-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, e+8qkcFfd6sC2ZmMzuobX2yQc2D+KHq4PVni8rSk9mos/pVhRrolkHI5ttJo7pWr e8BDE97+i+Us95a25cLOLA== 0000912057-95-000813.txt : 19950515 0000912057-95-000813.hdr.sgml : 19950515 ACCESSION NUMBER: 0000912057-95-000813 CONFORMED SUBMISSION TYPE: 497 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19950216 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: 497 SEC ACT: 1933 Act SEC FILE NUMBER: 033-20827 FILM NUMBER: 95512048 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 497 1 FORM 497 THE BEA FAMILY OF MUTUAL FUNDS SUPPLEMENT DATED FEBRUARY 16, 1995 TO PROSPECTUS DATED DECEMBER 28, 1994 The following paragraphs replace the fourth and fifth full paragraphs on page 27. The day-to-day portfolio management of BEA International Equity and BEA Emerging Markets Equity Portfolios is the responsibility of the BEA International Equities Management Team. The Team consists of the following investment professionals: Emilio Bassini (Managing Director), Piers Playfair (Senior Vice President), and Steven D. Bleiberg (Vice President. Mr. Bassini has been engaged as an investment professional with BEA for more than five years. Mr. Bleiberg rejoined BEA in 1991, he spent two years as a portfolio manager at Matrix Capital Management, prior to Matrix, Mr. Bleiberg spent five years at BEA in the equity research department. Mr. Playfair joined BEA in 1990, prior to joining BEA he was a manager in the corporate finance division of Samuel Montagu, London and a Director of Equity Capital Markets Group at Salomon Brothers. The day-to-day portfolio management of the BEA U.S. Core Equity Portfolio and the equity portion of the BEA Balanced Portfolio is the responsibility of the BEA Domestic Equity Management Team. The Team consists of the following investment professionals: William W. Priest, Jr. (Chief Executive Officer and Managing Director of BEA), John B. Hurford (Vice Chairman of the Executive Committee and Managing Director), Albert L. Zesiger (Managing Director), and Todd M. Rice (Vice President). Messrs. Priest, Hurford, and Zesiger have, on an individual basis, been engaged as investment professionals with BEA for more than five years. Mr. Rice joined BEA in 1990; previously, he was employed as an investment professional at Salomon Brothers. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- THE BEA FAMILY OF MUTUAL FUNDS BEA INTERNATIONAL EQUITY PORTFOLIO BEA EMERGING MARKETS EQUITY PORTFOLIO BEA U.S. CORE EQUITY PORTFOLIO BEA BALANCED PORTFOLIO BEA U.S. CORE FIXED INCOME PORTFOLIO BEA GLOBAL FIXED INCOME PORTFOLIO BEA STRATEGIC FIXED INCOME PORTFOLIO BEA MUNICIPAL BOND FUND PORTFOLIO BEA SHORT DURATION PORTFOLIO --------------------- PROSPECTUS --------------------- DECEMBER 28, 1994 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TABLE OF CONTENTS
PAGE ----- Fee Table.................................................................................................. 2 Financial Highlights....................................................................................... 4 The Fund................................................................................................... 8 Investment Objectives and Policies......................................................................... 8 Investment Limitations..................................................................................... 23 Risk Factors............................................................................................... 23 Management................................................................................................. 26 Expenses................................................................................................... 29 How to Purchase Shares..................................................................................... 30 How to Redeem Shares....................................................................................... 31 Net Asset Value............................................................................................ 32 Dividends and Distributions................................................................................ 33 Taxes...................................................................................................... 33 Description of Shares...................................................................................... 35 Other Information.......................................................................................... 37
- -------------------------------------------------------------------------------- The BEA Family consists of nine classes of common stock of The RBB Fund, Inc. (the "Fund"), an open-end management investment company. Shares (collectively, the "BEA Shares" or "Shares") of such classes (the "BEA Classes" or "Classes") are offered by this Prospectus and represent interests in one of nine 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 U.S. CORE EQUITY PORTFOLIO -- to provide long term appreciation of capital. The Portfolio will invest primarily in U.S. equity securities. BEA BALANCED PORTFOLIO -- to maximize total return consistent with preservation of capital through both income and capital appreciation. BEA U.S. CORE FIXED INCOME PORTFOLIO -- to provide high total return. The Portfolio will invest primarily in domestic fixed-income securities consistent with comparable broad market fixed income indices, such as the Lehman Brothers Aggregate Bond Index. BEA STRATEGIC FIXED INCOME PORTFOLIO -- to provide a high total return. The Portfolio will invest primarily in fixed income securities issued by corporations, governments and agencies, both domestic and foreign. The Portfolio will invest without regard to maturity or credit quality limitations. BEA GLOBAL FIXED INCOME PORTFOLIO -- to provide high total return. The Portfolio will invest primarily in both foreign and domestic fixed income securities. BEA MUNICIPAL BOND FUND PORTFOLIO -- to provide high total return. The Portfolio will invest primarily in municipal bonds issued by state and local authorities. BEA SHORT DURATION PORTFOLIO -- to provide investors with as high a level of current income as is consistent with the preservation of capital. There can be, of course, no assurance that a Portfolio's investment objective will be achieved. Investments in the Portfolios involve certain risks. See "Risk Factors." THE BEA INTERNATIONAL EQUITY, BEA EMERGING MARKETS EQUITY, BEA STRATEGIC FIXED INCOME, BEA U.S. CORE FIXED INCOME, BEA GLOBAL FIXED INCOME AND BEA MUNICIPAL BOND FUND PORTFOLIOS 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 THESE PORTFOLIOS. SEE "RISK FACTORS." THE PORTFOLIOS MAY ENGAGE IN SHORT-TERM TRADING AND MAY INVEST IN PUT AND CALL OPTIONS. SUCH ACTIVITY CONSTITUTES SPECULATIVE ACTIVITY AND INVOLVES GREATER RISKS OR COST TO THE PORTFOLIOS. THE PORTFOLIOS MAY INVEST UP TO 10% OF NET ASSETS IN ILLIQUID SECURITIES. SUCH INVESTMENTS CONSTITUTE SPECULATIVE ACTIVITY AND INVOLVE GREATER RISKS OR COSTS TO THE PORTFOLIOS. 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, 1994, acted as adviser for approximately $22.2 billion of assets. Generally, the minimum initial investment in a Portfolio is $1,000,000 and the minimum subsequent investment is $100,000. This Prospectus contains information that a prospective investor needs to know before investing. Please keep it for future reference. A Statement of Additional Information, dated December 28, 1994, 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) 888-9723. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. PROSPECTUS DECEMBER 28, 1994 - -------------------------------------------------------------------------------- FEE TABLE SHAREHOLDER TRANSACTION EXPENSES
BEA BEA BEA EMERGING STRATEGIC INTERNATIONAL MARKETS FIXED EQUITY EQUITY INCOME PORTFOLIO PORTFOLIO PORTFOLIO ------------- -------- --------- Redemption Fees (Payable to the Fund) (as a percentage of amount redeemed)................... 1.00% 1.50% .25%
ANNUAL PORTFOLIO OPERATING EXPENSES AFTER EXPENSE REIMBURSEMENTS AND WAIVERS*
BEA BEA BEA EMERGING U.S. CORE INTERNATIONAL MARKETS BEA U.S. BEA FIXED EQUITY EQUITY CORE EQUITY BALANCED INCOME PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO ------------- -------- ----------- ------------ --------- Management fees (after waivers)**................................ .78% .64% .68% .50% .05% Other Expenses (after reimbursements)........................... .47% .86% .32% .40% .45% --- --- --- --- --- Total Portfolio Operating Expenses (after waivers and reimbursements).................................. 1.25% 1.50% 1.00% .90% .50% --- --- --- --- --- --- --- --- --- ---
BEA BEA STRATEGIC BEA BEA GLOBAL FIXED FIXED MUNICIPAL SHORT INCOME INCOME BOND FUND DURATION PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO ------------- -------- ----------- --------- Management fees (after waivers)**................................ -- .63% .47% .15% Other Expenses (after reimbursements)........................... .75% .37% .53% .40% --- --- --- --- Total Portfolio Operating Expenses (after waivers and reimbursements).................................. .75% 1.00% 1.00% .55% --- --- --- --- --- --- --- --- - --------- * The operating expenses for the BEA International Equity, BEA Emerging Markets Equity, and BEA Strategic Fixed Income Portfolios are based on actual expenses for the year ended August 31, 1994. The operating expenses for the BEA U.S. Core Fixed Income, BEA Global Fixed Income, and BEA Municipal Bond Fund Portfolios are based on actual expenses for the period between the commencement dates of April 1, June 28 and June 20, 1994, respectively, and August 31, 1994. The anticipated operating expenses for the other Portfolios which were not then in existence represent estimates of costs and fees for the current fiscal year. ** Management fees are each based on average daily net assets and are calculated daily and paid monthly.
