RBB FUND INC, 497, 1996-01-02

RBB FUND INC
497, 1996-01-02

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<PAGE>
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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 HIGH YIELD PORTFOLIO
BEA MUNICIPAL BOND FUND PORTFOLIO
BEA SHORT DURATION PORTFOLIO

---------------------

PROSPECTUS

---------------------

DECEMBER 28, 1995

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<PAGE>
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TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Fee Table.................................................................................................. 2
Financial Highlights....................................................................................... 4
The Fund................................................................................................... 8
Investment Objectives and Policies......................................................................... 8
Investment Limitations..................................................................................... 22
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.......................................................................................... 35
</TABLE>

<PAGE>
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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 HIGH YIELD PORTFOLIO -- to provide a high total return. The
Portfolio will invest primarily in high yield fixed income securities (also
known as "junk bonds") issued by corporations, governments and agencies,
both domestic and foreign. The Portfolio will invest without regard to
maturity or credit quality limitations. This Portfolio was formerly known as
the BEA Strategic Fixed Income Portfolio.

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 HIGH YIELD,
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."

THE PORTFOLIOS MAY TREAT SECURITIES ACQUIRED PURSUANT TO RULE 144A OF THE
SECURITIES ACT OF 1933 ("RULE 144A SECURITIES") AS LIQUID, AND THEREFORE NOT
SUBJECT TO THE PORTFOLIOS' TEN PER CENT LIMITATION ON INVESTMENTS IN ILLIQUID
SECURITIES. HOWEVER, A PORTFOLIO WILL NOT INVEST MORE THAN FIFTY PER CENT OF ITS
TOTAL ASSETS IN (A) SECURITIES OF ISSUERS WHICH ARE RESTRICTED AS TO
DISPOSITION, INCLUDING RULE 144A SECURITIES, COMBINED WITH (B) THE SECURITIES OF
ISSUERS WHICH TOGETHER WITH ANY PREDECESSORS HAVE A RECORD OF LESS THAN THREE
YEARS CONTINUOUS OPERATION. THE PORTFOLIOS MAY INVEST IN THESE SECURITIES TO A
GREATER EXTENT THAN INVESTMENT COMPANIES WHICH MEET ALL OF THE REQUIREMENTS OF
SECTION 1301:6-3-09(E)(12) OF THE OHIO ADMINISTRATIVE CODE.

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, 1995, acted as adviser for
approximately $28.5 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, 1995, 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, 1995
<PAGE>
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FEE TABLE

SHAREHOLDER TRANSACTION EXPENSES

<TABLE>
<CAPTION>
BEA
BEA EMERGING
INTERNATIONAL MARKETS
EQUITY EQUITY
PORTFOLIO PORTFOLIO
------------- --------
<S> <C> <C>
Redemption Fees (Payable to the Fund) (as a
percentage of amount redeemed)................... 1.00% 1.50%
</TABLE>

ANNUAL PORTFOLIO OPERATING EXPENSES AFTER EXPENSE REIMBURSEMENTS AND WAIVERS*

<TABLE>
<CAPTION>
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
------------- -------- ----------- ------------ ---------
<S> <C> <C> <C> <C> <C>
Management fees
(after waivers)**................................ .80% .97% .35% .50% .20%
Other Expenses
(after reimbursements)........................... .45% .53% .65% .40% .30%
--- --- --- --- ---
Total Portfolio
Operating Expenses (after waivers and
reimbursements).................................. 1.25% 1.50% 1.00% .90% .50%
--- --- --- --- ---
--- --- --- --- ---
</TABLE>

<TABLE>
<CAPTION>
BEA BEA BEA BEA
GLOBAL FIXED HIGH MUNICIPAL SHORT
INCOME YIELD BOND FUND DURATION
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------- -------- ----------- ---------
<S> <C> <C> <C> <C>
Management fees
(after waivers)**................................ .11% .50% .62% .15%
Other Expenses
(after reimbursements)........................... .64% .30% .38% .40%
--- --- --- ---
Total Portfolio
Operating Expenses (after waivers and
reimbursements).................................. .75% .80% 1.00% .55%
--- --- --- ---
--- --- --- ---
<FN>
- ------------------------
* The operating expenses for the Portfolios are based on actual expenses for
the year ended August 31, 1995.

** Management fees are each based on average daily net assets and are
calculated daily and paid monthly.
</TABLE>

2
<PAGE>
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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.

<TABLE>
<CAPTION>
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
------ ------ ------- -------
<S> <C> <C> <C> <C>
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 $ 55 $122
BEA Balanced Portfolio . $ 9 $29 *** ***
BEA U.S. Core Fixed Income Portfolio.................................. $ 5 $16 $ 28 $ 63
BEA Global Fixed Income Portfolio..................................... $ 8 $24 $ 42 $ 93
BEA High Yield Portfolio.............................................. $ 8 $26 $ 44 $ 99
BEA Municipal Bond Fund Portfolio..................................... $10 $32 $ 55 $122
BEA Short Duration Portfolio.......................................... $ 6 $18 *** ***
<FN>
- ------------------------------

* Reflects a 1.00% redemption fee

** Reflects a 1.50% redemption fee

*** N/A
</TABLE>

An investor would pay the following expenses on the same investment,
assuming no redemption:

<TABLE>
<CAPTION>
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
---- ----- ----- -----
<S> <C> <C> <C> <C>
BEA International Equity Portfolio.......................... $13 $40 $69 $151
BEA Emerging Markets Equity Portfolio....................... $15 $47 $82 $179
</TABLE>

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.

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 Portfolios as of August 31, 1995,
except for BEA High Yield Portfolio which has been restated to reflect
anticipated fees for the current fiscal year. Actual expenses may be greater or
less than such costs and fees. The Fee Table reflects waiver of Management and
Administration Fees equal to .01%, .11%, .51%, .24%, .34%, .54%, .08%, .19% and
.05% for 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 High Yield, BEA Municipal Bond Fund 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 fee waivers or reimbursements,
estimated expenses for the fiscal year ended August 31, 1995 were as follows:

ANNUAL PORTFOLIO OPERATING EXPENSES BEFORE EXPENSE REIMBURSEMENTS AND WAIVERS

<TABLE>
<CAPTION>
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
--------- -------- --------- -------- ---------
<S> <C> <C> <C> <C> <C>
Management fees............................................. .80% 1.00% .75% .60% .375%
Other Expenses.............................................. .46% .61% .76% .54% .465%
--------- -------- --------- -------- ---------
Total Portfolio Operating Expenses.......................... 1.26% 1.61% 1.51% 1.14% .84%
--------- -------- --------- -------- ---------
--------- -------- --------- -------- ---------
</TABLE>

<TABLE>
<CAPTION>
BEA BEA
Global BEA Municipal BEA
Fixed High Bond Short
Income Yield Fund Duration
Portfolio Portfolio Portfolio Portfolio
--------- --------- --------- --------
<S> <C> <C> <C> <C>
Management fees............................................. .50% .70% .70% .15%
Other Expenses.............................................. .79% .38% .49% .45%
--------- --------- --------- --------
Total Portfolio Operating Expenses.......................... 1.29% 1.08% 1.19% .60%
--------- --------- --------- --------
--------- --------- --------- --------
</TABLE>

3
<PAGE>
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FINANCIAL HIGHLIGHTS

The tables below set forth certain information concerning the investment
results of the BEA Classes representing interests in the BEA International
Equity, BEA Emerging Markets Equity, BEA High Yield, 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, 1995, 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.

THE BEA FAMILY
THE RBB FUND, INC.
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
BEA INTERNATIONAL EQUITY PORTFOLIO BEA EMERGING MARKETS EQUITY PORTFOLIO (E)
----------------------------------------------------- ------------------------------------------------------
FOR THE FOR THE FOR THE PERIOD FOR THE FOR THE FOR THE PERIOD
YEAR ENDED YEAR ENDED OCTOBER 1, 1992* TO YEAR ENDED YEAR ENDED FEBRUARY 1, 1993* TO
AUGUST 31, 1995 AUGUST 31, 1994 AUGUST 31, 1993 AUGUST 31, 1995 AUGUST 31, 1994 AUGUST 31, 1993
--------------- --------------- ------------------- --------------- --------------- --------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of
period.............. $ 20.73 $ 18.73 $ 15.00 $ 24.58 $ 18.38 $ 15.00
--------------- --------------- ------------------- --------------- --------------- --------------------
Income from
investment
operations
Net investment
income.......... .06 .05 .04 .02 (.03) .02
Net gain (loss)
on securities
(both realized
and
unrealized)..... (1.75) 2.60 3.69 (5.94) 6.64 3.36
--------------- --------------- ------------------- --------------- --------------- --------------------
Total from
investment
operations...... (1.69) 2.65 3.73 (5.92) 6.61 3.38
--------------- --------------- ------------------- --------------- --------------- --------------------
Less Distributions
Dividends from
net investment
income.......... -- (.05) -- (.07) (.09) --
Distributions
from capital
gains........... (.80) (.60) -- (.92) (.32) --
--------------- --------------- ------------------- --------------- --------------- --------------------
Total
distributions... (.80) (.65) -- (.99) (.41) --
--------------- --------------- ------------------- --------------- --------------- --------------------
Net asset value,
end of period... $ 18.24 $ 20.73 $ 18.73 $ 17.67 $ 24.58 $ 18.38
--------------- --------------- ------------------- --------------- --------------- --------------------
--------------- --------------- ------------------- --------------- --------------- --------------------
Total return......... (8.06%)(d) 14.23%(d) 24.87%(c)(d) (24.42%)(d) 35.99%(d) 22.53%(c)(d)
Ratio/Supplemental
Data
Net assets, end
of period....... $773,254,630 $767,189,791 $268,403,524 $128,322,563 $140,675,379 $21,988,062
Ratio of expenses
to average net
assets.......... 1.25%(a) 1.25%(a) 1.25%(a)(b) 1.50%(a) 1.50%(a) 1.50%(a)(b)
Ratio of net
investment
income (loss) to
average net
assets.......... .35% .33% .41%(b) .02% (.02%) .28%(b)
Portfolio
turnover rate... 78% 104% 106%(c) 79% 54% 38%(c)

<FN>

(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 1.26% and 1.30% for the years ended August 31, 1995 and
1994, respectively, 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 1.61% and 2.01% for the years ended August 31, 1995 and 1994,
respectively, and 3.23% annualized for the period ended August 31, 1993.

(b) Annualized.

(d) Redemption fees not reflected in total return.

* Commencement of operations.
</TABLE>

4
<PAGE>
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THE BEA FAMILY
THE RBB FUND, INC.
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
BEA U.S. CORE BEA U.S. CORE FIXED INCOME
EQUITY PORTFOLIO PORTFOLIO
-------------------- -------------------------------
FOR THE PERIOD FOR THE FOR THE PERIOD
SEPTEMBER 1, 1994* YEAR ENDED APRIL 1, 1994*
TO AUGUST 31, TO
AUGUST 31, 1995 1995 AUGUST 31, 1994
-------------------- -------------- ---------------
<S> <C> <C> <C>
Net asset value, beginning of period............ $ 15.00 $ 14.77 $ 15.00
-------------------- -------------- ---------------
Income from investment operations
Net investment income....................... .22 .88 .42
Net gain (loss) on securities (both realized
and unrealized)............................ 2.72 .61 (.40)
-------------------- -------------- ---------------
Total from investment operations............ 2.94 1.49 .02
-------------------- -------------- ---------------
Less Distributions
Dividends from net investment income........ (.08) (.84) (.25)
Distributions from capital gains............ -- -- --
-------------------- -------------- ---------------
Total distributions......................... (.08) (.84) (.25)
-------------------- -------------- ---------------
Net asset value, end of period.............. $ 17.86 $ 15.42 $ 14.77
-------------------- -------------- ---------------
-------------------- -------------- ---------------
Total return.................................... 19.75% 10.60% 0.17%(c)
Ratio/Supplemental Data
Net assets, end of period................... $ 31,643,776 $ 99,249,839 $ 30,015,818
Ratio of expenses to average net assets..... 1.00%(a) 0.50%(a) 0.50%(a)(b)
Ratio of net investment income to average
net assets................................. 1.59% 6.47% 6.04%(b)
Portfolio turnover rate..................... 123% 304% 186%(c)

<FN>

(a) Without the waiver of advisory fees and administration fees, the ratio of
expenses to average net assets for the BEA U.S. Core Equity Portfolio would
have been 1.51% for the year ended August 31, 1995. Without the waiver of
advisory fees and administration fees, the ratios of expenses to average net
assets for the BEA U.S. Core Fixed Income Portfolio would have been .84% for
the year ended August 31, 1995 and .99% annualized for the period ended
August 31, 1994.

(b) Annualized.

* Commencement of operations
</TABLE>

5
<PAGE>
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THE BEA FAMILY
THE RBB FUND, INC.
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
BEA GLOBAL FIXED INCOME
PORTFOLIO BEA HIGH YIELD PORTFOLIO (E)
-------------------------------- --------------------------------------------------
FOR THE FOR THE PERIOD FOR THE FOR THE
YEAR ENDED JUNE 28, 1994* YEAR ENDED YEAR ENDED FOR THE PERIOD
AUGUST 31, TO AUGUST 31, AUGUST 31, MARCH 31, 1993* TO
1995 AUGUST 31, 1994 1995 1994 AUGUST 31, 1993
-------------- ---------------- -------------- -------------- ------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
period.......................... $ 15.00 $ 15.00 $ 15.94 $ 16.94 $ 15.00
-------------- ---------------- -------------- -------------- ------------------
Income from investment
operations
Net investment income........ 1.06 .15 1.42 1.20 .52
Net gains (losses) on
securities (both realized
and unrealized)............. .49 (.15) (.30) (.77) 1.42
-------------- ---------------- -------------- -------------- ------------------
Total from investment
operations.................. 1.55 -- 1.12 0.43 1.94
-------------- ---------------- -------------- -------------- ------------------
Less Distributions
Dividends from net investment
income...................... (.88) -- (1.34) (1.43) --
Distributions from capital
gains....................... -- -- -- -- --
-------------- ---------------- -------------- -------------- ------------------
Total distributions.......... (.88) -- (1.34) (1.43) --
-------------- ---------------- -------------- -------------- ------------------
Net asset value, end of
period...................... $ 15.67 $ 15.00 $ 15.72 $ 15.94 $ 16.94
-------------- ---------------- -------------- -------------- ------------------
-------------- ---------------- -------------- -------------- ------------------
Total return..................... 10.72% 0.00%(c) 7.79%(d) 2.24%(d) 12.93%(c)(d)
Ratio/Supplemental Data
Net assets, end of period.... $ 19,564,827 $ 6,300,360 $153,620,957 $143,517,472 $ 98,356,591
Ratio of expenses to average
net assets.................. 0.75%(a) 0.75%(a)(b) 1.00%(a) 1.00%(a) 1.00%(a)(b)
Ratio of net investment
income to average net
assets...................... 7.26% 5.64%(b) 9.37% 7.73% 7.56%(b)
Portfolio turnover rate...... 91% 0%(c) 70% 121% 72%(c)

<FN>

(a) 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 Global Fixed Income Portfolio would have been 1.29% for
the year ended August 31, 1995 and 1.92% annualized for the period ended
August 31, 1994. Without the waiver of advisory fees and administration
fees, the ratios of expenses to average net assets for the BEA High Yield
Portfolio would have been 1.08% and 1.13% for the years ended August 31,
1995 and 1994, respectively, and 1.17% annualized for the period ended
August 31, 1993.
(b) Annualized.
(c) Not annualized.
(d) Redemption fees not reflected in total return.
(e) Formerly BEA Strategic Fund Income Portfolio
* Commencement of operations
</TABLE>

6
<PAGE>
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THE BEA FAMILY
THE RBB FUND, INC.
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
BEA MUNICIPAL BOND FUND
PORTFOLIO
--------------------------------
FOR THE FOR THE PERIOD
YEAR ENDED JUNE 20, 1994*
AUGUST 31, TO
1995 AUGUST 31, 1994
-------------- ----------------
<S> <C> <C>
Net asset value, beginning of period..................................... $ 15.06 $ 15.00
-------------- ----------------
Income from investment operations
Net investment income................................................ .71 .09
Net gains (losses) on securities (both realized and unrealized)...... .50 (.03)
-------------- ----------------
Total from investment operations..................................... 1.21 0.06
-------------- ----------------
Less Distributions
Dividends from net investment income................................. (.76) --
Distributions from capital gains..................................... (.05) --
-------------- ----------------
Total distributions.................................................. (.81) --
-------------- ----------------
Net asset value, end of period....................................... $ 15.46 $ 15.06
-------------- ----------------
-------------- ----------------
Total return............................................................. 8.42% 0.40%(c)
Ratio/Supplemental Data
Net assets, end of period............................................ $ 48,977,837 $ 42,309,936
Ratio of expenses to average net assets.............................. 1.00%(a) 1.00%(a)(b)
Ratio of net investment income (loss) to average net assets.......... 4.76% 3.27%(b)
Portfolio turnover rate.............................................. 25% 9%(c)

<FN>

(a) Without the waiver of advisory fees and administration fees, the ratios of
expenses to average net assets for the BEA Municipal Bond Fund Portfolio
would have been 1.19% for the year ended August 31, 1995 and 1.34%
annualized for the period ended August 31, 1994.

(b) Annualized.

* Commencement of operations
</TABLE>

7
<PAGE>
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THE FUND

The Fund is an open-end management investment company that currently
operates or proposes to operate seventeen 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 or its affiliates. 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. Because of their different investment emphases, each
Portfolio should be considered as a vehicle for diversification and not as a
balanced investment program. The Statement of Additional Information contains a
more detailed description of the various investments and investment techniques
used by the Portfolios.

BEA INTERNATIONAL EQUITY PORTFOLIO

The BEA International Equity Portfolio's investment objective is to seek
long-term appreciation of capital. The Portfolio will invest primarily in equity
securities of non-U.S. issuers. The Portfolio defines equity securities of non-
U.S. issuers as securities of issuers whose principal activities are outside the
United States. The Portfolio expects that its investments will be concentrated
in Argentina, Australia, Austria, Brazil, Canada, Chile, Colombia, Denmark,
England, Finland, France, Germany, Greece, Hong Kong, Hungary, Italy, Japan,
Malaysia, Mexico, The Netherlands, New Zealand, Norway, Portugal, Singapore,
South Africa, Spain, Sweden, Switzerland, Thailand and Venezuela. The Portfolio
may invest in securities of issuers in Emerging Markets, as defined below under
"Investment Objectives and Policies -- BEA Emerging Markets Equity Portfolio,"
but does not expect to invest more than 40% of its total assets in securities of
issuers in Emerging Markets. The Portfolio will invest in securities of issuers
from at least three countries outside the United States.

Under normal market conditions, the Portfolio will invest a minimum of 80%
of its total assets in equity securities of non-U.S. issuers. Such equity
securities include common stock and preferred stock (including convertible
preferred stock); bonds, notes and debentures convertible into common or
preferred stock; stock purchase warrants and rights; equity interests in trusts
and partnerships; and depositary receipts of companies.

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

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which it invests, which may include lower-quality, high yielding securities,
commonly known as "junk bonds." See "Risk Factors -- Lower-Rated Securities."

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, Norway, Spain, Switzerland, the United
Kingdom and the United States. Under normal market conditions, the Portfolio
will invest a minimum of 80% of its total assets in equity securities of issuers
in Emerging Markets. The Portfolio will not necessarily seek to diversify
investments on a geographical basis or on the basis of the level of economic
development of any particular country. The Portfolio will at all times, except
during defensive periods, maintain investments in at least three Emerging
Markets.

The Portfolio normally will not emphasize dividend or interest income in
choosing securities, unless BEA believes the income will contribute to the
securities' appreciation potential.

An equity security of an issuer in an Emerging Market is defined as common
stock and preferred stock (including convertible preferred stock); bonds, notes
and debentures convertible into common or preferred stock; stock purchase
warrants and rights; equity interests in trusts and partnerships; and depositary
receipts of companies: (i) the principal securities trading market for which is
in an Emerging Market; (ii) whose principal trading market is in any country,
provided that, alone or on a consolidated basis, they derive 50% or more of
their annual revenue from either goods produced, sales made or services
performed in Emerging Markets; or (iii) that are organized under the laws of,
and with a principal office in, an Emerging Market. Determinations as to
eligibility will be made by BEA based on publicly available information and
inquiries made to the companies.

To the extent that the Portfolio's assets are not invested as described
above, the remainder of the assets may be invested in (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.

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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. 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.

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Core Fixed Income Portfolio may invest up to 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 the Statement of Additional Information
for a discussion of these and other investment policies and strategies.

BEA HIGH YIELD PORTFOLIO

BEA High Yield Portfolio seeks to provide high total return. The Portfolio
will invest primarily in high yield fixed income securities (commonly known as
"junk bonds") issued by corporations, governments and agencies, both U.S. and
foreign. Under normal market conditions, the Portfolio will invest a minimum of
65% of its total assets in such high yield fixed income securities, with the
remainder invested in fixed income securities which may have equity
characteristics, such as convertible bonds. The Portfolio is not limited in the
extent to which it can invest in junk bonds (i.e., securities rated below
investment grade by recognized rating agencies or in comparable unrated
securities). See "Risk Factors -- Lower-Rated Securities." The portion of the
Portfolio's assets invested in various countries will vary from time to time
depending on BEA's assessment of market opportunities.

The value of the securities held by the Portfolio, and thus the net asset
value of the shares of

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the 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. 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 high yield 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

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unless money is appropriated on a yearly basis. Although "non-appropriation"
lease obligations are secured by the leased property, disposition of 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 seeks to provide investors with as high a level
of current income as is consistent with the preservation of capital. 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 1940 Act. 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 Portfolio
ordinarily will invest in securities with longer maturities than those found in
money

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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 the equivalent of 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 S&P or Baa by Moody's) 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 "Common Investment Policies -- All Portfolios" below and "Common
Investment Policies" in 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 at which the Portfolio has valued the
securities.

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Such securities may include, among other things, loan participations and
assignments, options purchased in the over-the-counter markets, repurchase
agreements maturing in more than seven days, structured notes and restricted
securities other than Rule 144A securities that BEA has determined are liquid
pursuant to guidelines established by the Fund's Board of Directors. Because of
the absence of any liquid trading market currently for these investments, a
Portfolio may take longer to liquidate these positions than would be the case
for publicly traded securities. Although these securities may be resold in
privately negotiated transactions, the prices realized on such sales could be
less than those originally paid by a Portfolio. Securities that have legal or
contractual restrictions on resale but have a readily available market are not
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). A Portfolio will not
invest more than 50% of its total assets in (a) securities of issuers which are
restricted as to disposition, including Rule 144A securities, combined with (b)
securities of unseasoned issuers (see below). See Statement of Additional
Information, "Common Investment Policies -- All Portfolios -- Illiquid
Securities" and "Common Investment Objectives and Policies -- Structured Notes."

SECURITIES OF UNSEASONED ISSUERS. Each Portfolio will not invest in
securities of unseasoned issuers, including equity securities of unseasoned
issuers which are not readily marketable, if the aggregate investment in such
securities would exceed 5% of such Portfolio's net assets. The term "unseasoned"
refers to issuers which, together with their predecessors, have been in
operation for less than three years.

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

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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, a Portfolio may
lend its portfolio securities with an aggregate value of up to 30% of its total
assets to broker/dealers and other institutional investors 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 the 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 High Yield 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 in those circumstances where better prices and

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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 1940 Act authorizing the Portfolios and other investment companies
advised by BEA to acquire jointly securities issued in private placements,
subject to the terms and conditions of the order. The Board of the Fund has
adopted a policy that the Portfolios will not purchase private placements (i.e.
restricted securities other than Rule 144A securities).

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 HIGH YIELD, 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 High Yield and BEA Short Duration Portfolios may invest
in these investment funds and registered investment companies subject to the
provisions of the 1940 Act. If these Portfolios invest in such investment
companies, they will each bear their proportionate share of the costs incurred
by such companies, including investment advisory fees.

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 High Yield and BEA Short Duration Portfolios engage
in currency hedging transactions, they will be subject to the risk of changes in
relation to the U.S. dollar of the value of the foreign currencies in which
their assets are denominated. These Portfolios may also seek to protect, during
the period prior to its remittance, the value of the amount of interest,
dividends and net realized capital gains received or to be received in a local
currency that it intends to remit out of a foreign country by investing in
high-quality short-term U.S. dollar-denominated debt securities of such country
and/or participating in the forward currency market for the purchase of U.S.
dollars in the country. There can be no guarantee that suitable U.S.
dollar-denominated investments will be available at the time BEA wishes to use
them to hedge amounts to be remitted. Moreover, investors should be aware that
dollar-denominated securities may not be available in some or all foreign
countries, that the forward currency market for the purchase of U.S. dollars in
many foreign countries is not highly developed and that in certain countries no
forward market for foreign currencies currently exists or that such market may
be closed to investment by a Portfolio. The Portfolios may also use currency
options or futures for purposes of currency hedging (see below).

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 High Yield 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

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this paragraph. Such options may relate to particular securities or to various
indexes and may or may not be listed on a national securities exchange and
issued by the Options Clearing Corporation. These Portfolios may also invest in
futures contracts and options on futures contracts (index futures contracts or
interest rate futures contracts, as applicable) for hedging purposes (including
currency hedging) or for other purposes so long as aggregate initial margins and
premiums required for non-hedging positions do not exceed 5% of its net assets,
after taking into account any unrealized profits and losses on any such
contracts it has entered into. However, these 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.

These Portfolios will engage in unlisted over-the-counter options only with
broker/dealers deemed creditworthy by the Adviser. Closing transactions in
certain options are usually effected directly with the same broker/dealer that
effected the original option transaction. These 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, these 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.

The risks related to the use of options and futures contracts include: (i)
the correlation between movements in the market price of a portfolio's
investments (held or intended for purchase) being hedged and in the price of the
futures contract or option may be imperfect; (ii) possible lack of a liquid
secondary market for closing out options or futures positions; (iii) the need
for additional portfolio management skills and techniques; and (iv) losses due
to unanticipated market movements. Successful use of options and futures by
these Portfolios is subject to the Adviser's ability to correctly predict
movements in the direction of the market. For example, if a Portfolio uses
future contracts as a hedge against the possibility of a decline in the market
adversely affecting securities held by it and securities prices increase
instead, such Portfolio will lose part or all of the benefit of the increased
value of its securities which it has hedged because it will have approximately
equal offsetting losses in its futures positions. The risk of loss in trading
futures contracts in some strategies can be substantial, due both to the low
margin deposits required, and the extremely high degree of leverage involved in
futures pricing. As a result, a relatively small price movement in a futures
contract may result in immediate and substantial loss or gain to the investor.
Thus, a purchase or sale of a futures contract may result in losses or gains in
excess

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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 HIGH YIELD 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 High Yield 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 an 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
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 High Yield, 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.

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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 above.

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, and
the Portfolios will therefore not purchase any asset-backed securities which
would cause 25% or more of a Portfolio's total assets at the time of purchase to
be invested in asset-backed securities. 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 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

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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 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

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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
transaction, 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 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

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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's 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 from time to time
various foreign currencies pending their investment in foreign securities or
their conversion into U.S. dollars, the value of the Portfolios' assets as
measured in U.S. dollars may be affected favorably or unfavorably by changes in
exchange rates. In addition, investors should realize that the value of the
Portfolios' investments may be adversely affected by changes in political or
social conditions, diplomatic relations, confiscatory taxation, expropriation,
limitation on the removal of funds or assets, or imposition of (or change in)
exchange control regulations in those foreign nations. In addition, changes in
government administrations or economic or monetary policies in the U.S. or
abroad could result in appreciation or depreciation of portfolio securities and
could favorably or adversely affect the Portfolios' operations. Furthermore, the
economies of individual foreign nations may differ from that of the United
States, whether favorably or unfavorably, in areas such as growth of gross
national product, rate of inflation, capital reinvestment, resource
self-sufficiency and balance of payments position. Any foreign investments made
by the Portfolios must be made in compliance with U.S. and foreign currency
restrictions and tax laws restricting the amounts and types of foreign
investments.

In general, less information is publicly available with respect to foreign
issuers than is available with respect to U.S. companies. Most foreign companies
are also not subject to the uniform accounting and financial reporting
requirements applicable to issuers in the United States. The Portfolios' foreign
investments may

23
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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.

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 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.

24
<PAGE>
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Lower-rated debt securities (commonly known as "junk bonds") possess
speculative characteristics and are subject to greater market fluctuations and
risk of lost income and principal than higher-rated debt securities for a
variety of reasons. The markets for and prices of lower-rated debt securities
have been found to be less sensitive to interest rate changes than higher-rated
investments, but more sensitive to adverse economic changes or individual
corporate developments. Also, during an economic downturn or substantial period
of rising interest rates, highly leveraged issuers may experience financial
stress which would adversely affect their ability to service their principal and
interest payment obligations, to meet projected business goals and to obtain
additional financing. If the issuer of a debt security owned by a Portfolio
defaulted, the Portfolio could incur additional expenses in seeking recovery
with no guaranty of recovery. In addition, periods of economic uncertainty and
changes can be expected to result in increased volatility of market prices of
lower-rated debt securities and a Portfolio's net asset value. Lower-rated debt
securities also present risks based on payment expectations. For example,
lower-rated debt securities may contain redemption or call provisions. If an
issuer exercises these provisions in a declining interest rate market, a
Portfolio would have to replace the security with a lower yielding security,
resulting in a decreased return for investors. Conversely, a lower-rated debt
security's value will decrease in a rising interest rate market, as will the
value of a Portfolio's assets. If a Portfolio experiences unexpected net
redemptions, this may force it to sell its lower-rated debt securities, without
regard to their investment merits, thereby decreasing the asset base upon which
a Portfolio's expenses can be spread and possibly reducing a Portfolio's rate of
return.

