxes. 54 However, in lieu of sustaining the foregoing tax consequences, a Portfolio may elect to have its investment in any PFIC taxed as an investment in a "qualified electing fund" ("QEF"). A Portfolio making a QEF election would be required to include in its income each year a ratable portion, whether or not distributed, of the ordinary earnings and net capital gain of the QEF. Any such QEF inclusions would have to be taken into account by a Portfolio for purposes of satisfying the Distribution Requirement and the excise tax distribution requirement. The Internal Revenue Service has proposed regulations that would permit a Portfolio to elect (in lieu of paying deferred tax or making a QEF election) to mark-to-market annually any PFIC shares that it owned and to include any gains (but not losses) that it was deemed to realize as ordinary income. A Portfolio generally would not be subject to deferred Federal income tax on any gains that it was deemed to realize as a consequence of making a mark-to-market election, but such gains would be taken into account by the Portfolio for purposes of satisfying the Distribution Requirement and the excise tax distribution requirement. The proposed regulations would generally apply only prospectively, to taxable years ending after their promulgation as final regulations. SHORT-SHORT GAIN TEST. Because of the Short-Short Gain Test, the Portfolios may have to limit the sale of appreciated (but not depreciated) securities that they have held for less than three months. The short sale of (including for this purpose the acquisition of a put option on) (1) securities held on the date of the short sale or acquired after the short sale and on or before the date of closing thereof or (2) securities which are "substantially identical" to securities held on the date of the short sale or acquired after the short sale and on or before the date of the closing thereof may reduce the holding period of such securities for purposes of the Short-Short Gain Test. Any increase in value of a position that is part of a "designated hedge" will be offset by any decrease in value (whether realized or not) of the offsetting hedging position during the period of such hedge for purposes of the Short-Short Gain Test. Thus, only the net gain (if any) from the designated hedge will be included in gross income for purposes of the Short-Short Gain Test. Each of the Portfolios anticipates engaging in hedging transactions that qualify as designated hedges. However, because of the failure of the U.S. Treasury to promulgate regulations as authorized by the Code, it is not clear at the present time whether this treatment will be available to all of the Portfolios' hedging transactions. To the extent the Portfolios' transactions do not qualify as designated hedges, the Portfolios' investments in short sales, options or other transactions may be limited. ASSET DIVERSIFICATION REQUIREMENT. For purposes of the Asset Diversification Requirement, the issuer of a call option on a security (including an option written on an exchange) will be deemed to be the issuer of the underlying security. The Internal Revenue Service has informally ruled, however, that a call option that is written by a fund need not be counted for purposes of the Asset Diversification Requirement where the fund 55 holds the underlying security. However, the Internal Revenue Service has also informally ruled that a put option written by a fund must be treated as a separate asset and its value measured by "the value of the underlying security" for purposes of the Asset Diversification Requirement, regardless (apparently) of whether it is "covered" under the rules of the exchange. The Internal Revenue Service has not explained whether in valuing a written put option in this manner a fund should use the current value of the underlying security (its prospective future investment); the cash consideration that must be paid by the fund if the put option is exercised (its liability); or some other measure that would take into account the fund's unrealized profit or loss in writing the option. Under the Code, a fund may not rely on informal rulings of the Internal Revenue Service issued to other taxpayers. Consequently, a Portfolio may find it necessary to seek a ruling from the Internal Revenue Service on this issue or to curtail its writing of options in order to stay within the limits of the Asset Diversification Requirement. ADDITIONAL INFORMATION CONCERNING FUND SHARES The Fund has authorized capital of thirty billion shares of Common Stock, $.001 par value per share, of which 12.35 billion shares are currently classified as follows: 100 million shares are classified as Class A Common Stock (Growth & Income), 100 million shares are classified as Class B Common Stock, 100 million shares are classified as Class C Common Stock (Balanced), 100 million shares are classified as Class D Common Stock (Tax-Free), 500 million shares are classified as Class E Common Stock (Money), 500 million shares are classified as Class F Common Stock (Municipal Money), 500 million shares are classified as Class G Common Stock (Money), 500 million shares are classified as Class H Common Stock (Municipal Money), 1 billion shares are classified as Class I Common Stock (Money), 500 million shares are classified as Class J Common Stock (Municipal Money), 500 million shares are classified as Class K Common Stock (U.S. Government Money), 1,500 million shares are classified as Class L Common Stock (Money), 500 million shares are classified as Class M Common Stock (Municipal Money), 500 million shares are classified as Class N Common Stock (U.S. Government Money), 500 million shares are classified as Class O Common Stock (N.Y. Money), 100 million shares are classified as Class P Common Stock (Government), 100 million shares are classified as Class Q Common Stock, 500 million shares are classified as Class R Common Stock (Municipal Money), 500 million shares are classified as Class S Common Stock (U.S. Government Money), 500 million shares are classified as Class T Common Stock (International), 500 million shares are classified as Class U Common Stock (High Yield), 500 million shares are classified as Class V Common Stock (Emerging), 100 million shares are classified as Class W Common Stock (Laffer/Canto Equity), 50 million shares are classified as Class X Common Stock (U.S. Core Equity), 50 million shares are classified as Class Y Common Stock (U.S. Core Fixed Income), 50 million shares are classified as Class Z Common Stock (Global Fixed Income), 50 million shares are classified as Class AA Common Stock (Municipal Bond), 50 million shares are classified as Class BB Common Stock (BEA Balanced), 50 million shares are classified as Class CC Common Stock (Short Duration), 100 million shares are classified as 56 Class DD Common Stock (Growth & Income Series 2), 100 million shares are classified as Class EE Common Stock (Balanced Series 2), 50 million shares are classified as Class FF (n/i Micro Cap), 50 million shares are classified as Class GG (n/i Growth), 50 million shares are classified as Class HH (n/i Growth & Value), 100 million shares are classified as Class II (BEA Investor International), 100 million shares are classified as Class JJ (BEA Investor Emerging), 100 million shares are classified as Class KK (BEA Investor High Yield), 100 million shares are classified as Class LL (BEA Investor Global Telecom), 100 million shares are classified as Class MM (BEA Advisor International), 100 million shares are classified as Class NN (BEA Advisor Emerging), 100 million shares are classified as Class OO (BEA Advisor High Yield), 100 million shares are classified as Class PP (BEA Advisor Global Telecom), 700 million shares are classified as Class Janney Money Common Stock, 200 million shares are classified as Class Janney Municipal Money Common Stock, 500 million shares are classified as Class Janney U.S. Government Money Common Stock, 100 million shares are classified as Class Janney N.Y. Municipal Money Common Stock, 1 million shares are classified as Class Beta 1 Common Stock (Money), 1 million shares are classified as Class Beta 2 Common Stock (Municipal Money), 1 million shares are classified as Class Beta 3 Common Stock (U.S. Government Money), 1 million shares are classified as Class Beta 4 Common Stock (N.Y. Money), 1 million shares are classified as Gamma 1 Common Stock (Money), 1 million shares are classified as Gamma 2 Common Stock (Municipal Money), 1 million shares are classified as Gamma 3 Common Stock (U.S. Government Money), 1 million shares are classified as Gamma 4 Common Stock (N.Y. Money), 1 million shares are classified as Delta 1 Common Stock (Money), 1 million shares are classified as Delta 2 Common Stock (Municipal Money), 1 million shares are classified as Delta 3 Common Stock (U.S. Government Money), 1 million shares are classified as Delta 4 Common Stock (N.Y. Money), 1 million shares are classified as Epsilon 1 Common Stock (Money), 1 million shares are classified as Epsilon 2 Common Stock (Municipal Money), 1 million shares are classified as Epsilon 3 Common Stock (U.S. Government Money), 1 million shares are classified as Epsilon 4 Common Stock (N.Y. Money), 1 million shares are classified as Zeta 1 Common Stock (Money), 1 million shares are classified as Zeta 2 Common Stock (Municipal Money), 1 million shares are classified as Zeta 3 Common Stock (U.S. Government Money), 1 million shares are classified as Zeta 4 Common Stock (N.Y. Money), 1 million shares are classified as Eta 1 Common Stock (Money), 1 million shares are classified as Eta 2 Common Stock (Municipal Money), 1 million shares are classified as Eta 3 Common Stock (U.S. Government Money), 1 million shares are classified as Eta 4 Common Stock (N.Y. Money), 1 million shares are classified as Theta 1 Common Stock (Money), 1 million shares are classified as Theta 2 Common Stock (Municipal Money), 1 million shares are classified as Theta 3 Common Stock (U.S. Government Money), and 1 million shares are classified as Theta 4 Common Stock (N.Y. Money). Shares of the Class MM, NN, OO and PP Common Stock constitute the BEA Advisor classes. Under the Fund's charter, the Board of Directors has the power to classify or reclassify any unissued shares of Common Stock from time to time. The classes of Common Stock have been grouped into fifteen separate "families": the RBB Family, the Cash Preservation Family, the Sansom 57 Street Family, the Bedford Family, the Bradford Family, the BEA Family, the Janney Montgomery Scott Money Family, the n/i Family, the Beta Family, the Gamma Family, the Delta Family, the Epsilon Family, the Zeta Family, the Eta Family and the Theta Family. The RBB Family represents interests in one non-money market portfolio as well as the Money Market and Municipal Money Market Portfolios; the Cash Preservation Family represents interests in the Money Market and Municipal Money Market Portfolios; the Sansom Street Family represents interests in the Money Market, Municipal Money Market and Government Obligations Money Market Portfolios; Bedford Family represents interests in the Money Market, Municipal Money Market, Government Obligations Money Market and New York Municipal Money Market Portfolios; the Bradford Family represents interests in the Municipal Money Market and Government Obligations Money Market Portfolios; the BEA Family represents interests in nine non-money market portfolios; the n/i Family represents interests in three non-money market portfolios; the Janney Montgomery Scott Family and the Beta, Gamma, Delta, Epsilon, Zeta, Eta and Theta Families represent interests in the Money Market, Municipal Money Market, Government Obligations Money Market and New York Municipal Money Market Portfolios. The Fund does not currently intend to hold annual meetings of shareholders except as required by the 1940 Act or other applicable law. The Fund's amended By-Laws provide that shareholders collectively owning at least ten percent of the outstanding shares of all classes of Common Stock of the Fund have the right to call for a meeting of shareholders to consider the removal of one or more directors. To the extent required by law, the Fund will assist in shareholder communication in such matters. As stated in the Prospectus, holders of shares of each class of the Fund will vote in the aggregate and not by class on all matters, except where otherwise required by law. Further, shareholders of the Fund will vote in the aggregate and not by portfolio except as otherwise required by law or when the Board of Directors determines that the matter to be voted upon affects only the interests of the shareholders of a particular portfolio. Rule 18f-2 under the Investment Company Act provides that any matter required to be submitted by the provisions of such Act or applicable state law, or otherwise, to the holders of the outstanding securities of an investment company such as the Fund shall not be deemed to have been effectively acted upon unless approved by the holders of a majority of the outstanding shares of each portfolio affected by the matter. Rule 18f-2 further provides that a portfolio shall be deemed to be affected by a matter unless it is clear that the interests of each portfolio in the matter are identical or that the matter does not affect any interest of the Portfolio. Under the Rule, the approval of an investment advisory agreement or any change in a fundamental investment policy would be effectively acted upon with respect to a portfolio only if approved by the holders of a majority of the outstanding voting securities of such portfolio. However, the Rule also provides that the ratification of the selection of independent public accountants, the approval of principal underwriting contracts and the election of directors are not subject to the separate voting requirements and may be effectively acted upon by shareholders of an investment company voting without regard to portfolio. 58 Notwithstanding any provision of Maryland law requiring a greater vote of shares of the Fund's common stock (or of any class voting as a class) in connection with any corporate action, unless otherwise provided by law, (for example by Rule 18f-2 discussed above) or by the Fund's Articles of Incorporation, the Fund may take or authorize such action upon the favorable vote of the holders of more than 50% of all of the outstanding shares of Common Stock voting without regard to class (or portfolio). MISCELLANEOUS COUNSEL. The law firm of Ballard Spahr Andrews & Ingersoll, 1735 Market Street, 51st Floor, Philadelphia, Pennsylvania 19103 serves as counsel to the Fund and PFPC. The law firm of Drinker Biddle & Reath, 1100 Philadelphia National Bank Building, Broad and Chestnut Streets, Philadelphia, Pennsylvania 19107, serves as counsel to the Fund's independent directors. INDEPENDENT ACCOUNTANTS. Coopers & Lybrand L.L.P., 2400 Eleven Penn Center, Philadelphia, Pennsylvania 19103, serves as the Fund's independent accountants. No financial statements appear in this Statement of Additional Information because, as of the date hereof, the Advisor Class had no performance history. CONTROL PERSONS. As of July 23, 1996, to the Fund's knowledge, the following named persons at the addresses shown below owned of record approximately 5% or more of the total outstanding shares of the class of the Fund indicated below. See "Additional Information Concerning Fund Shares" above. The Fund does not know whether such persons also beneficially own such shares. PORTFOLIO NAME AND ADDRESS PERCENT OWNED - --------- ---------------- ------------- RBB Money Market Luanne M. Garvey and Robert J. 14.6 Portfolio Garvey (Class E) 2729 Woodland Avenue Trooper, PA 19403 Harold T. Erfer 12.8 414 Charles Lane Wynnewood, PA 19096 Karen M. McElhinny and 16.6 Contribution Account 4943 King Arthur Drive Erie, PA 16506 59 PORTFOLIO NAME AND ADDRESS PERCENT OWNED - --------- ---------------- ------------- John Robert Estrada and 15.9 Shirley Ann Estrada 1700 Raton Drive Arlington, TX 76018 Eric Levine and Linda & Howard 29.1 Levine 67 Lanes Pond Road Howell, NJ 07731 RBB Municipal Money William B. Pettus Trust 23.7 Market Portfolio Augustine W. Pettus Trust (Class F) 827 Winding Path Lane St. Louis, MO 63021-6635 Seymour Fein 76.3 P.O. Box 486 Tremont Post Office Bronx, NY 10457-0486 Cash Preservation Money Jewish Family and Children's 55.4 Market Portfolio Agency of Philadelphia (Class G) Capital Campaign Attn: S. Ramm 1610 Spruce Street Philadelphia, PA 19103 Lynda R. Succ Trustee for in 12.1 Trust under The Lynda R. Campbell Caring Trust 935 Rutger Street St. Louis, MO 63104 Theresa M. Palmer 7.6 5731 N. 4th Street Philadelphia, PA 19120 Cash Preservation Kenneth Farwell and Valerie 10.5 Municipal Money Market Farwell Jt. Ten Portfolio 3854 Sullivan (Class H) St. Louis, MO 63107 Larnie Johnson and Mary Alice 17.1 Johnson 4927 Lee Avenue St. Louis, MO 63115-1726 Andrew Diederich and Doris 5.8 Diederich 1003 Lindenman Des Peres, MO 63131 60 PORTFOLIO NAME AND ADDRESS PERCENT OWNED - --------- ---------------- ------------- Marcella L. Haugh Caring Tr Dtd 7.3 8/12/91 40 Plaza Square Apt. 202 St. Louis, MO 63101 Emil Hunter and Mary J. Hunter 7.1 428 W. Jefferson Kirkwood, MO 63122 Ralph R. Moreno Caring Trust 5.2 418 N. Concord Street Los Angeles, CA 90063 Sansom Street Money Wasner & Co. 19.1 Market Portfolio FAO Paine Webber and Managed (Class I) Assets Sundry Holdings Attn: Joe Domizio 200 Stevens Drive Lester, PA 19113 Saxon and Co. 75.1 FBO Paine Webber P.O. Box 7780 1888 Philadelphia, PA 19182 Robertson Stephens & Co. 5.8 FBO Exclusive Benefit Investors c/o Eric Moore 555 California Street/No. 2600 San Francisco, CA 94101 Bradford Municipal J.C. Bradford & Co. 100 Money (Class R) 330 Commerce Street Nashville, TN 37201 Bradford Government J.C. Bradford & Co. 100 Obligations Money 330 Commerce Street (Class S) Nashville, TN 37201 BEA International Blue Cross & Blue Shield of 5.1 Equity Massachusetts Inc. (Class T) Retirement Income Trust 100 Summmer Street Boston, MA 02310 BEA High Yield Temple Inland Master Retirement 10.9 Portfolio Trust (Class U) 303 South Temple Drive Diboll, TX 75941 Guenter Full Trst Michelin North 17.8 America Inc. Master Trust P. O. Box 19001 Greenville, SC 29602-9001 61 PORTFOLIO NAME AND ADDRESS PERCENT OWNED - --------- ---------------- ------------- Flour Corporation Master 10.0 Retirement Trust 2383 Michelson Drive Irvine, CA 92730 C S First Boston Pension Fund 10.6 Park Avenue Plaza, 34th Floor 55 E. 52nd Street New York, NY 10055 Attn: Steve Medici SC Johnson & Son, Inc. Retirement 14.4 Plan 1525 Howe Street Racine, WI 53403 BEA Emerging Markets Wachovia Bank North Carolina 13.9 Equity Portfolio Trust for Carolina Power & Light (Class V) Co. Supplemental Retirement Trust 301 N. Main Street Winston-Salem, NC 27101 Northern Trust Company Trustee 19.1 for Texas Instruments Employee Plan P.O. Box 92956 Chicago, IL 60675-2956 Hall Family Foundation 19.2 P.O. Box 419580 Kansas City, MO 64208 Arkansas Public Emploees 9.7 Retirement System 124 W. Capitol Avenue Little Rock, AR 72201 Northern Trust 11.5 Trustee for Pillsbury P.O. Box 92956 Chicago, IL 60675 Amherst H. Wilder Foundation 5.3 919 Lafond Avenue St. Paul, MN 55104 BEA US Core Equity Bank of New York 44.5 Portfolio Trust APU Buckeye Pipeline (Class X) One Wall Street New York, NY 10286 62 PORTFOLIO NAME AND ADDRESS PERCENT OWNED - --------- ---------------- ------------- Werner & Pfleiderer Pension 7.6 Plan Employees 663 E. Crescent Avenue Ramsey, NJ 07446 Washington Hebrew Congregation 7.6 3935 Macomb St. NW Washington, DC 20016 BEA US Core Fixed New England UFCW & Employers' 20.5 Income Portfolio Pension Fund Board of Trustees (Class Y) 161 Forbes Road, Suite 201 Braintree, MA 02184 Bankers Trust 16.3 Trust Pechniney Corp. Pension Master Trust 34 Exchange Place, 4th Floor Jersey City, NJ 07302 Patterson & Co. 7.4 P.O. Box 7829 Philadelphia, PA 19102 MAC & Co 5.7 FAO 176-655 ROBF1766552 Mutual Funds Operations P. O. Box 3198 Pittsburgh, PA 15230-3198 Bank of New York 7.4 Trst Fenway Partners Master Trust One Wall Street, 12th floor New York, NY 10286 Citibank NA 11.2 Trst CS First Boston Corp Emp S/P Attn: Sheila Adams 111 Wall Street, 20th floor Z 1 New York, NY 10043 BEA Global Fixed Income Sunkist Master Trust 35.9 Portfolio (Class Z) 14130 Riverside Drive Sherman Oaks, CA 91423 Patterson & Co. 25.7 P. O. Box 7829 Philadelphia, PA 19101 63 PORTFOLIO NAME AND ADDRESS PERCENT OWNED - --------- ---------------- ------------- Key Trust Co. of Ohio 20.8 FBO Eastern Enterp. Collective Inv. Trust P.O. Box 901536 Cleveland, OH 44202-1559 Mary E. Morten 6.2 C/O Credit Suisse New York 12 E. 49th Street, 40th Floor New York, NY 10017 Attn: Portfolio Management BEA Municipal Bond Fund William A. Marquard 36.2 Portfolio 2199 Maysville Rd. (Class AA) Carlisle, KY 40311 Arnold Leon 12.1 c/o Fiduciary Trust Company P.O. Box 3199 Church Street Station New York, NY 10008 Irwin Bard 8.5 1750 North East 183rd St. North Miami Beach, FL 33160 Matthew M. Sloves and Diane 5.5 Decker Sloves Tenants in Common 1304 Stagecoach Road, S.E. Albuquerque, NM 87123 n/i Micro Cap Fund Charles Schwab & Co. Inc. 13.4 (Class FF) Special Custody Account for the Exclusive Benefit of Customers Attn: Mutual Funds 101 Montgomery Street San Francisco, CA 94101 Chase Manhattan Bank 45.3 Trst Collins Group Trust 940 Newport Center Drive Newport Beach, CA 92660 Currie & Co. 9.3 c/o Fiduciary Trust Co. Intl P. O. Box 3199 Church Street Station New York, NY 10008 64 PORTFOLIO NAME AND ADDRESS PERCENT OWNED - --------- ---------------- ------------- n/i Growth Fund (Class GG) Charles Schwab & Co. Inc. 17.7 Special Custody Account for the Exclusive Benefit of Customers Attn: Mutual Funds 101 Montgomery Street San Francisco, CA 94101 U S Equity Investment Portfolio 30.9 LP c/o Asset Management Advisors Inc. 1001 N. US Hwy Suite 800 Jupiter, FL 33447 Currie & Co. 5.4 c/o Fiduciary Trust Co. Intl P. O. Box 3199 Church Street Station New York, NY 10008 Bank of New York 17.8 Trst Sunkist Growers Inc. 14130 Riverside Drive Sherman Oaks, CA 91423-2392 n/i Growth and Value Charles Schwab & Co. Inc. 43.6 Fund (Class HH) Special Custody Account for the Exclusive Benefit of Customers Attn: Mutual Funds 101 Montgomery Street San Francisco, CA 94104 Janney Montgomery Scott Janney Montgomery Scott 100 Money Market Portfolio 1801 Market Street (Class Janney Money Philadelphia, PA 19103-1675 Market) Janney Montgomery Scott Janney Montgomery Scott 100 Municipal Money Market 1801 Market Street Portfolio Philadelphia, PA 19103-1675 (Class Janney Municipal Money Market) Janney Montgomery Scott Janney Montgomery Scott 100 Government Obligations 1801 Market Street Money Market Portfolio Philadelphia, PA 19103-1675 (Class Janney Government Obligations Money) 65 PORTFOLIO NAME AND ADDRESS PERCENT OWNED - --------- ---------------- ------------- Janney Montgomery Scott Janney Montgomery Scott 100 New York Municipal 1801 Market Street Money Market Portfolio Philadelphia, PA 19103-1675 (Class Janney N.Y. Municipal Money) As of the above date, directors and officers as a group owned less than one percent of the shares of RBB. LITIGATION. There is currently no material litigation affecting RBB. FINANCIAL STATEMENTS. No financial statements are supplied because, as of the date of the Prospectus and this Statement of Additional Information, the Funds had no operating history. 66 APPENDIX -------- CORPORATE AND MUNICIPAL LONG-TERM DEBT RATINGS The following summarizes the ratings used by Standard & Poor's for corporate and municipal debt: "AAA" - This designation represents the highest rating assigned by Standard & Poor's to a debt obligation and indicates an extremely strong capacity to pay interest and repay principal. "AA" - Debt is considered to have a very strong capacity to pay interest and repay principal and differs from "AAA" issues only in small degree. "A" - Debt is considered to have a strong capacity to pay interest and repay principal although such issues are somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than debt in higher-rated categories. "BBB" - Debt is regarded as having an adequate capacity to pay interest and repay principal. Whereas such issues normally exhibit adequate protection parameters, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to pay interest and repay principal for debt in this category than in higher-rated categories. "BB," "B," and "CCC" - Debt that possesses one of these ratings is regarded, on balance, as predominantly speculative with respect to capacity to pay interest and repay principal in accordance with the terms of the obligation. "BB" indicates the lowest degree of speculation and "CCC" the highest degree of speculation. While such debt will likely have some quality and protective characteristics, these are outweighed by large uncertainties or major risk exposures to adverse conditions. "CC" - This rating is reserved for issues that are currently in arrears on dividends or sinking fund payments but that are currently paying. "C" - This rating is reserved for income bonds on which no interest is being paid. "D" - Debt is in default, and payment of interest and/or repayment of principal is in arrears. PLUS (+) OR MINUS (-) - The ratings from "AA" through "CCC" may be modified by the addition of a plus or minus sign to show relative standing within the major rating categories. A-1 The following summarizes the ratings used by Moody's for corporate and municipal long-term debt: "Aaa" - Bonds are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as "gilt edge." Interest payments are protected by a large or by an exceptionally stable margin and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues. "Aa" - Bonds are judged to be of high quality by all standards. Together with the "Aaa" group they comprise what are generally known as high grade bonds. They are rated lower than the best bonds because margins of protection may not be as large as in "Aaa" securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present which make the long-term risks appear somewhat larger than in "Aaa" securities. "A" - Bonds possess many favorable investment attributes and are to be considered as upper medium grade obligations. Factors giving security to principal and interest are considered adequate but elements may be present which suggest a susceptibility to impairment sometime in the future. "Baa" - Bonds considered medium-grade obligations, i.e., they are neither highly protected nor poorly secured. Interest payments and principal security appear adequate for the present but certain protective elements may be lacking or may be characteristically unreliable over any great length of time. Such bonds lack outstanding investment characteristics and in fact have speculative characteristics as well. "Ba," "B," "Caa," "Ca," and "C" - Bonds that possess one of these ratings provide questionable protection of interest and principal ("Ba" indicates some speculative elements; "B" indicates a general lack of characteristics of desirable investment; "Caa" represents a poor standing; "Ca" represents obligations which are speculative in a high degree; and "C" represents the lowest rated class of bonds). "Caa," "Ca" and "C" bonds may be in default. Con. (- - -) - Bonds for which the security depends upon the completion of some act or the fulfillment of some condition are rated conditionally. These are bonds secured by (a) earnings of projects under construction, (b) earnings of projects unseasoned in operation experience, (c) rentals which begin when facilities are completed, or (d) payments to which some other limiting condition attaches. Parenthetical rating denotes probable credit stature upon completion of construction or elimination of basis of condition. Moody's applies numerical modifiers 1, 2 and 3 in each generic classification from "Aa" to "B" in its bond rating system. The modifier 1 indicates that the company ranks in the higher end of its generic rating A-2 category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates that the issue ranks at the lower end of its generic rating category. MUNICIPAL NOTE RATINGS A Standard and Poor's rating reflects the liquidity concerns and market access risks unique to notes due in three years or less. The following summarizes the ratings used by Standard & Poor's Corporation for municipal notes: "SP-1" - The issuers of these municipal notes exhibit very strong or strong capacity to pay principal and interest. Those issues determined to possess overwhelming safety characteristics are given a plus (+) designation. "SP-2" - The issuers of these municipal notes exhibit satisfactory capacity to pay principal and interest. "SP-3" - The issuers of these municipal notes exhibit speculative capacity to pay principal and interest. Moody's ratings for state and municipal notes and other short-term loans are designated Moody's Investment Grade ("MIG") and variable rate demand obligations are designated Variable Moody's Investment Grade ("VMIG"). Such ratings recognize the differences between short-term credit risk and long-term risk. The following summarizes the ratings by Moody's Investors Service, Inc. for short-term notes: "MIG-1"/"VMIG-1" - Loans bearing this designation are of the best quality, enjoying strong protection by established cash flows, superior liquidity support or demonstrated broad-based access to the market for refinancing. "MIG-2"/"VMIG-2" - Loans bearing this designation are of high quality, with margins of protection ample although not so large as in the preceding group. "MIG-3"/"VMIG-3" - Loans bearing this designation are of favorable quality, with all security elements accounted for but lacking the undeniable strength of the preceding grades. Liquidity and cash flow protection may be narrow and market access for refinancing is likely to be less well established. "MIG-4"/"VMIG-4" - Loans bearing this designation are of adequate quality, carrying specific risk but having protection commonly regarded as required of an investment security and not distinctly or predominantly speculative. A-3 "SG" - Loans bearing this designation are of speculative quality and lack margins of protection. A-4 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- THE BEA FAMILY OF MUTUAL FUNDS Investor Class BEA International Equity Portfolio BEA Emerging Markets Equity Portfolio BEA Global Telecommunications Portfolio BEA High Yield Portfolio ___________ PROSPECTUS ___________ ________ ___, 1996 A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION BUT HAS NOT YET BECOME EFFECTIVE. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS (COMMUNICATION) SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. TABLE OF CONTENTS ANNUAL PORTFOLIO OPERATING EXPENSES...................................... 3 INVESTMENT OBJECTIVES AND POLICIES....................................... 4 INVESTMENT LIMITATIONS................................................... 8 RISK FACTORS............................................................. 9 MANAGEMENT............................................................... 10 EXPENSES................................................................. 13 HOW TO PURCHASE SHARES................................................... 14 HOW TO REDEEM SHARES..................................................... 15 NET ASSET VALUE.......................................................... 17 DIVIDENDS AND DISTRIBUTIONS.............................................. 18 TAXES.................................................................... 18 SHAREHOLDER SERVICING.................................................... 20 MULTI-CLASS STRUCTURE.................................................... 20 DESCRIPTION OF SHARES.................................................... 21 OTHER INFORMATION........................................................ 22 BEA FAMILY OF MUTUAL FUNDS INVESTOR CLASS The Investor Classes of the BEA Family consist of four classes of common stock of The RBB Fund, Inc. (the "Fund"), an open-end management investment company. Shares (collectively, the "Investor Shares" or "Shares") of such classes (the "Investor Classes" or "Classes") are offered by this Prospectus and represent interests in one of four of the investment portfolios of the Fund described in this Prospectus (collectively, the "Portfolios"). The investment objective of each Portfolio described in this Prospectus is as follows: BEA INTERNATIONAL EQUITY PORTFOLIO - to provide long-term appreciation of capital. The Portfolio will invest primarily in equity securities of non-U.S. issuers. BEA EMERGING MARKETS EQUITY PORTFOLIO - to provide long-term appreciation of capital. The Portfolio will invest primarily in equity securities in emerging country markets. BEA GLOBAL TELECOMMUNICATIONS PORTFOLIO - to provide long-term appreciation of capital. The Portfolio will invest primarily in equity securities of telecommunications companies, both foreign and domestic. BEA HIGH YIELD PORTFOLIO - to provide a high total return. The Portfolio will invest primarily in high yield fixed income securities (also known as "junk bonds") issued by corporations, governments and agencies, both domestic and foreign. The Portfolio will invest without regard to maturity or credit quality limitations. There can be, of course, no assurance that a Portfolio's investment objective will be achieved. Investments in the Portfolios involve certain risks. See "Risk Factors." THE BEA HIGH YIELD PORTFOLIO MAY INVEST ITS ASSETS WITHOUT LIMITATION IN SECURITIES WHICH MAY INCLUDE BELOW INVESTMENT-GRADE QUALITY SECURITIES COMMONLY KNOWN AS "JUNK BONDS." INVESTMENTS OF THIS TYPE ARE SUBJECT TO GREATER RISKS, INCLUDING THE RISK OF LOSS OF PRINCIPAL AND INTEREST, THAN THOSE INVOLVED WITH INVESTMENT GRADE SECURITIES. PURCHASERS SHOULD CAREFULLY ASSESS THE RISKS ASSOCIATED WITH AN INVESTMENT IN THIS PORTFOLIO. SEE "RISK FACTORS." THE INVESTOR SHARES OF THE PORTFOLIOS ARE SOLD UNDER THE NAME "BEA INVESTOR PORTFOLIOS." THE INVESTOR SHARES MAY NOT BE PURCHASED BY INDIVIDUALS DIRECTLY FROM THE FUND'S DISTRIBUTOR, BUT OTHER BROKER-DEALERS, FINANCIAL INSTITUTIONS, DEPOSITORY INSTITUTIONS, RETIREMENT PLANS AND OTHER FINANCIAL INTERMEDIARIES ("INSTITUTIONS") MAY PURCHASE INVESTOR SHARES FOR INDIVIDUALS. THE INVESTOR SHARES IMPOSE A 12b-1 FEE OF UP TO .50% PER ANNUM, WHICH IS THE ECONOMIC EQUIVALENT OF A SALES CHARGE. BEA Associates ("BEA" or the "Adviser"), a U.S. investment advisory firm, will act as the investment adviser to each Portfolio. BEA emphasizes a global investment strategy and, as of September 30, 1996, acted as adviser for approximately $____ billion of assets. This Prospectus contains information that a prospective investor needs to know before investing. Please keep it for future reference. A Statement of Additional Information, dated ________ ___, 1996, has been filed with the Securities and Exchange Commission and is incorporated by reference in this Prospectus. It may be obtained free of charge from the Fund's distributor by calling (800) ___-____. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. PROSPECTUS ________ ___, 1996 2 ANNUAL PORTFOLIO OPERATING EXPENSES BEA BEA U.S. BEA Emerging Global International Markets Telecommuni- BEA Equity Equity cations High Yield Portfolio Portfolio Portfolio Portfolio --------- --------- --------- --------- Management Fees*.. .80% 1.00% 1.00% .70% 12b-1 Fees........ .50% .50% .50% .50% Other Expenses.... . % . % . % . % ---- ---- ---- ---- Total Portfolio Operating Expenses ____% ____% ____% ____% ___________ * Management fees are each based on average daily net assets and are calculated daily and paid monthly. EXAMPLE An investor would pay the following expenses on a $1,000 investment in each of the Portfolios, assuming (1) a 5% annual return, and (2) redemption at the end of each time period. One Three Five Ten Year Years Years Years ---- ----- ----- ----- BEA International Equity Portfolio........ $__ $__ $___ $___ BEA Emerging Markets Equity Portfolio..... $__ $__ $___ $___ BEA Global Telecommunications Portfolio... $__ $__ N/A N/A BEA High Yield Portfolio.................. $__ $__ $___ $___ __________ The Example in the Fee Table assumes that all dividends and distributions are reinvested and that the amounts listed under "Annual Portfolio Operating Expenses" remain the same in the years shown. THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. The Fee Table is designed to assist an investor in understanding the various costs and expenses that an investor in each of the Portfolios will bear directly or indirectly. The expense figures are restated from fees and costs of the Institutional Classes of the Portfolios as of August 31, 1996, except for BEA Global Telecommunications Portfolio, which is based on estimated expenses for the current fiscal year. Actual expenses may be greater or less than such costs and fees. 3 FINANCIAL HIGHLIGHTS Financial highlights are not available for the Investor Classes of the Portfolios because, as of the date of this prospectus, such classes had no operating history. THE FUND The Fund is an open-end management investment company that currently operates or proposes to operate eighteen separate investment portfolios. Each of the four Classes of Shares offered by this Prospectus represents interests in one of the four Portfolios. Each Portfolio is non-diversified. The Fund was incorporated in Maryland on February 29, 1988. The Portfolios are designed primarily for investors seeking investment of funds held in an advisory or other similar capacity, which may include the investment of funds held or managed by broker-dealers, investment counselors and financial planners. Investment professionals such as those listed above may purchase Shares for discretionary or non-discretionary accounts maintained by individuals. INVESTMENT OBJECTIVES AND POLICIES The investment objective of each Portfolio may not be changed without the affirmative vote of a majority of the Portfolio's outstanding shares (as defined in the Investment Company Act of 1940, as amended (the "1940 Act")). As with other mutual funds, there can be no assurance that any Portfolio will achieve its investment objective. Because of their different investment emphases, each Portfolio should be considered as a vehicle for diversification and not as a balanced investment program. The Statement of Additional Information contains a more detailed description of the various investments and investment techniques used by the Portfolios. BEA INTERNATIONAL EQUITY PORTFOLIO The BEA International Equity Portfolio's investment objective is to seek long-term appreciation of capital. The Portfolio will invest primarily in equity securities of non-U.S. issuers. The Portfolio defines equity securities of non-U.S. issuers as securities of issuers whose principal activities are outside the United States. The Portfolio expects that its investments will be concentrated in Argentina, Australia, Austria, Brazil, Canada, Chile, Colombia, Denmark, England, Finland, France, Germany, Greece, Hong Kong, Hungary, Italy, Japan, Malaysia, Mexico, The Netherlands, New Zealand, Norway, Portugal, Singapore, South Africa, Spain, Sweden, Switzerland, Thailand and Venezuela. The Portfolio may invest in securities of issuers in Emerging Markets, as defined below under "Investment Objectives and Policies - BEA Emerging Markets Equity Portfolio," but does not expect to invest more than 40% of its total assets in securities of issuers in Emerging Markets. The Portfolio will invest in securities of issuers from at least three countries outside the United States. Under normal market conditions, the Portfolio will invest a minimum of 80% of its total assets in equity securities of non-U.S. issuers. Such equity securities include common stock and preferred stock (including convertible preferred stock); bonds, notes and debentures convertible into common or preferred stock; stock purchase warrants and rights; equity interests in trusts and partnerships; and depositary receipts of companies. 4 The Portfolio may invest up to 20% of its total assets in debt securities issued by U.S. or foreign governments or corporations, although it does not currently intend to invest more than 5% of its net assets in debt securities. The Portfolio has no limitation on the maturity or the credit quality of the debt securities in which it invests, which may include lower-quality, high yielding securities, commonly known as "junk bonds." See "Risk Factors -- Lower-Rated Securities." BEA EMERGING MARKETS EQUITY PORTFOLIO The BEA Emerging Markets Equity Portfolio's investment objective is to seek long-term appreciation of capital. The Portfolio will invest primarily in equity securities of issuers in Emerging Markets. As used in this Prospectus, an Emerging Market is any country which is generally considered to be an emerging or developing country by the World Bank and the International Finance Corporation, as well as countries that are classified by the United Nations as emerging or developing, at the time of the Portfolio's investment. The countries that will not be considered Emerging Markets include: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Italy, Japan, Luxembourg, the Netherlands, New Zealand, Norway, Spain, Switzerland, the United Kingdom and the United States. Under normal market conditions, the Portfolio will invest a minimum of 80% of its total assets in equity securities of issuers in Emerging Markets. The Portfolio will not necessarily seek to diversify investments on a geographical basis or on the basis of the level of economic development of any particular country. The Portfolio will at all times, except during defensive periods, maintain investments in at least three Emerging Markets. The Portfolio normally will not emphasize dividend or interest income in choosing securities, unless BEA believes the income will contribute to the securities' appreciation potential. An equity security of an issuer in an Emerging Market is defined as common stock and preferred stock (including convertible preferred stock); bonds, notes and debentures convertible into common or preferred stock; stock purchase warrants and rights; equity interests in trusts and partnerships; and depositary receipts of companies: (i) the principal securities trading market for which is in an Emerging Market; (ii) whose principal trading market is in any country, provided that, alone or on a consolidated basis, they derive 50% or more of their annual revenue from either goods produced, sales made or services performed in Emerging Markets; or (iii) that are organized under the laws of, and with a principal office in, an Emerging Market. Determinations as to eligibility will be made by BEA based on publicly available information and inquiries made to the companies. To the extent that the Portfolio's assets are not invested as described above, the remainder of the assets may be invested in government or corporate debt securities of Emerging Market or developed countries, although the Portfolio does not presently intend to invest more than 5% of its net assets in debt securities. Debt securities may include lower-rated debt securities (commonly known as "junk bonds"). See "Risk Factors -- Lower-Rated Securities." BEA GLOBAL TELECOMMUNICATIONS PORTFOLIO The BEA Global Telecommunications Portfolio's investment objective is long term capital appreciation. The Portfolio seeks to achieve its objective by investing primarily in equity securities of telecommunications companies, both foreign and domestic. It is the policy of the Portfolio under normal market conditions to invest not less than 65% of its total assets in equity securities (including common and preferred stocks, and convertible securities and warrants to acquire such equity 5 securities) of telecommunications companies. As a Portfolio investing in global markets, at least 65% of the Portfolio's investments will be made in at least three different countries. The Portfolio considers telecommunications companies to be those which are engaged primarily in designing, developing, operating, financing, manufacturing or providing the following activities, products and services: communications equipment and services (including equipment and services for both data and voice transmission); electronic components and equipment; broadcast (including television and radio, satellite, microwave and cable television and narrow casting); computer equipment, mobile communications and cellular radio and paging; electronic mail; local and wide area networking and linkage of word and data processing systems; publishing and information systems; video and telex; and emerging technologies combining telephone, television and/or computer systems (collective "telecommunication activity"). A "telecommunications" company is an entity in which (i) at least 50% of either its revenue or earnings was derived from telecommunications activity, or (ii) at least 50% of its assets was devoted to telecommunications activity based on the company's most recent fiscal year. The remainder of the assets of the BEA Global Telecommunications Portfolio may be invested in non-equity securities or securities issued by companies that are not primarily engaged in telecommunications activities. Because the Portfolio will concentrate its investments in the telecommunications industry, its investments may be subject to greater risk and market fluctuation than a fund that has securities representing a broader range of investment alternatives. The telecommunications industry is subject to extensive governmental regulation, which could adversely affect the Portfolio's performance. The nature and scope of such regulation generally is subject to political forces and market considerations, the effect of which cannot be predicted. Telecommunications companies in both developed and emerging countries are undergoing significant change due to varying and evolving levels of governmental regulation or deregulation and other factors. As a result, competitive pressures are intense and the securities of such companies may be subject to rapid price volatility. Telecommunications regulation typically limits rates charged, returns earned, providers of services, types of services, ownership, areas served and terms for dealing with competitors and customers. Telecommunications regulation generally has tended to be less stringent for newer services than for traditional telephone service, although there can be no assurances that such newer services will not be heavily regulated in the future. Regulation may also limit the use of new technologies and hamper efficient deprecation of existing assets. If regulation limits the use of new technologies by established carriers or forces cross-subsidies, large private networks may emerge. Service providers may also be subject to regulations regarding ownership and control, providers of services, subscription rates and technical standards. Companies offering telephone services are experiencing increasing competition from cellular telephones, and the cellular telephone industry, because it has a limited operating history, faces uncertainty concerning the future of the industry and demand for cellular telephones. All telecommunications companies in both developed and emerging countries are subject to the additional risk that technological innovations will make their products and services obsolete. While telephone companies in developed countries and certain emerging countries may pay an above average dividend, the Portfolio's investment decisions are based upon capital appreciation potential rather than income considerations. 6 BEA HIGH YIELD PORTFOLIO BEA High Yield Portfolio seeks to provide high total return. The Portfolio will invest primarily in high yield fixed income securities (commonly known as "junk bonds") issued by corporations, governments and agencies, both U.S. and foreign. Under normal market conditions, the Portfolio will invest a minimum of 65% of its total assets in such high yield fixed income securities, with the remainder invested in fixed income securities which may have equity characteristics, such as convertible bonds. The Portfolio is not limited in the extent to which it can invest in junk bonds (i.e., securities rated below investment grade by recognized rating agencies or in comparable unrated securities). See "Risk Factors - Lower-Rated Securities." The portion of the Portfolio's assets invested in various countries will vary from time to time depending on BEA's assessment of market opportunities. The value of the securities held by the Portfolio, and thus the net asset value of the shares of the Portfolio, generally will vary inversely in relation to changes in prevailing interest rates. Also, the value of such securities may be affected by changes in real or perceived creditworthiness of the issuers. The Portfolio is not restricted to any maximum or minimum time to maturity in purchasing portfolio securities, and the average maturity of the Portfolio's assets will vary based upon BEA's assessment of economic and market conditions. COMMON INVESTMENT POLICIES This section describes certain investment policies that are common to each Portfolio. These policies are described in more detail in the Statement of Additional Information. TEMPORARY INVESTMENTS. For temporary purposes during periods in which BEA believes changes in economic, financial or political conditions make it advisable, each Portfolio may reduce its holdings in equity and other securities and invest up to 100% of its assets in cash or certain short-term (less than twelve months to maturity) and medium-term (not greater than five years to maturity) interest-bearing instruments or deposits of United States and foreign issuers. Such investments may include, but are not limited to, commercial paper, certificates of deposit, variable or floating rate notes, bankers' acceptances, time deposits, government securities and money market deposit accounts. See Statement of Additional Information, "Common Investment Policies - -- Temporary Investments." To the extent permitted by their investment objectives and policies, the Portfolios may hold cash or cash equivalents pending investment. BORROWING. A Portfolio may borrow up to 33 1/3 percent of its total assets without obtaining shareholder approval. The Adviser intends to borrow, or to engage in reverse repurchase agreements or dollar roll transactions, only for temporary or emergency purposes. See Statement of Additional Information, "Common Investment Policies -- Reverse Repurchase Agreements" and "-- Borrowing." RULE 144A SECURITIES. Rule 144A securities are securities which are restricted as to resale to the general public, but which may be resold to qualified institutional buyers. Each Portfolio may invest in Rule 144A securities that BEA has determined are liquid pursuant to guidelines established by the Fund's Board of Directors. 7 INVESTMENT COMPANIES. Each Portfolio may invest in securities issued by other investment companies within the limit prescribed by the 1940 Act. As a shareholder of another investment company, each Portfolio would bear, along with other shareholders, its pro rata portion of the other investment company's expenses, including advisory fees. These expenses would be in addition to the advisory and other expenses that a Portfolio bears directly in connection with its own operations. PORTFOLIO TURNOVER. BEA will effect portfolio transactions in each Portfolio without regard to holding period, if, in its judgment, such transactions are advisable in light of general market, economic or financial conditions. The BEA International, Emerging Markets Equity and Global Telecommunications Portfolios anticipate that their annual portfolio turnover rate should not exceed 100% under normal conditions. However, it is impossible to predict portfolio turnover rates. The portfolio turnover rate for BEA High Yield Portfolio is anticipated to exceed 100%. The anticipated portfolio turnover rate for BEA High Yield Portfolio is greater than that of many other investment companies. A higher than normal portfolio turnover rate may affect the degree to which a Portfolio's net asset value fluctuates. Higher portfolio turnover rates are likely to result in comparatively greater brokerage commissions. In addition, short-term gains realized from portfolio transactions are taxable to shareholders as ordinary income. The amount of portfolio activity will not be a limiting factor when making portfolio decisions. See Statement of Additional Information, "Portfolio Transactions" and "Taxes." CURRENCY HEDGING. BEA may seek to hedge against a decline in value of a Portfolio's non-dollar denominated portfolio securities resulting from currency devaluations or fluctuations. Unless the BEA Portfolios engage in currency hedging transactions, they will be subject to the risk of changes in relation to the U.S. dollar of the value of the foreign currencies in which their assets are denominated. These Portfolios may also seek to protect, during the period prior to its remittance, the value of the amount of interest, dividends and net realized capital gains received or to be received in a local currency that it intends to remit out of a foreign country by investing in high-quality short-term U.S. dollar-denominated debt securities of such country and/or participating in the forward currency market for the purchase of U.S. dollars in the country. There can be no guarantee that suitable U.S. dollar-denominated investments will be available at the time BEA wishes to use them to hedge amounts to be remitted. The Statement of Additional Information contains additional investment policies and strategies that are common to the Portfolios. INVESTMENT LIMITATIONS Each Portfolio is subject to the following fundamental investment limitation, which may not be changed with respect to a Portfolio except upon the affirmative vote of the holders of a majority of that Portfolio's outstanding Shares. A complete list of the Portfolios' fundamental investment limitations is set forth in the Statement of Additional Information under "Investment Limitations." Each Portfolio may not: Borrow money or issue senior securities, except that each Portfolio may borrow from institutions and enter into reverse repurchase agreements and dollar rolls for temporary purposes in amounts up to one-third of the value of its total assets at the time of such borrowing; or mortgage, pledge or hypothecate any assets, except in connection with any such borrowing and then in amounts 8 not in excess of one-third of the value of the Portfolio's total assets at the time of such borrowing. Each Portfolio will not purchase securities while its aggregate borrowings (including reverse repurchase agreements, dollar rolls and borrowings from banks) in excess of 5% of its total assets are outstanding. Securities held in escrow or separate accounts in connection with the Portfolio's investment practices are not considered to be borrowings or deemed to be pledged for purposes of this limitation. RISK FACTORS FOREIGN SECURITIES. Investing in the securities of non-U.S. issuers involves opportunities and risks that are different from investing in the securities of U.S. issuers. The risks associated with investing in securities of non-U.S. issuers are generally heightened for investments in securities of issuers in Emerging Markets. Because foreign securities generally are denominated and pay dividends or interest in foreign currencies, and the Portfolios may hold from time to time various foreign currencies pending their investment in foreign securities or their conversion into U.S. dollars, the value of the Portfolios' assets as measured in U.S. dollars may be affected favorably or unfavorably by changes in exchange rates. In addition, investors should realize that the value of the Portfolios' investments may be adversely affected by changes in political or social conditions, diplomatic relations, confiscatory taxation, expropriation, limitation on the removal of funds or assets, or imposition of (or change in) exchange control regulations in those foreign nations. In addition, changes in government administrations or economic or monetary policies in the U.S. or abroad could result in appreciation or depreciation of portfolio securities and could favorably or adversely affect the Portfolios' operations. Furthermore, the economies of individual foreign nations may differ from that of the United States, whether favorably or unfavorably, in areas such as growth of gross national product, rate of inflation, capital reinvestment, resource self-sufficiency and balance of payments position. Any foreign investments made by the Portfolios must be made in compliance with U.S. and foreign currency restrictions and tax laws restricting the amounts and types of foreign investments. In general, less information is publicly available with respect to foreign issuers than is available with respect to U.S. companies. Most foreign companies are also not subject to the uniform accounting and financial reporting requirements applicable to issuers in the United States. The Portfolios' foreign investments may be less liquid and their prices may be more volatile than comparable investments in securities in U.S. companies. Expenses relating to foreign investments are higher than those relating to domestic securities. In addition, there is generally less government supervision and regulation of securities exchanges, brokers and issuers in foreign countries than in the United States. LOWER-RATED SECURITIES. The widespread expansion of government, consumer and corporate debt within the economy has made the corporate sector, especially cyclically sensitive industries, more vulnerable to economic downturns or increased interest rates. Because lower-rated debt securities involve issuers with weaker credit fundamentals (such as debt-to-equity ratios, interest charge coverage, earnings history and the like), an economic downturn, or increases in interest rates, could severely disrupt the market for lower-rated debt securities and adversely affect the value of outstanding debt securities and the ability of the issuers to repay principal and interest. 9 Lower-rated debt securities (commonly known as "junk bonds") possess speculative characteristics and are subject to greater market fluctuations and risk of lost income and principal than higher-rated debt securities for a variety of reasons. The markets for and prices of lower-rated debt securities have been found to be less sensitive to interest rate changes than higher-rated investments, but more sensitive to adverse economic changes or individual corporate developments. Also, during an economic downturn or substantial period of rising interest rates, highly leveraged issuers may experience financial stress which would adversely affect their ability to service their principal and interest payment obligations, to meet projected business goals and to obtain additional financing. If the issuer of a debt security owned by a Portfolio defaulted, the Portfolio could incur additional expenses in seeking recovery with no guaranty of recovery. In addition, periods of economic uncertainty and changes can be expected to result in increased volatility of market prices of lower-rated debt securities and a Portfolio's net asset value. Lower-rated debt securities also present risks based on payment expectations. For example, lower-rated debt securities may contain redemption or call provisions. If an issuer exercises these provisions in a declining interest rate market, a Portfolio would have to replace the security with a lower yielding security, resulting in a decreased return for investors. Conversely, a lower-rated debt security's value will decrease in a rising interest rate market, as will the value of a Portfolio's assets. If a Portfolio experiences unexpected net redemptions, this may force it to sell its lower-rated debt securities, without regard to their investment merits, thereby decreasing the asset base upon which a Portfolio's expenses can be spread and possibly reducing a Portfolio's rate of return. In addition, to the extent that there is no established retail secondary market, there may be thin trading of lower-rated debt securities, and this may have an impact on both BEA's ability to value accurately lower-rated debt securities and the Portfolio's assets, as judgment plays a greater role when reliable objective data are unavailable, and to dispose of the debt securities. Adverse publicity and investor perceptions, whether or not based on fundamental analysis, may decrease the value and liquidity of lower-rated debt securities, especially in a thinly traded market. MANAGEMENT BOARD OF DIRECTORS The business and affairs of the Fund and each investment portfolio are managed under the direction of the Fund's Board of Directors. INVESTMENT ADVISER BEA serves as the investment adviser for each of the Portfolios pursuant to investment advisory agreements (the "Advisory Agreements"). BEA is a general partnership organized under the laws of the State of New York and, together with its predecessor firms, has been engaged in the investment advisory business for over 50 years. BEA's principal offices are located at One Citicorp Center, 153 East 53rd Street, New York, New York 10022. Credit Suisse Capital Corporation ("CS Capital") is an 80% partner and CS Advisors Corp., a New York Corporation which is a wholly-owned subsidiary of CS Capital, is a 20% partner in BEA. CS Capital is a wholly-owned subsidiary of Credit Suisse Investment Corporation, which is a wholly-owned subsidiary of Credit 10 Suisse, the largest Swiss bank, which in turn is a subsidiary of CS Holding, a Swiss corporation. BEA is registered as an investment adviser under the Investment Advisers Act of 1940, as amended. BEA is a diversified asset manager, handling global equity, balanced, fixed income and derivative securities accounts for private individuals, as well as corporate pension and profit-sharing plans, state pension funds, union funds, endowments and other charitable institutions. As of September 30, 1996, BEA managed approximately $____ billion in assets. As an investment adviser, BEA emphasizes a global investment strategy. BEA currently acts as investment adviser for thirteen investment companies registered under the Investment Company Act, and as sub-adviser to certain portfolios of six other registered investment companies. BEA also acts as investment adviser for forty-two offshore funds, twenty-two of which are equity funds and twenty of which are debt funds. BEA has sole investment discretion for the Portfolios and will make all decisions affecting assets of each Portfolio under the supervision of the Fund's Board of Directors and in accordance with the Portfolios' stated policies. BEA will select investments for each of the Portfolios and will place purchase and sale orders on behalf of each of the Portfolios. BEA is also responsible for providing to the Portfolios' and the Fund's service providers prompt and accurate data with respect to the Portfolios' transactions and the valuation of portfolio securities. The day-to-day portfolio management of BEA International Equity, BEA Emerging Markets Equity and BEA Global Telecommunications Portfolios is the responsibility of the BEA International Equities Management Team. The Team consists of the following investment professionals: Emilio Bassini (Executive Director), Stephen M. Swift (Managing Director), Steven D. Bleiberg (Senior Vice President), Richard Watt (Senior Vice President), William P. Sterling (Managing Director), Ian Borsook (Vice President), and Stephen R. Waite (Vice President). Mr. Bassini and Mr. Bleiberg have, on an individual basis, been engaged as investment professionals with BEA for more than five years. Mr. Swift joined BEA in 1995, prior to which he spent three years at Credit Suisse Asset Management in London, where he was Head of Global Equities and portfolio manager for the CS Tiger Fund. For the previous 15 years he was with Wardley Investment Services, a Hong Kong-based subsidiary of the Hong Kong and Shanghai Bank. Mr. Watt joined BEA in 1995, prior to which he was head of emerging markets investments and research at Gartmore Investment Limited in London. Prior to 1992, he was a director of Kleinwort Benson International Investment in London and was a portfolio manager with Lorithan Regional Council, a public pension plan sponsor in Scotland. Mr. Sterling joined BEA in 1995, prior to which he was head of International Economics at Merrill Lynch & Company. Mr. Borsook joined BEA in 1995, prior to which he was a manager of global economic indicators and Vice President at Merrill Lynch & Company. Mr. Waite joined BEA in 1995, prior to which he was Vice President and Senior European Economist for Merrill Lynch & Company in London. Prior to May 1992 he was an economic consultant to Capital Group in Los Angeles. The day-to-day portfolio management of the BEA High Yield Portfolio is the responsibility of the BEA Fixed Income Management Team. The Team consists of the following investment professionals: Robert Moore (Executive Director), Gregg Diliberto (Managing Director), Richard Lindquist (Managing Director), Misia Dudley (Senior Vice President), Mark Silverstein (Senior Vice President), Robert Justich (Senior Vice President), Marianne Rossi (Vice President), William P. Sterling (Managing Director), Ian Borsook (Vice President), and Stephen R. Waite (Vice President). Messrs. Moore, Diliberto and Silverstein have, on an individual basis, been engaged as investment 11 professionals with BEA for more than five years. Mr. Lindquist, Ms. Dudley and Ms. Rossi joined BEA in 1995 as a result of BEA's acquisition of CS First Boston Investment Management. Prior to joining CS First Boston, Mr. Lindquist and Ms. Rossi were with Prudential Insurance Company of America. Prior to joining CS First Boston, Ms. Dudley was with Stockbridge Partners, and prior to that had spent five years with E.F. Hutton. Mr. Justich joined BEA in 1995, prior to which he worked at Merrill Lynch and as a Manager of Financial Services with Arthur Young & Company. For the services provided and expenses assumed by it, BEA is entitled to receive the following fees, computed daily and payable monthly based on a Portfolio's average daily net assets: Portfolio Annual Rate --------- ----------- BEA International Equity............ .80% of the average daily net assets* BEA Emerging Markets Equity......... 1.00% of the average daily net assets* BEA Global Telecommunications....... 1.00% of the average daily net assets* BEA High Yield...................... .70% of the average daily net assets ___________ * This fee is higher than that paid by most investment companies, although the fees are within the range of fees of investment companies with similar investment objectives. For the period ended August 31, 1996, the Fund paid BEA investment advisory fees, on annualized basis, with respect to the BEA International Equity, BEA Emerging Markets Equity and BEA High Yield Portfolios .__%, .__% and .__%, respectively, of the average net assets of the respective Portfolios, and BEA waived, approximately .__%, .__% and .__%, respectively, of the average net assets of each such Portfolio. BEA may, at its discretion, from time to time agree to waive voluntarily all or any portion of its advisory fee for any Portfolio. The Advisory Agreements provide that BEA shall not be liable for any error of judgment or mistake of law or for any loss suffered by the Fund in connection with the matters to which the Advisory Agreement relates and shall be indemnified for any losses and claims in connection with any claim relating thereto, except liability resulting from willful misfeasance, bad faith or gross negligence on BEA's part in the performance of its duties or from reckless disregard of its obligations and duties under the Advisory Agreement. BEA has agreed to reimburse each Portfolio for the amount, if any, by which the total operating and management expenses of such Portfolio for any fiscal year exceed the most restrictive state blue sky expense limitation in effect from time to time, to the extent required by such limitation. BEA may assume additional expenses of a Portfolio from time to time. In certain circumstances, BEA may assume such expenses on the condition that it is reimbursed by the Portfolio for such amounts prior to the end of a fiscal year. In such event, the reimbursement of such amounts will have the effect of increasing a Portfolio's expense ratio and of decreasing return to investors. 