2 - -------------------------------------------------------------------------------- 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.................................... $23* $51* $ 81* $166* BEA Emerging Markets Equity Portfolio................................. $31** $64** $100** $200** BEA U.S. Core Equity Portfolio........................................ $10 $32 **** **** BEA Balanced Portfolio . $ 9 $29 **** **** BEA U.S. Core Fixed Income Portfolio.................................. $ 5 $16 **** **** BEA Global Fixed Income Portfolio..................................... $ 8 $24 **** **** BEA Strategic Fixed Income Portfolio.................................. $13*** $35*** $ 58*** $126*** BEA Municipal Bond Fund Portfolio..................................... $10 $32 **** **** BEA Short Duration Portfolio.......................................... $ 6 $18 **** **** - ------------ * Reflects a 1.00% redemption fee ** Reflects a 1.50% redemption fee *** Reflects a .25% redemption fee **** N/A
An investor would pay the following expenses on the same investment, assuming no redemption:
ONE THREE FIVE TEN YEAR YEARS YEARS YEARS ---- ----- ----- ----- BEA International Equity Portfolio.......................... $13 $40 $69 $151 BEA Emerging Markets Equity Portfolio....................... $15 $47 $82 $179 BEA Strategic Fixed Income Portfolio........................ $10 $32 $55 $122
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. (For more complete descriptions of the various costs and expenses, see "Management" below.) The expense figures are based upon fees and costs of the BEA International Equity, BEA Emerging Markets Equity, BEA Strategic Fixed Income, BEA U.S. Core Fixed Income, BEA Global Fixed Income and BEA Municipal Bond Fund Portfolios as of August 31, 1994. For Portfolios not then in operation, the expense figures, including "Other Expenses," represent estimated costs and fees to be charged in the current fiscal year, taking into account anticipated fee waivers and expense reimbursements for the current fiscal year. Thus, actual expenses may be greater or less than such costs and fees. The Fee Table reflects waiver of Management and Administration Fees equal to .05%, .51%, .07%, .49%, 1.17%, .13%, .34%, .24% and .05% for the BEA International Equity, BEA Emerging Markets Equity, BEA U.S. Core Equity, BEA U.S. Core Fixed Income, BEA Global Fixed Income, BEA Strategic Fixed Income, BEA Municipal Bond Fund, BEA Balanced and BEA Short Duration Portfolios respectively. However, there can be no assurance that any future waivers of Management and Administration Fees (if any) will not vary from the figures reflected in the Fee Table. To the extent any service providers assume additional expenses of any Portfolio, such assumption of additional expenses will have the effect of lowering a Portfolio's overall expense ratio and increasing its return to investors. Absent anticipated fee waivers or reimbursements, estimated expenses for the current fiscal year are as follows: ANNUAL PORTFOLIO OPERATING EXPENSES BEFORE EXPENSE REIMBURSEMENTS AND WAIVERS
BEA BEA BEA U.S. Inter- Emerging BEA U.S. Core national Markets Core BEA Fixed Equity Equity Equity Balanced Income Portfolio Portfolio Portfolio Portfolio Portfolio --------- -------- --------- -------- --------- Management fees............................................. .80% 1.00% .75% .60% .375% Other Expenses.............................................. .50% 1.01% .32% .54% .615% --- --- --- --- --- Total Portfolio Operating Expenses.......................... 1.30% 2.01% 1.07% 1.14% .99% --- --- --- --- --- --- --- --- --- ---
BEA BEA BEA Global Strategic Municipal BEA Fixed Fixed Bond Short Income Income Fund Duration Portfolio Portfolio Portfolio Portfolio --------- --------- --------- -------- Management fees............................................. .50% .70% .70% .15% Other Expenses.............................................. 1.42% .43% .64% .45% --- --- --- --- Total Portfolio Operating Expenses.......................... 1.92% 1.13% 1.34% .60% --- --- --- --- --- --- --- ---
The Example in the Fee Table assumes that all dividends and distributions are reinvested and that the amounts listed under "Annual Portfolio Operating Expenses After Expense Reimbursements and Waivers" 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. 3 - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS The table below sets forth certain information concerning the investment results of the BEA Classes representing interests in the BEA International Equity, BEA Emerging Markets Equity, BEA Strategic Fixed Income, BEA U.S. Core Fixed Income, BEA Global Fixed Income and BEA Municipal Bond Fund Portfolios for each of the periods indicated. The financial data included in this table for each of the periods ended August 31, 1994 and August 31, 1993 are a part of the Fund's Financial Statements for each of the above Portfolios which have been audited by Coopers & Lybrand L.L.P., the Fund's independent accountants, whose report thereon appears in the Statement of Additional Information along with the financial statements. The financial data included in this table should be read in conjunction with the financial statements and related notes included in the Statement of Additional Information. No financial data for the period ended August 31, 1994 is included for the BEA Classes relating to the BEA U.S. Core Equity, BEA Balanced and BEA Short Duration Portfolios, as such classes had not commenced a public offering of their securities as of that date. 4 - -------------------------------------------------------------------------------- THE BEA FAMILY THE RBB FUND, INC. FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
BEA INTERNATIONAL BEA EMERGING MARKETS EQUITY PORTFOLIO EQUITY PORTFOLIO ------------------------------------- -------------------------------------- For the Year For the Period For the Year For the Period Ended October 1, 1992* to Ended February 1, 1993* to August 31, 1994 August 31, 1993 August 31, 1994 August 31, 1993 --------------- ------------------- --------------- -------------------- Net asset value, beginning of period......... $ 18.73 $ 15.00 $ 18.38 $ 15.00 --------------- ------------------- --------------- -------------------- Income from investment operations Net investment income (loss)............. .05 .04 (.03) .02 Net gains on securities (both realized and unrealized).......... 2.60 3.69 6.64 3.36 --------------- ------------------- --------------- -------------------- Total from investment operations......... 2.65 3.73 6.61 3.38 --------------- ------------------- --------------- -------------------- Less Distributions Dividends from net investment income..... (.05) -- (.09) -- Distributions from capital gains......... (.60) -- (.32) -- --------------- ------------------- --------------- -------------------- Total distributions...................... (.65) -- (.41) -- --------------- ------------------- --------------- -------------------- Net asset value, end of period........... $ 20.73 $ 18.73 $ 24.58 $ 18.38 --------------- ------------------- --------------- -------------------- --------------- ------------------- --------------- -------------------- Total Return................................. 14.23%(d) 24.87%(c)(d) 35.99%(d) 22.53%(c)(d) Ratio/Supplemental Data Net assets, end of period.................. $ 767,189,791 $268,403,524 $ 140,675,379 $21,988,062 Ratio of expenses to average net assets.... 1.25%(a) 1.25%(a)(b) 1.50%(a) 1.50%(a)(b) Ratio of net investment income (loss) to average net assets........................ .33% .41%(b) (.02)% .28%(b) Portfolio turnover rate.................... 104% 106%(c) 54% 38%(c) - --------- (a) Without the waiver of advisory fees and administration fees, the ratios of expenses to average net assets for the BEA International Equity Portfolio would have been 1.30% for the period ended August 31, 1994 and 1.46% annualized for the period ended August 31, 1993. Without the waiver of advisory fees and administration fees and without the reimbursement of operating expenses, the ratios of expenses to average net assets for the BEA Emerging Markets Equity Portfolio would have been 2.01% for the year ended August 31, 1994 and 3.23% annualized for the period ended August 31, 1993. (b) Annualized. (c) Not annualized. (d) Redemption fees not reflected in total return. * Commencement of operations.
5 - -------------------------------------------------------------------------------- THE BEA FAMILY THE RBB FUND, INC. FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
BEA U.S. CORE BEA GLOBAL FIXED INCOME FIXED INCOME PORTFOLIO PORTFOLIO ----------------- ----------------- For the Period For the Period April 1, 1994* to June 28, 1994* to August 31, 1994 August 31, 1994 ----------------- ----------------- Net asset value, beginning of period............................................ $ 15.00 $ 15.00 ----------------- ----------------- Income from investment operations Net investment income....................................................... .42 .15 Net loss on securities (both realized and unrealized)....................... (.41) (.15) ----------------- ----------------- Total from investment operations............................................ .01 -- ----------------- ----------------- Less Distributions Dividends from net investment income........................................ (.24) -- Distributions from capital gains............................................ -- -- ----------------- ----------------- Total distributions......................................................... (.24) -- ----------------- ----------------- Net asset value, end of period.............................................. $ 14.77 $ 15.00 ----------------- ----------------- ----------------- ----------------- Total Return.................................................................... .17%(c) .00%(c) Ratio/Supplemental Data Net assets, end of period..................................................... $30,015,818 $6,300,360 Ratio of expenses to average net assets....................................... .50%(a)(b) .75%(a)(b) Ratio of net investment income to average net assets.......................... 6.04%(b) 5.64%(b) Portfolio turnover rate....................................................... 186%(c) 0%(c) - --------- (a) Without the waiver of advisory fees and administration fees, the ratio of expenses to average net assets for the BEA U.S. Core Fixed Income Portfolio would have been .99% annualized for the period ended August 31, 1994. Without the waiver of advisory fees and administration fees and without the reimbursement of operating expenses, the ratio of expenses to average net assets for the BEA Global Fixed Income Portfolio would have been 1.92% annualized for the period ended August 31, 1994. (b) Annualized. (c) Not annualized. * Commencement of operations.
6 - -------------------------------------------------------------------------------- THE BEA FAMILY THE RBB FUND, INC. FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
BEA MUNICIPAL BEA STRATEGIC FIXED BOND FUND INCOME PORTFOLIO PORTFOLIO ------------------------------------ ----------------- For the Year For the Period For the Period Ended March 31, 1993* to June 20, 1994* to August 31, 1994 August 31, 1993 August 31, 1994 --------------- ------------------ ----------------- Net asset value, beginning of period........................ $ 16.94 $ 15.00 $ 15.00 --------------- ------------------ ----------------- Income from investment operations Net investment income................................... 1.20 .52 .09 Net gains (loss) on securities (both realized and unrealized)......................... (.77) 1.42 (.03) --------------- ------------------ ----------------- Total from investment operations...................... .43 1.94 .06 --------------- ------------------ ----------------- Less Distributions Dividends from net investment income.................... (1.43) -- -- Distributions from capital gains........................ -- -- -- --------------- ------------------ ----------------- Total distributions..................................... (1.43) -- -- --------------- ------------------ ----------------- Net asset value, end of period.......................... $ 15.94 $ 16.94 $ 15.06 --------------- ------------------ ----------------- --------------- ------------------ ----------------- Total Return................................................ 2.24%(d) 12.93%(c)(d) .40%(c) Ratio/Supplemental Data Net assets, end of period................................. $ 143,517,472 $ 98,356,591 $42,309,936 Ratio of expenses to average net assets................... 1.00%(a) 1.00%(a)(b) 1.00%(a)(b) Ratio of net investment income to average net assets...... 7.73% 7.56%(b) 3.27%(b) Portfolio turnover rate................................... 121% 72%(c) 9%(c) - --------- (a) Without the waiver of advisory fees and administration fees, the ratios of expenses to average net assets for the BEA Strategic Fixed Income Portfolio would have been 1.13% for the year ended August 31, 1994 and 1.17% annualized for the period ended August 31, 1993. Without the waiver of advisory fees and administration fees, the ratio of expenses to average net assets for the BEA Municipal Bond Fund Portfolio would have been 1.34% annualized for the period ended August 31, 1994. (b) Annualized. (c) Not annualized. (d) Redemption fees not reflected in total return. * Commencement of operations.