In addition, to the extent that there is no established retail secondary
market, there may be thin trading of lower-rated debt securities, and this may
have an impact on both BEA's ability to value accurately lower-rated debt
securities and the Portfolio's assets, as judgment plays a greater role when
reliable objective data are unavailable, and to dispose of the debt securities.
Adverse publicity and investor perceptions, whether or not based on fundamental
analysis, may decrease the value and liquidity of lower-rated debt securities,
especially in a thinly traded market.

Current laws may have an impact on the market for lower-rated debt
securities. The Financial Institutions Reform, Recovery and Enforcement Act of
1989 required federally insured savings associations to divest substantially all
their holdings of lower-rated debt securities by July 1, 1994 and prohibits such
savings associations from acquiring lower-rated debt securities, except through
certain qualified affiliates.

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

25
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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 CS Advisors Corp., a New York Corporation
which is a wholly-owned subsidiary of CS Capital, is a 20% partner in BEA. CS
Capital is a wholly-owned subsidiary of Credit Suisse Investment Corporation,
which is a wholly-owned subsidiary of Credit Suisse, the second largest Swiss
bank, which in turn is a subsidiary of CS Holding, a Swiss corporation. BEA is
registered as an investment adviser under the Investment Advisers Act of 1940,
as amended.

BEA is a diversified asset manager, handling global equity, balanced, fixed
income and derivative securities accounts for private individuals, as well as
corporate pension and profit-sharing plans, state pension funds, union funds,
endowments and other charitable institutions. As of September 30, 1995, BEA
managed approximately $28.5 billion in assets.

As an investment adviser, BEA emphasizes a global investment strategy. BEA
currently acts as investment adviser for sixteen investment companies registered
under the Investment Company Act. They are: Alpha Government Securities
Portfolio, BEA Strategic Income Fund, Inc., BEA Income Fund, Inc., BEA
Investment Funds, Inc. -- Institutional Government Fund, BEA Short Duration
Portfolio, The Brazilian Equity Fund, Inc., The Chile Fund, Inc., The Emerging
Markets Infrastructure Fund, Inc., The Emerging Markets Telecommunications Fund,
Inc., The First Israel Fund, Inc., The Indonesia Fund, Inc., The Latin America
Equity Fund, Inc., The Latin America Investment Fund, Inc., The Portugal Fund,
Inc., Touchstone International Equity Fund and Touchstone Variable Annuity
International Equity Portfolio. In addition, BEA acts as sub-adviser to certain
portfolios of four other registered investment companies: Frank Russell
Investment

26
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Company (Fixed Income III Fund and Multistrategy Bond Fund), Connecticut Mutual
Financial Services Series Fund I, Inc. (LifeSpan Balanced Portfolio, LifeSpan
Capital Appreciation Portfolio and LifeSpan Diversified Income Portfolio),
Connecticut Mutual Investment Accounts, Inc. (LifeSpan Balanced Account,
LifeSpan Capital Appreciation Account and LifeSpan Diversified Income Account),
SEI Institutional Managed Trust (High Yield Bond Portfolio) and WNL Series Trust
(BEA Growth and Income Fund). BEA also acts as investment adviser for
thirty-five offshore funds, eighteen of which are equity funds and seventeen of
which are debt funds.

BEA has sole investment discretion for the Portfolios and will make all
decisions affecting assets of each Portfolio under the supervision of the Fund's
Board of Directors and in accordance with the 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 (Executive Director), Stephen M. Swift
(Managing Director), Steven D. Bleiberg (Senior Vice President), Richard Watt
(Senior Vice President), William P. Sterling (Managing Director), Ian Borsook
(Vice President), and Stephen R. Waite (Vice President). Mr. Bassini has been
engaged as an investment professional with BEA for more than five years. Mr.
Swift joined BEA in 1995, prior to which he spent three years at Credit Suisse
Asset Management in London, where he was Head of Global Equities and portfolio
manager for the CS Tiger Fund. For the previous 15 years he was with Wardley
Investment Services, a Hong Kong-based subsidiary of the Hong Kong and Shanghai
Bank. Mr. Bleiberg rejoined BEA in 1991 after spending two years as a portfolio
manager at Matrix Capital Management, prior to which he spent five years at BEA
in the equity research department. Mr. Watt joined BEA in 1995, prior to which
he was head of emerging markets investments and research at Gartmore Investment
Limited in London. Prior to 1992, he was a director of Kleinwort Benson
International Investment in London and was a portfolio manager with Lorithan
Regional Council, a public pension plan sponsor in Scotland. Mr. Sterling joined
BEA in 1995, prior to which he was head of International Economics at Merrill
Lynch & Company. Mr. Borsook joined BEA in 1995, prior to which he was a manager
of global economic indicators and Vice President at Merrill Lynch & Company. Mr.
Waite joined BEA in 1995, prior to which he was Vice President and Senior
European Economist for Merrill Lynch & Company in London. Prior to May 1992 he
was an economic consultant to Capital Group in Los Angeles.

The day-to-day portfolio management of the BEA 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
Executive Director of BEA), John B. Hurford (Vice Chairman of the Executive
Committee and Managing Director), Todd M. Rice (Vice President), James A. Abate
(Senior Portfolio Manager), Christopher C. Thompson (Vice President), William P.
Sterling (Managing Director), Ian Borsook (Vice President), and Stephen R. Waite
(Vice President). Messrs. Priest, Hurford and Rice have, on an individual basis,
been engaged as investment professionals with BEA for more than five years. Mr.
Abate joined BEA in 1995; previously, he was a Managing Director for Vert
Independent Capital Research. Prior to joining Vert, Mr. Abate was a Manager in
Price Waterhouse's Valuation/Corporate Finance Group. Mr. Thompson joined BEA in
1995 as a result of the acquisition by BEA Associates of CS First Boston
Investment Management Corporation. Prior to the year and one half he spent at CS
First Boston Investment Management, Mr. Thompson spent six and one half years
with Brown Brothers Harriman & Company.

The day-to-day portfolio management of the BEA High Yield, BEA U.S. Core
Fixed Income, BEA Municipal Bond Fund, BEA Global

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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: Robert Moore (Executive Director), Gregg Diliberto (Managing
Director), Richard Lindquist (Managing Director), Misia Dudley (Senior Vice
President), Mark Silverstein (Senior Vice President), Robert Justich (Senior
Vice President), Marianne Rossi (Vice President), William P. Sterling (Managing
Director), Ian Borsook (Vice President), and Stephen R. Waite (Vice President).
Messrs. Moore 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. Mr. Lindquist, Ms. Dudley and Ms. Rossi joined BEA in 1995 as a result
of BEA's acquisition of CS First Boston Investment Management. Prior to joining
CS First Boston, Mr. Lindquist and Ms. Rossi were with Prudential Insurance
Company of America. Prior to joining CS First Boston, Ms. Dudley was with
Stockbridge Partners, and prior to that had spent five years with E.F. Hutton.
Mr. Justich joined BEA in 1995, prior to which he worked at Merrill Lynch and as
a Manager of Financial Services with Arthur Young & Company.

For the services provided and expenses assumed by it, BEA is entitled to
receive the following fees, computed daily and payable monthly based on a
Portfolio's average daily net assets:
<TABLE>
<CAPTION>
PORTFOLIO ANNUAL RATE
- -------------------------------- --------------------
<S> <C>
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 High Yield.................. .70% of the average
daily net assets

<CAPTION>
PORTFOLIO ANNUAL RATE
- -------------------------------- --------------------
<S> <C>
BEA Municipal Bond Fund......... .70% of the average
daily net assets
BEA Short Duration.............. .15% of the average
daily net assets
<FN>
- ------------------------------
* This fee is higher than that paid by most investment companies, although
the fees for the BEA International Equity and Emerging Markets Equity
Portfolios are within the range of fees of investment companies with
similar investment objectives.
</TABLE>

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, 1995, the Fund paid BEA investment advisory
fees, on annualized basis, with respect to the BEA International Equity, BEA
Emerging Markets Equity, BEA U.S. Core Equity, BEA Balanced, BEA High Yield, BEA
U.S. Core Fixed Income, BEA Global Fixed Income, BEA Municipal Bond Fund and BEA
Short Duration Portfolios .80%, .97%, .35%, .50%, .70%, .20%, .11%, .62%, and
.15%, respectively, of the average net assets of the respective Portfolios, and
BEA waived, approximately 0%, .03%, .40%, .10%, 0%, .175%, .39%, .08%, and 0%,
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

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.125% of each Portfolio's average daily net assets. PFPC has its principal
offices at 400 Bellevue Parkway, Wilmington, Delaware 19809.

ADMINISTRATIVE SERVICES AGENT

Counsellors Funds Service, Inc. ("Counsellors Service"), a wholly-owned
subsidiary of 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 custodian of the assets of the
BEA Municipal Bond Fund Portfolio. Brown Brothers Harriman & Co. serves as
custodian for the remaining Portfolios. The 1940 Act and the rules and
regulations adopted thereunder permit a Portfolio to maintain its securities and
cash in the custody of certain eligible banks and securities depositories. In
compliance with such rules and regulations, a Portfolio's portfolio of
securities and cash, when invested in securities of foreign issuers, may be held
by eligible foreign subcustodians appointed by the custodian.

EXPENSES

The expenses of each Portfolio are deducted from its total income before
dividends are paid. These expenses include, but are not limited to, fees paid to
the investment adviser, 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

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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, 1995, BEA International Equity
Portfolio's total expenses were 1.26% (annualized) of average net assets (not
taking into account waivers and reimbursements of .01% ), 1.61% (annualized) of
average net assets with respect to the BEA Emerging Markets Equity Portfolio
(not taking into account waivers and reimbursements of .11%), 1.51% (annualized)
of average net assets with respect to the BEA U.S. Core Equity Portfolio (not
taking into account waivers and reimbursements of .51%), 1.08% of average net
assets with respect to the BEA High Yield Portfolio (not taking into account
waivers and reimbursements of .08%), .84% (annualized) of average net assets
with respect to the BEA U.S. Core Fixed Income Portfolio (not taking into
account waivers and reimbursements of .34%), 1.29% (annualized) of average net
assets with respect to the BEA Global Fixed Income Portfolio (not taking into
account waivers and reimbursements of .54%), and 1.19% (annualized) of average
net assets with respect to the BEA Municipal Bond Fund Portfolio (not taking
into account waivers and reimbursements of .19%).

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 or its affiliates. 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 6950,
Wilmington, Delaware 19809. 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 clients of
BEA or its affiliates or by officers of such existing clients (or those holding
similar positions) with an initial investment of at least $100,000; all
subsequent investments for such persons must be at least $1,000. Subsequent
initial investments in any other Portfolio 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
or its affiliates and any BEA pension or profit-sharing plan, without being
subject to the minimum investment limitation or the requirement that investors
enter into an investment management agreement.

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 an exchange. Investors, particularly initial investors, are
urged to consult their tax advisers

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<PAGE>
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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
incur a redemption fee of 1.00%; redemptions in the BEA Emerging Markets Equity
Portfolio incur a redemption fee of 1.50%. No redemption fee is charged 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 Portfolio at such
time.

A request for redemption must be signed by all persons in whose names the
Shares are registered or by an authorized party, such as the agent or investment
adviser for the Shareholder. Signatures must conform exactly to the account
registration. If the proceeds of the redemption would exceed $10,000, or if the
proceeds are not to be paid to the record owner at the record address, or if the
shareholder is a corporation, partnership, trust or fiduciary, signature(s) must
be guaranteed by a bank, broker-dealer, credit union, national securities
exchange, savings association or any other organization which qualifies as an
"eligible guarantor institution" as that term is defined in rules adopted by the
Securities and Exchange Commission. In some cases, however, other documents may
be necessary.

INVOLUNTARY REDEMPTION

The Fund reserves the right to redeem an account in any Portfolio of a
shareholder (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
<PAGE>
- --------------------------------------------------------------------------------
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 Fund'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 Fund will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine, and if the Fund does not
employ such procedures, it may be liable for any losses due to unauthorized or
fraudulent telephone instructions. Neither the Fund nor PFPC will be liable for
any loss, liability, cost or expense for following the Fund's telephone
transaction procedures described below or for following instructions
communicated by telephone that it reasonably believes to be genuine.

The Fund's telephone transaction procedures include the following measures:
(1) requiring the appropriate telephone transaction privilege forms; (2)
requiring the caller to provide the names of the account owners, the account
social security number and name of the Portfolio, all of which must match the
Fund's records; (3) requiring the Fund's service representative to complete a
telephone transaction form, listing all of the above caller identification
information; (4) permitting exchanges only if the two account registrations are
identical; (5) requiring that redemption proceeds be sent only by check to the
account owners of record at the address of record, or by wire only to the owners
of record at the bank account of record; (6) sending a written confirmation for
each telephone transaction to the owners of record at the address of record
within five (5) business days of the call; and (7) maintaining tapes of
telephone transactions for six months, if the Fund elects to record shareholder
telephone transactions.

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 an eligible
guarantor institution. The exchange privilege may be modified or terminated at
any time, or from time to time, by the Fund, 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 assets, deducting its actual and accrued liabilities and dividing by the
total number of its Shares outstanding.

32
<PAGE>
- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS

The Fund will distribute substantially all of the net realized capital
gains, if any, of each of the Portfolios to each Portfolio's shareholders
annually. The Fund will distribute all net investment income, if any, for the
BEA International Equity, BEA Emerging Markets Equity, and BEA U.S. Core Equity
Portfolios annually. The Fund will distribute net investment income, if any, for
the BEA Balanced and BEA Short Duration Portfolios at least annually. The Fund
will distribute net investment income for the BEA U.S. Core Fixed Income, BEA
Global Fixed Income, BEA High Yield and BEA Municipal Bond Fund Portfolios 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 a Portfolio will be
taxed to shareholders as long-term capital gain regardless of the length of time
a shareholder has held his Shares or whether such gain was reflected in the
price paid for the Shares. All other distributions, to the extent they are
taxable, are taxed to shareholders as ordinary income. The current nominal
maximum marginal rate on ordinary income for individuals, trusts and estates is
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
its 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 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.

33
<PAGE>
- --------------------------------------------------------------------------------
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.

FOREIGN INCOME TAXES

Investment income received by the Portfolios from sources within foreign
countries may be subject to foreign income taxes withheld at the source. The
United States has entered into tax treaties with many foreign countries which
entitle the Portfolios to a reduced rate of, or exemption from, taxes on such
income. It is impossible to determine the effective rate of foreign tax in
advance since the amount of each Portfolio's assets to be invested in various
countries is not known.

If more than 50% of the value of a Portfolio's total assets at the close of
each taxable year consists of the stock or securities of foreign corporations,
such Portfolio will be eligible to elect to "pass through" to the Fund's
shareholders the amount of foreign income taxes paid by each Portfolio (the
"Foreign Tax Election"). Pursuant to the Foreign Tax Election, shareholders will
be required (i) to include in gross income, even though not actually received,
their respective pro-rata shares of the foreign income taxes paid by the
Portfolio that are attributable to any distributions they receive; and (ii)
either to deduct their pro-rata share of foreign taxes in computing their
taxable income, or to use it (subject to various Code limitations) as a foreign
tax credit against U.S. Federal income tax (but not

34
<PAGE>
- --------------------------------------------------------------------------------
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.

DESCRIPTION OF SHARES

The Fund has authorized capital of thirty billion shares of Common Stock,
$.001 par value per share, of which 12.2 billion shares are currently classified
into 60 different classes of Common Stock (as described in the Statement of
Additional Information).

THIS PROSPECTUS AND THE STATEMENT OF ADDITIONAL INFORMATION INCORPORATED
HEREIN RELATE PRIMARILY TO THE BEA CLASSES REPRESENTING AN INTEREST IN THE BEA
INTERNATIONAL EQUITY, BEA EMERGING MARKETS EQUITY, BEA HIGH YIELD, 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.

Each share that represents an interest in a Portfolio has an equal
proportionate interest in the assets belonging to such Portfolio with each other
share that represents an interest in such Portfolio. Shares of the Fund do not
have preemptive or conversion rights. When issued for payment as described in
this Prospectus, Shares will be fully paid and non-assessable. This Prospectus
combines offering information with respect to nine Portfolios; there is a
possibility that one Portfolio might become liable for any misstatement,
inaccuracy, or incomplete disclosure in the Prospectus concerning another
Portfolio.

The Fund currently does not intend to hold annual meetings of shareholders
except as required by the 1940 Act or other applicable law. The law under
certain circumstances provides shareholders with the right to call for a meeting
of shareholders to consider the removal of one or more directors. To the extent
required by law, the Fund will assist in shareholder communication in such
matters.

Holders of shares of each of the Portfolios will vote in the aggregate and
not by class on all matters, except where otherwise required by law.
Furthermore, shareholders of all investment portfolios of the Fund will vote in
the aggregate and not by portfolio except as otherwise required by law or when
the Board of Directors determines that the matter to be voted upon affects only
the interests of the shareholders of a particular investment portfolio. (See the
Statement of Additional Information under "Additional Information Concerning
Fund Shares" for examples of when the 1940 Act requires voting by investment
portfolio or by class.) Shareholders of the Fund are entitled to one vote for
each full share held (irrespective of class or portfolio) and fractional votes
for fractional shares held. Voting rights are not cumulative and, accordingly,
the holders of more than 50% of the aggregate shares of Common Stock of the Fund
may elect all of the directors.

As of September 29, 1995, 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.

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).

35
<PAGE>
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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.

36
<PAGE>
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS OR IN THE 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
<PAGE>

(This page has been left blank intentionally.)

<PAGE>
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

<TABLE>
<S> <C> <C>
/ / Individual / / Trust
Owner
/ / Joint
Tenant / / Corporation
Co-Owner*, minor, trust
/ / Custodian / / Other ------
Street Address
/ / UGMA / / (State)
City State Zip Code
</TABLE>

* 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)] $
- ---------------------.

<TABLE>
<S> <C>
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 High Yield Portfolio $ ---------------------
BEA Municipal Bond Fund Portfolio $ ---------------------
BEA Short Duration Portfolio $ ---------------------
</TABLE>

/ / 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. WIRE/ELECTRONIC TRANSFER INSTRUCTIONS

If desired, Funds can be wired to your bank.

/ / I authorize PFPC, Inc. to wire redemption proceeds to my commercial bank.

<TABLE>
<S> <C>
Bank Name Bank Account Number
Bank Address Bank Account Registration
Bank Routing Number
</TABLE>

- --------------------------------------------------------------------------------

4. 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.

<TABLE>
<C> <S> <C> <C> <C>
- --------------------------------------- --------------------------------------- ---------------------------------------
(Owner's Social Security #) (Tax Identification #) (Minor's Social Security #)
</TABLE>

- --------------------------------------------------------------------------------

5. 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.

<TABLE>
<S> <C>
- -------------------------------------------------- --------------------------------------------------
(Signature) (Signature)

- -------------------------------------------------- --------------------------------------------------
(President, Trustee, General Partner or Agent) (Co-owner, Secretary of Corporation,
Co-trustee, etc).
</TABLE>
<PAGE>

THE BEA FAMILY OF MUTUAL FUNDS

STATEMENT OF ADDITIONAL INFORMATION

This Statement of Additional Information provides supplementary
information pertaining to shares of nine classes (the "BEA Shares" or the
"Shares") representing interests in nine investment portfolios (the
"Portfolios") of The RBB Fund, Inc. (the "Fund"): 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 High Yield Portfolio (formerly BEA Strategic
Fixed Income Portfolio), BEA Municipal Bond Fund Portfolio, and BEA Short
Duration Portfolio (collectively, the "Portfolios"). This Statement of
Additional Information is not a prospectus, and should be read only in
conjunction with the Prospectus or Prospectuses of the Fund relating to the
Portfolios, dated December 28, 1995 (the "Prospectus"). A copy of the
Prospectus may be obtained from the Fund's distributor by calling toll-free
(800) 888-9723. This Statement of Additional Information is dated December 28,
1995.

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS STATEMENT OF ADDITIONAL INFORMATION IN
CONNECTION WITH THE OFFERING MADE BY THE PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE FUND OR ITS DISTRIBUTOR. THE STATEMENT OF ADDITIONAL INFORMATION DOES
NOT CONSTITUTE AN OFFERING BY THE FUND OR BY THE DISTRIBUTOR IN ANY JURISDICTION
IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE.

<PAGE>

CONTENTS

Prospectus
Page Page
---- ----------
General ............................................. 2 5
Common Investment Policies -- All Portfolios ........ 2 5
Common Investment Objectives and Policies -- BEA
International Equity, BEA Emerging Markets Equity,
BEA U.S. Core Equity, BEA Balanced, BEA U.S. Core
Fixed Income, BEA High Yield, BEA Global
Fixed Income and BEA Short Duration Portfolios..... 7 14
Supplemental Investment Objectives and Policies --
BEA International Equity, BEA Emerging Markets
Equity, BEA U.S. Core Equity, BEA Balanced, BEA
U.S. Core Fixed Income, BEA Strategic Fixed
Income, BEA Global Fixed Income and BEA Short Duration
Portfolios......................................... 16 16
Supplemental Investment Objectives and Policies --
BEA International Equity, BEA Emerging
Markets Equity, BEA U.S. Core Equity and BEA
Balanced Portfolios................................ 22 16
Investment Limitations .............................. 22 20
Risk Factors ........................................ 25 20
Directors and Officers .............................. 28 N/A
Investment Advisory and Servicing Arrangements....... 30 23
Portfolio Transactions .............................. 34 13
Purchase and Redemption Information ................. 36 27
Valuation of Shares ................................. 37 30
Performance and Yield Information.................... 38 33
Taxes ............................................... 41 30
Additional Information Concerning Fund Shares........ 50 32
Miscellaneous ....................................... 53 33
Financial Statements ................................ F-1 N/A
Appendix ............................................ A-1 N/A

<PAGE>

GENERAL

The RBB Fund, Inc. (the "Fund") is an open-end management investment
company currently operating or proposing to operate seventeen separate
investment portfolios. The Fund was organized as a Maryland corporation on
February 29, 1988.

Unless otherwise indicated, the following investment policies may be
changed by the Board of Directors without an affirmative vote of shareholders.
Capitalized terms used herein and not otherwise defined have the same meanings
as are given to such terms in the Prospectus.

COMMON INVESTMENT POLICIES -- ALL PORTFOLIOS

The following supplements the information contained in the Prospectus
concerning the investment objectives and policies of, and techniques used by the
Portfolios.

NON-DIVERSIFIED STATUS. Each Portfolio is classified as
non-diversified within the meaning of the Investment Company Act, which means
that each Portfolio is not limited by such Act in the proportion of its assets
that it may invest in securities of a single issuer. Each Portfolio's
investments will be limited, however, in order to qualify as a "regulated
investment company" for purposes of the Internal Revenue Code of 1986, as
amended. See "Taxes." To qualify, each Portfolio will comply with certain
requirements, including limiting its investments so that at the close of each
quarter of the taxable year (i) not more than 25% of the market value of each
Portfolio's total assets will be invested in the securities of a single issuer,
and (ii) with respect to 50% of the market value of its total assets, not more
than 5% of the market value of each Portfolio's total assets will be invested in
the securities of a single issuer and each Portfolio will not own more than 10%
of the outstanding voting securities of a single issuer. To the extent that
each Portfolio assumes large positions in the securities of a small number of
issuers, each Portfolio's return may fluctuate to a greater extent than that of
a diversified company as a result of changes in the financial condition or in
the market's assessment of the issuers.

REPURCHASE AGREEMENTS. Each Portfolio may agree to purchase
securities from a bank or recognized securities dealer and simultaneously commit
to resell the securities to the bank or dealer at an agreed-upon date and price
reflecting a market rate of interest unrelated to the coupon rate or maturity of
the purchased securities ("repurchase agreements"). Such Portfolio would
maintain custody of the underlying securities prior to their repurchase; thus,
the obligation of the bank or dealer to pay the repurchase price on the date
agreed to would be, in effect, secured by such securities. If the value of such
securities were less than the repurchase price, plus interest, the other party
to the agreement would be required to provide additional collateral so that at
all times the collateral is at least equal to the repurchase price plus accrued
interest. The Adviser will consider the

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creditworthiness of a seller in determining whether to have a Portfolio enter
into a repurchase agreement. There are no percentage limits on a Portfolio's
ability to enter into repurchase agreements. Each Portfolio will not invest
more than 15% of its assets in repurchase agreements maturing in more than seven
(7) days. Repurchase agreements are considered to be loans by the Portfolio
under the Investment Company Act of 1940 (the "Investment Company Act" or the
"1940 Act").

REVERSE REPURCHASE AGREEMENTS. Each Portfolio may also enter into
reverse repurchase agreements with the same parties with whom it may enter into
repurchase agreements. Reverse repurchase agreements involve the sale of
securities held by a Portfolio pursuant to such Portfolio's agreement to
repurchase them at a mutually agreed upon date, price and rate of interest. At
the time a Portfolio enters into a reverse repurchase agreement, it will
establish and maintain a segregated account with an approved custodian
containing cash or liquid high-grade debt securities having a value not less
than the repurchase price (including accrued interest). The assets contained in
the segregated account will be marked-to-market daily and additional assets will
be placed in such account on any day in which the assets fall below the
repurchase price (plus accrued interest). A Portfolio's liquidity and ability
to manage its assets might be affected when it sets aside cash or portfolio
securities to cover such commitments. Reverse repurchase agreements involve the
risk that the market value of the securities retained in lieu of sale may
decline below the price of the securities a Portfolio has sold but is obligated
to repurchase. In the event the buyer of securities under a reverse repurchase
agreement files for bankruptcy or becomes insolvent, such buyer or its trustee
or receiver may receive an extension of time to determine whether to enforce a
Portfolio's obligation to repurchase the securities, and a Portfolio's use of
the proceeds of the reverse repurchase agreement may effectively be restricted
pending such decision. Each Portfolio also may enter into "dollar rolls," in
which it sells fixed income securities for delivery in the current month and
simultaneously contract to repurchase substantially similar (same type, coupon
and maturity) securities on a specified future date. During the roll period, a
Portfolio would forgo principal and interest paid on such securities. A
Portfolio would be compensated by the difference between the current sales price
and the forward price for the future purchase, as well as by the interest earned
on the cash proceeds of the initial sale. Reverse repurchase agreements are
considered to be borrowings under the Investment Company Act.

WHEN-ISSUED SECURITIES AND DELAYED DELIVERY TRANSACTIONS. Each
Portfolio may purchase securities on a when-issued basis, and it may purchase or
sell securities for delayed delivery. These transactions occur when securities
are purchased or sold by a Portfolio with payment and delivery taking place in
the future to secure what is considered an advantageous yield and price to a
Portfolio at the time of entering into the transaction. Although the Portfolios
have not established a limit on the percentage of its assets that may be
committed in connection with such transactions, it will maintain a segregated
account with its custodian of cash, cash equivalents, U.S. Government securities
or other high grade liquid debt securities

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denominated in U.S. dollars or non-U.S. currencies in an aggregate amount equal
to the amount of its commitment in connection with such purchase transactions.
The assets contained in the segregated account will be marked-to-market daily
and additional assets will be placed in such account on any day in which assets
fall below the amount of its commitment. Each Portfolio's liquidity and ability
to manage its assets might be affected when it sets aside cash or portfolio
securities to cover such commitments. When a Portfolio engages in when-issued
transactions, it relies on the seller to consummate the trade. Failure of the
seller to do so may result in the Portfolio incurring a loss or missing an
opportunity to obtain a price considered to be advantageous. The Portfolio
currently anticipates that when-issued securities will not exceed 25% of its
total assets.

STANDBY COMMITMENT AGREEMENTS. Each Portfolio may from time to time
enter into standby commitment agreements. Such agreements commit such
Portfolio, for a stated period of time, to purchase a stated amount of a fixed
income security which may be issued and sold to the Portfolio at the option of
the issuer. The price and coupon of the security is fixed at the time of the
commitment. At the time of entering into the agreement a Portfolio is paid a
commitment fee, regardless of whether or not the security is ultimately issued.
A Portfolio will enter into such agreements only for the purpose of investing in
the security underlying the commitment at a yield and price that is considered
advantageous to a Portfolio. Each Portfolio will not enter into a standby
commitment with a remaining term in excess of 45 days and it will limit its
investment in such commitments so that the aggregate purchase price of the
securities subject to such commitments, together with the value of portfolio
securities subject to legal restrictions on resale, will not exceed 10% of its
assets taken at the time of acquisition of such commitment or security. Such
Portfolio will at all times maintain a segregated account with its custodian of
cash, cash equivalents, U.S. Government securities or other high grade liquid
debt securities denominated in U.S. dollars or non-U.S. currencies in an
aggregate amount equal to the purchase price of the securities underlying the
commitment. The assets contained in the segregated account will be
marked-to-market daily and additional assets will be placed in such account on
any day in which assets fall below the amount of the purchase price. A
Portfolio's liquidity and ability to manage its assets might be affected when it
sets aside cash or portfolio securities to cover such commitments.

There can be no assurance that the securities subject to a standby
commitment will be issued and the value of the security, if issued, on the
delivery date may be more or less than its purchase price. Because the issuance
of the security underlying the commitment is at the option of the issuer, a
Portfolio may bear the risk of a decline in the value of such security and may
not benefit from an appreciation in the value of the security during the
commitment period.

The purchase of a security subject to a standby commitment agreement
and the related commitment fee will be recorded on the date on which the
security can reasonably be expected to be issued, and the value of the

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security will be adjusted by the amount of the commitment fee. In the event the
security is not issued, the commitment fee will be recorded as income on the
expiration date of the standby commitment.