12 ADMINISTRATORS PFPC Inc. ("PFPC"), an indirect, wholly-owned subsidiary of PNC Bank Corp., serves as administrator for the Portfolios. As administrator, PFPC will provide various services to each Portfolio, including determining each of the Portfolio's net asset value, providing all accounting services for the Portfolios and generally assisting in all aspects of each Portfolio's operations. As compensation for administrative services, the Fund will pay PFPC a fee calculated at the annual rate of .125% of each Portfolio's average daily net assets. PFPC has its principal offices at 400 Bellevue Parkway, Wilmington, Delaware 19809. The Fund employs BEA as co-administrator. As co-administrator, BEA provides shareholder liaison services to the Fund, including responding to shareholder inquiries and providing information on shareholder account. As compensation, the Fund pays to BEA a fee calculated at an annual rate of .05% of each Portfolios average daily net assets. DISTRIBUTOR Counsellors Securities Inc. ("Counsellors Securities"), serves as the Fund's distributor. Counsellors Securities is located at 466 Lexington Avenue, New York, New York 10017-3147. Counsellors Securities receives a fee at an annual rate equal to .50% of the Portfolio's average daily net assets for distribution services, pursuant to a distribution agreement between Counsellor's Securities and the Fund in accordance with a distribution plan (the "12b-1 Plan") adopted by the Fund pursuant to Rule 12b-1 under the 1940 Act. Amounts paid to Counsellors Securities under the Fund's 12b-1 Plan may be used by Counsellors Securities to cover expenses that are related to (i) the sale of Investor Shares of the Portfolios, (ii) ongoing servicing and/or maintenance of the accounts of shareholders of the Portfolio, and (iii) sub-transfer agency services, subaccounting services or administrative services related to the sale of the Investor Shares of the Portfolios, all as set forth in the Fund's 12b-1 Plan. Payments under the 12b-1 Plan are not tied exclusively to the distribution expenses actually incurred. Counsellors Securities may delegate some or all of these functions to a Service Organization. See "Shareholder Servicing." The Fund's Board of Directors will evaluate the appropriateness of the 12b-1 Plan on a continuing basis and in doing so will consider all relevant factors, including expenses borne by Counsellors Securities and amounts received under the 12b-1 Plan. TRANSFER AGENT Boston Financial Data Services, Inc. ("BFDS") serves as Transfer Agent for the Portfolios. BFDS's address is Two Heritage Drive, Quincy, MA, 02171. CUSTODIAN Brown Brothers Harriman & Co. serves as custodian for the Portfolios. The 1940 Act and the rules and regulations adopted thereunder permit a Portfolio to maintain its securities and cash in the custody of certain eligible banks and securities depositories. In compliance with such rules and regulations, a Portfolio's portfolio of securities and cash, when invested in securities of foreign issuers, may be held by eligible foreign subcustodians appointed by the custodian. EXPENSES The expenses of each Portfolio are deducted from its total income before dividends are paid. These expenses include, but are not limited to, fees paid to the investment adviser, distributor, 13 administrator and co-administrator and fees and expenses of officers and directors who are not affiliated with the Portfolio's investment adviser or distributor, taxes, interest, legal fees, custodian fees, auditing fees, brokerage fees and commissions, certain of the fees and expenses of registering and qualifying the Portfolios and the Shares for distribution under Federal and state securities laws, expenses of preparing prospectuses and statements of additional information and of printing and distributing prospectuses and statements of additional information annually to existing shareholders, the expense of reports to shareholders, shareholders' meetings and proxy solicitations, fidelity bond and directors and officers liability insurance premiums, the expense of using independent pricing services and other expenses which are not expressly assumed by the Adviser under its investment advisory agreement with respect to a Portfolio. Any general expenses of the Fund that are not readily identifiable as belonging to a particular investment portfolio of the Fund will be allocated among all investment portfolios of the Fund based upon the relative net assets of the investment portfolios at the time such expenses are incurred. Transfer agency expenses, expenses of preparation, printing and distributing prospectuses, statements of additional information, proxy statements and reports to shareholders, registration fees and other costs identified as belonging to a particular class, are allocated to such class. HOW TO PURCHASE SHARES GENERAL BEA Investor Shares are only available for investment through investment professionals, financial institutions on behalf of their customers, retirement plans that elect to make one or more Portfolios an option for participants in the plans and other financial intermediaries. Individuals, including participants in retirement plans, cannot invest directly in Investor Shares of the Portfolios, but may do so only through a participating Institution. The Fund reserves the right to make Investor Shares available to other investors in the future. References in this Prospectus to shareholders or investors are generally to Institutions as the record holders of the Investor Shares. Each Institution separately determines the rules applicable to its customers investing in the Fund, including minimum initial and subsequent investment requirements and the procedures to be followed to effect purchases, redemptions and exchanges of Investor Shares. There is no minimum amount of initial or subsequent purchases of Investor Shares imposed on Institutions, although the Fund reserves the right to impose minimums in the future. Orders for the purchase of Investor Shares are placed with an Institution by its customers. The Institution is responsible for the prompt transmission of the order to the Fund. Institutions may purchase Investor Shares by telephoning BEA Investor Portfolios and sending payment by wire. After telephoning (800)___-____ for instructions, an Institution should then wire federal funds to Counsellors Securities Inc. using the following wire address: Orders by wire will not be accepted until a completed account application has been received in proper form, and an account number has been established. If a telephone order is received by the close of regular trading on the New York Stock Exchange (the "NYSE") (currently 4:00 p.m., Eastern time) AND payment by wire is received on the same day in proper form in accordance with instructions set forth above, the shares will be priced according to the net asset value of the Fund on 14 that day and are entitled to dividends and distributions beginning on that day. If payment by wire is received in proper form by the close of the NYSE without a prior telephone order, the purchase will be priced according to the net asset value of the Fund on that day and is entitled to dividends and distributions beginning on that day. However, if a wire received in proper form is not preceded by a telephone order AND is received after the close of regular trading on the NYSE, the payment will be held uninvested until the order is effected at the close of business on the next day that the Fund calculates its net asset value (a "business day"). Payment for orders that are not accepted will be returned to the institution after prompt inquiry. Certain organizations that have entered into agreements with the Fund or its agent may enter confirmed purchase orders on behalf of customers, with payment to follow no later than the Fund's pricing on the following business day. If payment is not received by such time, the organization could be held liable for resulting losses or fees incurred. After an investor has made his initial investment, additional shares may be purchased at any time in the manner outlined above. Payments for initial and subsequent investments should be preceded by an order placed with the Fund or its agent and should clearly indicate the investor's account number. In the interest of economy and convenience, physical certificates representing shares in the Fund are not normally issued. The Fund understands that some broker-dealers (other than Counsellors Securities), financial institutions, securities dealers and other industry professionals may impose certain conditions on their clients that invest in the Fund, which are in addition to or different than those described in this Prospectus, and, to the extent permitted by applicable regulatory authority, may charge their clients direct fees. Certain features of the Fund may be modified in these programs and administrative charges may be imposed for the services rendered. Therefore, a client or customer should contact the organization acting on his behalf concerning the fees (if any) charged in connection with a purchase or redemption of Fund shares and should read this Prospectus in light of the terms governing his accounts with the organization. HOW TO REDEEM SHARES GENERAL An investor may redeem (sell) shares on any day that the Fund's net asset value is calculated (see "Net Asset Value" below). Requests for the redemption (or exchange) of Investor Shares are placed with an Institution by its customers. The Institution is responsible for the prompt transmission of its customers' requests to the Fund or its agent. Institutions may redeem Investor Shares by calling BEA Investor Funds at (800) __________ between 9:00 a.m. and 4:00 p.m. (Eastern time) on any Business Day. An investor making a telephone withdrawal should state (i) the name of the Portfolio, (ii) the account number of the Portfolio, (iii) the name of the investor appearing on the Portfolio's records, (iv) the amount to be withdrawn and (v) the name of the person requesting the redemption. After receipt of the redemption request, the redemption proceeds will be wired to the investor's bank as indicated in the account application previously filled out by the investor. The Fund does not currently impose a service charge for effecting wire transfers but the Fund reserves the right to do so in the future. During periods of significant economic or market change, telephone 15 redemptions may be difficult to implement. If an investor is unable to contact BEA Investor Portfolios by telephone, an investor may deliver the redemption request to BEA Investor Portfolios by mail at ____________________. If a redemption order is received prior to the close of regular trading on the NYSE, the redemption order will be effected at the net asset value per share as determined on that day. If a redemption order is received after the close of regular trading on the NYSE, the redemption order will be effected at the net asset value as next determined. Redemption proceeds will normally be wired to an investor on the next business day following the date a redemption order is effected. If, however, in the judgment of BEA, immediate payment would adversely affect the Fund, the Fund reserves the right to pay the redemption proceeds within seven days after the redemption order is effected. Furthermore, the Fund may suspend the right of redemption or postpone the date of payment upon redemption (as well as suspend or postpone the recordation of an exchange of shares) for such periods as are permitted under the 1940 Act. The proceeds paid upon redemption may be more or less than the amount invested depending upon a share's net asset value at the time of redemption. If an investor redeems all the shares in his account, all dividends and distributions declared up to and including the date of redemption are paid along with the proceeds of the redemption. If the Shares to be redeemed have been recently purchased by check, the Fund's transfer agent may delay mailing a redemption check, which may be a period of up to 15 days from the date of purchase, pending a determination that the check has cleared. A request for redemption must be signed by all persons in whose names the Shares are registered or by an authorized party. Signatures must conform exactly to the account registration. If the proceeds of the redemption would exceed $10,000, or if the proceeds are not to be paid to the record owner at the record address, or if the shareholder is a corporation, partnership, trust or fiduciary, signature(s) must be guaranteed by a bank, broker-dealer, credit union, national securities exchange, savings association or any other organization which qualifies as an "eligible guarantor institution" as that term is defined in rules adopted by the Securities and Exchange Commission. In some cases, however, other documents may be necessary. INVOLUNTARY REDEMPTION The Fund reserves the right to redeem an account in any Portfolio of a shareholder at any time the net asset value of the account in such Portfolio falls below $500 as the result of a redemption request. Shareholders will be notified in writing that the value of their account in a Portfolio is less than $500 and will be allowed 30 days to make additional investments before the redemption is processed. EXCHANGE PRIVILEGE An Institution may exchange Investor Shares of a Portfolio for Investor Shares of any other BEA Investor Portfolio at their respective net asset values. Exchanges may be effected in the manner described under "Redemption of Shares" above. If an exchange request is received by BEA Investor Portfolios prior to 4:00 p.m. (Eastern time), the exchange will be made at each Portfolio's net asset 16 value determined on the same business day. The exchange privilege may be modified or terminated at any time upon 60 days' notice to shareholders. The exchange privilege is available to shareholders residing in any state in which the Investor Shares being acquired may legally be sold. When an investor effects an exchange of shares, the exchange is treated for federal income tax purposes as a redemption. Therefore, the investor may realize a taxable gain or loss in connection with the exchange. For further information regarding the exchange privilege, an investor should contact BEA Investor Portfolios at (800) __________. No exchange fee is currently imposed on exchanges, although the Fund reserves the right to impose a $5.00 administrative fee for each exchange. Shareholders are automatically provided with telephone exchange privileges when opening an account, unless they indicate on the Application that they do not wish to use this privilege. To add a telephone exchange feature to an existing account that previously did not provide for this option, a Telephone Exchange Authorization Form must be filed with BFDS. This form is available from BFDS. Once this election has been made, the shareholder may simply contact BFDS by telephone to request the exchange (800)___-____. The Fund will employ reasonable procedures to confirm that instructions communicated by telephone are genuine, and if the Fund does not employ such procedures, it may be liable for any losses due to unauthorized or fraudulent telephone instructions. Neither the Fund nor BFDS will be liable for any loss, liability, cost or expense for following the Fund's telephone transaction procedures described below or for following instructions communicated by telephone that it reasonably believes to be genuine. The Fund's telephone transaction procedures include the following measures: (1) requiring the appropriate telephone transaction privilege forms; (2) requiring the caller to provide the names of the account owners, the account social security number and name of the Portfolio, all of which must match the Fund's records; (3) requiring the Fund's service representative to complete a telephone transaction form, listing all of the above caller identification information; (4) permitting exchanges only if the two account registrations are identical; (5) requiring that redemption proceeds be sent only by check to the account owners of record at the address of record, or by wire only to the owners of record at the bank account of record; (6) sending a written confirmation for each telephone transaction to the owners of record at the address of record within five (5) business days of the call; and (7) maintaining tapes of telephone transactions for six months, if the Fund elects to record shareholder telephone transactions. If the exchanging shareholder does not currently own Shares of the Portfolio whose Shares are being acquired, a new account will be established with the same registration, dividend and capital gain options and authorized dealer of record as the account from which shares are exchanged, unless otherwise specified in writing by the shareholder with all signatures guaranteed by an eligible guarantor institution. If any amount remains in the account from which the exchange is being made, such amount must not drop below the minimum account value required by the Portfolio. 17 NET ASSET VALUE The net asset value for each Portfolio is determined daily as of the close of regular trading on the NYSE on each Business Day. The net asset value of a Portfolio is calculated by adding the value of all its securities to cash and other assets, deducting its actual and accrued liabilities and dividing by the total number of its Shares outstanding. DIVIDENDS AND DISTRIBUTIONS The Fund will distribute substantially all of the net realized capital gains, if any, of each of the Portfolios to each Portfolio's shareholders annually. The Fund will distribute all net investment income, if any, for the BEA International Equity, BEA Emerging Markets Equity and BEA Global Telecommunications Portfolios annually. The Fund will distribute net investment income for the BEA High Yield Portfolio at least quarterly. All distributions will be reinvested in the form of additional full and fractional Shares of the relevant Portfolio unless a shareholder elects otherwise. If a shareholder desires to have distributions paid out rather than reinvested, the shareholder should notify BFDS in writing. TAXES GENERAL The following discussion is only a brief summary of some of the important tax considerations generally affecting the Portfolios and their shareholders and is not intended as a substitute for careful tax planning. Accordingly, investors in the Portfolios should consult their tax advisers with specific reference to their own tax situation. Each Portfolio will elect to be taxed as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). So long as a Portfolio qualifies for this tax treatment, such Portfolio will be relieved of Federal income tax on amounts distributed to shareholders, but shareholders, unless otherwise exempt, will pay income or capital gains taxes on amounts so distributed (except distributions that are treated as a return of capital or that are designated as exempt interest dividends) regardless of whether such distributions are paid in cash or reinvested in additional Shares. Distributions out of the "net capital gain" (the excess of net long-term capital gain over net short-term capital loss), if any, of a Portfolio will be taxed to shareholders as long-term capital gain regardless of the length of time a shareholder has held his Shares or whether such gain was reflected in the price paid for the Shares. All other distributions, to the extent they are taxable, are taxed to shareholders as ordinary income. The current nominal maximum marginal rate on ordinary income for individuals, trusts and estates is generally 39.6%. However, the maximum rate imposed on net capital gain of such taxpayers is 28%. Corporate taxpayers are taxed at the same rates on both ordinary income and capital gains. Transactions in foreign currencies, forward contracts, options and futures contracts (including options and futures contracts on foreign currencies) will be subject to special provisions of the Code that, among other things, may affect the character (i.e., ordinary or capital) of gains or losses realized 18 by a Portfolio, accelerate the recognition of income by a Portfolio and defer a Portfolio's losses. Exchange control regulations may restrict repatriations of investment income and capital or of the proceeds of sales of securities by investors such as the Portfolios. In addition, certain investments (such as zero coupon securities and shares of so-called "passive foreign investment companies" or "PFICS") may cause a Portfolio to recognize income without the receipt of cash. Each of these circumstances, whether separately or in combination, may limit a Portfolio's ability to pay sufficient dividends and to make sufficient distributions to satisfy the Subchapter M and excise tax distributions requirements. The Fund will send written notices to shareholders annually regarding the tax status of distributions made by each Portfolio. Dividends declared in October, November or December of any year payable to shareholders of record on a specified date in such a month will be deemed to have been received by the shareholders on December 31, provided such dividends are paid during January of the following year. Each Portfolio intends to make sufficient actual or deemed distributions prior to the end of each calendar year to avoid liability for Federal excise tax. Investors should be careful to consider the tax implications of buying Shares just prior to a distribution. The price of shares purchased at that time will reflect the amount of the forthcoming distribution. Those investors purchasing just prior to a distribution will nevertheless be taxed on the entire amount of the distribution received. Shareholders who exchange Shares representing interests in one Portfolio for Shares representing interests in another Portfolio will generally recognize capital gain or loss for Federal income tax purposes. Under certain provisions of the Code, some shareholders may be subject to a 31% "backup" withholding tax on reportable dividends, capital gains distributions and redemption payments. Shareholders who are nonresident alien individuals, foreign trusts or estates, foreign corporations or foreign partnerships may be subject to different U.S. Federal income tax treatment. An investment in one Portfolio is not intended to constitute a balanced investment program. FOREIGN INCOME TAXES Investment income received by the Portfolios from sources within foreign countries may be subject to foreign income taxes withheld at the source. The United States has entered into tax treaties with many foreign countries which entitle the Portfolios to a reduced rate of, or exemption from, taxes on such income. It is impossible to determine the effective rate of foreign tax in advance since the amount of each Portfolio's assets to be invested in various countries is not known. If more than 50% of the value of a Portfolio's total assets at the close of each taxable year consists of the stock or securities of foreign corporations, such Portfolio will be eligible to elect to "pass through" to the Fund's shareholders the amount of foreign income taxes paid by each Portfolio (the "Foreign Tax Election"). Pursuant to the Foreign Tax Election, shareholders will be required (i) to include in gross income, even though not actually received, their respective pro-rata shares of the foreign income taxes paid by the Portfolio that are attributable to any distributions they receive; and (ii) either to deduct their pro-rata share of foreign taxes in computing their taxable income, or to use it (subject to various Code limitations) as a foreign tax credit against U.S. Federal income tax (but not both). In determining the source and character of distributions received from a Portfolio for 19 the purpose of the foreign tax credit limitation rules of the Code, shareholders will be required to treat allocable portions of a Portfolio's distributions as foreign source income. No deduction for foreign taxes may be claimed by a shareholder who does not itemize deductions. MISCELLANEOUS CONSIDERATIONS; EFFECT OF FUTURE LEGISLATION Future legislative or administrative changes or court decisions may materially affect the tax consequences of investing in one or more Portfolios of the Fund. Shareholders are also urged to consult their tax advisers concerning the application of state and local income taxes to investments in the Fund which may differ from the Federal income tax consequences described above. SHAREHOLDER SERVICING The Fund is authorized to offer Investor Shares exclusively to Institutions whose clients, customers or participants in retirement plans ("Customers") are beneficial owners of Investor Shares. Either those Institutions or companies providing certain services to them (together, "Service Organizations") may enter into service agreements ("Agreements") related to the sale of the Investor Shares with Counsellors Securities pursuant to a Distribution Plan, as described below. Pursuant to the terms of an Agreement, the Service Organization agrees to perform certain distribution, shareholder servicing, administrative and accounting services for its Customers. Distribution services would be marketing or other services in connection with the promotion and sale of Investor Shares. Shareholder services that may be provided include responding to Customer inquiries, providing information on Customer investments and providing other shareholder liaison services. Administrative and accounting services related to the sale of the Investor Shares may include (i) aggregating and processing purchase and redemption requests from Customers and placing net purchase and redemption orders with the Fund's transfer agent, (ii) processing dividend payments from the Fund on behalf of Customers and (iii) providing sub-accounting relating to the sale of Investor Shares beneficially owned by Customers or the information to the Fund necessary for subaccounting. The Board of Directors of the Fund has approved a Distribution Plan (the "Plan") pursuant to Rule 12b-1 under the 1940 Act under which Counsellors Securities may pay each participating Service Organization a negotiated fee on an annual basis not to exceed .75% of the value of the average daily net assets of its Customers invested in the Investor Shares. However, under the current Distribution Agreement between Counsellors Securities and the Fund on behalf of the Portfolios, this fee shall not exceed .50% of average daily net assets of Customers. The Fund may, in the future, enter into additional Agreements with Service Organizations. The Board of Directors of RBB will evaluate the appropriateness of the Plan on a continuing basis. MULTI-CLASS STRUCTURE The Fund offers other classes of shares of the Portfolios which are offered directly to institutional investors and financial planners pursuant to separate prospectuses. Shares of each class represent equal pro rata interests in the Portfolios and accrue dividends and calculate net asset value and performance quotations in the same manner. The Fund quotes performance of the Institutional and Advisor Shares separately from Investor Shares. Because of different fees paid by the Investor Shares, the total return on such shares can be expected, at any time, to be different than the total return on Institutional and Advisor Shares. Information concerning these other classes may be obtained by calling [BEA/Counsellors Securities/BFDS] at 1-800-___-____. 20 DESCRIPTION OF SHARES The Fund has authorized capital of thirty billion shares of Common Stock, $.001 par value per share, of which 12.35 billion shares are currently classified into 67 different classes of Common Stock (as described in the Statement of Additional Information). THIS PROSPECTUS AND THE STATEMENT OF ADDITIONAL INFORMATION INCORPORATED HEREIN RELATE PRIMARILY TO THE BEA INVESTOR CLASSES REPRESENTING AN INTEREST IN THE BEA INTERNATIONAL EQUITY, BEA EMERGING MARKETS EQUITY, BEA GLOBAL TELECOMMUNICATIONS AND BEA HIGH YIELD PORTFOLIOS AND DESCRIBE ONLY THE INVESTMENT OBJECTIVE AND POLICIES, OPERATIONS, CONTRACTS AND OTHER MATTERS RELATING TO SUCH CLASSES. Each share that represents an interest in a Portfolio has an equal proportionate interest in the assets belonging to such Portfolio with each other share that represents an interest in such Portfolio. Shares of the Fund do not have preemptive or conversion rights. When issued for payment as described in this Prospectus, Shares will be fully paid and non-assessable. This Prospectus combines offering information with respect to four Portfolios; there is a possibility that one Portfolio might become liable for any misstatement, inaccuracy, or incomplete disclosure in the Prospectus concerning another Portfolio. The Fund currently does not intend to hold annual meetings of shareholders except as required by the 1940 Act or other applicable law. The law under certain circumstances provides shareholders with the right to call for a meeting of shareholders to consider the removal of one or more directors. To the extent required by law, the Fund will assist in shareholder communication in such matters. Holders of shares of each of the Portfolios will vote in the aggregate and not by class on all matters, except where otherwise required by law. Furthermore, shareholders of all investment portfolios of the Fund will vote in the aggregate and not by portfolio except as otherwise required by law or when the Board of Directors determines that the matter to be voted upon affects only the interests of the shareholders of a particular investment portfolio. (See the Statement of Additional Information under "Additional Information Concerning Fund Shares" for examples of when the 1940 Act requires voting by investment portfolio or by class.) Shareholders of the Fund are entitled to one vote for each full share held (irrespective of class or portfolio) and fractional votes for fractional shares held. Voting rights are not cumulative and, accordingly, the holders of more than 50% of the aggregate shares of Common Stock of the Fund may elect all of the directors. As of July 23, 1996, to the Fund's knowledge, no person held of record or beneficially 25% or more of the outstanding shares of all classes of the Fund. 21 OTHER INFORMATION REPORTS AND INQUIRIES Shareholders of a Portfolio will receive unaudited semi-annual reports describing the Portfolio's investment operations and annual financial statements audited by independent accountants. Shareholder inquiries should be addressed to BFDS, the Fund's transfer agent. PERFORMANCE INFORMATION From time to time, each of the Portfolios may advertise its performance, including comparisons to other mutual funds with similar investment objectives and to stock or other relevant indices. All such advertisements will show the average annual total return over one, five and ten year periods or, if such periods have not yet elapsed, shorter periods corresponding to the life of a Portfolio. Such total return quotations will be computed by finding the compounded average annual total return for each time period that would equate the assumed initial investment of $1,000 to the ending redeemable value, net of any redemption and other fees, according to a required standardized calculation. The standard calculation is required by the SEC to provide consistency and comparability in investment company advertising. The Portfolios may also from time to time include in such advertising an aggregate total return figure or a total return figure that is not calculated according to the standardized formula in order to compare more accurately a Portfolio's performance with other measures of investment return. For example, a Portfolio's total return may be compared with data published by Lipper Analytical Services, Inc., CDA Investment Technologies, Inc., Mutual Fund Forecaster, Morningstar, Inc. or Weisenberger Investment Company Service, or with the performance of the Standard & Poor's 500 Stock Index, Standard & Poor's MidCap 400 Index, Moody's Bond Survey Bond Index, Wilshire 5000 Index, Lehman Brothers Bond Indexes, Consumer Price Index, Bond Buyer's 20-Bond Index, Dow Jones Industrial Average, national publications such as Money, Forbes, Barron's, the Wall Street Journal or the New York Times or publications of a local or regional nature, and other industry publications. From time to time, the BEA High Yield Portfolio may also advertise its "30-day yield." The yield refers to the income generated by an investment in the Portfolio over the 30-day period identified in the advertisement, and is computed by dividing the net investment income per share during the period by the maximum public offering price per share of the last day of the period. This income is "annualized" by assuming that the amount of income is generated each month over a one-year period and is compounded semi-annually. The annualized income is then shown as a percentage of the net asset value. The yield on Shares of the Portfolio will fluctuate and is not necessarily representative of future results. Shareholders should remember that yield is generally a function of portfolio quality and maturity, type of instrument, operating expenses and market conditions. Any fees charged by Institutions directly to their customers in connection with investments in the Portfolio are not reflected in the yields on the Portfolio's Shares, and such fees, if charged, will reduce the actual return received by shareholders on their investments. 22 NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS OR IN THE PORTFOLIOS' STATEMENT OF ADDITIONAL INFORMATION INCORPORATED HEREIN BY REFERENCE, IN CONNECTION WITH THE OFFERING MADE BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND OR ITS DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE FUND OR BY THE DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE. 23 THE BEA FAMILY OF MUTUAL FUNDS INVESTOR CLASS BEA INTERNATIONAL EQUITY PORTFOLIO BEA EMERGING MARKETS EQUITY PORTFOLIO BEA GLOBAL TELECOMMUNICATIONS PORTFOLIO BEA HIGH YIELD PORTFOLIO (INVESTMENT PORTFOLIOS OF THE RBB FUND, INC.) STATEMENT OF ADDITIONAL INFORMATION This Statement of Additional Information provides supplementary information pertaining to shares of four classes (the "Investor Shares" or the "Shares") representing interests in four investment portfolios (the "Portfolios") of The RBB Fund, Inc. (the "Fund"): BEA International Equity Portfolio, BEA Emerging Markets Equity Portfolio, BEA Global Telecommunications Portfolio and BEA High Yield Portfolio (collectively, the "Portfolios"). This Statement of Additional Information is not a prospectus, and should be read only in conjunction with the Prospectus of the Fund relating to the Portfolios, dated ________ __, 1996 (the "Prospectus"). A copy of the Prospectus may be obtained from the Fund's distributor by calling toll-free (800) 888-9723. This Statement of Additional Information is dated ________ __, 1996. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS STATEMENT OF ADDITIONAL INFORMATION IN CONNECTION WITH THE OFFERING MADE BY THE PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND OR ITS DISTRIBUTOR. THE STATEMENT OF ADDITIONAL INFORMATION DOES NOT CONSTITUTE AN OFFERING BY THE FUND OR BY THE DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION BUT HAS NOT YET BECOME EFFECTIVE. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS STATEMENT OF ADDITIONAL INFORMATION SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO THE REGISTRATION OR QUALIFICATION OF THE SECURITIES LAWS OF ANY SUCH STATE. CONTENTS Prospectus Page Page ---- ---------- General ............................................. 2 8 Common Investment Policies -- All Portfolios ........ 2 8 Supplemental Investment Objectives and Policies -- BEA International Equity, BEA Emerging Markets Equity and BEA Global Telecommunications Portfolios......................................... 22 19 Investment Limitations .............................. 22 22 Risk Factors ........................................ 25 23 Directors and Officers .............................. 28 N/A Investment Advisory and Servicing Arrangements....... 30 26 Portfolio Transactions .............................. 34 29 Purchase and Redemption Information ................. 36 30 Valuation of Shares ................................. 37 32 Performance and Yield Information.................... 38 36 Taxes ............................................... 41 33 Additional Information Concerning Fund Shares........ 50 35 Miscellaneous ....................................... 53 35 Appendix ............................................ A-1 N/A Financial Statements ................................ N/A N/A GENERAL The RBB Fund, Inc. (the "Fund") is an open-end management investment company currently operating or proposing to operate eighteen separate investment portfolios. The Fund was organized as a Maryland corporation on February 29, 1988. Unless otherwise indicated, the following investment policies may be changed by the Board of Directors without an affirmative vote of shareholders. Capitalized terms used herein and not otherwise defined have the same meanings as are given to such terms in the Prospectus. COMMON INVESTMENT POLICIES -- ALL PORTFOLIOS The following supplements the information contained in the Prospectus concerning the investment objectives and policies of, and techniques used by, the Portfolios. NON-DIVERSIFIED STATUS. Each Portfolio is classified as non-diversified within the meaning of the Investment Company Act, which means that each Portfolio is not limited by such Act in the proportion of its assets that it may invest in securities of a single issuer. Each Portfolio's investments will be limited, however, in order to qualify as a "regulated investment company" for purposes of the Internal Revenue Code of 1986, as amended. See "Taxes." To qualify, each Portfolio will comply with certain requirements, including limiting its investments so that at the close of each quarter of the taxable year (i) not more than 25% of the market value of each Portfolio's total assets will be invested in the securities of a single issuer, and (ii) with respect to 50% of the market value of its total assets, not more than 5% of the market value of each Portfolio's total assets will be invested in the securities of a single issuer and each Portfolio will not own more than 10% of the outstanding voting securities of a single issuer. To the extent that each Portfolio assumes large positions in the securities of a small number of issuers, each Portfolio's return may fluctuate to a greater extent than that of a diversified company as a result of changes in the financial condition or in the market's assessment of the issuers. TEMPORARY INVESTMENTS. The short-term and medium-term debt securities in which a Portfolio may invest for temporary and defensive purposes consist of: (a) obligations of the United States or foreign governments, their respective agencies or instrumentalities; (b) bank deposits and bank obligations (including certificates of deposit, time deposits and bankers' acceptances) of U.S. or foreign banks denominated in any currency; (c) floating rate securities and other instruments denominated in any currency issued by international development agencies; (d) finance company and corporate commercial paper and other short-term corporate debt obligations of U.S. and foreign corporations; and (e) repurchase agreements with banks and broker-dealers with respect to such securities. 2 REPURCHASE AGREEMENTS. Each Portfolio may agree to purchase securities from a bank or recognized securities dealer and simultaneously commit to resell the securities to the bank or dealer at an agreed-upon date and price reflecting a market rate of interest unrelated to the coupon rate or maturity of the purchased securities ("repurchase agreements"). Such Portfolio would maintain custody of the underlying securities prior to their repurchase; thus, the obligation of the bank or dealer to pay the repurchase price on the date agreed to would be, in effect, secured by such securities. If the value of such securities were less than the repurchase price, plus interest, the other party to the agreement would be required to provide additional collateral so that at all times the collateral is at least equal to the repurchase price plus accrued interest. Default by or bankruptcy of a seller would expose a Portfolio to possible loss because of adverse market action, expenses and/or delays in connection with the disposition of the underlying obligations. The Adviser will consider the creditworthiness of a seller in determining whether to have a Portfolio enter into a repurchase agreement. There are no percentage limits on a Portfolio's ability to enter into repurchase agreements. Each Portfolio will not invest more than 15% of its assets in repurchase agreements maturing in more than seven (7) days. Repurchase agreements are considered to be loans by the Portfolio under the Investment Company Act of 1940 (the "Investment Company Act" or the "1940 Act"). REVERSE REPURCHASE AGREEMENTS AND DOLLAR ROLLS. Each Portfolio may enter into reverse repurchase agreements with respect to portfolio securities for temporary purposes (such as to obtain cash to meet redemption requests when the liquidation of portfolio securities is deemed disadvantageous or inconvenient by the Adviser). Reverse repurchase agreements involve the sale of securities held by a Portfolio pursuant to such Portfolio's agreement to repurchase them at a mutually agreed upon date, price and rate of interest. At the time a Portfolio enters into a reverse repurchase agreement, it will establish and maintain a segregated account with an approved custodian containing cash or liquid high-grade debt securities having a value not less than the repurchase price (including accrued interest). The assets contained in the segregated account will be marked-to-market daily and additional assets will be placed in such account on any day in which the assets fall below the repurchase price (plus accrued interest). A Portfolio's liquidity and ability to manage its assets might be affected when it sets aside cash or portfolio securities to cover such commitments. Reverse repurchase agreements involve the risk that the market value of the securities retained in lieu of sale may decline below the price of the securities a Portfolio has sold but is obligated to repurchase. In the event the buyer of securities under a reverse repurchase agreement files for bankruptcy or becomes insolvent, such buyer or its trustee or receiver may receive an extension of time to determine whether to enforce a Portfolio's obligation to repurchase the securities, and a Portfolio's use of the proceeds of the reverse repurchase agreement may effectively be restricted pending such decision. Each Portfolio also may enter into "dollar rolls," in which it sells fixed income securities for delivery in the current month and simultaneously contract to repurchase substantially similar (same type, coupon 3 and maturity) securities on a specified future date. During the roll period, a Portfolio would forgo principal and interest paid on such securities. A Portfolio would be compensated by the difference between the current sales price and the forward price for the future purchase, as well as by the interest earned on the cash proceeds of the initial sale. Reverse repurchase agreements are considered to be borrowings under the Investment Company Act. WHEN-ISSUED SECURITIES, DELAYED DELIVERY TRANSACTIONS AND FORWARD COMMITMENTS. Each Portfolio may purchase securities on a when-issued basis, and it may purchase or sell securities for delayed delivery or on a forward commitment basis. These transactions occur when securities are purchased or sold by a Portfolio with payment and delivery taking place in the future to secure what is considered an advantageous yield and price to a Portfolio at the time of entering into the transaction. Although the Portfolios have not established a limit on the percentage of its assets that may be committed in connection with such transactions, it will maintain a segregated account with its custodian of cash, cash equivalents, U.S. Government securities or other high grade liquid debt securities denominated in U.S. dollars or non-U.S. currencies in an aggregate amount equal to the amount of its commitment in connection with such purchase transactions. The assets contained in the segregated account will be marked-to-market daily and additional assets will be placed in such account on any day in which assets fall below the amount of its commitment. Each Portfolio's liquidity and ability to manage its assets might be affected when it sets aside cash or portfolio securities to cover such commitments. When a Portfolio engages in when-issued transactions, it relies on the seller to consummate the trade. Failure of the seller to do so may result in the Portfolio incurring a loss or missing an opportunity to obtain a price considered to be advantageous. When-issued and forward commitment transactions involve the risk that the price or yield obtained in a transaction may be less favorable than the price or yield available in the market when the securities delivery takes place. The Portfolio currently anticipates that when-issued securities will not exceed 25% of its total assets. Each Portfolio does not intend to engage in when-issued purchases and forward commitments for speculative purposes but only in furtherance of their investment objectives. STANDBY COMMITMENT AGREEMENTS. Each Portfolio may from time to time enter into standby commitment agreements. Such agreements commit such Portfolio, for a stated period of time, to purchase a stated amount of a fixed income security which may be issued and sold to the Portfolio at the option of the issuer. The price and coupon of the security is fixed at the time of the commitment. At the time of entering into the agreement a Portfolio is paid a commitment fee, regardless of whether or not the security is ultimately issued. A Portfolio will enter into such agreements only for the purpose of investing in the security underlying the commitment at a yield and price that is considered advantageous to a Portfolio. Each Portfolio will not enter into a standby commitment with a remaining term in excess of 45 days and it will limit its investment in such commitments so that the aggregate purchase price of the securities subject to such commitments, together with the value of portfolio securities subject to legal restrictions on resale, will not exceed 4 10% of its assets taken at the time of acquisition of such commitment or security. Such Portfolio will at all times maintain a segregated account with its custodian of cash, cash equivalents, U.S. Government securities or other high grade liquid debt securities denominated in U.S. dollars or non-U.S. currencies in an aggregate amount equal to the purchase price of the securities underlying the commitment. The assets contained in the segregated account will be marked-to-market daily and additional assets will be placed in such account on any day in which assets fall below the amount of the purchase price. A Portfolio's liquidity and ability to manage its assets might be affected when it sets aside cash or portfolio securities to cover such commitments. There can be no assurance that the securities subject to a standby commitment will be issued and the value of the security, if issued, on the delivery date may be more or less than its purchase price. Because the issuance of the security underlying the commitment is at the option of the issuer, a Portfolio may bear the risk of a decline in the value of such security and may not benefit from an appreciation in the value of the security during the commitment period. The purchase of a security subject to a standby commitment agreement and the related commitment fee will be recorded on the date on which the security can reasonably be expected to be issued, and the value of the security will be adjusted by the amount of the commitment fee. In the event the security is not issued, the commitment fee will be recorded as income on the expiration date of the standby commitment. ILLIQUID SECURITIES. Each Portfolio may not invest more than 10% of its net assets in illiquid securities (including repurchase agreements which have a maturity of longer than seven days), including securities that are illiquid by virtue of the absence of a readily available market or legal or contractual restrictions on resale. The term "illiquid securities" for this purpose means securities that cannot be disposed of within seven days in the ordinary course of business at approximately the amount at which the Portfolio has valued the securities. Such securities may include, among other things, loan participations and assignments, options purchased in the over-the-counter markets, repurchase agreements maturing in more than seven days, structured notes and restricted securities other than Rule 144A securities that BEA has determined are liquid pursuant to guidelines established by the Fund's Board of Directors. Because of the absence of any liquid trading market currently for these investments, a Portfolio may take longer to liquidate these positions than would be the case for publicly traded securities. Although these securities may be resold in privately negotiated transactions, the prices realized on such sales could be less than those originally paid by a Portfolio. Securities that have legal or contractual restrictions on resale but have a readily available market are not considered illiquid for purposes of this limitation. BEA will monitor the liquidity of restricted securities in each Portfolio's portfolio and report periodically on such decisions to the Board of Directors of the Fund. Where there are no readily available market quotations, the security shall be valued at fair 5 value as determined in good faith by the Board of Directors of the Fund. The Board has adopted a policy that the Portfolios will not purchase private placements (i.e. restricted securities other than Rule 144A securities). With respect to each Portfolio, repurchase agreements subject to demand are deemed to have a maturity equal to the notice period. Historically, illiquid securities have included securities subject to contractual or legal restrictions on resale because they have not been registered under the Securities Act of 1933, as amended (the "Securities Act"), securities which are otherwise not readily marketable and repurchase agreements having a maturity of longer than seven days. Securities which have not been registered under the Securities Act are referred to as private placements or restricted securities and are purchased directly from the issuer or in the secondary market. The Board has adopted a policy that the Portfolios will not purchase private placements (i.e., restricted securities other than Rule 144A securities). Mutual funds do not typically hold a significant amount of these restricted or other illiquid securities because of the potential for delays on resale and uncertainty in valuation. Limitations on resale may have an adverse effect on the marketability of portfolio securities and a mutual fund might be unable to dispose of restricted or other illiquid securities promptly or at reasonable prices and might thereby experience difficulty satisfying redemptions within seven days. A mutual fund might also have to register such restricted securities in order to dispose of them resulting in additional expense and delay. Adverse market conditions could impede such a public offering of securities. In recent years, however, a large institutional market has developed for certain securities that are not registered under the Securities Act including repurchase agreements, commercial paper, foreign securities, municipal securities and corporate bonds and notes. Institutional investors depend on an efficient institutional market in which the unregistered security can be readily resold or on an issuer's ability to honor a demand for repayment. The fact that there are contractual or legal restrictions on resale to the general public or to certain institutions may not be indicative of the liquidity of such investments. The SEC has recently adopted Rule 144A which allows for a broader institutional trading market for securities otherwise subject to restriction on resale to the general public. Rule 144A establishes a "safe harbor" from the registration requirements of the Securities Act for resales of certain securities to qualified institutional buyers. The Adviser anticipates that the market for certain restricted securities such as institutional commercial paper will expand further as a result of this new regulation and the development of automated systems for the trading, clearance and settlement of unregistered securities of domestic and foreign issuers, such as the PORTAL System sponsored by the National Association of Securities Dealers, Inc. The Adviser will monitor the liquidity of restricted securities in a Portfolio under the supervision of the Board of Directors. In reaching liquidity decisions, the Adviser may consider, INTER ALIA, the following 6 factors: (1) the unregistered nature of the security; (2) the frequency of trades and quotes for the security; (3) the number of dealers wishing to purchase or sell the security and the number of other potential purchasers; (4) dealer undertakings to make a market in the security and (5) the nature of the security and the nature of the marketplace trades (e.g., the time needed to dispose of the security, the method of soliciting offers and the mechanics of the transfer). SECURITIES OF UNSEASONED ISSUERS. Each Portfolio will not invest in securities of unseasoned issuers, including equity securities of unseasoned issuers which are not readily marketable, if the aggregate investment in such securities would exceed 5% of such Portfolio's net assets. The term "unseasoned" refers to issuers which, together with their predecessors, have been in operation for less than three years. LENDING OF PORTFOLIO SECURITIES. To increase income on its investments, a Portfolio may lend its portfolio securities with an aggregate value of up to 30% of its total assets to broker/dealers and other institutional investors. Although each Portfolio does not currently intend to do so, it may lend its portfolio securities on a short or long term basis to broker-dealers or institutional investors that the Adviser deems qualified, but only when the borrower maintains with a Portfolio's custodian, collateral either in cash or money market instruments, in an amount at least equal to the market value of the securities loaned, plus accrued interest and dividends, determined on a daily basis and adjusted accordingly. Collateral for such loans may include cash, securities of the U.S. Government or its agencies or instrumentalities or an irrevocable letter of credit issued by a bank which is deemed creditworthy by the Adviser. In determining whether to lend securities to a particular broker-dealer or institutional investor, the Adviser will consider, and during the period of the loan will monitor, all relevant facts and circumstances, including the creditworthiness of the borrower. Such loans would involve risks of delay in receiving additional collateral in the event the value of the collateral decreased below the value of the securities loaned or of delay in recovering the securities loaned or even the loss of rights in the collateral should the borrower of the securities fail financially. Default by or bankruptcy of a borrower would expose the Portfolios to possible loss because of adverse market action, expenses and/or delays in connection with the disposition of the underlying securities. BORROWING. Each Portfolio may borrow up to 33 1/3 percent of its total assets. The Adviser intends to borrow only for temporary or emergency purposes, including to meet portfolio redemption requests so as to permit the orderly disposition of portfolio securities, or to facilitate settlement transactions on portfolio securities. Additional investments will not be made when borrowings exceed 5% of a Portfolio's total assets. Although the principal of such borrowings will be fixed, a Portfolio's assets may change in value during the time the borrowing is outstanding. Each Portfolio expects that some of its borrowings may be made on a secured basis. In such situations, either the custodian will segregate the pledged assets for the 7 benefit of the lender or arrangements will be made with a suitable subcustodian, which may include the lender. U.S. GOVERNMENT SECURITIES. The U.S. government securities in which a Portfolio may invest include direct obligations of the U.S. Treasury (such as Treasury bills, notes and bonds) and obligations issued by U.S. government agencies and instrumentalities, including securities that are supported by the full faith and credit of the United States and securities that are supported primarily or solely by the creditworthiness of the issuer (such as securities of the Federal Home Loan Banks, the Student Loan Marketing Association and the Tennessee Valley Authority). FOREIGN DEBT SECURITIES. The returns on foreign debt securities reflect interest rates and other market conditions prevailing in those countries and the effect of gains and losses in the denominated currencies against the U.S. dollar, which have had a substantial impact on investment in foreign fixed income securities. The relative performance of various countries' fixed income markets historically has reflected wide variations relating to the unique characteristics of each country's economy. Year-to-year fluctuations in certain markets have been significant, and negative returns have been experienced in various markets from time to time. The foreign government securities in which the Portfolios may invest generally consist of obligations issued or backed by national, state or provincial governments or similar political subdivisions or central banks in foreign countries. Foreign government securities also include debt obligations of supranational entities, which include international organizations designated, or backed by governmental entities to promote economic reconstruction or development, international banking institutions and related government agencies. Examples include the International Bank for Reconstruction and Development (the "World Bank"), the European Coal and Steel Community, the Asian Development Bank and the InterAmerican Development Bank. Foreign government securities also include debt securities of "quasi-governmental agencies" and debt securities denominated in multinational currency units of an issuer (including supranational issuers). Debt securities of quasi-governmental agencies are issued by entities owned by either a national, state or equivalent government or are obligations of a political unit that is not backed by the national government's full faith and credit and general taxing powers. An example of a multinational currency unit is the European Currency Unit ("ECU"). An ECU represents specified amounts of the currencies of certain member states of the European Economic Community. The specific amounts of currencies comprising the ECU may be adjusted by the Council of Ministers of the European Community to reflect changes in relative values of the underlying currencies. BRADY BONDS. Each Portfolio may invest in so-called "Brady Bonds," which have recently been issued by Costa Rica, Mexico, Uruguay and Venezuela and which may be issued by other Latin American countries. Brady Bonds are issued as part of a debt restructuring in which the bonds are issued 8 in exchange for cash and certain of the country's outstanding commercial bank loans. Investors should recognize that Brady Bonds have been issued only recently, and accordingly, they do not have a long payment history. Brady Bonds may be collateralized or uncollateralized, are issued in various currencies (primarily the U.S. dollar) and are actively traded in the over-the-counter ("OTC") secondary market for debt of Latin American issuers. LOAN PARTICIPATIONS AND ASSIGNMENTS. Each Portfolio may invest in fixed and floating rate loans ("Loans") arranged through private negotiations between a foreign government and one or more financial institutions ("Lenders"). The majority of the Portfolio's investments in Loans in Latin America are expected to be in the form of participations in Loans ("Participations") and assignments of portions of Loans from third parties ("Assignments"). Participations typically will result in each Portfolio having a contractual relationship only with the Lender, not with the borrower. Each Portfolio will have the right to receive payments of principal, interest and any fees to which it is entitled only from the Lender selling the Participation and only upon receipt by the Lender of the payments from the borrower. In connection with purchasing Participations, the Portfolios generally will have no right to enforce compliance by the borrower with the terms of the loan agreement relating to the Loan ("Loan Agreement"), nor any rights of set-off against the borrower, and the Portfolio may not directly benefit from any collateral supporting the Loan in which it has purchased the Participation. As a result, the Portfolios will assume the credit risk of both the borrower and the Lender that is selling the Participation. In the event of the insolvency of the Lender selling a Participation, the Portfolios may be treated as a general creditor of the Lender and may not benefit from any set-off between the Lender and the borrower. The Portfolios will acquire Participations only if the Lender interpositioned between the Portfolios and the borrower is determined by BEA to be creditworthy. Each Portfolio currently anticipates that it will not invest more than 5% of its total assets in Loan Participations and Assignments. CONVERTIBLE SECURITIES. BEA International Equity and BEA Emerging Markets Equity Portfolios may invest up to 20% of their total assets in convertible securities, and BEA High Yield and BEA Global Telecommunications Portfolios may invest up to 35% of their total assets in convertible securities. A convertible security is a bond, debenture, note, preferred stock or other security that may be converted into or exchanged for a prescribed amount of common stock of the same or a different issuer within a particular period of time at a specified price or formula. A convertible security entitles the holder to receive interest paid or accrued on debt or the dividend paid on preferred stock until the convertible security matures or is redeemed, converted or exchanged. Before conversion, convertible securities have characteristics similar to nonconvertible debt securities in that they ordinarily provide a stable stream of income with generally higher yields than those of common stocks of the same or similar issuers. Convertible securities rank senior to common stock in a corporation's capital structure but are usually subordinated to comparable nonconvertible securities. While no securities investment is completely without risk, 9 investments in convertible securities generally entail less risk than the corporation's common stock, although the extent to which such risk is reduced depends in large measure upon the degree to which the convertible security sells above its value as a fixed income security. Convertible securities have unique investment characteristics in that they generally (1) have higher yields than common stocks, but lower yields than comparable non-convertible securities, (2) are less subject to fluctuation in value than the underlying stock since they have fixed income characteristics and (3) provide the potential for capital appreciation if the market price of the underlying common stock increases. Most convertible securities currently are issued by U.S. companies, although a substantial Eurodollar convertible securities market has developed, and the markets for convertible securities denominated in local currencies are increasing. The value of a convertible security is a function of its "investment value" (determined by its yield in comparison with the yields of other securities of comparable maturity and quality that do not have a conversion privilege) and its "conversion value" (the security's worth, at market value, if converted into the underlying common stock). The investment value of a convertible security is influenced by changes in interest rates, with investment value declining as interest rates increase and increasing as interest rates decline. The credit standing of the issuer and other factors also may have an effect on the convertible security's investment value. The conversion value of a convertible security is determined by the market price of the underlying common stock. If the conversion value is low relative to the investment value, the price of the convertible security is governed principally by its investment value. Generally the conversion value decreases as the convertible security approaches maturity. To the extent the market price of the underlying common stock approaches or exceeds the conversion price, the price of the convertible security will be increasingly influenced by its conversion value. A convertible security generally will sell at a premium over its conversion value by the extent to which investors place value on the right to acquire the underlying common stock while holding a fixed income security. The Portfolios have no current intention of converting any convertible securities it may own into equity or holding them as equity upon conversion, although it may do so for temporary purposes. A convertible security might be subject to redemption at the option of the issuer at a price established in the convertible security's governing instrument. If a convertible security held by the Portfolio is called for redemption, the Portfolio will be required to permit the issuer to redeem the security, convert it into the underlying common stock or sell it to a third party. MORTGAGE-BACKED SECURITIES. BEA International Equity Portfolio and BEA Emerging Markets Equity Portfolio may invest up to 20% of their total assets in mortgage-backed securities and BEA High Yield Portfolio may invest up to 100% of its total assets in mortgage-backed securities, such as those issued by the Government National Mortgage Association ("GNMA"), the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation or 10 certain foreign issuers, as well as by private issuers such as commercial investment banks, savings and loan institutions, mortgage bankers and private mortgage insurance companies. Mortgage-backed securities represent direct or indirect participations in, or are secured by and payable from, mortgage loans secured by real property. The mortgages backing these securities include, among other mortgage instruments, conventional 30-year fixed rate mortgages, 15-year fixed rate mortgages, graduated payment mortgages and adjustable rate mortgages. The government or the issuing agency typically guarantees the payment of interest and principal of these securities. However, the guarantees do not extend to the securities' yield or value, which are likely to vary inversely with fluctuations in interest rates, nor do the guarantees extend to the yield or value of the Portfolio's shares. These securities generally are "pass-through" instruments, through which the holders receive a share of all interest and principal payments from the mortgages underlying the securities, net of certain fees. Yields on pass-through securities are typically quoted by investment dealers and vendors based on the maturity of the underlying instruments and the associated average life assumption. The average life of pass-through pools varies with the maturities of the underlying mortgage loans. A pool's term may be shortened by unscheduled or early payments of principal on the underlying mortgages. The occurrence of mortgage prepayments is affected by various factors, including the level of interest rates, general economic conditions, the location, scheduled maturity and age of the mortgage and other social and demographic conditions. Because prepayment rates of individual pools vary widely, it is not possible to predict accurately the average life of a particular pool. For pools of fixed rate 30-year mortgages, a common industry practice in the U.S. has been to assume that prepayments will result in a 12-year average life. At present, pools, particularly those with loans with other maturities or different characteristics, are priced on an assumption of average life determined for each pool. Although certain mortgage-related securities are guaranteed by a third party or are otherwise similarly secured, the market value of the security, which may fluctuate, is not so secured. If the Portfolios purchase a mortgage-related security at a premium, that portion may be lost if there is a decline in the market value of the security whether resulting from increases in interest rates or prepayment of the underlying mortgage collateral. As with other interest-bearing securities, the prices of such securities are inversely affected by changes in interest rates. However, though the value of a mortgage-related security may decline when interest rates rise, the converse is not necessarily true because in periods of declining interest rates mortgages underlying securities are prone to prepayment. In periods of falling interest rates, the rate of prepayment tends to increase, thereby shortening the actual average life of a pool of mortgage-related securities. Conversely, in periods of rising rates the rate of prepayment tends to decrease, thereby lengthening the actual average life of the pool. However, these effects may not be present, or may differ in degree, if the mortgage loans in the pools have adjustable interest rates or other special payment terms, such as a prepayment charge. Actual prepayment experience may cause 11 the yield of mortgage-backed securities to differ from the assumed average life yield. Reinvestment of prepayments may occur at higher or lower interest rates than the original investment, thus affecting a Portfolio's yield. For this and other reasons, a mortgage-related security's stated maturity may be shortened by an unscheduled prepayment on underlying mortgages and, therefore, it is not possible to predict accurately the security's return to the Portfolios. Mortgage-related securities provide regular payments consisting of interest and principal. No assurance can be given as to the return the Portfolios will receive when these amounts are reinvested. The rate of interest on mortgage-backed securities is lower than the interest rates paid on the mortgages included in the underlying pool due to the annual fees paid to the servicer of the mortgage pool for passing through monthly payments to certificate holders and to any guarantor, such as GNMA, and due to any yield retained by the issuer. Actual yield to the holder may vary from the coupon rate, even if adjustable, if the mortgage-backed securities are purchased or traded in the secondary market at a premium or discount. In addition, there is normally some delay between the time the issuer receives mortgage payments from the servicer and the time the issuer makes the payments on the mortgage-backed securities, and this delay reduces the effective yield to the holder of such securities. COLLATERALIZED MORTGAGE OBLIGATIONS. The Portfolios may also purchase collateralized mortgage obligations ("CMOs") issued by a U.S. Government instrumentality which are backed by a portfolio of mortgages or mortgage-backed securities. The issuer's obligations to make interest and principal payments is secured by the underlying portfolio of mortgages or mortgage-backed securities. These securities may be considered mortgage derivatives. The Portfolios may only invest in CMOs issued by FHLMC, FNMA or other agencies of the U.S. Government or instrumentalities established or sponsored by the U.S. Government. CMOs provide an investor with a specified interest in the cash flow of a pool of underlying mortgages or other mortgage-related securities. Issuers of CMOs frequently elect to be taxed as pass-through entities known as real estate mortgage investment conduits ("REMICs"). CMOs are issued in multiple classes, each with a specified fixed or floating interest rate and a final distribution date. Coupons can be fixed or variable. If variable, they can move with or in the reverse direction of interest rates. The coupon changes could be a multiple of the actual rate change and there may be limitations on what the coupon can be. Cash flows of pools can also be divided into a principal only class and an interest only class. In this case the principal only class ("PO") will only receive principal cash flows from the pool. All interest cash flows go to the interest only class. The relative payment rights of the various CMO classes may be structured in many ways either sequentially, or by other rules of priority. Generally, payments of principal are applied to the CMO classes in the order of their respective stated maturities, so that no principal payments will be made on a CMO class until all other classes having an earlier stated maturity date are paid in full. Sometimes, however, CMO classes are "parallel pay," i.e. payments of 12 principal are made to two or more classes concurrently. CMOs may exhibit more or less price volatility and interest rate risk than other types of mortgaged-related obligations. The CMO structure returns principal to investors sequentially, rather than according to the pro rata method of a pass-through. In the traditional CMO structure, all classes (called tranches) receive interest at a stated rate, but only one class at a time received principal. All principal payments received on the underlying mortgages or securities are first paid to the "fastest pay" tranche. After this tranche is retired, the next tranche in the sequence becomes the exclusive recipient of principal payments. This sequential process continues until the last tranche is retired. In the event of sufficient early repayments on the underlying mortgages, the "fastest-pay" tranche generally will be retired prior to its maturity. Thus the early retirement of a particular tranche of a CMO held by a Portfolio would have the same effect as the prepayment of mortgages underlying a mortgage-backed pass-through security as described above. ASSET-BACKED SECURITIES. Each Portfolio may invest in asset-backed securities, which represent participations in, or are secured by and payable from, assets such as motor vehicle installment sales, installment loan contracts, leases of various types of real and personal property and receivables from revolving credit (credit card) agreements. The Portfolios may also invest in other types of asset-backed securities that may be available in the future. Such assets are securitized through the use of trusts and special purpose corporations. Payments or distributions of principal and interest may be guaranteed up to certain amounts and for a certain time period by a letter of credit or a pool insurance policy issued by a financial institution unaffiliated with the trust or corporation. The estimated life of an asset-backed security varies with the prepayment experience with respect to the underlying debt instruments. The rate of such prepayments, and hence the life of the asset-backed security, will be primarily a function of current market rates, although other economic and demographic factors will be involved. In certain circumstances, asset-backed securities may be considered illiquid securities subject to the percentage limitations described above. Asset-backed securities are considered an industry for industry concentration purposes, and the Portfolios will therefore not purchase any asset-backed securities which would cause 25% or more of a Portfolio's total assets at the time of purchase to be invested in asset-backed securities. Asset-backed securities present certain risks that are not presented by other securities in which the Portfolio may invest. Automobile receivables generally are secured by automobiles. Most issuers of automobile receivables permit the loan servicers to retain possession of the underlying obligations. If the servicer were to sell these obligations to another party, there is a risk that the purchaser would acquire an interest superior to that of the holders of the asset-backed securities. In addition, because of the large number of vehicles involved in a typical issuance and technical requirements under state laws, the trustee for the holders of the automobile 13 receivables may not have a proper security interest in the underlying automobiles. Therefore, there is the possibility that recoveries on repossessed collateral may not, in some cases, be available to support payments on these securities. Credit card receivables are generally unsecured, and the debtors are entitled to the protection of a number of state and federal consumer credit laws, many of which give such debtors the right to set off certain amounts owed on the credit cards, thereby reducing the balance due. Because asset-backed securities are relatively new, the market experience in these securities is limited, and the market's ability to sustain liquidity through all phases of the market cycle has not been tested. ZERO COUPON SECURITIES. Each Portfolio may invest in "zero coupon" U.S. Treasury, foreign government and U.S. and foreign corporate debt securities, which are bills, notes and bonds that have been stripped of their unmatured interest coupons and receipts or certificates representing interests in such stripped debt obligations and coupons. A Portfolio currently anticipates that zero coupon securities will not exceed 20% of its total assets. A zero coupon security pays no interest to its holder prior to maturity. Accordingly, such securities usually trade at a deep discount from their face or par value and will be subject to greater fluctuations of market value in response to changing interest rates than debt obligations of comparable maturities that make current distributions of interest. A Portfolio anticipates that it will not normally hold zero coupon securities to maturity. Federal tax law requires that a holder of a zero coupon security accrue a portion of the discount at which the security was purchased as income each year, even though the holder receives no interest payment on the security during the year. STRUCTURED NOTES. The Portfolios may invest in structured notes. The distinguishing feature of a structured note is that the amount of interest and/or principal payable on the notes is based on the performance of a benchmark asset or market other than fixed-income securities or interest rates. Examples of a benchmark include stock prices, currency exchange rates and physical commodity prices. Investing