7 - -------------------------------------------------------------------------------- THE FUND The Fund is an open-end management investment company that currently operates or proposes to operate nineteen separate investment portfolios. Each of the nine classes of shares offered by this Prospectus represents interests in one of the nine 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 institutional, fiduciary, advisory, agency, custodial or other similar capacity, which may include the investment of funds held or managed by broker-dealers, investment counselors, insurance companies, employee benefit plans, colleges, churches, charities, corporations and other institutions. Shares are currently available for purchase by investors who have entered into an investment management agreement with BEA. In addition, Shares may be purchased directly by certain individuals described in "How to Purchase Shares." Institutional investors such as those listed above may purchase Shares for discretionary or 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. 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. The Portfolio may invest up to 20% of its total assets in debt securities issued by U.S. or foreign banks, corporations or the following: other business organizations, or by U.S. or foreign governments or governmental entities (including supranational organizations such as the International Bank for Reconstruction and Development (more commonly referred to as the "World Bank"), the Asian Development Bank, the InterAmerican Development Bank and the European Coal and Steel Community), mortgage-backed securities, asset-backed securities, zero-coupon securities, when-issued securities, repurchase and reverse repurchase agreements and dollar rolls and may lend portfolio securities to broker-dealers or institutional investors. The Portfolio may choose to take advantage of opportunities for capital appreciation from debt securities, by reason of anticipated changes in such factors as interest rates, currency relationships, or credit standing of individual issuers. 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." 8 - -------------------------------------------------------------------------------- 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. In accordance with the above-mentioned investment policies, the Portfolio may also invest in U.S. and foreign government securities, convertible securities, mortgage-backed securities, asset-backed securities, zero-coupon securities, when-issued securities, repurchase and reverse repurchase agreements and dollar rolls and may lend portfolio securities to broker-dealers or institutional investors. See "Investment Objectives and Policies -- Common Investment Policies" and the Statement of Additional Information. 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, Spain, Norway, 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 (i) debt securities denominated in the currency of an Emerging Market or issued or guaranteed by an Emerging Market company or the government of an Emerging Market, (ii) equity or debt securities of corporate or governmental issuers located in developed countries, and (iii) short-term and medium-term debt securities of the type described below under "Common Investment Policies -- Temporary Investments." Debt securities in (i) or (ii) above may include, without limitation, lower-rated debt securities (commonly known as "junk bonds"). See "Risk Factors - -- Lower-Rated Securities." In accordance with the above-mentioned investment policies, the Portfolio may also invest in convertible securities, mortgage-backed securities, asset-backed securities, zero-coupon securities, when-issued securities, repurchase and reverse repurchase agreements and dollar rolls and may lend portfolio securities to broker-dealers or institutional investors, as more fully described in "Investment Objectives and Policies -- Common Investment Policies" and the Statement of Additional Information. BEA U.S. CORE EQUITY PORTFOLIO The BEA U.S. Core Equity Portfolio will seek to provide long-term appreciation of capital. The Portfolio will invest primarily in U.S. 9 - -------------------------------------------------------------------------------- equity securities. Under normal market conditions, the BEA U.S. Core Equity Portfolio will invest 65% of the value of its total assets in equity securities. Equity securities include common stocks, preferred stocks, and securities which are convertible into common stock and readily marketable securities, such as rights and warrants, which derive their value from common stock. The BEA U.S. Core Equity Portfolio may also purchase without limitation dollar-denominated American Depository Receipts ("ADRs") and similar securities. For defensive purposes, the BEA U.S. Core Equity Portfolio may invest in fixed income securities and in money market instruments. The BEA U.S. Core Equity Portfolio normally will not emphasize dividend or interest income in choosing securities, unless BEA believes the income will contribute to the securities' appreciation potential. BEA BALANCED PORTFOLIO The BEA Balanced Portfolio's investment objective is to maximize total return consistent with preservation of capital through both income and capital appreciation. The Portfolio will invest in domestic equity and debt securities and cash equivalent instruments. The proportion of the Portfolio's assets to be invested in each type of security will vary from time to time in accordance with BEA's assessment of economic conditions and investment opportunities. The asset allocation strategy is based on the premise that, from time to time, certain asset classes are more attractive long-term investments than others. Timely shifts among equity securities, debt securities and cash equivalent instruments, as determined by their relative over-valuation or under-valuation, should produce superior investment returns over the long term. In general, the Portfolio will not attempt to predict short-term market movements or interest rate changes, focusing instead upon a longer-term outlook. BEA anticipates that under normal market conditions between 35% and 65% of the Portfolio's total assets will be invested in equity securities, and between 35% and 65% will be invested in debt securities. The Portfolio will be managed by teams of BEA managers, each dedicated to managing a portion of the Portfolio's assets. The BEA Domestic Equity Management Team will manage the Equity portion of the Portfolio, which will primarily invest in common stocks, preferred stocks, securities which are convertible into common stocks, and rights and warrants which derive their value from common stocks. The BEA Fixed Income Management Team will manage the Fixed-Income portion of the Portfolio, which will invest primarily in domestic fixed-income securities consistent with comparable broad market fixed-income indices, such as the Lehman Brothers Aggregate Bond Index. Debt securities include, without limitation, bonds, debentures, notes, equipment leases and trust certificates, mortgage-related securities, and obligations issued or guaranteed by the U.S. Government or its agencies or instrumentalities, or by states or municipalities. Under normal market conditions, the Portfolio will seek to maintain an average weighted quality of its debt and convertible securities comparable to the AA rating of S&P. Subject to this condition, the Portfolio may invest in lower-rated debt securities (commonly known as "junk bonds"). See "Risk Factors - -- Lower-Rated Securities." For more information on the Management Teams, see "Management -- Investment Adviser." Under normal market conditions, at least 35% of the Portfolio's total assets will be invested in fixed-income securities and at least 35% will be invested in equity securities. The actual percentage of assets invested in equity and fixed-income securities will vary from time to time in accordance with BEA's analysis of economic conditions and the underlying values of securities. BEA U.S. CORE FIXED INCOME PORTFOLIO The BEA U.S. Core Fixed Income Portfolio will seek to provide high total return. The Portfolio will invest at least 65% of the value of its total assets in domestic fixed income securities consistent with comparable broad market fixed-income indices, such as the Lehman Brothers Aggregate Bond Index. Debt securities may include, without limitation, bonds, debentures, notes, equipment lease and trust certificates, mortgage-related securities, and obligations issued or guaranteed by the U.S. Government or its agencies or instrumentalities. The BEA U.S. Core Fixed Income Portfolio may invest up to 10 - -------------------------------------------------------------------------------- 35% of the value of its total assets in debt securities of foreign issuers. With respect to 35% of the Portfolio's total assets, the Portfolio may also invest in other securities including but not limited to equity and equity-related securities. Under normal market conditions, the Portfolio will seek to maintain an average weighted quality comparable to the AA rating of Standard & Poor's Corporation ("S&P"). Subject to this condition, however, the Portfolio may invest in lower-rated debt securities (commonly known as "junk bonds"). See "Risk Factors -- Lower-Rated Securities." The Adviser estimates that the average weighted maturity of the Portfolio will range between 5 and 15 years. Depending upon prevailing market conditions, the BEA U.S. Core Fixed Income Portfolio may purchase debt securities at a discount from face value, which produces a yield greater than the coupon rate. Conversely, if debt securities are purchased at a premium over face value, the yield will be lower than the coupon rate. An increase in interest rates will generally reduce the value of the fixed income investments in the Portfolio and a decline in interest rates will generally increase the value of those investments. BEA GLOBAL FIXED INCOME PORTFOLIO The BEA Global Fixed Income Portfolio will seek to provide high total return. The Portfolio will invest 65% of the value of its total assets in fixed income securities issued by foreign and domestic corporations, governments and agencies. Under normal market conditions, the Portfolio will seek to maintain an average weighted quality comparable to the four highest bond ratings of S&P (i.e., BBB or better, commonly referred to as "investment grade"). The Portfolio may invest in fixed income securities which may have equity characteristics, such as convertible bonds. The BEA Global Fixed Income Portfolio will not limit its investments in securities rated below investment grade by recognized rating agencies or in comparable unrated securities (such lower-rated securities are commonly referred to as "junk bonds"). 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. There is no limit on investments in any region, country or currency, although the BEA Global Fixed Income Portfolio will normally invest in at least three different countries. In addition to fixed income securities issued by foreign and domestic corporations, the BEA Global Fixed Income Portfolio may also invest in foreign government securities ("sovereign bonds"), U.S. government securities including government agencies' securities, debt obligations of supranational entities, Brady Bonds, loan participations and assignments, convertible securities, mortgage-backed securities, asset-backed securities, zero-coupon securities, when-issued securities, repurchase and reverse repurchase agreements and dollar rolls and the BEA Global Fixed Income Portfolio may lend portfolio securities to broker-dealers or institutional investors. For defensive purposes the Portfolio may invest up to 100% of its assets in U.S. government securities including government agencies' securities and Temporary Investments (as described below). See "Common Investment Policies -- All Portfolios and Common Investment Objectives and Policies" in Statement of Additional Information for a discussion of these and other investment policies and strategies. BEA STRATEGIC FIXED INCOME PORTFOLIO BEA Strategic Fixed Income Portfolio seeks to provide high total return. The Portfolio will invest primarily in fixed income securities 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 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 securities rated below investment grade by recognized rating agencies or in comparable unrated securities. Such securities are commonly referred to as "junk bonds." 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. Thus, if interest rates have increased from the 11 - -------------------------------------------------------------------------------- time a debt or other fixed income security was purchased, such security, if sold, might be sold at a price less than its cost. Conversely, if interest rates have declined from the time such a security was purchased, such security, if sold, might be sold at a price greater than its cost. Also, the value of such securities may be affected by changes in real or perceived creditworthiness of the issuers. Thus, if creditworthiness is enhanced, the price may rise. Conversely, if creditworthiness declines, the price may decline. 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. In addition to fixed income securities issued by U.S. and foreign corporations, the Portfolio may also invest in U.S. government securities, foreign government securities ("sovereign bonds"), debt obligations of supranational entities, Brady Bonds, loan participations and assignments, convertible securities, mortgage-backed securities, asset-backed securities, zero-coupon securities, when-issued securities, repurchase and reverse repurchase agreements and dollar rolls and the Portfolio may lend portfolio securities to broker-dealers or institutional investors. See "Common Investment Policies -- All Portfolios" and "Common Investment Objectives and Policies" in the Statement of Additional Information for a discussion of these and other investment policies and strategies. BEA MUNICIPAL BOND FUND PORTFOLIO The BEA Municipal Bond Fund Portfolio seeks to provide high total return. The Portfolio will invest at least 65% of the value of its total assets in fixed income securities issued by state and local governments ("Municipal Obligations"), although the BEA Municipal Bond Fund Portfolio may invest its assets without limitation in securities of below investment-grade quality. The BEA Municipal Bond Fund Portfolio may invest up to 40% of its assets in municipal obligations the interest on which constitutes an item of tax preference for purposes of the Federal alternative minimum tax ("Alterative Minimum Tax Securities"). The two principal classifications of Municipal Obligations are "general obligation" securities and "revenue" securities. General obligation securities are secured by the issuer's pledge of its full faith, credit and taxing power for the payment of principal and interest. Revenue securities are payable only from the revenues derived from a particular facility or class of facilities or, in some cases, from the proceeds of a special excise tax or other specific revenue source such as the user of the facility being financed. Revenue securities include private activity bonds which are not payable from the unrestricted revenues of the issuer. Consequently, the credit quality of private activity bonds is usually directly related to the credit standing of the corporate user of the facility involved. Municipal Obligations may also include "moral obligation" bonds, which are normally issued by special purpose public authorities. If the issuer of moral obligation bonds is unable to meet its debt service obligations from current revenues, it may