ILLIQUID SECURITIES. Each Portfolio may not invest more than 10% of
its net assets in illiquid securities (including repurchase agreements which
have a maturity of longer than seven days), including securities that are
illiquid by virtue of the absence of a readily available market or legal or
contractual restrictions on resale. Securities that have legal or contractual
restrictions on resale but have a readily available market are not considered
illiquid for purposes of this limitation. With respect to each Portfolio,
repurchase agreements subject to demand are deemed to have a maturity equal to
the notice period.

Historically, illiquid securities have included securities subject to
contractual or legal restrictions on resale because they have not been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
securities which are otherwise not readily marketable and repurchase agreements
having a maturity of longer than seven days. Securities which have not been
registered under the Securities Act are referred to as private placements or
restricted securities and are purchased directly from the issuer or in the
secondary market. The Board has adopted a policy that the Portfolios will not
purchase private placements (i.e., restricted securities other than Rule 144A
securities). Mutual funds do not typically hold a significant amount of these
restricted or other illiquid securities because of the potential for delays on
resale and uncertainty in valuation. Limitations on resale may have an adverse
effect on the marketability of portfolio securities and a mutual fund might be
unable to dispose of restricted or other illiquid securities promptly or at
reasonable prices and might thereby experience difficulty satisfying redemptions
within seven days. A mutual fund might also have to register such restricted
securities in order to dispose of them resulting in additional expense and
delay. Adverse market conditions could impede such a public offering of
securities.

In recent years, however, a large institutional market has developed
for certain securities that are not registered under the Securities Act
including repurchase agreements, commercial paper, foreign securities, municipal
securities and corporate bonds and notes. Institutional investors depend on an
efficient institutional market in which the unregistered security can be readily
resold or on an issuer's ability to honor a demand for repayment. The fact that
there are contractual or legal restrictions on resale to the general public or
to certain institutions may not be indicative of the liquidity of such
investments.

The SEC has recently adopted Rule 144A which allows for a broader
institutional trading market for securities otherwise subject to restriction on
resale to the general public. Rule 144A establishes a "safe harbor" from the
registration requirements of the Securities Act for resales of certain
securities to qualified institutional buyers. The Adviser anticipates that the
market for certain restricted securities such as institutional commercial

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paper will expand further as a result of this new regulation and the development
of automated systems for the trading, clearance and settlement of unregistered
securities of domestic and foreign issuers, such as the PORTAL System sponsored
by the National Association of Securities Dealers, Inc.

The Adviser will monitor the liquidity of restricted securities in a
Portfolio under the supervision of the Board of Directors. In reaching
liquidity decisions, the Adviser may consider, INTER ALIA, the following
factors: (1) the unregistered nature of the security; (2) the frequency of
trades and quotes for the security; (3) the number of dealers wishing to
purchase or sell the security and the number of other potential purchasers; (4)
dealer undertakings to make a market in the security and (5) the nature of the
security and the nature of the marketplace trades (e.g., the time needed to
dispose of the security, the method of soliciting offers and the mechanics of
the transfer).

LENDING OF PORTFOLIO SECURITIES. Although each Portfolio does not
currently intend to do so, it may lend its portfolio securities on a short or
long term basis to broker-dealers or institutional investors that the Adviser
deems qualified, but only when the borrower maintains with a Portfolio's
custodian, collateral either in cash or money market instruments, in an amount
at least equal to the market value of the securities loaned, plus accrued
interest and dividends, determined on a daily basis and adjusted accordingly.
In determining whether to lend securities to a particular broker-dealer or
institutional investor, the Adviser will consider, and during the period of the
loan will monitor, all relevant facts and circumstances, including the
creditworthiness of the borrower. Such loans would involve risks of delay in
receiving additional collateral in the event the value of the collateral
decreased below the value of the securities loaned or of delay in recovering the
securities loaned or even the loss of rights in the collateral should the
borrower of the securities fail financially.

BORROWING. Each Portfolio may borrow up to 33 1/3 percent of its
total assets. The Adviser intends to borrow only for temporary or emergency
purposes, including to meet portfolio redemption requests so as to permit the
orderly disposition of portfolio securities, or to facilitate settlement
transactions on portfolio securities. Additional investments will not be made
when borrowings exceed 5% of a Portfolio's total assets. Although the principal
of such borrowings will be fixed, a Portfolio's assets may change in value
during the time the borrowing is outstanding. Each Portfolio expects that some
of its borrowings may be made on a secured basis. In such situations, either
the custodian will segregate the pledged assets for the benefit of the lender or
arrangements will be made with a suitable subcustodian, which may include the
lender.

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COMMON INVESTMENT OBJECTIVES AND POLICIES --BEA INTERNATIONAL EQUITY, BEA
EMERGING MARKETS EQUITY,BEA U.S. CORE EQUITY, BEA BALANCED, BEA U.S. CORE
FIXED INCOME, BEA HIGH YIELD, BEA GLOBAL FIXED INCOME AND BEA SHORT
DURATION PORTFOLIOS

U.S. GOVERNMENT SECURITIES. The U.S. government securities in which a
Portfolio may invest include direct obligations of the U.S. Treasury (such as
Treasury bills, notes and bonds) and obligations issued by U.S. government
agencies and instrumentalities, including securities that are supported by the
full faith and credit of the United States and securities that are supported
primarily or solely by the creditworthiness of the issuer (such as securities of
the Federal Home Loan Banks, the Student Loan Marketing Association and the
Tennessee Valley Authority).

FOREIGN DEBT SECURITIES. The returns on foreign debt securities
reflect interest rates and other market conditions prevailing in those countries
and the effect of gains and losses in the denominated currencies against the
U.S. dollar, which have had a substantial impact on investment in foreign fixed
income securities. The relative performance of various countries' fixed income
markets historically has reflected wide variations relating to the unique
characteristics of each country's economy. Year-to-year fluctuations in certain
markets have been significant, and negative returns have been experienced in
various markets from time to time.

The foreign government securities in which the Portfolios may invest
generally consist of obligations issued or backed by national, state or
provincial governments or similar political subdivisions or central banks in
foreign countries. Foreign government securities also include debt obligations
of supranational entities, which include international organizations designated,
or backed by governmental entities to promote economic reconstruction or
development, international banking institutions and related government agencies.
Examples include the International Bank for Reconstruction and Development (the
"World Bank"), the European Coal and Steel Community, the Asian Development Bank
and the InterAmerican Development Bank.

Foreign government securities also include debt securities of
"quasi-governmental agencies" and debt securities denominated in multinational
currency units of an issuer (including supranational issuers). Debt securities
of quasi-governmental agencies are issued by entities owned by either a
national, state or equivalent government or are obligations of a political unit
that is not backed by the national government's full faith and credit and
general taxing powers. An example of a multinational currency unit is the
European Currency Unit ("ECU"). An ECU represents specified amounts of the
currencies of certain member states of the European Economic Community. The
specific amounts of currencies comprising the ECU may be adjusted by the Council
of Ministers of the European Community to reflect changes in relative values of
the underlying currencies.

BRADY BONDS. Each Portfolio may invest in so-called "Brady Bonds,"
which have recently been issued by Costa Rica, Mexico, Uruguay and

<PAGE>

Venezuela and which may be issued by other Latin American countries. Brady
Bonds are issued as part of a debt restructuring in which the bonds are issued
in exchange for cash and certain of the country's outstanding commercial bank
loans. Investors should recognize that Brady Bonds have been issued only
recently, and accordingly, they do not have a long payment history. Brady Bonds
may be collateralized or uncollateralized, are issued in various currencies
(primarily the U.S. dollar) and are actively traded in the over-the-counter
("OTC") secondary market for debt of Latin American issuers.

LOAN PARTICIPATIONS AND ASSIGNMENTS. Each Portfolio may invest in
fixed and floating rate loans ("Loans") arranged through private negotiations
between a foreign government and one or more financial institutions ("Lenders").
The majority of the Portfolio's investments in Loans in Latin America are
expected to be in the form of participations in Loans ("Participations") and
assignments of portions of Loans from third parties ("Assignments").
Participations typically will result in each Portfolio having a contractual
relationship only with the Lender, not with the borrower. Each Portfolio will
have the right to receive payments of principal, interest and any fees to which
it is entitled only from the Lender selling the Participation and only upon
receipt by the Lender of the payments from the borrower. In connection with
purchasing Participations, the Portfolios generally will have no right to
enforce compliance by the borrower with the terms of the loan agreement relating
to the Loan ("Loan Agreement"), nor any rights of set-off against the borrower,
and the Portfolio may not directly benefit from any collateral supporting the
Loan in which it has purchased the Participation. As a result, the Portfolios
will assume the credit risk of both the borrower and the Lender that is selling
the Participation. In the event of the insolvency of the Lender selling a
Participation, the Portfolios may be treated as a general creditor of the Lender
and may not benefit from any set-off between the Lender and the borrower. The
Portfolios will acquire Participations only if the Lender interpositioned
between the Portfolios and the borrower is determined by BEA to be creditworthy.
Each Portfolio currently anticipates that it will not invest more than 5% of its
total assets in Loan Participations and Assignments.

CONVERTIBLE SECURITIES. The BEA U.S. Core Equity Portfolio may invest
up to 100% of its total assets in convertible securities, the BEA Balanced
Portfolio may invest up to 65% of its total assets in convertible securities,
the BEA International Equity and BEA Emerging Markets Equity Portfolios may
invest up to 20% of its total assets in convertible securities and each other
Portfolio may invest up to 35% of their total assets in convertible securities.
A convertible security is a bond, debenture, note, preferred stock or other
security that may be converted into or exchanged for a prescribed amount of
common stock of the same or a different issuer within a particular period of
time at a specified price or formula. A convertible security entitles the
holder to receive interest paid or accrued on debt or the dividend paid on
preferred stock until the convertible security matures or is redeemed, converted
or exchanged. Before conversion, convertible securities have characteristics
similar to nonconvertible debt securities in that they ordinarily provide a
stable stream of income with generally higher

<PAGE>

yields than those of common stocks of the same or similar issuers. Convertible
securities rank senior to common stock in a corporation's capital structure but
are usually subordinated to comparable nonconvertible securities. While no
securities investment is completely without risk, investments in convertible
securities generally entail less risk than the corporation's common stock,
although the extent to which such risk is reduced depends in large measure upon
the degree to which the convertible security sells above its value as a fixed
income security. Convertible securities have unique investment characteristics
in that they generally (1) have higher yields than common stocks, but lower
yields than comparable non-convertible securities, (2) are less subject to
fluctuation in value than the underlying stock since they have fixed income
characteristics and (3) provide the potential for capital appreciation if the
market price of the underlying common stock increases. Most convertible
securities currently are issued by U.S. companies, although a substantial
Eurodollar convertible securities market has developed, and the markets for
convertible securities denominated in local currencies are increasing.

The value of a convertible security is a function of its "investment
value" (determined by its yield in comparison with the yields of other
securities of comparable maturity and quality that do not have a conversion
privilege) and its "conversion value" (the security's worth, at market value, if
converted into the underlying common stock). The investment value of a
convertible security is influenced by changes in interest rates, with investment
value declining as interest rates increase and increasing as interest rates
decline. The credit standing of the issuer and other factors also may have an
effect on the convertible security's investment value. The conversion value of
a convertible security is determined by the market price of the underlying
common stock. If the conversion value is low relative to the investment value,
the price of the convertible security is governed principally by its investment
value. Generally the conversion value decreases as the convertible security
approaches maturity. To the extent the market price of the underlying common
stock approaches or exceeds the conversion price, the price of the convertible
security will be increasingly influenced by its conversion value. A convertible
security generally will sell at a premium over its conversion value by the
extent to which investors place value on the right to acquire the underlying
common stock while holding a fixed income security.

The Portfolios have no current intention of converting any convertible
securities it may own into equity or holding them as equity upon conversion,
although it may do so for temporary purposes. A convertible security might be
subject to redemption at the option of the issuer at a price established in the
convertible security's governing instrument. If a convertible security held by
the Portfolio is called for redemption, the Portfolio will be required to permit
the issuer to redeem the security, convert it into the underlying common stock
or sell it to a third party.

MORTGAGE-BACKED SECURITIES. BEA International Equity Portfolio and
BEA Emerging Markets Equity Portfolio may invest up to 20% of their total

<PAGE>

assets in mortgage-backed securities and each other Portfolio may invest up to
100% of its total assets in mortgage-backed securities, such as those issued by
the Government National Mortgage Association ("GNMA"), the Federal National
Mortgage Association, the Federal Home Loan Mortgage Corporation or certain
foreign issuers. Mortgage-backed securities represent direct or indirect
participations in, or are secured by and payable from, mortgage loans secured by
real property. The mortgages backing these securities include, among other
mortgage instruments, conventional 30-year fixed rate mortgages, 15-year fixed
rate mortgages, graduated payment mortgages and adjustable rate mortgages. The
government or the issuing agency typically guarantees the payment of interest
and principal of these securities. However, the guarantees do not extend to the
securities' yield or value, which are likely to vary inversely with fluctuations
in interest rates, nor do the guarantees extend to the yield or value of the
Portfolio's shares. These securities generally are "pass-through" instruments,
through which the holders receive a share of all interest and principal payments
from the mortgages underlying the securities, net of certain fees.

Yields on pass-through securities are typically quoted by investment
dealers and vendors based on the maturity of the underlying instruments and the
associated average life assumption. The average life of pass-through pools
varies with the maturities of the underlying mortgage loans. A pool's term may
be shortened by unscheduled or early payments of principal on the underlying
mortgages. The occurrence of mortgage prepayments is affected by various
factors, including the level of interest rates, general economic conditions, the
location, scheduled maturity and age of the mortgage and other social and
demographic conditions. Because prepayment rates of individual pools vary
widely, it is not possible to predict accurately the average life of a
particular pool. For pools of fixed rate 30-year mortgages, a common industry
practice in the U.S. has been to assume that prepayments will result in a
12-year average life. At present, pools, particularly those with loans with
other maturities or different characteristics, are priced on an assumption of
average life determined for each pool. In periods of falling interest rates,
the rate of prepayment tends to increase, thereby shortening the actual average
life of a pool of mortgage-related securities. Conversely, in periods of rising
rates the rate of prepayment tends to decrease, thereby lengthening the actual
average life of the pool. However, these effects may not be present, or may
differ in degree, if the mortgage loans in the pools have adjustable interest
rates or other special payment terms, such as a prepayment charge. Actual
prepayment experience may cause the yield of mortgage-backed securities to
differ from the assumed average life yield. Reinvestment of prepayments may
occur at higher or lower interest rates than the original investment, thus
affecting a Portfolio's yield.

The rate of interest on mortgage-backed securities is lower than the
interest rates paid on the mortgages included in the underlying pool due to the
annual fees paid to the servicer of the mortgage pool for passing through
monthly payments to certificate holders and to any guarantor, such as GNMA, and
due to any yield retained by the issuer. Actual yield to the holder may vary
from the coupon rate, even if adjustable, if the mortgage-backed

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securities are purchased or traded in the secondary market at a premium or
discount. In addition, there is normally some delay between the time the issuer
receives mortgage payments from the servicer and the time the issuer makes the
payments on the mortgage-backed securities, and this delay reduces the effective
yield to the holder of such securities.

COLLATERALIZED MORTGAGE OBLIGATIONS. The Portfolios may also purchase
collateralized mortgage obligations ("CMOs") issued by a U.S. Government
instrumentality which are backed by a portfolio of mortgages or mortgage-backed
securities. The issuer's obligations to make interest and principal payments is
secured by the underlying portfolio of mortgages or mortgage-backed securities.
Generally, CMOs are partitioned into several classes with a ranked priority by
which the classes of obligations are redeemed. The Portfolios may only invest
in CMOs issued by FHLMC, FNMA or other agencies of the U.S. Government or
instrumentalities established or sponsored by the U.S. Government.

The CMO structure returns principal to investors sequentially, rather
than according to the pro rata method of a pass-through. In the traditional CMO
structure, all classes (called tranches) receive interest at a stated rate, but
only one class at a time received principal. All principal payments received on
the underlying mortgages or securities are first paid to the "fastest pay"
tranche. After this tranche is retired, the next tranche in the sequence
becomes the exclusive recipient of principal payments. This sequential process
continues until the last tranche is retired. In the event of sufficient early
repayments on the underlying mortgages, the "fastest-pay" tranche generally will
be retired prior to its maturity. Thus the early retirement of a particular
tranche of a CMO held by a Portfolio would have the same effect as the
prepayment of mortgages underlying a mortgage-backed pass-through security as
described above.

ASSET-BACKED SECURITIES. Each Portfolio may invest in asset-backed
securities, which represent participations in, or are secured by and payable
from, assets such as motor vehicle installment sales, installment loan
contracts, leases of various types of real and personal property and receivables
from revolving credit (credit card) agreements. Such assets are securitized
through the use of trusts and special purpose corporations. Payments or
distributions of principal and interest may be guaranteed up to certain amounts
and for a certain time period by a letter of credit or a pool insurance policy
issued by a financial institution unaffiliated with the trust or corporation. A
Portfolio will not purchase any asset-backed securities which would cause 25% or
more of its total assets at the time of purchase to be invested in asset-backed
securities.

Asset-backed securities present certain risks that are not presented
by other securities in which the Portfolio may invest. Automobile receivables
generally are secured by automobiles. Most issuers of automobile receivables
permit the loan servicers to retain possession of the underlying obligations.
If the servicer were to sell these obligations to another party, there is a risk
that the purchaser would acquire an interest superior to that

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of the holders of the asset-backed securities. In addition, because of the
large number of vehicles involved in a typical issuance and technical
requirements under state laws, the trustee for the holders of the automobile
receivables may not have a proper security interest in the underlying
automobiles. Therefore, there is the possibility that recoveries on repossessed
collateral may not, in some cases, be available to support payments on these
securities. Credit card receivables are generally unsecured, and the debtors
are entitled to the protection of a number of state and federal consumer credit
laws, many of which give such debtors the right to set off certain amounts owed
on the credit cards, thereby reducing the balance due. Because asset-backed
securities are relatively new, the market experience in these securities is
limited, and the market's ability to sustain liquidity through all phases of the
market cycle has not been tested.

ZERO COUPON SECURITIES. Each Portfolio may invest in "zero coupon"
U.S. Treasury, foreign government and U.S. and foreign corporate debt
securities, which are bills, notes and bonds that have been stripped of their
unmatured interest coupons and receipts or certificates representing interests
in such stripped debt obligations and coupons. A Portfolio currently
anticipates that zero coupon securities will not exceed 20% of its total assets.
A zero coupon security pays no interest to its holder prior to maturity.
Accordingly, such securities usually trade at a deep discount from their face or
par value and will be subject to greater fluctuations of market value in
response to changing interest rates than debt obligations of comparable
maturities that make current distributions of interest. A Portfolio anticipates
that it will not normally hold zero coupon securities to maturity. Federal tax
law requires that a holder of a zero coupon security accrue a portion of the
discount at which the security was purchased as income each year, even though
the holder receives no interest payment on the security during the year.

STRUCTURED NOTES. The Portfolios may invest in structured notes. The
distinguishing feature of a structured note is that the amount of interest
and/or principal payable on the notes is based on the performance of a benchmark
asset or market other than fixed-income securities or interest rates. Examples
of a benchmark include stock prices, currency exchange rates and physical
commodity prices. Investing in a structured note allows a Portfolio to gain
exposure to the benchmark market while fixing the maximum loss that the
Portfolio may experience in the event that the market does not perform as
expected. The performance tie can be a straight relationship or leveraged,
although BEA generally will not use leverage in its structured note strategies.
Normally, these bonds are issued by U.S. government agencies and investment
banks arrange the structuring. Depending on the terms of the note, the
Portfolio may forego all or part of the interest and principal that would be
payable on a comparable conventional note; the Portfolio's loss cannot exceed
this foregone interest and/or principal. An investment in a structured note
involves risks similar to those associated with a direct investment in the
benchmark asset. Structured notes will be treated as illiquid securities for
investment limitation purposes.

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ADDITIONAL INVESTMENT CONSIDERATIONS AND RISKS--NON-INVESTMENT GRADE
FIXED INCOME SECURITIES. When and if available, fixed income securities may be
purchased by a Portfolio at a discount from face value. From time to time a
Portfolio may purchase securities in default with respect to the paying of
principal and/or interest at the time acquired if, in the opinion of BEA, such
securities have the potential for future capital appreciation.

Debt securities purchased by the Portfolios may bear fixed, fixed and
contingent or variable rates of interest and may involve equity features such as
conversion or exchange rights or warrants for the acquisition of stock of the
same or a different issuer; participations based on revenues, sales or profits,
or the purchase of common stock in a unit transaction (where corporate debt
securities and common stock are offered as a unit). Conversion of certain debt
securities may reduce net income per share and net asset value per share. The
occurrence of any income dilution of previously outstanding shares of common
stock when debt securities are converted will depend upon whether a Portfolio
can, from the investments made with the proceeds of the debt securities, earn an
amount per share issuable upon conversion at least equal to the amount earned
with respect to shares of common stock outstanding prior to conversion. If debt
securities are converted at a time when the net asset value per share of common
stock is greater than the conversion price, the conversion will result in a
decrease or dilution in then current net asset value per share of common stock.

The value of the lower rated fixed income securities that the
Portfolios purchase may fluctuate more than the value of higher rated debt
securities. These lower rated fixed income securities generally tend to reflect
short-term corporate and market developments to a greater extent than higher
rated securities which react primarily to fluctuations in the general level of
interest rates. Changes in the value of securities subsequent to their
acquisition will not affect cash income or yields to maturity to a Portfolio but
will be reflected in the net asset value of a Portfolio's shares. The
Portfolios attempt to reduce risk through credit analysis and attention to
current developments and trends in both the economy and financial markets.
There can be no assurance that such attempts will be successful.

HEDGING. Each of the Portfolios may engaged in various hedging
strategies. See "Currency Hedging" in the Prospectus.

FORWARD CURRENCY CONTRACTS. Each Portfolio may use forward currency
contracts to protect against uncertainty in the level of future exchange rates.
The Portfolio may enter into forward currency contracts with respect to specific
transactions. For example, when a portfolio anticipates the receipt in a
foreign currency of interest payments on a security that it holds, a portfolio
may desire to "lock-in" the U.S. dollar price of the security or the U.S. dollar
equivalent of such payment, as the case may be, by entering into a forward
contract for the purchase or sale, for a fixed amount of U.S. dollars, of the
amount of foreign currency involved in the underlying transaction. A Portfolio
will thereby be able to protect itself against a possible loss resulting from an
adverse change in the relationship between the

<PAGE>

currency exchange rates during the period between the date on which the security
is purchased or sold, or on which the payment is declared, and the date on which
such payments are made or received.

The precise matching of the forward contract amounts and the value of
the securities involved will not generally be possible because the future value
of such securities in foreign currencies will change as a consequence of market
movements in the value of those securities between the date the forward contract
is entered into and the date it matures. Accordingly, it may be necessary for a
Portfolio to purchase additional foreign currency on the spot (i.e., cash)
market (and bear the expense of such purchase) if the market value of the
security is less than the amount of foreign currency the Portfolio is obligated
to deliver and if a decision is made to sell the security and make delivery of
the foreign currency. Conversely, it may be necessary to sell on the spot
market some of the foreign currency received upon the sale of a Portfolio
security if its market value exceeds the amount of foreign currency a Portfolio
is obligated to deliver. The projection of short-term currency market movements
is extremely difficult, and the successful execution of a short-term hedging
strategy is highly uncertain. Forward contracts involve the risk that
anticipated currency movements will not be accurately predicted, causing a
Portfolio to sustain losses on these contracts and transaction costs. A
Portfolio may enter into a forward contract and maintain a net exposure on such
contract only if (1) the consummation of the contract would not obligate a
Portfolio to deliver an amount of foreign currency in excess of the value of a
Portfolio's portfolio securities or other assets denominated in that currency or
(2) a Portfolio maintains cash, government securities or liquid, high-grade debt
securities in a segregated account in an amount not less than the value of a
Portfolio's total assets committed to the consummation of the contract which
value must be marked to market daily. A Portfolio will comply with guidelines
established by the SEC with respect to coverage of forward contracts entered
into by mutual funds and, if such guidelines so require, will set aside cash,
U.S. government securities or liquid, high-grade debt securities in a segregated
account with its custodian in the amount prescribed. Under normal
circumstances, consideration of the prospect for currency parities will be
incorporated into the longer term investment decisions made with regard to
overall diversification strategies. However, the Adviser believes that it is
important to have the flexibility to enter into such forward contracts when it
determines that the best interests of a Portfolio will be served.

At or before the maturity date of a forward contract requiring a
portfolio to sell a currency, the Portfolios may either sell a portfolio
security and use the sale proceeds to make delivery of the currency or retain
the security and offset its contractual obligation to deliver the currency by
purchasing a second contract pursuant to which the Portfolio will obtain, on the
same maturity date, the same amount of the currency that it is obligated to
deliver. Similarly, the Portfolios may close out a forward contract requiring
it to purchase a specified currency by entering into a second contract entitling
it to sell the same amount of the same currency on the maturity date of the
first contract. A Portfolio would realize a gain or loss

<PAGE>

as a result of entering into such an offsetting forward currency contract under
either circumstance to the extent the exchange rate or rates between the
currencies involved moved between the execution dates of the first contract and
the offsetting contract.

The cost to a Portfolio of engaging in forward currency contracts will
vary with factors such as the currencies involved, the length of the contract
period and the market conditions then prevailing. Because forward currency
contracts are usually entered into on a principal basis, no fees or commissions
are involved. The use of forward currency contracts will not eliminate
fluctuations in the prices of the underlying securities a Portfolio owns or
intends to acquire, but it will fix a rate of exchange in advance. In addition,
although forward currency contracts limit the risk of loss due to a decline in
the value of the hedged currencies, at the same time they limit any potential
gain that might result should the value of the currencies increase.

Although a Portfolio will value its assets daily in terms of U.S.
dollars, it does not intend to convert its holdings of foreign currencies into
U.S. dollars on a daily basis. The Portfolios may convert foreign currency from
time to time, and investors should be aware of the costs of currency conversion.
Although foreign exchange dealers do not charge a fee for conversion, they do
realize a profit based on the difference between the prices at which they are
buying and selling various currencies. Thus, a dealer may offer to sell a
foreign currency to a Portfolio at one rate, while offering a lesser rate of
exchange should a Portfolio desire to resell that currency to the dealer.

FUTURES CONTRACTS. When a Portfolio purchases a futures contract, it
agrees to purchase a specified underlying instrument at a specified future date.
When a Portfolio sells a futures contract, it agrees to sell the underlying
instrument at a specified future date. The price at which the purchase and sale
will take place is fixed when a Portfolio enters into the contract. The
underlying instrument may be a specified type of security, such as U.S. Treasury
bonds or notes.

The majority of futures contracts are closed out by entering into an
offsetting purchase or sale transaction in the same contract on the exchange
where they are traded, rather than being held for the life of the contract.
Futures contracts are closed out at their current prices, which may result in a
gain or loss.

If a Portfolio holds a futures contract until the delivery date, it
will be required to complete the purchase and sale contemplated by the contract.
In the case of futures contracts on securities, the purchaser generally must
deliver the agreed-upon purchase price in cash, and the seller must deliver
securities that meet the specified characteristics of the contract.

<PAGE>

A Portfolio may purchase futures contracts as an alternative to
purchasing actual securities. For example, if a Portfolio intended to purchase
bonds but had not yet done so, it could purchase a futures contract in order to
lock in current bond prices while deciding on particular investments. This
strategy is sometimes known as an anticipatory hedge. Alternatively, a
Portfolio could purchase a futures contract if it had cash and short-term
securities on hand that it wished to invest in longer-term securities, but at
the same time that Portfolio wished to maintain a highly liquid position in
order to be prepared to meet redemption requests or other obligations. In these
strategies a Portfolio would use futures contracts to attempt to achieve an
overall return -- whether positive or negative --similar to the return from
longer-term securities, while taking advantage of potentially greater liquidity
that futures contracts may offer. Although a Portfolio would hold cash and
liquid debt securities in a segregated account with a value sufficient to cover
its open futures obligations, the segregated assets would be available to a
Portfolio immediately upon closing out the futures position, while settlement of
securities transactions can take several days. However, because the Portfolio's
cash that would otherwise have been invested in higher-yielding bonds would be
held uninvested or invested in short-term securities so long as the futures
position remains open, the Portfolio's return would involve a smaller amount of
interest income and potentially a greater amount of capital gain or loss.

A Portfolio may sell futures contracts to hedge its other investments
against changes in value, or as an alternative to sales of securities. For
example, if the investment adviser anticipated a decline in bond prices, but did
not wish to sell bonds owned by a Portfolio, it could sell a futures contract in
order to lock in a current sale price. If prices subsequently fell, the future
contract's value would be expected to rise and offset all or a portion of the
loss in the bonds that Portfolio had hedged. Of course, if prices subsequently
rose, the futures contract's value could be expected to fall and offset all or a
portion of the benefit of the Portfolio. In this type of strategy, the
Portfolio's return will tend to involve a larger component of interest income,
because the Portfolio will remain invested in longer-term securities rather than
selling them and investing the proceeds in short-term securities which generally
provide lower yields.

SUPPLEMENTAL INVESTMENT OBJECTIVES AND POLICIES -- BEA INTERNATIONAL
EQUITY, BEA EMERGING MARKETS EQUITY, BEA BALANCED, BEA U.S. CORE
EQUITY, BEA U.S. CORE FIXED INCOME, BEA GLOBAL FIXED INCOME, BEA
HIGH YIELD AND BEA SHORT DURATION PORTFOLIOS.