in a structured note allows a Portfolio to gain exposure to the benchmark market while fixing the maximum loss that the Portfolio may experience in the event that the market does not perform as expected. The performance tie can be a straight relationship or leveraged, although BEA generally will not use leverage in its structured note strategies. Normally, these bonds are issued by U.S. government agencies and investment banks arrange the structuring. Depending on the terms of the note, the Portfolio may forego all or part of the interest and principal that would be payable on a comparable conventional note; the Portfolio's loss cannot exceed this foregone interest and/or principal. An investment in a structured note involves risks similar to those associated with a direct investment in the benchmark asset. Structured notes will be treated as illiquid securities for investment limitation purposes. NON-INVESTMENT GRADE FIXED INCOME SECURITIES. When and if available, fixed income securities may be purchased by a Portfolio at a discount from face value. From time to time a Portfolio may purchase 14 securities in default with respect to the paying of principal and/or interest at the time acquired if, in the opinion of BEA, such securities have the potential for future capital appreciation. Debt securities purchased by the Portfolios may bear fixed, fixed and contingent or variable rates of interest and may involve equity features such as conversion or exchange rights or warrants for the acquisition of stock of the same or a different issuer; participations based on revenues, sales or profits, or the purchase of common stock in a unit transaction (where corporate debt securities and common stock are offered as a unit). Conversion of certain debt securities may reduce net income per share and net asset value per share. The occurrence of any income dilution of previously outstanding shares of common stock when debt securities are converted will depend upon whether a Portfolio can, from the investments made with the proceeds of the debt securities, earn an amount per share issuable upon conversion at least equal to the amount earned with respect to shares of common stock outstanding prior to conversion. If debt securities are converted at a time when the net asset value per share of common stock is greater than the conversion price, the conversion will result in a decrease or dilution in then current net asset value per share of common stock. The value of the lower rated fixed income securities that the Portfolios purchase may fluctuate more than the value of higher rated debt securities. These lower rated fixed income securities generally tend to reflect short-term corporate and market developments to a greater extent than higher rated securities which react primarily to fluctuations in the general level of interest rates. Changes in the value of securities subsequent to their acquisition will not affect cash income or yields to maturity to a Portfolio but will be reflected in the net asset value of a Portfolio's shares. The Portfolios attempt to reduce risk through credit analysis and attention to current developments and trends in both the economy and financial markets. There can be no assurance that such attempts will be successful. Lower-rated debt securities may include zero coupon securities or pay-in-kind securities. A zero coupon security bears no interest but is issued at a discount from its value at maturity. When held to maturity, its entire return equals the difference between its issue price and its maturity value. Pay-in-kind securities typically do not provide for cash interest payments but instead provide for the issuance of additional debt securities of the issuer in the face amount of the interest payment amount due in lieu of a cash payment. The market prices of both of these securities are affected to a greater extent by interest rate changes and thereby tend to be more volatile than securities which pay interest periodically and in cash. There are also special considerations associated with investing in lower-rated debt securities structured as zero coupon or pay-in-kind securities. For example, a Portfolio must include the interest ("original issue discount") on these securities in determining the amount of its required distributions to shareholders for federal income tax and federal excise tax purposes, even though it receives no cash interest until the security's 15 maturity or payment date. Therefore, in order to satisfy these distribution requirements, a Portfolio may have to sell some of its assets without regard to their investment merit to obtain cash to distribute to shareholders. These actions may occur under disadvantageous circumstances and are likely to reduce a Portfolio's assets and may thereby increase its expense ratio and decrease its rate of return. For additional information concerning these tax considerations, see "Taxes" below. From time to time, a Portfolio may also purchase securities not paying interest at the time acquired if, in the opinion of the Portfolio's Adviser, such securities have the potential for future income or capital appreciation. FORWARD CURRENCY CONTRACTS. Each Portfolio may use forward currency contracts to protect against uncertainty in the level of future exchange rates. The Portfolio may enter into forward currency contracts with respect to specific transactions. For example, when a portfolio anticipates the receipt in a foreign currency of interest payments on a security that it holds, a portfolio may desire to "lock-in" the U.S. dollar price of the security or the U.S. dollar equivalent of such payment, as the case may be, by entering into a forward contract for the purchase or sale, for a fixed amount of U.S. dollars, of the amount of foreign currency involved in the underlying transaction. A Portfolio will thereby be able to protect itself against a possible loss resulting from an adverse change in the relationship between the currency exchange rates during the period between the date on which the security is purchased or sold, or on which the payment is declared, and the date on which such payments are made or received. The precise matching of the forward contract amounts and the value of the securities involved will not generally be possible because the future value of such securities in foreign currencies will change as a consequence of market movements in the value of those securities between the date the forward contract is entered into and the date it matures. Accordingly, it may be necessary for a Portfolio to purchase additional foreign currency on the spot (i.e., cash) market (and bear the expense of such purchase) if the market value of the security is less than the amount of foreign currency the Portfolio is obligated to deliver and if a decision is made to sell the security and make delivery of the foreign currency. Conversely, it may be necessary to sell on the spot market some of the foreign currency received upon the sale of a Portfolio security if its market value exceeds the amount of foreign currency a Portfolio is obligated to deliver. The projection of short-term currency market movements is extremely difficult, and the successful execution of a short-term hedging strategy is highly uncertain. Forward contracts involve the risk that anticipated currency movements will not be accurately predicted, causing a Portfolio to sustain losses on these contracts and transaction costs. A Portfolio may enter into a forward contract and maintain a net exposure on such contract only if (1) the consummation of the contract would not obligate a Portfolio to deliver an amount of foreign currency in excess of the value of a Portfolio's portfolio securities or other assets denominated in that currency or (2) a Portfolio maintains cash, government securities or liquid, high-grade debt securities in a segregated account in an amount not less than the value of a Portfolio's 16 total assets committed to the consummation of the contract which value must be marked to market daily. A Portfolio will comply with guidelines established by the SEC with respect to coverage of forward contracts entered into by mutual funds and, if such guidelines so require, will set aside cash, U.S. government securities or liquid, high-grade debt securities in a segregated account with its custodian in the amount prescribed. Under normal circumstances, consideration of the prospect for currency parities will be incorporated into the longer term investment decisions made with regard to overall diversification strategies. However, the Adviser believes that it is important to have the flexibility to enter into such forward contracts when it determines that the best interests of a Portfolio will be served. At or before the maturity date of a forward contract requiring a portfolio to sell a currency, the Portfolios may either sell a portfolio security and use the sale proceeds to make delivery of the currency or retain the security and offset its contractual obligation to deliver the currency by purchasing a second contract pursuant to which the Portfolio will obtain, on the same maturity date, the same amount of the currency that it is obligated to deliver. Similarly, the Portfolios may close out a forward contract requiring it to purchase a specified currency by entering into a second contract entitling it to sell the same amount of the same currency on the maturity date of the first contract. A Portfolio would realize a gain or loss as a result of entering into such an offsetting forward currency contract under either circumstance to the extent the exchange rate or rates between the currencies involved moved between the execution dates of the first contract and the offsetting contract. The cost to a Portfolio of engaging in forward currency contracts will vary with factors such as the currencies involved, the length of the contract period and the market conditions then prevailing. Because forward currency contracts are usually entered into on a principal basis, no fees or commissions are involved. The use of forward currency contracts will not eliminate fluctuations in the prices of the underlying securities a Portfolio owns or intends to acquire, but it will fix a rate of exchange in advance. In addition, although forward currency contracts limit the risk of loss due to a decline in the value of the hedged currencies, at the same time they limit any potential gain that might result should the value of the currencies increase. Moreover, investors should be aware that dollar-denominated securities may not be available in some or all foreign countries, that the forward currency market for the purchase of U.S. dollars in many foreign countries is not highly developed and that in certain countries no forward market for foreign currencies currently exists or that such market may be closed to investment by a Portfolio. Although a Portfolio will value its assets daily in terms of U.S. dollars, it does not intend to convert its holdings of foreign currencies into U.S. dollars on a daily basis. The Portfolios may convert foreign currency from time to time, and investors should be aware of the costs of currency conversion. Although foreign exchange dealers do not charge a fee for conversion, they do realize a profit based on the difference between the 17 prices at which they are buying and selling various currencies. Thus, a dealer may offer to sell a foreign currency to a Portfolio at one rate, while offering a lesser rate of exchange should a Portfolio desire to resell that currency to the dealer. OPTIONS AND FUTURES CONTRACTS. The Portfolios may write covered call options, buy put options, buy call options and write put options, without limitation except as noted in this paragraph. Such options may relate to particular securities or to various indexes and may or may not be listed on a national securities exchange and issued by the Options Clearing Corporation. The Portfolios may also invest in futures contracts and options on futures contracts (index futures contracts or interest rate futures contracts, as applicable) for hedging purposes (including currency hedging) or for other purposes so long as aggregate initial margins and premiums required for non-hedging positions do not exceed 5% of its net assets, after taking into account any unrealized profits and losses on any such contracts it has entered into. Options trading is a highly specialized activity which entails greater than ordinary investment risks. A call option for a particular security gives the purchaser of the option the right to buy, and a writer the obligation to sell, the underlying security at the stated exercise price at any time prior to the expiration of the option, regardless of the market price of the security. The premium paid to the writer is in consideration for undertaking the obligations under the option contract. A put option for a particular security gives the purchaser the right to sell the underlying security at the stated exercise price at any time prior to the expiration date of the option, regardless of the market price of the security. In contrast to an option on a particular security, an option on an index provides the holder with the right to make or receive a cash settlement upon exercise of the option. The amount of this settlement will be equal to the difference between the closing price of the index at the time of exercise and the exercise price of the option expressed in dollars, times a specified multiple. The Portfolios will engage in unlisted over-the-counter options only with broker/dealers deemed creditworthy by the Adviser. Closing transactions in certain options are usually effected directly with the same broker/dealer that effected the original option transaction. The Portfolios bear the risk that the broker/dealer will fail to meet its obligations. There is no assurance that the Portfolios will be able to close an unlisted option position. Furthermore, unlisted options are not subject to the protections afforded purchasers of listed options by the Options Clearing Corporation, which performs the obligations of its members who fail to do so in connection with the purchase or sale of options. To enter into a futures contract, the Portfolios must make a deposit of initial margin with its custodian in a segregated account in the name of its futures broker. Subsequent payments to or from the broker, called variation margin, will be made on a daily basis as the price of the underlying security 18 or index fluctuates, making the long and short positions in the futures contracts more or less valuable. The risks related to the use of options and futures contracts include: (i) the correlation between movements in the market price of a portfolio's investments (held or intended for purchase) being hedged and in the price of the futures contract or option may be imperfect; (ii) possible lack of a liquid secondary market for closing out options or futures positions; (iii) the need for additional portfolio management skills and techniques; and (iv) losses due to unanticipated market movements. Successful use of options and futures by the Portfolios is subject to the Adviser's ability to correctly predict movements in the direction of the market. For example, if a Portfolio uses future contracts as a hedge against the possibility of a decline in the market adversely affecting securities held by it and securities prices increase instead, such Portfolio will lose part or all of the benefit of the increased value of its securities which it has hedged because it will have approximately equal offsetting losses in its futures positions. The risk of loss in trading futures contracts in some strategies can be substantial, due both to the low margin deposits required, and the extremely high degree of leverage involved in futures pricing. As a result, a relatively small price movement in a futures contract may result in immediate and substantial loss or gain to the investor. Thus, a purchase or sale of a futures contract may result in losses or gains in excess of the amount invested in the contract. These instruments and techniques are discussed in greater detail below. FUTURES CONTRACTS. When a Portfolio purchases a futures contract, it agrees to purchase a specified underlying instrument at a specified future date. When a Portfolio sells a futures contract, it agrees to sell the underlying instrument at a specified future date. The price at which the purchase and sale will take place is fixed when a Portfolio enters into the contract. The underlying instrument may be a specified type of security, such as U.S. Treasury bonds or notes. The majority of futures contracts are closed out by entering into an offsetting purchase or sale transaction in the same contract on the exchange where they are traded, rather than being held for the life of the contract. Futures contracts are closed out at their current prices, which may result in a gain or loss. If a Portfolio holds a futures contract until the delivery date, it will be required to complete the purchase and sale contemplated by the contract. In the case of futures contracts on securities, the purchaser generally must deliver the agreed-upon purchase price in cash, and the seller must deliver securities that meet the specified characteristics of the contract. A Portfolio may purchase futures contracts as an alternative to purchasing actual securities. For example, if a Portfolio intended to purchase bonds but had not yet done so, it could purchase a futures contract in order to lock in current bond prices while deciding on particular 19 investments. This strategy is sometimes known as an anticipatory hedge. Alternatively, a Portfolio could purchase a futures contract if it had cash and short-term securities on hand that it wished to invest in longer-term securities, but at the same time that Portfolio wished to maintain a highly liquid position in order to be prepared to meet redemption requests or other obligations. In these strategies a Portfolio would use futures contracts to attempt to achieve an overall return -- whether positive or negative -- similar to the return from longer-term securities, while taking advantage of potentially greater liquidity that futures contracts may offer. Although a Portfolio would hold cash and liquid debt securities in a segregated account with a value sufficient to cover its open futures obligations, the segregated assets would be available to a Portfolio immediately upon closing out the futures position, while settlement of securities transactions can take several days. However, because the Portfolio's cash that would otherwise have been invested in higher-yielding bonds would be held uninvested or invested in short-term securities so long as the futures position remains open, the Portfolio's return would involve a smaller amount of interest income and potentially a greater amount of capital gain or loss. A Portfolio may sell futures contracts to hedge its other investments against changes in value, or as an alternative to sales of securities. For example, if the investment adviser anticipated a decline in bond prices, but did not wish to sell bonds owned by a Portfolio, it could sell a futures contract in order to lock in a current sale price. If prices subsequently fell, the future contract's value would be expected to rise and offset all or a portion of the loss in the bonds that Portfolio had hedged. Of course, if prices subsequently rose, the futures contract's value could be expected to fall and offset all or a portion of the benefit of the Portfolio. In this type of strategy, the Portfolio's return will tend to involve a larger component of interest income, because the Portfolio will remain invested in longer-term securities rather than selling them and investing the proceeds in short-term securities which generally provide lower yields. FUTURES MARGIN PAYMENTS. The purchaser or seller of a futures contract is not required to deliver or pay for the underlying instrument unless the contract is held until the delivery date. However, both the purchaser and seller are required to deposit "initial margin" with a futures broker (known as a futures commission merchant, or FCM), when the contract is entered into. Initial margin deposits are equal to a percentage of the contract's value, as set by the exchange where the contract is traded, and may be maintained in cash or high quality liquid securities. If the value of either party's position declines, that party will be required to make additional "variation margin" payments to settle the change in value on a daily basis. The party that has a gain may be entitled to receive all or a portion of this amount. Initial and variation margin payments are similar to good faith deposits or performance bonds, unlike margin extended by a securities broker, and initial and variation margin payments do not constitute purchasing securities on margin for purposes of the Portfolio's investment limitations. In the event of the bankruptcy of an FCM that holds margin on behalf of a Portfolio, that Portfolio may be entitled to return of margin owed 20 to it only in proportion to the amount received by the FCM's other customers. The investment adviser will attempt to minimize this risk by careful monitoring of the creditworthiness of the FCMs with which a Portfolio does business. CORRELATION OF PRICE CHANGES. The prices of futures contracts depend primarily on the value of their underlying instruments. Because there are a limited number of types of futures contracts, it is likely that the standardized futures contracts available to a Portfolio will not match that Portfolio's current or anticipated investments. Futures prices can also diverge from the prices of their underlying instruments, even if the underlying instruments match the Portfolio's investments well. Futures prices are affected by such factors as current and anticipated short-term interest rates, changes in volatility of the underlying instrument, and the time remaining until expiration of the contract, which may not affect security prices the same way. Imperfect correlation between a Portfolio's investments and its futures positions may also result from differing levels of demand in the futures markets and the securities markets, from structural differences in how futures and securities are traded, or from imposition of daily price fluctuation limits for futures contracts. A Portfolio may purchase or sell futures contracts with a greater or lesser value than the securities it wishes to hedge or intends to purchase in order to attempt to compensate for differences in historical volatility between the futures contract and the securities, although this may not be successful in all cases. If price changes in a Portfolio's futures positions are poorly correlated with its other investments, its futures positions may fail to produce anticipated gains or result in losses that are not offset by the gains in that Portfolio's other investments. LIQUIDITY OF FUTURES CONTRACTS. Because futures contracts are generally settled within a day from the date they are closed out, compared with a settlement period of seven days for some types of securities, the futures markets can provide liquidity superior to the securities markets in many cases. Nevertheless, there is no assurance a liquid secondary market will exist for any particular futures contract at any particular time. In addition, futures exchanges may establish daily price fluctuation limits for futures contracts, and may halt trading if a contract's price moves upward or downward more than the limit in a given day. On volatile trading days when the price fluctuation limit is reached, it may be impossible for a Portfolio to enter into new positions or close out existing positions. If the secondary market for a futures contract is not liquid because of price fluctuation limits or otherwise, it would prevent prompt liquidation of unfavorable futures positions, and potentially could require a Portfolio to continue to hold a futures position until the delivery date regardless of changes in its value. As a result, a Portfolio's access to other assets held to cover its futures positions could also be impaired. PURCHASING PUT OPTIONS. By purchasing a put option, a Portfolio obtains the right (but not the obligation) to sell the option's underlying instrument at a fixed strike price. The option may give a Portfolio the right 21 to sell only on the option's expiration date, or may be exercisable at any time up to and including that date. In return for this right, a Portfolio pays the current market price for the option (known as the option premium). The option's underlying instrument may be a security, or a futures contract. A Portfolio may terminate its position in a put option it has purchased by allowing it to expire or by exercising the option. If the option is allowed to expire, the Portfolio will lose the entire premium it paid. If the Portfolio exercises the option, it completes the sale of the underlying instrument at the strike price. If the Portfolio exercises a put option on a futures contract, it assumes a seller's position in the underlying futures contract. Purchasing an option on a futures contract does not require the Portfolio to make futures margin payments unless it exercises the option. A Portfolio may also terminate a put option position by closing it out in the secondary market at its current price, if a liquid secondary market exists. Put options may be used by a Portfolio to hedge securities it owns, in a manner similar to selling futures contracts, by locking in a minimum price at which the Portfolio can sell. If security prices fall, the value of the put option would be expected to rise and offset all or a portion of the Portfolio's resulting losses. The put thus acts as hedge against a fall in the price of such securities. However, all other things being equal (including securities prices) option premiums tend to decrease over time as the expiration date nears. Therefore, because of the cost of the option in the form of the premium (and transaction costs), a Portfolio would expect to suffer a loss in the put option if prices do not decline sufficiently to offset the deterioration in the value of the option premium. This potential loss represents the cost of the hedge against a fall in prices. At the same time, because the maximum a Portfolio has at risk is the cost of the option, purchasing put options does not eliminate the potential for the Portfolio to profit from an increase in the value of the securities hedged to the same extent as selling a futures contract. PURCHASING CALL OPTIONS. The features of call options are essentially the same as those of put options, except that the purchaser of a call option obtains the right to purchase, rather than sell, the underlying instrument at the option's strike price (call options on futures contracts are settled by purchasing the underlying futures contract). By purchasing a call option, a Portfolio would attempt to participate in potential price increases of the underlying instrument, with results similar to those obtainable from purchasing a futures contract, but with risk limited to the cost of the option if security prices fell. At the same time, a Portfolio can expect to suffer a loss if security prices do not rise sufficiently to offset the cost of the option. The Portfolios may purchase call options in connection with "closing purchase transactions." A Portfolio may terminate its position in a call option by entering into a closing purchase transaction. A closing purchase transaction is the purchase of a call option on the same security with the same exercise price and call period as the option previously written 22 by the Portfolio. If a Portfolio is unable to enter into a closing purchase transaction, a Portfolio may be required to hold a security that it might otherwise have sold to protect against depreciation. WRITING PUT OPTIONS. When a Portfolio writes a put option, it takes the opposite side of the transaction from the option's purchaser. In return for receipt of the premium, a Portfolio assumes the obligation to pay the strike price for the option's underlying instrument if the other party to the option chooses to exercise it. When writing an option on a futures contract the Portfolio will be required to make margin payments to an FCM as described above for futures contracts. A Portfolio may seek to terminate its position in a put option it writes before exercise by closing out the option in the secondary market at its current price. If the secondary market is not liquid for an option the Portfolio has written, however, the Portfolio must continue to be prepared to pay the strike price while the option is outstanding, regardless of price changes, and must continue to set aside assets to cover its position. A Portfolio may write put options as an alternative to purchasing actual securities. If security prices rise, the Portfolio would expect to profit from a written put option, although its gain would be limited to the amount of the premium it received. If security prices remain the same over time, it is likely that the Portfolio will also profit, because it should be able to close out the option at a lower price. If security prices fall, the Portfolio would expect to suffer a loss. This loss should be less than the loss the Portfolio would have experienced from purchasing the underlying instrument directly, however, because the premium received for writing the option should mitigate the effects of the decline. As with other futures and options strategies used as alternatives for purchasing securities, the Portfolio's return from writing put options generally will involve a smaller amount of interest income than purchasing longer-term securities directly, because the Portfolio's cash will be invested in shorter-term securities which usually offer lower yields. WRITING CALL OPTIONS. Writing a call option obligates a Portfolio to sell or deliver the option's underlying instrument, in return for the strike price, upon exercise of the option. The characteristics of writing call options are similar to those of writing put options, as described above, except that writing covered call options generally is a profitable strategy if prices remain the same or fall. Through receipt of the option premium, the Portfolio would seek to mitigate the effects of a price decline. At the same time, because a Portfolio would have to be prepared to deliver the underlying instrument in return for the strike price, even if its current value is greater, the Portfolio would give up some ability to participate in security price increases when writing call options. COMBINED OPTION POSITIONS. A Portfolio may purchase and write options in combination with each other to adjust the risk and return characteristics of the overall position. For example, a Portfolio may purchase a put option and write a call option on the same underlying 23 instrument, in order to construct a combined position whose risk and return characteristics are similar to selling a futures contract. Another possible combined position would involve writing a call option at one strike price and buying a call option at a lower price, in order to reduce the risk of the written call option in the event of a substantial price increase. Because combined options positions involve multiple trades, they result in higher transaction costs and may be more difficult to open and close out. RISKS OF OPTIONS TRANSACTIONS. Options are subject to risks similar to those described above with respect to futures contracts, including the risk of imperfect correlation between the option and a Portfolio's other investments and the risk that there might not be a liquid secondary market for the option. In the case of options on futures contracts, there is also a risk of imperfect correlation between the option and the underlying futures contract. Options are also subject to the risks of an illiquid secondary market, particularly in strategies involving writing options, which a Portfolio cannot terminate by exercise. In general, options whose strike prices are close to their underlying instruments' current value will have the highest trading volume, while options whose strike prices are further away may be less liquid. The liquidity of options may also be affected if options exchanges impose trading halts, particularly when markets are volatile. ASSET COVERAGE FOR FUTURES AND OPTIONS POSITIONS. A Portfolio will not use leverage in its options and futures strategies. Such investments will be made for hedging purposes only. A Portfolio will hold securities or other options or futures positions whose values are expected to offset its obligations under the hedge strategies. A Portfolio will not enter into an option or futures position that exposes the Portfolio to an obligation to another party unless it owns either (i) an offsetting position in securities or other options or futures contracts or (ii) cash, receivables and short-term debt securities with a value sufficient to cover its potential obligations. A Portfolio will comply with guidelines established by the SEC with respect to coverage of options and futures strategies by mutual funds, and if the guidelines so require will set aside cash and high grade liquid debt securities in a segregated account with its custodian bank in the amount prescribed. Securities held in a segregated account cannot be sold while the futures or option strategy is outstanding, unless they are replaced with similar securities. As a result, there is a possibility that segregation of a large percentage of the Portfolio's assets could impede portfolio management or the Portfolio's ability to meet redemption requests or other current obligations. LIMITATIONS ON FUTURES AND OPTIONS TRANSACTIONS. The Fund on behalf of the Portfolios has filed a notice of eligibility for exclusion from the definition of the term "commodity pool operator" with the Commodity Futures Trading Commission ("CFTC") and the National Futures Association, which regulate trading in the futures markets. Pursuant to Section 4.5 of the regulations under the Commodity Exchange Act, the notice of eligibility includes the representation that the Portfolios will not enter into any commodity futures contract or option on a commodity futures contract if, as a 24 result, the sum of initial margin deposits on commodity futures contracts and related commodity options and premiums paid for options on commodity futures contracts the Portfolio has purchased, after taking into account unrealized profits and losses on such contracts, would exceed 5% of a Portfolio's total assets. The Portfolios' limitations on investments in futures contracts and its policies regarding futures contracts and the Portfolios' limitations on investments in options and their policies regarding options discussed above in this Statement of Additional Information, are not fundamental policies and may be changed as regulatory agencies permit. Various exchanges and regulatory authorities have recently undertaken reviews of options and futures trading in light of market volatility. Among the possible actions that have been presented are proposals to adopt new or more stringent daily price fluctuation limits for futures or options transactions, and proposals to increase the margin requirements for various types of strategies. It is impossible to predict what actions, if any, will result from these reviews at this time. SHORT SALES "AGAINST THE BOX." In a short sale, a Portfolio sells a borrowed security and has a corresponding obligation to the lender to return the identical security. Each Portfolio may engage in short sales if at the time of the short sale it owns or has the right to obtain, at no additional cost, an equal amount of the security being sold short. This investment technique is known as a short sale "against the box." In a short sale, a seller does not immediately deliver the securities sold and is said to have a short position in those securities until delivery occurs. If a Portfolio engages in a short sale, the collateral for the short position will be maintained by the Portfolio's custodian or a qualified sub-custodian. While the short sale is open, the Portfolio will maintain in a segregated account an amount of securities equal in kind and amount to the securities sold short or securities convertible into or exchangeable for such equivalent securities. These securities constitute the Portfolio's long position. A Portfolio may, however, make a short sale as a hedge, when it believes that the price of a security may decline, causing a decline in the value of a security owned by the Portfolio (or a security convertible or exchangeable for such security), or when the Portfolio wants to sell the security at an attractive current price, but also wishes to defer recognition of gain or loss for federal income tax purposes and for purposes of satisfying certain tests applicable to regulated investment companies under the Internal Revenue Code. In such case, any future losses in the Portfolio's long position should be reduced by a gain in the short position. Conversely, any gain in the long position should be reduced by a loss in the short position. The extent to which such gains or losses are reduced will depend upon the amount of the security sold short relative to the amount the Portfolio owns. There will be certain additional transaction costs associated with short sales against the box, but the Portfolio will endeavor to offset these costs with the income from the investment of the cash proceeds of short sales. 25 SECTION 4(2) PAPER. "Section 4(2) paper" is commercial paper which is issued in reliance on the "private placement" exemption from registration which is afforded by Section 4(2) of the Securities Act of 1933. Section 4(2) paper is restricted as to disposition under the Federal securities laws and is generally sold to institutional investors such as the Fund which agree that they are purchasing the paper for investment and not with a view to public distribution. Any resale by the purchaser must be in an exempt transaction. Section 4(2) paper normally is resold to other institutional investors through or with the assistance of investment dealers who make a market in the Section 4(2) paper, thereby providing liquidity. See "Illiquid Securities" above. SUPPLEMENTAL INVESTMENT OBJECTIVES AND POLICIES -- BEA INTERNATIONAL EQUITY, BEA EMERGING MARKETS EQUITY AND BEA GLOBAL TELECOMMUNICATIONS PORTFOLIOS RIGHTS OFFERINGS AND PURCHASE WARRANTS. Rights offerings and purchase warrants are privileges issued by a corporation which enable the owner to subscribe to and purchase a specified number of shares of the corporation at a specified price during a specified period of time. Subscription rights normally have a short lifespan to expiration. The purchase of rights or warrants involves the risk that a Portfolio could lose the purchase value of a right or warrant if the right to subscribe to additional shares is not executed prior to the rights and warrants expiration. Also, the purchase of rights and/or warrants involves the risk that the effective price paid for the right and/or warrant added to the subscription price of the related security may exceed the value of the subscribed security's market price such as when there is no movement in the level of the underlying security. INVESTMENT LIMITATIONS Each Portfolio has adopted the following fundamental investment limitations which may not be changed without the affirmative vote of the holders of a majority of the Portfolio's outstanding Shares (as defined in Section 2(a)(42) of the Investment Company Act). Each Portfolio may not: 1. Borrow money, except from banks, and only if after such borrowing there is asset coverage of at least 300% for all borrowings of the Portfolio; or mortgage, pledge or hypothecate any of its assets except in connection with any such borrowing and in amounts not in excess of the lesser of the dollar amounts borrowed or 33 1/3% of the value of the Portfolio's total assets at the time of such borrowing; (For the purpose of this restriction, collateral arrangements with respect to, if applicable, the writing of options, and futures contracts, options on futures contracts, forward currency contracts and collateral arrangements with respect to initial and variation margin are not deemed to be a pledge of assets and neither such arrangements nor the purchase or sale of futures or related options are deemed 26 to be the issuance of a senior security for purposes of Investment Limitation No. 2); 2. Issue any senior securities, except as permitted under the Investment Company Act; 3. Act as an underwriter of securities within the meaning of the Securities Act of 1933 except insofar as it might be deemed to be an underwriter upon disposition of certain portfolio securities acquired within the limitation on purchases of restricted securities; 4. Purchase or sell real estate (including real estate limited partnership interests), provided that a Portfolio may invest in securities secured by real estate or interests therein or issued by companies that invest in real estate or interests therein; 5. Purchase or sell commodities or commodity contracts, except that a Portfolio may deal in forward foreign exchange between currencies of the different countries in which it may invest and purchase and sell stock index and currency options, stock index futures, financial futures and currency futures contracts and related options on such futures; 6. Make loans, except through loans of portfolio instruments and repurchase agreements, provided that for purposes of this restriction the acquisition of bonds, debentures or other debt instruments or interests therein and investment in government obligations, Loan Participations and Assignments, short-term commercial paper, certificates of deposit and bankers' acceptances shall not be deemed to be the making of a loan; and 7. Except for BEA Global Telecommunications Portfolio, purchase any securities which would cause 25% or more of the value of the Portfolio's total assets at the time of purchase to be invested in the securities of one or more issuers conducting their principal business activities in the same industry, provided that (a) there is no limitation with respect to (i) instruments issued or guaranteed by the United States, any state, territory or possession of the United States, the District of Columbia or any of their authorities, agencies, instrumentalities or political subdivisions, and (ii) repurchase agreements secured by the instruments described in clause (i); (b) wholly-owned finance companies will be considered to be in the industries of their parents if their activities are primarily related to financing the activities of the parents; and (c) utilities will be divided according to their services, for example, gas, gas transmission, electric and gas, electric and telephone will each be considered a separate industry. In addition to the fundamental investment limitations specified above, a Portfolio may not: 1. Make investments for the purpose of exercising control or management. Investments by a Portfolio in wholly-owned investment entities created under the laws of certain countries will not be deemed 27 the making of investments for the purpose of exercising control or management; 2. Purchase securities on margin, except for short-term credits necessary for clearance of portfolio transactions, and except that a Portfolio may make margin deposits in connection with its use of options, futures contracts, options on futures contracts and forward contracts; 3. Purchase or sell interests in mineral leases, oil, gas or other mineral exploration or development programs, except that a Portfolio may invest in securities issued by companies that engage in oil, gas or other mineral exploration or development activities; and 4. Purchase or retain the securities of any issuer, if those individual officers and directors of the Fund, the Adviser or any subsidiary thereof each owning beneficially more than 1/2 of 1% of the securities of such issuer own in the aggregate more than 5% of the securities of such issuer. The policies set forth above are not fundamental and thus may be changed by the Fund's Board of Directors without a vote of the shareholders. In order to permit the sale of the Portfolios in certain states, the Fund on behalf of a Portfolio has undertaken to adhere to the following investment policies, each of which may be changed without shareholder approval: (1) That the dollar amount of short sales at any one time shall not exceed 25% of the net equity of a Portfolio, and the value of securities of any one issuer in which a Portfolio is short may not exceed the lesser of 2.0% of the value of a Portfolio's net assets or 2.0% of the securities of any class of any issuer. Short sales may be made only in those securities which are fully listed on a national securities exchange. This provision does not include the sale of securities if the Portfolio contemporaneously owns or has the right to obtain securities equivalent in kind and amount to those sold, i.e., short sales against the box. (2) That the investment in warrants, valued at the lower of cost or market, may not exceed 5.0% of the value of a Portfolio's net assets. Included within that amount, but not to exceed 2.0% of the value of a Portfolio's net assets, may be warrants which are not listed on the New York or American Stock Exchange. Warrants acquired by a Portfolio in units or attached to securities may be deemed to be without value. Except for the percentage restrictions applicable to the borrowing of money, if a percentage restriction is adhered to at the time of investment, a later increase or decrease in percentage resulting from a change in market 28 values of portfolio securities or amount of total or net assets will not be considered a violation of any of the foregoing restrictions. In order to permit the sale of shares of a Portfolio in certain states, a Portfolio may make commitments more restrictive than the investment policies and limitations above. If a Portfolio determines that any such commitment is no longer in its best interests, it will revoke the commitment by terminating sales of its shares in the state involved. In addition, a Portfolio may be subject to investment restrictions imposed by countries in which it invests directly or indirectly. Securities held by a Portfolio generally may not be purchased from, sold or loaned to the Adviser or its affiliates or any of their directors, officers or employees, acting as principal, unless pursuant to a rule or exemptive order under the Investment Company Act. 29 RISK FACTORS FOREIGN SECURITIES. Investments in foreign securities are subject to certain risks, discussed below. POLITICAL, ECONOMIC AND MARKET FACTORS. Investments in foreign securities involve risks relating to political and economic developments abroad, as well as those that result from the differences between the regulations to which U.S. and foreign issuers are subject. These risks may include expropriation, confiscatory taxation, withholding taxes on dividends and interest, limitations on the use or transfer of a Portfolio's assets and political or social instability or diplomatic developments. Moreover, individual foreign economies may differ favorably or unfavorably from the U.S. economy in such respects as growth of gross national product, rate of inflation, capital reinvestment, resource self-sufficiency and balance of payments positions. Securities of many foreign issuers may be less liquid, and their prices may be more volatile, than those of securities of comparable U.S. issuers. Brokerage commissions, custodial services and other costs relating to investment in foreign securities markets are generally more expensive than in the United States. Such markets have different clearance and settlement procedures and in certain markets there have been times when settlements have been unable to keep pace with the volume of securities transactions, making it difficult to conduct such transactions. There is generally less government supervision and regulation of exchanges, brokers and issuers in foreign securities markets than there is in the United States. In addition, substantial limitations may exist in certain countries with respect to the Portfolios' ability to repatriate investment income, capital or the proceeds of sales of securities by foreign investors. The Portfolios could be adversely affected by delays in, or a refusal to grant, any required government approval for repatriation of capital, as well as by the application to the Portfolios of any restrictions on investments. REPORTING STANDARDS. Most of the foreign securities held by the Portfolios will not be registered with the SEC, nor will the issuers thereof be subject to SEC or other U.S. reporting requirements. Accordingly, there will be less publicly available information concerning foreign issuers of securities held by the Portfolio than will be available concerning U.S. companies. Foreign companies, and in particular, companies in emerging markets, are not generally subject to uniform accounting, auditing and financial reporting standards or to other regulatory requirements comparable to those applicable to U.S. companies. EXCHANGE RATE FLUCTUATIONS. Because foreign securities ordinarily will be denominated in currencies other than the U.S. dollar, changes in foreign currency exchange rates will affect a Portfolio's net asset value, the value of interest and dividends earned, gains and losses realized on the sale of securities and net investment income and capital gain, if any, to be distributed to shareholders by a Portfolio. If the value of a foreign currency rises against the U.S. dollar, the value of a Portfolio's assets denominated 30 in that currency will increase; conversely, if the value of a foreign currency declines against the U.S. dollar, the value of a Portfolio's assets denominated in that currency will decrease. The exchange rates between the U.S. dollar and other currencies are determined by supply and demand in the currency exchange markets, international balances of payments, government intervention, speculation and other economic and political conditions. INVESTMENT CONTROLS. In certain countries that currently prohibit direct foreign investment in the securities of their companies, indirect foreign investment in the securities of companies listed and traded on the stock exchanges in these countries is permitted through investment funds which have been specifically authorized. The BEA Portfolios may invest in these investment funds and registered investment companies subject to the provisions of the 1940 Act. If these Portfolios invest in such investment companies, they will each bear their proportionate share of the costs incurred by such companies, including investment advisory fees. CLEARANCE AND SETTLEMENT PROCEDURES. Delays in clearance and settlement could result in temporary periods when assets of a Portfolio are uninvested and no return is earned thereon. The inability of a Portfolio to make intended security purchases due to settlement problems could cause a Portfolio to miss attractive investment opportunities. Inability to dispose of a portfolio security due to settlement problems could result either in losses to a Portfolio due to subsequent declines in the value of such portfolio security or, if a Portfolio has entered into a contract to sell the security, could result in possible liability to the purchaser. OPERATING EXPENSES. The costs attributable to foreign investing that a Portfolio must bear frequently are higher than those attributable to domestic investing. For example, the cost of maintaining custody of foreign securities exceeds custodian costs for domestic securities. Investment income on certain foreign securities in which a Portfolio may invest may be subject to foreign withholding or other taxes that could reduce the return on those securities. Tax treaties between the United States and foreign countries, however, may reduce or eliminate the amount of foreign tax to which a Portfolio would be subject. LOWER- OR NON-RATED CRITERIA FOR DEBT SECURITIES. The BEA High Yield Portfolio has established no rating criteria for the debt securities in which it may invest. Issuers of low rated or non-rated securities ("high yield" securities, commonly known as "junk bonds") may be highly leveraged and may not have available to them more traditional methods of financing. Therefore, the risks associated with acquiring the securities of such issuers generally is greater than is the case with higher rated securities. For example, during an economic downturn or a sustained period of rising interest rates, issuers of high yield securities may be more likely to experience financial stress, especially if such issuers are highly leveraged. During such periods, such issuers may not have sufficient revenues to meet their interest payment obligations. The issuer's ability to service its debt obligations also may be adversely affected by specific issuer developments, or 31 the issuer's inability to meet specific projected business forecasts, or the unavailability of additional financing. The risk of loss due to default by the issuer is significantly greater for the holders of lower-rated securities because such securities may be unsecured and may be subordinated to other creditors of the issuer. Lower-rated securities frequently have call or redemption features which would permit an issuer to repurchase the security from the Portfolio. If a call were exercised by the issuer during a period of declining interest rates, the Portfolio likely would have to replace such called security with a lower yielding security, thus decreasing the net investment income to the Portfolio and dividends to shareholders. The Portfolio may have difficulty disposing of certain lower-rated securities because there may be a thin trading market for such securities. The secondary trading market for high yield securities is generally not as liquid as the secondary market for higher rated securities. Reduced secondary market liquidity may have an adverse impact on market price and the Portfolio's ability to dispose of particular issues when necessary to meet the Portfolio's liquidity needs or in response to a specific economic event such as a deterioration in the creditworthiness of the issuer. Adverse publicity and investor perceptions, which may not be based on fundamental analysis, also may decrease the value and liquidity of lower-rated securities, particularly in a thinly traded market. Factors adversely affecting the market value of lower-rated securities are likely to adversely affect the Portfolio's net asset value. In addition, the Portfolio may incur additional expenses to the extent it is required to seek recovery upon a default on a portfolio holding or participate in the restructuring of the obligation. Current laws may have an impact on the market for lower-rated debt securities. The Financial Institutions Reform, Recovery and Enforcement Act of 1989 required federally insured savings associations to divest substantially all their holdings of lower-rated debt securities by July 1, 1994 and prohibits such savings associations from acquiring lower-rated debt securities, except through certain qualified affiliates. Finally, there are risks involved in applying credit ratings as a method for evaluating lower-rated debt securities. For example, credit ratings evaluate the safety of principal and interest payments, not the market risks involved in lower-rated debt securities. Since credit rating agencies may fail to change the credit ratings in a timely manner to reflect subsequent events, BEA will monitor the issuers of lower-rated debt securities in the Portfolio to determine if the issuers will have sufficient cash flow and profits to meet required principal and interest payments, and to assure the debt securities' liquidity so the Portfolio can meet redemption requests. BEA will not necessarily dispose of a portfolio security when its ratings have been changed. 32 SOVEREIGN DEBT. Investments in Sovereign Debt involve special risks. The issuer of the debt or the governmental authorities that control the repayment of the debt may be unable or unwilling to repay principal or interest when due in accordance with the terms of such debt, and the Portfolio may have limited legal recourse in the event of a default. Sovereign Debt differs from debt obligations issued by private entities in that, generally, remedies for defaults must be pursued in the courts of the defaulting party. Legal recourse is therefore somewhat limited. Political conditions, especially a sovereign entity's willingness to meet the terms of its debt obligations, are of considerable significance. Also, there can be no assurance that the holders of commercial bank loans to the same sovereign entity may not contest payments to the holders of Sovereign Debt in the event of default under commercial bank loan agreements. A sovereign debtor's willingness or ability to repay principal and pay interest in a timely manner may be affected by, among other factors, its cash flow situation, the extent of its foreign reserves, the availability of sufficient foreign exchange on the date a payment is due, the relative size of the debt service burden to the economy as a whole, the sovereign debtor's policy toward principal international lenders and the political constraints to which a sovereign debtor may be subject. Increased protectionism on the part of a country's trading partners, or political changes in those countries, could also adversely affect its exports. Such events could diminish a country's trade account surplus, if any, or the credit standing of a particular local government or agency. The occurrence of political, social or diplomatic changes in one or more of the countries issuing Sovereign Debt could adversely affect a Portfolio's investments. Political changes or a deterioration of a country's domestic economy or balance of trade may affect the willingness of countries to service their Sovereign Debt. While the Adviser intends to manage the Portfolios in a manner that will minimize the exposure to such risks, there can be no assurance that adverse political changes will not cause a Portfolio to suffer a loss of interest or principal on any of its holdings. Investors should also be aware that certain Sovereign Debt instruments in which a Portfolio may invest involve great risk. Sovereign Debt issued by issuers in many Emerging Markets generally is deemed to be the equivalent in terms of quality to securities rated below investment grade by Moody's and S&P. Such securities are regarded as predominantly speculative with respect to the issuer's capacity to pay interest and repay principal in accordance with the terms of the obligations and involve major risk exposure to adverse conditions. Some of such Sovereign Debt, which may not be paying interest currently or may be in payment default, may be comparable to securities rated D by S&P or C by Moody's. A Portfolio may have difficulty disposing of certain Sovereign Debt obligations because there may be a limited trading market for such securities. Because there is no liquid secondary market for many of these securities, a Portfolio anticipates that such securities could be sold only to a limited number of dealers or institutional investors. The lack of a liquid secondary market may have an adverse impact on the market price of such securities and a Portfolio's ability to dispose of particular issues when necessary to meet a Portfolio's liquidity needs or in 33 response to a specific economic event, such as a deterioration in the creditworthiness of the issuer. The lack of a liquid secondary market for certain securities also may make it more difficult for a Portfolio to obtain accurate market quotations for purposes of valuing a Portfolio's portfolio and calculating its net asset value. When and if available, fixed income securities may be purchased by a Portfolio at a discount from face value. However, a Portfolio does not intend to hold such securities to maturity for the purpose of achieving potential capital gains, unless current yields on these securities remain attractive. From time to time a Portfolio may purchase securities not paying interest at the time acquired if, in the opinion of the Adviser, such securities have the potential for future income or capital appreciation. DIRECTORS AND OFFICERS The directors and executive officers of the Fund, their business addresses and principal occupations during the past five years are: PRINCIPAL OCCUPATION NAME, ADDRESS AND AGE POSITION WITH FUND DURING PAST FIVE YEARS Arnold M. Reichman - 48* Director Since 1986, Managing 466 Lexington Avenue Director and Assistant New York, NY 10017 Secretary, E. M. Warburg, Pincus & Co., Inc.; Since 1990, Chief Executive Officer and since 1991, Secretary, Counsellors Securities, Inc; Officer of various investment companies advised by Warburg, Pincus Counsellors, Inc. Robert Sablowsky - 58** Director Since 1985, Executive 14 Wall Street Vice President of New York, NY 10005 Gruntal & Co., Inc., Director, Gruntal & Co., Inc. and Gruntal Financial Corp. Francis J. McKay - 60 Director Since 1963, Executive 7701 Burholme Avenue Vice President, Fox Chase Philadelphia, PA 1911 Cancer Center (Biomedical research and medical care.) 34 Marvin E. Sternberg -62 Director Since 1974, Chairman, 937 Mt. Pleasant Road Director and President, Bryn Mawr, PA 19010 Moyco Industries, Inc. (manufacturer of dental supplies and precision coated abrasives); Since 1968, Director and President, Mart MMM, Inc. (formerly Montgomeryville Merchandise Mart Inc.) and Mart PMM, Inc. (formerly Pennsauken Merchandise Mart, Inc.) (Shopping Centers); and Since 1975, Director and Executive Vice President, Cellucap Mfg. Co., Inc. (manufacturer of disposable headwear). Julian A. Brodsky -63 Director Director, Vice Chairman 1969 Comcast Corporation to present, Comcast 1234 Market Street Corporation (cable television 16th Floor and communications); Director, Philadelphia, PA 19107-3723 Comcast Cablevision of Philadelphia (cable television communications) and Nextel (wireless communications). Donald van Roden - 72 Director Self-employed 1200 Old Mill Lane businessman. Wyomissing, PA 19610 From February 1980 to March 1987, Vice Chairman, Smith Kline Beckman Corporation (pharmaceuticals); Director, AAA Mid-Atlantic (auto service); Director, Keystone Insurance Co. Edward J. Roach - 72 President and Certified Public Accountant; Bellevue Park Treasurer Vice Chairman of the Corporate Center of the Board, Fox Chase 400 Bellevue Parkway Cancer Center; Vice President Wilmington, DE 19809 and Trustee, Pennsylvania School for the Deaf; Trustee, Immaculata College; Vice President and Treasurer of various investment companies advised by PNC Institutional Management Corporation. 