draw on a reserve fund, the restoration of which is a moral commitment but not a legal obligation of the state or municipality which created the issuer. Purchasable Municipal Obligations include debt obligations issued by governmental entities to obtain funds for various public purposes, including the construction of a wide range of public facilities, the refunding of outstanding obligations, the payment of general operating expenses and the extension of loans to public institutions and facilities. Private activity bonds issued by or on behalf of public authorities to finance various privately operated facilities are considered municipal obligations. Also included within the general category of Municipal Obligations are participation certificates in a lease, an installment purchase contract, or a conditional sales contract ("lease obligations") entered into by a state or political subdivision to finance the acquisition or construction of equipment, land, or facilities. Although lease obligations do not constitute general obligations of the issuer for which the lessee's unlimited taxing power is pledged, certain lease obligations are backed by the lessee's covenant to appropriate money to make the lease obligation payments. However, under certain lease obligations, the lessee has no obligation to make these payments in future years unless money is appropriated on a yearly basis. Although "non-appropriation" lease obligations are secured by the leased property, disposition of 12 - -------------------------------------------------------------------------------- the property in the event of foreclosure might prove difficult. These securities represent a relatively new type of financing that is not yet as marketable as more conventional securities. Moreover, certain investments in lease obligations may be illiquid and subject to the investment limitations described below. BEA SHORT DURATION PORTFOLIO The Short Duration Portfolio is a non-diversified mutual fund that seeks to provide investors with as high a level of current income as is consistent with the preservation of capital. The Portfolio's investment objective cannot be changed without approval by the holders of a majority (as defined in the Investment Company Act of 1940) of the Portfolio's outstanding voting shares. The Adviser will seek to maintain a duration of approximately one year, but may vary the Portfolio's duration depending upon market conditions. Under normal circumstances, the dollar-weighted average life of the Portfolio's investment securities will be longer than six months and less than three years. The Portfolio's duration, under normal circumstances, will not exceed 1.5 years. Since the Portfolio ordinarily will invest in securities with longer maturities than those found in money market funds, its total return is expected to be higher and fluctuations in its net asset value are expected to be greater. Unlike money market funds, however, the Portfolio does not seek to maintain a stable net asset value and may not be able to return dollar-for-dollar the money invested. Moreover, there can be no assurance that the Portfolio's investment objective will be achieved. The Short Duration Portfolio will invest primarily in U.S. Dollar and foreign currency denominated debt securities and securities with debt-like characteristics (e.g., bearing interest or having a stated principal), such as bonds, debentures, notes, mortgage-related securities (including stripped mortgage-backed securities), asset-backed securities, municipal obligations and convertible debt obligations of domestic and foreign issuers throughout the world, including supranational entities. These securities also include money market instruments consisting of U.S. Government securities, certificates of deposit, time deposits, bankers' acceptances, short-term investment grade corporate bonds, participation interests and other short-term debt instruments, and repurchase agreements. The Portfolio also may purchase shares of other investment companies that invest in these securities to the extent permitted under the Investment Company Act of 1940. The Adviser will endeavor to hedge foreign currency denominated debt using various investment techniques in an effort to minimize fluctuations in the Portfolio's net asset value resulting from fluctuations in currency exchange rates relative to the U.S. dollar. The maturity of any single instrument held by the Portfolio is not limited. The duration of the Portfolio, however, under normal circumstances, will not exceed 1.5 years. The Adviser will seek to maintain a duration of approximately one year, but may vary the Portfolio's duration depending upon market conditions. As a measure of a fixed-income security's cash flow, duration is an alternative to the concept of "term to maturity" in assessing the price volatility associated with changes in interest rates. Generally, the longer the duration, the more volatility an investor should expect. For example, the market price of a bond with a duration of two years would be expected to decline 2% if interest rates rose 1%. Conversely, the market price of the same bond would be expected to increase 2% if interest rates fell 1%. Duration is a way of measuring a security's maturity in terms of the average time required to receive the present value of all interest and principal payments as opposed to its term to maturity. The maturity of a security measures only the time until final payment is due; it does not take account of the pattern of a security's cash flows over time, which would include how cash flow is affected by prepayments and by changes in interest rates. Incorporating a security's yield, coupon interest payments, final maturity and option features into one measure, duration is computed by determining the weighted average maturity of a bond's cash flows, where the present values of the cash flows serve as weights. In computing the duration of the Portfolio, the Adviser will estimate the duration of obligations that are subject to prepayment or redemption by the issuer, taking into account the influence of interest rates on prepayments and coupon flows. This method of computing duration is known as option-adjusted duration. Since the 13 - -------------------------------------------------------------------------------- Portfolio ordinarily will invest in securities with longer maturities than those found in money market funds, its total return is expected to be higher and fluctuations in its net asset value are expected to be greater. The average dollar-weighted credit rating of the securities held by the Portfolio will be at least A- by Moody's Investors Service, Inc. ("Moody's"), Standard & Poor's Corporation ("S&P"), Fitch Investors Service, Inc. ("Fitch") or Duff & Phelps, Inc. ("Duff"). To attempt to further limit risk, each security in which the Portfolio invests must be rated at least Baa by Moody's or BBB by S&P, Fitch or Duff or, if unrated, deemed to be of comparable quality by the Adviser. Debt securities in the lowest investment grade debt category (e.g., bonds rated BBB by Standard & Poor's Corporation or Baa by Moody's Investors Service, Inc.) may have speculative characteristics, and changes in economic conditions or other circumstances are more likely to lead to a weakened capacity to make principal and interest payments than is the case with higher grade debt securities. The average dollar-weighted portfolio credit rating will be measured on the basis of the dollar value of the securities purchased and their credit rating without reference to rating subcategories. Subject to the average dollar-weighted portfolio credit rating condition, the Fund may retain a debt security which was rated as investment grade at the time of purchase but whose rating is subsequently downgraded below investment grade. Such lower-rated debt securities are commonly referred to as "junk bonds." See "Risk Factors -- Lower-Rated Securities." The Short Duration Portfolio may engage in currency exchange transactions to attempt to protect against uncertainty in the level of future exchange rates. In addition, the Portfolio may utilize various other investment techniques and practices, such as options and futures transactions, buying and selling interest rate and currency swaps, caps, floors and collars, and short sales to further hedge against the overall risk to the Portfolio. The Portfolio also may engage in leveraging, lending portfolio securities, purchasing securities on a when-issued or forward commitment basis and purchasing illiquid securities. For a more detailed description of the investment policies of each Portfolio, see below "Common Investment Policies -- All Portfolios" and "Common Investment Policies" and also the Statement of Additional Information. COMMON INVESTMENT POLICIES -- ALL PORTFOLIOS 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 or 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 certain short-term (less than twelve months to maturity) and medium-term (not greater than five years to maturity) debt securities or hold cash. The short-term and medium-term debt securities in which a Portfolio may invest 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. BORROWING. A Portfolio may borrow up to 33 1/3 percent of its total assets without obtaining shareholder approval. The Adviser intends to borrow only for temporary or emergency purposes, or to engage in reverse repurchase agreements or dollar roll transactions. See Statement of Additional Information "Common Investment Policies -- All Portfolios -- Reverse Repurchase Agreements" and "-- Borrowing." ILLIQUID SECURITIES. Each Portfolio may invest in illiquid securities up to 10% of its net assets. 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 14 - -------------------------------------------------------------------------------- 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 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 deemed 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 a fair 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). See Statement of Additional Information "Common Investment Policies -- All Portfolios -- Illiquid Securities." SECURITIES OF UNSEASONED ISSUERS. Each Portfolio will not invest in securities of unseasoned issuers (including their predecessors) and including equity securities of 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 have been in operations for less than three years. REPURCHASE AGREEMENTS. Each Portfolio may agree to purchase debt securities from financial institutions subject to the seller's agreement to repurchase them at an agreed upon time and price ("Repurchase Agreements"). Repurchase Agreements are in substance loans. 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. CASH EQUIVALENTS. Each Portfolio may invest without limitation in short-term, interest-bearing instruments or deposits of United States and foreign issuers for temporary or defensive purposes to maintain liquidity or pending investment. 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. WHEN-ISSUED PURCHASERS AND FORWARD COMMITMENTS. Each Portfolio may purchase securities on a "when-issued" basis and may purchase or sell securities on a "forward commitment" basis. These transactions involve a commitment by a Portfolio to purchase or sell particular securities with payment and delivery taking place at a future date (perhaps one or two months later), and permit a Portfolio to lock-in a price or yield on a security it owns or intends to purchase, regardless of future changes in interest rates. When-issued and forward commitment transactions involve the risk, however, 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. A Portfolio's when-issued purchases and forward commitments are not expected to exceed 25% of the value of its total assets absent unusual market conditions. 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. REVERSE REPURCHASE AGREEMENTS. 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 risk that the market value of the securities sold by a Portfolio may decline below the price of the securities a Portfolio is obligated to repurchase. Each Portfolio may also enter into "dollar rolls," in which 15 - -------------------------------------------------------------------------------- it sells fixed income securities for delivery in the current month and simultaneously contracts to repurchase substantially similar (same type, coupon and maturity) securities on a specified future date. During the roll period, a portfolio would forego principal and interest paid on such securities. Reverse repurchase agreements and dollar rolls are considered to be borrowings by a Portfolio under the 1940 Act. SECURITIES LENDING. To increase income on its investments, the BEA Portfolios may lend their portfolio securities with an aggregate value of up to 30% of its total assets to broker/ dealers and other institutional investors pursuant to agreements requiring that the loans be continuously secured by collateral equal at all times in value to at least the market value of the securities loaned. 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 Adviser. 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. INVESTMENT COMPANIES. Each Portfolio may invest in securities issued by other investment companies within the limit prescribed by the 1940 Act. Each Portfolio currently intends to limit its investments so that, as determined immediately after a securities purchase is made, (i) not more than 5% of the value of its total assets will be invested in the securities of any one investment company; (ii) not more than 10% of the value of its total assets will be invested in the aggregate in securities of investment companies as a group; and (iii) not more than 3% of the outstanding voting stock of any one investment company will be owned by a Portfolio or by the Fund as a whole. 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. As a result of each Portfolio's investment policies, each Portfolio may engage in a substantial number of portfolio transactions. The BEA Short Duration Portfolio anticipates that its annual portfolio turnover rate should not exceed 500% under normal conditions, the BEA International Equity, BEA Emerging Markets Equity, and BEA Strategic Fixed Income Portfolios anticipate that their annual portfolio turnover rate should not exceed 150% under normal conditions, and the BEA U.S. Core Equity, BEA U.S. Core Fixed Income, BEA Global Fixed Income and BEA Municipal Bond Fund anticipate that their annual portfolio turnover rate should not exceed 100% under normal conditions. The BEA Balanced Portfolio anticipates that, under normal conditions, the annual portfolio turnover rate for the equity portion should not exceed 100%, and the annual portfolio turnover rate for the fixed income portion should not exceed 100%. However, it is impossible to predict portfolio turnover rates. 