FUTURES MARGIN PAYMENTS. The purchaser or seller of a futures
contract is not required to deliver or pay for the underlying instrument unless
the contract is held until the delivery date. However, both the purchaser and
seller are required to deposit "initial margin" with a futures broker (known as
a futures commission merchant, or FCM), when the contract is entered into.
Initial margin deposits are equal to a percentage of the contract's value, as
set by the exchange where the contract is traded, and may be maintained in cash
or high quality liquid securities. If the value of

<PAGE>

either party's position declines, that party will be required to make additional
"variation margin" payments to settle the change in value on a daily basis. The
party that has a gain may be entitled to receive all or a portion of this
amount. Initial and variation margin payments are similar to good faith
deposits or performance bonds, unlike margin extended by a securities broker,
and initial and variation margin payments do not constitute purchasing
securities on margin for purposes of the Portfolio's investment limitations. In
the event of the bankruptcy of an FCM that holds margin on behalf of a
Portfolio, that Portfolio may be entitled to return of margin owed to it only in
proportion to the amount received by the FCM's other customers. The investment
adviser will attempt to minimize this risk by careful monitoring of the
creditworthiness of the FCMs with which a Portfolio does business.

CORRELATION OF PRICE CHANGES. The prices of futures contracts depend
primarily on the value of their underlying instruments. Because there are a
limited number of types of futures contracts, it is likely that the standardized
futures contracts available to a Portfolio will not match that Portfolio's
current or anticipated investments. Futures prices can also diverge from the
prices of their underlying instruments, even if the underlying instruments match
the Portfolio's investments well. Futures prices are affected by such factors
as current and anticipated short-term interest rates, changes in volatility of
the underlying instrument, and the time remaining until expiration of the
contract, which may not affect security prices the same way. Imperfect
correlation between a Portfolio's investments and its futures positions may also
result from differing levels of demand in the futures markets and the securities
markets, from structural differences in how futures and securities are traded,
or from imposition of daily price fluctuation limits for futures contracts. A
Portfolio may purchase or sell futures contracts with a greater or lesser value
than the securities it wishes to hedge or intends to purchase in order to
attempt to compensate for differences in historical volatility between the
futures contract and the securities, although this may not be successful in all
cases. If price changes in a Portfolio's futures positions are poorly
correlated with its other investments, its futures positions may fail to produce
anticipated gains or result in losses that are not offset by the gains in that
Portfolio's other investments.

LIQUIDITY OF FUTURES CONTRACTS. Because futures contracts are
generally settled within a day from the date they are closed out, compared with
a settlement period of seven days for some types of securities, the futures
markets can provide liquidity superior to the securities markets in many cases.
Nevertheless, there is no assurance a liquid secondary market will exist for any
particular futures contract at any particular time. In addition, futures
exchanges may establish daily price fluctuation limits for futures contracts,
and may halt trading if a contract's price moves upward or downward more than
the limit in a given day. On volatile trading days when the price fluctuation
limit is reached, it may be impossible for a Portfolio to enter into new
positions or close out existing positions. If the secondary market for a
futures contract is not liquid because of price fluctuation

<PAGE>

limits or otherwise, it would prevent prompt liquidation of unfavorable futures
positions, and potentially could require a Portfolio to continue to hold a
futures position until the delivery date regardless of changes in its value. As
a result, a Portfolio's access to other assets held to cover its futures
positions could also be impaired.

PURCHASING PUT OPTIONS. By purchasing a put option, a Portfolio
obtains the right (but not the obligation) to sell the option's underlying
instrument at a fixed strike price. The option may give a Portfolio the right
to sell only on the option's expiration date, or may be exercisable at any time
up to and including that date. In return for this right, a Portfolio pays the
current market price for the option (known as the option premium). The option's
underlying instrument may be a security, or a futures contract.

A Portfolio may terminate its position in a put option it has
purchased by allowing it to expire or by exercising the option. If the option
is allowed to expire, the Portfolio will lose the entire premium it paid. If
the Portfolio exercises the option, it completes the sale of the underlying
instrument at the strike price. If the Portfolio exercises a put option on a
futures contract, it assumes a seller's position in the underlying futures
contract. Purchasing an option on a futures contract does not require the
Portfolio to make futures margin payments unless it exercises the option. A
Portfolio may also terminate a put option position by closing it out in the
secondary market at its current price, if a liquid secondary market exists.

Put options may be used by a Portfolio to hedge securities it owns, in
a manner similar to selling futures contracts, by locking in a minimum price at
which the Portfolio can sell. If security prices fall, the value of the put
option would be expected to rise and offset all or a portion of the Portfolio's
resulting losses. The put thus acts as hedge against a fall in the price of
such securities. However, all other things being equal (including securities
prices) option premiums tend to decrease over time as the expiration date nears.
Therefore, because of the cost of the option in the form of the premium (and
transaction costs), a Portfolio would expect to suffer a loss in the put option
if prices do not decline sufficiently to offset the deterioration in the value
of the option premium. This potential loss represents the cost of the hedge
against a fall in prices. At the same time, because the maximum a Portfolio has
at risk is the cost of the option, purchasing put options does not eliminate the
potential for the Portfolio to profit from an increase in the value of the
securities hedged to the same extent as selling a futures contract.

PURCHASING CALL OPTIONS. The features of call options are essentially
the same as those of put options, except that the purchaser of a call option
obtains the right to purchase, rather than sell, the underlying instrument at
the option's strike price (call options on futures contracts are settled by
purchasing the underlying futures contract). By purchasing a call option, a
Portfolio would attempt to participate in potential price increases of the
underlying instrument, with results similar to those obtainable from purchasing
a futures contract, but with risk limited to the cost of the option

<PAGE>

if security prices fell. At the same time, a Portfolio can expect to suffer a
loss if security prices do not rise sufficiently to offset the cost of the
option.

The Portfolios may purchase call options in connection with "closing
purchase transactions." A Portfolio may terminate its position in a call option
by entering into a closing purchase transaction. A closing purchase transaction
is the purchase of a call option on the same security with the same exercise
price and call period as the option previously written by the Portfolio. If a
Portfolio is unable to enter into a closing purchase transaction, a Portfolio
may be required to hold a security that it might otherwise have sold to protect
against depreciation.

WRITING PUT OPTIONS. When a Portfolio writes a put option, it takes
the opposite side of the transaction from the option's purchaser. In return for
receipt of the premium, a Portfolio assumes the obligation to pay the strike
price for the option's underlying instrument if the other party to the option
chooses to exercise it. When writing an option on a futures contract the
Portfolio will be required to make margin payments to an FCM as described above
for futures contracts. A Portfolio may seek to terminate its position in a put
option it writes before exercise by closing out the option in the secondary
market at its current price. If the secondary market is not liquid for an
option the Portfolio has written, however, the Portfolio must continue to be
prepared to pay the strike price while the option is outstanding, regardless of
price changes, and must continue to set aside assets to cover its position.

A Portfolio may write put options as an alternative to purchasing
actual securities. If security prices rise, the Portfolio would expect to
profit from a written put option, although its gain would be limited to the
amount of the premium it received. If security prices remain the same over
time, it is likely that the Portfolio will also profit, because it should be
able to close out the option at a lower price. If security prices fall, the
Portfolio would expect to suffer a loss. This loss should be less than the loss
the Portfolio would have experienced from purchasing the underlying instrument
directly, however, because the premium received for writing the option should
mitigate the effects of the decline. As with other futures and options
strategies used as alternatives for purchasing securities, the Portfolio's
return from writing put options generally will involve a smaller amount of
interest income than purchasing longer-term securities directly, because the
Portfolio's cash will be invested in shorter-term securities which usually offer
lower yields.

WRITING CALL OPTIONS. Writing a call option obligates a Portfolio to
sell or deliver the option's underlying instrument, in return for the strike
price, upon exercise of the option. The characteristics of writing call options
are similar to those of writing put options, as described above, except that
writing covered call options generally is a profitable strategy if prices remain
the same or fall. Through receipt of the option premium, the Portfolio would
seek to mitigate the effects of a price decline. At the same

<PAGE>

time, because a Portfolio would have to be prepared to deliver the underlying
instrument in return for the strike price, even if its current value is greater,
the Portfolio would give up some ability to participate in security price
increases when writing call options.

COMBINED OPTION POSITIONS. A Portfolio may purchase and write options
in combination with each other to adjust the risk and return characteristics of
the overall position. For example, a Portfolio may purchase a put option and
write a call option on the same underlying instrument, in order to construct a
combined position whose risk and return characteristics are similar to selling a
futures contract. Another possible combined position would involve writing a
call option at one strike price and buying a call option at a lower price, in
order to reduce the risk of the written call option in the event of a
substantial price increase. Because combined options positions involve multiple
trades, they result in higher transaction costs and may be more difficult to
open and close out.

RISKS OF OPTIONS TRANSACTIONS. Options are subject to risks similar
to those described above with respect to futures contracts, including the risk
of imperfect correlation between the option and a Portfolio's other investments
and the risk that there might not be a liquid secondary market for the option.
In the case of options on futures contracts, there is also a risk of imperfect
correlation between the option and the underlying futures contract. Options are
also subject to the risks of an illiquid secondary market, particularly in
strategies involving writing options, which a Portfolio cannot terminate by
exercise. In general, options whose strike prices are close to their underlying
instruments' current value will have the highest trading volume, while options
whose strike prices are further away may be less liquid. The liquidity of
options may also be affected if options exchanges impose trading halts,
particularly when markets are volatile.

ASSET COVERAGE FOR FUTURES AND OPTIONS POSITIONS. A Portfolio will
not use leverage in its options and futures strategies. Such investments will
be made for hedging purposes only. A Portfolio will hold securities or other
options or futures positions whose values are expected to offset its obligations
under the hedge strategies. A Portfolio will not enter into an option or
futures position that exposes the Portfolio to an obligation to another party
unless it owns either (i) an offsetting position in securities or other options
or futures contracts or (ii) cash, receivables and short-term debt securities
with a value sufficient to cover its potential obligations. A Portfolio will
comply with guidelines established by the SEC with respect to coverage of
options and futures strategies by mutual funds, and if the guidelines so require
will set aside cash and high grade liquid debt securities in a segregated
account with its custodian bank in the amount prescribed. Securities held in a
segregated account cannot be sold while the futures or option strategy is
outstanding, unless they are replaced with similar securities. As a result,
there is a possibility that segregation of a large percentage of the Portfolio's
assets could impede portfolio management or the Portfolio's ability to meet
redemption requests or other current obligations.

<PAGE>

LIMITATIONS ON FUTURES AND OPTIONS TRANSACTIONS. The Fund on behalf
of the Portfolios will file, if required, a notice of eligibility for exclusion
from the definition of the term "commodity pool operator" with the Commodity
Futures Trading Commission ("CFTC") and the National Futures Association, which
regulate trading in the futures markets. Pursuant to Section 4.5 of the
regulations under the Commodity Exchange Act, the notice of eligibility includes
the representation that the Portfolios will not enter into any commodity futures
contract or option on a commodity futures contract if, as a result, the sum of
initial margin deposits on commodity futures contracts and related commodity
options and premiums paid for options on commodity futures contracts the
Portfolio has purchased, after taking into account unrealized profits and losses
on such contracts, would exceed 5% of a Portfolio's total assets.

In addition, the Portfolios will not enter into any futures contract
and into any option if, as a result, the sum of (i) the current value of assets
hedged in the case of strategies involving the sale of securities, and (ii) the
current value of securities or other instruments underlying the respective
Portfolio's other futures or options positions, would exceed 50% of such
Portfolio's net assets.

The Portfolios' limitations on investments in futures contracts and
its policies regarding futures contracts and the Portfolios' limitations on
investments in options and their policies regarding options discussed above in
this Statement of Additional Information, are not fundamental policies and may
be changed as regulatory agencies permit.

Various exchanges and regulatory authorities have recently undertaken
reviews of options and futures trading in light of market volatility. Among the
possible actions that have been presented are proposals to adopt new or more
stringent daily price fluctuation limits for futures or options transactions,
and proposals to increase the margin requirements for various types of
strategies. It is impossible to predict what actions, if any, will result from
these reviews at this time.

SHORT SALES "AGAINST THE BOX." In a short sale, a Portfolio sells a
borrowed security and has a corresponding obligation to the lender to return the
identical security. Each Portfolio may engage in short sales if at the time of
the short sale it owns or has the right to obtain, at no additional cost, an
equal amount of the security being sold short. This investment technique is
known as a short sale "against the box." In a short sale, a seller does not
immediately deliver the securities sold and is said to have a short position in
those securities until delivery occurs. If a Portfolio engages in a short sale,
the collateral for the short position will be maintained by the Portfolio's
custodian or a qualified sub-custodian. While the short sale is open, the
Portfolio will maintain in a segregated account an amount of securities equal in
kind and amount to the securities sold short or securities convertible into or
exchangeable for such equivalent securities. These securities constitute the
Portfolio's long position. A Portfolio may, however, make a short sale as a
hedge, when it believes that the price of a

<PAGE>

security may decline, causing a decline in the value of a security owned by the
Portfolio (or a security convertible or exchangeable for such security), or when
the Portfolio wants to sell the security at an attractive current price, but
also wishes to defer recognition of gain or loss for federal income tax purposes
and for purposes of satisfying certain tests applicable to regulated investment
companies under the Internal Revenue Code. In such case, any future losses in
the Portfolio's long position should be reduced by a gain in the short position.
Conversely, any gain in the long position should be reduced by a loss in the
short position. The extent to which such gains or losses are reduced will
depend upon the amount of the security sold short relative to the amount the
Portfolio owns. There will be certain additional transaction costs associated
with short sales against the box, but the Portfolio will endeavor to offset
these costs with the income from the investment of the cash proceeds of short
sales.

SECTION 4(2) PAPER. "Section 4(2) paper" is commercial paper which is
issued in reliance on the "private placement" exemption from registration which
is afforded by Section 4(2) of the Securities Act of 1933. Section 4(2) paper
is restricted as to disposition under the Federal securities laws and is
generally sold to institutional investors such as the Fund which agree that they
are purchasing the paper for investment and not with a view to public
distribution. Any resale by the purchaser must be in an exempt transaction.
Section 4(2) paper normally is resold to other institutional investors through
or with the assistance of investment dealers who make a market in the Section
4(2) paper, thereby providing liquidity. See "Illiquid Securities" above.

SUPPLEMENTAL INVESTMENT OBJECTIVES AND POLICIES -- BEA INTERNATIONAL
EQUITY, BEA EMERGING MARKETS EQUITY, BEA U.S. CORE EQUITY AND BEA
BALANCED PORTFOLIOS

RIGHTS OFFERINGS AND PURCHASE WARRANTS. Rights offerings and purchase
warrants are privileges issued by a corporation which enable the owner to
subscribe to and purchase a specified number of shares of the corporation at a
specified price during a specified period of time. Subscription rights normally
have a short lifespan to expiration. The purchase of rights or warrants
involves the risk that a Portfolio could lose the purchase value of a right or
warrant if the right to subscribe to additional shares is not executed prior to
the rights and warrants expiration. Also, the purchase of rights and/or
warrants involves the risk that the effective price paid for the right and/or
warrant added to the subscription price of the related security may exceed the
value of the subscribed security's market price such as when there is no
movement in the level of the underlying security.

INVESTMENT LIMITATIONS

Each Portfolio has adopted the following fundamental investment
limitations which may not be changed without the affirmative vote of the

<PAGE>

holders of a majority of the Portfolio's outstanding Shares (as defined in
Section 2(a)(42) of the Investment Company Act). Each Portfolio may not:

1. Borrow money, except from banks, and only if after such borrowing
there is asset coverage of at least 300% for all borrowings of the Portfolio; or
mortgage, pledge or hypothecate any of its assets except in connection with any
such borrowing and in amounts not in excess of the lesser of the dollar amounts
borrowed or 33 1/3% of the value of the Portfolio's total assets at the time of
such borrowing; (For the purpose of this restriction, collateral arrangements
with respect to, if applicable, the writing of options, and futures contracts,
options on futures contracts, forward currency contracts and collateral
arrangements with respect to initial and variation margin are not deemed to be a
pledge of assets and neither such arrangements nor the purchase or sale of
futures or related options are deemed to be the issuance of a senior security
for purposes of Investment Limitation No. 2);

2. Issue any senior securities, except as permitted under the
Investment Company Act;

3. Act as an underwriter of securities within the meaning of the
Securities Act of 1933 except insofar as it might be deemed to be an underwriter
upon disposition of certain portfolio securities acquired within the limitation
on purchases of restricted securities;

4. Purchase or sell real estate (including real estate limited
partnership interests), provided that a Portfolio may invest in securities
secured by real estate or interests therein or issued by companies that invest
in real estate or interests therein;

5. Purchase or sell commodities or commodity contracts, except that
a Portfolio may deal in forward foreign exchange between currencies of the
different countries in which it may invest and purchase and sell stock index and
currency options, stock index futures, financial futures and currency futures
contracts and related options on such futures;

6. Make loans, except through loans of portfolio instruments and
repurchase agreements, provided that for purposes of this restriction the
acquisition of bonds, debentures or other debt instruments or interests therein
and investment in government obligations, Loan Participations and Assignments,
short-term commercial paper, certificates of deposit and bankers' acceptances
shall not be deemed to be the making of a loan; and

7. Invest more than 25% of its assets, taken at market value at the
time of each investment, in the securities of issuers in any particular industry
(excluding the U.S. Government and its agencies and instrumentalities).

In addition to the fundamental investment limitations specified above,
a Portfolio may not:

<PAGE>

1. Make investments for the purpose of exercising control or
management. Investments by a Portfolio in wholly-owned investment entities
created under the laws of certain countries will not be deemed the making
of investments for the purpose of exercising control or management;

2. Purchase securities on margin, except for short-term credits
necessary for clearance of portfolio transactions, and except that a
Portfolio may make margin deposits in connection with its use of options,
futures contracts, options on futures contracts and forward contracts;

3. Purchase or sell interests in mineral leases, oil, gas or
other mineral exploration or development programs, except that a Portfolio
may invest in securities issued by companies that engage in oil, gas or
other mineral exploration or development activities; and

4. Purchase or retain the securities of any issuer, if those
individual officers and directors of the Fund, the Adviser or any
subsidiary thereof each owning beneficially more than 1/2 of 1% of the
securities of such issuer own in the aggregate more than 5% of the
securities of such issuer.

The policies set forth above are not fundamental and thus may be
changed by the Fund's Board of Directors without a vote of the shareholders.

In order to permit the sale of the Portfolios in certain states, the
Fund on behalf of a Portfolio has undertaken to adhere to the following
investment policies, each of which may be changed without shareholder approval:

(1) That the dollar amount of short sales at any one time shall
not exceed 25% of the net equity of a Portfolio, and the value of
securities of any one issuer in which a Portfolio is short may not exceed
the lesser of 2.0% of the value of a Portfolio's net assets or 2.0% of the
securities of any class of any issuer. Short sales may be made only in
those securities which are fully listed on a national securities exchange.
This provision does not include the sale of securities if the Portfolio
contemporaneously owns or has the right to obtain securities equivalent in
kind and amount to those sold, i.e., short sales against the box.

(2) That the investment in warrants, valued at the lower of cost
or market, may not exceed 5.0% of the value of a Portfolio's net assets.
Included within that amount, but not to exceed 2.0% of the value of a
Portfolio's net assets, may be warrants which are not listed on the New
York or American Stock Exchange. Warrants acquired by a Portfolio in units
or attached to securities may be deemed to be without value.

<PAGE>

Except for the percentage restrictions applicable to the borrowing of
money, if a percentage restriction is adhered to at the time of investment, a
later increase or decrease in percentage resulting from a change in market
values of portfolio securities or amount of total or net assets will not be
considered a violation of any of the foregoing restrictions.

In order to permit the sale of shares of a Portfolio in certain
states, a Portfolio may make commitments more restrictive than the investment
policies and limitations above. If a Portfolio determines that any such
commitment is no longer in its best interests, it will revoke the commitment by
terminating sales of its shares in the state involved. In addition, a Portfolio
may be subject to investment restrictions imposed by countries in which it
invests directly or indirectly.

Securities held by a Portfolio generally may not be purchased from,
sold or loaned to the Adviser or its affiliates or any of their directors,
officers or employees, acting as principal, unless pursuant to a rule or
exemptive order under the Investment Company Act.

RISK FACTORS

CLEARANCE AND SETTLEMENT PROCEDURES. Delays in clearance and
settlement could result in temporary periods when assets of a Portfolio are
uninvested and no return is earned thereon. The inability of a Portfolio to
make intended security purchases due to settlement problems could cause a
Portfolio to miss attractive investment opportunities. Inability to dispose of
a portfolio security due to settlement problems could result either in losses to
a Portfolio due to subsequent declines in the value of such portfolio security
or, if a Portfolio has entered into a contract to sell the security, could
result in possible liability to the purchaser.

OPERATING EXPENSES. The costs attributable to foreign investing that
a Portfolio must bear frequently are higher than those attributable to domestic
investing. For example, the cost of maintaining custody of foreign securities
exceeds custodian costs for domestic securities. Investment income on certain
foreign securities in which a Portfolio may invest may be subject to foreign
withholding or other taxes that could reduce the return on those securities.
Tax treaties between the United States and foreign countries, however, may
reduce or eliminate the amount of foreign tax to which a Portfolio would be
subject.

NO RATING CRITERIA FOR DEBT SECURITIES. The BEA High Yield, BEA U.S.
Core Fixed Income, the BEA Global Fixed Income, and BEA Municipal Bond Fund
Portfolios have established no rating criteria for the debt securities in which
it may invest. Issuers of low rated or non-rated securities ("high yield"
securities, commonly known as "junk bonds") may be highly leveraged and may not
have available to them more traditional methods of financing. Therefore, the
risks associated with acquiring the securities of such issuers generally is
greater than is the case with higher rated securities. For

<PAGE>

example, during an economic downturn or a sustained period of rising interest
rates, issuers of high yield securities may be more likely to experience
financial stress, especially if such issuers are highly leveraged. During such
periods, such issuers may not have sufficient revenues to meet their interest
payment obligations. The issuer's ability to service its debt obligations also
may be adversely affected by specific issuer developments, or the issuer's
inability to meet specific projected business forecasts, or the unavailability
of additional financing. The risk of loss due to default by the issuer is
significantly greater for the holders of lower-rated securities because such
securities may be unsecured and may be subordinated to other creditors of the
issuer.

Lower-rated securities frequently have call or redemption features
which would permit an issuer to repurchase the security from a Portfolio. If a
call were exercised by the issuer during a period of declining interest rates, a
Portfolio likely would have to replace such called security with a lower
yielding security, thus decreasing the net investment income to a Portfolio and
dividends to shareholders.

A Portfolio may have difficulty disposing of certain lower-rated
securities because there may be a thin trading market for such securities. The
secondary trading market for high yield securities is generally not as liquid as
the secondary market for higher rated securities. Reduced secondary market
liquidity may have an adverse impact on market price and a Portfolio's ability
to dispose of particular issues when necessary to meet a Portfolio's liquidity
needs or in response to a specific economic event such as a deterioration in the
creditworthiness of the issuer.

Adverse publicity and investor perceptions, which may not be based on
fundamental analysis, also may decrease the value and liquidity of lower-rated
securities, particularly in a thinly traded market. Factors adversely affecting
the market value of lower-rated securities are likely to adversely affect the
Portfolio's net asset value. In addition, a Portfolio may incur additional
expenses to the extent it is required to seek recovery upon a default on a
portfolio holding or participate in the restructuring of the obligation.

SOVEREIGN DEBT. Investments in Sovereign Debt involve special risks.
The issuer of the debt or the governmental authorities that control the
repayment of the debt may be unable or unwilling to repay principal or interest
when due in accordance with the terms of such debt, and the Portfolio may have
limited legal recourse in the event of a default.

Sovereign Debt differs from debt obligations issued by private
entities in that, generally, remedies for defaults must be pursued in the courts
of the defaulting party. Legal recourse is therefore somewhat limited.
Political conditions, especially a sovereign entity's willingness to meet the
terms of its debt obligations, are of considerable significance. Also, there
can be no assurance that the holders of commercial bank loans to the same

<PAGE>

sovereign entity may not contest payments to the holders of Sovereign Debt in
the event of default under commercial bank loan agreements.

A sovereign debtor's willingness or ability to repay principal and pay
interest in a timely manner may be affected by, among other factors, its cash
flow situation, the extent of its foreign reserves, the availability of
sufficient foreign exchange on the date a payment is due, the relative size of
the debt service burden to the economy as a whole, the sovereign debtor's policy
toward principal international lenders and the political constraints to which a
sovereign debtor may be subject. Increased protectionism on the part of a
country's trading partners, or political changes in those countries, could also
adversely affect its exports. Such events could diminish a country's trade
account surplus, if any, or the credit standing of a particular local government
or agency.

The occurrence of political, social or diplomatic changes in one or
more of the countries issuing Sovereign Debt could adversely affect a
Portfolio's investments. Political changes or a deterioration of a country's
domestic economy or balance of trade may affect the willingness of countries to
service their Sovereign Debt. While the Adviser intends to manage the
Portfolios in a manner that will minimize the exposure to such risks, there can
be no assurance that adverse political changes will not cause a Portfolio to
suffer a loss of interest or principal on any of its holdings.

Investors should also be aware that certain Sovereign Debt instruments
in which a Portfolio may invest involve great risk. Sovereign Debt issued by
issuers in many Emerging Markets generally is deemed to be the equivalent in
terms of quality to securities rated below investment grade by Moody's and S&P.
Such securities are regarded as predominantly speculative with respect to the
issuer's capacity to pay interest and repay principal in accordance with the
terms of the obligations and involve major risk exposure to adverse conditions.
Some of such Sovereign Debt, which may not be paying interest currently or may
be in payment default, may be comparable to securities rated D by S&P or C by
Moody's. A Portfolio may have difficulty disposing of certain Sovereign Debt
obligations because there may be a limited trading market for such securities.
Because there is no liquid secondary market for many of these securities, a
Portfolio anticipates that such securities could be sold only to a limited
number of dealers or institutional investors. The lack of a liquid secondary
market may have an adverse impact on the market price of such securities and a
Portfolio's ability to dispose of particular issues when necessary to meet a
Portfolio's liquidity needs or in response to a specific economic event, such as
a deterioration in the creditworthiness of the issuer. The lack of a liquid
secondary market for certain securities also may make it more difficult for a
Portfolio to obtain accurate market quotations for purposes of valuing a
Portfolio's portfolio and calculating its net asset value. When and if
available, fixed income securities may be purchased by a Portfolio at a discount
from face value. However, a Portfolio does not intend to hold such securities
to maturity for the purpose of achieving potential capital gains, unless current
yields on these securities remain attractive. From time to time a Portfolio may
purchase securities not paying interest at the time acquired if, in the opinion
of the Adviser, such securities have the potential for future income or capital
appreciation.

<PAGE>

DIRECTORS AND OFFICERS

The directors and executive officers of the Fund, their business
addresses and principal occupations during the past five years are:

Position with Principal Occupation
Name, Address and Age Fund During Past Five Years
- --------------------- ------------- ----------------------

Arnold M. Reichman - 47* Director Since 1986, Managing
466 Lexington Avenue Director and Assistant
New York, NY 10017 Secretary, E. M. Warburg,
Pincus & Co., Inc.; Since
1990, Chief Executive
Officer and since 1991,
Secretary, Counsellors
Securities, Inc; Officer of
various investment
companies advised by
Warburg, Pincus
Counsellors, Inc.

Robert Sablowsky - 57** Director Since 1985, Executive
14 Wall Street Vice President of
New York, NY 10005 Gruntal & Co., Inc.,
Director, Gruntal & Co.,
Inc. and Gruntal Financial
Corp.

Francis J. McKay - 60 Director Since 1963, Executive
7701 Burholme Avenue Vice President, Fox Chase
Philadelphia, PA 1911 Cancer Center (Biomedical
research and medical care.)

Marvin E. Sternberg -61 Director Since 1974, Chairman,
937 Mt. Pleasant Road Director and President,
Bryn Mawr, PA 19010 Moyco Industries, Inc.
(manufacturer of dental
supplies and precision
coated abrasives); Since
1968, Director and
President, Mart MMM, Inc.
(formerly Montgomeryville
Merchandise Mart Inc.) and
Mart PMM, Inc. (formerly
Pennsauken Merchandise
Mart, Inc.) (Shopping
Centers); and Since 1975,
Director and Executive Vice
President, Cellucap Mfg.
Co., Inc. (manufacturer of
disposable headwear).

<PAGE>

Position with Principal Occupation
Name, Address and Age Fund During Past Five Years
- --------------------- ------------- ----------------------

Julian A. Brodsky -62 Director Director, Vice Chairman
1969 to
Comcast Corporation present, Comcast
Corporation
1234 Market Street (cable television and
16th Floor communications); Director,
Philadelphia, PA 19107-3723 Comcast Cablevision of
Philadelphia (cable
television communications)
and Nextel (wireless
communications).

Donald van Roden - 71 Director Self-employed
1200 Old Mill Lane businessman.
Wyomissing, PA 19610 From February 1980 to March
1987, Vice Chairman, Smith
Kline Beckman Corporation
(pharmaceuticals);
Director, AAA Mid-Atlantic
(auto service); Director,
Keystone Insurance Co.

Edward J. Roach - 71 President and Certified Public
Bellevue Park Treasurer Accountant;
Corporate Center Vice Chairman of the
400 Bellevue Parkway of the Board, Fox Chase
Wilmington, DE 19809 Cancer Center; Vice
President and Trustee,
Pennsylvania School
for the Deaf; Trustee,
Immaculata College;
Vice President and Treasurer
of various investment
companies advised by PNC
Institutional Management
Corporation.

Morgan R. Jones - 56 Secretary Chairman of the law firm of
1100 PNB Bank Building Drinker Biddle & Reath,
Broad and Chestnut Streets Philadelphia, Pennsylvania;
Philadelphia, PA 19107 Director, Rocking Horse
Child Care Centers of
America, Inc.