35 Morgan R. Jones - 56 Secretary Chairman of the law firm of 1100 PNB Bank Building Drinker Biddle & Reath, Broad and Chestnut Streets Philadelphia, Pennsylvania; Philadelphia, PA 19107 Director, Rocking Horse Child Care Centers of America, Inc. - -------------------- * Mr. Reichman is an "interested person" of the Fund as that term is defined in the 1940 Act by virtue of his position with Counsellors Securities Inc., the Fund's distributor. ** Mr. Sablowsky is an "interested person" of the Fund as that term is defined in the 1940 Act by virtue of his position with Gruntal & Co., Inc., a broker-dealer. Messrs. McKay, Sternberg and Brodsky are members of the Audit Committee of the Board of Directors. The Audit Committee, among other things, reviews results of the annual audit and recommends to the Fund the firm to be selected as independent auditors. Messrs. Reichman, McKay and van Roden are members of the Executive Committee of the Board of Directors. The Executive Committee may generally carry on and manage the business of the Fund when the Board of Directors is not in session. Messrs. McKay, Sternberg, Brodsky and van Roden are members of the Nominating Committee of the Board of Directors. The Nominating Committee recommends to the Board annually all persons to be nominated as directors of the Fund. The Fund pays directors who are not "affiliated persons" (as that term is defined in the 1940 Act) of any Investment Adviser of sub-advisor of the Fund or the Distributor $9,500 annually and $700 per meeting of the Board or any committee thereof that is not held in conjunction with a Board meeting. Such Directors are reimbursed for any expenses incurred in attending meetings of the Board of Directors or any committee thereof. The Chairman (currently Donald von Roden) receives an additional $5,000 for his services. For the year ended August 31, 1996, each of the following members of the Board of Directors received compensation from the Fund in the following amounts: Julian A. Brodsky in the aggregate amount of $_____; Francis J. McKay in the aggregate amount of $______; Marvin E. Sternberg in the aggregate amount of $______; Donald van Roden in the aggregate amount of $______. On October 24, 1990 the Fund adopted, as a participating employer, the Fund Office Retirement Profit-Sharing Plan and Trust Agreement, a retirement plan for employees (currently Edward J. Roach) pursuant to which the Fund will contribute on a monthly basis amounts equal to 10% of the monthly compensation of each eligible employee. By virtue of the services performed by the Fund's advisers, custodians, administrators and distributor, the Fund itself requires only one part-time employee. No officer, director or employee of BEA or the Distributor currently receives any compensation from the Fund. 36 INVESTMENT ADVISORY AND SERVICING ARRANGEMENTS ADVISORY AGREEMENTS. BEA Associates renders advisory and administrative services to each of the Portfolios pursuant to Investment Advisory Agreements. The Advisory Agreements relating to the Portfolios are dated September 16, 1992 for the BEA International Equity, BEA Emerging Markets Equity and BEA High Yield Portfolios, dated July 10, 1996 for the BEA Global Telecommunications Portfolio. Such advisory agreements are hereinafter collectively referred to as the "Advisory Contracts." BEA Associates is a diversified asset manager, handling global equity, balanced, fixed income and derivative securities accounts for private individuals, as well as corporate pension and profit-sharing plans, state pension funds, union funds, endowments and other charitable institutions. As of September 30, 1996, BEA Associates managed approximately $_____ billion in assets. CS Capital, BEA's ultimate parent, is a wholly-owned subsidiary of Credit Suisse Investment Corporation, which is a wholly-owned subsidiary of Credit Suisse, the second largest Swiss bank, which in turn is subsidiary of CS Holding, a Swiss corporation. BEA Associates is registered as an investment adviser under the Investment Advisers Act of 1940, as amended. As an investment adviser, BEA emphasizes a global investment strategy. BEA currently acts as investment adviser for thirteen investment companies registered under the Investment Company Act. They are: Alpha Government Securities Portfolio, BEA Strategic Income Fund, Inc., BEA Income Fund, Inc., BEA Short Duration Portfolio, The Brazilian Equity Fund, Inc., The Chile Fund, Inc., The Emerging Markets Infrastructure Fund, Inc., The Emerging Markets Telecommunications Fund, Inc., The First Israel Fund, Inc., The Indonesia Fund, Inc., The Latin America Equity Fund, Inc., The Latin America Investment Fund, Inc., and The Portugal Fund, Inc. In addition, BEA acts as sub-adviser to certain portfolios of six other registered investment companies: Frank Russell Investment Company (Fixed Income III Fund and Multistrategy Bond Fund), Oppenheimer (LifeSpan Balanced Portfolio, LifeSpan Income Portfolio and LifeSpan Growth Portfolio), Panorama (LifeSpan Balanced Account, LifeSpan Capital Appreciation Account and LifeSpan Diversified Income Account), SEI Institutional Managed Trust (High Yield Bond Portfolio), WNL Series Trust (BEA Growth and Income Fund), Touchstone International Equity Fund and Touchstone Variable Annuity International Equity Portfolio. BEA also acts as investment adviser for forty-two offshore funds, twenty-two of which are equity funds and twenty of which are debt funds. BEA Associates has sole investment discretion for the Portfolios and will make all decisions affecting assets in the Portfolios under the supervision of the Fund's Board of Directors and in accordance with each Portfolio's stated policies. BEA Associates will select investments for the Portfolios and will place purchase and sale orders on behalf of the Portfolios. For its services to the BEA International Equity, BEA Emerging Markets Equity, BEA Global Telecommunications and BEA High Yield Portfolios, BEA Associates will be paid (before any voluntary waivers or reimbursements) a 37 monthly fee computed at an annual rate of .80%, 1.00%, 1.00% and .70% of average daily net assets, respectively. For the year ended August 31, 1996, BEA waived advisory fees with respect to the BEA International Equity, BEA Emerging Markets Equity, BEA Global Telecommunications and BEA High Yield Portfolios in the amount of $___, $______, $______ and $______, respectively. During the same period, BEA received advisory fees (after waivers) in the amount of $_________, $_________, $______ and $_______, respectively. As required by various state regulations, BEA Associates will reimburse the Fund or the Portfolio affected (as applicable) if and to the extent that the aggregate operating expenses of the Fund or the Portfolio affected exceed applicable state limits for the fiscal year, to the extent required by such state regulations. Currently, the most restrictive of such applicable limits is believed to be 2-1/2% of the first $30 million of average annual net assets, 2% of the next $70 million of average annual net assets and 1 1/2% of the remaining average annual net assets. Certain expenses, such as brokerage commissions, taxes, interest and extraordinary items, are excluded from this limitation. Whether such expense limitations apply to the Fund as a whole or to each Portfolio on an individual basis depends upon the particular regulations of such states. Each Portfolio bears all of its own expenses not specifically assumed by the Adviser. General expenses of the Fund not readily identifiable as belonging to a Portfolio of the Fund are allocated among all investment Portfolios by or under the direction of the Fund's Board of Directors in such manner as the Board determines to be fair and equitable. Expenses borne by a Portfolio include, but are not limited to, the following (or a Portfolio's share of the following): (a) the cost (including brokerage commissions) of securities purchased or sold by a Portfolio and any losses incurred in connection therewith; (b) fees payable to and expenses incurred on behalf of a Portfolio by BEA Associates; (c) expenses of organizing the Fund that are not attributable to a class of the Fund; (d) certain of the filing fees and expenses relating to the registration and qualification of the Fund and a Portfolio's shares under Federal and/or state securities laws and maintaining such registrations and qualifications; (e) fees and salaries payable to the Fund's directors and officers; (f) taxes (including any income or franchise taxes) and governmental fees; (g) costs of any liability and other insurance or fidelity bonds; (h) any costs, expenses or losses arising out of a liability of or claim for damages or other relief asserted against the Fund or a Portfolio for violation of any law; (i) legal, accounting and auditing expenses, including legal fees of special counsel for the independent directors; (j) charges of custodians and other agents; (k) expenses of setting in type and printing prospectuses, statements of additional information and supplements thereto for existing shareholders, reports, statements, and confirmations to shareholders and proxy material that are not attributable to a class; (l) costs of mailing prospectuses, statements of additional information and supplements thereto to existing shareholders, as well as reports to shareholders and proxy material that are not attributable to a 38 class; (m) any extraordinary expenses; (n) fees, voluntary assessments and other expenses incurred in connection with membership in investment company organizations; (o) costs of mailing and tabulating proxies and costs of shareholders' and directors' meetings; (p) costs of PFPC's use of independent pricing services to value a Portfolio's securities; and (q) the cost of investment company literature and other publications provided by the Fund to its directors and officers. Transfer agency expenses, expenses of preparation, printing and mailing prospectuses, statements of additional information, proxy statements and reports to shareholders, organizational expenses and registration fees and other costs identified as belonging to a particular class of the Fund are allocated to such class. Under the Advisory Contracts, BEA Associates will not be liable for any error of judgment or mistake of law or for any loss suffered by the Fund or a Portfolio in connection with the performance of the Advisory Contracts, and shall be indemnified for any losses and expenses in connection with any claim relating thereto, except a loss resulting from willful misfeasance, bad faith or gross negligence on the part of BEA Associates in the performance of its duties or reckless disregard by it of its obligations and duties under the Advisory Contracts. The Advisory Contracts were approved on July 10, 1996, by vote of the Fund's Board of Directors, including a majority of those directors who are not parties to the Advisory Contracts or interested persons (as defined in the 1940 Act) of such parties. The Advisory Contracts were approved by each Portfolio's initial shareholder. Each Advisory Contract is terminable by vote of the Fund's Board of Directors or by the holders of a majority of the outstanding voting securities of the relevant Portfolio, at any time without penalty, on 60 days' written notice to BEA Associates. Each of the Advisory Contracts may also be terminated by BEA Associates on 60 days' written notice to the Fund. Each of the Advisory Contracts terminates automatically in the event of assignment thereof. CUSTODIAN AND TRANSFER AGENCY AGREEMENTS. Brown Brothers Harriman & Co. ("BBH") acts as the custodian for the Portfolios and also acts as the custodian for the Portfolios' foreign securities pursuant to a Custodian Agreement (the "Custodian Agreement"). Under the Custodian Agreement, BBH (a) maintains a separate account or accounts in the name of each Portfolio, (b) holds and transfers portfolio securities on account of each Portfolio, (c) accepts receipts and makes disbursements of money on behalf of each Portfolio, (d) collects and receives all income and other payments and distributions on account of each Portfolio's portfolio securities, and (e) makes periodic reports to the Fund's Board of Directors concerning each Portfolio's operations. BBH is authorized to select one or more banks or trust companies to serve as sub-custodian on behalf of the Fund, provided that BBH remains responsible for the performance of all its duties under the Custodian Agreement and holds the Fund harmless from the negligent acts and omissions of any sub-custodian. For its services to the Fund under the Custodian Agreement, BBH receives a fee which is calculated based upon each Portfolio's 39 average daily gross assets, exclusive of transaction charges and out-of-pocket expenses, which are also charged to the Fund. Boston Financial Data Services, Inc. ("BFDS"), an affiliate of State Street Bank and Trust Company, serves as the transfer and dividend disbursing agent for the Investor Classes pursuant to a Transfer Agency Agreement (the "Transfer Agency Agreement"), under which BFDS (a) issues and redeems shares of each of the Investor Classes, (b) addresses and mails all communications by each Portfolio to record owners of shares of each such Class, including reports to shareholders, dividend and distribution notices and proxy materials for its meetings of shareholders, (c) maintains shareholder accounts and, if requested, sub-accounts and (d) makes periodic reports to the Fund's Board of Directors concerning the operations of each Investor Class. For its services to the Fund under the Transfer Agency Agreement, BFDS receives a fee on a per transaction basis. ADMINISTRATION AGREEMENTS. PFPC Inc., an indirect, wholly owned subsidiary of PNC Bank Corp., serves as administrator to the Portfolios pursuant to an Administration and Accounting Services Agreement dated July 10, 1996 (the "PFPC Administration Agreement"). PFPC has agreed to calculate the Portfolios' net asset values, provide all accounting services for the Portfolios, and assist in related aspects of the Portfolios' operations. The PFPC Administration Agreement provides that PFPC shall not be liable for any error of judgment or mistake of law or any loss suffered by the Fund or the Portfolios in connection with the performance of the agreement, except a loss resulting from willful misfeasance, bad faith or negligence, or reckless disregard of its duties and obligations thereunder. In consideration for providing services pursuant to the PFPC Administration Agreement, PFPC receives a fee calculated at an annual rate of .125% of each Portfolio's average daily net assets, with a minimum annual fee of $_______. BEA serves as co-administrator to the Portfolios pursuant to Co-Administration Agreements dated July 10, 1996 (the "BEA Co-Administration Agreements"). BEA has agreed to provide shareholder liaison services to the Portfolios including responding to shareholder inquiries and providing information on shareholder accounts. The BEA Co-Administration Agreements provide that BEA shall not be liable for any error of judgment or mistake of law or any loss suffered by the Fund or the Portfolios in connection with the performace of the agreement, except a loss resulting from willful misfeasance, bad faith or negligence, or reckless disregard of its duties and obligations thereunder. In consideration for providing services pursuant to the BEA Co-Administration Agreements, BEA receives a fee calculated at an annual rate of .05% of each of the Portfolios' average daily net assets. DISTRIBUTION AND SHAREHOLDER SERVICING The Portfolios have each entered into Distribution Agreements with Counsellors Securities pursuant to their Distribution Plans (the "12-b1 Plans") under Rule 12-b1 of the 1940 Act. In consideration for Services (as defined below), the Distribution Agreement provides that the Portfolios will 40 each pay Counsellors Securities a fee calculated at an annual rate of .50% of the respective average daily net assets of the Investor Shares of the Portfolios. Services performed by Counsellors Securities include (a) the sale of the Investor Shares, as set forth in the 12b-1 Plans ("Selling Services"), (b) ongoing servicing and/or maintenance of the accounts of shareholders of the Portfolios, as set forth in the 12b-1 Plans ("Shareholder Services"), and (c) sub-transfer agency services, subaccounting services or administrative services, as set forth in the 12b-1 Plans ("Administrative Services") and including, without limitation, (i) payments reflecting an allocation of overhead and other office expenses of Counsellors Securities related to providing Services; (ii) payments made to, and reimbursement of expenses of, persons who provide support serviced in connection with the distribution of the Investor Shares including, but not limited to, office space and equipment, telephone facilities, answering routine inquiries regarding the Portfolios, and providing any other Shareholder Services; (iii) payments made to compensate selected dealers or other authorized persons for providing any Services; (iv) costs relating to the formulation and implementation of marketing and promotional activities, including, but not limited to, direct mail promotions and television, radio, newspaper, magazine and other mass media advertising, and related travel and entertainment expenses; (v) costs of printing and distributing prospectuses, statements of additional information and reports of the Portfolios to prospective shareholders of the Portfolios; and (vi) costs involved in obtaining whatever information, analyses and reports with respect to marketing and promotional activities that Counsellors Securities may, from time to time, deem advisable. PORTFOLIO TRANSACTIONS Subject to policies established by the Board of Directors, BEA Associates is responsible for the execution of portfolio transactions and the allocation of brokerage transactions for the Portfolios. In executing portfolio transactions, BEA Associates seeks to obtain the best net results for a Portfolio, taking into account such factors as the price (including the applicable brokerage commission or dealer spread), size of the order, difficulty of execution and operational facilities of the firm involved. While BEA Associates generally seeks reasonably competitive commission rates, payment of the lowest commission or spread is not necessarily consistent with obtaining the best results in particular transactions. Portfolio transactions for the Portfolios may be effected on domestic or foreign securities exchanges. In transactions for securities not actively traded on a domestic or foreign securities exchange, a Portfolio will deal directly with the dealers who make a market in the securities involved, except in those circumstances where better prices and execution are available elsewhere. Such dealers usually are acting as principal for their own account. On occasion, securities may be purchased directly from the issuer. Such portfolio securities are generally traded on a net basis and do not normally involve brokerage commissions. Securities firms may receive brokerage commissions on certain portfolio transactions, including options, futures and options on futures transactions and the purchase and sale of underlying securities upon exercise of options. The Portfolios have no obligation to deal with any broker in the execution of transactions in portfolio securities. The Portfolios may use affiliates of Credit Suisse in connection with the purchase or sale of securities in accordance with rules or exemptive orders adopted by the Securities and Exchange Commission (the "SEC") when BEA believes that the charge for the transaction does not exceed usual and customary levels. Commission rates for brokerage transactions on foreign stock exchanges are generally fixed. The reasonableness of any negotiated 40 commission paid by the Portfolios will be evaluated on the basis of the difficulty involved in execution, the time taken to conclude the transaction, the extent of the broker's commitment, if any, of its own capital and the amount involved in the transaction. It should be noted that commission rates in U.S. Markets are negotiated. In the case of over-the-counter issues, there is generally no stated commission, but the price usually includes an undisclosed commission or markup, and the Portfolio will normally deal with the principal market makers unless it can obtain better terms elsewhere. No Portfolio has any obligation to deal with any broker or group of brokers in the execution of portfolio transactions. BEA Associates may, consistent with the interests of a Portfolio and subject to the approval of the Board of Directors, select brokers on the basis of the research, statistical and pricing services they provide to a Portfolio and other clients of BEA Associates. Information and research received from such brokers will be in addition to, and not in lieu of, the services required to be performed by BEA Associates under his respective contracts. A commission paid to such brokers may be higher than that which another qualified broker would have charged for effecting the same transaction, provided that BEA Associates, as applicable, determines in good faith that such commission is reasonable in terms either of the transaction or the overall responsibility of BEA Associates to a Portfolio and its other clients and that the total commissions paid by a Portfolio will be reasonable in relation to the benefits to a Portfolio over the long-term. Corporate debt and U.S. Government securities are generally traded on the over-the-counter market on a "net" basis without a stated commission, through dealers acting for their own account and not as brokers. The Portfolios will primarily engage in transactions with these dealers or deal directly with the issuer unless a better price or execution could be obtained by using a broker. Prices paid to a dealer in debt securities will generally include a "spread," which is the difference between the prices at which the dealer is willing to purchase and sell the specific security at the time, and includes the dealer's normal profit. BEA Associates may seek to obtain an undertaking from issuers of commercial paper or dealers selling commercial paper to consider the repurchase of such securities from a Portfolio prior to their maturity at their original cost plus interest (sometimes adjusted to reflect the actual maturity of the securities), if it believes that a Portfolio's anticipated need for liquidity makes such action desirable. Any such repurchase prior to maturity reduces the possibility that a Portfolio would incur a capital loss in liquidating commercial paper (for which there is no established market), especially if interest rates have risen since acquisition of the particular commercial paper. Investment decisions for each Portfolio and for other investment accounts managed by BEA Associates are made independently of each other in the 41 light of differing conditions. However, the same investment decision may be made for two or more of such accounts. In such cases, simultaneous transactions are inevitable. Purchases or sales are then averaged as to price and allocated as to amount according to a formula deemed equitable to each such account. While in some cases this practice could have a detrimental effect upon the price or value of the security as far as a Portfolio is concerned, in other cases it is believed to be beneficial to a Portfolio. A Portfolio will not purchase securities during the existence of any underwriting or selling group relating to such security of which BEA Associates or any affiliated person (as defined in the 1940 Act) thereof is a member except pursuant to procedures adopted by the Fund's Board of Directors pursuant to Rule 10f-3 under the 1940 Act. Among other things, these procedures, which will be reviewed by the Fund's directors as deemed necessary and appropriate require that the commission paid in connection with such a purchase be reasonable and fair, that the purchase be at not more than the public offering price prior to the end of the first business day after the date of the public offer, and that BEA Associates not participate in or benefit from the sale to a Portfolio. In no instance will portfolio securities be purchased from or sold to the Distributor or BEA Associates or any affiliated person of the foregoing entities except as permitted by SEC exemptive order or by applicable law. During the year ended August 31, 1996, BEA International Equity Portfolio paid $_________ of brokerage commissions, BEA Emerging Markets Equity Portfolio paid $_______ of brokerage commissions and for each other Portfolio no brokerage commissions were paid during such period. BEA International Equity, BEA Emerging Markets Equity and BEA Global Telecommunications Portfolios expect that their annual Portfolio turnover rate should not exceed 100% under normal market conditions. BEA High Yield Portfolio anticipates that its portfolio turnover may exceed 100%. A high rate of portfolio turnover involves correspondingly greater brokerage commission expenses and other transaction costs, which must be borne directly by a Portfolio. Federal income tax laws may restrict the extent to which a Portfolio may engage in short term trading of securities. See "Taxes". Each of the Portfolios anticipates that its annual portfolio turnover rate will vary from year to year. The portfolio turnover rate is calculated by dividing the lesser of a Portfolio's annual sales or purchases of portfolio securities (exclusive of purchases or sales of securities whose maturities at the time of acquisition were one year or less) by the monthly average value of the securities in the Portfolio during the year. The Portfolios have the benefit of an exemptive order issued by the SEC under the 1940 Act authorizing the Portfolios and other investment companies advised by BEA to acquire jointly securities issued in private placements, subject to the terms and conditions of the order. The Board of the Fund has adopted a policy that the Portfolios will not purchase private placements (i.e. restricted securities other than Rule 144A securities). 42 PURCHASE AND REDEMPTION INFORMATION The Fund reserves the right, if conditions exist which make cash payments undesirable, to honor any request for redemption of a Portfolio's shares by making payment in whole or in part in securities chosen by the Fund and valued in the same way as they would be valued for purposes of computing a Portfolio's net asset value. If payment is made in securities, a shareholder may incur transaction costs in converting these securities into cash. Investors will also be required to bear certain transaction costs associated with Redemptions-In-Kind. The Fund has elected, however, to be governed by Rule 18f-1 under the Investment Company Act so that a Portfolio is obligated to redeem its shares solely in cash up to the lesser of $250,000 or 1% of its net asset value during any 90-day period for any one shareholder of a Portfolio. Under the Investment Company Act, a Portfolio may suspend the right to redemption or postpone the date of payment upon redemption for any period during which the New York Stock Exchange, Inc. (the "NYSE") is closed (other than customary weekend and holiday closings), or during which trading on said Exchange is restricted, or during which (as determined by the SEC by rule or regulation) an emergency exists as a result of which disposal or valuation of Portfolio securities is not reasonably practicable, or for such other periods as the SEC may permit. (A Portfolio may also suspend or postpone the recordation of the transfer of its shares upon the occurrence of any of the foregoing conditions.) Recently the staff of the SEC has recommended that the SEC consider recommending to the United States Congress that the Investment Company Act be amended to permit so-called "Interval Funds". Such Interval Funds may be structured to permit redemptions less frequently than daily. In the event that the SEC administratively or Congress legislatively permits the creation of such Interval Funds, the Portfolios may consider appropriate changes in their structures to conform with such provisions and to recognize the nature of the markets in foreign securities. VALUATION OF SHARES The net asset value per share of each Portfolio is calculated separately as of the close of regular trading of the NYSE on each Business Day. "Business Day" means each weekday when the NYSE is open. Currently, the NYSE is closed on New Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence Day (observed), Labor Day, Thanksgiving Day and Christmas Day (observed). Securities which are listed on stock exchanges, whether U.S. or foreign are valued at the last sale price on the day the securities are valued or, lacking any sales on such day, at the mean of the bid and asked prices available prior to the valuation. Portfolio securities primarily traded in foreign markets may be traded in such markets on days which are not Business Days. Because net asset value per share of each Portfolio is determined only 43 on Business Days, the net asset value of shares of a Portfolio may be significantly affected on days when an investor does not have access to the Portfolio. If on any Business Day a foreign securities exchange or foreign market is closed, the securities traded on such exchange or in such market will be valued at the last sale price reported on the previous business day of such foreign exchange or market. In cases where securities are traded on more than one exchange, the securities are generally valued on the exchange designated by the Board of Directors or its delegates as the primary market. Securities traded in the over-the-counter market and listed on the National Association of Securities Dealers Automatic Quotation System ("NASDAQ") are valued at the last trade price listed on the NASDAQ at 4:00 p.m.; securities listed on NASDAQ for which there were no sales on that day and other over-the-counter securities are valued at the mean of the bid and asked prices available prior to valuation. Securities for which market quotations are not readily available are valued at fair value as determined in good faith by or under the direction of the Fund's Board of Directors. The amortized cost method of valuation may also be used with respect to debt obligations with sixty days or less remaining to maturity. Any assets which are denominated in a foreign currency are converted into U.S. dollars at the prevailing market rates for purposes of calculating net asset value. Foreign currency exchange rates are generally determined prior to the close of the NYSE. Occasionally, events affecting the value of foreign securities and such exchange rates occur between the time at which they are determined and the close of the NYSE, which events will not be reflected in a computation of the Portfolio's net asset value. If events materially affecting the value of such securities or assets or currency exchange rates occurred during such time period, the securities or assets would be valued at their fair value as determined in good faith by or under the direction of the Board of Directors. The foreign currency exchange transactions of a Portfolio conducted on a spot basis will be valued at the spot rate for purchasing or selling currency prevailing on the foreign exchange market. Under normal market conditions this rate differs from the prevailing exchange rate by an amount generally less than one-tenth of one percent due to the costs of converting from one currency to another. In determining the approximate market value of portfolio investments, the Fund may employ outside organizations, which may use a matrix or formula method that takes into consideration market indices, matrices, yield curves and other specific adjustments. This may result in the securities being valued at a price different from the price that would have been determined had the matrix or formula method not been used. All cash, receivables and current payables are carried on the Fund's books at their face value. Other assets, if any, are valued at fair value as determined in good faith by the Fund's Board of Directors. 44 PERFORMANCE AND YIELD INFORMATION TOTAL RETURN. For purposes of quoting and comparing the performance of the Portfolios to that of other mutual funds and to stock or other relevant indices in advertisements or in reports to shareholders, performance may be stated in terms of total return. Under the rules of the Securities and Exchange Commission, funds advertising performance must include total return quotes calculated according to the following formula: P(1 + T)(n) = ERV Where: P = a hypothetical initial payment of $1,000 T = average annual total return n = number of years (1, 5 or 10) ERV = ending redeemable value at the end of the 1, 5 or 10 year periods (or fractional portion thereof) of a hypothetical $1,000 payment made at the beginning of the 1, 5 or 10 year periods. Under the foregoing formula, the time periods used in advertising will be based on rolling calendar quarters, updated to the last day of the most recent quarter prior to submission of the advertisement for publication, and will cover one, five and ten year periods or a shorter period dating from the effectiveness of the Fund's registration statement. In calculating the ending redeemable value, the maximum sales load is deducted from the initial $1,000 payment and all dividends and distributions by the Fund are assumed to have been reinvested at net asset value, as described in the Prospectus, on the reinvestment dates during the period. Total return, or "T" in the formula above, is computed by finding the average annual compounded rates of return over the 1, 5 and 10 year periods (or fractional portion thereof) that would equate the initial amount invested to the ending redeemable value. Any sales loads that might in the future be made applicable at the time to reinvestments would be included as would any recurring account charges that might be imposed by the Fund. The Portfolios may also from time to time include in such advertising an aggregate total return figure or a total return figure that is not calculated according to the formula set forth above in order to compare more accurately a Portfolio's performance with other measures of investment return. For example, in comparing a Portfolio's total return with data published by Lipper Analytical Services, Inc., CDA Investment Technologies, Inc. or Weisenberger Investment Company Service, or with the performance of the Standard & Poor's 500 Stock Index or the Dow Jones Industrial Average, as appropriate, a Portfolio may calculate its aggregate and/or average annual total return for the specified periods of time by assuming the investment of $10,000 in Portfolio shares and assuming the reinvestment of each dividend or other distribution at net asset value on the reinvestment date. The Portfolio does not, for these purposes, deduct from the initial value invested any 45 amount representing sales charges. The Portfolio will, however, disclose the maximum sales charge and will also disclose that the performance data do not reflect sales charges and that inclusion of sales charges would reduce the performance quoted. Such alternative total return information will be given no greater prominence in such advertising than the information prescribed under SEC rules, and all advertisements containing performance data will include a legend disclosing that such performance data represent past performance and that the investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Calculated according to the SEC rules for the period beginning on the commencement of operations and ended August 31, 1996, the average annual total return for the BEA International Equity Portfolio (commencing October 1, 1992) was ____% (annualized), BEA Emerging Markets Equity Portfolio (commencing February 1, 1993) was ____% (annualized) and BEA High Yield Portfolio (commencing March 1, 1993) was ____$ (annualized). For the same period, the aggregate total return for the Portfolios was _____%, _____% and _____%, respectively. Calculated according to the non-standardized computation for the period beginning on the commencement of operations of each of the BEA International Equity and BEA Emerging Markets Equity Portfolios and ending on August 31, 1996, the average annual total return for the Portfolios was ____% and ____%, respectively. The aggregate total return for the Portfolios calculated according to the non-standardized computation for the period beginning on the commencement of operations of each of the Portfolios and ending August 31, 1996 was _____% and _____%, respectively. YIELD. Certain Portfolios may also advertise their yield. Under the rules of the SEC, a Portfolio advertising yield must calculate yield using the following formula: YIELD = 2[(a-b +1)(6) - 1] --- cd Where: a = dividends and interest earned during the period. b = expenses accrued for the period (net of reimbursement). c = the average daily number of shares outstanding during the period that were entitled to receive dividends. d = the maximum offering price per share on the last day of the period. Under the foregoing formula, yield is computed by compounding semi-annually, the net investment income per share earned during a 30 day period divided by the maximum offering price per share on the last day of the 46 period. For the purpose of determining the interest earned (variable "a" in the formula) on debt obligations that were purchased by a Portfolio at a discount or premium, the formula generally calls for amortization of the discount or premium; the amortization schedule will be adjusted monthly to reflect changes in the market values of the debt obligations. Yield may fluctuate daily and does not provide a basis for determining future yields. Because the yields will fluctuate, they cannot be compared with yields on savings account or other investment alternatives that provide an agreed to or guaranteed fixed yield for a stated period of time. However, yield information may be useful to an investor considering temporary investments in money market instruments. In comparing the yield of one money market fund to another, consideration should be given to each fund's investment policies, including the types of investments made, lengths of maturities of the portfolio securities, the method used by each fund to compute the yield (methods may differ) and whether there are any special account charges which may reduce the effective yield. The yields on certain obligations are dependent on a variety of factors, including general money market conditions, conditions in the particular market for the obligation, the financial condition of the issuer, the size of the offering, the maturity of the obligation and the ratings of the issue. The ratings of Moody's Investors Service and Standard & Poor's Corporation represent their respective opinions as to the quality of the obligations they undertake to rate. Ratings, however, are general and are not absolute standards of quality. Consequently, obligations with the same rating, maturity and interest rate may have different market prices. In addition, subsequent to its purchase by a Portfolio, an issue may cease to be rated or may have its rating reduced below the minimum required for purchase. In such an event, the Portfolio's investment adviser will consider whether the Portfolio should continue to hold the obligation. TAXES GENERAL TAX CONSEQUENCES TO THE FUND AND ITS SHAREHOLDERS. The following is only a summary of certain additional tax considerations generally affecting the Portfolios and their shareholders that are not described in the Fund's Prospectus. No attempt is made to present a detailed explanation of the tax treatment of the Portfolios or their shareholders, and the discussion in this Statement of Additional Information and in the Prospectus is not intended as a substitute for careful tax planning. Investors are urged to consult their tax advisers with specific reference to their own tax situation. Each Portfolio has elected to be taxed as a regulated investment company under Part I of Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"). As a regulated investment company, each Portfolio is exempt from Federal income tax on its net investment income and realized capital gains which it distributes to shareholders, provided that it (a) distributes an amount equal to the sum of (i) at least 90% of its investment 47 company taxable income (net taxable investment income and the excess of net short-term capital gain over net long-term capital loss), if any, for the year and (ii) at least 90% of its net tax-exempt interest income, if any, for the year (the "Distribution Requirement"), and (b) satisfies certain other requirements of the Code that are described below. Distributions of investment company taxable income and net tax-exempt interest income made during the taxable year or, under specified circumstances, within twelve months after the close of the taxable year will satisfy the Distribution Requirement. The Distribution Requirement for any year may be waived if a regulated investment company establishes to the satisfaction of the Internal Revenue Service that it is unable to satisfy the Distribution Requirement by reason of distributions previously made for the purpose of avoiding liability for Federal excise tax (discussed below). In addition to satisfaction of the Distribution Requirement each Portfolio must derive at least 90% of its gross income from dividends, interest, certain payments with respect to securities loans and gains from the sale or other disposition of stock or securities or foreign currencies, or from other income derived with respect to its business of investing in such stock, securities, or currencies (the "Income Requirement") and derive less than 30% of its gross income from the sale or other disposition of any of the following investments, if such investments were held for less than three months: (a) stock or securities (as defined in Section 2(a)(36) of the 1940 Act); (b) options, futures, or forward contracts (other than options, futures or forward contracts on foreign currencies); and (c) foreign currencies (or options, futures or forward contracts on foreign currencies) but only if such currencies (or options, futures or forward contracts) are not directly related to the regulated investment company's principal business of investing in stock or securities (or in options and futures with respect to stocks or securities) (the "Short-Short Gain Test"). Interest (including accrued original issue discount, "accrued market discount") received by a Portfolio at maturity or on disposition of a security held for less than three months will not be treated as gross income derived from the sale or other disposition of such security for purposes of the Short-Short Gain Test. However, any other income which is attributable to realized market appreciation will be treated as gross income from the sale or other disposition of securities for this purpose. Future Treasury regulations may provide that currency gains that are not "directly related" to a Portfolio's principal business of investing in stock or securities (or in options or futures with respect to stock or securities) will not satisfy the Income Requirements. Income derived by a regulated investment company from a partnership or trust (including a foreign entity that is classified as a partnership or trust for U.S. federal income tax purposes) will satisfy the Income Requirement only to the extent such income is attributable to items of income of the partnership or trust that would satisfy the Income Requirement if they were realized by a regulated investment company in the same manner as realized by the partnership or trust. In addition to the foregoing requirements, at the close of each quarter of its taxable year, at least 50% of the value of each Portfolio's 48 assets must consist of cash and cash items, U.S. Government securities, securities of other regulated investment companies, and securities of other issuers (as to which the Portfolio has not invested more than 5% of the value of its total assets in securities of such issuer and as to which the Portfolio does not hold more than 10% of the outstanding voting securities of such issuer), and no more than 25% of the value of each Portfolio's total assets may be invested in the securities of any one issuer (other than U.S. Government securities and securities of other regulated investment companies), or in two or more issuers which such Portfolio controls and which are engaged in the same or similar trades or businesses (the "Asset Diversification Requirement"). The Internal Revenue Service has taken the position, in informal rulings issued to other taxpayers, that the issuer of a repurchase agreement is the bank or dealer from which securities are purchased. A Portfolio will not enter into repurchase agreements with any one bank or dealer if entering into such agreements would, under the informal position expressed by the Internal Revenue Service, cause it to fail to satisfy the Asset Diversification Requirement. Distributions of investment company taxable income will be taxable (subject to the possible allowance of the dividend received deduction described below) to shareholders as ordinary income, regardless of whether such distributions are paid in cash or are reinvested in shares. Shareholders receiving any distribution from the Fund in the form of additional shares will be treated as receiving a taxable distribution in an amount equal to the fair market value of the shares received, determined as of the reinvestment date. Each Portfolio intends to distribute to shareholders its excess of net long-term capital gain over net short-term capital loss ("net capital gain"), if any, for each taxable year. Such gain is distributed as a capital gain dividend and is taxable to shareholders as long-term capital gain, regardless of the length of time the shareholder has held his shares, whether such gain was recognized by the Portfolio prior to the date on which a shareholder acquired shares of the Portfolio and whether the distribution was paid in cash or reinvested in shares. The aggregate amount of distributions designated by any Portfolio as capital gain dividends may not exceed the net capital gain of such Portfolio for any taxable year, determined by excluding any net long-term capital loss attributable to transactions occurring after October 31 of such year and by treating any such loss as if it arose on the first day of the following taxable year. Such distributions will be designated as capital gain dividends in a written notice mailed by the Fund to shareholders not later than 60 days after the close of each Portfolio's respective taxable year. In the case of corporate shareholders, distributions (other than capital gain dividends) of a Portfolio for any taxable year will qualify for the 70% dividends received deduction, only to the extent of the gross amount of "qualifying dividends" received by such Portfolio for the year. Generally, a dividend will be treated as a "qualifying dividend" only if it 49 has been received from a domestic corporation. However, if a Portfolio owns at least 10 percent of the stock (by vote and value) of certain foreign corporations with U.S. source income, then a portion of the dividends paid by such foreign corporations may constitute "qualifying dividends". A dividend received by a taxpayer will not be treated as a "qualifying dividend" if (1) it has been received with respect to any share of stock that the taxpayer has held for 45 days (90 days in the case of certain preferred stock) or less (excluding any day more than 45 days (or 90 days in the case of certain preferred stock) after the date on which the stock becomes ex-dividend), or (2) to the extent that the taxpayer is under an obligation (pursuant to a short sale or otherwise) to make related payments with respect to positions in substantially similar or related property. The Fund will designate the portion, if any, of the distribution made by a Portfolio that qualifies for the dividends received deduction in a written notice mailed by the Fund to shareholders not later than 60 days after the close of the Portfolio's taxable year. Investors should note that recent legislative changes made to the Code have increased the significance of the distinction between capital gain and ordinary income distributions for some individual investors. Under this legislation, the maximum marginal rate on ordinary income for individuals, trusts and estates has nominally been increased only from 28% to 31%. However, due to the phase-out of personal exemptions and the enactment of limitations on itemized deductions for individual taxpayers whose adjusted gross income exceeds certain threshold amounts that depend on the taxpayer's filing status, the actual maximum marginal rate may be significantly greater. By contrast, the maximum rate on the net capital gain of individuals, trusts and estates remains 28%. Capital gains and ordinary income of corporate taxpayers will continue to be taxed at a nominal maximum rate of 34% (an effective marginal rate of 39% applies in the case of corporations having taxable income between $100,000 and $335,000). Investors should be aware that any loss realized upon the sale, exchange or redemption of shares held for six months or less will be treated as a long-term capital loss to the extent any capital gain dividends have been paid with respect to such shares. Corporate taxpayers may be liable for alternative minimum tax, which is imposed at the rate of 20% of "alternative minimum taxable income" (less, in the case of corporate shareholders with "alternative minimum taxable income" of less than $310,000, the applicable "exemption amount"), in lieu of the regular corporate income tax. "Alternative minimum taxable income" is equal to "taxable income" (as determined for corporate income regular tax purposes) with certain adjustments. Although corporate taxpayers in determining "alternative minimum taxable income" are allowed to exclude exempt interest dividends (other than exempt interest dividends derived from certain private activity bonds ("AMT Preference Dividends"), as explained in the Prospectus) and to utilize the 70% dividends received deduction at the first level of computation, the Code requires (as a second computational step) that "alternative minimum taxable income" be increased by 75% of the excess of "adjusted current earnings" over other "alternative minimum taxable income." 50 Corporate shareholders will have to take into account (1) all exempt interest dividends and (2) the full amount of all dividends from a Portfolio that are treated as "qualifying dividends" for purposes of the dividends received deduction in determining their "adjusted current earnings." As much as 75% of any exempt interest dividend and 82.5% of any "qualifying dividend" received by a corporate shareholder could, as a consequence, be subject to alternative minimum tax. Exempt interest dividends received by such a corporate shareholder may accordingly be subject to alternative minimum tax at an effective rate of 15%. Corporate investors should also note that the Superfund Amendments and Reauthorization Act of 1986 imposes an environmental tax on corporate taxpayers of 0.14% of the excess of "alternative minimum taxable income" (with certain modifications) over $2,000,000 for taxable years beginning after 1986 and before 1996, regardless of whether such taxpayers are liable for alternative minimum tax. If for any taxable year any Portfolio does not qualify as a regulated investment company, all of its taxable income will be subject to tax at regular corporate rates without any deduction for distributions to shareholders, and all distributions will be taxable as ordinary dividends to the extent of such Portfolio's current and accumulated earning and profits. Such distributions will be eligible for the dividends received deduction in the case of corporate shareholders. Investors should be aware that any loss realized on a sale of shares of a Portfolio will be disallowed to the extent an investor repurchases shares of the same Portfolio within a period of 61 days (beginning 30 days before and ending 30 days after the day of disposition of the shares). Dividends paid by a Portfolio in the form of shares within the 61-day period would be treated as a purchase for this purpose. The Code imposes a non-deductible 4% excise tax on regulated investment companies that do not distribute with respect to each calendar year an amount equal to 98% of their ordinary income for the calendar year plus 98% of their capital gain net income for the 1-year period ending on October 31 of such calendar year. The balance of such income must be distributed during the next calendar year. For the foregoing purposes, a company is treated as having distributed any amount on which it is subject to income tax for any taxable year ending in such calendar year. Because each Portfolio intends to distribute all of its taxable income currently, no Portfolio anticipates incurring any liability for this excise tax. However, investors should note that a Portfolio may in certain circumstances be required to liquidate investments in order to make sufficient distributions to avoid excise tax liability. The Fund will be required in certain cases to withhold and remit to the United States Treasury 31% of dividends paid to any shareholder (1) who has provided either an incorrect tax identification number or no number at all, (2) who is subject to backup withholding by the Internal Revenue Service for failure to report the receipt of interest or dividend income properly, or 51 (3) who has failed to certify to the Fund that he is not subject to backup withholding or that he is an "exempt recipient." The foregoing general discussion of Federal income tax consequences is based on the Code and the regulations issued thereunder as in effect on the date of this Statement of Additional Information. Future legislative or administrative changes or court decisions may significantly change the conclusions expressed herein, and any such changes or decisions may have a retroactive effect with respect to the transactions contemplated herein. Although each Portfolio expects to qualify as a "regulated investment company" and to be relieved of all or substantially all Federal income taxes, depending upon the extent of its activities in states and localities in which its offices are maintained, in which its agents or independent contractors are located or in which it is otherwise deemed to be conducting business, each Portfolio may be subject to the tax laws of such states or localities. Certain states exempt from state income taxation dividends paid by a regulated investment company that are derived from interest on U.S. Government obligations. Each Portfolio will accordingly inform its shareholders annually of the percentage, if any, of its ordinary dividends that is derived from interest on U.S. Government obligations. Shareholders should consult with their tax advisers as to the availability and extent of any applicable state income tax exemption. SPECIAL TAX CONSIDERATIONS. The following discussion relates to the particular Federal income tax consequences of the investment policies of the Portfolios. The ability of the Portfolios to engage in options, short sale and futures activities will be somewhat limited by the requirements for their continued qualification as regulated investment companies under the Code, in particular the Distribution Requirement, the Short-Short Gain Test and the Asset Diversification Requirement. STRADDLES.The options transactions that the Portfolios enter into may result in "straddles" for Federal income tax purposes. The straddle rules of the Code may affect the character of gains and losses realized by the Portfolios. In addition, losses realized by the Portfolios on positions that are part of a straddle may be deferred under the straddle rules, rather than being taken into account in calculating the investment company taxable income and net capital gain of the Portfolios for the taxable year in which such losses are realized. Losses realized prior to October 31 of any year may be similarly deferred under the straddle rules in determining the "required distribution" that the Portfolios must make in order to avoid Federal excise tax. Furthermore, in determining their investment company taxable income and ordinary income, the Portfolios may be required to capitalize, rather than deduct currently, any interest expense on indebtedness incurred or continued to purchase or carry any positions that are part of a straddle. The tax 52 consequences to the Portfolios of holding straddle positions may be further affected by various elections provided under the Code and Treasury regulations, but at the present time the Portfolios are uncertain which (if any) of these elections they will make. Because only a few regulations implementing the straddle rules have been promulgated by the U.S. Treasury, the tax consequences to the Portfolios of engaging in options transactions are not entirely clear. Nevertheless, it is evident that application of the straddle rules may substantially increase or decrease the amount which must be distributed to shareholders in satisfaction of the Distribution Requirement (or to avoid Federal excise tax liability) for any taxable year in comparison to a fund that did not engage in options transactions. For purposes of the Short-Short Gain Test, current Treasury regulations provide that (except to the extent that the short sale rules discussed below would otherwise apply) the straddle rules will have no effect on the holding period of any straddle position. However, the U.S. Treasury has announced that it is continuing to study the application of the straddle rules for this purpose. OPTIONS AND SECTION 1256 CONTRACTS. The writer of a covered put or call option generally does not recognize income upon receipt of the option premium. If the option expires unexercised or is closed on an exchange, the writer generally recognizes short-term capital gain. If the option is exercised, the premium is included in the consideration received by the writer in determining the capital gain or loss recognized in the resultant sale. However, certain options transactions that the Portfolios enter into, as well as futures transactions and transactions in forward foreign currency contracts that are traded in the interbank market entered into by the Portfolios, will be subject to special tax treatment as "Section 1256 contracts." Section 1256 contracts are treated as if they are sold for their fair market value on the last business day of the taxable year (i.e., marked-to-market), regardless of whether a taxpayer's obligations (or rights) under such contracts have terminated (by delivery, exercise, entering into a closing transaction or otherwise) as of such date. Any gain or loss recognized as a consequence of the year-end marking-to-market of Section 1256 contracts is combined (after application of the straddle rules that are described above) with any other gain or loss that was previously recognized upon the termination of Section 1256 contracts during that taxable year. The net amount of such gain or loss for the entire taxable year is generally treated as 60% long-term capital gain or loss and 40% short-term capital gain or loss, except in the case of marked-to-market forward foreign currency contracts for which such gain or loss is treated as ordinary income or loss. Such short-term capital gain (and, in the case of marked-to-market forward foreign currency contracts, such ordinary income) would be included in determining the investment company taxable income of the relevant Portfolio for purposes of the Distribution Requirement, even if it were wholly attributable to the year-end marking-to-market of Section 1256 contracts that the relevant Portfolio continued to hold. Investors should also note that Section 1256 contracts will be treated as having been sold on October 31 in calculating the "required distribution" that a Portfolio must make to avoid Federal excise tax liability. 53 Each of the Portfolios may elect not to have the year-end marking-to-market rule apply to Section 1256 contracts that are part of a "mixed straddle" with other investments of such Portfolio that are not Section 1256 contracts (the "Mixed Straddle Election"). It is unclear under present law how certain gain that the Portfolios may derive from trading in Section 1256 contracts for which a Mixed Straddle Election is not made will be treated for purposes of the "Short-Short Gain Test." The Portfolios may seek a ruling from the Internal Revenue Service in order to resolve this issue. FOREIGN CURRENCY TRANSACTIONS. In general, gains from "foreign currencies" and from foreign currency options, foreign currency futures and forward foreign exchange contracts relating to investments in stock, securities or foreign currencies will be qualifying income for purposes of determining whether the Portfolio qualifies as a RIC. It is currently unclear, however, who will be treated as the issuer of a foreign currency instrument or how foreign currency options, futures or forward foreign currency contracts will be valued for purposes of the Asset Diversification Requirement. A Portfolio may request a private letter ruling from the Internal Revenue Service for guidance on some or all of these issues. Under Code Section 988 special rules are provided for certain transactions in a foreign currency other than the taxpayer's functional currency (i.e., unless certain special rules apply, currencies other than the U.S. dollar). In general, foreign currency gains or losses from certain forward contracts, from futures contracts that are not "regulated futures contracts", and from unlisted options will be treated as ordinary income or loss. In certain circumstances where the transaction is not undertaken as part of a straddle, a Portfolio may elect capital gain or loss treatment for such transactions. Alternatively, a Portfolio may elect ordinary income or loss treatment for transactions in futures contracts and options on foreign currency that would otherwise produce capital gain or loss. In general gains or losses from a foreign currency transaction subject to Code Section 988 will increase or decrease the amount of the Portfolio's investment company taxable income available to be distributed to shareholders as ordinary income, rather than increasing or decreasing the amount of the Portfolio's net capital gain. Additionally, if losses from a foreign currency transaction subject to Code Section 988 exceed other investment company taxable income during a taxable year, a Portfolio will not be able to make any ordinary dividend distributions, and any distributions made before the losses were realized but in the same taxable year would be recharacterized as a return of capital to shareholders, thereby reducing each shareholder's basis in his Shares. PASSIVE FOREIGN INVESTMENT COMPANIES. If a Portfolio acquires shares in certain foreign investment entities, called "passive foreign investment companies" ("PFIC"), such Portfolio may be subject to "deferred" Federal income tax on a portion of any "excess distribution" received with respect to such shares or on a portion of any gain recognized upon a disposition of such shares, notwithstanding the distribution of such income to the shareholders of such Portfolio. Additional charges in the nature of interest may also be imposed on a Portfolio in respect of such deferred taxes. 54 However, in lieu of sustaining the foregoing tax consequences, a Portfolio may elect to have its investment in any PFIC taxed as an investment in a "qualified electing fund" ("QEF"). A Portfolio making a QEF election would be required to include in its income each year a ratable portion, whether or not distributed, of the ordinary earnings and net capital gain of the QEF. Any such QEF inclusions would have to be taken into account by a Portfolio for purposes of satisfying the Distribution Requirement and the excise tax distribution requirement. The Internal Revenue Service has proposed regulations that would permit a Portfolio to elect (in lieu of paying deferred tax or making a QEF election) to mark-to-market annually any PFIC shares that it owned and to include any gains (but not losses) that it was deemed to realize as ordinary income. A Portfolio generally would not be subject to deferred Federal income tax on any gains that it was deemed to realize as a consequence of making a mark-to-market election, but such gains would be taken into account by the Portfolio for purposes of satisfying the Distribution Requirement and the excise tax distribution requirement. The proposed regulations would generally apply only prospectively, to taxable years ending after their promulgation as final regulations. SHORT-SHORT GAIN TEST. Because of the Short-Short Gain Test, the Portfolios may have to limit the sale of appreciated (but not depreciated) securities that they have held for less than three months. The short sale of (including for this purpose the acquisition of a put option on) (1) securities held on the date of the short sale or acquired after the short sale and on or before the date of closing thereof or (2) securities which are "substantially identical" to securities held on the date of the short sale or acquired after the short sale and on or before the date of the closing thereof may reduce the holding period of such securities for purposes of the Short-Short Gain Test. Any increase in value of a position that is part of a "designated hedge" will be offset by any decrease in value (whether realized or not) of the offsetting hedging position during the period of such hedge for purposes of the Short-Short Gain Test. Thus, only the net gain (if any) from the designated hedge will be included in gross income for purposes of the Short-Short Gain Test. Each of the Portfolios anticipates engaging in hedging transactions that qualify as designated hedges. However, because of the failure of the U.S. Treasury to promulgate regulations as authorized by the Code, it is not clear at the present time whether this treatment will be available to all of the Portfolios' hedging transactions. To the extent the Portfolios' transactions do not qualify as designated hedges, the Portfolios' investments in short sales, options or other transactions may be limited. ASSET DIVERSIFICATION REQUIREMENT. For purposes of the Asset Diversification Requirement, the issuer of a call option on a security (including an option written on an exchange) will be deemed to be the issuer of the underlying security. The Internal Revenue Service has informally ruled, however, that a call option that is written by a fund need not be counted for purposes of the Asset Diversification Requirement where the fund 55 holds the underlying security. However, the Internal Revenue Service has also informally ruled that a put option written by a fund must be treated as a separate asset and its value measured by "the value of the underlying security" for purposes of the Asset Diversification Requirement, regardless (apparently) of whether it is "covered" under the rules of the exchange. The Internal Revenue Service has not explained whether in valuing a written put option in this manner a fund should use the current value of the underlying security (its prospective future investment); the cash consideration that must be paid by the fund if the put option is exercised (its liability); or some other measure that would take into account the fund's unrealized profit or loss in writing the option. Under the Code, a fund may not rely on informal rulings of the Internal Revenue Service issued to other taxpayers. Consequently, a Portfolio may find it necessary to seek a ruling from the Internal Revenue Service on this issue or to curtail its writing of options in order to stay within the limits of the Asset Diversification Requirement. ADDITIONAL INFORMATION CONCERNING FUND SHARES The Fund has authorized capital of thirty billion shares of Common Stock, $.001 par value per share, of which 12.35 billion shares are currently classified as follows: 100 million shares are classified as Class A Common Stock (Growth & Income), 100 million shares are classified as Class B Common Stock, 100 million shares are classified as Class C Common Stock (Balanced), 100 million shares are classified as Class D Common Stock (Tax-Free), 500 million shares are classified as Class E Common Stock (Money), 500 million shares are classified as Class F Common Stock (Municipal Money), 500 million shares are classified as Class G Common Stock (Money), 500 million shares are classified as Class H Common Stock (Municipal Money), 1 billion shares are classified as Class I Common Stock (Money), 500 million shares are classified as Class J Common Stock (Municipal Money), 500 million shares are classified as Class K Common Stock (U.S. Government Money), 1,500 million shares are classified as Class L Common Stock (Money), 500 million shares are classified as Class M Common Stock (Municipal Money), 500 million shares are classified as Class N Common Stock (U.S. Government Money), 500 million shares are classified as Class O Common Stock (N.Y. Money), 100 million shares are classified as Class P Common Stock (Government), 100 million shares are classified as Class Q Common Stock, 500 million shares are classified as Class R Common Stock (Municipal Money), 500 million shares are classified as Class S Common Stock (U.S. Government Money), 500 million shares are classified as Class T Common Stock (International), 500 million shares are classified as Class U Common Stock (High Yield), 500 million shares are classified as Class V Common Stock (Emerging), 100 million shares are classified as Class W Common Stock (Laffer/Canto Equity), 50 million shares are classified as Class X Common Stock (U.S. Core Equity), 50 million shares are classified as Class Y Common Stock (U.S. Core Fixed Income), 50 million shares are classified as Class Z Common Stock (Global Fixed Income), 50 million shares are classified as Class AA Common Stock (Municipal Bond), 50 million shares are classified as Class BB Common Stock (BEA Balanced), 50 million shares are classified as Class CC Common Stock (Short Duration), 100 million shares are classified as 56 Class DD Common Stock (Growth & Income Series 2), 100 million shares are classified as Class EE Common Stock (Balanced Series 2), 50 million shares are classified as Class FF (n/i Micro Cap), 50 million shares are classified as Class GG (n/i Growth), 50 million shares are classified as Class HH (n/i Growth & Value), 100 million shares are classified as Class II (BEA Investor International), 100 million shares are classified as Class JJ (BEA Investor Emerging), 100 million shares are classified as Class KK (BEA Investor High Yield), 100 million shares are classified as Class LL (BEA Investor Global Telecom), 100 million shares are classified as Class MM (BEA Advisor International), 100 million shares are classified as Class NN (BEA Advisor Emerging), 100 million shares are classified as Class OO (BEA Advisor High Yield), 100 million shares are classified as Class PP (BEA Advisor Global Telecom), 700 million shares are classified as Class Janney Money Common Stock, 200 million shares are classified as Class Janney Municipal Money Common Stock, 500 million shares are classified as Class Janney U.S. Government Money Common Stock, 100 million shares are classified as Class Janney N.Y. Municipal Money Common Stock, 1 million shares are classified as Class Beta 1 Common Stock (Money), 1 million shares are classified as Class Beta 2 Common Stock (Municipal Money), 1 million shares are classified as Class Beta 3 Common Stock (U.S. Government Money), 1 million shares are classified as Class Beta 4 Common Stock (N.Y. Money), 1 million shares are classified as Gamma 1 Common Stock (Money), 1 million shares are classified as Gamma 2 Common Stock (Municipal Money), 1 million shares are classified as Gamma 3 Common Stock (U.S. Government Money), 1 million shares are classified as Gamma 4 Common Stock (N.Y. Money), 1 million shares are classified as Delta 1 Common Stock (Money), 1 million shares are classified as Delta 2 Common Stock (Municipal Money), 1 million shares are classified as Delta 3 Common Stock (U.S. Government Money), 1 million shares are classified as Delta 4 Common Stock (N.Y. Money), 1 million shares are classified as Epsilon 1 Common Stock (Money), 1 million shares are classified as Epsilon 2 Common Stock (Municipal Money), 1 million shares are classified as Epsilon 3 Common Stock (U.S. Government Money), 1 million shares are classified as Epsilon 4 Common Stock (N.Y. Money), 1 million shares are classified as Zeta 1 Common Stock (Money), 1 million shares are classified as Zeta 2 Common Stock (Municipal Money), 1 million shares are classified as Zeta 3 Common Stock (U.S. Government Money), 1 million shares are classified as Zeta 4 Common Stock (N.Y. Money), 1 million shares are classified as Eta 1 Common Stock (Money), 1 million shares are classified as Eta 2 Common Stock (Municipal Money), 1 million shares are classified as Eta 3 Common Stock (U.S. Government Money), 1 million shares are classified as Eta 4 Common Stock (N.Y. Money), 1 million shares are classified as Theta 1 Common Stock (Money), 1 million shares are classified as Theta 2 Common Stock (Municipal Money), 1 million shares are classified as Theta 3 Common Stock (U.S. Government Money), and 1 million shares are classified as Theta 4 Common Stock (N.Y. Money). Shares of the Class II, JJ, KK and LL Common Stock constitute the BEA Investor classes. Under the Fund's charter, the Board of Directors has the power to classify or reclassify any unissued shares of Common Stock from time to time. The classes of Common Stock have been grouped into fifteen separate "families": the RBB Family, the Cash Preservation Family, the Sansom 57 Street Family, the Bedford Family, the Bradford Family, the BEA Family, the Janney Montgomery Scott Money Family, the n/i Family, the Beta Family, the Gamma Family, the Delta Family, the Epsilon Family, the Zeta Family, the Eta Family and the Theta Family. The RBB Family represents interests in one non-money market portfolio as well as the Money Market and Municipal Money Market Portfolios; the Cash Preservation Family represents interests in the Money Market and Municipal Money Market Portfolios; the Sansom Street Family represents interests in the Money Market, Municipal Money Market and Government Obligations Money Market Portfolios; Bedford Family represents interests in the Money Market, Municipal Money Market, Government Obligations Money Market and New York Municipal Money Market Portfolios; the Bradford Family represents interests in the Municipal Money Market and Government Obligations Money Market Portfolios; the BEA Family represents interests in nine non-money market portfolios; the n/i Family represents interests in three non-money market portfolios; the Janney Montgomery Scott Family and the Beta, Gamma, Delta, Epsilon, Zeta, Eta and Theta Families represent interests in the Money Market, Municipal Money Market, Government Obligations Money Market and New York Municipal Money Market Portfolios. The Fund does not currently intend to hold annual meetings of shareholders except as required by the 1940 Act or other applicable law. The Fund's amended By-Laws provide that shareholders collectively owning at least ten percent of the outstanding shares of all classes of Common Stock of the Fund have the right to call for a meeting of shareholders to consider the removal of one or more directors. To the extent required by law, the Fund will assist in shareholder communication in such matters. As stated in the Prospectus, holders of shares of each class of the Fund will vote in the aggregate and not by class on all matters, except where otherwise required by law. Further, shareholders of the Fund will vote in the aggregate and not by portfolio except as otherwise required by law or when the Board of Directors determines that the matter to be voted upon affects only the interests of the shareholders of a particular portfolio. Rule 18f-2 under the Investment Company Act provides that any matter required to be submitted by the provisions of such Act or applicable state law, or otherwise, to the holders of the outstanding securities of an investment company such as the Fund shall not be deemed to have been effectively acted upon unless approved by the holders of a majority of the outstanding shares of each portfolio affected by the matter. Rule 18f-2 further provides that a portfolio shall be deemed to be affected by a matter unless it is clear that the interests of each portfolio in the matter are identical or that the matter does not affect any interest of the Portfolio. Under the Rule, the approval of an investment advisory agreement or any change in a fundamental investment policy would be effectively acted upon with respect to a portfolio only if approved by the holders of a majority of the outstanding voting securities of such portfolio. However, the Rule also provides that the ratification of the selection of independent public accountants, the approval of principal underwriting contracts and the election of directors are not subject to the separate voting requirements and may be effectively acted upon by shareholders of an investment company voting without regard to portfolio. 58 Notwithstanding any provision of Maryland law requiring a greater vote of shares of the Fund's common stock (or of any class voting as a class) in connection with any corporate action, unless otherwise provided by law, (for example by Rule 18f-2 discussed above) or by the Fund's Articles of Incorporation, the Fund may take or authorize such action upon the favorable vote of the holders of more than 50% of all of the outstanding shares of Common Stock voting without regard to class (or portfolio). MISCELLANEOUS COUNSEL. The law firm of Ballard Spahr Andrews & Ingersoll, 1735 Market Street, 51st Floor, Philadelphia, Pennsylvania 19103 serves as counsel to the Fund and PFPC. The law firm of Drinker Biddle & Reath, 1100 Philadelphia National Bank Building, Broad and Chestnut Streets, Philadelphia, Pennsylvania 19107, serves as counsel to the Fund's independent directors. INDEPENDENT ACCOUNTANTS. Coopers & Lybrand L.L.P., 2400 Eleven Penn Center, Philadelphia, Pennsylvania 19103, serves as the Fund's independent accountants. No financial statements appear in this Statement of Additional Information because, as of the date hereof, the Investor Class had no performance history. CONTROL PERSONS. As of July __, 1996, to the Fund's knowledge, the following named persons at the addresses shown below owned of record approximately 5% or more of the total outstanding shares of the class of the Fund indicated below. See "Additional Information Concerning Fund Shares" above. The Fund does not know whether such persons also beneficially own such shares. PORTFOLIO NAME AND ADDRESS PERCENT OWNED - --------- ---------------- ------------- RBB Money Market Luanne M. Garvey and Robert J. 14.6 Portfolio Garvey (Class E) 2729 Woodland Avenue Trooper, PA 19403 Harold T. Erfer 12.8 414 Charles Lane Wynnewood, PA 19096 Karen M. McElhinny and 16.6 Contribution Account 4943 King Arthur Drive Erie, PA 16506 59 PORTFOLIO NAME AND ADDRESS PERCENT OWNED - --------- ---------------- ------------- John Robert Estrada and 15.9 Shirley Ann Estrada 1700 Raton Drive Arlington, TX 76018 Eric Levine and Linda & Howard Levine 67 Lanes Pond Road Howell, NJ 07731 29.1 RBB Municipal Money William B. Pettus Trust 23.7 Market Portfolio Augustine W. Pettus Trust (Class F) 827 Winding Path Lane St. Louis, MO 63021-6635 Seymour Fein 76.3 P.O. Box 486 Tremont Post Office Bronx, NY 10457-0486 Cash Preservation Money Jewish Family and Children's 55.4 Market Portfolio Agency of Philadelphia (Class G) Capital Campaign Attn: S. Ramm 1610 Spruce Street Philadelphia, PA 19103 Lynda R. Succ Trustee for in 12.1 Trust under The Lynda R. Campbell Caring Trust 935 Rutger Street St. Louis, MO 63104 Theresa M. Palmer 7.6 5731 N. 4th Street Philadelphia, PA 19120 Cash Preservation Kenneth Farwell and Valerie 10.5 Municipal Money Market Farwell Jt. Ten Portfolio 3854 Sullivan (Class H) St. Louis, MO 63107 Larnie Johnson and Mary Alice 17.1 Johnson 4927 Lee Avenue St. Louis, MO 63115-1726 Andrew Diederich and Doris 5.8 Diederich 1003 Lindenman Des Peres, MO 63131 60 PORTFOLIO NAME AND ADDRESS PERCENT OWNED - --------- ---------------- ------------- Marcella L. Haugh Caring Tr Dtd 7.3 8/12/91 40 Plaza Square Apt. 202 St. Louis, MO 63101 Emil Hunter and Mary J. Hunter 7.1 428 W. Jefferson Kirkwood, MO 63122 Ralph R. Moreno Caring Trust 5.2 418 N. Concord Street Los Angeles, CA 90063 Sansom Street Money Wasner & Co. 19.1 Market Portfolio FAO Paine Webber and Managed (Class I) Assets Sundry Holdings Attn: Joe Domizio 200 Stevens Drive Lester, PA 19113 Saxon and Co. 75.1 FBO Paine Webber P.O. Box 7780 1888 Philadelphia, PA 19182 Robertson Stephens & Co. 5.8 FBO Exclusive Benefit Investors c/o Eric Moore 555 California Street/No. 2600 San Francisco, CA 94101 Bradford Municipal J.C. Bradford & Co. 100 Money (Class R) 330 Commerce Street Nashville, TN 37201 Bradford Government J.C. Bradford & Co. 100 Obligations Money 330 Commerce Street (Class S) Nashville, TN 37201 BEA International Blue Cross & Blue Shield of 5.1 Equity Massachusetts Inc. (Class T) Retirement Income Trust 100 Summmer Street Boston, MA 02310 BEA High Yield Temple Inland Master Retirement 10.9 Portfolio Trust (Class U) 303 South Temple Drive Diboll, TX 75941 Guenter Full Trst Michelin North 17.8 America Inc. Master Trust P. O. Box 19001 Greenville, SC 29602-9001 61 PORTFOLIO NAME AND ADDRESS PERCENT OWNED - --------- ---------------- ------------- Flour Corporation Master 10.0 Retirement Trust 2383 Michelson Drive Irvine, CA 92730 C S First Boston Pension Fund 10.6 Park Avenue Plaza, 34th Floor 55 E. 52nd Street New York, NY 10055 Attn: Steve Medici SC Johnson & Son, Inc. Retirement 14.4 Plan 1525 Howe Street Racine, WI 53403 BEA Emerging Markets Wachovia Bank North Carolina 13.9 Equity Portfolio Trust for Carolina Power & Light (Class V) Co. Supplemental Retirement Trust 301 N. Main Street Winston-Salem, NC 27101 Northern Trust Company Trustee 19.1 for Texas Instruments Employee Plan P.O. Box 92956 Chicago, IL 60675-2956 Hall Family Foundation 19.2 P.O. Box 419580 Kansas City, MO 64208 Arkansas Public Emploees 9.7 Retirement System 124 W. Capitol Avenue Little Rock, AR 72201 Northern Trust 11.5 Trustee for Pillsbury P.O. Box 92956 Chicago, IL 60675 Amherst H. Wilder Foundation 5.3 919 Lafond Avenue St. Paul, MN 55104 BEA US Core Equity Bank of New York 44.5 Portfolio Trust APU Buckeye Pipeline (Class X) One Wall Street New York, NY 10286 62 PORTFOLIO NAME AND ADDRESS PERCENT OWNED - --------- ---------------- ------------- Werner & Pfleiderer Pension 7.6 Plan Employees 663 E. Crescent Avenue Ramsey, NJ 07446 Washington Hebrew Congregation 7.6 3935 Macomb St. NW Washington, DC 20016 BEA US Core Fixed New England UFCW & Employers' 20.5 Income Portfolio Pension Fund Board of Trustees (Class Y) 161 Forbes Road, Suite 201 Braintree, MA 02184 Bankers Trust 16.3 Trust Pechniney Corp. Pension Master Trust 34 Exchange Place, 4th Floor Jersey City, NJ 07302 Patterson & Co. 7.4 P.O. Box 7829 Philadelphia, PA 19102 MAC & Co 5.7 FAO 176-655 ROBF1766552 Mutual Funds Operations P. O. Box 3198 Pittsburgh, PA 15230-3198 Bank of New York 7.4 Trst Fenway Partners Master Trust One Wall Street, 12th floor New York, NY 10286 Citibank NA 11.2 Trst CS First Boston Corp Emp S/P Attn: Sheila Adams 111 Wall Street, 20th floor Z 1 New York, NY 10043 BEA Global Fixed Income Sunkist Master Trust 35.9 Portfolio (Class Z) 14130 Riverside Drive Sherman Oaks, CA 91423 Patterson & Co. 25.7 P. O. Box 7829 Philadelphia, PA 19101 63 PORTFOLIO NAME AND ADDRESS PERCENT OWNED - --------- ---------------- ------------- Key Trust Co. of Ohio 20.8 FBO Eastern Enterp. Collective Inv. Trust P.O. Box 901536 Cleveland, OH 44202-1559 Mary E. Morten 6.2 C/O Credit Suisse New York 12 E. 49th Street, 40th Floor New York, NY 10017 Attn: Portfolio Management BEA Municipal Bond Fund William A. Marquard 36.2 Portfolio 2199 Maysville Rd. (Class AA) Carlisle, KY 40311 Arnold Leon 12.1 c/o Fiduciary Trust Company P.O. Box 3199 Church Street Station New York, NY 10008 Irwin Bard 8.5 1750 North East 183rd St. North Miami Beach, FL 33160 Matthew M. Sloves and Diane 5.5 Decker Sloves Tenants in Common 1304 Stagecoach Road, S.E. Albuquerque, NM 87123 n/i Micro Cap Fund (Class FF) Charles Schwab & Co. Inc. 13.4 Special Custody Account for the Exclusive Benefit of Customers Attn: Mutual Funds 101 Montgomery Street San Francisco, CA 94101 Chase Manhattan Bank 45.3 Trst Collins Group Trust 940 Newport Center Drive Newport Beach, CA 92660 Currie & Co. 9.3 c/o Fiduciary Trust Co. Intl P. O. Box 3199 Church Street Station New York, NY 10008 64 PORTFOLIO NAME AND ADDRESS PERCENT OWNED - --------- ---------------- ------------- n/i Growth Fund Charles Schwab & Co. Inc. 17.7 (Class GG) Special Custody Account for the Exclusive Benefit of Customers Attn: Mutual Funds 101 Montgomery Street San Francisco, CA 94101 U S Equity Investment Portfolio 30.9 LP c/o Asset Management Advisors Inc. 1001 N. US Hwy Suite 800 Jupiter, FL 33447 Currie & Co. 5.4 c/o Fiduciary Trust Co. Intl P. O. Box 3199 Church Street Station New York, NY 10008 Bank of New York 17.8 Trst Sunkist Growers Inc. 14130 Riverside Drive Sherman Oaks, CA 91423-2392 n/i Growth and Value Charles Schwab & Co. Inc. 43.6 Fund (Class HH) Special Custody Account for the Exclusive Benefit of Customers Attn: Mutual Funds 101 Montgomery Street San Francisco, CA 94104 Janney Montgomery Scott Janney Montgomery Scott 100 Money Market Portfolio 1801 Market Street (Class Janney Money Philadelphia, PA 19103-1675 Market) Janney Montgomery Scott Janney Montgomery Scott 100 Municipal Money Market 1801 Market Street Portfolio Philadelphia, PA 19103-1675 (Class Janney Municipal Money Market) Janney Montgomery Scott Janney Montgomery Scott 100 Government Obligations 1801 Market Street Money Market Portfolio Philadelphia, PA 19103-1675 (Class Janney Government Obligations Money) 65 PORTFOLIO NAME AND ADDRESS PERCENT OWNED - --------- ---------------- ------------- Janney Montgomery Scott Janney Montgomery Scott 100 New York Municipal 1801 Market Street Money Market Portfolio Philadelphia, PA 19103-1675 (Class Janney N.Y. Municipal Money) As of the above date, directors and officers as a group owned less than one percent of the shares of RBB. LITIGATION. There is currently no material litigation affecting RBB. FINANCIAL STATEMENTS. No financial statements are supplied because, as of the date of the Prospectus and this Statement of Additional Information, the Funds had no operating history. 