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 anticipated portfolio turnover rate for each 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." PORTFOLIO 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 16 - -------------------------------------------------------------------------------- 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. The Portfolios have the benefit of an exemptive order issued by the SEC under the Investment Company 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 has adopted a policy that the Portfolios will not purchase private placements (i.e. restricted securities other than Rule 144A securities). The Statement of Additional Information contains additional investment policies and strategies that are common to Portfolios. COMMON INVESTMENT POLICIES -- BEA INTERNATIONAL EQUITY, BEA EMERGING MARKETS EQUITY, BEA U.S. CORE EQUITY, BEA BALANCED, BEA U.S. CORE FIXED INCOME, BEA GLOBAL FIXED INCOME, BEA STRATEGIC FIXED INCOME, AND BEA SHORT DURATION PORTFOLIOS 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 International Equity, BEA Emerging Markets Equity, BEA U.S. Core Equity, BEA Balanced, BEA U.S. Core Fixed Income, BEA Global Fixed Income, BEA Strategic Fixed Income, and BEA Short Duration Portfolios may invest in these investment funds and registered investment companies subject to the provisions of the 1940 Act. If the BEA International Equity, BEA Emerging Markets Equity, BEA U.S. Core Equity, BEA Balanced, BEA U.S. Core Fixed Income, BEA Global Fixed Income, BEA Strategic Fixed Income and BEA Short Duration Portfolios invest in such investment companies, such Portfolios will each bear their proportionate share of the costs incurred by such companies, including investment advisory fees. 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 International Equity, BEA Emerging Markets Equity, BEA U.S. Core Equity, BEA Balanced, BEA U.S. Core Fixed Income, BEA Global Fixed Income, BEA Strategic Fixed Income, and BEA Short Duration Portfolios engages in currency hedging transactions, it will be subject to the risk of changes in relation to the U.S. dollar of the value of the foreign currencies in which its assets are denominated. The BEA International Equity, BEA Emerging Markets Equity, BEA U.S. Core Equity, BEA Balanced, BEA U.S. Core Fixed Income, BEA Global Fixed Income, BEA Strategic Fixed Income, and BEA Short Duration 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. 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 17 - -------------------------------------------------------------------------------- foreign currencies currently exists or that such market may be closed to investment by a Portfolio. OPTIONS AND FUTURES CONTRACTS. The BEA International Equity, BEA Emerging Markets Equity, BEA U.S. Core Equity, BEA Balanced, BEA U.S. Core Fixed Income, BEA Global Fixed Income, BEA Strategic Fixed Income, and BEA Short Duration 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 BEA International Equity, BEA Emerging Markets Equity, BEA U.S. Core Equity, BEA Balanced, BEA U.S. Core Fixed Income, BEA Global Fixed Income, BEA Strategic Fixed Income, and BEA Short Duration 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 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. However, the BEA International Equity, BEA Emerging Markets Equity, BEA U.S. Core Equity, BEA Balanced, BEA U.S. Core Fixed Income, BEA Global Fixed Income, BEA Strategic Fixed Income and BEA Short Duration Portfolios may not write put options or purchase or sell futures contracts or options on futures contracts to hedge more than its total assets unless immediately after any such transaction the aggregate amount of premiums paid for put options and the amount of margin deposits on its existing futures positions do not exceed 5% of its total assets. 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 BEA International Equity, BEA Emerging Markets Equity, BEA U.S. Core Equity, BEA Balanced, BEA U.S. Core Fixed Income, BEA Global Fixed Income, BEA Strategic Fixed Income, and BEA Short Duration Portfolios will engage in unlisted over-the-counter options only with broker/dealers deemed creditworthy by Adviser. Closing transactions in certain options are usually effected directly with the same broker/dealer that effected the original option transaction. The BEA International Equity, BEA Emerging Markets Equity, BEA U.S. Core Equity, BEA Balanced, BEA U.S. Core Fixed Income, BEA Global Fixed Income, BEA Strategic Fixed Income, and BEA Short Duration Portfolios bear the risk that the broker/ dealer will fail to meet its obligations. There is no assurance that each of these 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 BEA International Equity, BEA Emerging Markets Equity, BEA U.S. Core Equity, BEA Balanced, BEA U.S. Core Fixed Income, BEA Global Fixed Income, BEA Strategic Fixed Income, and BEA Short Duration 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 or index fluctuates, making the long and short positions in the futures contracts more or less valuable. 18 - -------------------------------------------------------------------------------- The risks related to the use of options and futures contracts include: (i) the correlation between movements in the markets 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 BEA International Equity, BEA Emerging Markets Equity, BEA U.S. Core Equity, BEA Balanced, BEA U.S. Core Fixed Income, BEA Global Fixed Income, BEA Strategic Fixed Income, and BEA Short Duration Portfolios is subject to the Adviser's ability to correctly predict movements in the direction of the market. For example, if such 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 future 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. For a further discussion see "Investment Policies" in the Statement of Additional Information. SUPPLEMENTAL INVESTMENT POLICIES -- BEA INTERNATIONAL EQUITY, BEA EMERGING MARKETS EQUITY, BEA BALANCED, BEA U.S. CORE FIXED INCOME, BEA GLOBAL FIXED INCOME PORTFOLIO, BEA STRATEGIC FIXED INCOME AND BEA SHORT DURATION PORTFOLIOS MORTGAGE-RELATED PASS-THROUGHS AND DERIVATIVES. The BEA International Equity, BEA Emerging Markets Equity, BEA Balanced, BEA U.S. Core Fixed Income, BEA Global Fixed Income, BEA Strategic Fixed Income, and BEA Short Duration Portfolios may invest in mortgage-related securities. Purchasable mortgage- related securities are represented by pools of mortgage loans assembled for sale to investors by various governmental agencies such as the Government National Mortgage Association and government-related organizations such as the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation, as well as by private issuers such as commercial investment banks, savings and loan institutions, mortgage bankers and private mortgage insurance companies. 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 these 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. For this and other reasons, a mortgage-related security's stated maturity may be shortened by a unscheduled prepayment on underlying mortgages and, therefore, it is not possible to predict accurately the security's return to these Portfolios. Mortgage-related securities provide regular payments consisting of interest and principal. No assurance can be given as to the return these Portfolios will receive when these amounts are reinvested. Mortgaged-related securities acquired by these Portfolios may include collateralized mortgage obligations ("CMOs") issued by FNMA, FHLMC or other U.S. Government agencies or instrumentalities, as well as by private issuers. These securities may be considered mortgage derivatives. CMOs provide an investor with a specified interest in the cash flow of a pool of underlying mortgages or other mortgage-related securities. 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 19 - -------------------------------------------------------------------------------- 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 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. ASSET-BACKED SECURITIES. The BEA International Equity, BEA Emerging Markets Equity, BEA Balanced, BEA U.S. Core Fixed Income, BEA Strategic Fixed Income, BEA Global Fixed Income, and BEA Short Duration Portfolios may purchase asset-backed securities, which represent a participation in, or are secured by and payable from, a stream of payments generated by particular assets, most often a pool of assets similar to one another. Assets generating such payments will consist of such instruments as motor vehicle installment purchase obligations, credit card receivables and home equity loans. These Portfolios may also invest in other types of asset-backed securities that may be available in the future. Payment of principal and interest may be guaranteed up to certain amounts and for a certain time period by a letter of credit issued by a financial institution unaffiliated with entities issuing the securities. 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 below. Asset-backed securities may involve certain risks that are not presented by mortgage-backed securities arising primarily from the nature of the underlying assets (i.e., credit card and automobile loan receivables as opposed to real estate mortgages). For example, credit card receivables are generally unsecured and may require the repossession of personal property upon the default of the debtor which may be difficult or impracticable in some cases. Asset-backed securities are considered an industry for industry concentration purposes. See "Investment Limitations." SUPPLEMENTAL INVESTMENT POLICIES -- BEA MUNICIPAL BOND FUND PORTFOLIO TAX-EXEMPT DERIVATIVES AND OTHER MUNICIPAL OBLIGATIONS. The BEA Municipal Bond Fund Portfolio may invest in tax-exempt derivative securities relating to Municipal Obligations, including tender option bonds, participations, beneficial interests in trusts and partnership interests. A typical tax-exempt derivative security involves the purchase of an interest in a pool of Municipal Obligations which interest includes a tender option, demand or other feature, allowing the Portfolio to tender the underlying Municipal Obligation to a third party at periodic intervals and to receive the principal amount thereof. A participation interest gives the Portfolio an undivided interest in a Municipal Obligation in the proportion the Portfolio's participation bears to the total principal amount of the Municipal Obligation, and typically provides for a repurchase feature for all or any part of the full principal amount of the participation interest, plus accrued interest. Trusts and partnerships are typically used to convert long-term fixed rate high quality bonds of a single state or municipal issuer into variable or floating rate demand instruments. Opinions relating to the validity of Municipal Obligations and to the exemption of interest thereon from Federal income tax are rendered by bond counsel to the respective issuers at the time of issuance, and opinions relating to the validity of and the tax-exempt status of payments received by the Funds from tax-exempt 20 - -------------------------------------------------------------------------------- derivative securities are rendered by counsel to the respective sponsors of such securities. The Fund and its investment adviser will rely on such opinions and will not review independently the underlying proceedings relating to the issuance of Municipal Obligations, the creation of any tax-exempt derivative securities, or the basis for such opinions. During normal market conditions, up to 20% of the BEA Municipal Bond Fund Portfolio's net assets may be invested in securities which are not Municipal Obligations; at least 80% of the BEA Municipal Bond Fund Portfolio's net assets will be invested in Municipal Obligations the interest on which is exempt from regular Federal income tax. During temporary defensive periods, the BEA Municipal Bond Fund Portfolio may invest without limitation in obligations which are not Municipal Obligations and may hold without limitation uninvested cash reserves. Such securities may include, without limitation, bonds, notes, variable rate demand notes and commercial paper, provided such securities are rated within the relevant categories, applicable to Municipal Obligations set forth above, or if unrated, are of comparable quality as determined by the Adviser, and may also include, without limitation, other debt obligations, such as bank obligations. The BEA Municipal Bond Fund Portfolio may acquire "stand-by commitments" with respect to Municipal Obligations held by it. Under a stand-by commitment, a dealer agrees to purchase at the BEA Municipal Bond Fund Portfolio's option specified Municipal Obligations at a specified price. The acquisition of a stand-by commitment may increase the cost, and thereby reduce the yield, of the Municipal Obligation to which such commitment relates. The BEA Municipal Bond Fund Portfolio will acquire stand-by commitments solely to facilitate portfolio liquidity and does not intend to exercise its rights thereunder for trading purposes. The Tax Reform Act of 1986 substantially revised provisions of prior law affecting the issuance and use of proceeds of certain Municipal Obligations. A new definition of private activity bonds applies to many types of bonds, including those which were industrial development bonds under prior law. Interest on private activity bonds issued after August 15, 1986 is tax-exempt only if the bonds fall within certain defined categories of qualified private activity bonds and meet the requirements specified in those respective categories. In addition, interest on certain private activity bonds issued after August 7, 1986 that is received by taxpayers subject to alternative minimum tax is taxable. The Act has generally not changed the tax treatment of bonds issued to finance governmental operations. As used in this Prospectus, the term "private activity bonds" also includes industrial development revenue bonds issued prior to the effective date of the provisions of the Tax Reform Act of 1986. Investors should also be aware of the possibility of state and local alternative minimum or minimum income tax liability on interest from Alternative Minimum Tax Securities. Although the BEA Municipal Bond Fund Portfolio may invest 25% or more of its net assets in Municipal Obligations the interest on which is paid solely from revenues of similar projects, and may invest up to 40% of its total assets in private activity bonds when added together with any taxable investments held by the BEA Municipal Bond Fund Portfolio, they do not presently intend to do so unless in the opinion of the Adviser the investment is warranted. To the extent the BEA Municipal Bond Fund Portfolio's assets are invested in Municipal Obligations payable from the revenues of similar projects or are invested in private activity bonds, the BEA Municipal Bond Fund Portfolio will be subject to the peculiar risks presented by the laws and economic conditions relating to such projects and bonds to a greater extent than it would be if its assets were not so invested. The amount of information regarding the financial condition of issuers of Municipal Obligations may not be as extensive as that which is made available by public corporations and the secondary market for Municipal Obligations may be less liquid than that for taxable fixed-income securities. Accordingly, the ability of the BEA Municipal Bond Fund Portfolio to buy and sell tax-exempt securities may, at any particular time and with respect to any particular securities, be limited. SUPPLEMENTAL INVESTMENT POLICIES -- BEA SHORT DURATION PORTFOLIO INTEREST RATE SWAPS, CAPS, FLOORS AND COLLARS. The Short Duration Portfolio may enter 21 - -------------------------------------------------------------------------------- into interest rate swaps and may purchase or sell interest rate caps, floors and collars. The Portfolio will enter into these transactions primarily to preserve a return or spread on a particular investment or portion of its portfolio. The Portfolio also may enter into these transactions to protect against any increase in the price of securities the Portfolio anticipates purchasing at a later date. Interest rate swaps involve the exchange by the Portfolio with another party of their respective commitments to pay or receive interest (for example, an exchange of floating rate payments for fixed-rate payments). The exchange commitments can involve payments to be made in the same currency or in different currencies. The purchase of an interest