__________________

* Mr. Reichman is an "interested person" of the Fund as that term is
defined in the 1940 Act by virtue of his position with Counsellors
Securities Inc., the Fund's distributor.

** Mr. Sablowsky is an "interested person" of the Fund as that term is
defined in the 1940 Act by virtue of his position with Gruntal & Co.,
Inc., a broker-dealer.

Messrs. McKay, Sternberg and Brodsky are members of the Audit
Committee of the Board of Directors. The Audit Committee, among other things,
reviews results of the annual audit and recommends to the Fund the firm to be
selected as independent auditors.

<PAGE>

Messrs. Reichman, McKay and van Roden are members of the
Executive Committee of the Board of Directors. The Executive Committee may
generally carry on and manage the business of the Fund when the Board of
Directors is not in session.

Messrs. McKay, Sternberg, Brodsky and van Roden are members of
the Nominating Committee of the Board of Directors. The Nominating Committee
recommends to the Board annually all persons to be nominated as directors of the
Fund.

The Fund pays directors who are not "affiliated persons" (as that
term is defined in the 1940 Act) of any Investment Adviser of sub-advisor of the
Fund or the Distributor $9,500 annually and $700 per meeting of the Board or any
committee thereof that is not held in conjunction with a Board meeting. Such
Directors are reimbursed for any expenses incurred in attending meetings of the
Board of Directors or any committee thereof. The Chairman (currently Donald von
Roden) receives an additional $5,000 for his services. For the year ended
August 31, 1995, each of the following members of the Board of Directors
received compensation from the fund in the following amounts: Julian A. Brodsky
in the aggregate amount of $9,425; Francis J. McKay in the aggregate amount of
$12,025; Marvin E. Sternberg in the aggregate amount of $12,675; Donald van
Roden in the aggregate amount of $14,675. On October 24, 1990 the Fund adopted,
as a participating employer, the Fund Office Retirement Profit-Sharing Plan and
Trust Agreement, a retirement plan for employees (currently Edward J. Roach)
pursuant to which the Fund will contribute on a monthly basis amounts equal to
10% of the monthly compensation of each eligible employee. By virtue of the
services performed by PNC Institutional Management Corporation ("PIMC"), the
Fund's adviser to certain investment portfolios of the Fund, BEA Associates
("BEA Associates"), the Fund's adviser to the BEA Portfolios, Warburg Pincus
Counsellors, Inc. (Warburg"), the Fund's adviser to the Warburg Pincus
Portfolios, PNC Bank, National Association ("PNC Bank"), the Fund's custodian,
and Counsellors Securities Inc. (the "Distributor"), the Fund's distributor, the
Fund itself requires only one part-time employee. No officer, director or
employee of PIMC, BEA, PNC Bank or the Distributor currently receives any
compensation from the Fund.

INVESTMENT ADVISORY AND SERVICING ARRANGEMENTS

ADVISORY AGREEMENTS. BEA Associates renders advisory and
administrative services to each of the Portfolios pursuant to Investment
Advisory Agreements. The Advisory Agreements relating to the Portfolios are
dated September 16, 1992 for the BEA International Equity, BEA Emerging Markets
Equity and BEA High Yield Portfolios, dated August 31, 1993 for the BEA U.S.
Core Equity, BEA U.S. Core Fixed Income, BEA Global Fixed Income and BEA
Municipal Bond Fund Portfolios, and dated November 17, 1994 for the BEA Balanced
and BEA Short Duration Portfolios. Such advisory agreements are hereinafter
collectively referred to as the "Advisory Contracts."

<PAGE>

BEA Associates is a diversified asset manager, handling global
equity, balanced, fixed income and derivative securities accounts for private
individuals, as well as corporate pension and profit-sharing plans, state
pension funds, union funds, endowments and other charitable institutions. As of
September 30, 1995, BEA Associates managed approximately $28.5 billion in
assets. BEA Associates is a general partnership organized under the laws of the
State of New York and, together with it predecessor firms, has been engaged in
the investment advisory business for over 50 years. Credit Suisse Capital
Corporation ("CS Capital") is an 80% partner and Basic Appraisals, Inc. is a 20%
partner in BEA Associates. CS Capital is a wholly-owned subsidiary of Credit
Suisse Investment Corporation, which is a wholly-owned subsidiary of Credit
Suisse, the second largest Swiss bank, which in turn is subsidiary of CS
Holding, a Swiss corporation. No one person or entity possesses a controlling
interest in Basic Appraisals, Inc. BEA Associates is registered as an
investment adviser under the Investment Advisers Act of 1940, as amended.

BEA Associates has sole investment discretion for the Portfolios
and will make all decisions affecting assets in the Portfolios under the
supervision of the Fund's Board of Directors and in accordance with each
Portfolio's stated policies. BEA Associates will select investments for the
Portfolios and will place purchase and sale orders on behalf of the Portfolios.
For its services to the BEA International Equity, BEA Emerging Markets Equity,
BEA U.S. Core Equity, BEA U.S. Core Fixed Income, BEA Global Fixed Income, BEA
High Yield, BEA Municipal Bond Fund, BEA Balanced and BEA Short Duration
Portfolios, BEA Associates will be paid (before any voluntary waivers or
reimbursements) a monthly fee computed at an annual rate of .80%, 1.00%, .75%,
.375%, .50%, .70%, .70%, .60% and .15% of average daily net assets,
respectively.

For the year ended August 31, 1995, BEA waived advisory fees with
respect to the BEA International Equity, BEA Emerging Markets Equity, BEA U.S.
Core Equity, BEA U.S. Core Fixed Income, BEA Global Fixed Income, BEA High Yield
and BEA Municipal Bond Fund Portfolios in the amount of $0, $33,702, $88,725,
$121,336, $68,558, $0, and $38,740 respectively. During the same period, BEA
received advisory fees (after waivers) in the amount of $6,012,837, $1,250,012,
$77,156, $133,139, $18,914, $1,002,002, and $295,376 respectively.

As required by various state regulations, BEA Associates will
reimburse the Fund or the Portfolio affected (as applicable) if and to the
extent that the aggregate operating expenses of the Fund or the Portfolio
affected exceed applicable state limits for the fiscal year, to the extent
required by such state regulations. Currently, the most restrictive of such
applicable limits is believed to be 2-1/2% of the first $30 million of average
annual net assets, 2% of the next $70 million of average annual net assets and
1 1/2% of the remaining average annual net assets. Certain expenses, such as
brokerage commissions, taxes, interest and extraordinary items, are excluded
from this limitation. Whether such expense limitations apply to the Fund as a

<PAGE>

whole or to each Portfolio on an individual basis depends upon the particular
regulations of such states.

Each Portfolio bears all of its own expenses not specifically
assumed by the Adviser. General expenses of the Fund not readily identifiable
as belonging to a Portfolio of the Fund are allocated among all investment
Portfolios by or under the direction of the Fund's Board of Directors in such
manner as the Board determines to be fair and equitable. Expenses borne by a
Portfolio include, but are not limited to, the following (or a Portfolio's share
of the following): (a) the cost (including brokerage commissions) of securities
purchased or sold by a Portfolio and any losses incurred in connection
therewith; (b) fees payable to and expenses incurred on behalf of a Portfolio by
BEA Associates; (c) expenses of organizing the Fund that are not attributable to
a class of the Fund; (d) certain of the filing fees and expenses relating to the
registration and qualification of the Fund and a Portfolio's shares under
Federal and/or state securities laws and maintaining such registrations and
qualifications; (e) fees and salaries payable to the Fund's directors and
officers; (f) taxes (including any income or franchise taxes) and governmental
fees; (g) costs of any liability and other insurance or fidelity bonds; (h) any
costs, expenses or losses arising out of a liability of or claim for damages or
other relief asserted against the Fund or a Portfolio for violation of any law;
(i) legal, accounting and auditing expenses, including legal fees of special
counsel for the independent directors; (j) charges of custodians and other
agents; (k) expenses of setting in type and printing prospectuses, statements of
additional information and supplements thereto for existing shareholders,
reports, statements, and confirmations to shareholders and proxy material that
are not attributable to a class; (l) costs of mailing prospectuses, statements
of additional information and supplements thereto to existing shareholders, as
well as reports to shareholders and proxy material that are not attributable to
a class; (m) any extraordinary expenses; (n) fees, voluntary assessments and
other expenses incurred in connection with membership in investment company
organizations; (o) costs of mailing and tabulating proxies and costs of
shareholders' and directors' meetings; (p) costs of PFPC's use of independent
pricing services to value a Portfolio's securities; and (q) the cost of
investment company literature and other publications provided by the Fund to its
directors and officers. Transfer agency expenses, expenses of preparation,
printing and mailing prospectuses, statements of additional information, proxy
statements and reports to shareholders, organizational expenses and registration
fees and other costs identified as belonging to a particular class of the Fund
are allocated to such class.

Under the Advisory Contracts, BEA Associates will not be liable
for any error of judgment or mistake of law or for any loss suffered by the Fund
or a Portfolio in connection with the performance of the Advisory Contracts, and
shall be indemnified for any losses and expenses in connection with any claim
relating thereto, except a loss resulting from willful misfeasance, bad faith or
gross negligence on the part of BEA Associates in the performance of its duties
or reckless disregard by it of its obligations and duties under the Advisory
Contracts.

<PAGE>

The Advisory Contracts were approved on July 26, 1995, by vote of
the Fund's Board of Directors, including a majority of those directors who are
not parties to the Advisory Contracts or interested persons (as defined in the
1940 Act) of such parties. The Advisory Contracts were approved by each
Portfolio's initial shareholder. Each Advisory Contract is terminable by vote
of the Fund's Board of Directors or by the holders of a majority of the
outstanding voting securities of the relevant Portfolio, at any time without
penalty, on 60 days' written notice to BEA Associates. Each of the Advisory
Contracts may also be terminated by BEA Associates on 60 days' written notice to
the Fund. Each of the Advisory Contracts terminates automatically in the event
of assignment thereof.

CUSTODIAN AND TRANSFER AGENCY AGREEMENTS. PNC Bank, National
Association ("PNC"), serves as custodian for the BEA Municipal Bond Fund
pursuant to a custodian agreement (the "PNC Custodian Agreement"). PNC's
principal business address is 17th and Chestnut Streets, Philadelphia,
Pennsylvania 19103. Brown Brothers Harriman & Co. ("BBH") acts as the custodian
for the remaining Portfolios and also acts as the custodian for the Portfolios'
foreign securities pursuant to a Custodian Agreement (the "BBH Custodian
Agreement," and together with the PNC Custodian Agreement, the "Custodian
Agreements"). Under the Custodian Agreements, PNC and BBH (the "Custodians")
(a) maintain a separate account or accounts in the name of each Portfolio, (b)
hold and transfer portfolio securities on account of each Portfolio, (c) accept
receipts and make disbursements of money on behalf of each Portfolio, (d)
collect and receive all income and other payments and distributions on account
of each Portfolio's portfolio securities, and (e) make periodic reports to the
Fund's Board of Directors concerning each Portfolio's operations. The
Custodians are authorized to select one or more banks or trust companies to
serve as sub-custodian on behalf of the Fund, provided that the Custodians
remain responsible for the performance of all their duties under the Custodian
Agreements and hold the Fund harmless from the negligent acts and omissions of
any sub-custodian. For their services to the Fund under the Custodian
Agreements, each of the Custodians receive a fee which is calculated based upon
each Portfolio's average daily gross assets, exclusive of transaction charges
and out-of-pocket expenses, which are also charged to the Fund.

PFPC Inc. ("PFPC"), an affiliate of PNC Bank, serves as the
transfer and dividend disbursing agent for the BEA Classes pursuant to a
Transfer Agency Agreement, as supplemented (collectively, the "Transfer Agency
Agreement"), under which PFPC (a) issues and redeems shares of each of the BEA
Classes, (b) addresses and mails all communications by each Portfolio to record
owners of shares of each such Class, including reports to shareholders, dividend
and distribution notices and proxy materials for its meetings of shareholders,
(c) maintains shareholder accounts and, if requested, sub-accounts and (d) makes
periodic reports to the Fund's Board of Directors concerning the operations of
each BEA Class. PFPC may, on 30 days' notice to the Fund, assign its duties as
transfer and dividend disbursing agent to any other affiliate of PNC Bank Corp.
For its services to the Fund under the Transfer Agency Agreement, PFPC receives
a fee for orders which are placed via

<PAGE>

third parties and electronically relayed to PFPC at the annual rate of $8 per
account for the BEA International Equity, BEA Emerging Markets Equity, BEA U.S.
Core Equity and BEA Global Fixed Income Portfolios, and $11 per account for the
BEA U.S. Core Fixed Income and BEA Municipal Bond Fund Portfolios. PFPC
receives a fee for all other orders at an annual rate of $10 per account for the
BEA International Equity, BEA Emerging Markets Equity, BEA U.S. Core Equity and
BEA Global Fixed Income Portfolios, and $13 per account for the BEA U.S. Core
Fixed Income and BEA Municipal Bond Fund Portfolios.

PORTFOLIO TRANSACTIONS

Subject to policies established by the Board of Directors, BEA
Associates is responsible for the execution of portfolio transactions and the
allocation of brokerage transactions for the Portfolios. In executing portfolio
transactions, BEA Associates seeks to obtain the best net results for a
Portfolio, taking into account such factors as the price (including the
applicable brokerage commission or dealer spread), size of the order, difficulty
of execution and operational facilities of the firm involved. While BEA
Associates generally seeks reasonably competitive commission rates, payment of
the lowest commission or spread is not necessarily consistent with obtaining the
best results in particular transactions.

Commission rates for brokerage transactions on foreign stock
exchanges are generally fixed. The reasonableness of any negotiated commission
paid by the Portfolios will be evaluated on the basis of the difficulty involved
in execution, the time taken to conclude the transaction, the extent of the
broker's commitment, if any, of its own capital and the amount involved in the
transaction. It should be noted that commission rates in U.S. Markets are
negotiated.

In the case of over-the-counter issues, there is generally no
stated commission, but the price usually includes an undisclosed commission or
markup, and the Portfolio will normally deal with the principal market makers
unless it can obtain better terms elsewhere.

No Portfolio has any obligation to deal with any broker or group
of brokers in the execution of portfolio transactions. BEA Associates may,
consistent with the interests of a Portfolio and subject to the approval of the
Board of Directors, select brokers on the basis of the research, statistical and
pricing services they provide to a Portfolio and other clients of BEA
Associates. Information and research received from such brokers will be in
addition to, and not in lieu of, the services required to be performed by BEA
Associates under his respective contracts. A commission paid to such brokers
may be higher than that which another qualified broker would have charged for
effecting the same transaction, provided that BEA Associates, as applicable,
determines in good faith that such commission is reasonable in terms either of
the transaction or the overall responsibility of BEA Associates to a Portfolio
and its other clients and that the total commissions

<PAGE>

paid by a Portfolio will be reasonable in relation to the benefits to a
Portfolio over the long-term.

Corporate debt and U.S. Government securities are generally
traded on the over-the-counter market on a "net" basis without a stated
commission, through dealers acting for their own account and not as brokers.
The Portfolios will primarily engage in transactions with these dealers or deal
directly with the issuer unless a better price or execution could be obtained by
using a broker. Prices paid to a dealer in debt securities will generally
include a "spread," which is the difference between the prices at which the
dealer is willing to purchase and sell the specific security at the time, and
includes the dealer's normal profit.

BEA Associates may seek to obtain an undertaking from issuers of
commercial paper or dealers selling commercial paper to consider the repurchase
of such securities from a Portfolio prior to their maturity at their original
cost plus interest (sometimes adjusted to reflect the actual maturity of the
securities), if it believes that a Portfolio's anticipated need for liquidity
makes such action desirable. Any such repurchase prior to maturity reduces the
possibility that a Portfolio would incur a capital loss in liquidating
commercial paper (for which there is no established market), especially if
interest rates have risen since acquisition of the particular commercial paper.

Investment decisions for each Portfolio and for other investment
accounts managed by BEA Associates are made independently of each other in the
light of differing conditions. However, the same investment decision may be
made for two or more of such accounts. In such cases, simultaneous transactions
are inevitable. Purchases or sales are then averaged as to price and allocated
as to amount according to a formula deemed equitable to each such account.
While in some cases this practice could have a detrimental effect upon the price
or value of the security as far as a Portfolio is concerned, in other cases it
is believed to be beneficial to a Portfolio. A Portfolio will not purchase
securities during the existence of any underwriting or selling group relating to
such security of which BEA Associates or any affiliated person (as defined in
the 1940 Act) thereof is a member except pursuant to procedures adopted by the
Fund's Board of Directors pursuant to Rule 10f-3 under the 1940 Act. Among
other things, these procedures, which will be reviewed by the Fund's directors
as deemed necessary and appropriate require that the commission paid in
connection with such a purchase be reasonable and fair, that the purchase be at
not more than the public offering price prior to the end of the first business
day after the date of the public offer, and that BEA Associates not participate
in or benefit from the sale to a Portfolio.

In no instance will portfolio securities be purchased from or
sold to the Distributor or BEA Associates or any affiliated person of the
foregoing entities except as permitted by SEC exemptive order or by applicable
law.

<PAGE>

During the year ended August 31, 1995, BEA International Equity
Portfolio paid $3,662,674 of brokerage commissions, BEA Emerging Markets Equity
Portfolio paid $778,886 of brokerage commissions, BEA U.S. Core Equity Portfolio
paid $110,474 of brokerage commissions, and for each other Portfolio no
brokerage commissions were paid during such period.

The BEA Short Duration Portfolio expects that its annual
portfolio turnover rate will not exceed 500% under normal market conditions.
BEA International Equity, BEA Emerging Markets Equity and BEA High Yield
Portfolios expect that their annual Portfolio turnover rate should not exceed
150% under normal market conditions. BEA U.S. Core Equity, BEA U.S. Core Fixed
Income, BEA Global Fixed Income and BEA Municipal Bond Fund expect that their
annual portfolio turnover rate should not exceed 100% under normal market
conditions. The BEA Balanced Portfolio expects that its annual portfolio
turnover rate will not exceed 100% under normal market conditions for the equity
portion and 100% for the fixed income portion. A high rate of portfolio
turnover involves correspondingly greater brokerage commission expenses and
other transaction costs, which must be borne directly by a Portfolio. Federal
income tax laws may restrict the extent to which a Portfolio may engage in short
term trading of securities. See "Taxes". Each of the Portfolios anticipates
that its annual portfolio turnover rate will vary from year to year. The
portfolio turnover rate is calculated by dividing the lesser of a Portfolio's
annual sales or purchases of portfolio securities (exclusive of purchases or
sales of securities whose maturities at the time of acquisition were one year or
less) by the monthly average value of the securities in the Portfolio during the
year.

PURCHASE AND REDEMPTION INFORMATION

The Fund reserves the right, if conditions exist which make cash
payments undesirable, to honor any request for redemption of a Portfolio's
shares by making payment in whole or in part in securities chosen by the Fund
and valued in the same way as they would be valued for purposes of computing a
Portfolio's net asset value. If payment is made in securities, a shareholder
may incur transaction costs in converting these securities into cash. The Fund
has elected, however, to be governed by Rule 18f-1 under the Investment Company
Act so that a Portfolio is obligated to redeem its shares solely in cash up to
the lesser of $250,000 or 1% of its net asset value during any 90-day period for
any one shareholder of a Portfolio.

Under the Investment Company Act, a Portfolio may suspend the
right to redemption or postpone the date of payment upon redemption for any
period during which the New York Stock Exchange, Inc. (the "NYSE") is closed
(other than customary weekend and holiday closings), or during which trading on
said Exchange is restricted, or during which (as determined by the SEC by rule
or regulation) an emergency exists as a result of which disposal or valuation of
Portfolio securities is not reasonably practicable, or for such other periods as
the SEC may permit. (A Portfolio may also suspend or

<PAGE>

postpone the recordation of the transfer of its shares upon the occurrence of
any of the foregoing conditions.)

Recently the staff of the SEC has recommended that the SEC
consider recommending to the United States Congress that the Investment Company
Act be amended to permit so-called "Interval Funds". Such Interval Funds may be
structured to permit redemptions less frequently than daily. In the event that
the SEC administratively or Congress legislatively permits the creation of such
Interval Funds, the Portfolios may consider appropriate changes in their
structures to conform with such provisions and to recognize the nature of the
markets in foreign securities.

VALUATION OF SHARES

The net asset value per share of each Portfolio is calculated
separately as of the close of regular trading of the NYSE on each Business Day.
"Business Day" means each weekday when the NYSE is open. Currently, the NYSE is
closed on New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day (observed), Labor Day, Thanksgiving Day and Christmas Day
(observed). Securities which are listed on stock exchanges, whether U.S. or
foreign are valued at the last sale price on the day the securities are valued
or, lacking any sales on such day, at the mean of the bid and asked prices
available prior to the valuation. Portfolio securities primarily traded in
foreign markets may be traded in such markets on days which are not Business
Days. Because net asset value per share of each Portfolio is determined only on
Business Days, the net asset value of shares of a Portfolio may be significantly
affected on days when an investor does not have access to the Portfolio. If on
any Business Day a foreign securities exchange or foreign market is closed, the
securities traded on such exchange or in such market will be valued at the last
sale price reported on the previous business day of such foreign exchange or
market. In cases where securities are traded on more than one exchange, the
securities are generally valued on the exchange designated by the Board of
Directors or its delegates as the primary market. Securities traded in the
over-the-counter market and listed on the National Association of Securities
Dealers Automatic Quotation System ("NASDAQ") are valued at the last trade price
listed on the NASDAQ at 4:00 p.m.; securities listed on NASDAQ for which there
were no sales on that day and other over-the-counter securities are valued at
the mean of the bid and asked prices available prior to valuation. Securities
for which market quotations are not readily available are valued at fair value
as determined in good faith by or under the direction of the Fund's Board of
Directors. The amortized cost method of valuation may also be used with respect
to debt obligations with sixty days or less remaining to maturity. Any assets
which are denominated in a foreign currency are converted into U.S. dollars at
the prevailing market rates for purposes of calculating net asset value.

Foreign currency exchange rates are generally determined prior to
the close of the NYSE. Occasionally, events affecting the value of foreign
securities and such exchange rates occur between the time at which they are

<PAGE>

determined and the close of the NYSE, which events will not be reflected in a
computation of the Portfolio's net asset value. If events materially affecting
the value of such securities or assets or currency exchange rates occurred
during such time period, the securities or assets would be valued at their fair
value as determined in good faith by or under the direction of the Board of
Directors. The foreign currency exchange transactions of a Portfolio conducted
on a spot basis will be valued at the spot rate for purchasing or selling
currency prevailing on the foreign exchange market. Under normal market
conditions this rate differs from the prevailing exchange rate by an amount
generally less than one-tenth of one percent due to the costs of converting from
one currency to another.

In determining the approximate market value of portfolio
investments, the Fund may employ outside organizations, which may use a matrix
or formula method that takes into consideration market indices, matrices, yield
curves and other specific adjustments. This may result in the securities being
valued at a price different from the price that would have been determined had
the matrix or formula method not been used. All cash, receivables and current
payables are carried on the Fund's books at their face value. Other assets, if
any, are valued at fair value as determined in good faith by the Fund's Board of
Directors.

PERFORMANCE AND YIELD INFORMATION

TOTAL RETURN. For purposes of quoting and comparing the
performance of the Portfolios to that of other mutual funds and to stock or
other relevant indices in advertisements or in reports to shareholders,
performance may be stated in terms of total return. Under the rules of the
Securities and Exchange Commission, funds advertising performance must include
total return quotes calculated according to the following formula:

P(1 + T)TO THE POWER OF n = ERV

Where: P = a hypothetical initial payment of $1,000

T = average annual total return

n = number of years (1, 5 or 10)

ERV = ending redeemable value at the end of the 1, 5 or 10
year periods (or fractional portion thereof) of a hypothetical $1,000 payment
made at the beginning of the 1, 5 or 10 year periods.

Under the foregoing formula, the time periods used in advertising
will be based on rolling calendar quarters, updated to the last day of the most
recent quarter prior to submission of the advertisement for publication, and
will cover one, five and ten year periods or a shorter period dating from the
effectiveness of the Fund's registration statement. In calculating the ending
redeemable value, the maximum sales load is deducted from the initial

<PAGE>

$1,000 payment and all dividends and distributions by the Fund are assumed to
have been reinvested at net asset value, as described in the Prospectus, on the
reinvestment dates during the period. Total return, or "T" in the formula
above, is computed by finding the average annual compounded rates of return over
the 1, 5 and 10 year periods (or fractional portion thereof) that would equate
the initial amount invested to the ending redeemable value. Any sales loads
that might in the future be made applicable at the time to reinvestments would
be included as would any recurring account charges that might be imposed by the
Fund.

The Portfolios may also from time to time include in such
advertising an aggregate total return figure or a total return figure that is
not calculated according to the formula set forth above in order to compare more
accurately a Portfolio's performance with other measures of investment return.
For example, in comparing a Portfolio's total return with data published by
Lipper Analytical Services, Inc., CDA Investment Technologies, Inc. or
Weisenberger Investment Company Service, or with the performance of the
Standard & Poor's 500 Stock Index or the Dow Jones Industrial Average, as
appropriate, a Portfolio may calculate its aggregate and/or average annual total
return for the specified periods of time by assuming the investment of $10,000
in Portfolio shares and assuming the reinvestment of each dividend or other
distribution at net asset value on the reinvestment date. The Portfolio does
not, for these purposes, deduct from the initial value invested any amount
representing sales charges. The Portfolio will, however, disclose the maximum
sales charge and will also disclose that the performance data do not reflect
sales charges and that inclusion of sales charges would reduce the performance
quoted. Such alternative total return information will be given no greater
prominence in such advertising than the information prescribed under SEC rules,
and all advertisements containing performance data will include a legend
disclosing that such performance data represent past performance and that the
investment return and principal value of an investment will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their original
cost.

Calculated according to the SEC rules for the period beginning on
the commencement of operations and ending August 31, 1995, the average annual
total return for the BEA International Equity Portfolio (commencing October 1,
1992), BEA Emerging Markets Equity Portfolio (commencing February 1, 1993), BEA
U.S. Core Equity Portfolio (commencing September 1, 1994), BEA High Yield
Portfolio (commencing March 1, 1993), BEA U.S. Core Fixed Income Portfolio
(commencing April 1, 1994), BEA Global Fixed Income Portfolio (commencing June
28, 1994), and BEA Municipal Bond Fund Portfolio (commencing June 20, 1994),
respectively was 9.37% (annualized), 8.70% (annualized), 19.75% (annualized),
9.02% (annualized), 7.48% (annualized), 9.02% (annualized) and 7.28%
(annualized). For the same period, the aggregate total return for the
Portfolios was 29.85%, 24.02%, 19.75%, 24.15%, 10.78%, 10.72%, and 8.86%,
respectively.

Calculated according to the non-standardized computation for the
period beginning on the commencement of operations of each of the BEA

<PAGE>

International Equity and BEA Emerging Markets Equity Portfolios and ending on
August 31, 1995, the average annual total return for the Portfolios was 9.74%
and 9.35%, respectively. The aggregate total return for the Portfolios
calculated according to the non-standardized computation for the period
beginning on the commencement of operations of each of the Portfolios and ending
August 31, 1995 was 31.15% and 25.94%, respectively.

YIELD. Certain Portfolios may also advertise their yield. Under
the rules of the SEC, a Portfolio advertising yield must calculate yield using
the following formula:

YIELD = 2[(a-b +1)TO THE POWER OF 6 - 1]
---
cd

Where: a = dividends and interest earned during the period.

b = expenses accrued for the period (net of
reimbursement).

c = the average daily number of shares outstanding
during the period that were entitled to receive dividends.

d = the maximum offering price per share on the last
day of the period.

Under the foregoing formula, yield is computed by compounding
semi-annually, the net investment income per share earned during a 30 day period
divided by the maximum offering price per share on the last day of the period.
For the purpose of determining the interest earned (variable "a" in the formula)
on debt obligations that were purchased by a Portfolio at a discount or premium,
the formula generally calls for amortization of the discount or premium; the
amortization schedule will be adjusted monthly to reflect changes in the market
values of the debt obligations.

Yield may fluctuate daily and does not provide a basis for
determining future yields. Because the yields will fluctuate, they cannot be
compared with yields on savings account or other investment alternatives that
provide an agreed to or guaranteed fixed yield for a stated period of time.
However, yield information may be useful to an investor considering temporary
investments in money market instruments. In comparing the yield of one money
market fund to another, consideration should be given to each fund's investment
policies, including the types of investments made, lengths of maturities of the
portfolio securities, the method used by each fund to compute the yield (methods
may differ) and whether there are any special account charges which may reduce
the effective yield.

The yields on certain obligations are dependent on a variety of
factors, including general money market conditions, conditions in the particular
market for the obligation, the financial condition of the issuer, the size of
the offering, the maturity of the obligation and the ratings of

<PAGE>

the issue. The ratings of Moody's Investors Service and Standard & Poor's
Corporation represent their respective opinions as to the quality of the
obligations they undertake to rate. Ratings, however, are general and are not
absolute standards of quality. Consequently, obligations with the same rating,
maturity and interest rate may have different market prices. In addition,
subsequent to its purchase by a Portfolio, an issue may cease to be rated or may
have its rating reduced below the minimum required for purchase. In such an
event, the Portfolio's investment adviser will consider whether the Portfolio
should continue to hold the obligation.

TAXES

GENERAL TAX CONSEQUENCES TO THE FUND AND ITS SHAREHOLDERS. The
following is only a summary of certain additional tax considerations generally
affecting the Portfolios and their shareholders that are not described in the
Fund's Prospectus. No attempt is made to present a detailed explanation of the
tax treatment of the Portfolios or their shareholders, and the discussion in
this Statement of Additional Information and in the Prospectus is not intended
as a substitute for careful tax planning. Investors are urged to consult their
tax advisers with specific reference to their own tax situation.