66 APPENDIX CORPORATE AND MUNICIPAL LONG-TERM DEBT RATINGS The following summarizes the ratings used by Standard & Poor's for corporate and municipal debt: "AAA" - This designation represents the highest rating assigned by Standard & Poor's to a debt obligation and indicates an extremely strong capacity to pay interest and repay principal. "AA" - Debt is considered to have a very strong capacity to pay interest and repay principal and differs from "AAA" issues only in small degree. "A" - Debt is considered to have a strong capacity to pay interest and repay principal although such issues are somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than debt in higher-rated categories. "BBB" - Debt is regarded as having an adequate capacity to pay interest and repay principal. Whereas such issues normally exhibit adequate protection parameters, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to pay interest and repay principal for debt in this category than in higher-rated categories. "BB," "B," and "CCC" - Debt that possesses one of these ratings is regarded, on balance, as predominantly speculative with respect to capacity to pay interest and repay principal in accordance with the terms of the obligation. "BB" indicates the lowest degree of speculation and "CCC" the highest degree of speculation. While such debt will likely have some quality and protective characteristics, these are outweighed by large uncertainties or major risk exposures to adverse conditions. "CC" - This rating is reserved for issues that are currently in arrears on dividends or sinking fund payments but that are currently paying. "C" - This rating is reserved for income bonds on which no interest is being paid. "D" - Debt is in default, and payment of interest and/or repayment of principal is in arrears. PLUS (+) OR MINUS (-) - The ratings from "AA" through "CCC" may be modified by the addition of a plus or minus sign to show relative standing within the major rating categories. A-1 The following summarizes the ratings used by Moody's for corporate and municipal long-term debt: "Aaa" - Bonds are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as "gilt edge." Interest payments are protected by a large or by an exceptionally stable margin and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues. "Aa" - Bonds are judged to be of high quality by all standards. Together with the "Aaa" group they comprise what are generally known as high grade bonds. They are rated lower than the best bonds because margins of protection may not be as large as in "Aaa" securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present which make the long-term risks appear somewhat larger than in "Aaa" securities. "A" - Bonds possess many favorable investment attributes and are to be considered as upper medium grade obligations. Factors giving security to principal and interest are considered adequate but elements may be present which suggest a susceptibility to impairment sometime in the future. "Baa" - Bonds considered medium-grade obligations, i.e., they are neither highly protected nor poorly secured. Interest payments and principal security appear adequate for the present but certain protective elements may be lacking or may be characteristically unreliable over any great length of time. Such bonds lack outstanding investment characteristics and in fact have speculative characteristics as well. "Ba," "B," "Caa," "Ca," and "C" - Bonds that possess one of these ratings provide questionable protection of interest and principal ("Ba" indicates some speculative elements; "B" indicates a general lack of characteristics of desirable investment; "Caa" represents a poor standing; "Ca" represents obligations which are speculative in a high degree; and "C" represents the lowest rated class of bonds). "Caa," "Ca" and "C" bonds may be in default. Con. (- - -) - Bonds for which the security depends upon the completion of some act or the fulfillment of some condition are rated conditionally. These are bonds secured by (a) earnings of projects under construction, (b) earnings of projects unseasoned in operation experience, (c) rentals which begin when facilities are completed, or (d) payments to which some other limiting condition attaches. Parenthetical rating denotes probable credit stature upon completion of construction or elimination of basis of condition. Moody's applies numerical modifiers 1, 2 and 3 in each generic classification from "Aa" to "B" in its bond rating system. The modifier 1 indicates that the company ranks in the higher end of its generic rating A-2 category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates that the issue ranks at the lower end of its generic rating category. MUNICIPAL NOTE RATINGS A Standard and Poor's rating reflects the liquidity concerns and market access risks unique to notes due in three years or less. The following summarizes the ratings used by Standard & Poor's Corporation for municipal notes: "SP-1" - The issuers of these municipal notes exhibit very strong or strong capacity to pay principal and interest. Those issues determined to possess overwhelming safety characteristics are given a plus (+) designation. "SP-2" - The issuers of these municipal notes exhibit satisfactory capacity to pay principal and interest. "SP-3" - The issuers of these municipal notes exhibit speculative capacity to pay principal and interest. Moody's ratings for state and municipal notes and other short-term loans are designated Moody's Investment Grade ("MIG") and variable rate demand obligations are designated Variable Moody's Investment Grade ("VMIG"). Such ratings recognize the differences between short-term credit risk and long-term risk. The following summarizes the ratings by Moody's Investors Service, Inc. for short-term notes: "MIG-1"/"VMIG-1" - Loans bearing this designation are of the best quality, enjoying strong protection by established cash flows, superior liquidity support or demonstrated broad-based access to the market for refinancing. "MIG-2"/"VMIG-2" - Loans bearing this designation are of high quality, with margins of protection ample although not so large as in the preceding group. "MIG-3"/"VMIG-3" - Loans bearing this designation are of favorable quality, with all security elements accounted for but lacking the undeniable strength of the preceding grades. Liquidity and cash flow protection may be narrow and market access for refinancing is likely to be less well established. "MIG-4"/"VMIG-4" - Loans bearing this designation are of adequate quality, carrying specific risk but having protection commonly regarded as required of an investment security and not distinctly or predominantly speculative. A-3 "SG" - Loans bearing this designation are of speculative quality and lack margins of protection. A-4 PART C OTHER INFORMATION Item 24. FINANCIAL STATEMENTS AND EXHIBITS (a) Financial Statements: (1) Included in Part A of the Registration Statement: None. Included in Part B of the Registration Statement: None. Notes to Financial Statements (b) Exhibits: See Note # ---------- (1) (a) Articles of Incorporation of Registrant 1 (b) Articles Supplementary of Registrant. 1 (c) Articles of Amendment to Articles of Incorporation of Registrant. 2 (d) Articles Supplementary of Registrant. 2 (e) Articles Supplementary of Registrant. 5 (f) Articles Supplementary of Registrant. 6 (g) Articles Supplementary of Registrant. 9 (h) Articles Supplementary of Registrant. 10 (i) Articles Supplementary of Registrant. 14 (j) Articles Supplementary of Registrant. 14 (k) Articles Supplementary of Registrant. 19 (l) Articles Supplementary of Registrant. 19 (m) Articles Supplementary of Registrant. 19 (n) Articles Supplementary of Registrant. 19 (o) Articles Supplementary of Registrant. 20 See Note # ---------- (p) Articles Supplementary of registrant. 23 (q) Form Of Articles Supplementary of Registrant. (2) Amended By-Laws adopted August 16, 1988. 3 (a) Amendment to By-Laws adopted July 25, 1989. 4 (b) By-Laws amended through October 24, 1989. 5 (c) By-Laws amended through April 24, 1996. 23 (3) None. (4) Specimen Certificates a) SafeGuard Equity Growth and Income Shares 3 b) SafeGuard Fixed Income Shares 3 c) SafeGuard Balanced Shares 3 d) SafeGuard Tax-Free Shares 3 e) SafeGuard Money Market Shares 3 f) SafeGuard Tax-Free Money Market Shares 3 g) Cash Preservation Money Market Shares 3 h) Cash Preservation Tax-Free Money Market Shares 3 i) Sansom Street Money Market Shares 3 j) Sansom Street Tax-Free Money Market Shares 3 k) Sansom Street Government Obligations Money 3 Market Shares l) Bedford Money Market Shares 3 m) Bedford Tax-Free Money Market Shares 3 n) Bedford Government Obligations Money 3 Market Shares o) Bedford New York Municipal Money Market Shares 5 p) SafeGuard Government Securities Shares 5 q) Income Opportunities High Yield Bond Shares 6 r) Bradford Tax-Free Money Market Shares 8 s) Bradford Government Obligations Money Market 8 Shares t) Alpha 1 Money Market Shares 8 u) Alpha 2 Tax-Free Money Market Shares 8 v) Alpha 3 Government Obligations Money Market 8 Shares w) Alpha 4 New York Municipal Money Market 8 Shares x) Beta 1 Money Market Shares 8 y) Beta 2 Tax-Free Money Market Shares 8 z) Beta 3 Government Obligations Money Market 8 Shares aa) Beta 4 New York Municipal Money Market Shares 8 bb) Gamma 1 Money Market Shares 8 2 See Note # ---------- cc) Gamma 2 Tax-Free Money Market Shares 8 dd) Gamma 3 Government Obligations Money Market 8 Shares ee) Gamma 4 New York Municipal Money Market Shares 8 ff) Delta 1 Money Market Shares 8 gg) Delta 2 Tax-Free Money Market Shares 8 hh) Delta 3 Government Obligations Money Market 8 Shares ii) Delta 4 New York Municipal Money Market Shares 8 jj) Epsilon 1 Money Market Shares 8 kk) Epsilon 2 Tax-Free Money Market Shares 8 ll) Epsilon 3 Government Obligations Money Market Shares 8 mm) Epsilon 4 New York Municipal Money Market Shares 8 nn) Zeta 1 Money Market Shares 8 oo) Zeta 2 Tax-Free Money Market Shares 8 pp) Zeta 3 Government Obligations Money Market Shares 8 qq) Zeta 4 New York Municipal Money Market Shares rr) Eta 1 Money Market Shares 8 ss) Eta 2 Tax-Free Money Market Shares 8 tt) Eta 3 Government Obligations Money Market Shares 8 uu) Eta 4 New York Municipal Money Market Shares 8 vv) Theta 1 Money Market Shares 8 ww) Theta 2 Tax-Free Money Market Shares 8 xx) Theta 3 Government Obligations Money Market Shares 8 yy) Theta 4 New York Municipal Money Market Shares 8 zz) BEA International Equity Shares 9 a1) BEA Strategic Fixed Income Shares 9 a2) BEA Emerging Markets Equity Shares 9 a3) Laffer/Canto Equity Shares 12 a4) BEA U.S. Core Equity Shares 13 a5) BEA U.S. Core Fixed Income Shares 13 a6) BEA Global Fixed Income Shares 13 a7) BEA Municipal Bond Shares 13 a8) BEA Balanced Shares 16 a9) BEA Short Duration Shares 16 a10) Warburg Growth & Income Shares 18 a11) Warburg Balanced Shares 18 (5) (a) Investment Advisory Agreement (Money) 3 between Registrant and Provident Institutional Management Corporation, dated as of August 16, 1988. 3 See Note # ---------- (b) Sub-Advisory Agreement (Money) between 3 Provident Institutional Management Corporation and Provident National Bank, dated as of August 16, 1988. (c) Investment Advisory Agreement 3 (Tax -Free Money) between Registrant and Provident Institutional Management Corporation, dated as of August 16, 1988. (d) Sub-Advisory Agreement (Tax-Free Money) 3 between Provident Institutional Management Corporation and Provident National Bank, dated as of August 16, 1988. (e) Investment Advisory Agreement 3 (Government Money) between Registrant and Provident Institutional Management Corporation, dated as of August 16, 1988. (f) Sub-Advisory Agreement (Government Money) 3 between Provident Institutional Management Corporation and Provident National Bank, dated as of August 16, 1988. (k) Investment Advisory Agreement (Balanced) 3 between Registrant and Provident Institutional Management Corporation, dated as of August 16, 1988. (l) Sub-Advisory Agreement (Balanced) between 4 Provident Institutional Management Corporation and Provident National Bank, dated as of August 16, 1988. (m) Investment Advisory Agreement (Tax-Free) 3 between Registrant and Provident Institutional Management Corporation, dated as of August 16, 1988. (n) Sub-Advisory Agreement (Tax-Free) between 3 Provident Institutional Management Corporation and Provident National Bank, dated as of August 16, 1988. (s) Investment Advisory Agreement 8 (Government Securities) between Registrant and Provident Institutional Management Corporation dated as of April 8, 1991. 4 See Note # ---------- (t) Investment Advisory Agreement 8 (High Yield Bond) between Registrant and Provident Institutional Management Corporation dated as of April 8, 1991. (u) Sub-Advisory Agreement (High Yield Bond) 8 between Registrant and Warburg, Pincus Counsellors, Inc. dated as of April 8, 1991. (v) Investment Advisory Agreement 9 (New York Municipal Money Market) between Registrant and Provident Institutional Management Corporation dated November 5, 1991. (w) Investment Advisory Agreement (Equity) 10 between Registrant and Provident Institutional Management Corporation dated November 5, 1991. (x) Sub-Advisory Agreement (Equity) between 10 Registrant, Provident Institutional Management Corporation and Warburg, Pincus Counsellors, Inc. dated November 5, 1991. (y) Investment Advisory Agreement 10 (Tax-Free Money Market) between Registrant and Provident Institutional Management Corporation dated April 21, 1992. (z) Investment Advisory Agreement 11 (BEA International Equity Portfolio) between Registrant and BEA Associates. (aa) Investment Advisory Agreement 11 (BEA Strategic Fixed Income Portfolio) between Registrant and BEA Associates. (bb) Investment Advisory Agreement 11 (BEA Emerging Markets Equity Portfolio) between Registrant and BEA Associates. (cc) Investment Advisory Agreement 14 (Laffer/Canto Equity Portfolio) between Registrant and Laffer Advisors Incorporated, dated as of July 21, 1993. 5 See Note # ---------- (dd) Sub-Advisory Agreement 12 (Laffer/Canto Sector Equity Portfolio) between PNC Institutional Management Corporation and Laffer Advisors Incorporated, dated as of July 21, 1993. (ee) Investment Advisory Agreement 15 (BEA U.S. Core Equity Portfolio) between Registrant and BEA Associates, dated as of October 27, 1993. (ff) Investment Advisory Agreement 15 (BEA U.S. Core Fixed Income Portfolio) between Registrant and BEA Associates, dated as of October 27, 1993. (gg) Investment Advisory Agreement 15 (BEA Global Fixed Income Portfolio) between Registrant and BEA Associates, dated as of October 27, 1993. (hh) Investment Advisory Agreement 15 (BEA Municipal Bond Fund Portfolio) between Registrant and BEA Associates, dated as of October 27, 1993. (ii) Investment Advisory Agreement 14 (Warburg Pincus Growth and Income Fund) between Registrant and Warburg, Pincus Counsellors, Inc. (jj) Investment Advisory Agreement 16 (Warburg Pincus Balanced Fund) between Registrant and Warburg, Pincus Counsellors, Inc. (kk) Investment Advisory Agreement (BEA Balanced) between Registrant and BEA Associates. (ll) Investment Advisory Agreement (BEA Short Duration Portfolio) between Registrant and BEA Associates. (mm) Investment Advisory Agreement (Warburg 21 Pincus Tax Free Fund) between Registrant and Warburg, Pincus Counsellors, Inc. (nn) Investment Advisory Agreement (NI 23 6 See Note # ---------- Micro Cap Fund) between Registrant and Numeric Investors, L.P. (oo) Investment Advisory Agreement (NI 23 Growth Fund) between Registrant and Numeric Investors, L.P. (pp) Investment Advisory Agreement (NI 23 Growth & Value Fund) between Registrant and Numeric Investors, L.P. (qq) Form of Investment Advisory Agreement (BEA Global Telecommunications Portfolio) between Registrant and BEA Associates. (6) (r) Distribution Agreement and Supplements 8 (Classes A through Q) between the Registrant and Counsellors Securities Inc. dated as of April 10, 1991. (s) Distribution Agreement Supplement 9 (Classes L, M, N and O) between the Registrant and Counsellors Securities Inc. dated as of November 5, 1991. (t) Distribution Agreement Supplements 9 (Classes R, S, and Alpha 1 through Theta 4) between the Registrant and Counsellors Securities Inc. dated as of November 5, 1991. (u) Distribution Agreement Supplement 10 (Classes T, U and V) between the Registrant and Counsellors Securities Inc. dated as of September 18, 1992. (v) Distribution Agreement Supplement 14 (Class W) between the Registrant and Counsellors Securities Inc. dated as of July 21, 1993. (w) Distribution Agreement Supplement 14 (Classes X, Y, Z and AA) between the Registrant and Counselors Securities Inc. (x) Distribution Agreement Supplement 18 (Classes BB and CC) between Registrant and Counsellor's Securities Inc. dated as of October 26, 1994. (y) Distribution Agreement Supplement 18 7 See Note # ---------- (Classes DD and EE) between Registrant and Counsellor's Securities Inc. dated as of October 26, 1994. (z) Distribution Agreement Supplement 19 (Classes L, M, N and O) between the Registrant and Counsellor's Securities Inc. (aa) Distribution Agreement Supplement 19 (Classes R, S) between the Registrant and Counsellor's Securities Inc. (bb) Distribution Agreement Supplements 19 (Classes Alpha 1 through Theta 4) between the Registrant and Counsellor's Securities Inc. (cc) Distribution Agreement Supplement Janney 20 Classes (Alpha 1, Alpha 2, Alpha 3 and Alpha 4 between the Registrant and Counsellor's Securities, Inc. (dd) Distribution Agreement Supplement NI 23 Classes (Classes FF, GG and HH) (ee) Form of Distribution Agreement Supplement (classes II, JJ, KK, and LL) (ff) Form of Distribution Agreement Supplement (Classes MM, NN, OO, and PP) (7) Fund Office Retirement Profit-Sharing and 7 Trust Agreement, dated as of October 24, 1990. (8) (a) Custodian Agreement between Registrant and 3 Provident National Bank dated as of August 16, 1988. (b) Sub-Custodian Agreement among 10 The Chase Manhattan Bank, N.A., the Registrant and Provident National Bank, dated as of July 13, 1992, relating to custody of Registrant's foreign securities. (e) Amendment No. 1 to Custodian Agreement 9 dated August 16, 1988. (f) Agreement between Brown Brothers Harriman 10 & Co. and Registrant on behalf of 8 See Note # ---------- BEA International Equity Portfolio, dated September 18, 1992. (g) Agreement between Brown Brothers Harriman & 10 Co. and Registrant on behalf of BEA Strategic Fixed Income Portfolio, dated September 18, 1992. (h) Agreement between Brown Brothers Harriman 10 & Co. and Registrant on behalf of BEA Emerging Markets Equity Portfolio, dated September 18, 1992. (i) Agreement between Brown Brothers Harriman 15 & Co. and Registrant on behalf of BEA Emerging Markets Equity, BEA International Equity, BEA Strategic Fixed Income and BEA Global Fixed Income Portfolios, dated as of November 29, 1993. (j) Agreement between Brown Brothers Harriman 15 & Co. and Registrant on behalf of BEA U.S. Core Equity and BEA U.S. Core Fixed Income Portfolio dated as of November 29, 1993. (k) Custodian Contract between 18 Registrant and State Street Bank and Trust Company. (l) Form of Custody Agreement between the 23 Registrant and Custodial Trust Company on behalf of NI Micro Cap Fund, NI Growth Fund and NI Growth & Value Fund, Portfolios of the Registrant. (9) (a) Transfer Agency Agreement (Sansom Street) 3 between Registrant and Provident Financial Processing Corporation, dated as of August 16, 1988. (b) Transfer Agency Agreement (Cash Preservation) 3 between Registrant and Provident Financial Processing Corporation, dated as of August 16, 1988. (c) Shareholder Servicing Agreement 3 (Sansom Street Money). (d) Shareholder Servicing Agreement 3 (Sansom Street Tax-Free Money). 9 See Note # ---------- (e) Shareholder Servicing Agreement 3 (Sansom Street Government Money). (f) Shareholder Services Plan 3 (Sansom Street Money). (g) Shareholder Services Plan 3 (Sansom Street Tax-Free Money). (h) Shareholder Services Plan 3 (Sansom Street Government Money). (i) Transfer Agency Agreement (SafeGuard) 3 between Registrant and Provident Financial Processing Corporation, dated as of August 16, 1988. (j) Transfer Agency Agreement (Bedford) 3 between Registrant and Provident Financial Processing Corporation, dated as of August 16, 1988. (k) Transfer Agency Agreement 7 (Income Opportunities) between Registrant and Provident Financial Processing Corporation dated June 25, 1990. (l) Administration and Accounting Services 8 Agreement between Registrant and Provident Financial Processing Corporation, relating to Government Securities Portfolio, dated as of April 10, 1991. (m) Administration and Accounting Services 9 Agreement between Registrant and Provident Financial Processing Corporation, relating to New York Municipal Money Market Portfolio dated as of November 5, 1991. (n) Administration and Accounting Services 9 Agreement between Registrant and Provident Financial Processing Corporation, relating to Equity Portfolio dated as of November 5, 1991. 10 See Note # ---------- (o) Administration and Accounting Services 9 Agreement between Registrant and Provident Financial Processing Corporation, relating to High Yield Bond Portfolio, dated as of April 10, 1991. (p) Administration and Accounting Services 10 Agreement between Registrant and Provident Financial Processing Corporation (International) dated September 18, 1992. (q) Administration and Accounting Services 10 Agreement between Registrant and Provident Financial Processing Corporation (Strategic) dated September 18, 1992; (r) Administration and Accounting Services 10 Agreement between Registrant and Provident Financial Processing Corporation (Emerging) dated September 18, 1992. (s) Transfer Agency Agreement and Supplements 9 (Bradford, Alpha, Beta, Gamma, Delta, Epsilon, Zeta, Eta and Theta) between Registrant and Provident Financial Processing Corporation dated as of November 5, 1991. (t) Transfer Agency Agreement Supplement 10 (BEA) between Registrant and Provident Financial Processing Corporation dated as of September 18, 1992. (u) Administrative Services Agreement between 10 Registrant and Counsellor's Fund Services, Inc. (BEA Portfolios) dated September 18, 1992. (v) Administration and Accounting Services 10 Agreement between Registrant and Provident Financial Processing Corporation, relating to Tax-Free Money Market Portfolio, dated as of April 21, 1992. (w) Transfer Agency Agreement Supplement 12 (Laffer) between Registrant and PFPC Inc. dated as of July 21, 1993. (x) Administration and Accounting Services 12 Agreement between Registrant and PFPC Inc., relating to Laffer/Canto Equity Fund, 11 See Note # ---------- dated July 21, 1993. (y) Transfer Agency Agreement Supplement 15 (BEA U.S. Core Equity, BEA U.S. Core Fixed Income, BEA Global Fixed Income and BEA Municipal Bond Fund) between Registrant and PFPC Inc. dated as of October 27, 1993. (z) Administration and Accounting Services 15 Agreement between Registrant and PFPC Inc. relating to (Core Equity) dated as of October 27, 1993. (aa) Administration and Accounting Services 15 Agreement between Registrant and PFPC Inc. (Core Fixed Income) dated October 27, 1993. (bb) Administration and Accounting Services 15 Agreement between Registrant and PFPC Inc. (International Fixed Income) dated October 27, 1993 (cc) Administration and Accounting Services 15 Agreement between Registrant and PFPC Inc. (Municipal Bond) dated October 27, 1993. (dd) Transfer Agency Agreement Supplement 18 (BEA Balanced and Short Duration) between Registrant and PFPC Inc. dated October 26, 1994. (ee) Administration and Accounting Services 18 Agreement between Registrant and PFPC Inc. (BEA Balanced) dated October 26, 1994. (ff) Administration and Accounting Services 18 Agreement between Registrant and PFPC Inc. (BEA Short Duration) dated October 26, 1994. (gg) Co-Administration Agreement between 18 Registrant and PFPC Inc. (Warburg Pincus Growth & Income Fund) dated August 4, 1994. (hh) Co-Administration Agreement between 18 Registrant and PFPC Inc. (Warburg Pincus Balanced Fund) dated August 4, 1994. 12 See Note # ---------- (ii) Co-Administration Agreement between 18 Registrant and Counsellors Funds Services, Inc. (Warburg Pincus Growth & Income Fund) dated August 4, 1994. (jj) Co-Administration Agreement between 18 Registrant and Counsellors Funds Services, Inc. (Warburg Pincus Balanced Fund) dated August 4, 1994. (kk) Administrative Services Agreement Supplement 18 between Registrant and Counsellor's Fund Services, Inc. (BEA Classes) dated October 26, 1994. (ll) Co-Administration Agreement between 21 Registrant and PFPC Inc. (Warburg Pincus Tax Free Fund) dated March 31, 1995. (mm) Co-Administration Agreement between 21 Registrant and Counsellors Funds Services, Inc. (Warburg Pincus Tax Free Fund) dated March 31, 1995. (nn) Transfer Agency and Service Agreement 21 between Registrant and State Street Bank and Trust Company and PFPC, Inc. dated February 1, 1995. (oo) Supplement to Transfer Agency and Service 21 Agreement between Registrant, State Street Bank and Trust Company, Inc. and PFPC dated April 10, 1995. (pp) Amended and Restated Credit Agreement dated 22 December 15, 1994. (qq) Transfer Agency Agreement Supplement (NI 23 Micro Cap Fund, NI Growth Fund and NI Growth & Value Fund) between Registrant and PFPC, Inc. dated April 24, 1996. (rr) Administration and Accounting Services 23 Agreement between Registrant and PFPC, Inc. (NI Micro Cap Fund) dated April 24, 1996. (ss) Administration and Accounting Services 23 Agreement between Registrant and PFPC, Inc. (NI Growth Fund) dated April 24, 1996. 13 See Note # ---------- (tt) Administration and Accounting Services 23 Agreement between Registrant and PFPC, Inc. (NI Growth & Value Fund) dated April 24, 1996. 14 See Note # ---------- (uu) Administrative Services Agreement between 23 Registrant and Counsellors Fund Services, Inc. (NI Micro Cap Fund, NI Growth Fund and NI Growth & Value Fund) dated April 24, 1996. (vv) Form of Administration and Accounting Services Agreement between Registrant and PFPC, Inc. (BEA Global Telecommunications). (ww) Form of Co-Administration Agreement between Registrant Investor and BEA Associates (BEA International Equity Investor Portfolio). (xx) Form of Co-Administration Agreement between Registrant and BEA Associates (BEA International Equity Advisor Portfolio). (yy) Form of Co-Administration Agreement Between Registrant and BEA Associates (BEA Emerging Markets Equity Investor Portfolio). (zz) Form of Co-Administration Agreement between Registrant and BEA Associates (BEA Emerging Markets Equity Advisor Portfolio). (aaa) Form of Co-Administration Agreement between Registrant and BEA Associates (BEA High Yield Investor Portfolio). (bbb) Form of Co-Administration Agreement between Registrant and BEA Associates (BEA High Yield Advisor Portfolio). (ccc) Form of Co-Administration Agreement between Registrant and BEA Associates (BEA Global Telecommunications Investor Portfolio). (ddd) Form of Co-Administration Agreement between Registrant and BEA Associates (BEA Global Telecommunications Advisor Portfolio). (eee) Form of Transfer Agreement and Service Agreement between Registrant and State Street Bank and Trust Company. 15 See Note # ---------- (10)(a) Opinion of Counsel. 23 (10)(b) Consent of Counsel. (11) Consent of Independent Accountants. (12) None. (13)(a) Subscription Agreement (relating to 2 Classes A through N). (b) Subscription Agreement between Registrant 7 and Planco Financial Services, Inc., relating to Classes O and P. (c) Subscription Agreement between Registrant and 7 Planco Financial Services, Inc., relating to Class Q. (d) Subscription Agreement between Registrant 9 and Counsellors Securities Inc. relating to Classes R, S, and Alpha 1 through Theta 4. (e) Subscription Agreement between Registrant 10 and Counsellors Securities Inc. relating to Classes T, U and V. (f) Subscription Agreement between Registrant 18 and Counsellor's Securities Inc. relating to Classes BB and CC. (g) Purchase Agreement between Registrant and 21 Counsellors Securities Inc. relating to Class DD (Warburg Pincus Growth & Income Fund Series 2). (h) Purchase Agreement between Registrant and 21 Counsellors Securities Inc. relating to Class EE (Warburg Pincus Balanced Fund Series 2). (i) Purchase Agreement between Registrant and 23 Numeric Investors, L.P. relating to Class FF (NI Micro Cap Fund). (j) Purchase Agreement between Registrant and 23 Numeric Investors, L.P. relating to Class GG (NI Growth Fund). (k) Purchase Agreement between Registrant and 23 Numeric Investors, L.P. relating to 16 See Note # ---------- Class HH (NI Growth & Value Fund) (l) Form of Subscription Agreement between Registrant and Counsellors Securities, Inc. relating to Classes II through PP. (14) None. (15)(a) Plan of Distribution (Sansom Street Money). 3 (b) Plan of Distribution (Sansom Street Tax-Free 3 Money). (c) Plan of Distribution (Sansom Street 3 Government Money). (d) Plan of Distribution (Cash Preservation 3 Money). (e) Plan of Distribution (Cash Preservation 3 Tax-Free Money). (f) Plan of Distribution (SafeGuard Equity). 3 (g) Plan of Distribution 3 (SafeGuard Fixed Income). (h) Plan of Distribution (SafeGuard Balanced). 3 (i) Plan of Distribution (SafeGuard Tax-Free). 3 (j) Plan of Distribution (SafeGuard Money). 3 (k) Plan of Distribution (SafeGuard Tax-Free Money). 3 (l) Plan of Distribution (Bedford Money). 3 (m) Plan of Distribution (Bedford Tax-Free 3 Money). (n) Plan of Distribution (Bedford Government 3 Money). (o) Plan of Distribution (Bedford New York 7 Municipal Money). (p) Plan of Distribution (SafeGuard Government 7 Securities). 17 See Note # ---------- (q) Plan of Distribution (Income Opportunities 7 High Yield). (r) Amendment No. 1 to Plans of Distribution 8 (Classes A through Q). (s) Plan of Distribution (Bradford Tax-Free 9 Money). (t) Plan of Distribution (Bradford Government 9 Money). (u) Plan of Distribution (Alpha Money). 9 (v) Plan of Distribution (Alpha Tax-Free 9 Money). (w) Plan of Distribution (Alpha Government 9 Money). (x) Plan of Distribution (Alpha New York 9 Money). (y) Plan of Distribution (Beta Money). 9 (z) Plan of Distribution (Beta Tax-Free 9 Money). (aa) Plan of Distribution (Beta Government 9 Money). (bb) Plan of Distribution (Beta New York 9 Money). (cc) Plan of Distribution (Gamma Money). 9 (dd) Plan of Distribution (Gamma Tax-Free 9 Money). (ee) Plan of Distribution (Gamma Government 9 Money). (ff) Plan of Distribution (Gamma New York 9 Money). (gg) Plan of Distribution (Delta Money). 9 (hh) Plan of Distribution (Delta Tax-Free 9 Money). 18 See Note # ---------- (ii) Plan of Distribution (Delta Government 9 Money). (jj) Plan of Distribution (Delta New York 9 Money). (kk) Plan of Distribution (Epsilon Money). 9 (ll) Plan of Distribution (Epsilon Tax-Free 9 Money). (mm) Plan of Distribution (Epsilon Government 9 Money). (nn) Plan of Distribution (Epsilon New York 9 Money). (oo) Plan of Distribution (Zeta Money). 9 (pp) Plan of Distribution (Zeta Tax-Free 9 Money). (qq) Plan of Distribution (Zeta Government 9 Money). (rr) Plan of Distribution (Zeta New York 9 Money). (ss) Plan of Distribution (Eta Money). 9 (tt) Plan of Distribution (Eta Tax-Free Money). 9 (uu) Plan of Distribution (Eta Government 9 Money). (vv) Plan of Distribution (Eta New York 9 Money). (ww) Plan of Distribution (Theta Money). 9 (xx) Plan of Distribution (Theta Tax-Free 9 Money). (yy) Plan of Distribution (Theta Government 9 Money). (zz) Plan of Distribution (Theta New York 9 Money). (aaa) Plan of Distribution (Laffer Equity). 12 19 See Note # ---------- (bbb) Plan Distribution (Warburg Pincus Growth 18 & Income Series 2). (ccc) Plan of Distribution (Warburg Pincus 18 Balanced Series 2). (ddd) Form of Plan of Distribution (BEA International Equity Investor). (eee) Form of Plan of Distribution (BEA International Equity Advisor). (fff) Form of Plan of Distribution (BEA Emerging Markets Equity Investor). (ggg) Form of Plan of Distribution (BEA Emerging Markets Equity Advisor). (hhh) Form of Plan of Distribution (BEA High Yield Investor). (iii) Form of Plan of Distribution (BEA High Yield Advisor). (jjj) Form of Plan of Distribution (BEA Global Telecommunications Investor). (kkk) Form of Plan of Distribution (BEA Global Telecommunications Advisor). (16) Schedule of Computation of Performance 3 Quotations. (17) None. (18) Rule 18f-3 Plan. 21 (19) Representation of Ballard Spahr Andrews & Ingersoll pursuant to Rule 485(b) under the Securities Act of 1933. - ----------------- NOTE # 1 Incorporated herein by reference to the same exhibit number of Registrant's Registration Statement (No. 33-20827) filed on March 24, 1988. 20 See Note # ---------- 2 Incorporated herein by reference to the same exhibit number of Pre-Effective Amendment No. 2 to Registrant's Registration Statement (No. 33-20827) filed on July 12, 1988. 3 Incorporated herein by reference to the same exhibit number of Post-Effective Amendment No. 1 to Registrant's Registration Statement (No. 33-20827) filed on March 23, 1989. 4 Incorporated herein by reference to the same exhibit number of Post-Effective Amendment No. 2 to Registrant's Registration Statement (No. 33-20827) filed on October 25, 1989. 5 Incorporated herein by reference to the same exhibit number of Post-Effective Amendment No. 3 to the Registrant's Registration Statement (No. 33-20827) filed on April 27, 1990. 6 Incorporated herein by reference to the same exhibit number of Post-Effective Amendment No. 4 to the Registrant's Registration Statement (No. 33-20827) filed on May 1, 1990. 7 Incorporated herein by reference to the same exhibit number of Post-Effective Amendment No. 5 to the Registrant's Registration Statement (No. 33-20827) filed on December 14, 1990. 21 NOTE # 8 Incorporated herein by reference to the same exhibit number of Post-Effective Amendment No. 6 to the Registrant's Registration Statement (No. 33-20827) filed on October 24, 1991. 9 Incorporated herein by reference to the same exhibit number of Post-Effective Amendment No. 7 to the Registrant's Registration Statement (No. 33-20827) filed on July 15, 1992. 10 Incorporated herein by reference to the same exhibit number of Post-Effective Amendment No. 8 to the Registrant's Registration Statement (No. 33-20827) filed on October 22, 1992. 11 Incorporated herein by reference to the same exhibit number of Post-Effective Amendment No. 9 to the Registrant's Registration Statement (No. 33-20827) filed on December 16, 1992. 12 Incorporated herein by reference to the same exhibit number of Post-Effective Amendment No. 11 to the Registrant's Registrant Statement (No. 33-20827) filed on June 21, 1993. 13 Incorporated herein by reference to the same exhibit number Post-Effective Amendment No. 12 to the Registrant's Registration Statement (No. 33-20827) filed on July 27, 1993. 14 Incorporated herein by reference to the same exhibit number of Post-Effective Amendment No. 13 to the Registrant's Registration Statement (No. 33-20827) filed on October 29, 1993. 15 Incorporated herein by reference to the same exhibit number of Post-Effective Amendment No. 14 to the Registrant's Registration Statement (No. 33-20827) filed on December 21, 1993. 16 Incorporated herein by reference to the same exhibit number of Post-Effective Amendment No. 19 to the Registrant's Registration Statement (No. 33-20827) filed on October 14, 1994. 17 Incorporated herein by reference to the same exhibit number of Post-Effective Amendment No. 20 to the Registrant's Registration Statement (No. 33-20827) filed on October 21, 1994. 18 Incorporated herein by reference to the same exhibit number of Post-Effective Amendment No. 21 to the Registrant's Registration Statement (No. 33-20827) filed on October 28, 1994. 19 Incorporated herein by reference to the same exhibit number of Post-Effective Amendment No. 22 to the Registrant's Registration Statement (No. 33-20827) filed on December 19, 1994. 22 20 Incorporated herein by reference to the same exhibit number of Post-Effective Amendment No. 27 to the Registrant's Registration Statement (No. 33-20827) filed on March 31, 1995. 21 Incorporated herein by reference to the same exhibit number of Post-Effective Amendment No. 28 to the Registrant's Registration Statement (No. 33-20827) filed on October 6, 1995. 22 Incorporated herein by reference to the same exhibit number of Post-Effective Amendment No. 29 to the Registrant's Registration Statement (No. 33-20827) filed on October 25, 1995. 23 Incorporated herein by reference to the same exhibit number of Post-Effective Amendment No. 34 to the Registrant's Registration Statement (No. 33-20827) Filed on May 16, 1996. Item 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT None. Item 26. NUMBER OF HOLDERS OF SECURITIES The following information is given as of July 24, 1996. TITLE OF CLASS OF COMMON STOCK NUMBER OF RECORD HOLDERS a) RBB Money Market 11 b) RBB Municipal Money Market 2 c) Cash Preservation Money Market 35 d) Cash Preservation Municipal Money Market 68 e) Sansom Street Money Market 3 f) Sansom Street Municipal Money Market 0 g) Sansom Street Government Obligations 0 Money Market h) Bedford Money Market 97,325 i) Bedford Municipal Money Market 4,495 j) Bedford Government Obligations Money 3,532 Market k) Bedford New York Municipal Money Market 2,809 l) RBB Government Securities 536 m) Bradford Municipal Money Market 1 n) Bradford Government Obligations Money 1 Market o) BEA International Equity 206 p) BEA High Yield 48 q) BEA Emerging Markets Equity 37 r) BEA U.S. Core Equity 70 s) BEA U.S. Core Fixed Income 49 t) BEA U.S. Global Fixed Income 10 u) BEA Municipal Bond fund 35 v) BEA Short Duration 0 23 w) BEA Balanced 0 x) Janney Montgomery Scott 1 Money Market y) Janney Montgomery Scott 1 Municipal Money Market z) Janney Montgomery Scott 1 Government Obligations Money Market aa) Janney Montgomery Scott 1 New York Municipal Money Market bb) ni Micro Corp 346 cc) ni Growth 381 dd) ni Growth & Value 181 Item 27. INDEMNIFICATION Sections 1, 2, 3 and 4 of Article VIII of Registrant's Articles of Incorporation, as amended, incorporated herein by reference as Exhibits 1(a) and 1(c), provide as follows: Section 1. To the fullest extent that limitations on the liability of directors and officers are permitted by the Maryland General Corporation Law, no director or officer of the Corporation shall have any liability to the Corporation or its shareholders for damages. This limitation on liability applies to events occurring at the time a person serves as a director or officer of the Corporation whether or not such person is a director or officer at the time of any proceeding in which liability is asserted. Section 2. The Corporation shall indemnify and advance expenses to its currently acting and its former directors to the fullest extent that indemnification of directors is permitted by the Maryland General Corporation Law. The Corporation shall indemnify and advance expenses to its officers to the same extent as its directors and to such further extent as is consistent with law. The Board of Directors may by By-law, resolution or agreement make further provision for indemnification of directors, officers, employees and agents to the fullest extent permitted by the Maryland General Corporation Law. Section 3. No provision of this Article shall be effective to protect or purport to protect any director or officer of the Corporation against any liability to the Corporation or its security holders to which he would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office. Section 4. References to the Maryland General Corporation Law in this Article are to the law as from time to time amended. No further amendment to the Articles of Incorporation of the Corporation shall decrease, but may 24 expand, any right of any person under this Article based on any event, omission or proceeding prior to such amendment. Insofar as indemnification for liability arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of Registrant pursuant to the foregoing provisions, or otherwise, Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by Registrant of expenses incurred or paid by a director, officer or controlling person of Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. Item 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER Information as to any other business, profession, vocation or employment of a substantial nature in which any directors and officers of PIMC, BEA, and Warburg are, or at any time during the past two (2) years have been, engaged for their own accounts or in the capacity of director, officer, employee, partner or trustee is incorporated herein by reference to Schedules A and D of PIMC's Form ADV (File No. 801-13304) filed on March 28, 1993, Schedules B and D of BEA's Form ADV (File No. 801-37170) filed on March 30, 1993, and Schedules A and D of Warburg's Form ADV (File No. 801-07321) filed on August 28, 1992, respectively. There is set forth below information as to any other business, profession, vocation or employment of a substantial nature in which each director or officer of PNC Bank, National Association (successor by merger to Provident National Bank) ("PNC Bank"), is, or at any time during the past two years has been, engaged for his own account or in the capacity of director, officer, employee, partner or trustee. PNC BANK, NATIONAL ASSOCIATION Directors and Officers To the knowledge of Registrant, none of the directors or officers of PNC except those set forth below, is or has been, at any time during the past two years, engaged in any other business, profession, vocation or employment of a substantial nature, except that certain directors and officers of PNC Bank also hold various positions with, and engage in business for, PNC Bank Corp. (formerly PNC Financial Corp), which owns all the outstanding stock 25 of PNC Bank, or other subsidiaries of PNC Bank Corp. Set forth below are the names and principal businesses of the directors and certain of the senior executive officers of PNC Bank who are engaged in any other business, profession, vocation or employment of substantial nature. 26 PNC BANK, NATIONAL ASSOCIATION Position with PNC Bank, National Other Business Type of Association Name Connections Business - ------------ ---- -------------- -------- Director B.R. Brown President and C.E.O. of Coal Consol, Inc. Pittsburgh, PA (22) Director Constance E. Clayton Superintendent of Schools Educator The School District of Philadelphia Philadelphia, PA (23) Director F. Eugene Dixon, Jr. Private Trustee Trustee Lafayette Hill, PA (24) Director A. James Freeman Vice Chairman and C.E.O. Manufacturing Lord Corporation Erie, PA (25) Director Banking Marine Bank Erie, PA (26) Director Dr. Stuart Heydt President and C.E.O. Medical Geisinger Foundation Danville, PA (27) Director Edward P. Junker, III Chairman and C.E.O. Banking Marine Bank Erie, PA (26) Director Thomas A. McConomy President, C.E.O. and Manufacturing Chairman, Calgon Carbon Corporation Pittsburgh, PA (28) Director Robert C. Milsom Retired Pittsburgh, PA* Director Thomas H. O'Brien Chairman and C.E.O. Bank PNC Bank Corp. (14) Holding Director Dr. J. Dennis O'Connor Chancellor Education University of Pittsburgh Pittsburgh, PA (29) 27 Position with PNC Bank, National Other Business Type of Association Name Connections Business - ------------ ---- -------------- -------- Director Rocco A. Ortenzio Chairman and C.E.O. Medical Continental Medical Systems, Inc. Mechanicsburg, PA (30) Director Robert C. Robb, Jr. Partner Financial Lewis, Eckert, Robb & and Company Management Plymouth Meeting, PA (31) Consultants Director Daniel M. Rooney President, Pittsburgh Football Steelers Football Club of the National Football League Pittsburgh, PA (32) Director Seth E. Schofield Chairman, President and Airline C.E.O. USAir Group, Inc. and USAir, Inc. Arlington, VA (33) Director Robert M. Valentini President and C.E.O. Communica- Bell of Pennsylvania and tions Chairman Network Policy Council of Bell Atlantic Corporation Philadelphia, PA (34) President and James E. Rohr President Bank Chief Executive PNC Bank Corp. Holding Officer (14) Company President and Bruce E. Robbins None. Chief Executive Officer of PNC Bank, National Association, Pittsburgh Senior Executive Edward V. Randall, Jr. None. Vice President Executive J. Richard Carnall Director Banking Vice President PNC National Bank (2) Chairman and Director Financial- PFPC Inc. (3) Related Services 28 Position with PNC Bank, National Other Business Type of Association Name Connections Business - ------------ ---- -------------- -------- Director PNC Trust Company Fiduciary of New York (11) Activities Director Equipment Hayden Bolts, Inc.* Leasing Director, Real Estate Parkway Real Estate Company* Director Investment Provident Capital Advisory Management, Inc. (5) Director Investment Advanced Investment Advisory Management, Inc. (15) Executive Richard C. Caldwell Director Banking Vice President PNC National Bank (2) Director Investment Provident Capital Advisory Management, Inc. (5) Director Fiduciary PNC Trust Company Activities of New York (11) Executive Vice President Bank Holding PNC Bank Corp. (14) Company Director Investment Advanced Investment Advisory Management, Inc. (15) Director Banking PNC Bank, New Jersey, New Jersey, National Association (16) Director Financial- PFPC Inc. (3) Related Services Executive Vice Herbert G. None. President Summerfield, Jr. 29 Position with PNC Bank, National Other Business Type of Association Name Connections Business - ------------ ---- -------------- -------- Executive Vice Joe R. Irwin None. President President and Richard L. Smoot Senior Vice President Banking Chief Executive Operations Officer of PNC PNC Bank Corp. (20) Bank, National Association, Director Fiduciary Philadelphia PNC Trust Company of Activities New York (11) Director Investment PNC Institutional Advisory Management Corporation (28) Director Financial PFPC Inc. (3) Related Services Executive Vice W. Herbert Crowder, III None. President Executive Vice Walter L. West None. President Senior Vice George Lula None. President Secretary William F. Strome Director International PNC Bank Banking International (35) Services Managing General Counsel Bank Holding and Senior Vice President Company PNC Bank Corp. Senior Vice James P. Conley None. President/ Credit Policy - -------------------- * For more information, contact William F. Strome, PNC Bank, National Association, Broad and Chestnut Streets, Philadelphia, PA 19101. (1) PNC Bank, National Association, 120 S. 17th Street, Philadelphia, PA 19103. (2) PNC National Bank, 103 Bellevue Parkway, Wilmington, DE 19809. (3) PFPC Inc., 400 Bellevue Parkway, Wilmington, DE 19809. 30 (4) PNC Service Corp, 103 Bellevue Parkway, Wilmington, DE 19809. (5) Provident Capital Management, Inc., 30 S. 17th Street, Site 1500, Philadelphia, PA 19103. (6) PNC National Investment Corporation, Broad and Chestnut Streets, Philadelphia, PA 19101. (7) Provident Realty Management, Inc., Broad and Chestnut Streets, Philadelphia, PA 19101. (8) Provident Realty, Inc., Broad and Chestnut Streets, Philadelphia, PA 19101. (9) PNC Bancorp, Inc. 3411 Silverside Park, Wilmington, DE 19810 (10) PNC New Jersey Credit Corp, 1415 Route 70 East, Suite 604, Cherry Hill, NJ 08034. (11) PNC Trust Company of New York, 40 Broad Street, New York, NY 10084. (12) Provcor Properties, Inc., Broad and Chestnut Streets, Philadelphia, PA 19101. (13) PNC Credit Corp, 103 Bellevue Parkway, Wilmington, DE 19809. (14) PNC Bank Corp., 5th Avenue and Wood Streets, Pittsburgh, PA 15265. (15) Advanced Investment Management, Inc., 27th Floor, One Oliver Plaza, Pittsburgh, PA 15265. (16) PNC Bank of New Jersey, National Association, Woodland Falls Corporate Park, 210 Lake Drive East, Cherry Hill, NJ 08002. (17) PNC Institutional Management Corporation, 400 Bellevue Parkway, Wilmington, DE 19809. (18) Provident National Leasing Corporation, Broad and Chestnut Streets, Philadelphia, PA 19101 (19) Provident National Bank Corp. New Jersey, 1 Centennial Square, Haddonfield, NJ 08033 (20) The Clayton Bank and Trust Company, Clayton, DE 19938 (21) Keystone Life Insurance Company, 1207 Chestnut Street, Philadelphia, PA 19107-4101 (22) Consol, Inc., Consol Plaza, Pittsburgh, PA 15241 (23) School District of Philadelphia, 21 Street and The Parkway, Philadelphia, PA 19103-1099 (24) F. Eugene Dixon, Jr., Private Trustee, 665 Thomas Road, Lafayette Hill, PA 19444-0178 (25) Lord Corporation, 2000 W. Grandview Boulevard, Erie, PA 16514 (26) Marine Bank, Ninth and State Streets, Erie, PA 16553 (27) Geisinger Foundation, 100 N. Academy Avenue, Danville, PA 17822 (28) Calgon Carbon Corporation, P.O. Box 717, Pittsburgh, PA 15230-0717 (29) University of Pittsburgh, 107 Cathedral of Learning, Pittsburgh, PA 15260 (30) Continental Medical Systems, Inc., P.O. Box 715, Mechanicsburg, PA 17055 (31) Lewis, Eckert, Robb & Company, 425 One Plymouth Meeting, Plymouth Meeting, PA 19462 (32) Football Club of the National Football League, 300 Stadium Circle, Pittsburgh, PA 15212 (33) USAir Group, Inc. and USAir, Inc., 2345 Crystal Drive, Arlington, VA 22227 (34) Bell of Pennsylvania, One Parkway, Philadelphia, PA 19102 (35) PNC Bank International, 5th and Wood Streets, Pittsburgh, PA 15222 31 Item 29. PRINCIPAL UNDERWRITER (a) Counsellors Securities Inc. (the "Distributor") acts as distributor for the following investment companies: Warburg, Pincus Cash Reserve Fund Warburg, Pincus New York Tax Exempt Fund Warburg, Pincus New York Municipal Bond Fund Warburg, Pincus Intermediate Maturity Government Fund Warburg, Pincus Fixed Income Fund Warburg, Pincus Global Fixed Income Fund Warburg, Pincus Capital Appreciation Fund Warburg, Pincus Emerging Growth Fund Warburg, Pincus International Equity Fund Warburg, Pincus Japan OTC Fund Counsellors Tandem Securities Fund Warburg Pincus Growth & Income Fund Warburg Pincus Balanced Fund Warburg Pincus Tax Free Fund The Distributor acts as a principal underwriter, depositor or investment adviser for the following investment companies: None other than Registrant and companies listed above. (b) Information for each director or officer of the Distributor is set forth below: Name and Principal Positions and Offices Positions and Offices Business Address with the Distributor with Registrant - ------------------ --------------------- --------------------- John L. Vogelstein Director 466 Lexington Avenue New York, New York 10017 Lionel I. Pincus Director 466 Lexington Avenue New York, New York 10017 Reuben S. Leibowitz Director, 466 Lexington Avenue President and Chief New York, New York 10017 Financial Officer John L. Furth Director 466 Lexington Avenue New York, New York 10017 Arnold M. Reichman Vice President, Director 466 Lexington Avenue Secretary and New York, New York 10017 Chief Operating Officer 32 Roger Reinlieb Vice President 466 Lexington Avenue New York, New York 10017 Karen Amato Assistant Secretary 466 Lexington Avenue New York, New York 10017 Stephen Distler Treasurer 466 Lexington Avenue New York, New York 10017 (c) Information as to commissions and other compensation received by the principal underwriter is set forth below. Net Name of Underwriting Compensation Principal Discounts and on Redemption Brokerage Other Underwriter Commissions and Repurchase Commissions Compensation - ----------- ------------- -------------- ----------- ------------ Counsellors $ 0 $ 0 $ 0 $ 0 Securities Inc. Item 30. LOCATION OF ACCOUNTS AND RECORDS (1) PNC Bank, National Association (successor by merger to Provident National Bank), Broad and Chestnut Street, Philadelphia, PA 19101 (records relating to its functions as sub-adviser and custodian). (2) Counsellors Securities Inc., 466 Lexington Avenue, New York, New York 10017 (records relating to its functions as distributor). (3) PNC Institutional Management Corporation (formerly Provident Institutional Management Corporation), Bellevue Corporate Center, 103 Bellevue Parkway, Wilmington, Delaware 19809 (records relating to its functions as investment adviser, sub-adviser and administrator). (4) PFPC Inc. (formerly Provident Financial Processing Corporation), Bellevue Corporate Center, 400 Bellevue Parkway, Wilmington, Delaware 19809 (records relating to its functions as transfer agent and dividend disbursing agent). (5) Ballard Spahr Andrews & Ingersoll, 1735 Market Street - 51st Floor, Philadelphia, Pennsylvania 19103 (Registrant's Articles of Incorporation, By-Laws and Minute Books). 33 (6) BEA Associates, One Citicorp Center, 153 East 53rd Street, New York, New York 10022 (records relating to its function as investment adviser). (7) Warburg, Pincus Counsellors, Inc., 466 Lexington Avenue, New York, New York 10017-3147 (records relating to its functions as investment adviser). Item 31. MANAGEMENT SERVICES None. Item 32. UNDERTAKINGS (a) Registrant hereby undertakes to hold a meeting of shareholders for the purpose of considering the removal of directors in the event the requisite number of shareholders so request. (b) Registrant hereby undertakes to file a post-effective amendment, using unaudited financial statements for each of the NI Micro Cap Fund, NI Growth Fund and NI Growth & Value Fund which need not be certified, within four to six months from effective date of this Registration Statement. 34 SIGNATURES Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant has duly caused this Post-Effective Amendment to its Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Wilmington, and State of Delaware, on July 29, 1996. THE RBB FUND, INC. By: /s/ Edward J. Roach ------------------------ Edward J. Roach President and Treasurer Pursuant to the requirements of the Securities Act of 1933, this Post-Effective Amendment to Registrant's Registration Statement has been signed below by the following persons in the capacities and on the date indicated. Signature Title Date --------- ----- ---- /s/ Edward J. Roach President (Principal July 29, 1996 - ---------------------- Executive Officer) and Treasurer (Principal Financial and Accounting Officer) Edward J. Roach /s/ Donald van Roden Director July 29, 1996 - ----------------------- Donald van Roden /s/ Francis J. McKay Director July 29, 1996 - ----------------------- Francis J. McKay /s/ Marvin E. Sternberg Director July 29, 1996 - ----------------------- Marvin E. Sternberg /s/ Julian A. Brodsky Director July 29, 1996 - ----------------------- Julian A. Brodsky /s/ Arnold M. Reichman Director July 29, 1996 - ----------------------- Arnold M. Reichman /s/ Robert Sablowsky Director July 29, 1996 - ----------------------- Robert Sablowsky 35 THE RBB FUND, INC. RBB CLASSES WARBURG PINCUS CLASSES WARBURG PINCUS SERIES 2 CLASSES CASH PRESERVATION CLASSES SANSOM STREET CLASSES BEDFORD CLASSES BRADFORD CLASSES BEA INSTITUTIONAL CLASSES BEA INVESTOR CLASSES BEA ADVISOR CLASSES JANNEY (ALPHA) CLASSES NI CLASSES BETA CLASSES GAMMA CLASSES DELTA CLASSES EPSILON CLASSES ZETA CLASSES ETA CLASSES THETA CLASSES EXHIBIT INDEX ------------- Exhibit Page - ------- ---- (1)(q) Form of Articles of Supplementary of Registrant (5)(qq) Form of Investment Advisory Agreement (BEA Global Telecommunications Portfolio) between Registrant and BEA Associates. (6)(ee) Form of Distribution Agreement Supplement (Classes II, JJ, KK and LL) (ff) Form of Distribution Agreement Supplement (Classes MM, NN, OO, AND PP) (9)(vv) Form of Administraiton and Accounting Services Agreement between Registrant and PFPC, Inc. (BEA Global Telecommunications) (ww) Form of Co-Administration Agreements between Registrant and BEA Associates (BEA International Equity Investor Portfolio) (xx) Form of Co-Administration Agreements between Registrant and BEA Associates (BEA International Equity Advisor Portfolio) (yy) Form of Co-Administration Agreements between Registrant and BEA Associates (BEA Emerging Markets Equity Investor Portfolio) (zz) Form of Co-Administration Agreements between Registrant and BEA Associates (BEA Emerging Markets Equity Advisor Portfolio) (aaa) Form of Co-Administration Agreements between Registrant and BEA Associates (BEA High Yield Investor Portfolio) (bbb) Form of Co-Administration Agreements between Registrant and BEA Associates (BEA High Yield Advisor Portfolio) (ccc) Form of Co-Administration Agreements between Registrant 36 and BEA Associates (BEA Global Telecommunications Investor Portfolio) (ddd) Form of Co-Administration Agreements between Registrant and BEA Associates (BEA Global Telecommunications Advisor Portfolio) (eee) Form of Transfer Agency and Service Agreement between Registrant and State Street Bank and Trust Company (10)(B) Consent of Counsel (11) Consent of Independent Accountants (13)(L) Form of Subscription Agreement between Registrant and Counsellors Securities Inc. relating to Classes II though PP. (15)(ddd) Form of Plan of Distribution (BEA International Equity Investor) (eee) Form of Plan of Distribution (BEA International Equity Advisor) (fff) Form of Plan of Distribution (BEA Emerging Markets Equity Investor) (ggg) Form of Plan of Distribution (BEA Emerging Markets Equity Advisor) (hhh) Form of Plan of Distribution (BEA High Yield Investor) (iii) Form of Plan of Distribution (BEA High Yield Advisor) (jjj) Form of Plan of Distribution (BEA Global Telecommunications Investor) (kkk) Form of Plan of Distribution (BEA Global Telecommunications Advisor) 37 EX-1.(Q) 2 EXHIBIT 1(Q) 195852.001(BF) EXHIBIT (1)(q) THE RBB FUND, INC. ARTICLES SUPPLEMENTARY TO THE CHARTER THE RBB FUND, INC., a Maryland corporation having its principal office in Baltimore, Maryland (hereinafter called the "Corporation"), hereby certifies to the State Department of Assessments and Taxation of Maryland that: FIRST: The Board of Directors of the Corporation, an open-end investment company registered under the Investment Company Act of 1940, as amended, and having authorized capital of thirty billion (30,000,000,000) shares of common stock, par value $.001 per share, has adopted a unanimous resolution increasing the number of shares of common stock that are classified (but not increasing the aggregate number of authorized shares) into separate classes by: classifying an additional one hundred million (100,000,000) of the previously authorized, unissued and unclassified shares of the common stock, par value $.001 per share, with an aggregate par value of one hundred thousand dollars ($100,000), as Class II Common Stock (BEA International Equity Investor Portfolio); classifying an additional one hundred million (100,000,000) of the previously authorized, unissued and unclassified shares of the common stock, par value $.001 per share, with an aggregate par value of one hundred thousand dollars ($100,000), as Class JJ Common Stock (BEA Emerging Markets Equity Investor Portfolio); classifying an additional one hundred million (100,000,000) of the previously authorized, unissued and unclassified shares of the common stock, par value $.001 per share, with an aggregate par value of one hundred thousand dollars ($100,000), as Class KK Common Stock (BEA High Yield Investor Portfolio); classifying an additional one hundred million (100,000,000) of the previously authorized, unissued and unclassified shares of the common stock, par value $.001 per share, with an aggregate par value of one hundred thousand dollars ($100,000), as Class LL Common Stock (BEA Global Telecommunications Investor Portfolio); classifying an additional one hundred million (100,000,000) of the previously authorized, unissued and unclassified shares of the common stock, par value $.001 per share, with an aggregate par value of one 2 hundred thousand dollars ($100,000), as Class MM Common Stock (BEA International Equity Advisor Portfolio); classifying an additional one hundred million (100,000,000) of the previously authorized, unissued and unclassified shares of the common stock, par value $.001 per share, with an aggregate par value of one hundred thousand dollars ($100,000), as Class NN Common Stock (BEA Emerging Markets Equity Advisor Portfolio); classifying an additional one hundred million (100,000,000) of the previously authorized, unissued and unclassified shares of the common stock, par value $.001 per share, with an aggregate par value of one hundred thousand dollars ($100,000), as Class OO Common Stock (BEA High Yield Advisor Portfolio); classifying an additional one hundred million (100,000,000) of the previously authorized, unissued and unclassified shares of the common stock, par value $.001 per share, with an aggregate par value of one hundred thousand dollars ($100,000), as Class PP Common Stock (BEA Global Telecommunications Advisor Portfolio); 3 SECOND: A description of the shares so classified with the preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends, qualifications and terms and conditions of redemption as set or changed by the Board of Directors of the Corporation is as follows: A description of the preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends, qualifications and terms and conditions or redemption of each class of common stock of the Corporation is set forth in Article VI, Section (6) of the Corporation's Charter, and has not been changed by the Board of Directors of the Corporation. THIRD: The shares aforesaid have been duly classified by the Board of Directors of the Corporation pursuant to authority and power contained in the charter of the Corporation. FOURTH: Immediately before the increase in the number of shares of common stock that have been classified into separate classes: (a) the Corporation had authority to issue thirty billion (30,000,000,000) shares of its common stock and the aggregate par value of all the shares of all classes was thirty million dollars ($30,000,000); (b) the number of shares of each authorized class of common stock was as follows: Class A - one hundred million (100,000,000), par value $.001 per share; 4 Class B - one hundred million (100,000,000), par value $.001 per share; Class C - one hundred million (100,000,000), par value $.001 per share; Class D - one hundred million (100,000,000), par value $.001 per share; Class E - five hundred million (500,000,000), par value $.001 per share; Class F - five hundred million (500,000,000), par value $.001 per share; Class G - five hundred million (500,000,000), par value $.001 per share; Class H - five hundred million (500,000,000), par value $.001 per share; Class I - one billion (1,000,000,000), par value $.001 per share; Class J - five hundred million (500,000,000), par value $.001 per share; Class K - five hundred million (500,000,000), par value $.001 per share; Class L - one billion five hundred million (1,500,000,000), par value $.001 per share; Class M - five hundred million (500,000,000), par value $.001 per share; 5 Class N - five hundred million (500,000,000), par value $.001 per share; Class O - five hundred million (500,000,000), par value $.001 per share; Class P - one hundred million (100,000,000), par value $.001 per share; Class Q - one hundred million (100,000,000), par value $.001 per share; Class R - five hundred million (500,000,000), par value $.001 per share; Class S - five hundred million (500,000,000), par value $.001 per share; Class T - five hundred million (500,000,000), par value $.001 per share; Class U - five hundred million (500,000,000), par value $.001 per share; Class V - five hundred million (500,000,000), par value $.01 per share; Class W - one hundred million (100,000,000), par value $.001 per share; Class X - fifty million (50,000,000), par value $.001 per share; Class Y - fifty million (50,000,000), par value $.001 per share; Class Z - fifty million (50,000,000), par value $.001 per share; Class AA - fifty million (50,000,000), par value $.001 per share; 6 Class BB - fifty million (50,000,000), par value $.001 per share; Class CC - fifty million (50,000,000), par value $.001 per share; Class DD - one hundred million (100,000,000), par value $.001 per share; Class EE - one hundred million (100,000,000), par value $.001 per share; Class FF - fifty million (50,000,000), par value $.001 per share; Class GG - fifty million (50,000,000), par value $.001 per share; Class HH - fifty million (50,000,000), par value $.001 per share; Class Alpha 1 - seven hundred million (700,000,000), par value $.001 per share; Class Alpha 2 - two hundred million (200,000,000), par value $.001 per share; Class Alpha 3 - five hundred million (500,000,000), par value $.001 per share; Class Alpha 4 - one hundred million (100,000,000), par value $.001 per share; Class Beta 1 - one million (1,000,000), par value $.001 per share; 7 Class Beta 2 - one million (1,000,000), par value $.001 per share; Class Beta 3 - one million (1,000,000), par value $.001 per share; Class Beta 4 - one million (1,000,000), par value $.001 per share; Class Gamma 1 - one million (1,000,000), par value $.001 per share; Class Gamma 2 - one million (1,000,000), par value $.001 per share; Class Gamma 3 - one million (1,000,000), par value $.001 per share; Class Gamma 4 - one million (1,000,000), par value $.001 per share; Class Delta 1 - one million (1,000,000), par value $.001 per share; Class Delta 2 - one million (1,000,000), par value $.001 per share; Class Delta 3 - one million (1,000,000), par value $.001 per share; Class Delta 4 - one million (1,000,000), par value $.001 per share; Class Epsilon 1 - five hundred million (1,000,000), par value $.001 per share; 8 Class Epsilon 2 - one million (1,000,000), par value $.001 per share; Class Epsilon 3 - one million (1,000,000), par value $.001 per share; Class Epsilon 4 - one million (1,000,000), par value $.001 per share; Class Zeta 1 - one million (1,000,000), par value $.001 per share; Class Zeta 2 - one million (1,000,000), par value $.001 per share; Class Zeta 3 - one million (1,000,000), par value $.001 per share; Class Zeta 4 - one hundred million (1,000,000), par value $.001 per share; Class Eta 1 - one million (1,000,000), par value $.001 per share; Class Eta 2 - one million (1,000,000) par value $.001 per share; Class Eta 3 - one million (1,000,000), par value $.001 per share; Class Eta 4 - one million (1,000,000), par value $.001 per share; Class Theta 1 - one million (1,000,000), par value $.001 per share; 9 Class Theta 2 - one million (1,000,000), par value $.001 per share; Class Theta 3 - one million (1,000,000), par value $.001 per share; and Class Theta 4 - one million (1,000,000), par value $.001 per share, for a total of twelve billion three hundred seventy-eight million (12,378,000,000) shares classified into separate classes of common stock. After the increase in the number of shares of common stock that have been classified into separate classes: (c) the Corporation has the authority to issue thirty billion (30,000,000,000) shares of its common stock and the aggregate par value of all the shares of all classes is now thirty million dollars ($30,000,000); and (d) the number of authorized shares of each class is now as follows: Class A - one hundred million (100,000,000), par value $.001 per share; Class B - one hundred million (100,000,000), par value $.001 per share; Class C - one hundred million (100,000,000), par value $.001 per share; Class D - one hundred million (100,000,000), par value $.001 per share; 10 Class E - five hundred million (500,000,000), par value $.001 per share; Class F - five hundred million (500,000,000), par value $.001 per share; Class G - five hundred million (500,000,000), par value $.001 per share; Class H - five hundred million (500,000,000), par value $.001 per share; Class I - one billion (1,000,000,000), par value $.001 per share; Class J - five hundred million (500,000,000), par value $.001 per share; Class K - five hundred million (500,000,000), par value $.001 per share; Class L - one billion five hundred million (1,500,000,000), par value $.001 per share; Class M - five hundred million (500,000,000), par value $.001 per share; Class N - five hundred million (500,000,000), par value $.001 per share; Class O - five hundred million (500,000,000), par value $.001 per share; Class P - one hundred million (100,000,000), par value $.001 per share; 11 Class Q - one hundred million (100,000,000), par value $.001 per share; Class R - five hundred million (500,000,000), par value $.001 per share; Class S - five hundred million (500,000,000), par value $.001 per share; Class T - five hundred million (500,000,000), par value $.001 per share; Class U - five hundred million (500,000,000), par value $.001 per share; Class V - five hundred million (500,000,000), par value $.001 per share; Class W - one hundred million (100,000,000), par value $.001 per share; Class X - fifty million (50,000,000), par value $.001 per share; Class Y - fifty million (50,000,000), par value $.001 per share; Class Z - fifty million (50,000,000), par value $.001 per share; Class AA - fifty million (50,000,000), par value $.001 per share; Class BB - fifty million (50,000,000), par value $.001 per share; Class CC - fifty million (50,000,000), par value $.001 per share; Class DD - one hundred million (100,000,000), par value $.001 per share; 12 Class EE - one hundred million (100,000,000), par value $.001 per share; Class FF - fifty million (50,000,000), par value $.001 per share; Class GG - fifty million (50,000,000), par value $.001 per share; Class HH - fifty million (50,000,000), par value $.001 per share; Class II - one hundred million (100,000,000), par value $.001 per share; Class JJ - one hundred million (100,000,000), par value $.001 per share; Class KK - one hundred million (100,000,000), par value $.001 per share; Class LL - one hundred million (100,000,000), par value $.001 per share; Class MM - one hundred million (100,000,000), par value $.001 per share; Class NN - one hundred million (100,000,000), par value $.001 per share; Class OO - one hundred million (100,000,000), par value $.001 per share; Class PP - one hundred million (100,000,000), par value $.001 per share; 13 Class Alpha 1 - seven hundred million (700,000,000), par value $.001 per share; Class Alpha 2 - two hundred million (200,000,000), par value $.001 per share; Class Alpha 3 - five hundred million (500,000,000), par value $.001 per share; Class Alpha 4 - one hundred million (100,000,000), par value $.001 per share; Class Beta 1 - one million (1,000,000), par value $.001 per share; Class Beta 2 - one million (1,000,000), par value $.001 per share; Class Beta 3 - one million (1,000,000), par value $.001 per share; Class Beta 4 - one million (1,000,000), par value $.001 per share; Class Gamma 1 - one million (1,000,000), par value $.001 per share; Class Gamma 2 - one million (1,000,000), par value $.001 per share; Class Gamma 3 - one million (1,000,000), par value $.001 per share; Class Gamma 4 - one million (1,000,000), par value $.001 per share; 14 Class Delta 1 - one million (1,000,000), par value $.001 per share; Class Delta 2 - one million (1,000,000), par value $.001 per share; Class Delta 3 - one million (1,000,000), par value $.001 per share; Class Delta 4 - one million (1,000,000), par value $.001 per share; Class Epsilon 1 - one million (1,000,000), par value $.001 per share; Class Epsilon 2 - one million (1,000,000), par value $.001 per share; Class Epsilon 3 - one million (1,000,000), par value $.001 per share; Class Epsilon 4 - one million (1,000,000), par value $.001 per share; Class Zeta 1 - one million (1,000,000), par value $.001 per share; Class Zeta 2 - one million (1,000,000), par value $.001 per share; Class Zeta 3 - one million (1,000,000), par value $.001 per share; Class Zeta 4 - one million (1,000,000), par value $.001 per share; 15 Class Eta 1 - one million (1,000,000), par value $.001 per share; Class Eta 2 - one million (1,000,000) par value $.001 per share; Class Eta 3 - one million (1,000,000), par value $.001 per share; Class Eta 4 - one million (1,000,000), par value $.001 per share; Class Theta 1 - one million (1,000,000), par value $.001 per share; Class Theta 2 - one million (1,000,000), par value $.001 per share; Class Theta 3 - one million (1,000,000), par value $.001 per share; Class Theta 4 - one million (1,000,000), par value $.001 per share; for a total of thirteen billion one hundred seventy-eight million (13,178,000,000) shares classified into separate classes of common stock. 