rate cap entitles the purchaser, to the extent that a specified index exceeds a predetermined interest rate, to receive payments of interest on a contractually-based principal amount from the seller of such interest rate cap. The purchase of an interest rate floor entitles the purchaser, to the extent that a specified index falls below a predetermined interest rate, to receive payments on a notional principal amount from the seller of such interest rate floor. A collar has aspects of both a cap and a floor. The Short Duration Portfolio may enter into these transactions on either an asset-based or liability-based basis depending on whether it is hedging its assets or its liabilities, and will usually enter into interest rate swaps on a net basis. In so doing, the two payment streams are netted out, with the Portfolio receiving or paying, as the case may be, only the net amount of the two payments. The net amount of the excess, if any, of the Short Duration Portfolio's obligations over its entitlements with respect to each interest rate swap will be accrued on a daily basis and an amount of cash or high-quality liquid debt securities having an aggregate net asset value at least equal to the accrued excess will be maintained in a segregated account by the Portfolio's Custodian. If the Portfolio enters into an interest rate swap other than on a net basis, the Portfolio would maintain a segregated account in the full amount accrued on a daily basis of the Portfolio's obligations with respect to the swap. The Portfolio will enter into swap, cap or floor transactions with its Custodian, and with other counterparties, but only if: (i) for transactions with maturities under one year, such other counterparty has outstanding short-term paper rated at least A-1 by S&P, Prime-1 by Moody's, F-1 by Fitch or Duff-1 by Duff, or (ii) for transactions with maturities greater than one year, the counterparty has outstanding debt securities rated at least Aa by Moody's or AA by S&P, Fitch or Duff. If there is a default by the other party to such a transac- tion, the Portfolio will have contractual remedies pursuant to the agreements related to the transaction. To the extent the Portfolio sells (i.e., writes) caps and floors, it will maintain in a segregated account cash or high-quality liquid debt securities having an aggregate net asset value at least equal to the full amount accrued on a daily basis, of the Portfolio's obligations with respect to any caps or floors. The use of interest rate swaps is a highly specialized activity which involves investment techniques and risks different from those associated with ordinary portfolio security transactions. If the Adviser is incorrect in its forecasts of market values, interest rates and other applicable factors, the investment performance of the Portfolio would diminish compared with what it would have been if these investment techniques were not used. Moreover, even if the Adviser is correct in its forecasts, there is a risk that the swap position may correlate imperfectly with the price of the asset or liability being hedged. There is no limit on the amount of interest rate swap transactions that may be entered into by the Portfolio. These transactions do not involve the delivery of securities or other underlying assets or principal. Accordingly, the risk of loss with respect to interest rate swaps is limited to the net amount of interest payments that the Portfolio is contractually obligated to make. If the other party to an interest rate swap defaults, the Portfolio's risk of loss consists of the net amount of interest payments that the Portfolio contractually is entitled to receive. The Portfolio may purchase and sell (i.e., write) caps and floors without limitation, subject to the segregated account requirement described above. The swap market has grown substantially in recent years with a large number of banks and investment banking firms acting both as principals and as agents utilizing standardized swap documentation. Caps and floors are more recent 22 - -------------------------------------------------------------------------------- innovations for which standardized documentation has not yet been developed and, accordingly, they are less liquid than swaps. PORTFOLIO TURNOVER. Using certain investment techniques may produce higher than normal portfolio turnover and may affect the degree to which the Short Duration Portfolio's net asset value fluctuates. Higher portfolio turnover rates (100% annually or more) 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. Under normal market conditions, the Portfolio's turnover rate generally will not exceed 500%. INVESTMENT LIMITATIONS Each Portfolio is subject to the following fundamental investment limitations, 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. Each Portfolio may not: 1. 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. 2. 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 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. If a percentage limitation is satisfied at the time of investment, a later increase or decrease in such percentage resulting from a change in the value of the Portfolio's portfolio securities will not constitute a violation of such limitation, except that any borrowing by the Portfolio that exceeds the fundamental investment restrictions stated above must be reduced to meet such restrictions within the period required by the 1940 Act (currently three days). In order to permit the sale of a Portfolio shares in certain states, the Fund may make commitments more restrictive than the investment policies and limitations described in this Prospectus. Should the Fund determine that any such commitment is no longer in the best interests of the Fund, it will revoke the commitment by terminating sales of its shares in the state involved. 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 23 - -------------------------------------------------------------------------------- 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. Although the Portfolios intend to invest in securities of companies and governments of developed, stable nations, 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. 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. Because of their investment emphases, each Portfolio should be considered as a vehicle for diversification and not as a balanced investment program. In addition, substantial limitations may exist in certain countries with respect to BEA Global Fixed Income Portfolio's ability to repatriate investment income, capital or the proceeds of sales of securities by foreign investors. BEA Global Fixed Income Portfolio 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 Portfolio of any restrictions on investments. REPORTING STANDARDS. Most of the foreign securities held by the BEA Global Fixed Income Portfolio 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 24 - -------------------------------------------------------------------------------- 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 all of the Portfolios' 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 the Portfolios. If the value of a foreign currency rises against the U.S. dollar, the value of a Portfolio's assets denominated in that currency will increase; conversely, if the value of a foreign currency declines against the U.S. dollar, the value of a 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. LOWER-RATED SECURITIES. The widespread expansion of government, consumer and corporate debt within the economy has made the corporate sector, especially cyclically sensitive industries, more vulnerable to economic downturns or increased interest rates. Because lower-rated debt securities involve issuers with weaker credit fundamentals (such as debt-to-equity ratios, interest charge coverage, earnings history and the like), an economic downturn, or increases in interest rates, could severely disrupt the market for lower-rated debt securities and adversely affect the value of outstanding debt securities and the ability of the issuers to repay principal and interest. Lower-rated debt securities (commonly known as "junk bonds") possess speculative characteristics and are subject to greater market fluctuations and risk of lost income and principal than higher-rated debt securities for a variety of reasons. The markets for and prices of lower-rated debt securities have been found to be less sensitive to interest rate changes than higher-rated investments, but more sensitive to adverse economic changes or individual corporate developments. Also, during an economic downturn or substantial period of rising interest rates, highly leveraged issuers may experience financial stress which would adversely affect their ability to service their principal and interest payment obligations, to meet projected business goals and to obtain additional financing. If the issuer of a debt security owned by a 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 trade market. Current laws may have an impact on the market for lower-rated debt securities. The Financial Institutions Reform, Recovery and Enforcement Act of 1989 requires 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. 25 - -------------------------------------------------------------------------------- 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 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" in the Statement of Additional Information. 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. 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 a 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. FIXED INCOME SECURITIES. The value of the securities held by a Portfolio, and thus the net asset value of the shares of a Portfolio, generally will vary inversely in relation to changes in prevailing interest rates. Thus, if interest rates have increased from the time a debt or other fixed income security was purchased, such security, if sold, might be sold at a price less than its cost. Conversely, if interest rates have declined from the time such a security was purchased, such security, if sold, might be sold at a price greater than its cost. Also, the value of such securities may be affected by changes in real or perceived creditworthiness of the issuers. Thus, if creditworthiness is enhanced, the price may rise. Conversely, if creditworthiness declines, the price may decline. A 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. 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 Basic Appraisals, Inc. 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 26 - -------------------------------------------------------------------------------- Credit Suisse, the second largest Swiss bank, which in turn is a subsidiary of CS Holding, a Swiss corporation. No one person or entity possesses a controlling interest in Basic Appraisals, Inc. 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, 1994, BEA managed approximately $22.2 billion in assets. As an investment adviser, BEA emphasizes a global investment strategy. BEA currently acts as investment adviser for fourteen registered investment companies under the Investment Company Act. They are: The Chile Fund, Inc., The Indonesia Fund, Inc., The Portugal Fund, Inc., The Latin America Investment Fund, Inc., The Latin America Equity Fund, Inc., The Brazilian Equity Fund, Inc., The First Israel Fund, Inc., The Emerging Markets Telecommunications Fund, Inc., The Emerging Markets Infrastructure Fund, Inc., The Bear Stearns Emerging Markets Debt Fund, Inc., The BEA International Equity Fund, The BEA Emerging Markets Equity Fund, The BEA Strategic Fixed Income Fund and The BEA U.S. Core Fixed Income Fund. BEA also acts as investment adviser for nineteen offshore funds, thirteen of which are equity funds: The South America Fund N.V., The Mexican Investment Company, Latin America Capital Partners, Ltd., Brazilian Equity Investments I Ltd., Argentine Equity Investments I Ltd., C.I. Global Fund, C.I. Emerging Markets Fund, C.I. North America Fund, C.I. Global Equity RSP Fund, C.I. Latin America Fund, Credit Suisse North America Fund, Credit Suisse Equity Fund-Latin America and Credit Suisse Transatlantic Fund and six of which focus on investments in fixed income securities: The Mexico Debt Fund, The Bear Stearns Emerging Markets Fixed Income Fund, C.I. World Bond Fund, C.I. Global Bond RSP Fund, and Credits Emerging Markets Debt Fund. 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 Portfolio's 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 and BEA Emerging Markets Equity Portfolios is the responsibility of the BEA International Equities Management Team. The Team consists of the following investment professionals: Emilio Bassini (Managing Director), Piers Playfair (Senior Vice President), Steven D. Bleiberg (Vice President), Margaret P. Kendall (Vice President). Mr. Bassini and Ms. Kendall have, on an individual basis, been engaged as investment professionals within BEA for more than five years. Mr. Bleiberg rejoined BEA in 1991, he spent two years as a portfolio manager at Matrix Capital Management, prior to Matrix, Mr. Bleiberg spent 5 years at BEA in the equity research department. Mr. Playfair joined BEA in 1990, prior to joining BEA he was a manager in the corporate finance division of Samuel Montagu, London and a Director of Equity Capital Markets Group at Salomon Brothers. The day-to-day portfolio management of the BEA U.S. Core Equity Portfolio and the equity portion of the BEA Balanced Portfolio is the responsibility of the BEA Domestic Equity Management Team. The Team consists of the following investment professionals: William W. Priest, Jr. (Chief Executive Officer and Managing Director of BEA), John B. Hurford (Vice Chairman of the Executive Committee and Managing Director), Albert L. Zesiger (Managing Director), Michael Takata (Senior Vice President), and Todd M. Rice (Vice President). Messrs. Priest, Hurford, and Zesiger have, on an individual basis, been engaged as investment professionals with BEA for more than five years. Mr. Takata has been with BEA since 1991; prior to joining BEA he was a vice president of County NatWest 27 - -------------------------------------------------------------------------------- Securities. Mr. Rice joined BEA in 1990; previously, he was employed as an investment professional at Salomon Brothers. The day-to-day portfolio management of the BEA Strategic Fixed Income, BEA U.S. Core Fixed Income, BEA Municipal Bond Fund, BEA Global Fixed Income and BEA Short Duration Portfolios, as well as the fixed income portion of the BEA Balanced Portfolio, is the responsibility of the BEA Fixed Income Management Team. The Team consists of the following investment professionals: Mark Arnold (Chief Operating Officer and Managing Director), Robert Moore (Managing Director), Gregg Diliberto (Senior Vice President), and Mark Silverstein (Vice President). Messrs. Arnold, Moore and Diliberto have, on an individual basis, been engaged as investment professionals with BEA for more than five years. Mr. Silverstein joined BEA in 1991; prior to joining BEA he was a vice president of First Boston. 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 U.S. Core Equity............ .75% of the average daily net assets* BEA Balanced.................... .60% of the average daily net assets BEA U.S. Core Fixed Income...... .375% of the average daily net assets BEA Global Fixed Income......... .50% of the average daily net assets BEA Strategic Fixed Income...... .70% of the average daily net assets BEA Municipal Bond Fund......... .70% of the average daily net assets BEA Short Duration.............. .15% of the average daily net assets - ------------ * This fee is higher than that paid by most investment companies.