Each Portfolio has elected to be taxed as a regulated investment
company under Part I of Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"). As a regulated investment company, each Portfolio is
exempt from Federal income tax on its net investment income and realized capital
gains which it distributes to shareholders, provided that it (a) distributes an
amount equal to the sum of (i) at least 90% of its investment company taxable
income (net taxable investment income and the excess of net short-term capital
gain over net long-term capital loss), if any, for the year and (ii) at least
90% of its net tax-exempt interest income, if any, for the year (the
"Distribution Requirement"), and (b) satisfies certain other requirements of the
Code that are described below. Distributions of investment company taxable
income and net tax-exempt interest income made during the taxable year or, under
specified circumstances, within twelve months after the close of the taxable
year will satisfy the Distribution Requirement. The Distribution Requirement
for any year may be waived if a regulated investment company establishes to the
satisfaction of the Internal Revenue Service that it is unable to satisfy the
Distribution Requirement by reason of distributions previously made for the
purpose of avoiding liability for Federal excise tax (discussed below).

In addition to satisfaction of the Distribution Requirement each
Portfolio must derive at least 90% of its gross income from dividends, interest,
certain payments with respect to securities loans and gains from the sale or
other disposition of stock or securities or foreign currencies, or from other
income derived with respect to its business of investing in such stock,
securities, or currencies (the "Income Requirement") and derive less than 30% of
its gross income from the sale or other disposition of any of the following
investments, if such investments were held for less than three

<PAGE>

months: (a) stock or securities (as defined in Section 2(a)(36) of the 1940
Act); (b) options, futures, or forward contracts (other than options, futures or
forward contracts on foreign currencies); and (c) foreign currencies (or
options, futures or forward contracts on foreign currencies) but only if such
currencies (or options, futures or forward contracts) are not directly related
to the regulated investment company's principal business of investing in stock
or securities (or in options and futures with respect to stocks or securities)
(the "Short-Short Gain Test"). Interest (including accrued original issue
discount, "accrued market discount") received by a Portfolio at maturity or on
disposition of a security held for less than three months will not be treated as
gross income derived from the sale or other disposition of such security for
purposes of the Short-Short Gain Test. However, any other income which is
attributable to realized market appreciation will be treated as gross income
from the sale or other disposition of securities for this purpose.

Future Treasury regulations may provide that currency gains that
are not "directly related" to a Portfolio's principal business of investing in
stock or securities (or in options or futures with respect to stock or
securities) will not satisfy the Income Requirements. Income derived by a
regulated investment company from a partnership or trust (including a foreign
entity that is classified as a partnership or trust for U.S. federal income tax
purposes) will satisfy the Income Requirement only to the extent such income is
attributable to items of income of the partnership or trust that would satisfy
the Income Requirement if they were realized by a regulated investment company
in the same manner as realized by the partnership or trust.

In addition to the foregoing requirements, at the close of each
quarter of its taxable year, at least 50% of the value of each Portfolio's
assets must consist of cash and cash items, U.S. Government securities,
securities of other regulated investment companies, and securities of other
issuers (as to which the Portfolio has not invested more than 5% of the value of
its total assets in securities of such issuer and as to which the Portfolio does
not hold more than 10% of the outstanding voting securities of such issuer), and
no more than 25% of the value of each Portfolio's total assets may be invested
in the securities of any one issuer (other than U.S. Government securities and
securities of other regulated investment companies), or in two or more issuers
which such Portfolio controls and which are engaged in the same or similar
trades or businesses (the "Asset Diversification Requirement").

The Internal Revenue Service has taken the position, in informal
rulings issued to other taxpayers, that the issuer of a repurchase agreement is
the bank or dealer from which securities are purchased. A Portfolio will not
enter into repurchase agreements with any one bank or dealer if entering into
such agreements would, under the informal position expressed by the Internal
Revenue Service, cause it to fail to satisfy the Asset Diversification
Requirement.

Distributions of investment company taxable income will be
taxable (subject to the possible allowance of the dividend received deduction

<PAGE>

described below) to shareholders as ordinary income, regardless of whether such
distributions are paid in cash or are reinvested in shares. Shareholders
receiving any distribution from the Fund in the form of additional shares will
be treated as receiving a taxable distribution in an amount equal to the fair
market value of the shares received, determined as of the reinvestment date.

Each Portfolio intends to distribute to shareholders its excess
of net long-term capital gain over net short-term capital loss ("net capital
gain"), if any, for each taxable year. Such gain is distributed as a capital
gain dividend and is taxable to shareholders as long-term capital gain,
regardless of the length of time the shareholder has held his shares, whether
such gain was recognized by the Portfolio prior to the date on which a
shareholder acquired shares of the Portfolio and whether the distribution was
paid in cash or reinvested in shares. The aggregate amount of distributions
designated by any Portfolio as capital gain dividends may not exceed the net
capital gain of such Portfolio for any taxable year, determined by excluding any
net long-term capital loss attributable to transactions occurring after October
31 of such year and by treating any such loss as if it arose on the first day of
the following taxable year. Such distributions will be designated as capital
gain dividends in a written notice mailed by the Fund to shareholders not later
than 60 days after the close of each Portfolio's respective taxable year.

In the case of corporate shareholders, distributions (other than
capital gain dividends) of a Portfolio for any taxable year will qualify for the
70% dividends received deduction, only to the extent of the gross amount of
"qualifying dividends" received by such Portfolio for the year. Generally, a
dividend will be treated as a "qualifying dividend" only if it has been received
from a domestic corporation. However, if a Portfolio owns at least 10 percent
of the stock (by vote and value) of certain foreign corporations with U.S.
source income, then a portion of the dividends paid by such foreign corporations
may constitute "qualifying dividends". A dividend received by a taxpayer will
not be treated as a "qualifying dividend" if (1) it has been received with
respect to any share of stock that the taxpayer has held for 45 days (90 days in
the case of certain preferred stock) or less (excluding any day more than 45
days (or 90 days in the case of certain preferred stock) after the date on which
the stock becomes ex-dividend), or (2) to the extent that the taxpayer is under
an obligation (pursuant to a short sale or otherwise) to make related payments
with respect to positions in substantially similar or related property. The
Fund will designate the portion, if any, of the distribution made by a Portfolio
that qualifies for the dividends received deduction in a written notice mailed
by the Fund to shareholders not later than 60 days after the close of the
Portfolio's taxable year.

Investors should note that recent legislative changes made to the
Code have increased the significance of the distinction between capital gain and
ordinary income distributions for some individual investors. Under this
legislation, the maximum marginal rate on ordinary income for individuals,
trusts and estates has nominally been increased only from 28% to 31%.

<PAGE>

However, due to the phase-out of personal exemptions and the enactment of
limitations on itemized deductions for individual taxpayers whose adjusted gross
income exceeds certain threshold amounts that depend on the taxpayer's filing
status, the actual maximum marginal rate may be significantly greater. By
contrast, the maximum rate on the net capital gain of individuals, trusts and
estates remains 28%. Capital gains and ordinary income of corporate taxpayers
will continue to be taxed at a nominal maximum rate of 34% (an effective
marginal rate of 39% applies in the case of corporations having taxable income
between $100,000 and $335,000). Investors should be aware that any loss
realized upon the sale, exchange or redemption of shares held for six months or
less will be treated as a long-term capital loss to the extent any capital gain
dividends have been paid with respect to such shares.

The BEA Municipal Bond Fund Portfolio is designed to provide
investors with current tax-exempt interest income. Exempt interest dividends
distributed to shareholders by this Portfolio are not included in the
shareholder's gross income for regular Federal income tax purpose. In order for
the Municipal Bond Portfolio to pay exempt interest dividends during any taxable
year, at the close of each fiscal quarter at least 50% of the value of the
Portfolio must consist of exempt interest obligations.

In addition, the BEA Municipal Bond Fund Portfolio may not be an
appropriate investment for entities which are "substantial users" of facilities
financed by private activity bonds or "related persons" thereof. "Substantial
user" is defined under U.S. Treasury Regulations to include a nonexempt person
who regularly uses a part of such facilities in his trade or business and (a)
whose gross revenues are more than 5% of the total revenue derived by all users
of such facilities, (b) who occupies more than 5% of the entire usable area of
such facilities, or (c) for whom such facilities or a part thereof were
specifically constructed, reconstructed or acquired. "Related persons" include
certain related natural persons, affiliated corporations, a partnership and its
partners and an S corporation and its shareholder.

A Portfolio may acquire standby commitments with respect to
Municipal Obligations held in its portfolio and will treat any interest received
on Municipal Obligations subject to such standby commitments a tax-exempt
income. In Rev. Rul. 82-144, 1982-2 C.B. 34, the Internal Revenue Service held
that a mutual fund acquired ownership of municipal obligations for federal
income tax purposes, even though the fund simultaneously purchased "put"
agreements with respect to the same municipal obligations from the seller of the
obligations. The Fund will not engage in transactions involving the use of
standby commitments that differ materially from the transaction described in
Rev. Rul. 82-144 without first obtaining a private letter ruling from the
Internal Revenue Service or the opinion of counsel.

Interest on indebtedness incurred by a shareholder to purchase or
carry shares of the BEA Municipal Bond Fund Portfolio is not deductible for
income tax purposes of (as expected) the BEA Municipal Bond Fund Portfolio
distributes exempt interest dividends during the shareholder's taxable year.

<PAGE>

Receipt of exempt interest dividends may result in collateral Federal income tax
consequences to certain other taxpayers, including persons subject to
alternative minimum tax (see Prospectus and discussion below), financial
institutions, property and casualty insurance companies, individual recipients
of Social Security or Railroad Retirement benefits, and foreign corporations
engaged in a trade or business in the United States. Prospective investors
should consult their own tax advisers as to such consequences.

Corporate taxpayers may be liable for alternative minimum tax,
which is imposed at the rate of 20% of "alternative minimum taxable income"
(less, in the case of corporate shareholders with "alternative minimum taxable
income" of less than $310,000, the applicable "exemption amount"), in lieu of
the regular corporate income tax. "Alternative minimum taxable income" is equal
to "taxable income" (as determined for corporate income regular tax purposes)
with certain adjustments. Although corporate taxpayers in determining
"alternative minimum taxable income" are allowed to exclude exempt interest
dividends (other than exempt interest dividends derived from certain private
activity bonds ("AMT Preference Dividends"), as explained in the Prospectus) and
to utilize the 70% dividends received deduction at the first level of
computation, the Code requires (as a second computational step) that
"alternative minimum taxable income" be increased by 75% of the excess of
"adjusted current earnings" over other "alternative minimum taxable income."

Corporate shareholders will have to take into account (1) all
exempt interest dividends and (2) the full amount of all dividends from a
Portfolio that are treated as "qualifying dividends" for purposes of the
dividends received deduction in determining their "adjusted current earnings."
As much as 75% of any exempt interest dividend and 82.5% of any "qualifying
dividend" received by a corporate shareholder could, as a consequence, be
subject to alternative minimum tax. Exempt interest dividends received by such
a corporate shareholder may accordingly be subject to alternative minimum tax at
an effective rate of 15%.

Corporate investors should also note that the Superfund
Amendments and Reauthorization Act of 1986 imposes an environmental tax on
corporate taxpayers of 0.14% of the excess of "alternative minimum taxable
income" (with certain modifications) over $2,000,000 for taxable years beginning
after 1986 and before 1996, regardless of whether such taxpayers are liable for
alternative minimum tax.

If for any taxable year any Portfolio does not qualify as a
regulated investment company, all of its taxable income will be subject to tax
at regular corporate rates without any deduction for distributions to
shareholders, and all distributions will be taxable as ordinary dividends
(including amounts derived from interest on Municipal Obligations in the case of
the BEA Municipal Bond Fund Portfolio) to the extent of such Portfolio's current
and accumulated earning and profits. Such distributions will be eligible for
the dividends received deduction in the case of corporate shareholders.
Investors should be aware that any loss realized on a sale of shares of a
Portfolio will be disallowed to the extent an investor repurchases

<PAGE>

shares of the same Portfolio within a period of 61 days (beginning 30 days
before and ending 30 days after the day of disposition of the shares).
Dividends paid by a Portfolio in the form of shares within the 61-day period
would be treated as a purchase for this purpose.

The Code imposes a non-deductible 4% excise tax on regulated
investment companies that do not distribute with respect to each calendar year
an amount equal to 98% of their ordinary income for the calendar year plus 98%
of their capital gain net income for the 1-year period ending on October 31 of
such calendar year. The balance of such income must be distributed during the
next calendar year. For the foregoing purposes, a company is treated as having
distributed any amount on which it is subject to income tax for any taxable year
ending in such calendar year. Because each Portfolio intends to distribute all
of its taxable income currently, no Portfolio anticipates incurring any
liability for this excise tax. However, investors should note that a Portfolio
may in certain circumstances be required to liquidate investments in order to
make sufficient distributions to avoid excise tax liability.

The Fund will be required in certain cases to withhold and remit
to the United States Treasury 31% of dividends paid to any shareholder (1) who
has provided either an incorrect tax identification number or no number at all,
(2) who is subject to backup withholding by the Internal Revenue Service for
failure to report the receipt of interest or dividend income properly, or (3)
who has failed to certify to the Fund that he is not subject to backup
withholding or that he is an "exempt recipient."

The foregoing general discussion of Federal income tax
consequences is based on the Code and the regulations issued thereunder as in
effect on the date of this Statement of Additional Information. Future
legislative or administrative changes or court decisions may significantly
change the conclusions expressed herein, and any such changes or decisions may
have a retroactive effect with respect to the transactions contemplated herein.

Although each Portfolio expects to qualify as a "regulated
investment company" and to be relieved of all or substantially all Federal
income taxes, depending upon the extent of its activities in states and
localities in which its offices are maintained, in which its agents or
independent contractors are located or in which it is otherwise deemed to be
conducting business, each Portfolio may be subject to the tax laws of such
states or localities.

Certain states exempt from state income taxation dividends paid
by a regulated investment company that are derived from interest on U.S.
Government obligations. Each Portfolio will accordingly inform its shareholders
annually of the percentage, if any, of its ordinary dividends that is derived
from interest on U.S. Government obligations. Shareholders should consult with
their tax advisers as to the availability and extent of any applicable state
income tax exemption.

<PAGE>

SPECIAL TAX CONSIDERATIONS. The following discussion relates to
the particular Federal income tax consequences of the investment policies of the
Portfolios. The ability of the Portfolios to engage in options, short sale and
futures activities will be somewhat limited by the requirements for their
continued qualification as regulated investment companies under the Code, in
particular the Distribution Requirement, the Short-Short Gain Test and the Asset
Diversification Requirement.

STRADDLES. The options transactions that the Portfolios enter
into may result in "straddles" for Federal income tax purposes. The straddle
rules of the Code may affect the character of gains and losses realized by the
Portfolios. In addition, losses realized by the Portfolios on positions that
are part of a straddle may be deferred under the straddle rules, rather than
being taken into account in calculating the investment company taxable income
and net capital gain of the Portfolios for the taxable year in which such losses
are realized. Losses realized prior to October 31 of any year may be similarly
deferred under the straddle rules in determining the "required distribution"
that the Portfolios must make in order to avoid Federal excise tax.
Furthermore, in determining their investment company taxable income and ordinary
income, the Portfolios may be required to capitalize, rather than deduct
currently, any interest expense on indebtedness incurred or continued to
purchase or carry any positions that are part of a straddle. The tax
consequences to the Portfolios of holding straddle positions may be further
affected by various elections provided under the Code and Treasury regulations,
but at the present time the Portfolios are uncertain which (if any) of these
elections they will make.

Because only a few regulations implementing the straddle rules
have been promulgated by the U.S. Treasury, the tax consequences to the
Portfolios of engaging in options transactions are not entirely clear.
Nevertheless, it is evident that application of the straddle rules may
substantially increase or decrease the amount which must be distributed to
shareholders in satisfaction of the Distribution Requirement (or to avoid
Federal excise tax liability) for any taxable year in comparison to a fund that
did not engage in options transactions. For purposes of the Short-Short Gain
Test, current Treasury regulations provide that (except to the extent that the
short sale rules discussed below would otherwise apply) the straddle rules will
have no effect on the holding period of any straddle position. However, the
U.S. Treasury has announced that it is continuing to study the application of
the straddle rules for this purpose.

OPTIONS AND SECTION 1256 CONTRACTS. The writer of a covered put
or call option generally does not recognize income upon receipt of the option
premium. If the option expires unexercised or is closed on an exchange, the
writer generally recognizes short-term capital gain. If the option is
exercised, the premium is included in the consideration received by the writer
in determining the capital gain or loss recognized in the resultant sale.
However, certain options transactions that the Portfolios enter into, as well as
futures transactions and transactions in forward foreign currency contracts

<PAGE>

that are traded in the interbank market entered into by the Portfolios, will be
subject to special tax treatment as "Section 1256 contracts." Section 1256
contracts are treated as if they are sold for their fair market value on the
last business day of the taxable year (i.e., marked-to-market), regardless of
whether a taxpayer's obligations (or rights) under such contracts have
terminated (by delivery, exercise, entering into a closing transaction or
otherwise) as of such date. Any gain or loss recognized as a consequence of the
year-end marking-to-market of Section 1256 contracts is combined (after
application of the straddle rules that are described above) with any other gain
or loss that was previously recognized upon the termination of Section 1256
contracts during that taxable year. The net amount of such gain or loss for the
entire taxable year is generally treated as 60% long-term capital gain or loss
and 40% short-term capital gain or loss, except in the case of marked-to-market
forward foreign currency contracts for which such gain or loss is treated as
ordinary income or loss. Such short-term capital gain (and, in the case of
marked-to-market forward foreign currency contracts, such ordinary income) would
be included in determining the investment company taxable income of the relevant
Portfolio for purposes of the Distribution Requirement, even if it were wholly
attributable to the year-end marking-to-market of Section 1256 contracts that
the relevant Portfolio continued to hold. Investors should also note that
Section 1256 contracts will be treated as having been sold on October 31 in
calculating the "required distribution" that a Portfolio must make to avoid
Federal excise tax liability.

Each of the Portfolios may elect not to have the year-end
marking-to-market rule apply to Section 1256 contracts that are part of a "mixed
straddle" with other investments of such Portfolio that are not Section 1256
contracts (the "Mixed Straddle Election"). It is unclear under present law how
certain gain that the Portfolios may derive from trading in Section 1256
contracts for which a Mixed Straddle Election is not made will be treated for
purposes of the "Short-Short Gain Test." The Portfolios may seek a ruling from
the Internal Revenue Service in order to resolve this issue.

FOREIGN CURRENCY TRANSACTIONS. In general, gains from "foreign
currencies" and from foreign currency options, foreign currency futures and
forward foreign exchange contracts relating to investments in stock, securities
or foreign currencies will be qualifying income for purposes of determining
whether the Portfolio qualifies as a RIC. It is currently unclear, however, who
will be treated as the issuer of a foreign currency instrument or how foreign
currency options, futures or forward foreign currency contracts will be valued
for purposes of the Asset Diversification Requirement. A Portfolio may request
a private letter ruling from the Internal Revenue Service for guidance on some
or all of these issues.

Under Code Section 988 special rules are provided for certain
transactions in a foreign currency other than the taxpayer's functional currency
(i.e., unless certain special rules apply, currencies other than the U.S.
dollar). In general, foreign currency gains or losses from certain forward
contracts, from futures contracts that are not "regulated futures

<PAGE>

contracts", and from unlisted options will be treated as ordinary income or
loss. In certain circumstances where the transaction is not undertaken as part
of a straddle, a Portfolio may elect capital gain or loss treatment for such
transactions. Alternatively, a Portfolio may elect ordinary income or loss
treatment for transactions in futures contracts and options on foreign currency
that would otherwise produce capital gain or loss. In general gains or losses
from a foreign currency transaction subject to Code Section 988 will increase or
decrease the amount of the Portfolio's investment company taxable income
available to be distributed to shareholders as ordinary income, rather than
increasing or decreasing the amount of the Portfolio's net capital gain.
Additionally, if losses from a foreign currency transaction subject to Code
Section 988 exceed other investment company taxable income during a taxable
year, a Portfolio will not be able to make any ordinary dividend distributions,
and any distributions made before the losses were realized but in the same
taxable year would be recharacterized as a return of capital to shareholders,
thereby reducing each shareholder's basis in his Shares.

PASSIVE FOREIGN INVESTMENT COMPANIES. If a Portfolio acquires
shares in certain foreign investment entities, called "passive foreign
investment companies" ("PFIC"), such Portfolio may be subject to "deferred"
Federal income tax on a portion of any "excess distribution" received with
respect to such shares or on a portion of any gain recognized upon a disposition
of such shares, notwithstanding the distribution of such income to the
shareholders of such Portfolio. Additional charges in the nature of interest
may also be imposed on a Portfolio in respect of such deferred taxes. However,
in lieu of sustaining the foregoing tax consequences, a Portfolio may elect to
have its investment in any PFIC taxed as an investment in a "qualified electing
fund" ("QEF"). A Portfolio making a QEF election would be required to include
in its income each year a ratable portion, whether or not distributed, of the
ordinary earnings and net capital gain of the QEF. Any such QEF inclusions
would have to be taken into account by a Portfolio for purposes of satisfying
the Distribution Requirement and the excise tax distribution requirement.

The Internal Revenue Service has proposed regulations that would
permit a Portfolio to elect (in lieu of paying deferred tax or making a QEF
election) to mark-to-market annually any PFIC shares that it owned and to
include any gains (but not losses) that it was deemed to realize as ordinary
income. A Portfolio generally would not be subject to deferred Federal income
tax on any gains that it was deemed to realize as a consequence of making a
mark-to-market election, but such gains would be taken into account by the
Portfolio for purposes of satisfying the Distribution Requirement and the excise
tax distribution requirement. The proposed regulations would generally apply
only prospectively, to taxable years ending after their promulgation as final
regulations.

SHORT-SHORT GAIN TEST. Because of the Short-Short Gain Test, the
Portfolios may have to limit the sale of appreciated (but not depreciated)
securities that they have held for less than three months. The short sale of
(including for this purpose the acquisition of a put option on) (1) securities

<PAGE>

held on the date of the short sale or acquired after the short sale and on or
before the date of closing thereof or (2) securities which are "substantially
identical" to securities held on the date of the short sale or acquired after
the short sale and on or before the date of the closing thereof may reduce the
holding period of such securities for purposes of the Short-Short Gain Test.

Any increase in value of a position that is part of a "designated
hedge" will be offset by any decrease in value (whether realized or not) of the
offsetting hedging position during the period of such hedge for purposes of the
Short-Short Gain Test. Thus, only the net gain (if any) from the designated
hedge will be included in gross income for purposes of the Short-Short Gain
Test. Each of the Portfolios anticipates engaging in hedging transactions that
qualify as designated hedges. However, because of the failure of the U.S.
Treasury to promulgate regulations as authorized by the Code, it is not clear at
the present time whether this treatment will be available to all of the
Portfolios' hedging transactions. To the extent the Portfolios' transactions do
not qualify as designated hedges, the Portfolios' investments in short sales,
options or other transactions may be limited.

ASSET DIVERSIFICATION REQUIREMENT. For purposes of the Asset
Diversification Requirement, the issuer of a call option on a security
(including an option written on an exchange) will be deemed to be the issuer of
the underlying security. The Internal Revenue Service has informally ruled,
however, that a call option that is written by a fund need not be counted for
purposes of the Asset Diversification Requirement where the fund holds the
underlying security. However, the Internal Revenue Service has also informally
ruled that a put option written by a fund must be treated as a separate asset
and its value measured by "the value of the underlying security" for purposes of
the Asset Diversification Requirement, regardless (apparently) of whether it is
"covered" under the rules of the exchange. The Internal Revenue Service has not
explained whether in valuing a written put option in this manner a fund should
use the current value of the underlying security (its prospective future
investment); the cash consideration that must be paid by the fund if the put
option is exercised (its liability); or some other measure that would take into
account the fund's unrealized profit or loss in writing the option. Under the
Code, a fund may not rely on informal rulings of the Internal Revenue Service
issued to other taxpayers. Consequently, a Portfolio may find it necessary to
seek a ruling from the Internal Revenue Service on this issue or to curtail its
writing of options in order to stay within the limits of the Asset
Diversification Requirement.

ADDITIONAL INFORMATION CONCERNING FUND SHARES

The Fund has authorized capital of thirty billion shares of
Common Stock, $.001 par value per share, of which 12.2 billion shares are
currently classified as follows: 100 million shares are classified as Class A
Common Stock (Growth & Income), 100 million shares are classified as Class B
Common Stock, 100 million shares are classified as Class C Common Stock
(Balanced), 100 million shares are classified as Class D Common Stock
(Tax-Free), 500

<PAGE>

million shares are classified as Class E Common Stock (Money), 500 million
shares are classified as Class F Common Stock (Municipal Money), 500 million
shares are classified as Class G Common Stock (Money), 500 million shares are
classified as Class H Common Stock (Municipal Money), 1 billion shares are
classified as Class I Common Stock (Money), 500 million shares are classified as
Class J Common Stock (Municipal Money), 500 million shares are classified as
Class K Common Stock (U.S. Government Money), 1,500 million shares are
classified as Class L Common Stock (Money), 500 million shares are classified as
Class M Common Stock (Municipal Money), 500 million shares are classified as
Class N Common Stock (U.S. Government Money), 500 million shares are classified
as Class O Common Stock (N.Y. Money), 100 million shares are classified as Class
P Common Stock (Government), 100 million shares are classified as Class Q Common
Stock, 500 million shares are classified as Class R Common Stock (Municipal
Money), 500 million shares are classified as Class S Common Stock (U.S.
Government Money), 500 million shares are classified as Class T Common Stock
(International), 500 million shares are classified as Class U Common Stock (High
Yield), 500 million shares are classified as Class V Common Stock (Emerging),
100 million shares are classified as Class W Common Stock (Laffer/Canto Equity),
50 million shares are classified as Class X Common Stock (U.S. Core Equity), 50
million shares are classified as Class Y Common Stock (U.S. Core Fixed Income),
50 million shares are classified as Class Z Common Stock (Global Fixed Income),
50 million shares are classified as Class AA Common Stock (Municipal Bond), 50
million shares are classified as Class BB Common Stock (BEA Balanced), 50
million shares are classified as Class CC Common Stock (Short Duration), 100
million shares are classified as Class DD Common Stock (Growth & Income Series
2), 100 million shares are classified as Class EE Common Stock (Balanced Series
2), 700 million shares are classified as Class Alpha 1 Common Stock (Money), 200
million shares are classified as Class Alpha 2 Common Stock (Municipal Money),
500 million shares are classified as Class Alpha 3 Common Stock (U.S. Government
Money), 100 million shares are classified as Class Alpha 4 Common Stock (N.Y.
Money), 1 million shares are classified as Class Beta 1 Common Stock (Money), 1
million shares are classified as Class Beta 2 Common Stock (Municipal Money), 1
million shares are classified as Class Beta 3 Common Stock (U.S. Government
Money), 1 million shares are classified as Class Beta 4 Common Stock (N.Y.
Money), 1 million shares are classified as Gamma 1 Common Stock (Money), 1
million shares are classified as Gamma 2 Common Stock (Municipal Money), 1
million shares are classified as Gamma 3 Common Stock (U.S. Government Money), 1
million shares are classified as Gamma 4 Common Stock (N.Y. Money), 1 million
shares are classified as Delta 1 Common Stock (Money), 1 million shares are
classified as Delta 2 Common Stock (Municipal Money), 1 million shares are
classified as Delta 3 Common Stock (U.S. Government Money), 1 million shares are
classified as Delta 4 Common Stock (N.Y. Money), 1 million shares are classified
as Epsilon 1 Common Stock (Money), 1 million shares are classified as Epsilon 2
Common Stock (Municipal Money), 1 million shares are classified as Epsilon 3
Common Stock (U.S. Government Money), 1 million shares are classified as Epsilon
4 Common Stock (N.Y. Money), 1 million shares are classified as Zeta 1 Common
Stock (Money), 1 million shares are classified as Zeta 2 Common Stock (Municipal
Money), 1 million shares are classified as Zeta 3 Common Stock (U.S. Government
Money), 1 million shares are classified as

<PAGE>

Zeta 4 Common Stock (N.Y. Money), 1 million shares are classified as Eta 1
Common Stock (Money), 1 million shares are classified as Eta 2 Common Stock
(Municipal Money), 1 million shares are classified as Eta 3 Common Stock (U.S.
Government Money), 1 million shares are classified as Eta 4 Common Stock (N.Y.
Money), 1 million shares are classified as Theta 1 Common Stock (Money), 1
million shares are classified as Theta 2 Common Stock (Municipal Money), 1
million shares are classified as Theta 3 Common Stock (U.S. Government Money),
and 1 million shares are classified as Theta 4 Common Stock (N.Y. Money).
Shares of the Class T, U, V, X, Y, Z, AA, BB and CC Common Stock constituted the
BEA classes. Under the Fund's charter, the Board of Directors has the power to
classify or reclassify any unissued shares of Common Stock from time to time.