16 IN WITNESS WHEREOF, The RBB Fund, Inc. has caused these presents to be signed and attested in its name and on its behalf by its President and Secretary on __________, 1996. THE RBB FUND, INC. ATTEST: By: - ---------------------------------- ------------------------------------ Morgan R. Jones Edward J. Roach Secretary President 17 THE UNDERSIGNED, President of The RBB Fund, Inc., who executed on behalf of said corporation the foregoing Articles Supplementary to the Charter, of which this certificate is made a part, hereby acknowledges, in the name and on behalf of said Corporation, and further certifies that, to the best of his knowledge, information and belief, the matters and facts set forth therein with respect to the approval thereof are true in all material respects, under the penalties of perjury. ------------------------------------------ Edward J. Roach President 18 EX-5.(QQ) 3 EXHIBIT 5(QQ) INVESTMENT ADVISORY AGREEMENT (BEA Global Telecommunications Portfolio) AGREEMENT made as of July __, 1996 between THE RBB FUND, INC., a Maryland corporation (herein called the "Company"), and BEA ASSOCIATES, a New York general partnership (herein called the "Investment Advisor"). WHEREAS, the Company is registered as an open-end, management investment company under the Investment Company Act of 1940 (the "1940 Act") and currently offers or proposes to offer shares representing interests in seventeen separate investment portfolios; and WHEREAS, the Company desires to retain the Investment Advisor to render certain investment advisory services to the Company with respect to the Company's BEA Global Telecommunications Portfolio (the "Portfolio"), and the Investment Advisor is willing to so render such services, NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, and intending to be legally bound hereby, it is agreed between the parties hereto as follows: 1. APPOINTMENT. The Company hereby appoints the Investment Advisor to act as investment advisor for the Portfolio for the period and on the terms set forth in this Agreement. The Investment Advisor accepts such appointment and agrees to render the services herein set forth, for the compensation herein provided. 2. DELIVERY OF DOCUMENTS. The Company has furnished the Investment Advisor with copies properly certified or authenticated of each of the following: (a) Resolutions of the Board of Directors of the Company authorizing the appointment of the Investment Advisor and the execution and delivery of this Agreement; (b) Each Prospectus relating to any class of Shares representing interests in the Portfolio of the Company in effect under the 1933 Act (such prospectuses, as presently in effect and as they shall from time to time be amended and supplemented, are herein collectively called the "Prospectuses"). The Company will furnish the Investment Advisor from time to time with copies, properly certified or authenticated, of all amendments of or supplements to the foregoing, if any. 3. MANAGEMENT OF THE PORTFOLIO. Subject to the supervision of the Board of Directors of the Company, the Investment Advisor will provide for the overall management of the Portfolio including (i) the provision of a continuous investment program for the Portfolio, including investment research and management with respect to all securities, investments, cash and cash equivalents in the Portfolio, (ii) the determination from time to time of what securities and other investments will be purchased, retained, or sold by the Company for the Portfolio, and (iii) the placement from time to time of orders for all purchases and sales made for the Portfolio. The Investment Advisor will provide the services rendered by it hereunder in accordance with the Portfolio's investment objectives, restrictions and policies as stated in the applicable Prospectus and the applicable statement of additional information contained in the Registration Statement. The Investment Advisor further agrees that it will render to the Company's Board of Directors such periodic and special reports regarding the performance of its duties under this Agreement as the Board may request. The Investment Advisor agrees to provide to the Company (or its agents and service providers) prompt and accurate data with respect to the Portfolio's transactions and, where not otherwise available, the daily valuation of securities in the Portfolio. 4. BROKERAGE. The Investment Advisor may place orders either directly with the issuer or with any broker or dealer. In placing orders with brokers and dealers, the Investment Advisor will attempt to obtain the best price and the most favorable execution of its orders. In placing orders, the Investment Advisor will consider the experience and skill of the firm's securities traders as well as the firm's financial responsibility and administrative efficiency. Consistent with this obligation, the Investment Advisor may, subject to the review of the Board of Directors, select brokers on the basis of the research, statistical and pricing services they provide to the Portfolio and other clients of the Investment Advisor. Information and research received from such brokers will be in addition to, and not in lieu of, the services required to be performed by the Investment Advisor hereunder. A commission paid to such brokers may be higher than that which another qualified broker would have charged for effecting the same transaction, provided that the Investment Advisor determines in good faith that such commission is reasonable in terms either of the transaction or the overall responsibility of the Investment Advisor to the Portfolio and its other clients and that the total commissions paid by the Portfolio will be reasonable in relation to the benefits to the Portfolio over the long-term. 2 In no instance will the Portfolio's securities be purchased from or sold to the Company's principal underwriter, the Investment Advisor, or any affiliated person thereof, except to the extent permitted by SEC exemptive order or by applicable law. 5. CONFORMITY WITH LAW; CONFIDENTIALITY. The Investment Advisor further agrees that it will comply with all applicable rules and regulations of all federal regulatory agencies having jurisdiction over the Investment Advisor in the performance of its duties hereunder. The Investment Advisor will treat confidentially and as proprietary information of the Company all records and other information relating to the Company and prior, present or potential shareholders (except clients of the Investment Advisor and its affiliates), and will not use such records and information for any purpose other than performance of its responsibilities and duties hereunder, except after prior notification to and approval in writing by the Company, which approval shall not be unreasonably withheld and may not be withheld where the Investment Advisor may be exposed to civil or criminal contempt proceedings for failure to comply, when requested to divulge such information by duly constituted authorities, or when so requested by the Company. 6. SERVICES NOT EXCLUSIVE. The investment management and services rendered by the Investment Advisor hereunder are not to be deemed exclusive, and the Investment Advisor shall be free to render similar services to others so long as its services under this Agreement are not impaired thereby. 7. BOOKS AND RECORDS. In compliance with the requirements of Rule 31a-3 under the 1940 Act, the Investment Advisor hereby agrees that all records which it maintains for the Portfolio are the property of the Company and further agrees to surrender promptly to the Company any of such records upon the Company's request. The Investment Advisor further agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940 Act the records required to be maintained by Rule 31a-1 under the 1940 Act. 8. EXPENSES. During the term of this Agreement, the Investment Advisor will pay all expenses incurred by it in connection with its activities under this Agreement other than the cost of securities purchased for the Portfolio (including brokerage commissions, if any), the cost of independent pricing services used in valuing the Portfolio's securities and fees and expenses of registering and qualifying shares for distribution under state securities laws. If the expenses borne by the Portfolio in any fiscal year exceed the most restrictive applicable expense limitations imposed 3 by the securities regulations of any state in which the Shares of the Portfolio are registered or qualified for sale to the public, the Investment Advisor shall reimburse the Portfolio for any excess up to the amount of the fees payable by the Portfolio to it during such fiscal year pursuant to Paragraph 9 hereof in the same proportion that its fees bear to the total fees paid by the Company for investment advisory services in respect of the Portfolio; PROVIDED, HOWEVER, that notwithstanding the foregoing, the Investment Advisor shall reimburse the Portfolio for such excess expenses regardless of the amount of such fees payable to it during such fiscal year to the extent that the securities regulations of any state in which the Shares are registered or qualified for sale so require. 9. COMPENSATION. (a) For the services provided and the expenses assumed pursuant to this Agreement with respect to the Portfolio, the Company will pay the Investment Advisor from the assets of the Portfolio and the Investment Advisor will accept as full compensation therefor a fee, computed daily and payable monthly, at the annual rate of 1.00 % of the Portfolio's average daily net assets. (b) The fee attributable to the Portfolio shall be satisfied only against assets of the Portfolio and not against the assets of any other investment portfolio of the Company. 10. LIMITATION OF LIABILITY OF THE INVESTMENT ADVISOR. The Investment Advisor shall not be liable for any error of judgment or mistake of law or for any loss suffered by the Company in connection with the matters to which this Agreement relates, except a loss resulting from a breach of fiduciary duty with respect to the receipt of compensation for services or a loss resulting from willful misfeasance, bad faith or gross negligence on the part of the Investment Advisor in the performance of its duties or from reckless disregard by it of its obligations and duties under this Agreement ("disabling conduct"). The Portfolio will indemnify the Investment Advisor against and hold it harmless from any and all losses, claims, damages, liabilities or expenses (including reasonable counsel fees and expenses) resulting from any claim, demand, action or suit not resulting from disabling conduct by the Investment Advisor. Indemnification shall be made only following: (i) a final decision on the merits by a court or other body before whom the proceeding was brought that the Investment Advisor was not liable by reason of disabling conduct or (ii) in the absence of such a decision, a reasonable determination, based upon a review of the facts, that the Investment Advisor was not liable by reason of disabling conduct by (a) the vote of a majority of a quorum of directors of the Portfolio who are neither 4 "interested persons" of the Portfolio nor parties to the proceeding ("disinterested non-party directors") or (b) an independent legal counsel in a written opinion. The Investment Advisor shall be entitled to advances from the Portfolio for payment of the reasonable expenses incurred by it in connection with the matter as to which it is seeking indemnification in the manner and to the fullest extent permissible under the Maryland General Corporation Law. The Investment Advisor shall provide to the Portfolio a written affirmation of its good faith belief that the standard of conduct necessary for indemnification by the Portfolio has been met and a written undertaking to repay any such advance if it should ultimately be determined that the standard of conduct has not been met. In addition, at least one of the following additional conditions shall be met: (a) the Investment Advisor shall provide a security in form and amount acceptable to the Portfolio for its undertaking; (b) the Portfolio is insured against losses arising by reason of the advance; or (c) a majority of a quorum of disinterested non-party directors, or independent legal counsel, in a written opinion, shall have determined, based upon a review of facts readily available to the Portfolio at the time the advance is proposed to be made, that there is reason to believe that the Investment Advisor will ultimately be found to be entitled to indemnification. Any amounts payable by the Portfolio under this Section shall be satisfied only against the assets of the Portfolio and not against the assets of any other investment portfolio of the Company. 11. DURATION AND TERMINATION. This Agreement shall become effective with respect to the Portfolio upon approval of this Agreement by vote of a majority of the outstanding voting securities of the Portfolio and, unless sooner terminated as provided herein, shall continue with respect to the Portfolio until August 16, 1997. Thereafter, if not terminated, this Agreement shall continue with respect to the Portfolio for successive annual periods ending on August 16, PROVIDED such continuance is specifically approved at least annually (a) by the vote of a majority of those members of the Board of Directors of the Company who are not parties to this Agreement or interested persons of any such party, cast in person at a meeting called for the purpose of voting on such approval, and (b) by the Board of Directors of the Company or by vote of a majority of the outstanding voting securities of the Portfolio; PROVIDED, HOWEVER, that this Agreement may be terminated with respect to the Portfolio by the Company at any time, without the payment of any penalty, by the Board of Directors of the Company or by vote of a majority of the outstanding voting securities of the Portfolio, on 60 days' prior written notice to the Investment Advisor, or by the Investment Advisor at any time, without payment of any penalty, on 90 days' prior written notice to the Company. This Agreement will immediately terminate in the event of its assignment. (As used in 5 this Agreement, the terms "majority of the outstanding voting securities," "interested person" and "assignment" shall have the same meaning as such terms have in the 1940 Act). 12. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may be changed, discharged or terminated orally, except by an instrument in writing signed by the party against which enforcement of the change, discharge or termination is sought, and no amendment of this Agreement affecting the Portfolio shall be effective until approved by vote of the holders of a majority of the outstanding voting securities of the Portfolio. 13. MISCELLANEOUS. The captions in this Agreement are included for convenience of reference only and in no way define or delimit any of the provisions hereof or otherwise affect their construction or effect. If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and shall be governed by Delaware law. 14. CHANGE IN MEMBERSHIP. The Investment Advisor shall notify the Company of any change in its membership within a reasonable time after such change. 15. GOVERNING LAW. This Agreement shall be governed by and construed and enforced in accordance with the laws of the state of New York without giving effect to the conflicts of laws principles thereof. IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed by their officers designated below as of the day and year first above written. THE RBB FUND, INC. By: __________________________ President BEA ASSOCIATES By: __________________________ EX-6.(EE) 4 EXHIBIT 6(EE) Exhibit (6)(ee) DISTRIBUTION AGREEMENT SUPPLEMENT (BEA Investor Classes) This supplemental agreement is entered into this ___ day of __________, 1996, by and between THE RBB FUND, INC. (the "Fund") and COUNSELLORS SECURITIES INC. (the "Distributor"). The Fund is a corporation organized under the laws of the State of Maryland and is an open-end management investment company. The Fund and the Distributor have entered into a Distribution Agreement, dated as of April 10, 1991 (as from time to time amended and supplemented, the "Distribution Agreement"), pursuant to which the Distributor has undertaken to act as distributor for the Fund, as more fully set forth therein. Certain capitalized terms used without definition in this Distribution Agreement Supplement have the meaning specified in the Distribution Agreement. The Fund agrees with the Distributor as follows: 1. ADOPTION OF DISTRIBUTION AGREEMENT. The Distribution Agreement is hereby adopted for the BEA Investor Classes of Common Stock (Classes II, JJ, KK and LL) of the Fund. Each such BEA Advisor Class shall constitute a "Class" as referred to in the Distribution Agreement and its shares shall be "Class Shares" as referred to therein. 2. PAYMENT OF FEES. For all services to be rendered, facilities furnished and expenses paid or assumed by the Distributor as provided in the Distribution Agreement and herein, the Fund shall pay the Distributor a monthly 12b-1 fee on the first business day of each month, based upon the average daily value (as determined on each business day at the time set forth in the Prospectus for determining net asset value per share) of the net assets of the Classes during the preceeding month, at an annual rate of 0.50%. IN WITNESS WHEREOF, the undersigned have entered into this Agreement, intending to be legally bound hereby, as of the date and year first above written. THE RBB FUND, INC. COUNSELLORS SECURITIES INC. By______________________ By_________________________ EX-6.(FF) 5 EXHIBIT 6(FF) Exhibit (6)(ff) DISTRIBUTION AGREEMENT SUPPLEMENT (BEA Advisor Classes) This supplemental agreement is entered into this ___ day of __________, 1996, by and between THE RBB FUND, INC. (the "Fund") and COUNSELLORS SECURITIES INC. (the "Distributor"). The Fund is a corporation organized under the laws of the State of Maryland and is an open-end management investment company. The Fund and the Distributor have entered into a Distribution Agreement, dated as of April 10, 1991 (as from time to time amended and supplemented, the "Distribution Agreement"), pursuant to which the Distributor has undertaken to act as distributor for the Fund, as more fully set forth therein. Certain capitalized terms used without definition in this Distribution Agreement Supplement have the meaning specified in the Distribution Agreement. The Fund agrees with the Distributor as follows: 1. ADOPTION OF DISTRIBUTION AGREEMENT. The Distribution Agreement is hereby adopted for the BEA Advisor Classes of Common Stock (Classes MM, NN, OO and PP) of the Fund. Each such BEA Class shall constitute a "Class" as referred to in the Distribution Agreement and its shares shall be "Class Shares" as referred to therein. 2. PAYMENT OF FEES. For all services to be rendered, facilities furnished and expenses paid or assumed by the Distributor as provided in the Distribution Agreement and herein, the Fund shall pay the Distributor A monthly 12b-1 fee on the first business day of each month, based upon the average daily value ( as determined on each businessday at the time set forth in the Prospectus for determining net asset value per share) of the net assets of the Classes during the preceeding month, at an annual rate of 0.25% IN WITNESS WHEREOF, the undersigned have entered into this Agreement, intending to be legally bound hereby, as of the date and year first above written. THE RBB FUND, INC. COUNSELLORS SECURITIES INC. By______________________ By_______________________ EX-9.(VV) 6 EXHIBIT 9(VV) EXHIBIT (9)(VV) ADMINISTRATION AND ACCOUNTING SERVICES AGREEMENT TERMS AND CONDITIONS This Agreement is made as of ____________, 1996 by and between THE RBB FUND, INC., a Maryland corporation (the "Fund"), and PFPC INC., a Delaware corporation ("PFPC"), which is an indirect wholly owned subsidiary of PNC Bank Corp. The Fund is registered as an open-end, non-diversified investment company under the Investment Company Act of 1940, as amended (the "1940 Act"). The Fund wishes to retain PFPC to provide administration and accounting services to its BEA Global Telecommunications Portfolio (the "Portfolio"), and PFPC wishes to furnish such services. In consideration of the promises and mutual covenants herein contained, the parties agree as follows: 1. DEFINITIONS. (a) "1933 ACT" means the Securities Act of 1933, as amended. (b) "1934 ACT" means the Securities Exchange Act of 1934, as amended. (c) "AUTHORIZED PERSON" means any officer of the Fund and any other person, duly authorized by the Fund's Board of Directors, to give Oral and Written Instructions on behalf of the Fund and listed on the Certificate attached hereto as Appendix B or any amendment thereto as may be received by PFPC from time to 1 time. An Authorized Person's scope of authority may be limited by the Fund by setting forth such limitation on the Certificate. (d) "BOOK-ENTRY SYSTEM" means Federal Reserve Treasury book-entry system for United States and federal agency securities, its successor or successors, and its nominee or nominees and any book-entry system maintained by an exchange registered with the SEC under the 1934 Act. (e) "ORAL INSTRUCTIONS" mean oral instructions received by PFPC from an Authorized Person or from a person reasonably believed by PFPC to be an Authorized Person. (f) "SEC" means the Securities and Exchange Commission. (g) "SHARES" mean the shares of common stock of the Fund representing an interest in the Portfolio. (h) "PROPERTY" means: (i) any and all securities and other investment items of the Portfolio which the Fund may from time to time deposit, or cause to be deposited, with PFPC or which PFPC may from time to time hold for the Fund on behalf of the Portfolio; (ii) all income in respect of any of such securities or other investment items; (iii) all proceeds of the sale of any of such securities or investment items; and (iv) all proceeds of the sale of Shares which are received by PFPC from time to time, from or on behalf of the Fund. (i) "WRITTEN INSTRUCTIONS" mean written instructions signed by two Authorized Persons and received by PFPC. The 2 instructions may be delivered by hand, mail, tested telegram, cable, telex or facsimile sending device. 2. APPOINTMENT. The Fund hereby appoints PFPC to provide administration and accounting services to the Portfolio, in accordance with the terms set forth in this Agreement. PFPC accepts such appointment and agrees to furnish such services. 3. DELIVERY OF DOCUMENTS. The Fund has provided or, where applicable, will provide PFPC with the following: (a) certified or authenticated copies of the resolutions of the Fund's Board of Directors, approving the appointment of PFPC to provide services pursuant to this Agreement; (b) a copy of the Fund's most recent effective registration statement; (c) a copy of the Fund's advisory agreement or agreements with respect to the Portfolio; (d) a copy of the Fund's distribution agreement or agreements with respect to the Portfolio; (e) a copy of any additional administration agreement with respect to the Portfolio; (f) copies of any shareholder servicing agreements made in respect of the Portfolio; and (g) certified or authenticated copies of any and all amendments or supplements to the foregoing. 4. COMPLIANCE WITH GOVERNMENT RULES AND REGULATIONS. PFPC undertakes to comply with all applicable requirements of the 1933 Act, the 1934 Act and the 1940 Act, and any laws, rules and regulations of governmental authorities 3 having jurisdiction with respect to all duties to be performed by PFPC hereunder. Except as specifically set forth herein, PFPC assumes no responsibility for such compliance by the Fund. 5. INSTRUCTIONS. Unless otherwise provided in this Agreement, PFPC shall act only upon Oral and Written Instructions. PFPC shall be entitled to rely upon any Oral and Written Instructions it receives from an Authorized Person (or from a person reasonably believed by PFPC to be an Authorized Person) pursuant to this Agreement. PFPC may assume that any Oral or Written Instruction received hereunder is not in any way inconsistent with the provisions of organizational documents or this Agreement or of any vote, resolution or proceeding of the Fund's Board of Directors or of the Fund's shareholders. The Fund agrees to forward to PFPC Written Instructions confirming Oral Instructions so that PFPC receives the Written Instructions by the close of business on the same day that such Oral Instructions are received. The fact that such confirming Written Instructions are not received by PFPC shall in no way invalidate the transactions or enforceability of the transactions authorized by the Oral Instructions. The Fund further agrees that PFPC shall incur no liability to the Fund in acting upon Oral or Written Instructions provided such instructions reasonably appear to have been received from an Authorized Person. 4 6. RIGHT TO RECEIVE ADVICE. (a) ADVICE OF THE FUND. If PFPC is in doubt as to any action it should or should not take, PFPC may request directions or advice, including Oral or Written Instructions, from the Fund. (b) ADVICE OF COUNSEL. If PFPC shall be in doubt as to any questions of law pertaining to any action it should or should not take, PFPC may request advice at its own cost from such counsel of its own choosing (who may be counsel for the Fund, the Fund's advisor or PFPC, at the option of PFPC). (c) CONFLICTING ADVICE. In the event of a conflict between directions, advice or Oral or Written Instructions PFPC receives from the Fund, and the advice it receives from counsel, PFPC shall be entitled to rely upon and follow the advice of counsel. (d) PROTECTION OF PFPC. PFPC shall be protected in any action it takes or does not take in reliance upon directions, advice or Oral or Written Instructions it receives from the Fund or from counsel and which PFPC believes, in good faith, to be consistent with those directions, advice and Oral or Written Instructions. Nothing in this paragraph shall be construed so as to impose an obligation upon PFPC (i) to seek such directions, advice or Oral or Written Instructions, or (ii) to act in accordance with such directions, advice or Oral or Written Instructions unless, under the terms of other provisions of this 5 Agreement, the same is a condition of PFPC's properly taking or not taking such action. 7. RECORDS. The books and records pertaining to the Fund, which are in the possession of PFPC, shall be the property of the Fund. Such books and records shall be prepared and maintained as required by the 1940 Act and other applicable securities laws, rules and regulations. The Fund and Authorized Persons shall have access to such books and records at all times during PFPC's normal business hours. Upon the reasonable request of the Fund, copies of any such books and records shall be provided by PFPC to the Fund or to an Authorized Person at the Fund's expense to be paid from the assets of the Portfolio. PFPC shall keep the following records: (a) all books and records with respect to the Portfolio's books of account; (b) records of the Portfolio's securities transactions; (c) all other books and records as PFPC is required to maintain pursuant to Rule 31a-1 of the 1940 Act and as specifically set forth in Appendix B hereto. 8. CONFIDENTIALITY. PFPC agrees to keep confidential all records of the Fund and information relative to the Fund and its shareholders (past, present and potential), unless the release of such records or information is otherwise consented to, in writing, by the Fund. The Fund agrees that such consent shall not be 6 unreasonably withheld. The Fund further agrees that, should PFPC be required to provide such information or records to duly constituted authorities (who may institute civil or criminal contempt proceedings for failure to comply), PFPC shall not be required to seek the Fund's consent prior to disclosing such information. 9. LIAISON WITH ACCOUNTANTS. PFPC shall act as liaison with the Fund's independent public accountants and shall provide account analyses, fiscal year summaries, and other audit-related schedules, all with respect to the Portfolio. PFPC shall take all reasonable action in the performance of its obligations under this Agreement to assure that the necessary information is made available to such accountants for the expression of their opinion, as such may be required by the Fund from time to time. 10. DISASTER RECOVERY. PFPC shall enter into and shall maintain in effect with appropriate parties one or more agreements making reasonable provision of emergency use of electronic data processing equipment to the extent appropriate equipment is available. In the event of equipment failures, PFPC shall, at no additional expense to the Fund, take reasonable steps to minimize service interruptions but shall have no liability with respect thereto. 7 11. COMPENSATION. As compensation for services rendered by PFPC during the term of this Agreement, the Fund will pay to PFPC from the assets of the Portfolio a fee or fees as may be agreed to in writing by the Fund and PFPC. 12. INDEMNIFICATION. The Fund agrees to indemnify and hold harmless PFPC and its nominees from all taxes, charges, expenses, assessments, claims and liabilities (including, without limitation, liabilities arising under the 1933 Act, the 1934 Act and the 1940 Act, and any state and foreign securities and blue sky laws, and amendments thereto, and expenses, including (without limitation) attorneys' fees and disbursements, arising directly or indirectly from any action which PFPC takes or does not take (i) at the request or on the direction of or in reliance on the advice of the Fund or (ii) upon Oral or Written Instructions. Neither PFPC, nor any of its nominees, shall be indemnified against any liability to the Fund or to its shareholders (or any expenses incident to such liability) arising out of PFPC's own willful misfeasance, gross negligence or reckless disregard of its duties and obligations under this Agreement. 13. RESPONSIBILITY OF PFPC. PFPC shall be under no duty to take any action on behalf of the Fund except as specifically set forth herein or as may be specifically agreed to by PFPC in writing. PFPC shall be obligated to exercise care and diligence in the performance of 8 its duties hereunder, to act in good faith and to use its best efforts, within reasonable limits, in performing services provided for under this Agreement. PFPC shall be responsible for failure to perform its duties under this Agreement arising out of PFPC's gross negligence. Notwithstanding the foregoing, PFPC shall not be responsible for losses beyond its control, provided that PFPC has acted in accordance with the standard of care set forth above; and provided further that PFPC shall only be responsible for that portion of losses or damages suffered by the fund that are attributable to the gross negligence of PFPC. Without limiting the generality of the foregoing or of any other provision of this Agreement, PFPC, in connection with its duties under this Agreement, shall not be liable for (a) the validity or invalidity or authority or lack thereof of any Oral or Written Instruction, notice or other instrument which conforms to the applicable requirements of this Agreement, and which PFPC reasonably believes to be genuine; or (b) delays or errors or loss of data occurring by reason of circumstances beyond PFPC's control, including acts of civil or military authority, national emergencies, labor difficulties, fire, flood or catastrophe, acts of God, insurrection, war, riots or failure of the mails, transportation, communication or power supply. Notwithstanding anything in this Agreement to the contrary, PFPC shall have no liability to the Fund for any consequential, special or indirect losses or damages which the Fund may incur or suffer by or as a consequence of PFPC's 9 performance of the services provided hereunder, whether or not the likelihood of such losses or damages was known by PFPC. 14. DESCRIPTION OF ACCOUNTING SERVICES ON A CONTINUING BASIS. PFPC will perform the following accounting functions with respect to the Portfolio if required: (i) Journalize investment, capital share and income and expense activities; (ii) Verify investment buy/sell trade tickets when received from the investment advisor (the "Advisor") and transmit trades to the Fund's foreign custodian (the "Custodian") for proper settlement; (iii) Maintain individual ledgers for investment securities; (iv) Maintain historical tax lots for each security; (v) Reconcile cash and investment balances with the Custodian, and provide the Advisor with the beginning cash balance available for investment purposes; (vi) Update the cash availability throughout the day as required by the Advisor; (vii) Post to and prepare the Statement of Assets and Liabilities and the Statement of Operations; (viii) Calculate various contractual expenses (E.G., advisory and custody fees); (ix) Monitor the expense accruals and notify an officer of the Fund of any proposed adjustments; (x) Control all disbursements and authorize such disbursements upon Written Instructions; 10 (xi) Calculate capital gains and losses; (xii) Determine net income; (xiii) Obtain security market quotes from independent pricing services approved by the Advisor, or if such quotes are unavailable, then obtain such prices from Advisor, and in either case calculate the market value of the investments; (xiv) Transmit or mail a copy of the daily portfolio valuation to the Advisor; (xv) Compute net asset value; (xvi) As appropriate, compute yields, total return, expense ratios, portfolio turnover rate, and, if required, portfolio average dollar-weighted maturity; and (xvii) Prepare a monthly financial statement, which will include the following items: Schedule of Investments Statement of Assets and Liabilities Statement of Operations Cash Statement Schedule of Capital Gains and Losses. 15. DESCRIPTION OF ADMINISTRATION SERVICES ON A CONTINUING BASIS. PFPC will perform the following administration services with respect to the Portfolio: (i) Prepare quarterly broker security transactions summaries; (ii) Prepare monthly security transaction listings; (iii) (a) Assist in the preparation of support schedules necessary for completion of federal and state tax returns; or (b) prepare for execution and file the Fund's Federal and state tax returns; 11 (iv) (a) Assist in the preparation of Semi-Annual Reports with the SEC on Form N-SAR; or (b) prepare and file the Fund's Semi-Annual Reports with the SEC on Form N-SAR. (v) (a) Assist in the preparation of annual, semi-annual, and quarterly shareholder reports; or (b) prepare and file with the SEC the Fund's annual, semi-annual, and quarterly shareholder reports; (vi) Assist with the preparation of registration statements and other filings relating to the registration of Shares; (vii) Monitor the Portfolio's status as a regulated investment company under SubChapter M of the Internal Revenue Code of 1986, as amended; and (viii) Coordinate contractual relationships and communications between the Fund and its service providers. 16. DURATION AND TERMINATION. This Agreement shall continue until terminated by the Fund or by PFPC on sixty (60) days' prior written notice to the other party. 17. NOTICES. All notices and other communications, including written Instructions, shall be in writing or by confiding telegram, cable, telex or facsimile sending device. If notice is sent by confirming telegram, cable, telex or facsimile sending device, it shall be deemed to have been given immediately. If notice is sent by first-class mail, it shall be deemed to have been given three days after it has been mailed. If notice is sent by messenger, it shall be deemed to have been given on the day it is 12 delivered. Notices shall be addressed (a) if to PFPC at PFPC's address, 400 Bellevue Parkway, Wilmington, Delaware 19809; (b) if to the Fund, at the address of the Fund; or (c) if to neither of the foregoing, at such other address as shall have been notified to the sender of any such Notice or other communication. 18. AMENDMENTS. This Agreement, or any term thereof, may be changed or waived only by written amendment, signed by the party against whom enforcement of such change or waiver is sought. 19. DELEGATION. PFPC may assign its rights and delegate its duties hereunder to any wholly owned direct or indirect subsidiary of PNC Bank, National Association or PNC Bank Corp, provided that (i) PFPC gives the Fund thirty (30) days' prior written notice; (ii) the delegate agrees with PFPC to comply with all relevant provisions of the 1940 Act; and (iii) PFPC and such delegate promptly provide such information as the Fund may request, and respond to such questions as the Fund may ask, relative to the delegation, including (without limitation) the capabilities of the delegate. 20. COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 13 21. FURTHER ACTIONS. Each party agrees to perform such further acts and execute such further documents as are necessary to effectuate the purposes hereof. 22. MISCELLANEOUS. This Agreement embodies the entire agreement and understanding between the parties and supersedes all prior agreements and understandings relating to the subject matter hereof, provided that the parties may embody in one or more separate documents their agreement, if any, with respect to delegated and/or Oral Instructions. The captions in this Agreement are included for convenience of reference only and in no way define or delimit any of the provisions hereof or otherwise affect their construction or effect. This Agreement shall be deemed to be a contract made in Delaware and governed by Delaware law. If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby. This Agreement shall be binding and shall inure to the benefit off the parties hereto and their respective successors. 14 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their officers designated below on the day and year first above written. PFPC INC. By:___________________________ THE RBB FUND, INC. By:___________________________ 15 APPENDIX A [LIST BOOKS AND RECORDS TO BE Maintained by PFPC] 16 APPENDIX B ---------- Authorized Persons __________________________ ______________________________ (name) (signature) __________________________ ______________________________ (name) (signature) __________________________ ______________________________ (name) (signature) __________________________ ______________________________ (name) (signature) __________________________ ______________________________ (name) (signature) __________________________ ______________________________ (name) (signature) B-1 EX-9.(WW) 7 EXHIBIT 9(WW) CO-ADMINISTRATION AGREEMENT July __, 1996 BEA Associates 153 East 53rd Street 58th Floor New York, New York 10022 Dear Sirs: The RBB Fund, Inc. (the "Company"), a corporation organized under the laws of the State of Maryland, confirms its agreement with BEA Associates ("BEA") with respect to the BEA International Equity Investor Portfolio (the "Fund"), a portfolio of the Company, as follows: 1. INVESTMENT DESCRIPTION; APPOINTMENT The Company desires to employ its capital by investing and reinvesting in investments of the kind and in accordance with the limitations specified in the Company's Articles of Incorporation, as amended from time to time (the "Charter"), in the Company's By-laws, as amended from time to time (the "By-laws"), in the Fund's prospectus (the "Prospectus") and statement of additional information (the "Statement of Additional Information") as in effect from time to time, and in such manner and to the extent as may from time to time be approved by the Board of Directors of the Company. Copies of the Fund's Prospectus and Statement of Additional Information and the Company's Charter and By-laws have been submitted to BEA. The Fund employs BEA Associates (the "Adviser") as its investment adviser. The Company desires to employ and hereby appoints BEA as its co-administrator for the Fund. BEA accepts this appointment and agrees to furnish the services for the compensation set forth below. 2. SERVICES AS CO-ADMINISTRATOR Subject to the supervision and direction of the Board of Directors of the Company, BEA will: (a) assist in supervising all aspects of the Fund's operations, except those performed by other parties pursuant to written agreements with the Company; (b) provide various shareholder liaison services including, but not limited to, responding to inquiries of shareholders regarding the Fund, providing information on shareholder investments, assisting shareholders of the Fund in changing dividend options, account designations and addresses, and other similar services; (c) provide certain administrative services including, but not limited to, providing periodic statements showing the account balance of a Fund shareholder and integrating the statements with those of other transactions and balances in the shareholder's other accounts serviced by the Fund's custodian or transfer agent; (d) supply the Fund with office facilities (which may be BEA Service's own offices), data processing services, clerical, internal executive and administrative services, and stationery and office supplies; (e) furnish corporate secretarial services, including assisting in the preparation of materials for Board of Directors meetings and distributing those materials and assisting in the preparation of minutes of meetings of the Company's Board of Directors and any Committees thereof and of the Fund's shareholders; (f) coordinate the preparation of reports to the Fund's shareholders of record and the Securities and Exchange Commission (the "SEC") including, but not limited to, proxy statements; annual, semi-annual and quarterly reports to shareholders; annual and semi-annual reports on Form N-SAR; and post-effective amendments to the Fund's Registration Statement on Form N-1A (the "Registration Statements"); (g) develop computer systems for the generation of consolidated periodic reports to investors; (h) assist in other regulatory filings as necessary; (i) assist the Fund's investment adviser, at the investment adviser's request, in monitoring and developing compliance procedures for the Fund which will include, among other matters, procedures to assist the investment adviser in monitoring compliance with the Fund's investment objective, policies, restrictions, tax matters and applicable laws and regulations; and (j) acting as liaison between the Fund and the Fund's independent public accountants, counsel, custodian or custodians, transfer agent and co-administrator and taking all reasonable action in the performance of its obligations under this Agreement 2 to assure that all necessary information is made available to each of them. In performing all services under this Agreement, BEA shall act in conformity with applicable law, the Company's Charter and By-Laws, and all amendments thereto, and the investment objective, investment policies and other practices and policies set forth in the Fund's Registration Statement, as such Registration Statement and practices and policies may be amended from time to time. 3. COMPENSATION In consideration of services rendered pursuant to this Agreement, the Fund will pay BEA on the first business day of each month a fee for the previous month at an annual rate of .05% of the Fund's average daily net assets for the first $125 million of average daily net assets, and .10% of average daily net assets for Fund assets above $125 million. The fee for the period from the date BEA commences its operations on behalf of the Fund to the end of the month during which BEA commences such operations shall be prorated according to the proportion that such period bears to the full monthly period. Upon any termination of this Agreement before the end of any month, the fee for such part of a month shall be prorated according to the proportion which such period bears to the full monthly period and shall be payable upon the date of termination of this Agreement. For the purpose of determining fees payable to BEA, fees shall be calculated monthly and the value of the Fund's net assets shall be computed at the times and in the manner specified in the Prospectus and Statement of Additional Information as from time to time in effect. 4. EXPENSES BEA will bear all expenses in connection with the performance of its services under this Agreement; PROVIDED, HOWEVER, that the Fund will reimburse BEA for the out-of-pocket expenses incurred by it on behalf of the Fund. Such reimbursable expenses shall include, but not be limited to, postage, telephone, telex and Federal Express charges. BEA will bill the Fund as soon as practicable after the end of each calendar month for the expenses it is entitled to have reimbursed. The Fund will bear certain other expenses to be incurred in its operation, including: taxes, interest, brokerage fees and commissions, if any; fees of Directors of the Company who are not officers, directors, or employees of the Adviser or BEA; Securities and Exchange Commission fees and state Blue Sky qualification fees; charges of custodians and transfer and dividend disbursing agents; certain insurance premiums; outside auditing and legal expenses; costs of maintenance of corporate existence; except as otherwise provided herein, costs 3 attributable to investor services, including without limitation, telephone and personnel expenses; costs of preparing and printing prospectuses and statements of additional information for regulatory purposes and for distribution to existing shareholders; costs of shareholders' reports and meetings, and meetings of the officers of Board of Directors of the Company; costs of any pricing services; and any extraordinary expenses. 5. STANDARD OF CARE BEA shall exercise its best judgment in rendering the services listed in paragraph 2 above. BEA shall not be liable for any error of judgment or mistake of law or for any loss suffered by the Fund in connection with the matters to which this Agreement relates provided that nothing in this Agreement shall be deemed to protect or purport to protect BEA against liability to the Fund or to its shareholders to which BEA would otherwise be subject by reason of willful misfeasance, bad faith or negligence on its part in the performance of its duties or by reason of BEA's reckless disregard of its obligations and duties under this Agreement. 6. TERM OF AGREEMENT This Agreement shall become effective on the day following approval by the Board of Directors of the Company including a majority of the Board of Directors who are not "interested persons" (as defined in the Investment Company Act of 1940, as amended) of any party to this Agreement, and shall continue until September 16, 1995 and shall continue automatically (unless terminated as provided herein) for successive annual periods ending on September 16 of each year, provided that such continuance is specifically approved at least annually by the Board of Directors of the Company, including a majority of the Board of Directors who are not "interested persons" of any party to this Agreement, by vote cast in person at a meeting called for the purpose of voting on such approval. This Agreement is terminable, without penalty, on 60 days' written notice, by the Board of Directors of the Company or by vote of holders of a majority of the Fund's shares, or upon 60 days' written notice, by BEA. 7. SERVICE TO OTHER COMPANIES OR ACCOUNTS The Company understands that BEA now acts, will continue to act and may act in the future as administrator, co-administrator or administrative services agent to one or more other investment companies, and the Company has no objection to BEA's so acting. The Company understands that the persons employed by BEA to assist in the performance of BEA's duties hereunder will not devote their full time to such service and nothing contained in this Agreement shall be deemed to limit or 4 restrict the right of BEA or any affiliate of BEA to engage in and devote time and attention to other businesses or to render services of whatever kind or nature. 8. LIMITATION OF LIABILITY The Company and BEA agree that the obligations of the Company under this Agreement will not be binding upon any of the directors, shareholders, nominees, officers, employees or agents, whether past, present or future, of the Company, individually, but are binding only upon the assets and property of the Fund, as provided in the Company's Charter. The execution and delivery of this Agreement has been authorized by the Board of Directors of the Company, and signed by an authorized officer of the Company, acting as such, and neither the authorization by the Board of Directors nor the execution and delivery by the officer will be deemed to have been made by any of them individually or to impose any liability on any of them personally, but will bind only the property of the Fund as provided in the Charter. If the foregoing is in accordance with your understanding, kindly indicate your acceptance hereof by signing and returning to us the enclosed copy hereof. Very truly yours, RBB FUND, INC. By:___________________________ Name: Title: Accepted: BEA ASSOCTIATES By:___________________________ Name: Title: 5 EX-9.(XX) 8 EXHIBIT 9(XX) --------------- EXHIBIT (9)(XX) CO-ADMINISTRATION AGREEMENT July __, 1996 BEA Associates 153 East 53rd Street 58th Floor New York, New York 10022 Dear Sirs: The RBB Fund, Inc. (the "Company"), a corporation organized under the laws of the State of Maryland, confirms its agreement with BEA Associates ("BEA") with respect to the BEA International Equity Advisor Portfolio (the "Fund"), a portfolio of the Company, as follows: 1. INVESTMENT DESCRIPTION; APPOINTMENT The Company desires to employ its capital by investing and reinvesting in investments of the kind and in accordance with the limitations specified in the Company's Articles of Incorporation, as amended from time to time (the "Charter"), in the Company's By-laws, as amended from time to time (the "By-laws"), in the Fund's prospectus (the "Prospectus") and statement of additional information (the "Statement of Additional Information") as in effect from time to time, and in such manner and to the extent as may from time to time be approved by the Board of Directors of the Company. Copies of the Fund's Prospectus and Statement of Additional Information and the Company's Charter and By-laws have been submitted to BEA. The Fund employs BEA Associates (the "Adviser") as its investment adviser. The Company desires to employ and hereby appoints BEA as its co-administrator for the Fund. BEA accepts this appointment and agrees to furnish the services for the compensation set forth below. 2. SERVICES AS CO-ADMINISTRATOR Subject to the supervision and direction of the Board of Directors of the Company, BEA will: (a) assist in supervising all aspects of the Fund's operations, except those performed by other parties pursuant to written agreements with the Company; (b) provide various shareholder liaison services including, but not limited to, responding to inquiries of shareholders regarding the Fund, providing information on shareholder investments, assisting shareholders of the Fund in changing dividend options, account designations and addresses, and other similar services; (c) provide certain administrative services including, but not limited to, providing periodic statements showing the account balance of a Fund shareholder and integrating the statements with those of other transactions and balances in the shareholder's other accounts serviced by the Fund's custodian or transfer agent; (d) supply the Fund with office facilities (which may be BEA Service's own offices), data processing services, clerical, internal executive and administrative services, and stationery and office supplies; (e) furnish corporate secretarial services, including assisting in the preparation of materials for Board of Directors meetings and distributing those materials and assisting in the preparation of minutes of meetings of the Company's Board of Directors and any Committees thereof and of the Fund's shareholders; (f) coordinate the preparation of reports to the Fund's shareholders of record and the Securities and Exchange Commission (the "SEC") including, but not limited to, proxy statements; annual, semi-annual and quarterly reports to shareholders; annual and semi-annual reports on Form N-SAR; and post-effective amendments to the Fund's Registration Statement on Form N-1A (the "Registration Statements"); (g) develop computer systems for the generation of consolidated periodic reports to investors; (h) assist in other regulatory filings as necessary; (i) assist the Fund's investment adviser, at the investment adviser's request, in monitoring and developing compliance procedures for the Fund which will include, among other matters, procedures to assist the investment adviser in monitoring compliance with the Fund's investment objective, policies, restrictions, tax matters and applicable laws and regulations; and (j) acting as liaison between the Fund and the Fund's independent public accountants, counsel, custodian or custodians, transfer agent and co-administrator and taking all reasonable action in the performance of its obligations under this Agreement 2 to assure that all necessary information is made available to each of them. In performing all services under this Agreement, BEA shall act in conformity with applicable law, the Company's Charter and By-Laws, and all amendments thereto, and the investment objective, investment policies and other practices and policies set forth in the Fund's Registration Statement, as such Registration Statement and practices and policies may be amended from time to time. 3. COMPENSATION In consideration of services rendered pursuant to this Agreement, the Fund will pay BEA on the first business day of each month a fee for the previous month at an annual rate of .05% of the Fund's average daily net assets for the first $125 million of average daily net assets, and .10% of average daily net assets for Fund assets above $125 million. The fee for the period from the date BEA commences its operations on behalf of the Fund to the end of the month during which BEA commences such operations shall be prorated according to the proportion that such period bears to the full monthly period. Upon any termination of this Agreement before the end of any month, the fee for such part of a month shall be prorated according to the proportion which such period bears to the full monthly period and shall be payable upon the date of termination of this Agreement. For the purpose of determining fees payable to BEA, fees shall be calculated monthly and the value of the Fund's net assets shall be computed at the times and in the manner specified in the Prospectus and Statement of Additional Information as from time to time in effect. 4. EXPENSES BEA will bear all expenses in connection with the performance of its services under this Agreement; PROVIDED, HOWEVER, that the Fund will reimburse BEA for the out-of-pocket expenses incurred by it on behalf of the Fund. Such reimbursable expenses shall include, but not be limited to, postage, telephone, telex and Federal Express charges. BEA will bill the Fund as soon as practicable after the end of each calendar month for the expenses it is entitled to have reimbursed. The Fund will bear certain other expenses to be incurred in its operation, including: taxes, interest, brokerage fees and commissions, if any; fees of Directors of the Company who are not officers, directors, or employees of the Adviser or BEA; Securities and Exchange Commission fees and state Blue Sky qualification fees; charges of custodians and transfer and dividend disbursing agents; certain insurance premiums; outside auditing and legal expenses; costs of maintenance of corporate existence; except as otherwise provided herein, costs 3 attributable to investor services, including without limitation, telephone and personnel expenses; costs of preparing and printing prospectuses and statements of additional information for regulatory purposes and for distribution to existing shareholders; costs of shareholders' reports and meetings, and meetings of the officers of Board of Directors of the Company; costs of any pricing services; and any extraordinary expenses. 5. STANDARD OF CARE BEA shall exercise its best judgment in rendering the services listed in paragraph 2 above. BEA shall not be liable for any error of judgment or mistake of law or for any loss suffered by the Fund in connection with the matters to which this Agreement relates provided that nothing in this Agreement shall be deemed to protect or purport to protect BEA against liability to the Fund or to its shareholders to which BEA would otherwise be subject by reason of willful misfeasance, bad faith or negligence on its part in the performance of its duties or by reason of BEA's reckless disregard of its obligations and duties under this Agreement. 6. TERM OF AGREEMENT This Agreement shall become effective on the day following approval by the Board of Directors of the Company including a majority of the Board of Directors who are not "interested persons" (as defined in the Investment Company Act of 1940, as amended) of any party to this Agreement, and shall continue until September 16, 1995 and shall continue automatically (unless terminated as provided herein) for successive annual periods ending on September 16 of each year, provided that such continuance is specifically approved at least annually by the Board of Directors of the Company, including a majority of the Board of Directors who are not "interested persons" of any party to this Agreement, by vote cast in person at a meeting called for the purpose of voting on such approval. This Agreement is terminable, without penalty, on 60 days' written notice, by the Board of Directors of the Company or by vote of holders of a majority of the Fund's shares, or upon 60 days' written notice, by BEA. 7. SERVICE TO OTHER COMPANIES OR ACCOUNTS The Company understands that BEA now acts, will continue to act and may act in the future as administrator, co-administrator or administrative services agent to one or more other investment companies, and the Company has no objection to BEA's so acting. The Company understands that the persons employed by BEA to assist in the performance of BEA's duties hereunder will not devote their full time to such service and nothing contained in this Agreement shall be deemed to limit or 4 restrict the right of BEA or any affiliate of BEA to engage in and devote time and attention to other businesses or to render services of whatever kind or nature. 8. LIMITATION OF LIABILITY The Company and BEA agree that the obligations of the Company under this Agreement will not be binding upon any of the directors, shareholders, nominees, officers, employees or agents, whether past, present or future, of the Company, individually, but are binding only upon the assets and property of the Fund, as provided in the Company's Charter. The execution and delivery of this Agreement has been authorized by the Board of Directors of the Company, and signed by an authorized officer of the Company, acting as such, and neither the authorization by the Board of Directors nor the execution and delivery by the officer will be deemed to have been made by any of them individually or to impose any liability on any of them personally, but will bind only the property of the Fund as provided in the Charter. If the foregoing is in accordance with your understanding, kindly indicate your acceptance hereof by signing and returning to us the enclosed copy hereof. Very truly yours, RBB FUND, INC. By:________________________ Name: Title: Accepted: BEA ASSOCTIATES By:___________________________ Name: Title: 5 EX-9.(YY) 9 EXHIBIT 9(YY) CO-ADMINISTRATION AGREEMENT July __, 1996 BEA Associates 153 East 53rd Street 58th Floor New York, New York 10022 Dear Sirs: The RBB Fund, Inc. (the "Company"), a corporation organized under the laws of the State of Maryland, confirms its agreement with BEA Associates ("BEA") with respect to the BEA Emerging Markets Equity Investor Portfolio (the "Fund"), a portfolio of the Company, as follows: 1. INVESTMENT DESCRIPTION; APPOINTMENT The Company desires to employ its capital by investing and reinvesting in investments of the kind and in accordance with the limitations specified in the Company's Articles of Incorporation, as amended from time to time (the "Charter"), in the Company's By-laws, as amended from time to time (the "By-laws"), in the Fund's prospectus (the "Prospectus") and statement of additional information (the "Statement of Additional Information") as in effect from time to time, and in such manner and to the extent as may from time to time be approved by the Board of Directors of the Company. Copies of the Fund's Prospectus and Statement of Additional Information and the Company's Charter and By-laws have been submitted to BEA. The Fund employs BEA Associates (the "Adviser") as its investment adviser. The Company desires to employ and hereby appoints BEA as its co-administrator for the Fund. BEA accepts this appointment and agrees to furnish the services for the compensation set forth below. 2. SERVICES AS CO-ADMINISTRATOR Subject to the supervision and direction of the Board of Directors of the Company, BEA will: 1 (a) assist in supervising all aspects of the Fund's operations, except those performed by other parties pursuant to written agreements with the Company; (b) provide various shareholder liaison services including, but not limited to, responding to inquiries of shareholders regarding the Fund, providing information on shareholder investments, assisting shareholders of the Fund in changing dividend options, account designations and addresses, and other similar services; (c) provide certain administrative services including, but not limited to, providing periodic statements showing the account balance of a Fund shareholder and integrating the statements with those of other transactions and balances in the shareholder's other accounts serviced by the Fund's custodian or transfer agent; (d) supply the Fund with office facilities (which may be BEA Service's own offices), data processing services, clerical, internal executive and administrative services, and stationery and office supplies; (e) furnish corporate secretarial services, including assisting in the preparation of materials for Board of Directors meetings and distributing those materials and assisting in the preparation of minutes of meetings of the Company's Board of Directors and any Committees thereof and of the Fund's shareholders; (f) coordinate the preparation of reports to the Fund's shareholders of record and the Securities and Exchange Commission (the "SEC") including, but not limited to, proxy statements; annual, semi-annual and quarterly reports to shareholders; annual and semi-annual reports on Form N-SAR; and post-effective amendments to the Fund's Registration Statement on Form N-1A (the "Registration Statements"); (g) develop computer systems for the generation of consolidated periodic reports to investors; (h) assist in other regulatory filings as necessary; (i) assist the Fund's investment adviser, at the investment adviser's request, in monitoring and developing compliance procedures for the Fund which will include, among other matters, procedures to assist the investment adviser in monitoring compliance with the Fund's investment objective, policies, restrictions, tax matters and applicable laws and regulations; and (j) acting as liaison between the Fund and the Fund's independent public accountants, counsel, custodian or custodians, transfer agent and co-administrator and taking all reasonable action in the performance of its obligations under this Agreement 2 to assure that all necessary information is made available to each of them. In performing all services under this Agreement, BEA shall act in conformity with applicable law, the Company's Charter and By-Laws, and all amendments thereto, and the investment objective, investment policies and other practices and policies set forth in the Fund's Registration Statement, as such Registration Statement and practices and policies may be amended from time to time. 3. COMPENSATION In consideration of services rendered pursuant to this Agreement, the Fund will pay BEA on the first business day of each month a fee for the previous month at an annual rate of .05% of the Fund's average daily net assets for the first $125 million of average daily net assets, and .10% of average daily net assets for Fund assets above $125 million. The fee for the period from the date BEA commences its operations on behalf of the Fund to the end of the month during which BEA commences such operations shall be prorated according to the proportion that such period bears to the full monthly period. Upon any termination of this Agreement before the end of any month, the fee for such part of a month shall be prorated according to the proportion which such period bears to the full monthly period and shall be payable upon the date of termination of this Agreement. For the purpose of determining fees payable to BEA, fees shall be calculated monthly and the value of the Fund's net assets shall be computed at the times and in the manner specified in the Prospectus and Statement of Additional Information as from time to time in effect. 4. EXPENSES BEA will bear all expenses in connection with the performance of its services under this Agreement; PROVIDED, HOWEVER, that the Fund will reimburse BEA for the out-of-pocket expenses incurred by it on behalf of the Fund. Such reimbursable expenses shall include, but not be limited to, postage, telephone, telex and Federal Express charges. BEA will bill the Fund as soon as practicable after the end of each calendar month for the expenses it is entitled to have reimbursed. The Fund will bear certain other expenses to be incurred in its operation, including: taxes, interest, brokerage fees and commissions, if any; fees of Directors of the Company who are not officers, directors, or employees of the Adviser or BEA; Securities and Exchange Commission fees and state Blue Sky qualification fees; charges of custodians and transfer and dividend disbursing agents; certain insurance premiums; outside auditing and legal expenses; costs of maintenance of corporate existence; except as otherwise provided herein, costs 3 attributable to investor services, including without limitation, telephone and personnel expenses; costs of preparing and printing prospectuses and statements of additional information for regulatory purposes and for distribution to existing shareholders; costs of shareholders' reports and meetings, and meetings of the officers of Board of Directors of the Company; costs of any pricing services; and any extraordinary expenses. 5. STANDARD OF CARE BEA shall exercise its best judgment in rendering the services listed in paragraph 2 above. BEA shall not be liable for any error of judgment or mistake of law or for any loss suffered by the Fund in connection with the matters to which this Agreement relates provided that nothing in this Agreement shall be deemed to protect or purport to protect BEA against liability to the Fund or to its shareholders to which BEA would otherwise be subject by reason of willful misfeasance, bad faith or negligence on its part in the performance of its duties or by reason of BEA's reckless disregard of its obligations and duties under this Agreement. 6. TERM OF AGREEMENT This Agreement shall become effective on the day following approval by the Board of Directors of the Company including a majority of the Board of Directors who are not "interested persons" (as defined in the Investment Company Act of 1940, as amended) of any party to this Agreement, and shall continue until September 16, 1995 and shall continue automatically (unless terminated as provided herein) for successive annual periods ending on September 16 of each year, provided that such continuance is specifically approved at least annually by the Board of Directors of the Company, including a majority of the Board of Directors who are not "interested persons" of any party to this Agreement, by vote cast in person at a meeting called for the purpose of voting on such approval. This Agreement is terminable, without penalty, on 60 days' written notice, by the Board of Directors of the Company or by vote of holders of a majority of the Fund's shares, or upon 60 days' written notice, by BEA. 7. SERVICE TO OTHER COMPANIES OR ACCOUNTS The Company understands that BEA now acts, will continue to act and may act in the future as administrator, co-administrator or administrative services agent to one or more other investment companies, and the Company has no objection to BEA's so acting. The Company understands that the persons employed by BEA to assist in the performance of BEA's duties hereunder will not devote their full time to such service and nothing contained in this Agreement shall be deemed to limit or 4 restrict the right of BEA or any affiliate of BEA to engage in and devote time and attention to other businesses or to render services of whatever kind or nature. 8. LIMITATION OF LIABILITY The Company and BEA agree that the obligations of the Company under this Agreement will not be binding upon any of the directors, shareholders, nominees, officers, employees or agents, whether past, present or future, of the Company, individually, but are binding only upon the assets and property of the Fund, as provided in the Company's Charter. The execution and delivery of this Agreement has been authorized by the Board of Directors of the Company, and signed by an authorized officer of the Company, acting as such, and neither the authorization by the Board of Directors nor the execution and delivery by the officer will be deemed to have been made by any of them individually or to impose any liability on any of them personally, but will bind only the property of the Fund as provided in the Charter. If the foregoing is in accordance with your understanding, kindly indicate your acceptance hereof by signing and returning to us the enclosed copy hereof. Very truly yours, RBB FUND, INC. By:___________________________ Name: Title: Accepted: BEA ASSOCTIATES By:___________________________ Name: Title: 5 EX-9.(ZZ) 10 EXHIBIT 9(ZZ) --------------- EXHIBIT (9)(22) CO-ADMINISTRATION AGREEMENT July __, 1996 BEA Associates 153 East 53rd Street 58th Floor New York, New York 10022 Dear Sirs: The RBB Fund, Inc. (the "Company"), a corporation organized under the laws of the State of Maryland, confirms its agreement with BEA Associates ("BEA") with respect to the BEA Emerging Markets Equity Advisor Portfolio (the "Fund"), a portfolio of the Company, as follows: 1. INVESTMENT DESCRIPTION; APPOINTMENT The Company desires to employ its capital by investing and reinvesting in investments of the kind and in accordance with the limitations specified in the Company's Articles of Incorporation, as amended from time to time (the "Charter"), in the Company's By-laws, as amended from time to time (the "By-laws"), in the Fund's prospectus (the "Prospectus") and statement of additional information (the "Statement of Additional Information") as in effect from time to time, and in such manner and to the extent as may from time to time be approved by the Board of Directors of the Company. Copies of the Fund's Prospectus and Statement of Additional Information and the Company's Charter and By-laws have been submitted to BEA. The Fund employs BEA Associates (the "Adviser") as its investment adviser. The Company desires to employ and hereby appoints BEA as its co-administrator for the Fund. BEA accepts this appointment and agrees to furnish the services for the compensation set forth below. 