BEA may, at its discretion, from time to time agree to waive voluntarily all or any portion of its advisory fee for any Portfolio. For the period ended August 31, 1994, the Fund paid BEA investment advisory fees, on annualized basis, with respect to the BEA International Equity, BEA Emerging Markets Equity, BEA Strategic Fixed Income, BEA U.S. Core Fixed Income, BEA Global Fixed Income, and BEA Municipal Bond Fund Portfolios, aggregating .78%, .64%, .63%, .05%, 0% and 47%, respectively, of the average net assets of the respective Portfolios, and BEA waived, approximately .2%, .36%, .07%, .325%, .50%, and .23%, respectively, of the average net assets of each such 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. ADMINISTRATOR AGENT PFPC Inc. ("PFPC"), an indirect, wholly-owned subsidiary of PNC Bank Corp., serves as administrator and transfer agent 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 to 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. As of October 31, 1994, PFPC was performing accounting and/or administrative services for 290 investment companies and investment partnerships, with combined total assets of approximately $80.7 billion. PNC Bank Corp. is a multi-bank holding company with its principal offices in Pittsburgh, Pennsylvania. ADMINISTRATIVE SERVICES AGENT Counsellors Funds Service, Inc. ("Counsellors Service"), a wholly-owned subsidiary of 28 - -------------------------------------------------------------------------------- Counsellors Securities Inc. ("Counsellors" or the "Distributor"), provides certain administrative services to each of the Portfolios that are not provided by PFPC, subject to the supervision and direction of the Board of Directors of the Fund. These services include furnishing certain internal quasi-legal, executive and administrative services, acting as liaison between the Portfolios and the Portfolios' various service providers, furnishing corporate secretarial services, which include assisting in the preparation of materials for meetings of the Board of Directors of the Fund, coordinating the preparation of proxy statements and annual, semi-annual and quarterly reports and generally assisting in monitoring and developing compliance procedures for the Portfolios. As compensation for such administrative services, the Fund will pay to Counsellors Service each month a fee for the previous month calculated at the annual rate of .15% of each Portfolio's average daily net assets. DISTRIBUTOR Counsellors serves as distributor of the Shares. Counsellors is a wholly-owned subsidiary of Warburg, Pincus Counsellors, Inc. ("WPC") and is located at 466 Lexington Avenue, New York, New York 10017-3147. WPC is a wholly-owned subsidiary of Warburg, Pincus Counsellors, G.P. No compensation is payable by the Fund to Counsellors for distribution services with respect to the Portfolios. CUSTODIAN PNC Bank, National Association serves as the domestic custodian of the assets of the BEA U.S. Core Equity, BEA U.S. Core Fixed Income, BEA Global Fixed Income, BEA Municipal Bond Fund, BEA Balanced and BEA Short Duration Portfolios. With respect to foreign securities, Brown Brothers Harriman & Co. acts as the global custodian. 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, the 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, administrative services agent fees and administrator's fees 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. 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 29 - -------------------------------------------------------------------------------- amounts will have the effect of increasing a Portfolio's expense ratio and of decreasing return to investors. For the Fund's fiscal year ended August 31, 1994, the Fund's total expenses were 1.30% (annualized) of average net assets with respect to the BEA International Equity Portfolio (not taking into account waiver's and reimbursements of .05% ), 2.01% (annualized) of average net assets with respect to the BEA Emerging Markets Equity Portfolio (not taking into account waivers and reimbursements of .51%), 1.13% of average net assets with respect to the BEA Strategic Fixed Income Portfolio (not taking into account waivers and reimbursements of .13%), .99% (annualized) of average net assets with respect to the BEA U.S. Core Fixed Income Portfolio (not taking into account waivers and reimbursements of .49%), 1.92% (annualized) of average net assets with respect to the BEA Global Fixed Income Portfolio (not taking into account waivers and reimbursements of 1.17%), 1.34% (annualized) of average net assets with respect to the BEA Municipal Bond Fund Portfolio (not taking into account waivers and reimbursements of .34%. Total expenses as a percentage of average net assets for the remaining BEA classes are not reported as no Shares of such classes had been sold to the public during the period ended August 31, 1994. HOW TO PURCHASE SHARES GENERAL Shares representing interests in the Portfolios are offered continuously for sale by the Distributor. Except as described below, BEA Class Shares are currently available for purchase only by investors who have entered into an investment management agreement with BEA. Shares may be purchased initially by completing the application and forwarding the application to the Fund's transfer agent, PFPC. Purchases of Shares may be effected by wire to an account to be specified by PFPC or by mailing a check or Federal Reserve Draft, payable to the order of "The BEA Family" c/o PFPC, P.O. Box 8950, Wilmington, Delaware 19899. The name of the Portfolio for which Shares are being purchased must also appear on the check or Federal Reserve Draft. Federal Reserve Drafts are available at national banks or any state bank which is a member of the Federal Reserve System. Initial investments in any Portfolio must be at least $1,000,000, except shares may be purchased by existing BEA clients or by officers of existing BEA clients (or those holding similar positions) with an initial investment of at least $100,000; all subsequent investments for such persons must be at least $10,000. Subsequent investments in a Portfolio by other persons must be at least $100,000. The Fund reserves the right to reject any purchase order. Shares of the Portfolios may be purchased by officers and employees of BEA and any BEA pension or profit-sharing plan, without being subject to the minimum investment limitation or the requirement that investors enter into an investment management agreement. Shares may be purchased on any Business Day. A "Business Day" is any day that the New York Stock Exchange (the "NYSE") is open for business. Currently, the NYSE is closed on weekends and New Year's Day, President's Day, Good Friday, Memorial Day, Independence Day (observed), Labor Day, Thanksgiving Day and Christmas Day (observed). The price paid for Shares purchased will be the net asset value next computed after an order is received by the Fund's transfer agent prior to its close of business on such day. Orders received by the Fund's transfer agent after its close of business are priced at the net asset value next determined on the following Business Day. PURCHASES IN-KIND Subject to the approval of the Adviser, investors may acquire Shares of any of the Portfolios in exchange for portfolio securities that are eligible for investment by the relevant Portfolio or Portfolios. Such portfolio securities must (a) meet the investment objectives and policies of the Portfolios, (b) be acquired for investment and not for resale, (c) be liquid securities which are not restricted as to transfer either by law or liquidity of market, and (d) have a value which is readily ascertainable. Generally an investor will recognize for federal income tax purposes any gain or loss realized on an exchange of property for Shares. Under certain circumstances, initial investors may not recognize gain or loss on such 30 - -------------------------------------------------------------------------------- an exchange. Investors, particularly initial investors, are urged to consult their tax advisers in determining the particular federal income tax consequences of their purchase in-kind. Such exchanges will be subject to each Portfolio's minimum investment requirement. HOW TO REDEEM SHARES GENERAL Shareholders may redeem for cash some or all of their Shares at any time. To do so, a written request in proper form must be sent directly to The BEA Family c/o PFPC, P.O. Box 8950, Wilmington, Delaware 19899. The redemption price is the net asset value per share next determined after the initial receipt of proper notice of redemption. Redemptions in the BEA International Equity Portfolio incurs a redemption fee of 1.00%; the BEA Emerging Markets Equity Portfolio, 1.50%; and the BEA Strategic Fixed Income Portfolio, .25%. No redemption fee is charge for redemptions involving a redemption in-kind (see below). The value of Shares at the time of redemption may be more or less than the shareholder's cost, depending on the market value of the securities held by the Fund at such time. A request for redemption must be signed by all persons in whose names the Shares are registered or by an authorized party. 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 commercial bank or trust company (not a savings bank), by a federally chartered savings and loan, or by a member firm of a national securities exchange. 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 (other than an officer or employee of BEA or any BEA pension or profit sharing plan) at any time the net asset value of the account in such Portfolio falls below $50,000 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 $50,000 and will be allowed 30 days to make additional investments before the redemption is processed. PAYMENT OF REDEMPTION PROCEEDS Payment of the Redemption Price for Shares redeemed will be made by wire or by check mailed within seven days after acceptance by the Fund's transfer agent, PFPC, of the request and any other necessary documents in proper order. Such payment may be postponed or the right of redemption suspended as provided by the rules of the SEC. If the Shares to be redeemed have been recently purchased by check, the Fund's transfer agent may delay mailing a redemption check, which may be a period of up to 15 days from the date of purchase, pending a determination that the check has cleared. REDEMPTION IN-KIND 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 after they have redeemed their Shares. 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. EXCHANGE PRIVILEGE A Shareholder may exchange Shares of any one of the BEA Family Classes for Shares of any other of the BEA Family Classes. Such exchange will be effected at the net asset value of the exchanged Class (less any applicable redemption fee) and the net asset value of the Class to be acquired next determined after the transfer agent's receipt of a request for an exchange. No exchange fee is currently imposed on exchanges, although the Fund reserves the right to impose a $5.00 administrative fee for each exchange. An exchange of Shares will be treated as a sale for Federal income tax purposes. 31 - -------------------------------------------------------------------------------- An investor considering an exchange to any of the other BEA portfolios should refer to the prospectus and statement of additional information regarding such portfolio. A shareholder wishing to make an exchange may do so by sending a written request to the Portfolio's transfer agent. In the case of shareholders holding share certificates, the certificates must accompany the request for an 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. SHAREHOLDERS HOLDING SHARE CERTIFICATES ARE NOT ELIGIBLE TO EXCHANGE SHARES BY TELEPHONE BECAUSE SHARE CERTIFICATES MUST ACCOMPANY ALL EXCHANGE REQUESTS. 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 PFPC. This form is available from PFPC. Once this election has been made, the shareholder may simply contact PFPC by telephone to request the exchange (800)447-1139 (in Delaware call collect (302)791-1031). The Portfolio will employ reasonable procedures to confirm that instructions communicated by telephone are genuine, and if the Portfolio does not employ such procedures, it may be liable for any losses due to unauthorized or fraudulent telephone instructions. Neither the Portfolio nor PFPC will be liable for any loss, liability, cost or expense for following the Portfolio's telephone transaction procedures described below or for following instructions communicated by telephone that it reasonably believes to be genuine. The Portfolio'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 fund, all of which must match the Fund's records; (3) requiring the Portfolio'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, maintaining tapes of telephone transactions for six months, if the Portfolio elects to record shareholder telephone transactions. For accounts held of record by a broker-dealer, trustee, custodian or other agent, additional documentation or information regarding the scope of a caller's authority is required. Finally, for telephone transactions in accounts held jointly, additional information regarding other account holders is required. Telephone transactions will not be permitted in connection with IRA, other retirement plan accounts, or accounts with attorney-in-fact under power of attorney. 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 a commercial bank or trust company or a member firm of a national securities exchange. The exchange privilege may be modified or terminated at any time, or from time to time, by the Portfolio, upon 60 days written notice to shareholders. If an exchange is to another BEA portfolio, the dollar value of Shares acquired must equal or exceed the Portfolio's minimum for a new account; if to an existing account, the dollar value must equal or exceed the Portfolio's minimum for subsequent investments. 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 32 - -------------------------------------------------------------------------------- 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 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, the BEA Emerging Markets Equity, and BEA U.S. Core Equity Portfolios annually. The Fund will distribute net investment income, if any, for the BEA Balanced and the BEA Short Duration Portfolios at least annually. The Fund will distribute net investment income for the BEA U.S. Core Fixed Income, the BEA Global Fixed Income, the BEA Strategic Fixed Income and the BEA Municipal Bond Fund 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 PFPC 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 either 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 31%. 