The classes of Common Stock have been grouped into fifteen
separate "families": the RBB Family, the Warburg Pincus Family, the Cash
Preservation Family, the Sansom Street Family, the Bedford Family, the Bradford
Family, the BEA Family, the Janney Montgomery Scott Money Family, the Beta
Family, the Gamma Family, the Delta Family, the Epsilon Family, the Zeta Family,
the Eta Family and the Theta Family. The RBB Family represents interests in one
non-money market portfolio as well as the Money Market and Municipal Money
Market Portfolios; the Warburg Pincus Family represents interests in the Growth
& Income, Balanced, and Tax Free 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; Bedford Family represents
interests in the Money Market, Municipal Money Market, Government Obligations
Money Market and New York Municipal Money Market Portfolios; the Bradford Family
represents interests in the Municipal Money Market and Government Obligations
Money Market Portfolios; the BEA Family represents interests in nine non-money
market portfolios; the Janney Montgomery Scott Family and the Beta, Gamma,
Delta, Epsilon, Zeta, Eta and Theta Families represent interests in the Money
Market, Municipal Money Market, Government Obligations Money Market and New York
Municipal Money Market Portfolios.

The Fund does not currently intend to hold annual meetings of
shareholders except as required by the 1940 Act or other applicable law. The
Fund's amended By-Laws provide that shareholders collectively owning at least
ten percent of the outstanding shares of all classes of Common Stock of the Fund
have the right to call for a meeting of shareholders to consider the removal of
one or more directors. To the extent required by law, the Fund will assist in
shareholder communication in such matters.

As stated in the Prospectus, holders of shares of each class of
the Fund will vote in the aggregate and not by class on all matters, except
where otherwise required by law. Further, shareholders of the Fund will vote in
the aggregate and not by portfolio except as otherwise required by law or when
the Board of Directors determines that the matter to be voted upon affects only
the interests of the shareholders of a particular portfolio. Rule 18f-2 under
the Investment Company Act provides that any matter required

<PAGE>

to be submitted by the provisions of such Act or applicable state law, or
otherwise, to the holders of the outstanding securities of an investment company
such as the Fund shall not be deemed to have been effectively acted upon unless
approved by the holders of a majority of the outstanding shares of each
portfolio affected by the matter. Rule 18f-2 further provides that a portfolio
shall be deemed to be affected by a matter unless it is clear that the interests
of each portfolio in the matter are identical or that the matter does not affect
any interest of the Portfolio. Under the Rule, the approval of an investment
advisory agreement or any change in a fundamental investment policy would be
effectively acted upon with respect to a portfolio only if approved by the
holders of a majority of the outstanding voting securities of such portfolio.
However, the Rule also provides that the ratification of the selection of
independent public accountants, the approval of principal underwriting contracts
and the election of directors are not subject to the separate voting
requirements and may be effectively acted upon by shareholders of an investment
company voting without regard to portfolio.

Notwithstanding any provision of Maryland law requiring a greater
vote of shares of the Fund's common stock (or of any class voting as a class) in
connection with any corporate action, unless otherwise provided by law, (for
example by Rule 18f-2 discussed above) or by the Fund's Articles of
Incorporation, the Fund may take or authorize such action upon the favorable
vote of the holders of more than 50% of all of the outstanding shares of Common
Stock voting without regard to class (or portfolio).

MISCELLANEOUS

COUNSEL. The law firm of Ballard Spahr Andrews & Ingersoll, 1735
Market Street, 51st Floor, Philadelphia, Pennsylvania 19103 serves as counsel to
the Fund, PIMC, PNC, PFPC and the Distributor. The law firm of Drinker Biddle &
Reath, 1100 Philadelphia National Bank Building, Broad and Chestnut Streets,
Philadelphia, Pennsylvania 19107, serves as counsel to the Fund's independent
directors.

INDEPENDENT ACCOUNTANTS. Coopers & Lybrand L.L.P., 2400 Eleven
Penn Center, Philadelphia, Pennsylvania 19103, serves as the Fund's independent
accountants. The Portfolios' financial statements which appear in this
Statement of Additional Information have been audited by Coopers & Lybrand
L.L.P., as set forth in their report, which also appears in this Statement of
Additional Information, and have been included herein in reliance upon the
report of such firm given upon their authority as experts in accounting and
auditing.

CONTROL PERSONS. As of September 29, 1995, to the Fund's
knowledge, the following named persons at the addresses shown below owned of
record approximately 5% or more of the total outstanding shares of the class of
the Fund indicated below. See "Additional Information Concerning Fund Shares"
above. The Fund does not know whether such persons also beneficially own such
shares.

<PAGE>

PORTFOLIO NAME AND ADDRESS PERCENT OWNED
--------- ---------------- -------------
<S> <C> <C>
Warburg Pincus Charles Schwab & Co., Inc. Reinvest Account 33.16
Growth & Income Fund (Class A) Attn: Mutual Funds Dept.
101 Montgomery Street
San Francisco, CA 94104-4122

National Financial Services Corp. 11.93
FBO Customers
P.O. Box 3908
Church Street Station
New York, New York 10008-3908

Warburg Pincus Charles Schwab & Co., Inc. 41.00
Balanced Fund Reinvest Account
(Class C) Attn: Mutual Funds Dept.
101 Montgomery Street
San Francisco, CA 94104-4122

National Financial Services Corp. 19.56
FBO Customers
P.O. Box 3908
Church Street Station
New York, New York 10008-3908

Warburg Pincus Gruntal Co. 10.67
Tax Free Fund FBO 995-10702-19
(Class D) 14 Wall Street
New York, New York 10005-2176

Gruntal Co. 9.59
FBO 995-16852-14
14 Wall Street
New York, New York 10005-2176

RBB Money Market Portfolio Luanne M. Garvey and Robert J. Garvey 14.3
(Class E) 2729 Woodland Avenue
Trooper, PA 19403

Harold T. Erfer 13.0
414 Charles Lane
Wynnewood, PA 19096

M. McElhinny and Contribution Account 16.8
4943 King Arthur Drive
Erie, PA 16506

<PAGE>

E.L. Haines Jr. and Betty J. Haines 7.8
2341 Pinebluff Drive
Dallas, TX 75228

John Robert Estrada and 13.5
Shirley Ann Estrada
1700 Raton Drive
Arlington, TX 76018

Eric Levine and Linda & Howard Levine 29.5
67 Lanes Pond Road
Howell, NJ 07731

RBB Municipal Money Market Portfolio William B. Pettus Trust 10.9
(Class F) Augustine W. Pettus Trust
827 Winding Path Lane
St. Louis, MO 63021-6635

Seymour Fein 89.1
P.O. Box 486
Tremont Post Office
Bronx, NY 10457-0486

Cash Preservation Money Market Portfolio Jewish Family and Children's 56.0
(Class G) Agency of Philadelphia
Capital Campaign
Attn: S. Ramm
1610 Spruce Street
Philadelphia, PA 19103

Helen M. Ellenby 5.9
503 Falcon Lane
West Chester, PA 19382-5716

Lynda R. Succ Trustee for in Trust under The Lynda R. 11.5
Campbell Caring Trust
935 Rutger Street
St. Louis, MO 63104

CASH Preservation Municipal Money Market Larnie Johnson and Mary Alice 6.5
Portfolio Johnson
(Class H) 4927 Lee Avenue
St. Louis, MO 63115-1726

<PAGE>

Deborah C. Brown of Trustee for Barbara J.C. Custis 6.5
Trustee
The Crowe Trust
9921 West 128th Terrace
Overland Park, KS 66213

Sansom Street Money Market Portfolio Wasner & Co. 15.3
(Class I) FAO Paine Webber and Managed Assets Sundry Holdings
Attn: Joe Domizio
200 Stevens Drive
Lester, PA 19113

Saxon and Co. 75.1
FBO Paine Webber
A/C 32 32 400 4000038
P.O. Box 7780 1888
Philadelphia, PA 19182

Robertson Stephens & Co. 9.6
FBO Exclusive Benefit Investors
555 California St./#2600
San Francisco, CA 94104

BEA High Yield Portfolio Chase Manhattan Bankers Trustee for Kendale Company Master 17.9
(Class U) Pension Plan
Attn: Mark Tesoriero
3 Metrotech Center
6th Floor
Brooklyn, NY 11245

Temple Inland Master Retirement Trust 5.9
303 South Temple Drive
Diboll, TX 75941

State of Oregon 55.6
Treasury Department
159 State Capital Building
Salem, or 97310

BEA Emerging Markets Equity Portfolio Wachovia Bank North Carolina Trust for Carolina Power & 11.9
(Class V) Light Co. Supplemental Retirement Trust
301 N. Main Street
Winston-Salem, NC 27101

<PAGE>

Northern Trust Company Trustee for Texas Instruments 19.696
Employee Plan
P.O. Box 92956
Chicago, IL 60675-2956

Hall Family Foundation 20.5
P.O. Box 419580
Kansas City, MO 64208

Northern Trust 12.2
Trustee for Pillsbury
P.O. Box 92956
Chicago, IL 60675

Amherst H. Wilder Foundation 6.0
919 Lafond Avenue
St. Paul, MN 55104

Northern Trust Company Trste 20.4
for Texas Instruments Employee Plan
P.O. Box 92956 AC 22-69966/2-059328
Chicago, IL 60675-2956

Wachovia Bank of North Carolina NA
and for Fleming Companies, Inc.
TRST Master Pension Trust 5.0
307 north Main - 3099 St. P.O. Box
Winston Salem, NC 27150

BEA US Core Equity Portfolio Bank of New York 61.8
(Class X) Trust APU Buckeye Pipeline
One Wall Street
New York, NY 10286

Werner & Pfleiderer Pension 11.1
Plan Employees
663 E. Crescent Avenue
Ramsey, NJ 07446

BEA Associates 9.3
FAO Profit Sharing Trust
153 E. 53rd Street
New York, NY 10022

BEA Associates 5.9
FAO Pension Trust
153 E. 53rd Street
New York, NY 10022

<PAGE>

BEA US Core Fixed Income Portfolio New England UFCW & Employers' Pension Fund Board of Trustees 30.2
(Class Y) 161 Forbes Road, Suite 201
Braintree, MA 02184

Bankers Trust 23.6
Trust Pechniney Corp. Pension Master Trust
34 Exchange Place
4th Floor
Jersey City, NJ 07302

Kollmorgen Corporation 5.5
Pension Trust
1601 Thapelo Road
Waltham, MA 02154

Patterson & Co. 9.9
P.O. Box 7829
Philadelphia, PA 19101

Bank of New York 11.4
Fenway Partners Master Trust
One Wall Street - 12th Floor
New York, NY 10286

BEA Global Fixed Income Portfolio Sunkist Master Trust 45.2
(Class Z) 14130 Riverside Drive
Sherman Oaks, CA 91423

Key Trust Co. of Ohio 25.1
FBO Eastern Enterp. Collective Inv. Trust
P.O. Box 901536
Cleveland, OH 44202-1559

Patterson & Co.
P.O. Box 7829 29.7
Philadelpia, PA 19101

BEA Municipal Bond Fund Portfolio William A. Marquard 29.7
(Class AA) 2199 Maysville Road
Carlisle, KY 40311

Arnold Leon 10.4
c/o Fiduciary Trust Company
P.O. Box 3199
Church Street Station
New York, NY 10008

<PAGE>

Edgar E. Sharp 7.4
P.O. Box 8338
Longboat Key, FL 34228

John C. Cahill 13.6
c/o David Holmgren
30 White Birch Lane
Cots Cob, CT 06870

Irwin Bard 7.3
1750 North East 183rd St. North
Miami Beach, FL 33160

Warburg Pincus Growth & Income Series 2 Connecticut General Life Ins. Co. on behalf of its separate 98.71
(Class DD) accounts
55E 55F 55G c/o Melissa Spencer
M110
CIGNA Corp. P.O. Box 2975
Hartford, CT 06104-2975

Warburg Pincus Balanced Fund Series 2 Warburg Pincus Counsellors Inc. 85.19
(Class EE) Attn: Stephen Distler
466 Lexington Avenue
10th Floor
New York, New York 10017-3140

Janney Montgomery Scott Money Market Janney Montgomery Scott 100
Portfolio 1801 Market Street
(Class Alpha 1) Philadelphia, PA 19103-1675

Janney Montgomery Scott Municipal Money Janney Montgomery Scott 100
Market Portfolio 1801 Market Street
(Class Alpha 2) Philadelphia, PA 19103-1675

Janney Montgomery Scott Government Janney Montgomery Scott 100
Obligations Money Market Portfolio 1801 Market Street
(Class Alpha 3) Philadelphia, PA 19103-1675

Janney Montgomery Scott New York Municipal Janney Montgomery Scott 100
Money Market Portfolio 1801 Market Street
(Class Alpha 4) Philadelphia, PA 19103-1675
</TABLE>

As of the above date, directors and officers as a group owned less than one
percent of the shares of RBB.

LITIGATION. There is currently no material litigation affecting RBB.

<PAGE>

APPENDIX

CORPORATE AND MUNICIPAL LONG-TERM DEBT RATINGS

The following summarizes the ratings used by Standard & Poor's for
corporate and municipal debt:

"AAA" - This designation represents the highest rating assigned by
Standard & Poor's to a debt obligation and indicates an extremely strong
capacity to pay interest and repay principal.

"AA" - Debt is considered to have a very strong capacity to pay
interest and repay principal and differs from "AAA" issues only in small degree.

"A" - Debt is considered to have a strong capacity to pay interest and
repay principal although such issues are somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions than debt in
higher-rated categories.

"BBB" - Debt is regarded as having an adequate capacity to pay
interest and repay principal. Whereas such issues normally exhibit adequate
protection parameters, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to pay interest and repay principal
for debt in this category than in higher-rated categories.

"BB," "B," and "CCC" - Debt that possesses one of these ratings is
regarded, on balance, as predominantly speculative with respect to capacity to
pay interest and repay principal in accordance with the terms of the obligation.
"BB" indicates the lowest degree of speculation and "CCC" the highest degree of
speculation. While such debt will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.

"CC" - This rating is reserved for issues that are currently in
arrears on dividends or sinking fund payments but that are currently paying.

"C" - This rating is reserved for income bonds on which no interest is
being paid.

"D" - Debt is in default, and payment of interest and/or repayment of
principal is in arrears.

PLUS (+) OR MINUS (-) - The ratings from "AA" through "CCC" may be
modified by the addition of a plus or minus sign to show relative standing
within the major rating categories.

A-1

<PAGE>

The following summarizes the ratings used by Moody's for corporate and
municipal long-term debt:

"Aaa" - Bonds are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt edge."
Interest payments are protected by a large or by an exceptionally stable margin
and principal is secure. While the various protective elements are likely to
change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.

"Aa" - Bonds are judged to be of high quality by all standards.
Together with the "Aaa" group they comprise what are generally known as high
grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in "Aaa" securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in "Aaa"
securities.

"A" - Bonds possess many favorable investment attributes and are to be
considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.

"Baa" - Bonds considered medium-grade obligations, i.e., they are
neither highly protected nor poorly secured. Interest payments and principal
security appear adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.

"Ba," "B," "Caa," "Ca," and "C" - Bonds that possess one of these
ratings provide questionable protection of interest and principal ("Ba"
indicates some speculative elements; "B" indicates a general lack of
characteristics of desirable investment; "Caa" represents a poor standing; "Ca"
represents obligations which are speculative in a high degree; and "C"
represents the lowest rated class of bonds). "Caa," "Ca" and "C" bonds may be in
default.

Con. (- - -) - Bonds for which the security depends upon the
completion of some act or the fulfillment of some condition are rated
conditionally. These are bonds secured by (a) earnings of projects under
construction, (b) earnings of projects unseasoned in operation experience, (c)
rentals which begin when facilities are completed, or (d) payments to which some
other limiting condition attaches. Parenthetical rating denotes probable credit
stature upon completion of construction or elimination of basis of condition.

Moody's applies numerical modifiers 1, 2 and 3 in each generic
classification from "Aa" to "B" in its bond rating system. The modifier 1
indicates that the company ranks in the higher end of its generic rating

A-2

<PAGE>

category; the modifier 2 indicates a mid-range ranking; and the modifier 3
indicates that the issue ranks at the lower end of its generic rating category.

MUNICIPAL NOTE RATINGS

A Standard and Poor's rating reflects the liquidity concerns and
market access risks unique to notes due in three years or less. The following
summarizes the ratings used by Standard & Poor's Corporation for municipal
notes:

"SP-1" - The issuers of these municipal notes exhibit very strong or
strong capacity to pay principal and interest. Those issues determined to
possess overwhelming safety characteristics are given a plus (+) designation.

"SP-2" - The issuers of these municipal notes exhibit satisfactory
capacity to pay principal and interest.

"SP-3" - The issuers of these municipal notes exhibit speculative
capacity to pay principal and interest.

Moody's ratings for state and municipal notes and other short-term
loans are designated Moody's Investment Grade ("MIG") and variable rate demand
obligations are designated Variable Moody's Investment Grade ("VMIG"). Such
ratings recognize the differences between short-term credit risk and long-term
risk. The following summarizes the ratings by Moody's Investors Service, Inc.
for short-term notes:

"MIG-1"/"VMIG-1" - Loans bearing this designation are of the best
quality, enjoying strong protection by established cash flows, superior
liquidity support or demonstrated broad-based access to the market for
refinancing.

"MIG-2"/"VMIG-2" - Loans bearing this designation are of high quality,
with margins of protection ample although not so large as in the preceding
group.

"MIG-3"/"VMIG-3" - Loans bearing this designation are of favorable
quality, with all security elements accounted for but lacking the undeniable
strength of the preceding grades. Liquidity and cash flow protection may be
narrow and market access for refinancing is likely to be less well established.

"MIG-4"/"VMIG-4" - Loans bearing this designation are of adequate
quality, carrying specific risk but having protection commonly regarded as
required of an investment security and not distinctly or predominantly
speculative.

A-3

<PAGE>

"SG" - Loans bearing this designation are of speculative quality and
lack margins of protection.

A-4

<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

To the Shareholders and Board of Directors of The RBB Fund, Inc.:

We have audited the accompanying statements of net assets of 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 and
BEA Municipal Bond Portfolios of The RBB Fund, Inc., as of August 31, 1995 and
the related statements of operations for the year then ended, the statements of
changes in net assets for each of the two years (or periods) in the two year
period then ended, and the financial highlights for each of the periods
presented. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments held as of
August 31, 1995, by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
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 and
BEA Municipal Bond Portfolios of The RBB Fund, Inc., as of August 31, 1995, and
the results of their operations for the year then ended, the changes in their
net assets for each of the years (or periods) in the two year period then ended,
and their financial highlights for each of the periods presented, in conformity
with generally accepted accounting principles.

COOPERS & LYBRAND L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
October 16, 1995

F-1
<PAGE>
THE BEA FAMILY
THE RBB FUND, INC
BEA INTERNATIONAL EQUITY PORTFOLIO
STATEMENT OF NET ASSETS
AUGUST 31, 1995
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
----------- ------------
<S> <C> <C>
COMMON AND CONVERTIBLE STOCKS, WARRANTS AND
RIGHTS -- 93.4%
ARGENTINA -- 1.8%
Bagley y Cia. Ltd.......................... 1,710 $ 3,507
Banco de Galicia y Buenos Aires S.A. de
C.V. Class B............................. 53,000 243,910
Banco Frances del Rio de la Plata.......... 253,916 1,740,108
Buenos Aires Embotelladora S.A. ADR Class
B........................................ 29,400 698,250
Compania Naviera Perez Companc S.A. Class
B........................................ 317,000 1,484,228
Quilmes Industrial S.A. ADR................ 119,040 2,339,136
Sodigas del Sur S.A.+...................... 55 742,112
Sodigas Pampeana S.A.+..................... 55 841,061
Telecom Argentina S.A. ADR................. 28,300 1,231,050
Telecom Argentina S.A.
Class B.................................. 299,520 1,324,474
Telefonica de Argentina ADR................ 81,470 2,016,429
YPF Sociedad Anonima S.A. ADS.............. 79,500 1,401,188
------------
14,065,453
------------
AUSTRALIA -- 0.5%
News Corp. Ltd............................. 45,050 258,618
News Corp. Ltd. ADR........................ 109,600 2,493,400
News Corp. Ltd. Pfd........................ 22,525 116,446
News Corp. Ltd. Pfd. ADR................... 54,800 1,109,700
------------
3,978,164
------------
BRAZIL -- 5.3%
Banco Bradesco S.A. PN..................... 635,847,475 6,129,054
Banco Itau S.A. PN......................... 8,589,000 2,705,411
Brasmotors S.A. PN......................... 10,120,000 2,601,296
Centrais Eletricas Brasileiras S.A. ON..... 9,923,151 2,749,317
Centrais Eletricas Brasileiras S.A. PN..... 7,173,060 1,979,817
Centrais Eletricas Brasileiras S.A. PN
ADR**.................................... 36,000 500,184
Cia. Cervejaria Brahma PN Warrants Expire
1996**................................... 369,916 62,351

<CAPTION>
NUMBER
OF SHARES VALUE
----------- ------------
<S> <C> <C>
BRAZIL -- (CONTINUED)
Cia. Energetica de Minas Gerais ADR........ 1,613 $ 36,147
Cia. Paulista de Forca e Luz ON............ 52,341,260 2,949,968
Cia. Tecidos Norte de Minas Gerais PN...... 7,709,000 2,598,767
Lojas Americanas PN........................ 203,461,786 5,251,318
Multibras Eletrodo S.A. PN................. 2,173,100 2,266,388
Petroleo Brasileiro S.A. PN................ 12,457,733 1,200,824
Telesp PN.................................. 31,057,000 5,103,916
Usinas Siderurgicas de Minas Gerais S.A.
PN....................................... 3,320,798,000 3,393,389
Usinas Siderurgicas de Minas Gerais S.A.
144A ADR................................. 165,500 1,724,675
------------
41,252,822
------------
CANADA -- 0.6%
Magna International, Inc.
Class A.................................. 100,100 4,479,475
------------
CHILE -- 2.7%
Chilectra S.A. 144A ADR.................... 61,750 2,889,715
Compania de Telefonos de Chile S.A. ADR.... 81,470 5,947,310
Embotelladora Andina S.A. ADR.............. 100,800 3,490,200
Empresa Nacional de Electricidad S.A.
ADR...................................... 258,500 5,137,688
Enersis S.A. ADR........................... 126,500 3,209,937
------------
20,674,850
------------
DENMARK -- 1.1%
Tele Danmark A/S ADS....................... 211,700 5,636,512
Unidanmark A/S 144A........................ 61,890 2,825,779
------------
8,462,291
------------
FINLAND -- 1.4%
Kymmene OY................................. 115,900 3,409,756
Nokia Corp. Class A........................ 82,796 5,740,281
Nokia Corp. ADR............................ 27,900 1,935,563
------------
11,085,600
------------
FRANCE -- 6.3%
Alcatel Alsthom Compagnie Generale
D'Electricite............................ 43,338 4,344,791
</TABLE>

See Accompanying Notes to Financial Statements.

F-2
<PAGE>
THE BEA FAMILY
THE RBB FUND, INC
BEA INTERNATIONAL EQUITY PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED)
AUGUST 31, 1995
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
----------- ------------
FRANCE -- (CONTINUED)
<S> <C> <C>
Banque Nationale de Paris Ordinary......... 91,127 $ 3,737,377
Bertrand Faure............................. 134,662 5,176,024
Bouygues................................... 36,998 4,500,866
Carrefour Super Marche..................... 14,333 7,999,695
Groupe Danone.............................. 4 656
Legrand.................................... 11,364 1,735,942
Louis Vitton Moet Hennesey................. 23,230 4,179,117
Michelin Class B........................... 94,365 4,094,535
Schneider S.A.............................. 114,140 4,703,820
Technip S.A................................ 74,320 4,762,064
Valeo S.A.................................. 78,235 3,734,112
------------
48,968,999
------------
GERMANY -- 4.2%
Deutsche Bank AG........................... 80,490 3,729,690
Gehe AG.................................... 8,370 3,787,175
Hoechst AG................................. 24,095 5,784,442
Mannesmann AG.............................. 14,503 4,572,768
SAP AG..................................... 6,450 980,136
SAP AG 144A ADR............................ 71,800 3,518,200
Veba AG.................................... 171,800 6,567,618
Volkswagen AG.............................. 12,621 3,861,553
------------
32,801,582
------------
HONG KONG -- 4.8%
Cheung Kong Holdings Ltd................... 860,300 4,267,879
China Light and Power Company Ltd.......... 1,087,500 5,338,802
Guoco Bank Ltd............................. 869,000 4,131,413
HKR International Ltd...................... 3,120,800 2,459,386
HKR International Warrants Due 2000**...... 274,920 56,117
HSBC Holdings PLC.......................... 524,011 7,039,649
New World Development Company.............. 881,000 3,209,638
Sun Hung Kai Properties.................... 574,200 4,172,696
Swire Pacific Ltd. Class A................. 822,500 6,163,038
------------
36,838,618
------------
INDIA -- 0.9%
India Fund Class B......................... 28,233 54,970
<CAPTION>
NUMBER
OF SHARES VALUE
----------- ------------
<S> <C> <C>
INDIA -- (CONTINUED)
India Liberalisation Fund
Class A 144A**........................... 301,632 $ 2,491,480
Indian Opportunity Fund Ltd.**............. 349,156 4,277,160
Morgan Stanley India Investment Fund,
Inc...................................... 1,600 16,600
------------
6,840,210
------------
INDONESIA*** -- 0.3%
PT Kabelindo Murni......................... 1,212,000 561,854
PT Matahari Putra Prima.................... 1,155,750 2,092,086
------------
2,653,940
------------
ISRAEL -- 2.0%
ECI Telecom Ltd............................ 256,020 5,280,413
Geotek Communications, Inc.**.............. 80,500 628,906
Geotek Communications, Inc. Series M
Cumulative Convertible Pfd.+............. 600 5,817,813
Teva Pharmaceutical Industries Ltd. ADR.... 100,840 3,819,315
------------
15,546,447
------------
ITALY -- 0.9%
Industrie Natuzzi SPA ADR.................. 28,200 987,000
Telecom Italia Mobile**.................... 846,884 1,248,561
Telecom Italia Mobile di Risp.**........... 1,573,650 1,576,072
Telecom Italia Non-Convertible di Risp.
SPA...................................... 1,573,650 2,024,579
Telecom Italia SPA......................... 846,884 1,360,645
------------
7,196,857
------------
JAPAN -- 23.8%
Aida Engineering Ltd....................... 90,000 667,519
Amada Company Ltd.......................... 136,000 1,419,130
Aoki International Company Ltd............. 40,000 842,967
Aoyama Trading Company..................... 91,000 2,420,460
Asahi Bank Ltd............................. 296,000 3,088,696
Bank of Tokyo Ltd.......................... 241,000 3,722,864
Brother Industries Ltd..................... 239,000 1,256,737
Chubu Electric Power Company, Inc.......... 1,787 41,681
Citizen Watch Company Ltd.................. 201,000 1,536,031
</TABLE>

See Accompanying Notes to Financial Statements.

F-3
<PAGE>
THE BEA FAMILY
THE RBB FUND, INC
BEA INTERNATIONAL EQUITY PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED)
AUGUST 31, 1995
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
----------- ------------
JAPAN -- (CONTINUED)
<S> <C> <C>
Dai Nippon Printing Company................ 274,000 $ 4,344,757
Dai-Ichi Kangyo Bank Ltd................... 364,000 6,293,197
Daicel Chemical Industries................. 195,000 1,065,269
Daiwa Securities Company Ltd............... 168,000 2,113,964
Fuji Bank Ltd.............................. 354,000 7,424,041
Fuji Photo Film Company Ltd................ 384,000 9,624,552
Gakken Company Ltd.**...................... 107,000 698,373
Haseko Corp................................ 173,000 796,419
Hitachi Ltd................................ 931,000 10,190,997
Honda Motor Company........................ 210,000 3,738,107
Industrial Bank of Japan Ltd............... 286,000 8,046,036
Kikkoman................................... 192,000 1,451,540
Kirin Brewery Company Ltd.................. 307,000 3,203,478
Komatsu Ltd................................ 546,000 4,507,642
Konica Corp................................ 255,000 1,820,870
Kumagai-Gumi Ltd........................... 475,000 2,269,309
Kureha Chemical Industry Company........... 238,000 1,049,391
Marudai Food Company Ltd................... 108,000 772,297
Marui Company Ltd.......................... 153,000 2,692,174
Maruichi Steel Tube........................ 58,000 1,062,097
Matsushita Electric Industrial Company..... 620,000 9,704,348
Mitsubishi Estate Company Ltd.............. 235,000 2,764,706
Mitsubishi Gas and Chemical Company........ 169,000 708,849
Mitsubishi Trust and Banking Corp.......... 173,000 2,884,808
Nichicon................................... 144,000 2,062,404
Nippon Meat Packers........................ 147,000 2,030,179
Nippon Oil Company......................... 642,000 3,631,980
Nippon Sheet Glass Company Ltd............. 4,000 18,169
Nisshinbo Industries, Inc.................. 239,000 2,149,166
Nitto Denko Corp........................... 252,000 3,995,908
Nomura Securities Company Ltd.............. 246,000 4,831,918
NSK Ltd.................................... 558,000 3,761,862
Olympus Optical Company.................... 246,000 2,234,762
Sakura Bank Ltd............................ 436,000 4,638,772
Seino Transportation Company Ltd........... 103,000 1,717,545
<CAPTION>
NUMBER
OF SHARES VALUE
----------- ------------
<S> <C> <C>
JAPAN -- (CONTINUED)
Sekisui House Ltd.......................... 429,000 $ 5,398,159
Shimachu................................... 29,000 756,522
Shiseido Company Ltd....................... 506,000 5,280,000
Sumitomo Bank Ltd.......................... 373,000 6,906,701
Taiyo Yuden Company Ltd.................... 85,000 895,652
Takeda Chemical Industries Ltd............. 648,000 8,750,486
Tohoku Electric Power Company.............. 124,700 2,997,903
Tokai Bank Ltd............................. 248,000 2,765,422
Tokio Marine and Fire Insurance Company.... 205,000 2,432,737
Tokyo Style Corp. Ltd...................... 93,000 1,322,455
Toyota Motor Corp.......................... 384,000 7,621,074
Uny Company Ltd............................ 111,000 1,771,458
Yokogawa Electric Corp..................... 168,000 1,581,176
------------
183,775,716
------------
MALAYSIA -- 2.6%
Genting Berhad............................. 454,000 4,022,209
Malayan Banking Berhad..................... 656,000 5,391,060
Renong Berhad Holding Company.............. 2,164,000 4,181,391
Technology Resources Industries Berhad**... 663,300 1,701,792
Telekom Malaysia Berhad.................... 87,000 610,343
United Engineers Malaysia Ltd.............. 594,000 3,976,669
------------
19,883,464
------------
MEXICO -- 4.0%
Cementos Apasco S.A. de C.V................ 274,829 1,207,316
Cifra S.A. de C.V.
Class A.................................. 13,702 17,467
Cifra S.A. de C.V. Class B................. 630,460 803,685
Cifra S.A. de C.V. Class C................. 528,289 632,934
Coca-Cola Femsa S.A. de C.V. ADR........... 68,800 1,591,000
Corporacion Industrial San Luis S.A. de
C.V. CPO................................. 117,199 2,782,072
Grupo Carso S.A. de C.V. Class A1**........ 206,280 1,326,321
Grupo Elektra S.A. de C.V. CPO............. 300,000 1,432,907
</TABLE>

See Accompanying Notes to Financial Statements.