2. SERVICES AS CO-ADMINISTRATOR Subject to the supervision and direction of the Board of Directors of the Company, BEA will: 1 (a) assist in supervising all aspects of the Fund's operations, except those performed by other parties pursuant to written agreements with the Company; (b) provide various shareholder liaison services including, but not limited to, responding to inquiries of shareholders regarding the Fund, providing information on shareholder investments, assisting shareholders of the Fund in changing dividend options, account designations and addresses, and other similar services; (c) provide certain administrative services including, but not limited to, providing periodic statements showing the account balance of a Fund shareholder and integrating the statements with those of other transactions and balances in the shareholder's other accounts serviced by the Fund's custodian or transfer agent; (d) supply the Fund with office facilities (which may be BEA Service's own offices), data processing services, clerical, internal executive and administrative services, and stationery and office supplies; (e) furnish corporate secretarial services, including assisting in the preparation of materials for Board of Directors meetings and distributing those materials and assisting in the preparation of minutes of meetings of the Company's Board of Directors and any Committees thereof and of the Fund's shareholders; (f) coordinate the preparation of reports to the Fund's shareholders of record and the Securities and Exchange Commission (the "SEC") including, but not limited to, proxy statements; annual, semi-annual and quarterly reports to shareholders; annual and semi-annual reports on Form N-SAR; and post-effective amendments to the Fund's Registration Statement on Form N-1A (the "Registration Statements"); (g) develop computer systems for the generation of consolidated periodic reports to investors; (h) assist in other regulatory filings as necessary; (i) assist the Fund's investment adviser, at the investment adviser's request, in monitoring and developing compliance procedures for the Fund which will include, among other matters, procedures to assist the investment adviser in monitoring compliance with the Fund's investment objective, policies, restrictions, tax matters and applicable laws and regulations; and (j) acting as liaison between the Fund and the Fund's independent public accountants, counsel, custodian or custodians, transfer agent and co-administrator and taking all reasonable action in the performance of its obligations under this Agreement to assure that all necessary information is made available to each of them. In performing all services under this Agreement, BEA shall act in conformity with applicable law, the Company's Charter and By-Laws, and all amendments thereto, and the investment objective, investment policies and other practices and policies set forth in the Fund's Registration Statement, as such Registration Statement and practices and policies may be amended from time to time. 3. COMPENSATION In consideration of services rendered pursuant to this Agreement, the Fund will pay BEA on the first business day of each month a fee for the previous month at an annual rate of .05% of the Fund's average daily net assets for the first $125 million of average daily net assets, and .10% of average daily net assets for Fund assets above $125 million. The fee for the period from the date BEA commences its operations on behalf of the Fund to the end of the month during which BEA commences such operations shall be prorated according to the proportion that such period bears to the full monthly period. Upon any termination of this Agreement before the end of any month, the fee for such part of a month shall be prorated according to the proportion which such period bears to the full monthly period and shall be payable upon the date of termination of this Agreement. For the purpose of determining fees payable to BEA, fees shall be calculated monthly and the value of the Fund's net assets shall be computed at the times and in the manner specified in the Prospectus and Statement of Additional Information as from time to time in effect. 4. EXPENSES BEA will bear all expenses in connection with the performance of its services under this Agreement; PROVIDED, HOWEVER, that the Fund will reimburse BEA for the out-of-pocket expenses incurred by it on behalf of the Fund. Such reimbursable expenses shall include, but not be limited to, postage, telephone, telex and Federal Express charges. BEA will bill the Fund as soon as practicable after the end of each calendar month for the expenses it is entitled to have reimbursed. The Fund will bear certain other expenses to be incurred in its operation, including: taxes, interest, brokerage fees and commissions, if any; fees of Directors of the Company who are not officers, directors, or employees of the Adviser or BEA; Securities and Exchange Commission fees and state Blue Sky qualification fees; charges of custodians and transfer and dividend disbursing agents; certain insurance premiums; outside auditing and legal expenses; costs of maintenance of corporate existence; except as otherwise provided herein, costs 3 attributable to investor services, including without limitation, telephone and personnel expenses; costs of preparing and printing prospectuses and statements of additional information for regulatory purposes and for distribution to existing shareholders; costs of shareholders' reports and meetings, and meetings of the officers of Board of Directors of the Company; costs of any pricing services; and any extraordinary expenses. 5. STANDARD OF CARE BEA shall exercise its best judgment in rendering the services listed in paragraph 2 above. BEA shall not be liable for any error of judgment or mistake of law or for any loss suffered by the Fund in connection with the matters to which this Agreement relates provided that nothing in this Agreement shall be deemed to protect or purport to protect BEA against liability to the Fund or to its shareholders to which BEA would otherwise be subject by reason of willful misfeasance, bad faith or negligence on its part in the performance of its duties or by reason of BEA's reckless disregard of its obligations and duties under this Agreement. 6. TERM OF AGREEMENT This Agreement shall become effective on the day following approval by the Board of Directors of the Company including a majority of the Board of Directors who are not "interested persons" (as defined in the Investment Company Act of 1940, as amended) of any party to this Agreement, and shall continue until September 16, 1995 and shall continue automatically (unless terminated as provided herein) for successive annual periods ending on September 16 of each year, provided that such continuance is specifically approved at least annually by the Board of Directors of the Company, including a majority of the Board of Directors who are not "interested persons" of any party to this Agreement, by vote cast in person at a meeting called for the purpose of voting on such approval. This Agreement is terminable, without penalty, on 60 days' written notice, by the Board of Directors of the Company or by vote of holders of a majority of the Fund's shares, or upon 60 days' written notice, by BEA. 7. SERVICE TO OTHER COMPANIES OR ACCOUNTS The Company understands that BEA now acts, will continue to act and may act in the future as administrator, co-administrator or administrative services agent to one or more other investment companies, and the Company has no objection to BEA's so acting. The Company understands that the persons employed by BEA to assist in the performance of BEA's duties hereunder will not devote their full time to such service and nothing contained in this Agreement shall be deemed to limit or 4 restrict the right of BEA or any affiliate of BEA to engage in and devote time and attention to other businesses or to render services of whatever kind or nature. 8. LIMITATION OF LIABILITY The Company and BEA agree that the obligations of the Company under this Agreement will not be binding upon any of the directors, shareholders, nominees, officers, employees or agents, whether past, present or future, of the Company, individually, but are binding only upon the assets and property of the Fund, as provided in the Company's Charter. The execution and delivery of this Agreement has been authorized by the Board of Directors of the Company, and signed by an authorized officer of the Company, acting as such, and neither the authorization by the Board of Directors nor the execution and delivery by the officer will be deemed to have been made by any of them individually or to impose any liability on any of them personally, but will bind only the property of the Fund as provided in the Charter. If the foregoing is in accordance with your understanding, kindly indicate your acceptance hereof by signing and returning to us the enclosed copy hereof. Very truly yours, RBB FUND, INC. By:___________________________ Name: Title: Accepted: BEA ASSOCTIATES By:___________________________ Name: Title: 5 EX-9.(AAA) 11 EXHIBIT 9(AAA) EXHIBIT (9)(aaa) CO-ADMINISTRATION AGREEMENT July __, 1996 BEA Associates 153 East 53rd Street 58th Floor New York, New York 10022 Dear Sirs: The RBB Fund, Inc. (the "Company"), a corporation organized under the laws of the State of Maryland, confirms its agreement with BEA Associates ("BEA") with respect to the BEA High Yield Investor Portfolio (the "Fund"), a portfolio of the Company, as follows: 1. INVESTMENT DESCRIPTION; APPOINTMENT The Company desires to employ its capital by investing and reinvesting in investments of the kind and in accordance with the limitations specified in the Company's Articles of Incorporation, as amended from time to time (the "Charter"), in the Company's By-laws, as amended from time to time (the "By-laws"), in the Fund's prospectus (the "Prospectus") and statement of additional information (the "Statement of Additional Information") as in effect from time to time, and in such manner and to the extent as may from time to time be approved by the Board of Directors of the Company. Copies of the Fund's Prospectus and Statement of Additional Information and the Company's Charter and By-laws have been submitted to BEA. The Fund employs BEA Associates (the "Adviser") as its investment adviser. The Company desires to employ and hereby appoints BEA as its co-administrator for the Fund. BEA accepts this appointment and agrees to furnish the services for the compensation set forth below. 2. SERVICES AS CO-ADMINISTRATOR Subject to the supervision and direction of the Board of Directors of the Company, BEA will: 1 (a) assist in supervising all aspects of the Fund's operations, except those performed by other parties pursuant to written agreements with the Company; (b) provide various shareholder liaison services including, but not limited to, responding to inquiries of shareholders regarding the Fund, providing information on shareholder investments, assisting shareholders of the Fund in changing dividend options, account designations and addresses, and other similar services; (c) provide certain administrative services including, but not limited to, providing periodic statements showing the account balance of a Fund shareholder and integrating the statements with those of other transactions and balances in the shareholder's other accounts serviced by the Fund's custodian or transfer agent; (d) supply the Fund with office facilities (which may be BEA Service's own offices), data processing services, clerical, internal executive and administrative services, and stationery and office supplies; (e) furnish corporate secretarial services, including assisting in the preparation of materials for Board of Directors meetings and distributing those materials and assisting in the preparation of minutes of meetings of the Company's Board of Directors and any Committees thereof and of the Fund's shareholders; (f) coordinate the preparation of reports to the Fund's shareholders of record and the Securities and Exchange Commission (the "SEC") including, but not limited to, proxy statements; annual, semi-annual and quarterly reports to shareholders; annual and semi-annual reports on Form N-SAR; and post-effective amendments to the Fund's Registration Statement on Form N-1A (the "Registration Statements"); (g) develop computer systems for the generation of consolidated periodic reports to investors; (h) assist in other regulatory filings as necessary; (i) assist the Fund's investment adviser, at the investment adviser's request, in monitoring and developing compliance procedures for the Fund which will include, among other matters, procedures to assist the investment adviser in monitoring compliance with the Fund's investment objective, policies, restrictions, tax matters and applicable laws and regulations; and (j) acting as liaison between the Fund and the Fund's independent public accountants, counsel, custodian or custodians, transfer agent and co-administrator and taking all reasonable action in the performance of its obligations under this Agreement to assure that all necessary information is made available to each of them. In performing all services under this Agreement, BEA shall act in conformity with applicable law, the Company's Charter and By-Laws, and all amendments thereto, and the investment objective, investment policies and other practices and policies set forth in the Fund's Registration Statement, as such Registration Statement and practices and policies may be amended from time to time. 3. COMPENSATION In consideration of services rendered pursuant to this Agreement, the Fund will pay BEA on the first business day of each month a fee for the previous month at an annual rate of .05% of the Fund's average daily net assets for the first $125 million of average daily net assets, and .10% of average daily net assets for Fund assets above $125 million. The fee for the period from the date BEA commences its operations on behalf of the Fund to the end of the month during which BEA commences such operations shall be prorated according to the proportion that such period bears to the full monthly period. Upon any termination of this Agreement before the end of any month, the fee for such part of a month shall be prorated according to the proportion which such period bears to the full monthly period and shall be payable upon the date of termination of this Agreement. For the purpose of determining fees payable to BEA, fees shall be calculated monthly and the value of the Fund's net assets shall be computed at the times and in the manner specified in the Prospectus and Statement of Additional Information as from time to time in effect. 4. EXPENSES BEA will bear all expenses in connection with the performance of its services under this Agreement; PROVIDED, HOWEVER, that the Fund will reimburse BEA for the out-of-pocket expenses incurred by it on behalf of the Fund. Such reimbursable expenses shall include, but not be limited to, postage, telephone, telex and Federal Express charges. BEA will bill the Fund as soon as practicable after the end of each calendar month for the expenses it is entitled to have reimbursed. The Fund will bear certain other expenses to be incurred in its operation, including: taxes, interest, brokerage fees and commissions, if any; fees of Directors of the Company who are not officers, directors, or employees of the Adviser or BEA; Securities and Exchange Commission fees and state Blue Sky qualification fees; charges of custodians and transfer and dividend disbursing agents; certain insurance premiums; outside auditing and legal expenses; costs of maintenance of corporate existence; except as otherwise provided herein, costs 3 attributable to investor services, including without limitation, telephone and personnel expenses; costs of preparing and printing prospectuses and statements of additional information for regulatory purposes and for distribution to existing shareholders; costs of shareholders' reports and meetings, and meetings of the officers of Board of Directors of the Company; costs of any pricing services; and any extraordinary expenses. 5. STANDARD OF CARE BEA shall exercise its best judgment in rendering the services listed in paragraph 2 above. BEA shall not be liable for any error of judgment or mistake of law or for any loss suffered by the Fund in connection with the matters to which this Agreement relates provided that nothing in this Agreement shall be deemed to protect or purport to protect BEA against liability to the Fund or to its shareholders to which BEA would otherwise be subject by reason of willful misfeasance, bad faith or negligence on its part in the performance of its duties or by reason of BEA's reckless disregard of its obligations and duties under this Agreement. 6. TERM OF AGREEMENT This Agreement shall become effective on the day following approval by the Board of Directors of the Company including a majority of the Board of Directors who are not "interested persons" (as defined in the Investment Company Act of 1940, as amended) of any party to this Agreement, and shall continue until September 16, 1995 and shall continue automatically (unless terminated as provided herein) for successive annual periods ending on September 16 of each year, provided that such continuance is specifically approved at least annually by the Board of Directors of the Company, including a majority of the Board of Directors who are not "interested persons" of any party to this Agreement, by vote cast in person at a meeting called for the purpose of voting on such approval. This Agreement is terminable, without penalty, on 60 days' written notice, by the Board of Directors of the Company or by vote of holders of a majority of the Fund's shares, or upon 60 days' written notice, by BEA. 7. SERVICE TO OTHER COMPANIES OR ACCOUNTS The Company understands that BEA now acts, will continue to act and may act in the future as administrator, co-administrator or administrative services agent to one or more other investment companies, and the Company has no objection to BEA's so acting. The Company understands that the persons employed by BEA to assist in the performance of BEA's duties hereunder will not devote their full time to such service and nothing contained in this Agreement shall be deemed to limit or 4 restrict the right of BEA or any affiliate of BEA to engage in and devote time and attention to other businesses or to render services of whatever kind or nature. 8. LIMITATION OF LIABILITY The Company and BEA agree that the obligations of the Company under this Agreement will not be binding upon any of the directors, shareholders, nominees, officers, employees or agents, whether past, present or future, of the Company, individually, but are binding only upon the assets and property of the Fund, as provided in the Company's Charter. The execution and delivery of this Agreement has been authorized by the Board of Directors of the Company, and signed by an authorized officer of the Company, acting as such, and neither the authorization by the Board of Directors nor the execution and delivery by the officer will be deemed to have been made by any of them individually or to impose any liability on any of them personally, but will bind only the property of the Fund as provided in the Charter. If the foregoing is in accordance with your understanding, kindly indicate your acceptance hereof by signing and returning to us the enclosed copy hereof. Very truly yours, RBB FUND, INC. By:___________________________ Name: Title: Accepted: BEA ASSOCTIATES By:___________________________ Name: Title: 5 EX-9.(BBB) 12 EXHIBIT 9(BBB) CO-ADMINISTRATION AGREEMENT July __, 1996 BEA Associates 153 East 53rd Street 58th Floor New York, New York 10022 Dear Sirs: The RBB Fund, Inc. (the "Company"), a corporation organized under the laws of the State of Maryland, confirms its agreement with BEA Associates ("BEA") with respect to the BEA High Yield Advisor Portfolio (the "Fund"), a portfolio of the Company, as follows: 1. INVESTMENT DESCRIPTION; APPOINTMENT The Company desires to employ its capital by investing and reinvesting in investments of the kind and in accordance with the limitations specified in the Company's Articles of Incorporation, as amended from time to time (the "Charter"), in the Company's By-laws, as amended from time to time (the "By-laws"), in the Fund's prospectus (the "Prospectus") and statement of additional information (the "Statement of Additional Information") as in effect from time to time, and in such manner and to the extent as may from time to time be approved by the Board of Directors of the Company. Copies of the Fund's Prospectus and Statement of Additional Information and the Company's Charter and By-laws have been submitted to BEA. The Fund employs BEA Associates (the "Adviser") as its investment adviser. The Company desires to employ and hereby appoints BEA as its co-administrator for the Fund. BEA accepts this appointment and agrees to furnish the services for the compensation set forth below. 2. SERVICES AS CO-ADMINISTRATOR Subject to the supervision and direction of the Board of Directors of the Company, BEA will: 1 (a) assist in supervising all aspects of the Fund's operations, except those performed by other parties pursuant to written agreements with the Company; (b) provide various shareholder liaison services including, but not limited to, responding to inquiries of shareholders regarding the Fund, providing information on shareholder investments, assisting shareholders of the Fund in changing dividend options, account designations and addresses, and other similar services; (c) provide certain administrative services including, but not limited to, providing periodic statements showing the account balance of a Fund shareholder and integrating the statements with those of other transactions and balances in the shareholder's other accounts serviced by the Fund's custodian or transfer agent; (d) supply the Fund with office facilities (which may be BEA Service's own offices), data processing services, clerical, internal executive and administrative services, and stationery and office supplies; (e) furnish corporate secretarial services, including assisting in the preparation of materials for Board of Directors meetings and distributing those materials and assisting in the preparation of minutes of meetings of the Company's Board of Directors and any Committees thereof and of the Fund's shareholders; (f) coordinate the preparation of reports to the Fund's shareholders of record and the Securities and Exchange Commission (the "SEC") including, but not limited to, proxy statements; annual, semi-annual and quarterly reports to shareholders; annual and semi-annual reports on Form N-SAR; and post-effective amendments to the Fund's Registration Statement on Form N-1A (the "Registration Statements"); (g) develop computer systems for the generation of consolidated periodic reports to investors; (h) assist in other regulatory filings as necessary; (i) assist the Fund's investment adviser, at the investment adviser's request, in monitoring and developing compliance procedures for the Fund which will include, among other matters, procedures to assist the investment adviser in monitoring compliance with the Fund's investment objective, policies, restrictions, tax matters and applicable laws and regulations; and (j) acting as liaison between the Fund and the Fund's independent public accountants, counsel, custodian or custodians, transfer agent and co-administrator and taking all reasonable action in the performance of its obligations under this Agreement to assure that all necessary information is made available to each of them. In performing all services under this Agreement, BEA shall act in conformity with applicable law, the Company's Charter and By-Laws, and all amendments thereto, and the investment objective, investment policies and other practices and policies set forth in the Fund's Registration Statement, as such Registration Statement and practices and policies may be amended from time to time. 3. COMPENSATION In consideration of services rendered pursuant to this Agreement, the Fund will pay BEA on the first business day of each month a fee for the previous month at an annual rate of .05% of the Fund's average daily net assets for the first $125 million of average daily net assets, and .10% of average daily net assets for Fund assets above $125 million. The fee for the period from the date BEA commences its operations on behalf of the Fund to the end of the month during which BEA commences such operations shall be prorated according to the proportion that such period bears to the full monthly period. Upon any termination of this Agreement before the end of any month, the fee for such part of a month shall be prorated according to the proportion which such period bears to the full monthly period and shall be payable upon the date of termination of this Agreement. For the purpose of determining fees payable to BEA, fees shall be calculated monthly and the value of the Fund's net assets shall be computed at the times and in the manner specified in the Prospectus and Statement of Additional Information as from time to time in effect. 4. EXPENSES BEA will bear all expenses in connection with the performance of its services under this Agreement; PROVIDED, HOWEVER, that the Fund will reimburse BEA for the out-of-pocket expenses incurred by it on behalf of the Fund. Such reimbursable expenses shall include, but not be limited to, postage, telephone, telex and Federal Express charges. BEA will bill the Fund as soon as practicable after the end of each calendar month for the expenses it is entitled to have reimbursed. The Fund will bear certain other expenses to be incurred in its operation, including: taxes, interest, brokerage fees and commissions, if any; fees of Directors of the Company who are not officers, directors, or employees of the Adviser or BEA; Securities and Exchange Commission fees and state Blue Sky qualification fees; charges of custodians and transfer and dividend disbursing agents; certain insurance premiums; outside auditing and legal expenses; costs of maintenance of corporate existence; except as otherwise provided herein, costs 3 attributable to investor services, including without limitation, telephone and personnel expenses; costs of preparing and printing prospectuses and statements of additional information for regulatory purposes and for distribution to existing shareholders; costs of shareholders' reports and meetings, and meetings of the officers of Board of Directors of the Company; costs of any pricing services; and any extraordinary expenses. 5. STANDARD OF CARE BEA shall exercise its best judgment in rendering the services listed in paragraph 2 above. BEA shall not be liable for any error of judgment or mistake of law or for any loss suffered by the Fund in connection with the matters to which this Agreement relates provided that nothing in this Agreement shall be deemed to protect or purport to protect BEA against liability to the Fund or to its shareholders to which BEA would otherwise be subject by reason of willful misfeasance, bad faith or negligence on its part in the performance of its duties or by reason of BEA's reckless disregard of its obligations and duties under this Agreement. 6. TERM OF AGREEMENT This Agreement shall become effective on the day following approval by the Board of Directors of the Company including a majority of the Board of Directors who are not "interested persons" (as defined in the Investment Company Act of 1940, as amended) of any party to this Agreement, and shall continue until September 16, 1995 and shall continue automatically (unless terminated as provided herein) for successive annual periods ending on September 16 of each year, provided that such continuance is specifically approved at least annually by the Board of Directors of the Company, including a majority of the Board of Directors who are not "interested persons" of any party to this Agreement, by vote cast in person at a meeting called for the purpose of voting on such approval. This Agreement is terminable, without penalty, on 60 days' written notice, by the Board of Directors of the Company or by vote of holders of a majority of the Fund's shares, or upon 60 days' written notice, by BEA. 7. SERVICE TO OTHER COMPANIES OR ACCOUNTS The Company understands that BEA now acts, will continue to act and may act in the future as administrator, co-administrator or administrative services agent to one or more other investment companies, and the Company has no objection to BEA's so acting. The Company understands that the persons employed by BEA to assist in the performance of BEA's duties hereunder will not devote their full time to such service and nothing contained in this Agreement shall be deemed to limit or 4 restrict the right of BEA or any affiliate of BEA to engage in and devote time and attention to other businesses or to render services of whatever kind or nature. 8. LIMITATION OF LIABILITY The Company and BEA agree that the obligations of the Company under this Agreement will not be binding upon any of the directors, shareholders, nominees, officers, employees or agents, whether past, present or future, of the Company, individually, but are binding only upon the assets and property of the Fund, as provided in the Company's Charter. The execution and delivery of this Agreement has been authorized by the Board of Directors of the Company, and signed by an authorized officer of the Company, acting as such, and neither the authorization by the Board of Directors nor the execution and delivery by the officer will be deemed to have been made by any of them individually or to impose any liability on any of them personally, but will bind only the property of the Fund as provided in the Charter. If the foregoing is in accordance with your understanding, kindly indicate your acceptance hereof by signing and returning to us the enclosed copy hereof. Very truly yours, RBB FUND, INC. By:___________________________ Name: Title: Accepted: BEA ASSOCTIATES By:___________________________ Name: Title: 5 EX-9.(CCC) 13 EXHIBIT 9(CCC) EXHIBIT 9(ccc) CO-ADMINISTRATION AGREEMENT July __, 1996 BEA Associates 153 East 53rd Street 58th Floor New York, New York 10022 Dear Sirs: The RBB Fund, Inc. (the "Company"), a corporation organized under the laws of the State of Maryland, confirms its agreement with BEA Associates ("BEA") with respect to the BEA Global Telecommunications Investor Portfolio (the "Fund"), a portfolio of the Company, as follows: 1. INVESTMENT DESCRIPTION; APPOINTMENT The Company desires to employ its capital by investing and reinvesting in investments of the kind and in accordance with the limitations specified in the Company's Articles of Incorporation, as amended from time to time (the "Charter"), in the Company's By-laws, as amended from time to time (the "By-laws"), in the Fund's prospectus (the "Prospectus") and statement of additional information (the "Statement of Additional Information") as in effect from time to time, and in such manner and to the extent as may from time to time be approved by the Board of Directors of the Company. Copies of the Fund's Prospectus and Statement of Additional Information and the Company's Charter and By-laws have been submitted to BEA. The Fund employs BEA Associates (the "Adviser") as its investment adviser. The Company desires to employ and hereby appoints BEA as its co-administrator for the Fund. BEA accepts this appointment and agrees to furnish the services for the compensation set forth below. 2. SERVICES AS CO-ADMINISTRATOR Subject to the supervision and direction of the Board of Directors of the Company, BEA will: 1 (a) assist in supervising all aspects of the Fund's operations, except those performed by other parties pursuant to written agreements with the Company; (b) provide various shareholder liaison services including, but not limited to, responding to inquiries of shareholders regarding the Fund, providing information on shareholder investments, assisting shareholders of the Fund in changing dividend options, account designations and addresses, and other similar services; (c) provide certain administrative services including, but not limited to, providing periodic statements showing the account balance of a Fund shareholder and integrating the statements with those of other transactions and balances in the shareholder's other accounts serviced by the Fund's custodian or transfer agent; (d) supply the Fund with office facilities (which may be BEA Service's own offices), data processing services, clerical, internal executive and administrative services, and stationery and office supplies; (e) furnish corporate secretarial services, including assisting in the preparation of materials for Board of Directors meetings and distributing those materials and assisting in the preparation of minutes of meetings of the Company's Board of Directors and any Committees thereof and of the Fund's shareholders; (f) coordinate the preparation of reports to the Fund's shareholders of record and the Securities and Exchange Commission (the "SEC") including, but not limited to, proxy statements; annual, semi-annual and quarterly reports to shareholders; annual and semi-annual reports on Form N-SAR; and post-effective amendments to the Fund's Registration Statement on Form N-1A (the "Registration Statements"); (g) develop computer systems for the generation of consolidated periodic reports to investors; (h) assist in other regulatory filings as necessary; (i) assist the Fund's investment adviser, at the investment adviser's request, in monitoring and developing compliance procedures for the Fund which will include, among other matters, procedures to assist the investment adviser in monitoring compliance with the Fund's investment objective, policies, restrictions, tax matters and applicable laws and regulations; and (j) acting as liaison between the Fund and the Fund's independent public accountants, counsel, custodian or custodians, transfer agent and co-administrator and taking all reasonable action in the performance of its obligations under this Agreement to assure that all necessary information is made available to each of them. In performing all services under this Agreement, BEA shall act in conformity with applicable law, the Company's Charter and By-Laws, and all amendments thereto, and the investment objective, investment policies and other practices and policies set forth in the Fund's Registration Statement, as such Registration Statement and practices and policies may be amended from time to time. 3. COMPENSATION In consideration of services rendered pursuant to this Agreement, the Fund will pay BEA on the first business day of each month a fee for the previous month at an annual rate of .05% of the Fund's average daily net assets for the first $125 million of average daily net assets, and .10% of average daily net assets for Fund assets above $125 million. The fee for the period from the date BEA commences its operations on behalf of the Fund to the end of the month during which BEA commences such operations shall be prorated according to the proportion that such period bears to the full monthly period. Upon any termination of this Agreement before the end of any month, the fee for such part of a month shall be prorated according to the proportion which such period bears to the full monthly period and shall be payable upon the date of termination of this Agreement. For the purpose of determining fees payable to BEA, fees shall be calculated monthly and the value of the Fund's net assets shall be computed at the times and in the manner specified in the Prospectus and Statement of Additional Information as from time to time in effect. 4. EXPENSES BEA will bear all expenses in connection with the performance of its services under this Agreement; PROVIDED, HOWEVER, that the Fund will reimburse BEA for the out-of-pocket expenses incurred by it on behalf of the Fund. Such reimbursable expenses shall include, but not be limited to, postage, telephone, telex and Federal Express charges. BEA will bill the Fund as soon as practicable after the end of each calendar month for the expenses it is entitled to have reimbursed. The Fund will bear certain other expenses to be incurred in its operation, including: taxes, interest, brokerage fees and commissions, if any; fees of Directors of the Company who are not officers, directors, or employees of the Adviser or BEA; Securities and Exchange Commission fees and state Blue Sky qualification fees; charges of custodians and transfer and dividend disbursing agents; certain insurance premiums; outside auditing and legal expenses; costs of maintenance of corporate existence; except as otherwise provided herein, costs 3 attributable to investor services, including without limitation, telephone and personnel expenses; costs of preparing and printing prospectuses and statements of additional information for regulatory purposes and for distribution to existing shareholders; costs of shareholders' reports and meetings, and meetings of the officers of Board of Directors of the Company; costs of any pricing services; and any extraordinary expenses. 5. STANDARD OF CARE BEA shall exercise its best judgment in rendering the services listed in paragraph 2 above. BEA shall not be liable for any error of judgment or mistake of law or for any loss suffered by the Fund in connection with the matters to which this Agreement relates provided that nothing in this Agreement shall be deemed to protect or purport to protect BEA against liability to the Fund or to its shareholders to which BEA would otherwise be subject by reason of willful misfeasance, bad faith or negligence on its part in the performance of its duties or by reason of BEA's reckless disregard of its obligations and duties under this Agreement. 6. TERM OF AGREEMENT This Agreement shall become effective on the day following approval by the Board of Directors of the Company including a majority of the Board of Directors who are not "interested persons" (as defined in the Investment Company Act of 1940, as amended) of any party to this Agreement, and shall continue until September 16, 1995 and shall continue automatically (unless terminated as provided herein) for successive annual periods ending on September 16 of each year, provided that such continuance is specifically approved at least annually by the Board of Directors of the Company, including a majority of the Board of Directors who are not "interested persons" of any party to this Agreement, by vote cast in person at a meeting called for the purpose of voting on such approval. This Agreement is terminable, without penalty, on 60 days' written notice, by the Board of Directors of the Company or by vote of holders of a majority of the Fund's shares, or upon 60 days' written notice, by BEA. 7. SERVICE TO OTHER COMPANIES OR ACCOUNTS The Company understands that BEA now acts, will continue to act and may act in the future as administrator, co-administrator or administrative services agent to one or more other investment companies, and the Company has no objection to BEA's so acting. The Company understands that the persons employed by BEA to assist in the performance of BEA's duties hereunder will not devote their full time to such service and nothing contained in this Agreement shall be deemed to limit or 4 restrict the right of BEA or any affiliate of BEA to engage in and devote time and attention to other businesses or to render services of whatever kind or nature. 8. LIMITATION OF LIABILITY The Company and BEA agree that the obligations of the Company under this Agreement will not be binding upon any of the directors, shareholders, nominees, officers, employees or agents, whether past, present or future, of the Company, individually, but are binding only upon the assets and property of the Fund, as provided in the Company's Charter. The execution and delivery of this Agreement has been authorized by the Board of Directors of the Company, and signed by an authorized officer of the Company, acting as such, and neither the authorization by the Board of Directors nor the execution and delivery by the officer will be deemed to have been made by any of them individually or to impose any liability on any of them personally, but will bind only the property of the Fund as provided in the Charter. If the foregoing is in accordance with your understanding, kindly indicate your acceptance hereof by signing and returning to us the enclosed copy hereof. Very truly yours, RBB FUND, INC. By:___________________________ Name: Title: Accepted: BEA ASSOCTIATES By:___________________________ Name: Title: 5 EX-9.(DDD) 14 EXHIBIT 9(DDD) EXHIBIT (9) (ddd) CO-ADMINISTRATION AGREEMENT July __, 1996 BEA Associates 153 East 53rd Street 58th Floor New York, New York 10022 Dear Sirs: The RBB Fund, Inc. (the "Company"), a corporation organized under the laws of the State of Maryland, confirms its agreement with BEA Associates ("BEA") with respect to the BEA Global Telecommunications Advisor Portfolio (the "Fund"), a portfolio of the Company, as follows: 1. INVESTMENT DESCRIPTION; APPOINTMENT The Company desires to employ its capital by investing and reinvesting in investments of the kind and in accordance with the limitations specified in the Company's Articles of Incorporation, as amended from time to time (the "Charter"), in the Company's By-laws, as amended from time to time (the "By-laws"), in the Fund's prospectus (the "Prospectus") and statement of additional information (the "Statement of Additional Information") as in effect from time to time, and in such manner and to the extent as may from time to time be approved by the Board of Directors of the Company. Copies of the Fund's Prospectus and Statement of Additional Information and the Company's Charter and By-laws have been submitted to BEA. The Fund employs BEA Associates (the "Adviser") as its investment adviser. The Company desires to employ and hereby appoints BEA as its co-administrator for the Fund. BEA accepts this appointment and agrees to furnish the services for the compensation set forth below. 2. SERVICES AS CO-ADMINISTRATOR Subject to the supervision and direction of the Board of Directors of the Company, BEA will: 1 (a) assist in supervising all aspects of the Fund's operations, except those performed by other parties pursuant to written agreements with the Company; (b) provide various shareholder liaison services including, but not limited to, responding to inquiries of shareholders regarding the Fund, providing information on shareholder investments, assisting shareholders of the Fund in changing dividend options, account designations and addresses, and other similar services; (c) provide certain administrative services including, but not limited to, providing periodic statements showing the account balance of a Fund shareholder and integrating the statements with those of other transactions and balances in the shareholder's other accounts serviced by the Fund's custodian or transfer agent; (d) supply the Fund with office facilities (which may be BEA Service's own offices), data processing services, clerical, internal executive and administrative services, and stationery and office supplies; (e) furnish corporate secretarial services, including assisting in the preparation of materials for Board of Directors meetings and distributing those materials and assisting in the preparation of minutes of meetings of the Company's Board of Directors and any Committees thereof and of the Fund's shareholders; (f) coordinate the preparation of reports to the Fund's shareholders of record and the Securities and Exchange Commission (the "SEC") including, but not limited to, proxy statements; annual, semi-annual and quarterly reports to shareholders; annual and semi-annual reports on Form N-SAR; and post-effective amendments to the Fund's Registration Statement on Form N-1A (the "Registration Statements"); (g) develop computer systems for the generation of consolidated periodic reports to investors; (h) assist in other regulatory filings as necessary; (i) assist the Fund's investment adviser, at the investment adviser's request, in monitoring and developing compliance procedures for the Fund which will include, among other matters, procedures to assist the investment adviser in monitoring compliance with the Fund's investment objective, policies, restrictions, tax matters and applicable laws and regulations; and (j) acting as liaison between the Fund and the Fund's independent public accountants, counsel, custodian or custodians, transfer agent and co-administrator and taking all reasonable action in the performance of its obligations under this Agreement 2 to assure that all necessary information is made available to each of them. In performing all services under this Agreement, BEA shall act in conformity with applicable law, the Company's Charter and By-Laws, and all amendments thereto, and the investment objective, investment policies and other practices and policies set forth in the Fund's Registration Statement, as such Registration Statement and practices and policies may be amended from time to time. 3. COMPENSATION In consideration of services rendered pursuant to this Agreement, the Fund will pay BEA on the first business day of each month a fee for the previous month at an annual rate of .05% of the Fund's average daily net assets for the first $125 million of average daily net assets, and .10% of average daily net assets for Fund assets above $125 million. The fee for the period from the date BEA commences its operations on behalf of the Fund to the end of the month during which BEA commences such operations shall be prorated according to the proportion that such period bears to the full monthly period. Upon any termination of this Agreement before the end of any month, the fee for such part of a month shall be prorated according to the proportion which such period bears to the full monthly period and shall be payable upon the date of termination of this Agreement. For the purpose of determining fees payable to BEA, fees shall be calculated monthly and the value of the Fund's net assets shall be computed at the times and in the manner specified in the Prospectus and Statement of Additional Information as from time to time in effect. 4. EXPENSES BEA will bear all expenses in connection with the performance of its services under this Agreement; PROVIDED, HOWEVER, that the Fund will reimburse BEA for the out-of-pocket expenses incurred by it on behalf of the Fund. Such reimbursable expenses shall include, but not be limited to, postage, telephone, telex and Federal Express charges. BEA will bill the Fund as soon as practicable after the end of each calendar month for the expenses it is entitled to have reimbursed. The Fund will bear certain other expenses to be incurred in its operation, including: taxes, interest, brokerage fees and commissions, if any; fees of Directors of the Company who are not officers, directors, or employees of the Adviser or BEA; Securities and Exchange Commission fees and state Blue Sky qualification fees; charges of custodians and transfer and dividend disbursing agents; certain insurance premiums; outside auditing and legal expenses; costs of maintenance of corporate existence; except as otherwise provided herein, costs 3 attributable to investor services, including without limitation, telephone and personnel expenses; costs of preparing and printing prospectuses and statements of additional information for regulatory purposes and for distribution to existing shareholders; costs of shareholders' reports and meetings, and meetings of the officers of Board of Directors of the Company; costs of any pricing services; and any extraordinary expenses. 5. STANDARD OF CARE BEA shall exercise its best judgment in rendering the services listed in paragraph 2 above. BEA shall not be liable for any error of judgment or mistake of law or for any loss suffered by the Fund in connection with the matters to which this Agreement relates provided that nothing in this Agreement shall be deemed to protect or purport to protect BEA against liability to the Fund or to its shareholders to which BEA would otherwise be subject by reason of willful misfeasance, bad faith or negligence on its part in the performance of its duties or by reason of BEA's reckless disregard of its obligations and duties under this Agreement. 6. TERM OF AGREEMENT This Agreement shall become effective on the day following approval by the Board of Directors of the Company including a majority of the Board of Directors who are not "interested persons" (as defined in the Investment Company Act of 1940, as amended) of any party to this Agreement, and shall continue until September 16, 1995 and shall continue automatically (unless terminated as provided herein) for successive annual periods ending on September 16 of each year, provided that such continuance is specifically approved at least annually by the Board of Directors of the Company, including a majority of the Board of Directors who are not "interested persons" of any party to this Agreement, by vote cast in person at a meeting called for the purpose of voting on such approval. This Agreement is terminable, without penalty, on 60 days' written notice, by the Board of Directors of the Company or by vote of holders of a majority of the Fund's shares, or upon 60 days' written notice, by BEA. 7. SERVICE TO OTHER COMPANIES OR ACCOUNTS The Company understands that BEA now acts, will continue to act and may act in the future as administrator, co-administrator or administrative services agent to one or more other investment companies, and the Company has no objection to BEA's so acting. The Company understands that the persons employed by BEA to assist in the performance of BEA's duties hereunder will not devote their full time to such service and nothing contained in this Agreement shall be deemed to limit or 4 restrict the right of BEA or any affiliate of BEA to engage in and devote time and attention to other businesses or to render services of whatever kind or nature. 8. LIMITATION OF LIABILITY The Company and BEA agree that the obligations of the Company under this Agreement will not be binding upon any of the directors, shareholders, nominees, officers, employees or agents, whether past, present or future, of the Company, individually, but are binding only upon the assets and property of the Fund, as provided in the Company's Charter. The execution and delivery of this Agreement has been authorized by the Board of Directors of the Company, and signed by an authorized officer of the Company, acting as such, and neither the authorization by the Board of Directors nor the execution and delivery by the officer will be deemed to have been made by any of them individually or to impose any liability on any of them personally, but will bind only the property of the Fund as provided in the Charter. If the foregoing is in accordance with your understanding, kindly indicate your acceptance hereof by signing and returning to us the enclosed copy hereof. Very truly yours, RBB FUND, INC. By: ------------------------------------- Name: Title: Accepted: BEA ASSOCTIATES By: --------------------------- Name: Title: 5 EX-9.(EEE) 15 EXHIBIT 9(EEE) TRANSFER AGENCY AND SERVICE AGREEMENT between THE RBB FUND, INC. and STATE STREET BANK AND TRUST COMPANY 1 TABLE OF CONTENTS ----------------- Page ---- 1. Terms of Appointment: Duties of the Bank . . . . . . . . . . . . . . . . 3 2. Fees and Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 3. Representations and Warranties of the Bank . . . . . . . . . . . . . . . 6 4. Representations and Warranties of the Fund . . . . . . . . . . . . . . . 7 5. Data Access and Proprietary Information. . . . . . . . . . . . . . . . . 7 6. Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 7. Standard of Care . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 8. Covenants of the Fund and the Bank . . . . . . . . . . . . . . . . . . . 11 9. Termination of Agreement . . . . . . . . . . . . . . . . . . . . . . . . 12 10. Additional Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 11. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 12. Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 13. Massachusetts Law to Apply . . . . . . . . . . . . . . . . . . . . . . . 13 14. Force Majeure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 15. Consequential Damages. . . . . . . . . . . . . . . . . . . . . . . . . . 13 16. Merger of Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . 13 17. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 2 TRANSFER AGENCY AND SERVICE AGREEMENT AGREEMENT made as of the day of , __________, 1996, by and between THE RBB FUND, INC., Maryland corporation, having its principal office and place of business at 400 Bellevue Parkway, Suite 100, Wilmington, Delaware 19809 (the "Fund"), and STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust company having its principal office and place of business at 225 Franklin Street, Boston, Massachusetts 02110 (the "Bank"). WHEREAS, the Fund is authorized to issue shares in separate series, with each such series representing interests in a separate portfolio of securities and other assets; and WHEREAS, the Fund intends to initially offer shares in eight series, the BEA International Equity Portfolio, BEA Emerging Markets Portfolio, BEA U.S. Core Equity Portfolio, BEA U.S. Core Fixed Income Portfolio, BEA Global Fixed Income Portfolio, BEA High Yield Portfolio, BEA Municipal Bond Portfolio and BEA Global Telecommunications Portfolio (each such series, together with all other series subsequently established by the Fund and made subject to this Agreement in accordance with Article 10, being herein referred to as a "Portfolio", and collectively as the "Portfolios"); WHEREAS, the Fund on behalf of the Portfolios desires to appoint the Bank as its transfer agent, dividend disbursing agent, custodian of certain retirement plans and agent in connection with certain other activities, and the Bank desires to accept such appointment; NOW, THEREFORE, in consideration of the mutual covenants herein contained, the parties hereto agree as follows: 1. TERMS OF APPOINTMENT: DUTIES OF THE BANK 1.1 Subject to the terms and conditions set forth in this Agreement, the Fund, on behalf of the Portfolios, hereby employs and appoints the Bank to act as, and the Bank agrees to act as its transfer agent for the Fund's authorized and issued shares of its common stock, $__________ par value, ("Shares"), dividend disbursing agent, custodian of certain retirement plans and agent in connection with any accumulation, open-account or similar plans provided to the shareholders of each of the respective Portfolios of the Fund ("Shareholders") and set out in the currently effective prospectus and statement of additional information ("prospectus") of the Fund on behalf of the applicable Portfolio, including without limitation any periodic investment plan or periodic withdrawal program. 3 1.2 The Bank agrees that it will perform the following services: (a) In accordance with procedures established from time to time by agreement between the Fund on behalf of each of the Portfolios, as applicable and the Bank, the Bank shall: (i) Receive for acceptance, orders for the purchase of Shares, and promptly deliver payment and appropriate documentation thereof to the Custodian of the Fund authorized pursuant to the Articles of Incorporation of the Fund (the "Custodian"); (ii) Pursuant to purchase orders, issue the appropriate number of Shares and hold such Shares in the appropriate Shareholder account; (iii) Receive for acceptance redemption requests and redemption directions and deliver the appropriate documentation thereof to the Custodian; (iv) In respect to the transactions in items (i), (ii) and (iii) above, the Bank shall execute transactions directly with broker-dealers authorized by the Fund who shall thereby be deemed to be acting on behalf of the Fund; (v) At the appropriate time as and when it receives monies paid to it by the Custodian with respect to any redemption, pay over or cause to be paid over in the appropriate manner such monies as instructed by the redeeming Shareholders; (vi) Effect transfers of Shares by the registered owners thereof upon receipt of appropriate instructions; (vii) Prepare and transmit payments for dividends and distributions declared by the Fund on behalf of the applicable Portfolio; (viii) Issue replacement certificates for those certificates alleged to have been lost, stolen or destroyed upon receipt by the Bank of indemnification satisfactory to the Bank and protecting the Bank and the Fund, and the Bank at its option, may issue replacement certificates in place of mutilated stock certificates upon presentation thereof and without such indemnity; 4 (ix) Maintain records of account for and advise the Fund and its Shareholders as to the foregoing; and (x) Record the issuance of shares of the Fund and maintain pursuant to SEC Rule 17Ad-10(e) a record of the total number of shares of the Fund which are authorized, based upon data provided to it by the Fund, and issued and outstanding. The Bank shall also provide the Fund on a regular basis with the total number of shares which are authorized and issued and outstanding and shall have no obligation, when recording the issuance of shares, to monitor the issuance of such shares or to take cognizance of any laws relating to the issue or sale of such shares, which functions shall be the sole responsibility of the Fund. (b) In addition to and neither in lieu nor in contravention of the services set forth in the above paragraph (a), the Bank shall: (i) perform the customary services of a transfer agent, dividend disbursing agent, custodian of certain retirement plans and, as relevant, agent in connection with accumulation, open-account or similar plans (including without limitation any periodic investment plan or periodic withdrawal program), including but not limited to: maintaining all Shareholder accounts, preparing Shareholder meeting lists, mailing proxies, mailing Shareholder reports and prospectuses to current Shareholders, withholding taxes on U.S. resident and non-resident alien accounts, preparing and filing U.S. Treasury Department Forms 1099 and other appropriate forms required with respect to dividends and distributions by federal authorities for all Shareholders, preparing and mailing confirmation forms and statements of account to Shareholders for all purchases and redemptions of Shares and other confirmable transactions in Shareholder accounts, preparing and mailing activity statements for Shareholders, and providing Shareholder account information and (ii) provide a system which will enable the Fund to monitor the total number of Shares sold in each State. (c) In addition, the Fund shall (i) identify to the Bank in writing those transactions and assets to be treated as exempt from blue sky reporting for each State and (ii) verify the establishment of transactions for each State on the system prior to activation and thereafter monitor the daily activity for each State. The responsibility of the Bank for the Fund's blue sky State registration status is solely limited to the initial 5 establishment of transactions subject to blue sky compliance by the Fund and the reporting of such transactions to the Fund as provided above. (d) Procedures as to who shall provide certain of these services in Section 1 may be established from time to time by agreement between the Fund on behalf of each Portfolio and the Bank per the attached service responsibility schedule. The Bank may at times perform only a portion of these services and the Fund or its agent may perform these services on the Fund's behalf. (e) The Bank shall provide additional services on behalf of the Fund (i.e., escheatment services) which may be agreed upon in writing between the Fund and the Bank. 2. FEES AND EXPENSES 2.1 For the performance by the Bank pursuant to this Agreement, the Fund agrees on behalf of each of the Portfolios to pay the Bank an annual maintenance fee for each Shareholder account as set out in the initial fee schedule attached hereto. Such fees and out-of-pocket expenses and advances identified under Section 2.2 below may be changed from time to time subject to mutual written agreement between the Fund and the Bank. 2.2 In addition to the fee paid under Section 2.1 above, the Fund agrees on behalf of each of the Portfolios to reimburse the Bank for out-of-pocket expenses, including but not limited to confirmation production, postage, forms, telephone, microfilm, microfiche, tabulating proxies, records storage, or advances incurred by the Bank for the items set out in the fee schedule attached hereto. In addition, any other expenses incurred by the Bank at the request or with the consent of the Fund, will be reimbursed by the Fund on behalf of the applicable Portfolio. 2.3 The Fund agrees on behalf of each of the Portfolios to pay all fees and reimbursable expenses within five days following the receipt of the respective billing notice. Postage for mailing of dividends, proxies, Fund reports and other mailings to all shareholder accounts shall be advanced to the Bank by the Fund at least seven (7) days prior to the mailing date of such materials. 3. REPRESENTATIONS AND WARRANTIES OF THE BANK The Bank represents and warrants to the Fund that: 3.1 It is a trust company duly organized and existing and in good standing under the laws of the Commonwealth of Massachusetts. 6 3.2 It is duly qualified to carry on its business in the Commonwealth of Massachusetts. 3.3 It is empowered under applicable laws and by its Charter and By-Laws to enter into and perform this Agreement. 3.4 All requisite corporate proceedings have been taken to authorize it to enter into and perform this Agreement. 3.5 It has and will continue to have access to the necessary facilities, equipment and personnel to perform its duties and obligations under this Agreement. 4. REPRESENTATIONS AND WARRANTIES OF THE FUND The Fund represents and warrants to the Bank that: 4.1 It is a corporation duly organized and existing and in good standing under the laws of the State of Maryland. 4.2 It is empowered under applicable laws and by its Articles of Incorporation and By-Laws to enter into and perform this Agreement. 4.3 All corporate proceedings required by said Articles of Incorporation and By-Laws have been taken to authorize it to enter into and perform this Agreement. 4.4 It is an open-end and diversified management investment company registered under the Investment Company Act of 1940, as amended. 4.5 A registration statement under the Securities Act of 1933, as amended on behalf of each of the Portfolios is currently effective and will remain effective, and appropriate state securities law filings have been made and will continue to be made, with respect to all Shares of the Fund being offered for sale. 5. DATA ACCESS AND PROPRIETARY INFORMATION 5.1 The Fund acknowledges that the data bases, computer programs, screen formats, report formats, interactive design techniques, and documentation manuals furnished to the Fund by the Bank as part of the Fund's ability to access certain Fund-related data ("Customer Data") maintained by the Bank on data bases under the control and ownership of the Bank ("Data Access Services") constitute copyrighted, trade secret, or other proprietary information (collectively, "Proprietary Information") of substantial value to the Bank or other third party. In no event shall Proprietary Information be deemed Customer Data. 7 The Fund agrees to treat all Proprietary Information as proprietary to the Bank and further agrees that it shall not divulge any Proprietary Information to any person or organization except as may be provided hereunder. Without limiting the foregoing, the Fund agrees for itself and its employees and agents: (a) to access Customer Data solely from locations as may be designated in writing by the Bank and solely in accordance with the Bank's applicable user documentation; (b) to refrain from copying or duplicating in any way the Proprietary Information; (c) to refrain from obtaining unauthorized access to any portion of the Proprietary Information, and if such access is inadvertently obtained, to inform in a timely manner of such fact and dispose of such information in accordance with the Bank's instructions; (d) to refrain from causing or allowing the data acquired hereunder from being retransmitted to any other computer facility or other location, except with the prior written consent of the Bank; (e) that the Fund shall have access only to those authorized transactions agreed upon by the parties; (f) to honor all reasonable written requests made by the Bank to protect at the Bank's expense the rights of the Bank in Proprietary Information at common law, under federal copyright law and under other federal or state law. Each party shall take reasonable efforts to advise its employees of their obligations pursuant to this Section 5. The obligations of this Section shall survive any earlier termination of this Agreement. 5.2 If the Fund notifies the Bank that any of the Data Access Services do not operate in material compliance with the most recently issued user documentation for such services, the Bank shall endeavor in a timely manner to correct such failure. Organizations from which the Bank may obtain certain data included in the Data Access Services are solely responsible for the contents of such data and the Fund agrees to make no claim against the Bank arising out of the contents of such third-party data, including, but not limited to, the accuracy thereof. DATA ACCESS SERVICES AND ALL COMPUTER PROGRAMS AND SOFTWARE SPECIFICATIONS USED IN CONNECTION THEREWITH ARE PROVIDED ON AN AS IS, AS AVAILABLE BASIS. THE BANK EXPRESSLY DISCLAIMS ALL WARRANTIES EXCEPT THOSE EXPRESSLY STATED HEREIN 8 INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. 5.3 If the transactions available to the Fund include the ability to originate electronic instructions to the Bank in order to (i) effect the transfer or movement of cash or Shares or (ii) transmit Shareholder information or other information, then in such event the Bank shall be entitled to rely on the validity and authenticity of such instruction without undertaking any further inquiry as long as such instruction is undertaken in conformity with security procedures established by the Bank from time to time. 6. INDEMNIFICATION 6.1 The Bank shall not be responsible for, and the Fund shall on behalf of the applicable Portfolio indemnify and hold the Bank harmless from and against, any and all losses, damages, costs, charges, counsel fees, payments, expenses and liability arising out of or attributable to: (a) All actions of the Bank or its agents or subcontractors required to be taken pursuant to this Agreement, provided that such actions are taken in good faith and without negligence or willful misconduct. (b) The Fund's lack of good faith, negligence or willful misconduct which arise out of the breach of any representation or warranty of the Fund hereunder. (c) The reliance on or use by the Bank or its agents or subcontractors of information, records, documents or services which (i) are received by the Bank or its agents or subcontractors, and (ii) have been prepared. maintained or performed by the Fund or any other person or firm on behalf of the Fund including but not limited to any previous transfer agent or registrar. (d) The reliance on, or the carrying out by the Bank or its agents or subcontractors of any instructions or requests of the Fund on behalf of the applicable Portfolio. (e) The offer or sale of Shares in violation of any requirement under the federal securities laws or regulations or the securities laws or regulations of any state that such Shares be registered in such state or in violation of any stop order or other determination or ruling by any federal agency or any state with respect to the offer or sale of such Shares in such state. 9 (f) The negotiation and processing by the Bank of checks not made payable to the order of the Bank, the Fund, the Fund's management company, transfer agent or distributor or the retirement account custodian or trustee for a plan account investing in Shares, which checks are tendered to the Bank for the purchase of Shares (i.e., checks made payable to prospective or existing Shareholders, such checks are commonly known as "third party checks"). 6.2 At any time the Bank may apply to any officer of the Fund for instructions, and may consult with legal counsel with respect to any matter arising in connection with the services to be performed by the Bank under this Agreement, and the Bank and its agents or subcontractors shall not be liable and shall be indemnified by the Fund on behalf of the applicable Portfolio for any action taken or omitted by it in reliance upon such instructions or upon the opinion of such counsel. The Bank, its agents and subcontractors shall be protected and indemnified in acting upon any paper or document furnished by or on behalf of the Fund, reasonably believed to be genuine and to have been signed by the proper person or persons, or upon any instruction, information, data, records or documents provided the Bank or its agents or subcontractors by machine readable input, telex, CRT data entry or other similar means authorized by the Fund, and shall not be held to have notice of any change of authority of any person, until receipt of written notice thereof from the Fund. The Bank, its agents and subcontractors shall also be protected and indemnified in recognizing stock certificates which are reasonably believed to bear the proper manual or facsimile signatures of the officers of the Fund, and the proper countersignature of any former transfer agent or former registrar, or of a co-transfer agent or co-registrar. 6.3 In order that the indemnification provisions contained in this Section 6 shall apply, upon the assertion of a claim for which the Fund may be required to indemnify the Bank, the Bank shall promptly notify the Fund of such assertion, and shall keep the Fund advised with respect to all developments concerning such claim. The Fund shall have the option to participate with the Bank in the defense of such claim or to defend against said claim in its own name or in the name of the Bank. The Bank shall in no case confess any claim or make any compromise in any case in which the Fund may be required to indemnify the Bank except with the Fund's prior written consent. 7. STANDARD OF CARE The Bank shall at all times act in good faith and agrees to use its best efforts within reasonable limits to insure the accuracy of all services performed under this Agreement, but 10 assumes no responsibility and shall not be liable for loss or damage due to errors unless said errors are caused by its negligence, bad faith, or willful misconduct or that of its employees. 8. COVENANTS OF THE FUND AND THE BANK 8.1 The Fund shall on behalf of each of the Portfolios promptly furnish to the Bank the following: (a) A certified copy of the resolution of the Board of Directors of the Fund authorizing the appointment of the Bank and the execution and delivery of this Agreement. (b) A copy of the Articles of Incorporation and By-Laws of the Fund and all amendments thereto. 8.2 The Bank hereby agrees to establish and maintain facilities and procedures reasonably acceptable to the Fund for safekeeping of stock certificates, check forms and facsimile signature imprinting devices, if any; and for the preparation or use, and for keeping account of, such certificates, forms and devices. 8.3 The Bank shall keep records relating to the services to be performed hereunder, in the form and manner as it may deem advisable. To the extent required by Section 31 of the Investment Company Act of 1940, as amended, and the Rules thereunder, the Bank agrees that all such records prepared or maintained by the Bank relating to the services to be performed by the Bank hereunder are the property of the Fund and will be preserved, maintained and made available in accordance with such Section and Rules, and will be surrendered promptly to the Fund on and in accordance with its request. 8.4 The Bank and the Fund agree that all books, records. information and data pertaining to the business of the other party which are exchanged or received pursuant to the negotiation or the carrying out of this Agreement shall remain confidential, and shall not be voluntarily disclosed to any other person, except as may be required by law. 8.5 In case of any requests or demands for the inspection of the Shareholder records of the Fund, the Bank will endeavor to notify the Fund and to secure instructions from an authorized officer of the Fund as to such inspection. The Bank reserves the right, however, to exhibit the Shareholder records to any person whenever it is advised by its counsel that it may be held liable for the failure to exhibit the Shareholder records to such person. 11 9. TERMINATION OF AGREEMENT 9.1 This Agreement may be terminated by either party upon one hundred twenty (120) days written notice to the other. 9.2 Should the Fund exercise its right to terminate, all out-of-pocket expenses associated with the movement of records and material will be borne by the Fund on behalf of the applicable Portfolio(s). Additionally, the Bank reserves the right to charge for any other reasonable expenses associated with such termination and/or a charge equivalent to the average of three (3) months' fees. 10. ADDITIONAL FUND In the event that the Fund establishes one or more series of Shares in addition to the BEA International Equity Portfolio, BEA Emerging Markets Portfolio, BEA U.S. Core Equity Portfolio, BEA U.S. Core Fixed Income Portfolio, BEA Global Fixed Income Portfolio, BEA High Yield Portfolio, BEA Municipal Bond Portfolio and BEA Global Telecommunications Portfolio with respect to which it desires to have the Bank render services as transfer agent under the terms hereof, it shall so notify the Bank in writing, and if the Bank agrees in writing to provide such services, such series of Shares shall become a Portfolio hereunder. 11. ASSIGNMENT 11.1 Except as provided in Section 11.3 below, neither this Agreement nor any rights or obligations hereunder may be assigned by either party without the written consent of the other party. 11.2 This Agreement shall inure to the benefit of and be binding upon the parties and their respective permitted successors and assigns. 