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. The BEA Municipal Bond Fund Portfolio intends to pay substantially all of their dividends as "exempt interest dividends." Investors in this Portfolio should note, however, that taxpayers are required to report the receipt of tax- exempt interest and "exempt interest dividends" in their Federal income tax returns and that in two circumstances such amounts, while exempt from regular Federal income tax, are subject to alternative minimum tax at a rate of 24% in the case of individuals, trusts and estates, and 20% in the case of corporate taxpayers. First, tax-exempt interest and "exempt interest dividends" derived from certain private activity bonds issued after August 7, 1986, will generally constitute an item of tax preference for corporate and noncorporate taxpayers in determining alternative minimum tax liability. Depending upon market conditions, the BEA Municipal Bond Fund Portfolio may invest up to 40% of its net assets in such private activity bonds. Secondly, tax-exempt interest and "exempt interest dividends" derived from all Municipal Obligations must be taken into account by corporate taxpayers in determining their adjusted current earnings adjustment for alternative minimum tax purposes. Shareholders who are recipients of Social Security Act or Railroad Retirement Act benefits should further note that tax-exempt interest and "exempt interest dividends" will be taken into account in determining the taxability of their benefit payments. The BEA Municipal Bond Fund Portfolio will determine annually the percentages of its net investment income which are fully tax-exempt, which constitute an item of tax preference 33 - -------------------------------------------------------------------------------- for alternative minimum tax purposes, and which are fully taxable and will apply such percentages uniformly to all distributions declared from net investment income during that year. These percentages may differ significantly from the actual percentages for any particular day. Transactions in foreign currencies, forward contracts, options and futures contracts (including options and futures contracts on foreign currencies) will be subject to special provisions of the Code that, among other things, may affect the character (i.e., ordinary or capital) of gains or losses realized by a 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. Shares of the BEA Municipal Bond Fund Portfolio would not be suitable for tax-exempt institutions and may not be suitable for retirement plans qualified under Section 401 of the Internal Revenue Code, H.R. 10 plans and individual retirement accounts since such plans and accounts are generally tax-exempt and, therefore, not only would not gain any additional benefit from the Portfolios' dividends being tax-exempt but also such dividends would be taxable when distributed to the beneficiary. 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 advisors 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. 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. 34 - -------------------------------------------------------------------------------- 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. 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. 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. DESCRIPTION OF SHARES The Fund has authorized capital of thirty billion shares of Common Stock, $.001 par value per share, of which 10.7 billion shares are currently classified into 61 different classes of Common Stock (as described in the Statement of Additional Information). The classes of Common Stock have been grouped into sixteen separate "families": the RBB Family, Warburg Pincus, the Cash Preservation Family, the Sansom Street Family, the Bedford Family, the Bradford Family, the BEA Family, the Laffer/Canto Equity Fund, the Alpha 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 the Tax-Free, Government Securities, Money Market and Municipal Money Market Portfolios; Warburg Pincus represents interests in the Warburg Pincus Growth & Income and Balanced Funds; the Cash Preservation Family represents interests in the Money Market and Municipal Money Market Portfolios; the Sansom Street Family represents interests in the Money Market, Municipal Money Market and Government Obligations Money Market Portfolios; the Bedford Family represents interests in the Money Market, Municipal Money Market, Government Obligations Money Market and New York Municipal Money Market Portfolios; the Bradford Family represents interests in the Municipal Money Market and Government Obligations Money Market Portfolios; and the BEA Family represents interests in the BEA International Equity, BEA Strategic Fixed Income, BEA Emerging Markets Equity, BEA U.S. Core Equity, BEA U.S. Core Fixed Income, BEA Global Fixed Income, BEA Municipal Bond Fund, BEA Balanced and BEA Short Duration Portfolios; and the Alpha, Beta, Gamma, Delta, Epsilon, Zeta, Eta and Theta Families (collectively, the "Additional Families") represent interests in the Money Market, Municipal Money Market, Government Obligations Money Market and New York Municipal Money Market Portfolios. THIS PROSPECTUS AND THE STATEMENT OF ADDITIONAL INFORMATION INCORPORATED HEREIN RELATE PRIMARILY TO THE BEA CLASSES REPRESENTING AN INTEREST IN THE BEA INTERNATIONAL EQUITY, BEA EMERGING MARKETS EQUITY, BEA STRATEGIC FIXED INCOME, BEA U.S. CORE EQUITY, BEA BALANCED, BEA U.S. CORE FIXED INCOME, BEA GLOBAL FIXED INCOME, BEA MUNICIPAL BOND FUND AND BEA SHORT DURATION PORTFOLIOS AND DESCRIBE ONLY THE INVESTMENT OBJECTIVE AND POLICIES, OPERATIONS, CONTRACTS AND OTHER MATTERS RELATING TO SUCH CLASSES. 35 - -------------------------------------------------------------------------------- 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, even where a share has a different class designation than another share representing an interest in that 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. The Fund currently does not intend to hold annual meetings of shareholders except as required by the Investment Company Act or other applicable law, but does intend to hold a meeting of shareholders of each of the Portfolios after such Portfolio's first fiscal year following the commencement of the public offering of shares in the Portfolios. 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. Further, 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 when the Investment Company 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 September 30, 1994, 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, although as of such date Home Insurance Company owned more than 25% of the outstanding shares of the RBB Family Classes representing interests in the Government Securities Portfolio; Seymour Fein owned more than 25% of the outstanding shares of the RBB Family Class representing an interest in the Municipal Money Market; Boston Financial Data Services owned more than 25% of the outstanding shares of Warburg Pincus Class representing interests in the Growth & Income Fund; Planco Inc. Profit Sharing Plan Trust owned more than 25% of the outstanding shares of Warburg Pincus Class representing interests in the Balanced Fund; E. M. Warburg Pincus & Co., Inc. owned more than 25% of the outstanding shares of Warburg Pincus representing interests in the Balanced Fund; the Jewish Family and Children's Agency of Philadelphia Capital Campaign owned more than 25% of the outstanding shares of the Cash Preservation Class representing an interest in the Money Market Portfolio; the Crowe Trust owned more than 25% of the outstanding shares of the Cash Preservation Class representing an interest in the Municipal Money Market Portfolio; Wasner & Co for account of Paine Webber Managed Assets -- Sundry Holding owned more than 25% of the outstanding shares of the Sansom Street Family Class representing an interest in the Money Market Portfolio; the State of Oregon, Treasury Department, owned more than 25% of the outstanding Shares of the BEA Family Class representing an interest in the BEA Strategic Fixed Income Portfolio; the Bank of New York owned more than 25% of the outstanding Shares of the BEA Family Class representing an interest in the BEA U.S. Core Equity Portfolio; the New England UFCW and Employers' Pension Fund Board of Trustees owned more than 25% of the outstanding Shares of the BEA Family Class representing an interest in the BEA U.S. Core Fixed Income Portfolio; Bankers Trust on behalf of the Pechiney Corporation Pension Master Trust owned more than 25% of the outstanding Shares of the BEA Family Class representing an interest in the BEA U.S. Core Fixed Income Portfolio; the Bank of New York as trustee for the Eastern Enterprises Retirement Plan Trust owned more than 25% of the outstanding Shares of the BEA Family Class representing an interest in the BEA Global Fixed Income Portfolio; and John Hancock Clearing Corporation Special Custody Account for the Exclusive Benefit of Customers 36 - -------------------------------------------------------------------------------- owned more than 25% of the outstanding shares of the Laffer/Canto Equity Class representing an interest in the Laffer/Canto Equity Portfolio. 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 PFPC, the Fund's transfer agent, Bellevue Park Corporate Center, 400 Bellevue Parkway, Wilmington, Delaware 19809, toll-free (800) 447-1139 (in Delaware call collect (302) 791-1031). SHARE CERTIFICATES The Fund will issue share certificates for any of the Shares only upon the written request of a shareholder sent to PFPC. 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. For these purposes, the performance of a Portfolio, as well as the performance published by such services or experienced by such indices, will usually not reflect redemption fees, the inclusion of which would reduce performance results. If a Portfolio advertises non-standard computations, however, the Portfolio will disclose such fees, and will also disclose that the performance data do not reflect such fees and that inclusion of such fees would reduce the performance quoted. From time to time, each of the Portfolios other than the BEA International Equity, BEA Emerging Markets Equity and BEA U.S. Core Equity Portfolios may also advertise its "30-day yield." The yield refers to the income generated by an investment in a 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 a 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 broker/dealers directly to their customers in connection with investments in a Portfolio are not reflected in the yields on a Portfolio's Shares, and such fees, if charged, will reduce the actual return received by shareholders on their investments. 37 - -------------------------------------------------------------------------------- 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. Investment Adviser BEA Associates New York, New York THE BEA FAMILY NEW ACCOUNT APPLICATION Mail completed application to: PFPC - Attention: The BEA Family, P.O. Box 8950, Wilmington, DE 19899 1. REGISTRATION. PLEASE PRINT / / Individual / / Trust Owner / / Joint Tenant / / Corporation Co-Owner*, minor, trust / / Custodian / / Other ------ Street Address / / UGMA / / (State) City State Zip Code
* For joint registration, both must sign. The registration will be as joint tenants with the right of survivorship and not as tenants in common, unless otherwise stated. - -------------------------------------------------------------------------------- 2. INVESTMENTS. TOTAL AMOUNT INVESTED [(MINIMUM OF $1,000,000; $100,000 FOR SUBSEQUENT INVESTMENTS)] $ - -------------------. BEA International Equity Portfolio $ ------------------- BEA Emerging Markets Equity Portfolio $ ------------------- BEA U.S. Core Equity Portfolio $ ------------------- BEA Balanced Fund $ ------------------- BEA U.S. Core Fixed Income Portfolio $ ------------------- BEA Global Fixed Income Portfolio $ ------------------- BEA Strategic Fixed Income Portfolio $ ------------------- BEA Municipal Bond Fund Portfolio $ ------------------- BEA Short Duration Portfolio $ -------------------
/ / BY CHECK. Make payable to "The BEA Family." / / BY WIRE. Call PFPC Inc. ("PFPC") directly at (800) 447-1139 (in Delaware call collect (302) 791-1149) to obtain a Fund account number and for further instructions. Then, fill in your new fund account number ----------------. - -------------------------------------------------------------------------------- 3. TAX IDENTIFICATION Under penalties of perjury, I certify with my signature below that the number shown in this section of the application is my correct taxpayer identification number and that I am not subject to backup withholding because the Internal Revenue Service has not notified me that I am subject to backup withholding as a result of a failure to report all interest or dividends, or the Internal Revenue Service has notified me that I am no longer subject to backup withholding. If you are subject to backup withholding, check the box in front of the following statement. / / The Internal Revenue Service has notified me that I am subject to backup withholding. or or (Minor's Social Security (Owner's Social Security #) (Tax Identification #) #)
- -------------------------------------------------------------------------------- 4. SIGNATURES Citizenship: / / U.S. / / Other - -------------- Please provide Phone Number ( ) _______________________________ Sign below exactly as printed in Registration. I (we) am (are) of legal age and have read the prospectus. I (we) hereby certify that each of the persons listed below has been duly elected, and is now legally holding the office set below his name and has the authority to make this authorization. Please print titles below if signing on behalf of a business or trust. (Signature) (Signature) (President, Trustee, General Partner or (Co-owner, Secretary of Corporation, Agent) Co-trustee, etc).
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