11.3 The Bank may, without further consent on the part of the Fund, subcontract for the performance hereof with (i) Boston Financial Data Services, Inc., a Massachusetts corporation ("BFDS") which is duly registered as a transfer agent pursuant to Section 17A(c)(2) of the Securities Exchange Act of 1934, as amended ("Section 17A(c)(2)"), (ii) a BFDS subsidiary duly registered as a transfer agent pursuant to Section 17A(c)(2) or (iii) a BFDS affiliate duly registered as a transfer agent pursuant to Section 17A(c)(2); provided, however, that the Bank shall be as fully responsible to the Fund for the acts and omissions of any subcontractor as it is for its own acts and omissions. 12 12. AMENDMENT This Agreement may be amended or modified by a written agreement executed by both parties and authorized or approved by a resolution of the Board of Directors of the Fund. 13. MASSACHUSETTS LAW TO APPLY This Agreement shall be construed and the provisions thereof interpreted under and in accordance with the laws of the Commonwealth of Massachusetts. 14. FORCE MAJEURE In the event either party is unable to perform its obligations under the terms of this Agreement because of acts of God, strikes, equipment or transmission failure or damage reasonably beyond its control, or other causes reasonably beyond its control, such party shall not be liable for damages to the other for any damages resulting from such failure to perform or otherwise from such causes. 15. CONSEQUENTIAL DAMAGES Neither party to this Agreement shall be liable to the other party for consequential damages under any provision of this Agreement or for any consequential damages arising out of any act or failure to act hereunder. 16. MERGER OF AGREEMENT This Agreement constitutes the entire agreement between the parties hereto and supersedes any prior agreement with respect to the subject matter hereof whether oral or written. 17. COUNTERPARTS This Agreement may be executed by the parties hereto on any number of counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. 13 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed in their names and on their behalf by and through their duly authorized officers, as of the day and year first above written. THE RBB FUND, INC. BY:_________________________________ ATTEST: _______________________ STATE STREET BANK AND TRUST COMPANY BY:__________________________________ Executive Vice President ATTEST: _______________________ 14 STATE STREET BANK & TRUST COMPANY FUND SERVICE RESPONSIBILITIES Service Performed Responsibility - ----------------- -------------- Bank Fund ---- ---- 1. Receives orders for the purchase of Shares. 2. Issue Shares and hold Shares in Shareholders accounts. 3. Receive redemption requests. 4. Effect transactions 1-3 above directly with broker-dealers. 5. Pay over monies to redeeming Shareholders. 6. Effect transfers of Shares. 7. Prepare and transmit dividends and distributions. 8. Issue Replacement Certificates. 9. Reporting of abandoned property. 10. Maintain records of account. 11. Maintain and keep a current and accurate control book for each issue of securities. 12. Mail proxies. 13. Mail Shareholder reports. 14. Mail prospectuses to current Shareholders. 15. Withhold taxes on U.S. resident and non-resident alien accounts. EX-10.(B) 16 EXHIBIT 10(B) CONSENT We hereby consent to the use of our name under the caption "Miscellaneous-Counsel" in the Statement of Additional Information of Post- Effective Amendment No. 37 to the Registration Statement on Form N-1A of The RBB Fund, Inc. (Registration No. 33-20827) filed under the Securities Act of 1933 and Amendment No. 39 under the Investment Company Act of 1940. /S/ BALLARD SPAHR ANDREWS & INGERSOLL Ballard Spahr Andrews & Ingersoll July 25, 1996 EX-11 17 EXHIBIT 11 CONSENT OF INDEPENDENT ACCOUNTANTS We consent in this Post-Effective Amendment No. 37 under the Securities Act of 1933, as amended to this Registration Statement on Form N-1A (File No. 33-20827) of The RBB Fund, Inc. to the reference to our Firm under the heading "Miscellaneous-- Independent Accountants" in the Statement of Additional Information. COOPERS & LYBRAND L.L.P. 2400 Eleven Penn Center Philadelphia, Pennsylvania July 29, 1996 EX-13.1 18 EXHIBIT 13.1 SUBSCRIPTION AGREEMENT ---------------------- The RBB Fund, Inc. (the "Fund"), a Maryland corporation, and Counsellors Securities Inc. ("Counsellors"), a New York corporation, intending to be legally bound, hereby agree with each other as follows: 1. The Fund hereby offers Counsellors and Counsellors hereby purchases the following shares of Common Stock of the Fund (par value $.001 per share) (such shares hereinafter sometimes collectively known as "Shares") at a price per Share listed below. Number of Purchase Price Class of common stock Shares Purchased Per Share - --------------------- ---------------- -------------- II 10 $ 15 JJ 10 15 KK 10 15 LL 10 15 MM 10 15 NN 10 15 OO 10 15 PP 10 15 The Fund hereby acknowledges receipt from Counsellors of funds in the amount of $1,200.00 in full payment for the Shares. 2. Counsellors represents and warrants to the Fund that the Shares are being acquired for investment purposes and not with a view to the distribution thereof. 3. This agreement may be executed in counterparts, and all such counterparts taken together shall be deemed to constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the ____ day of ________, 1996. THE RBB FUND, INC. By:___________________________ President COUNSELLORS SECURITIES INC. By:___________________________ President 2 EX-15.(DDD) 19 EXHIBIT 15(DDD) PLAN OF DISTRIBUTION PURSUANT TO RULE 12b-1 OF THE RBB FUND, INC. (BEA International Equity Investor Class) WHEREAS, The RBB Fund, Inc. (the "Fund") intends to engage in business as an open-end management investment company and is registered as such under the Investment Company Act of 1940, as amended (the "Act"); and WHEREAS, the Fund desires to adopt a Plan of Distribution pursuant to Rule 12b-1 under the Act with respect to shares of its Class II Common Stock, par value $.001 per share (the "Class II Shares") and the Board of Directors has determined that there is a reasonable likelihood that adoption of this Plan of Distribution will benefit the Fund and its stockholders; and WHEREAS, the Fund intends to employ Counsellors Securities Inc. (the "Distributor") as distributor of the Class II Shares; and WHEREAS, the Fund and the Distributor intend to enter into a separate Distribution Agreement with the Fund for Class II Shares, pursuant to which the Fund will employ the Distributor as distributor for the continuous offering of Class II Shares; NOW, THEREFORE, the Fund hereby adopts, and the Distributor hereby agrees to the terms of, this Plan of Distribution (the "Plan") in accordance with Rule 12b-1 under the Act on the following terms and conditions: 1. The Fund shall pay to the Distributor, as the distributor of the Class II Shares, compensation for distribution of its shares at an annual rate not to exceed .75% of the average daily net assets of the Class II Shares. The amount of such compensation shall be agreed upon by the Board of Directors of the Fund and by the Distributor and shall be calculated and accrued daily and paid monthly or at such other intervals as the Board of Directors and the Distributor shall mutually agree. 2. The amount set forth in paragraph 1 of this Plan shall be paid for the Distributor's services as distributor of the Class II Shares. Such amount may be spent by the Distributor on any activities or expenses primarily intended to result in the sale of Class II Shares, including, but not limited to: compensation to and expenses of employees of the Distributor who engage in or support distribution of the Class II Shares, including overhead and telephone expenses,; printing of prospectuses and reports for other than existing shareholders; preparation, printing and distribution of sales literature and advertising materials; and compensation to certain financial institutions ("Service Organizations") who sell Class II Shares. The Distributor may negotiate with any such Service Organizations the services to be provided by the Service Organization to shareholders in connection with the sale of Class II Shares ("Distribution Services"), and all or any portion of the compensation paid to the Distributor under paragraph 1 of this Plan may be reallocated by the Distributor to Service Organizations who sell Class II Shares. The compensation paid to Service Organizations with respect to Distribution Services will compensate Service Organizations to cover certain expenses primarily intended to result in the sale of Class II Shares, including, but not limited to: (a) costs of payments made to employees that engage in the sale of Class II Shares; (b) payments made to, and expenses of, persons who provide support services in connection with the sale of Class II Shares, including, but not limited to, office space and equipment, telephone facilities, processing shareholder transactions and providing any other shareholder services not otherwise provided by the Fund's transfer agent; (c) costs relating to the formulation and implementation of marketing and promotional activities, including, but not limited to, direct mail promotions and television, radio, newspaper, magazine and other mass media advertising; (d) costs of printing and distributing prospectuses, statements of additional information and reports relating to the Class II Shares to prospective shareholders of the Class II Shares; (e) costs involved in preparing, printing and distributing sales literature pertaining to the Class II Shares; and (f) costs involved in obtaining whatever information, analyses and reports with respect to marketing and promotional activities that the Service Organization may, from time to time, deem advisable. The compensation paid to Service Organizations with respect to Shareholder Services will compensate Service Organizations for personal service and/or the maintenance of shareholder accounts, including but not limited to (a) responding to inquiries of customers or clients of the Service Organization who beneficially own Class II Shares ("Customers"), (b) providing information on Customer investments and (c) providing other shareholder liaison services. The compensation paid to Service Organizations with respect to Administrative Services will compensate Service Organizations for administrative and accounting services to their Customers, including, but not limited to: (a) aggregating and processing purchase and redemption requests from Customers and placing net purchase and redemption orders with the Fund's distributor or transfer agent; 2 (b) providing Customers with a service that invests the assets of their accounts in the Class II Shares; (c) processing dividend payments from the Class II Shares on behalf of Customers; (d) providing information periodically to Customers showing their positions in the Class II Shares; (e) arranging for bank wires; (f) providing sub-accounting with respect to Class II Shares beneficially owned by Customers or the information to the Fund necessary for sub-accounting; (g) forwarding shareholder communications from the Fund (for example, proxies, shareholder reports, annual and semi-annual financial statements and dividend, distribution and tax notices related to the Class II Shares) to Customers, if required by law; and (h) providing other similar services to the extent permitted under applicable statutes, rules and regulations. 3. This Plan shall not take effect until it has been approved by a vote of at least a majority (as defined in the Act) of the outstanding Class II Shares. 4. In addition to the approval required by paragraph 3 above, this Plan shall not take effect until it has been approved, together with any related agreements, by votes of a majority of both (a) the Board of Directors of the Fund and (b) those directors of the Fund who are not "interested persons" of the Fund (as defined in the Act) and have no direct or indirect financial interest in the operation of this Plan or any agreements related to it (the "Rule 12b-1 Directors"), cast in person at a meeting (or meetings) called for the purpose of voting on this Plan and such related agreements. 5. This Plan shall continue in effect until August 16, 1995. Thereafter, this Plan shall continue in effect for so long as such continuance is specifically approved at least annually in the manner provided for approval of this Plan in paragraph 4. 6. The Distributor shall provide to the Board of Directors of the Fund and the Board of Directors shall review, at least quarterly, a written report of the amounts expended pursuant to this Plan and the purposes for which such expenditures were made, including commissions, advertising, printing, interest, carrying charges and allocated overhead expenses. 7. This Plan may be terminated at any time by vote of a majority of the Rule 12b-1 Directors, or by a vote of a majority of the outstanding Class II Shares. 3 8. This Plan may not be amended to increase materially the amount of compensation provided for in paragraph 1 hereof unless such amendment is approved in the manner provided for initial approval in paragraph 3 hereof, and no material amendment to the Plan of any kind, including an amendment which would increase materially the amount of compensation, shall be made unless approved in the manner provided for approval and annual renewal in paragraph 4 hereof. 9. While this Plan is in effect, the selection and nomination of Directors who are not interested persons (as defined in the Act) of the Fund shall be committed to the discretion of the then current Directors who are not interested persons (as defined in the Act) of the Fund. 10. The Fund shall preserve copies of this Plan and any related agreements and all reports made pursuant to paragraph 6 hereof for a period of not less than six years from the date of this Plan, the agreements or such reports, as the case may be, the first two years in an easily accessible place. Dated: _____________________, 1996 EX-15.(EEE) 20 EXHIBIT 15(EEE) PLAN OF DISTRIBUTION PURSUANT TO RULE 12b-1 OF THE RBB FUND, INC. (BEA International Equity Advisor Class) WHEREAS, The RBB Fund, Inc. (the "Fund") intends to engage in business as an open-end management investment company and is registered as such under the Investment Company Act of 1940, as amended (the "Act"); and WHEREAS, the Fund desires to adopt a Plan of Distribution pursuant to Rule 12b-1 under the Act with respect to shares of its Class MM Common Stock, par value $.001 per share (the "Class MM Shares") and the Board of Directors has determined that there is a reasonable likelihood that adoption of this Plan of Distribution will benefit the Fund and its stockholders; and WHEREAS, the Fund intends to employ Counsellors Securities Inc. (the "Distributor") as distributor of the Class MM Shares; and WHEREAS, the Fund and the Distributor intend to enter into a separate Distribution Agreement with the Fund for Class MM Shares, pursuant to which the Fund will employ the Distributor as distributor for the continuous offering of Class MM Shares; NOW, THEREFORE, the Fund hereby adopts, and the Distributor hereby agrees to the terms of, this Plan of Distribution (the "Plan") in accordance with Rule 12b-1 under the Act on the following terms and conditions: 1. The Fund shall pay to the Distributor, as the distributor of the Class MM Shares, compensation for distribution of its shares at an annual rate not to exceed .25% of the average daily net assets of the Class MM Shares. The amount of such compensation shall be agreed upon by the Board of Directors of the Fund and by the Distributor and shall be calculated and accrued daily and paid monthly or at such other intervals as the Board of Directors and the Distributor shall mutually agree. 2. The amount set forth in paragraph 1 of this Plan shall be paid for the Distributor's services as distributor of the Class MM Shares. Such amount may be spent by the Distributor on any activities or expenses primarily intended to result in the sale of Class MM Shares, including, but not limited to: 1 compensation to and expenses of employees of the Distributor who engage in or support distribution of the Class MM Shares, including overhead and telephone expenses,; printing of prospectuses and reports for other than existing shareholders; preparation, printing and distribution of sales literature and advertising materials; and compensation to certain financial institutions ("Service Organizations") who sell Class MM Shares. The Distributor may negotiate with any such Service Organizations the services to be provided by the Service Organization to shareholders in connection with the sale of Class MM Shares ("Distribution Services"), and all or any portion of the compensation paid to the Distributor under paragraph 1 of this Plan may be reallocated by the Distributor to Service Organizations who sell Class MM Shares. The compensation paid to Service Organizations with respect to Distribution Services will compensate Service Organizations to cover certain expenses primarily intended to result in the sale of Class MM Shares, including, but not limited to: (a) costs of payments made to employees that engage in the sale of Class MM Shares; (b) payments made to, and expenses of, persons who provide support services in connection with the sale of Class MM Shares, including, but not limited to, office space and equipment, telephone facilities, processing shareholder transactions and providing any other shareholder services not otherwise provided by the Fund's transfer agent; (c) costs relating to the formulation and implementation of marketing and promotional activities, including, but not limited to, direct mail promotions and television, radio, newspaper, magazine and other mass media advertising; (d) costs of printing and distributing prospectuses, statements of additional information and reports relating to the Class MM Shares to prospective shareholders of the Class MM Shares; (e) costs involved in preparing, printing and distributing sales literature pertaining to the Class MM Shares; and (f) costs involved in obtaining whatever information, analyses and reports with respect to marketing and promotional activities that the Service Organization may, from time to time, deem advisable. The compensation paid to Service Organizations with respect to Shareholder Services will compensate Service Organizations for personal service and/or the maintenance of shareholder accounts, including but not limited to (a) responding to inquiries of customers or clients of the Service Organization who beneficially own Class MM Shares ("Customers"), (b) providing information on Customer investments and (c) providing other shareholder liaison services. The compensation paid to Service Organizations with respect to Administrative Services will compensate Service Organizations for administrative and accounting services to their Customers, including, but not limited to: (a) aggregating and processing purchase and redemption requests from Customers and placing net purchase and redemption orders with the Fund's distributor or transfer agent; 2 (b) providing Customers with a service that invests the assets of their accounts in the Class MM Shares; (c) processing dividend payments from the Class MM Shares on behalf of Customers; (d) providing information periodically to Customers showing their positions in the Class MM Shares; (e) arranging for bank wires; (f) providing sub-accounting with respect to Class MM Shares beneficially owned by Customers or the information to the Fund necessary for sub-accounting; (g) forwarding shareholder communications from the Fund (for example, proxies, shareholder reports, annual and semi-annual financial statements and dividend, distribution and tax notices related to the Class MM Shares) to Customers, if required by law; and (h) providing other similar services to the extent permitted under applicable statutes, rules and regulations. 3. This Plan shall not take effect until it has been approved by a vote of at least a majority (as defined in the Act) of the outstanding Class MM Shares. 4. In addition to the approval required by paragraph 3 above, this Plan shall not take effect until it has been approved, together with any related agreements, by votes of a majority of both (a) the Board of Directors of the Fund and (b) those directors of the Fund who are not "interested persons" of the Fund (as defined in the Act) and have no direct or indirect financial interest in the operation of this Plan or any agreements related to it (the "Rule 12b-1 Directors"), cast in person at a meeting (or meetings) called for the purpose of voting on this Plan and such related agreements. 5. This Plan shall continue in effect until August 16, 1995. Thereafter, this Plan shall continue in effect for so long as such continuance is specifically approved at least annually in the manner provided for approval of this Plan in paragraph 4. 6. The Distributor shall provide to the Board of Directors of the Fund and the Board of Directors shall review, at least quarterly, a written report of the amounts expended pursuant to this Plan and the purposes for which such expenditures were made, including commissions, advertising, printing, interest, carrying charges and allocated overhead expenses. 7. This Plan may be terminated at any time by vote of a majority of the Rule 12b-1 Directors, or by a vote of a majority of the outstanding Class MM Shares. 3 8. This Plan may not be amended to increase materially the amount of compensation provided for in paragraph 1 hereof unless such amendment is approved in the manner provided for initial approval in paragraph 3 hereof, and no material amendment to the Plan of any kind, including an amendment which would increase materially the amount of compensation, shall be made unless approved in the manner provided for approval and annual renewal in paragraph 4 hereof. 9. While this Plan is in effect, the selection and nomination of Directors who are not interested persons (as defined in the Act) of the Fund shall be committed to the discretion of the then current Directors who are not interested persons (as defined in the Act) of the Fund. 10. The Fund shall preserve copies of this Plan and any related agreements and all reports made pursuant to paragraph 6 hereof for a period of not less than six years from the date of this Plan, the agreements or such reports, as the case may be, the first two years in an easily accessible place. Dated: _____________________, 1996 4 EX-15.(FFF) 21 EXHIBIT 15(FFF) PLAN OF DISTRIBUTION PURSUANT TO RULE 12b-1 OF THE RBB FUND, INC. (BEA Emerging Markets Equity Portfolio Investor Class) WHEREAS, The RBB Fund, Inc. (the "Fund") intends to engage in business as an open-end management investment company and is registered as such under the Investment Company Act of 1940, as amended (the "Act"); and WHEREAS, the Fund desires to adopt a Plan of Distribution pursuant to Rule 12b-1 under the Act with respect to shares of its Class JJ Common Stock, par value $.001 per share (the "Class JJ Shares") and the Board of Directors has determined that there is a reasonable likelihood that adoption of this Plan of Distribution will benefit the Fund and its stockholders; and WHEREAS, the Fund intends to employ Counsellors Securities Inc. (the "Distributor") as distributor of the Class JJ Shares; and WHEREAS, the Fund and the Distributor intend to enter into a separate Distribution Agreement with the Fund for Class JJ Shares, pursuant to which the Fund will employ the Distributor as distributor for the continuous offering of Class JJ Shares; NOW, THEREFORE, the Fund hereby adopts, and the Distributor hereby agrees to the terms of, this Plan of Distribution (the "Plan") in accordance with Rule 12b-1 under the Act on the following terms and conditions: 1. The Fund shall pay to the Distributor, as the distributor of the Class JJ Shares, compensation for distribution of its shares at an annual rate not to exceed .75% of the average daily net assets of the Class JJ Shares. The amount of such compensation shall be agreed upon by the Board of Directors of the Fund and by the Distributor and shall be calculated and accrued daily and paid monthly or at such other intervals as the Board of Directors and the Distributor shall mutually agree. 2. The amount set forth in paragraph 1 of this Plan shall be paid for the Distributor's services as distributor of the Class JJ Shares. Such amount may be spent by the Distributor on any activities or expenses primarily intended to result in the 1 sale of Class JJ Shares, including, but not limited to: compensation to and expenses of employees of the Distributor who engage in or support distribution of the Class JJ Shares, including overhead and telephone expenses,; printing of prospectuses and reports for other than existing shareholders; preparation, printing and distribution of sales literature and advertising materials; and compensation to certain financial institutions ("Service Organizations") who sell Class JJ Shares. The Distributor may negotiate with any such Service Organizations the services to be provided by the Service Organization to shareholders in connection with the sale of Class JJ Shares ("Distribution Services"), and all or any portion of the compensation paid to the Distributor under paragraph 1 of this Plan may be reallocated by the Distributor to Service Organizations who sell Class JJ Shares. The compensation paid to Service Organizations with respect to Distribution Services will compensate Service Organizations to cover certain expenses primarily intended to result in the sale of Class JJ Shares, including, but not limited to: (a) costs of payments made to employees that engage in the sale of Class JJ Shares; (b) payments made to, and expenses of, persons who provide support services in connection with the sale of Class JJ Shares, including, but not limited to, office space and equipment, telephone facilities, processing shareholder transactions and providing any other shareholder services not otherwise provided by the Fund's transfer agent; (c) costs relating to the formulation and implementation of marketing and promotional activities, including, but not limited to, direct mail promotions and television, radio, newspaper, magazine and other mass media advertising; (d) costs of printing and distributing prospectuses, statements of additional information and reports relating to the Class JJ Shares to prospective shareholders of the Class JJ Shares; (e) costs involved in preparing, printing and distributing sales literature pertaining to the Class JJ Shares; and (f) costs involved in obtaining whatever information, analyses and reports with respect to marketing and promotional activities that the Service Organization may, from time to time, deem advisable. The compensation paid to Service Organizations with respect to Shareholder Services will compensate Service Organizations for personal service and/or the maintenance of shareholder accounts, including but not limited to (a) responding to inquiries of customers or clients of the Service Organization who beneficially own Class JJ Shares ("Customers"), (b) providing information on Customer investments and (c) providing other shareholder liaison services. The compensation paid to Service Organizations with respect to Administrative Services will compensate Service Organizations for administrative and accounting services to their Customers, including, but not limited to: (a) aggregating and processing purchase and redemption requests from Customers and placing net purchase and redemption orders with the Fund's distributor or transfer agent; (b) providing Customers with a service that invests the assets of their accounts in the Class JJ Shares; (c) processing dividend payments from the Class JJ Shares on behalf of Customers; (d) 2 providing information periodically to Customers showing their positions in the Class JJ Shares; (e) arranging for bank wires; (f) providing sub-accounting with respect to Class JJ Shares beneficially owned by Customers or the information to the Fund necessary for sub-accounting; (g) forwarding shareholder communications from the Fund (for example, proxies, shareholder reports, annual and semi-annual financial statements and dividend, distribution and tax notices related to the Class JJ Shares) to Customers, if required by law; and (h) providing other similar services to the extent permitted under applicable statutes, rules and regulations. 3. This Plan shall not take effect until it has been approved by a vote of at least a majority (as defined in the Act) of the outstanding Class JJ Shares. 4. In addition to the approval required by paragraph 3 above, this Plan shall not take effect until it has been approved, together with any related agreements, by votes of a majority of both (a) the Board of Directors of the Fund and (b) those directors of the Fund who are not "interested persons" of the Fund (as defined in the Act) and have no direct or indirect financial interest in the operation of this Plan or any agreements related to it (the "Rule 12b-1 Directors"), cast in person at a meeting (or meetings) called for the purpose of voting on this Plan and such related agreements. 5. This Plan shall continue in effect until August 16, 1995. Thereafter, this Plan shall continue in effect for so long as such continuance is specifically approved at least annually in the manner provided for approval of this Plan in paragraph 4. 6. The Distributor shall provide to the Board of Directors of the Fund and the Board of Directors shall review, at least quarterly, a written report of the amounts expended pursuant to this Plan and the purposes for which such expenditures were made, including commissions, advertising, printing, interest, carrying charges and allocated overhead expenses. 7. This Plan may be terminated at any time by vote of a majority of the Rule 12b-1 Directors, or by a vote of a majority of the outstanding Class JJ Shares. 8. This Plan may not be amended to increase materially the amount of compensation provided for in paragraph 1 hereof unless such amendment is approved in the manner provided for initial approval in paragraph 3 hereof, and no material amendment to the Plan of any kind, including an amendment which would increase materially the amount of compensation, shall be made unless approved in the manner provided for approval and annual renewal in paragraph 4 hereof. 3 9. While this Plan is in effect, the selection and nomination of Directors who are not interested persons (as defined in the Act) of the Fund shall be committed to the discretion of the then current Directors who are not interested persons (as defined in the Act) of the Fund. 10. The Fund shall preserve copies of this Plan and any related agreements and all reports made pursuant to paragraph 6 hereof for a period of not less than six years from the date of this Plan, the agreements or such reports, as the case may be, the first two years in an easily accessible place. Dated: _____________________, 1996 4 EX-15.(GGG) 22 EXHIBIT 15(GGG) PLAN OF DISTRIBUTION PURSUANT TO RULE 12b-1 OF THE RBB FUND, INC. (BEA Emerging Markets Equity Portfolio Advisor Class) WHEREAS, The RBB Fund, Inc. (the "Fund") intends to engage in business as an open-end management investment company and is registered as such under the Investment Company Act of 1940, as amended (the "Act"); and WHEREAS, the Fund desires to adopt a Plan of Distribution pursuant to Rule 12b-1 under the Act with respect to shares of its Class NN Common Stock, par value $.001 per share (the "Class NN Shares") and the Board of Directors has determined that there is a reasonable likelihood that adoption of this Plan of Distribution will benefit the Fund and its stockholders; and WHEREAS, the Fund intends to employ Counsellors Securities Inc. (the "Distributor") as distributor of the Class NN Shares; and WHEREAS, the Fund and the Distributor intend to enter into a separate Distribution Agreement with the Fund for Class NN Shares, pursuant to which the Fund will employ the Distributor as distributor for the continuous offering of Class NN Shares; NOW, THEREFORE, the Fund hereby adopts, and the Distributor hereby agrees to the terms of, this Plan of Distribution (the "Plan") in accordance with Rule 12b-1 under the Act on the following terms and conditions: 1. The Fund shall pay to the Distributor, as the distributor of the Class NN Shares, compensation for distribution of its shares at an annual rate not to exceed .25% of the average daily net assets of the Class NN Shares. The amount of such compensation shall be agreed upon by the Board of Directors of the Fund and by the Distributor and shall be calculated and accrued daily and paid monthly or at such other intervals as the Board of Directors and the Distributor shall mutually agree. 2. The amount set forth in paragraph 1 of this Plan shall be paid for the Distributor's services as distributor of the Class NN Shares. Such amount may be spent by the Distributor on any activities or expenses primarily intended to result in the sale of Class NN Shares, including, but not limited to: compensation to and expenses of employees of the Distributor who engage in or support distribution of the Class NN Shares, including overhead and telephone expenses,; printing of prospectuses and reports for other than existing shareholders; preparation, printing and distribution of sales literature and advertising materials; and compensation to certain financial institutions ("Service Organizations") who sell Class NN Shares. The Distributor may negotiate with any such Service Organizations the services to be provided by the Service Organization to shareholders in connection with the sale of Class NN Shares ("Distribution Services"), and all or any portion of the compensation paid to the Distributor under paragraph 1 of this Plan may be reallocated by the Distributor to Service Organizations who sell Class NN Shares. The compensation paid to Service Organizations with respect to Distribution Services will compensate Service Organizations to cover certain expenses primarily intended to result in the sale of Class NN Shares, including, but not limited to: (a) costs of payments made to employees that engage in the sale of Class NN Shares; (b) payments made to, and expenses of, persons who provide support services in connection with the sale of Class NN Shares, including, but not limited to, office space and equipment, telephone facilities, processing shareholder transactions and providing any other shareholder services not otherwise provided by the Fund's transfer agent; (c) costs relating to the formulation and implementation of marketing and promotional activities, including, but not limited to, direct mail promotions and television, radio, newspaper, magazine and other mass media advertising; (d) costs of printing and distributing prospectuses, statements of additional information and reports relating to the Class NN Shares to prospective shareholders of the Class NN Shares; (e) costs involved in preparing, printing and distributing sales literature pertaining to the Class NN Shares; and (f) costs involved in obtaining whatever information, analyses and reports with respect to marketing and promotional activities that the Service Organization may, from time to time, deem advisable. The compensation paid to Service Organizations with respect to Shareholder Services will compensate Service Organizations for personal service and/or the maintenance of shareholder accounts, including but not limited to (a) responding to inquiries of customers or clients of the Service Organization who beneficially own Class NN Shares ("Customers"), (b) providing information on Customer investments and (c) providing other shareholder liaison services. The compensation paid to Service Organizations with respect to Administrative Services will compensate Service Organizations for administrative and accounting services to their Customers, including, but not limited to: (a) aggregating and processing purchase and redemption requests from Customers and placing net purchase and redemption orders with the Fund's distributor or transfer agent; (b) providing Customers with a service that invests the assets of their accounts in the Class NN Shares; (c) processing dividend payments from the Class NN Shares on behalf of Customers; (d) 2 providing information periodically to Customers showing their positions in the Class NN Shares; (e) arranging for bank wires; (f) providing sub-accounting with respect to Class NN Shares beneficially owned by Customers or the information to the Fund necessary for sub-accounting; (g) forwarding shareholder communications from the Fund (for example, proxies, shareholder reports, annual and semi-annual financial statements and dividend, distribution and tax notices related to the Class NN Shares) to Customers, if required by law; and (h) providing other similar services to the extent permitted under applicable statutes, rules and regulations. 3. This Plan shall not take effect until it has been approved by a vote of at least a majority (as defined in the Act) of the outstanding Class NN Shares. 4. In addition to the approval required by paragraph 3 above, this Plan shall not take effect until it has been approved, together with any related agreements, by votes of a majority of both (a) the Board of Directors of the Fund and (b) those directors of the Fund who are not "interested persons" of the Fund (as defined in the Act) and have no direct or indirect financial interest in the operation of this Plan or any agreements related to it (the "Rule 12b-1 Directors"), cast in person at a meeting (or meetings) called for the purpose of voting on this Plan and such related agreements. 5. This Plan shall continue in effect until August 16, 1995. Thereafter, this Plan shall continue in effect for so long as such continuance is specifically approved at least annually in the manner provided for approval of this Plan in paragraph 4. 6. The Distributor shall provide to the Board of Directors of the Fund and the Board of Directors shall review, at least quarterly, a written report of the amounts expended pursuant to this Plan and the purposes for which such expenditures were made, including commissions, advertising, printing, interest, carrying charges and allocated overhead expenses. 7. This Plan may be terminated at any time by vote of a majority of the Rule 12b-1 Directors, or by a vote of a majority of the outstanding Class NN Shares. 8. This Plan may not be amended to increase materially the amount of compensation provided for in paragraph 1 hereof unless such amendment is approved in the manner provided for initial approval in paragraph 3 hereof, and no material amendment to the Plan of any kind, including an amendment which would increase materially the amount of compensation, shall be made unless approved in the manner provided for approval and annual renewal in paragraph 4 hereof. 3 9. While this Plan is in effect, the selection and nomination of Directors who are not interested persons (as defined in the Act) of the Fund shall be committed to the discretion of the then current Directors who are not interested persons (as defined in the Act) of the Fund. 10. The Fund shall preserve copies of this Plan and any related agreements and all reports made pursuant to paragraph 6 hereof for a period of not less than six years from the date of this Plan, the agreements or such reports, as the case may be, the first two years in an easily accessible place. Dated: _____________________, 1996 4 EX-15.(HHH) 23 EXHIBIT 15(HHH) PLAN OF DISTRIBUTION PURSUANT TO RULE 12b-1 OF THE RBB FUND, INC. (BEA High Yield Investor Class) WHEREAS, The RBB Fund, Inc. (the "Fund") intends to engage in business as an open-end management investment company and is registered as such under the Investment Company Act of 1940, as amended (the "Act"); and WHEREAS, the Fund desires to adopt a Plan of Distribution pursuant to Rule 12b-1 under the Act with respect to shares of its Class OO Common Stock, par value $.001 per share (the "Class OO Shares") and the Board of Directors has determined that there is a reasonable likelihood that adoption of this Plan of Distribution will benefit the Fund and its stockholders; and WHEREAS, the Fund intends to employ Counsellors Securities Inc. (the "Distributor") as distributor of the Class OO Shares; and WHEREAS, the Fund and the Distributor intend to enter into a separate Distribution Agreement with the Fund for Class OO Shares, pursuant to which the Fund will employ the Distributor as distributor for the continuous offering of Class OO Shares; NOW, THEREFORE, the Fund hereby adopts, and the Distributor hereby agrees to the terms of, this Plan of Distribution (the "Plan") in accordance with Rule 12b-1 under the Act on the following terms and conditions: 1. The Fund shall pay to the Distributor, as the distributor of the Class OO Shares, compensation for distribution of its shares at an annual rate not to exceed .75% of the average daily net assets of the Class OO Shares. The amount of such compensation shall be agreed upon by the Board of Directors of the Fund and by the Distributor and shall be calculated and accrued daily and paid monthly or at such other intervals as the Board of Directors and the Distributor shall mutually agree. 2. The amount set forth in paragraph 1 of this Plan shall be paid for the Distributor's services as distributor of the Class OO Shares. Such amount may be spent by the Distributor on any activities or expenses primarily intended to result in the 1 sale of Class OO Shares, including, but not limited to: compensation to and expenses of employees of the Distributor who engage in or support distribution of the Class OO Shares, including overhead and telephone expenses,; printing of prospectuses and reports for other than existing shareholders; preparation, printing and distribution of sales literature and advertising materials; and compensation to certain financial institutions ("Service Organizations") who sell Class OO Shares. The Distributor may negotiate with any such Service Organizations the services to be provided by the Service Organization to shareholders in connection with the sale of Class OO Shares ("Distribution Services"), and all or any portion of the compensation paid to the Distributor under paragraph 1 of this Plan may be reallocated by the Distributor to Service Organizations who sell Class OO Shares. The compensation paid to Service Organizations with respect to Distribution Services will compensate Service Organizations to cover certain expenses primarily intended to result in the sale of Class OO Shares, including, but not limited to: (a) costs of payments made to employees that engage in the sale of Class OO Shares; (b) payments made to, and expenses of, persons who provide support services in connection with the sale of Class OO Shares, including, but not limited to, office space and equipment, telephone facilities, processing shareholder transactions and providing any other shareholder services not otherwise provided by the Fund's transfer agent; (c) costs relating to the formulation and implementation of marketing and promotional activities, including, but not limited to, direct mail promotions and television, radio, newspaper, magazine and other mass media advertising; (d) costs of printing and distributing prospectuses, statements of additional information and reports relating to the Class OO Shares to prospective shareholders of the Class OO Shares; (e) costs involved in preparing, printing and distributing sales literature pertaining to the Class OO Shares; and (f) costs involved in obtaining whatever information, analyses and reports with respect to marketing and promotional activities that the Service Organization may, from time to time, deem advisable. The compensation paid to Service Organizations with respect to Shareholder Services will compensate Service Organizations for personal service and/or the maintenance of shareholder accounts, including but not limited to (a) responding to inquiries of customers or clients of the Service Organization who beneficially own Class OO Shares ("Customers"), (b) providing information on Customer investments and (c) providing other shareholder liaison services. The compensation paid to Service Organizations with respect to Administrative Services will compensate Service Organizations for administrative and accounting services to their Customers, including, but not limited to: (a) aggregating and processing purchase and redemption requests from Customers and placing net purchase and redemption orders with the Fund's distributor or transfer agent; (b) providing Customers with a service that invests the assets of their accounts in the Class OO Shares; (c) processing dividend payments from the Class OO Shares on behalf of Customers; (d) 2 providing information periodically to Customers showing their positions in the Class OO Shares; (e) arranging for bank wires; (f) providing sub-accounting with respect to Class OO Shares beneficially owned by Customers or the information to the Fund necessary for sub-accounting; (g) forwarding shareholder communications from the Fund (for example, proxies, shareholder reports, annual and semi-annual financial statements and dividend, distribution and tax notices related to the Class OO Shares) to Customers, if required by law; and (h) providing other similar services to the extent permitted under applicable statutes, rules and regulations. 3. This Plan shall not take effect until it has been approved by a vote of at least a majority (as defined in the Act) of the outstanding Class OO Shares. 4. In addition to the approval required by paragraph 3 above, this Plan shall not take effect until it has been approved, together with any related agreements, by votes of a majority of both (a) the Board of Directors of the Fund and (b) those directors of the Fund who are not "interested persons" of the Fund (as defined in the Act) and have no direct or indirect financial interest in the operation of this Plan or any agreements related to it (the "Rule 12b-1 Directors"), cast in person at a meeting (or meetings) called for the purpose of voting on this Plan and such related agreements. 5. This Plan shall continue in effect until August 16, 1995. Thereafter, this Plan shall continue in effect for so long as such continuance is specifically approved at least annually in the manner provided for approval of this Plan in paragraph 4. 6. The Distributor shall provide to the Board of Directors of the Fund and the Board of Directors shall review, at least quarterly, a written report of the amounts expended pursuant to this Plan and the purposes for which such expenditures were made, including commissions, advertising, printing, interest, carrying charges and allocated overhead expenses. 7. This Plan may be terminated at any time by vote of a majority of the Rule 12b-1 Directors, or by a vote of a majority of the outstanding Class OO Shares. 8. This Plan may not be amended to increase materially the amount of compensation provided for in paragraph 1 hereof unless such amendment is approved in the manner provided for initial approval in paragraph 3 hereof, and no material amendment to the Plan of any kind, including an amendment which would increase materially the amount of compensation, shall be made unless approved in the manner provided for approval and annual renewal in paragraph 4 hereof. 3 9. While this Plan is in effect, the selection and nomination of Directors who are not interested persons (as defined in the Act) of the Fund shall be committed to the discretion of the then current Directors who are not interested persons (as defined in the Act) of the Fund. 10. The Fund shall preserve copies of this Plan and any related agreements and all reports made pursuant to paragraph 6 hereof for a period of not less than six years from the date of this Plan, the agreements or such reports, as the case may be, the first two years in an easily accessible place. Dated: _____________________, 1996 EX-15.(III) 24 EXHIBIT 15(III) EXHIBIT G PLAN OF DISTRIBUTION PURSUANT TO RULE 12b-1 OF THE RBB FUND, INC. (BEA High Yield Advisor Class) WHEREAS, The RBB Fund, Inc. (the "Fund") intends to engage in business as an open-end management investment company and is registered as such under the Investment Company Act of 1940, as amended (the "Act"); and WHEREAS, the Fund desires to adopt a Plan of Distribution pursuant to Rule 12b-1 under the Act with respect to shares of its Class KK Common Stock, par value $.001 per share (the "Class KK Shares") and the Board of Directors has determined that there is a reasonable likelihood that adoption of this Plan of Distribution will benefit the Fund and its stockholders; and WHEREAS, the Fund intends to employ Counsellors Securities Inc. (the "Distributor") as distributor of the Class KK Shares; and WHEREAS, the Fund and the Distributor intend to enter into a separate Distribution Agreement with the Fund for Class KK Shares, pursuant to which the Fund will employ the Distributor as distributor for the continuous offering of Class KK Shares; NOW, THEREFORE, the Fund hereby adopts, and the Distributor hereby agrees to the terms of, this Plan of Distribution (the "Plan") in accordance with Rule 12b-1 under the Act on the following terms and conditions: 1. The Fund shall pay to the Distributor, as the distributor of the Class KK Shares, compensation for distribution of its shares at an annual rate not to exceed .25% of the average daily net assets of the Class KK Shares. The amount of such compensation shall be agreed upon by the Board of Directors of the Fund and by the Distributor and shall be calculated and accrued daily and paid monthly or at such other intervals as the Board of Directors and the Distributor shall mutually agree. 2. The amount set forth in paragraph 1 of this Plan shall be paid for the Distributor's services as distributor of the Class KK Shares. Such amount may be spent by the Distributor on any activities or expenses primarily intended to result in the -1- sale of Class KK Shares, including, but not limited to: compensation to and expenses of employees of the Distributor who engage in or support distribution of the Class KK Shares, including overhead and telephone expenses,; printing of prospectuses and reports for other than existing shareholders; preparation, printing and distribution of sales literature and advertising materials; and compensation to certain financial institutions ("Service Organizations") who sell Class KK Shares. The Distributor may negotiate with any such Service Organizations the services to be provided by the Service Organization to shareholders in connection with the sale of Class KK Shares ("Distribution Services"), and all or any portion of the compensation paid to the Distributor under paragraph 1 of this Plan may be reallocated by the Distributor to Service Organizations who sell Class KK Shares. The compensation paid to Service Organizations with respect to Distribution Services will compensate Service Organizations to cover certain expenses primarily intended to result in the sale of Class KK Shares, including, but not limited to: (a) costs of payments made to employees that engage in the sale of Class KK Shares; (b) payments made to, and expenses of, persons who provide support services in connection with the sale of Class KK Shares, including, but not limited to, office space and equipment, telephone facilities, processing shareholder transactions and providing any other shareholder services not otherwise provided by the Fund's transfer agent; (c) costs relating to the formulation and implementation of marketing and promotional activities, including, but not limited to, direct mail promotions and television, radio, newspaper, magazine and other mass media advertising; (d) costs of printing and distributing prospectuses, statements of additional information and reports relating to the Class KK Shares to prospective shareholders of the Class KK Shares; (e) costs involved in preparing, printing and distributing sales literature pertaining to the Class KK Shares; and (f) costs involved in obtaining whatever information, analyses and reports with respect to marketing and promotional activities that the Service Organization may, from time to time, deem advisable. The compensation paid to Service Organizations with respect to Shareholder Services will compensate Service Organizations for personal service and/or the maintenance of shareholder accounts, including but not limited to (a) responding to inquiries of customers or clients of the Service Organization who beneficially own Class KK Shares ("Customers"), (b) providing information on Customer investments and (c) providing other shareholder liaison services. The compensation paid to Service Organizations with respect to Administrative Services will compensate Service Organizations for administrative and accounting services to their Customers, including, but not limited to: (a) aggregating and processing purchase and redemption requests from Customers and placing net purchase and redemption orders with the Fund's distributor or transfer agent; (b) providing Customers with a service that invests the assets of their accounts in the Class KK Shares; (c) processing dividend payments from the Class KK Shares on behalf of Customers; (d) -2- providing information periodically to Customers showing their positions in the Class KK Shares; (e) arranging for bank wires; (f) providing sub-accounting with respect to Class KK Shares beneficially owned by Customers or the information to the Fund necessary for sub-accounting; (g) forwarding shareholder communications from the Fund (for example, proxies, shareholder reports, annual and semi-annual financial statements and dividend, distribution and tax notices related to the Class KK Shares) to Customers, if required by law; and (h) providing other similar services to the extent permitted under applicable statutes, rules and regulations. 3. This Plan shall not take effect until it has been approved by a vote of at least a majority (as defined in the Act) of the outstanding Class KK Shares. 4. In addition to the approval required by paragraph 3 above, this Plan shall not take effect until it has been approved, together with any related agreements, by votes of a majority of both (a) the Board of Directors of the Fund and (b) those directors of the Fund who are not "interested persons" of the Fund (as defined in the Act) and have no direct or indirect financial interest in the operation of this Plan or any agreements related to it (the "Rule 12b-1 Directors"), cast in person at a meeting (or meetings) called for the purpose of voting on this Plan and such related agreements. 5. This Plan shall continue in effect until August 16, 1995. Thereafter, this Plan shall continue in effect for so long as such continuance is specifically approved at least annually in the manner provided for approval of this Plan in paragraph 4. 6. The Distributor shall provide to the Board of Directors of the Fund and the Board of Directors shall review, at least quarterly, a written report of the amounts expended pursuant to this Plan and the purposes for which such expenditures were made, including commissions, advertising, printing, interest, carrying charges and allocated overhead expenses. 7. This Plan may be terminated at any time by vote of a majority of the Rule 12b-1 Directors, or by a vote of a majority of the outstanding Class KK Shares. 8. This Plan may not be amended to increase materially the amount of compensation provided for in paragraph 1 hereof unless such amendment is approved in the manner provided for initial approval in paragraph 3 hereof, and no material amendment to the Plan of any kind, including an amendment which would increase materially the amount of compensation, shall be made unless approved in the manner provided for approval and annual renewal in paragraph 4 hereof. -3- 9. While this Plan is in effect, the selection and nomination of Directors who are not interested persons (as defined in the Act) of the Fund shall be committed to the discretion of the then current Directors who are not interested persons (as defined in the Act) of the Fund. 10. The Fund shall preserve copies of this Plan and any related agreements and all reports made pursuant to paragraph 6 hereof for a period of not less than six years from the date of this Plan, the agreements or such reports, as the case may be, the first two years in an easily accessible place. Dated: _____________________, 1996 -4- EX-15.(JJJ) 25 EXHIBIT 15(JJJ) PLAN OF DISTRIBUTION PURSUANT TO RULE 12b-1 OF THE RBB FUND, INC. (BEA Global Telecommunications Portfolio Investor Class) WHEREAS, The RBB Fund, Inc. (the "Fund") intends to engage in business as an open-end management investment company and is registered as such under the Investment Company Act of 1940, as amended (the "Act"); and WHEREAS, the Fund desires to adopt a Plan of Distribution pursuant to Rule 12b-1 under the Act with respect to shares of its Class LL Common Stock, par value $.001 per share (the "Class LL Shares") and the Board of Directors has determined that there is a reasonable likelihood that adoption of this Plan of Distribution will benefit the Fund and its stockholders; and WHEREAS, the Fund intends to employ Counsellors Securities Inc. (the "Distributor") as distributor of the Class LL Shares; and WHEREAS, the Fund and the Distributor intend to enter into a separate Distribution Agreement with the Fund for Class LL Shares, pursuant to which the Fund will employ the Distributor as distributor for the continuous offering of Class LL Shares; NOW, THEREFORE, the Fund hereby adopts, and the Distributor hereby agrees to the terms of, this Plan of Distribution (the "Plan") in accordance with Rule 12b-1 under the Act on the following terms and conditions: 1. The Fund shall pay to the Distributor, as the distributor of the Class LL Shares, compensation for distribution of its shares at an annual rate not to exceed .75% of the average daily net assets of the Class LL Shares. The amount of such compensation shall be agreed upon by the Board of Directors of the Fund and by the Distributor and shall be calculated and accrued daily and paid monthly or at such other intervals as the Board of Directors and the Distributor shall mutually agree. 2. The amount set forth in paragraph 1 of this Plan shall be paid for the Distributor's services as distributor of the Class LL Shares. Such amount may be spent by the Distributor on any activities or expenses primarily intended to result in the 1 sale of Class LL Shares, including, but not limited to: compensation to and expenses of employees of the Distributor who engage in or support distribution of the Class LL Shares, including overhead and telephone expenses,; printing of prospectuses and reports for other than existing shareholders; preparation, printing and distribution of sales literature and advertising materials; and compensation to certain financial institutions ("Service Organizations") who sell Class LL Shares. The Distributor may negotiate with any such Service Organizations the services to be provided by the Service Organization to shareholders in connection with the sale of Class LL Shares ("Distribution Services"), and all or any portion of the compensation paid to the Distributor under paragraph 1 of this Plan may be reallocated by the Distributor to Service Organizations who sell Class LL Shares. The compensation paid to Service Organizations with respect to Distribution Services will compensate Service Organizations to cover certain expenses primarily intended to result in the sale of Class LL Shares, including, but not limited to: (a) costs of payments made to employees that engage in the sale of Class LL Shares; (b) payments made to, and expenses of, persons who provide support services in connection with the sale of Class LL Shares, including, but not limited to, office space and equipment, telephone facilities, processing shareholder transactions and providing any other shareholder services not otherwise provided by the Fund's transfer agent; (c) costs relating to the formulation and implementation of marketing and promotional activities, including, but not limited to, direct mail promotions and television, radio, newspaper, magazine and other mass media advertising; (d) costs of printing and distributing prospectuses, statements of additional information and reports relating to the Class LL Shares to prospective shareholders of the Class LL Shares; (e) costs involved in preparing, printing and distributing sales literature pertaining to the Class LL Shares; and (f) costs involved in obtaining whatever information, analyses and reports with respect to marketing and promotional activities that the Service Organization may, from time to time, deem advisable. The compensation paid to Service Organizations with respect to Shareholder Services will compensate Service Organizations for personal service and/or the maintenance of shareholder accounts, including but not limited to (a) responding to inquiries of customers or clients of the Service Organization who beneficially own Class LL Shares ("Customers"), (b) providing information on Customer investments and (c) providing other shareholder liaison services. The compensation paid to Service Organizations with respect to Administrative Services will compensate Service Organizations for administrative and accounting services to their Customers, including, but not limited to: (a) aggregating and processing purchase and redemption requests from Customers and placing net purchase and redemption orders with the Fund's distributor or transfer agent; (b) providing Customers with a service that invests the assets of their accounts in the Class LL Shares; (c) processing dividend payments from the Class LL Shares on behalf of Customers; (d) 2 providing information periodically to Customers showing their positions in the Class LL Shares; (e) arranging for bank wires; (f) providing sub-accounting with respect to Class LL Shares beneficially owned by Customers or the information to the Fund necessary for sub-accounting; (g) forwarding shareholder communications from the Fund (for example, proxies, shareholder reports, annual and semi-annual financial statements and dividend, distribution and tax notices related to the Class LL Shares) to Customers, if required by law; and (h) providing other similar services to the extent permitted under applicable statutes, rules and regulations. 3. This Plan shall not take effect until it has been approved by a vote of at least a majority (as defined in the Act) of the outstanding Class LL Shares. 4. In addition to the approval required by paragraph 3 above, this Plan shall not take effect until it has been approved, together with any related agreements, by votes of a majority of both (a) the Board of Directors of the Fund and (b) those directors of the Fund who are not "interested persons" of the Fund (as defined in the Act) and have no direct or indirect financial interest in the operation of this Plan or any agreements related to it (the "Rule 12b-1 Directors"), cast in person at a meeting (or meetings) called for the purpose of voting on this Plan and such related agreements. 5. This Plan shall continue in effect until August 16, 1995. Thereafter, this Plan shall continue in effect for so long as such continuance is specifically approved at least annually in the manner provided for approval of this Plan in paragraph 4. 6. The Distributor shall provide to the Board of Directors of the Fund and the Board of Directors shall review, at least quarterly, a written report of the amounts expended pursuant to this Plan and the purposes for which such expenditures were made, including commissions, advertising, printing, interest, carrying charges and allocated overhead expenses. 7. This Plan may be terminated at any time by vote of a majority of the Rule 12b-1 Directors, or by a vote of a majority of the outstanding Class LL Shares. 8. This Plan may not be amended to increase materially the amount of compensation provided for in paragraph 1 hereof unless such amendment is approved in the manner provided for initial approval in paragraph 3 hereof, and no material amendment to the Plan of any kind, including an amendment which would increase materially the amount of compensation, shall be made unless approved in the manner provided for approval and annual renewal in paragraph 4 hereof. 3 9. While this Plan is in effect, the selection and nomination of Directors who are not interested persons (as defined in the Act) of the Fund shall be committed to the discretion of the then current Directors who are not interested persons (as defined in the Act) of the Fund. 10. The Fund shall preserve copies of this Plan and any related agreements and all reports made pursuant to paragraph 6 hereof for a period of not less than six years from the date of this Plan, the agreements or such reports, as the case may be, the first two years in an easily accessible place. Dated: _____________________, 1996 4 EX-15.(KKK) 26 EXHIBIT 15(KKK) PLAN OF DISTRIBUTION PURSUANT TO RULE 12b-1 OF THE RBB FUND, INC. (BEA Global Telecommunications Portfolio Advisor Class) WHEREAS, The RBB Fund, Inc. (the "Fund") intends to engage in business as an open-end management investment company and is registered as such under the Investment Company Act of 1940, as amended (the "Act"); and WHEREAS, the Fund desires to adopt a Plan of Distribution pursuant to Rule 12b-1 under the Act with respect to shares of its Class PP Common Stock, par value $.001 per share (the "Class PP Shares") and the Board of Directors has determined that there is a reasonable likelihood that adoption of this Plan of Distribution will benefit the Fund and its stockholders; and WHEREAS, the Fund intends to employ Counsellors Securities Inc. (the "Distributor") as distributor of the Class PP Shares; and WHEREAS, the Fund and the Distributor intend to enter into a separate Distribution Agreement with the Fund for Class PP Shares, pursuant to which the Fund will employ the Distributor as distributor for the continuous offering of Class PP Shares; NOW, THEREFORE, the Fund hereby adopts, and the Distributor hereby agrees to the terms of, this Plan of Distribution (the "Plan") in accordance with Rule 12b-1 under the Act on the following terms and conditions: 1. The Fund shall pay to the Distributor, as the distributor of the Class PP Shares, compensation for distribution of its shares at an annual rate not to exceed .25% of the average daily net assets of the Class PP Shares. The amount of such compensation shall be agreed upon by the Board of Directors of the Fund and by the Distributor and shall be calculated and accrued daily and paid monthly or at such other intervals as the Board of Directors and the Distributor shall mutually agree. 2. The amount set forth in paragraph 1 of this Plan shall be paid for the Distributor's services as distributor of the Class PP Shares. Such amount may be spent by the Distributor on any activities or expenses primarily intended to result in the 1 sale of Class PP Shares, including, but not limited to: compensation to and expenses of employees of the Distributor who engage in or support distribution of the Class PP Shares, including overhead and telephone expenses,; printing of prospectuses and reports for other than existing shareholders; preparation, printing and distribution of sales literature and advertising materials; and compensation to certain financial institutions ("Service Organizations") who sell Class PP Shares. The Distributor may negotiate with any such Service Organizations the services to be provided by the Service Organization to shareholders in connection with the sale of Class PP Shares ("Distribution Services"), and all or any portion of the compensation paid to the Distributor under paragraph 1 of this Plan may be reallocated by the Distributor to Service Organizations who sell Class PP Shares. The compensation paid to Service Organizations with respect to Distribution Services will compensate Service Organizations to cover certain expenses primarily intended to result in the sale of Class PP Shares, including, but not limited to: (a) costs of payments made to employees that engage in the sale of Class PP Shares; (b) payments made to, and expenses of, persons who provide support services in connection with the sale of Class PP Shares, including, but not limited to, office space and equipment, telephone facilities, processing shareholder transactions and providing any other shareholder services not otherwise provided by the Fund's transfer agent; (c) costs relating to the formulation and implementation of marketing and promotional activities, including, but not limited to, direct mail promotions and television, radio, newspaper, magazine and other mass media advertising; (d) costs of printing and distributing prospectuses, statements of additional information and reports relating to the Class PP Shares to prospective shareholders of the Class PP Shares; (e) costs involved in preparing, printing and distributing sales literature pertaining to the Class PP Shares; and (f) costs involved in obtaining whatever information, analyses and reports with respect to marketing and promotional activities that the Service Organization may, from time to time, deem advisable. The compensation paid to Service Organizations with respect to Shareholder Services will compensate Service Organizations for personal service and/or the maintenance of shareholder accounts, including but not limited to (a) responding to inquiries of customers or clients of the Service Organization who beneficially own Class PP Shares ("Customers"), (b) providing information on Customer investments and (c) providing other shareholder liaison services. The compensation paid to Service Organizations with respect to Administrative Services will compensate Service Organizations for administrative and accounting services to their Customers, including, but not limited to: (a) aggregating and processing purchase and redemption requests from Customers and placing net purchase and redemption orders with the Fund's distributor or transfer agent; (b) providing Customers with a service that invests the assets of their accounts in the Class PP Shares; (c) processing dividend payments from the Class PP Shares on behalf of Customers; (d) 2 providing information periodically to Customers showing their positions in the Class PP Shares; (e) arranging for bank wires; (f) providing sub-accounting with respect to Class PP Shares beneficially owned by Customers or the information to the Fund necessary for sub-accounting; (g) forwarding shareholder communications from the Fund (for example, proxies, shareholder reports, annual and semi-annual financial statements and dividend, distribution and tax notices related to the Class PP Shares) to Customers, if required by law; and (h) providing other similar services to the extent permitted under applicable statutes, rules and regulations. 3. This Plan shall not take effect until it has been approved by a vote of at least a majority (as defined in the Act) of the outstanding Class PP Shares. 4. In addition to the approval required by paragraph 3 above, this Plan shall not take effect until it has been approved, together with any related agreements, by votes of a majority of both (a) the Board of Directors of the Fund and (b) those directors of the Fund who are not "interested persons" of the Fund (as defined in the Act) and have no direct or indirect financial interest in the operation of this Plan or any agreements related to it (the "Rule 12b-1 Directors"), cast in person at a meeting (or meetings) called for the purpose of voting on this Plan and such related agreements. 5. This Plan shall continue in effect until August 16, 1995. Thereafter, this Plan shall continue in effect for so long as such continuance is specifically approved at least annually in the manner provided for approval of this Plan in paragraph 4. 6. The Distributor shall provide to the Board of Directors of the Fund and the Board of Directors shall review, at least quarterly, a written report of the amounts expended pursuant to this Plan and the purposes for which such expenditures were made, including commissions, advertising, printing, interest, carrying charges and allocated overhead expenses. 7. This Plan may be terminated at any time by vote of a majority of the Rule 12b-1 Directors, or by a vote of a majority of the outstanding Class PP Shares. 8. This Plan may not be amended to increase materially the amount of compensation provided for in paragraph 1 hereof unless such amendment is approved in the manner provided for initial approval in paragraph 3 hereof, and no material amendment to the Plan of any kind, including an amendment which would increase materially the amount of compensation, shall be made unless approved in the manner provided for approval and annual renewal in paragraph 4 hereof. 3 9. While this Plan is in effect, the selection and nomination of Directors who are not interested persons (as defined in the Act) of the Fund shall be committed to the discretion of the then current Directors who are not interested persons (as defined in the Act) of the Fund. 10. The Fund shall preserve copies of this Plan and any related agreements and all reports made pursuant to paragraph 6 hereof for a period of not less than six years from the date of this Plan, the agreements or such reports, as the case may be, the first two years in an easily accessible place. Dated: _____________________, 1996 -----END PRIVACY-ENHANCED MESSAGE-----