F-4
<PAGE>
THE BEA FAMILY
THE RBB FUND, INC
BEA INTERNATIONAL EQUITY PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED)
AUGUST 31, 1995
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
----------- ------------
MEXICO -- (CONTINUED)
<S> <C> <C>
Grupo Embotelladora de Mexico S.A. de C.V.
GDS**.................................... 50 $ 613
Grupo Industrial Alfa S.A. de C.V. Class
A........................................ 352,000 4,863,898
Grupo Mexico S.A. Class B**................ 666,400 3,433,131
Grupo Modelo S.A. de C.V.
Class C.................................. 376,000 1,489,585
Grupo Sidek S.A. de C.V.
Class L**................................ 12,223 13,160
Grupo Televisa S.A. de C.V. CPO
Certificates............................. 53,400 623,569
Grupo Televisa S.A. de C.V. GDS............ 57,860 1,374,175
Kimberly Clark de Mexico
S.A. de C.V. Class A..................... 129,900 1,807,395
Panamerican Beverages, Inc.
Class A.................................. 74,800 2,225,300
Telefonos de Mexico S.A. de C.V. Class A... 221,504 360,917
Telefonos de Mexico S.A. de C.V. Class L... 683,071 1,117,356
Telefonos de Mexico S.A. de C.V. Sponsored
ADR...................................... 25,600 838,400
Telefonos de Mexico S.A. de C.V.
Unsponsored ADR.......................... 4,900 7,963
Tubos de Acero de Mexico S.A.**............ 213,000 1,463,099
Tubos de Acero de Mexico S.A. ADR**........ 157,100 981,875
------------
30,394,138
------------
NETHERLANDS -- 1.8%
Koninklijke Pit Naderland NV 144A.......... 160,960 5,547,983
Philips Electronics NV..................... 180,825 8,112,392
Philips Electronics NV ADR................. 11,500 517,500
------------
14,177,875
------------
<CAPTION>
NUMBER
OF SHARES VALUE
----------- ------------
<S> <C> <C>
NORWAY -- 0.5%
Norsk Hydro A/S............................ 87,200 $ 3,689,100
------------
PAKISTAN -- 0.0%
Nishat Mills............................... 3,450 3,749
Nishat Mills Rights**...................... 517 240
Phillips Electrical Pakistan............... 1,045 5,144
------------
9,133
------------
PHILIPPINES -- 0.5%
Philippine Long Distance Telephone Co.
ADR...................................... 61,950 3,895,112
------------
PUERTO RICO -- 0.6%
Cellular Communications of Puerto Rico Inc.
ADR**.................................... 152,900 4,701,675
------------
RUSSIA -- 0.4%
Petersburg Long Distance, Inc.**........... 228,800 1,630,200
Templeton Russia Fund Inc.**............... 114,900 1,654,560
------------
3,284,760
------------
SINGAPORE -- 2.8%
DBS Land Ltd............................... 393,000 1,128,786
Overseas-Chinese Banking Corp. Ltd.***..... 473,000 5,327,702
Sembawang Corp. Ltd........................ 460,000 2,639,212
Singapore Press Holdings***................ 394,800 5,447,434
United Overseas Bank Ltd.***............... 555,680 4,811,590
Wing Tai Holdings.......................... 1,325,000 2,359,908
------------
21,714,632
------------
SOUTH KOREA -- 1.1%
Korea Fund, Inc............................ 429,825 8,703,956
------------
SPAIN -- 1.1%
Banco Popular.............................. 23,400 3,602,585
Repsol S.A................................. 4,400 138,114
Repsol S.A. ADR............................ 143,100 4,525,538
------------
8,266,237
------------
</TABLE>

See Accompanying Notes to Financial Statements.

F-5
<PAGE>
THE BEA FAMILY
THE RBB FUND, INC
BEA INTERNATIONAL EQUITY PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED)
AUGUST 31, 1995
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
----------- ------------
SWEDEN -- 2.9%
<S> <C> <C>
Astra AB Fria Class A...................... 175,520 $ 5,821,160
Astra AB Fria Class B...................... 13,000 422,240
Autoliv AB................................. 82,200 4,967,959
Ericsson Telephone Company ADR Class B..... 281,600 6,019,200
Hennes & Mauritz Fria Class B.............. 80,304 4,765,326
------------
21,995,885
------------
SWITZERLAND -- 1.7%
BBC Brown Boveri AG........................ 5,606 5,915,014
Roche Holding AG........................... 1,030 6,900,299
------------
12,815,313
------------
THAILAND*** -- 3.2%
Advanced Information Services Public
Company Ltd.............................. 204,800 3,165,911
Finance One Public Company Ltd............. 398,000 2,709,652
Krung Thai Bank Public Company Ltd......... 1,541,270 5,987,312
Phatra Thanakit Public Company Ltd......... 375,600 2,978,326
Siam Cement Company Ltd.................... 63,900 4,370,893
Telecomasia Corp. Public Company Ltd.**.... 407,000 1,312,115
Thai Farmers Bank Public Company Ltd....... 460,100 4,495,971
------------
25,020,180
------------
UNITED KINGDOM -- 13.6%
Airtours PLC............................... 796,120 4,545,170
British Airport Authority PLC.............. 847,101 6,768,093
British Sky Broadcasting PLC**............. 226,000 1,192,095
British Sky Broadcasting Group PLC ADR**... 322,200 10,229,850
De la Rue PLC.............................. 449,004 6,074,220
Flextech PLC**............................. 612,610 4,162,766
General Cable PLC**........................ 396,300 5,647,275
<CAPTION>
NUMBER
OF SHARES VALUE
----------- ------------
<S> <C> <C>
UNITED KINGDOM -- (CONTINUED)
House of Fraser PLC........................ 1,787,300 $ 3,798,759
International Cabletel, Inc................ 239,866 6,476,382
Rentokil Group PLC......................... 948,610 4,370,871
Reuters Holdings PLC Class B............... 442,020 3,840,199
Reuters Holdings PLC ADR
Class B.................................. 144,300 7,557,713
Standard Chartered Bank PLC................ 2,089,769 14,005,730
Vodafone Group PLC......................... 1,530,033 6,290,288
Vodafone Group PLC ADR..................... 129,000 5,401,875
Wassall PLC................................ 1,274,192 5,455,917
WPP Group PLC.............................. 3,299,251 8,394,271
WPP Group PLC ADR.......................... 89,800 471,450
------------
104,682,924
------------
TOTAL COMMON AND CONVERTIBLE STOCKS,
WARRANTS AND RIGHTS (Cost
$683,469,877)........................... 721,855,408
------------
<CAPTION>
PAR
(000)
-----------
<S> <C> <C>
FOREIGN BONDS -- 0.7%
HONG KONG -- 0.0%
HKR International Ltd. 6.00% 06/26/00...... HKD 3,608 375,260
------------
SOUTH AFRICA -- 0.7%
Liberty Life Africa Convertible 144A
6.50% 09/30/04........................... $ 1,700 1,938,000
Sappi BVI Finance Ltd.
Convertible 144A
7.50% 08/01/02........................... 3,680 3,781,200
------------
5,719,200
------------
TOTAL FOREIGN BONDS
(Cost $5,736,881)..................... 6,094,460
------------
</TABLE>

See Accompanying Notes to Financial Statements.

F-6

<PAGE>
THE BEA FAMILY
THE RBB FUND, INC
BEA INTERNATIONAL EQUITY PORTFOLIO
STATEMENT OF NET ASSETS (CONCLUDED)
AUGUST 31, 1995
<TABLE>
<CAPTION>
PAR
(000) VALUE
----------- ------------
U.S. TREASURY OBLIGATIONS -- 3.7%
<S> <C> <C>
U.S. Treasury Bills
5.40% 09/21/95........................... $ 3,000 $ 2,990,886
5.415% 09/21/95.......................... 5,000 4,984,958
5.385% 11/09/95.......................... 15,000 14,845,416
5.415% 11/09/95.......................... 6,000 5,938,166
------------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $28,758,866)...................... 28,759,426
------------
SHORT-TERM INVESTMENT -- 2.2%
BBH Grand Cayman U.S. Dollar
Time Deposit
4.875% 09/01/95.......................... 16,646 16,646,000
------------
TOTAL SHORT-TERM INVESTMENT
(Cost $16,646,000)................................... 16,646,000
------------
TOTAL INVESTMENTS AT VALUE -- 100.0%
(Cost $734,611,624)................................... $773,355,294
LIABILITIES IN EXCESS
OF OTHER ASSETS -- 0.0%............................... (100,664)
------------
NET ASSETS (APPLICABLE to
42,398,465 BEA shares) -- 100.0%...................... $773,254,630
------------
------------

NET ASSET VALUE AND OFFERING
PRICE PER SHARE
($773,254,630 DIVIDED BY 42,398,465)................. $18.24
------------
------------
REDEMPTION PRICE PER SHARE
($18.24 x .9900)...................................... $18.06
------------
------------
</TABLE>

* Cost for Federal income tax purposes at August 31, 1995 is
$735,164,987. The gross appreciation (depreciation) on a tax basis is as
follows:

<TABLE>
<S> <C>
Gross Appreciation.......... $ 82,828,785
Gross Depreciation.......... (44,638,478)
--------------
Net Appreciation............ $ 38,190,307
--------------
--------------
</TABLE>

** Non-income producing securities.
*** Denotes foreign shares.
+ Not readily marketable securities.

INVESTMENT ABBREVIATIONS

<TABLE>
<S> <C>
ADR........................... American Depository Receipts
ADS........................... American Depository Shares
GDS........................... Global Depository Shares
</TABLE>

CURRENCY ABBREVIATIONS

<TABLE>
<S> <C>
HKD........................... Hong Kong Dollars
</TABLE>

See Accompanying Notes to Financial Statements.

F-7

<PAGE>
THE BEA FAMILY
THE RBB FUND, INC.
INTERNATIONAL EQUITY PORTFOLIO

STATEMENT OF OPERATIONS
FOR THE YEAR ENDED
AUGUST 31, 1995

<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends.................................. $ 12,122,179
Interest................................... 1,221,035
Foreign taxes withheld..................... (1,379,398)
--------------
TOTAL INVESTMENT INCOME.................. 11,963,816
--------------
EXPENSES
Investment advisory fees................... 6,012,837
Administration service fees................ 1,127,321
Custodian fees............................. 1,116,208
Administration fees........................ 939,506
Audit fees................................. 71,767
Registration fees.......................... 65,500
Legal fees................................. 48,460
Insurance expense.......................... 22,167
Transfer agent fees........................ 20,778
Printing fees.............................. 15,263
Miscellaneous fees......................... 12,868
Organization expense....................... 10,636
Directors fees............................. 6,781
--------------
9,470,092
Less fees waived........................... (112,954)
--------------
TOTAL EXPENSES........................... 9,357,138
--------------
NET INVESTMENT INCOME........................ 2,606,678
--------------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS:
Net realized loss from:
Security transactions.................... (47,542,087)
Foreign exchange transactions............ (1,416,894)
--------------
(48,958,981)
--------------
Net unrealized appreciation (depreciation)
from:
Investments.............................. (18,843,388)
Translation of assets and liabilities in
foreign currencies...................... 42,664
--------------
(18,800,724)
--------------
NET LOSS ON INVESTMENTS AND FOREIGN CURRENCY
TRANSACTIONS................................ (67,759,705)
--------------
NET DECREASE IN NET ASSETS RESULTING FROM
OPERATIONS.................................. $ (65,153,027)
--------------
--------------
</TABLE>

STATEMENTS OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
FOR THE FOR THE
YEAR ENDED YEAR ENDED
AUGUST 31, AUGUST 31,
1995 1994
------------- -------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income...................... $ 2,606,678 $ 1,601,997
Net gain (loss) on investments and foreign
currency.................................. (67,759,705) 60,027,767
------------- -------------
Net increase (decrease) in net assets
resulting from operations............... (65,153,027) 61,629,764
------------- -------------
Distributions to shareholders:
Dividends to shareholders from net investment
income:
BEA shares ($.00 and $.05, respectively,
per share)................................ -- (806,718)
Distributions to shareholders from net
realized capital gains:
BEA shares ($.80 and $.60, respectively,
per share)................................ (32,112,690) (9,939,092)
------------- -------------
Total distributions to shareholders........ (32,112,690) (10,745,810)
------------- -------------
Net capital share transactions............... 103,330,556 447,902,313
------------- -------------
Total increase in net assets................. 6,064,839 498,786,267
Net Assets:
Beginning of year.......................... 767,189,791 268,403,524
------------- -------------
End of year................................ $773,254,630 $767,189,791
------------- -------------
------------- -------------
</TABLE>

See Accompanying Notes to Financial Statements.

F-8

<PAGE>
THE BEA FAMILY
THE RBB FUND, INC
BEA EMERGING MARKETS EQUITY PORTFOLIO
STATEMENT OF NET ASSETS
August 31, 1995

<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
----------- ------------
<S> <C> <C>
COMMON STOCK, WARRANTS AND RIGHTS -- 92.0%
ARGENTINA -- 4.3%
Astra Cia. Argentina de Petro S.A.......... 109,080 $ 189,339
Bagley y Cia. Ltd.......................... 61,335 125,793
Banco de Galicia y Buenos Aires S.A. de
C.V. Class B............................. 43,427 199,854
Banco Frances del Rio de la Plata.......... 63,290 433,732
Buenos Aires Embotelladora S.A. ADR Class
B........................................ 22,100 524,875
Comercial del Plata........................ 34,400 80,532
Compania Naviera Perez Companc S.A. Class
B........................................ 127,009 594,669
Inversiones y Representaciones S.A. Class
B**...................................... 256,824 560,128
Quilmes Industrial S.A. ADR................ 19,315 379,540
Telecom Argentina S.A. ADR................. 24,400 1,061,400
Telecom Argentina S.A. Class B............. 129,600 573,090
Telefonica de Argentina ADR................ 17,032 421,542
YPF Sociedad Anonima S.A. ADS.............. 23,100 407,138
------------
5,551,632
------------
BRAZIL -- 16.6%
Banco Bradesco S.A. PN..................... 83,914,366 808,866
Banco do Brasil PN......................... 22,657,000 362,321
Banco Itau S.A. PN......................... 3,175,000 1,000,079
Centrais Eletricas Brasileiras S.A. ON..... 4,684,781 1,297,969
Centrais Eletricas Brasileiras S.A. PN..... 2,075,729 572,917
Centrais Eletricas de Santa Catarin PN
Class B.................................. 772,000 618,088
Cia. Cervejaria Brahma PN.................. 1,442,789 539,573
Cia. Cervejaria Brahma PN Warrants Due
1996**................................... 182,777 30,808
Cia. Energetica de Minas Gerais
ADR...................................... 21,338 478,185
<CAPTION>
NUMBER
OF SHARES VALUE
----------- ------------
<S> <C> <C>
BRAZIL -- (CONTINUED)
Cia. Energetica de Minas Gerais
PN....................................... 4,249,989 $ 96,260
Cia. Energetica de Minas Gerais
144A ADS................................. 20,783 465,747
Cia. Paulista de Forca e Luz ON............ 13,382,220 754,226
Cia. Siderurgica Nacional S.A. ADR......... 9,700 220,025
Cia. Siderurgica Nacional S.A. ON.......... 4,692,700 104,804
Cia. Tecidos Norte de Minas Gerais PN...... 2,562,000 863,671
Cia. Vale do Rio Doce ADR.................. 1,200 46,114
Cia. Vale do Rio Doce PN................... 3,555,500 546,856
Investimentos Itau PN...................... 1,483,700 973,764
Lojas Americanas PN........................ 42,436,000 1,095,267
Makro Atacadista ON**...................... 381,000 429,465
Makro Atacadista 144A GDR**................ 27,300 300,300
Marco Polo PN Class B**.................... 964,000 171,118
Moinho Santista Industries Gerais PN**..... 145,200 117,781
Multibras Eletrodo S.A. PN................. 581,000 605,942
Petroleo Brasileiro S.A. PN................ 10,189,666 982,201
Petroquimica do Nordest S.A. PN Class A.... 816,000 537,266
Refrigeracao Parana S.A. PN................ 559,223,000 1,360,869
Santista Alimentos S.A.**.................. 666,500 477,451
Souza Cruz ON.............................. 110,600 821,417
Tec Toy Industria de Brinquedos PN.**...... 203,430,000 81,436
Telecomunicacoes Brasileiras S.A. ADR...... 40,800 1,713,642
Telecomunicacoes Brasileiras S.A. PN....... 35,332,405 1,533,521
Telesp PN.................................. 1,455,928 239,268
Usinas Siderurgica de Minas Gerais S.A.
PN....................................... 880,903,000 900,159
Usinas Siderurgica de Minas Gerais S.A.
144A ADR................................. 16,900 176,115
------------
21,323,491
------------
</TABLE>

See Accompanying Notes to Financial Statements.

F-9

<PAGE>
THE BEA FAMILY
THE RBB FUND, INC
BEA EMERGING MARKETS EQUITY PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED)
AUGUST 31, 1995
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
----------- ------------
<S> <C> <C>
CHILE -- 6.9%
Chilectra S.A. 144A ADR.................... 27,100 $ 1,268,199
Compania de Telefonos de Chile S.A. ADR.... 29,895 2,182,335
Embotelladora Andina S.A. ADR.............. 32,400 1,121,850
Empresa Nacional de Electricidad S.A.
ADR...................................... 107,200 2,130,600
Enersis S.A. ADR........................... 39,800 1,009,925
Sociedad Quimica y Minera Chile ADR........ 23,650 1,099,725
------------
8,812,634
------------
COLOMBIA -- 0.4%
Cementos Diamante S.A. 144A ADS............ 29,200 525,600
------------
ECUADOR -- 0.5%
Cemento Nacional Ecuador GDR............... 3,296 692,160
------------
HONG KONG -- 4.3%
Cheung Kong Holdings Ltd................... 127,000 630,037
China Light and Power Company Ltd.......... 138,000 677,476
Consolidated Electric Power Asia........... 283,600 584,383
Consolidated Electric Power Asia 144A...... 18,650 382,325
Guoco Bank Ltd............................. 126,000 599,031
HKR International Ltd...................... 499,400 393,559
HKR International Warrants Due 2000**...... 107,880 22,021
HSBC Holdings PLC.......................... 66,831 897,930
Sun Hung Kai Properties.................... 90,000 654,027
Swire Pacific Ltd. Class A................. 89,500 670,628
------------
5,511,417
------------
HUNGARY -- 0.4%
Fotex A.S.................................. 365,600 460,453
------------
INDIA -- 3.4%
Arvind Mills Ltd. 144A GDS**............... 16,000 65,920
Hindalco 144A GDR.......................... 13,400 482,400

<CAPTION>
NUMBER
OF SHARES VALUE
----------- ------------
<S> <C> <C>
INDIA -- (CONTINUED)
India Fund Class B......................... 469,738 $ 914,583
India Liberalisation Fund Class A 144A**... 134,163 1,108,186
Indian Opportunity Fund Ltd.**............. 79,020 967,995
Morgan Stanley India Investment Fund,
Inc...................................... 43,500 451,313
Reliance Industries 144A ADR............... 23,800 452,200
------------
4,442,597
------------
INDONESIA*** -- 2.9%
Bank International Indonesia............... 262,500 944,537
Duta Anggada Realty........................ 410 294
PT Hanjaya Mandala Sampoerna............... 92,500 878,035
PT Kabelindo Murni......................... 418,500 194,007
PT Matahari Putra Prima.................... 488,750 884,713
PT Pakuwon Jati............................ 1,021,000 788,852
------------
3,690,438
------------
ISRAEL -- 2.4%
ECI Telecom Ltd............................ 42,140 869,138
Elscint Ltd. ADR........................... 61,050 167,888
Geotek Communications, Inc.**.............. 141,300 1,103,906
Tecnomatix Technologies**.................. 29,000 304,500
Teva Pharmaceutical Industries
Ltd. ADR................................. 15,430 584,411
------------
3,029,843
------------
MALAYSIA -- 13.0%
Berjaya Group Berhad....................... 2,067,500 1,607,917
Genting Berhad............................. 342,000 3,029,946
Magnum Corp................................ 376,500 762,207
Malayan Banking Berhad..................... 599,500 4,926,739
Malaysia International Shipping***......... 349,333 1,001,295
Renong Berhad Holding Company.............. 830,000 1,603,768
Technology Resources Industries Berhad
**....................................... 488,000 1,252,034
Telekom Malaysia Berhad.................... 39,000 273,602
Time Engineering........................... 391,000 1,348,006
</TABLE>

See Accompanying Notes to Financial Statements.

F-10

<PAGE>
THE BEA FAMILY
THE RBB FUND, INC
BEA EMERGING MARKETS EQUITY PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED)
AUGUST 31, 1995
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
----------- ------------
<S> <C> <C>
MALAYSIA -- (CONTINUED)
United Engineers Malaysia Ltd.............. 129,000 $ 863,620
------------
16,669,134
------------
MEXICO -- 11.6%
Cementos Apasco S.A. de C.V................ 150,240 660,000
Cementos Mexicanos S.A. Class B**.......... 164,265 757,036
Cifra S.A. de C.V. Class B................. 54,039 68,887
Cifra S.A. de C.V. Class C................. 614,029 735,658
Coca-Cola Femsa S.A. de C.V.
ADR...................................... 22,330 516,381
Corporacion Geo S.A. de C.V. 144A ADR Class
B**...................................... 38,100 582,435
Corporacion Industrial San Luis
S.A. de C.V. CPO......................... 62,632 1,486,760
Fomento Economico Mexicano S.A. de C.V.
Class B.................................. 107,650 295,092
Grupo Carso S.A. de C.V. Class A1**........ 151,990 977,252
Grupo Elektra S.A. de C.V. CPO............. 214,000 1,022,141
Grupo Embotelladora de Mexico S.A. de C.V.
GDS**.................................... 50 613
Grupo Financiero Banamex Accival S.A. de
C.V. Class B............................. 32,000 65,329
Grupo Financiero Banamex Accival S.A. de
C.V. Class L............................. 335,000 670,000
Grupo Industrial Alfa S.A. de C.V. Class
A........................................ 81,000 1,119,249
Grupo Industrial Bimbo S.A. de C.V. Class
A........................................ 55,199 233,229
Grupo Mexico S.A. Class B**................ 169,700 874,253
Grupo Modelo S.A. de C.V. Class C.......... 288,000 1,140,958
Grupo Situr S.A. de C.V. Class B**......... 421,932 235,904
Grupo Televisa S.A. de C.V. CPO
Certificates............................. 37,300 435,564

<CAPTION>
NUMBER
OF SHARES VALUE
----------- ------------
<S> <C> <C>
MEXICO -- (CONTINUED)
Grupo Televisa S.A. de C.V. GDS............ 11,350 $ 269,562
Kimberly Clark de Mexico S.A. de C.V. Class
A........................................ 39,270 546,392
Panamerican Beverages, Inc. Class A........ 30,200 898,450
Telefonos de Mexico S.A. de C.V. Class A... 103,213 168,175
Telefonos de Mexico S.A. de C.V. Class L... 215,570 352,626
Telefonos de Mexico S.A. de C.V. Sponsored
ADR...................................... 5,730 187,657
Tubos de Acero de Mexico S.A.**............ 51,000 350,319
Tubos de Acero de Mexico S.A. ADR**........ 37,900 236,875
------------
14,886,797
------------
PHILIPPINES -- 1.4%
Ayala Corp. B.............................. 580,600 695,733
Philippine Long Distance Telephone Co.
ADR...................................... 18,500 1,163,191
------------
1,858,924
------------
PORTUGAL -- 1.3%
Modelo Sociedade Gestora de Participacoes
Sociais, S.A............................. 12,335 422,903
Portugal Telecom S.A. ADR**................ 17,300 313,562
Sonae Industria e Investimentos............ 42,050 956,058
------------
1,692,523
------------
PUERTO RICO -- 0.6%
Cellular Communications of Puerto Rico Inc.
ADR.**................................... 25,800 793,350
------------
RUSSIA -- 1.0%
Petersburg Long Distance,
Inc.**................................... 94,100 670,462
Templeton Russia Fund Inc.**............... 41,000 590,400
------------
1,260,862
------------
</TABLE>

See Accompanying Notes to Financial Statements.

F-11

<PAGE>
THE BEA FAMILY
THE RBB FUND, INC
BEA EMERGING MARKETS EQUITY PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED)
AUGUST 31, 1995
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
----------- ------------
<S> <C> <C>
SINGAPORE -- 1.7%
Asia Pulp & Paper Company Ltd. ADR**....... 58,700 $ 770,437
Overseas-Chinese Banking Corp. Ltd.***..... 47,000 529,391
Sembawang Corp. Ltd........................ 64,000 367,195
United Overseas Bank Ltd.***............... 58,280 504,642
------------
2,171,665
------------
SOUTH AFRICA -- 5.7%
Anglo American Industrial Corporation
Ltd...................................... 17,100 771,851
De Beers Centenary Linked UT............... 14,900 382,130
De Beers Consolidated Mines ADR............ 59,700 1,533,544
Gencor Ltd................................. 264,230 993,889
Murray & Roberts Holdings.................. 117,800 749,241
Nedcor Ltd................................. 12,900 164,095
Nedcor Ltd. GDR Units**.................... 6,600 341,550
Polifin Ltd................................ 5,925 12,075
SA Iron & Steel Industrial Corporation
Ltd...................................... 1,080,900 1,241,904
Sasol Ltd.................................. 39,500 337,676
South African Breweries Ltd................ 26,500 804,678
------------
7,332,633
------------
SOUTH KOREA -- 3.2%
Korea Fund, Inc............................ 200,175 4,053,544
------------
THAILAND -- 10.4%
Advanced Information Services Public
Company Ltd. (Local)..................... 4,300 66,472

<CAPTION>
NUMBER
OF SHARES VALUE
----------- ------------
<S> <C> <C>
THAILAND -- (CONTINUED)
Advanced Information Services Public
Company Ltd.***.......................... 49,400 $ 763,652
Bangkok Bank Public Company Ltd.***........ 87,400 980,056
Krung Thai Bank Public Company Ltd.
(Local).................................. 51,000 197,097
Krung Thai Bank Public Company Ltd.***..... 561,980 2,183,102
Land and House Public Company Ltd.***...... 29,000 504,045
MDX Company Ltd.***........................ 156,300 344,273
Phatra Thanakit Public Company Ltd.***..... 313,100 2,482,731
Regional Container Lines***................ 5,420 80,312
Sahaviriya Steel
Industry**/***........................... 489,600 980,376
Siam Cement Company Ltd.***................ 19,800 1,354,361
Telecomasia Corp. Public Company
Ltd.**/***............................... 303,600 978,767
Thai Farmers Bank Public Company Ltd.***... 246,100 2,404,822
------------
13,320,066
------------
TOTAL COMMON STOCK,
WARRANTS AND RIGHTS
(Cost $121,218,225).................................. 118,079,763
------------
</TABLE>

See Accompanying Notes to Financial Statements.

F-12

<PAGE>
THE BEA FAMILY
THE RBB FUND, INC
BEA EMERGING MARKETS EQUITY PORTFOLIO
STATEMENT OF NET ASSETS (CONCLUDED)
AUGUST 31, 1995

<TABLE>
<CAPTION>
PAR
(000) VALUE
----------- ------------
FOREIGN BONDS -- 3.2%
<S> <C> <C>
COLOMBIA -- 0.6%
Banco de Colombia Convertible 144A
5.20% 02/01/99........................... $ 1,100 $ 764,500
------------
HONG KONG -- 0.1%
HKR International Ltd.
6.00% 06/26/00........................... HKD 1,416 147,254
------------
SOUTH AFRICA -- 1.9%
Liberty Life Africa Convertible
6.50% 09/30/04........................... $ 200 228,000
Liberty Life Africa Convertible
144A 6.50% 09/30/04...................... 850 969,000
Sappi BVI Finance Ltd. Convertible 144A
7.50% 08/01/02........................... 1,260 1,294,650
------------
2,491,650
------------
THAILAND -- 0.6%
Bangkok Bank Public Convertible 3.25%
03/03/04................................. 790 760,375
------------
TOTAL FOREIGN BONDS
(Cost $4,516,793)...................................... 4,163,779
------------
SHORT-TERM INVESTMENT -- 5.5%
BBH Grand Cayman U.S Dollar
Time Deposit 4.875% 09/01/95............. 6,998 6,998,000
------------

TOTAL SHORT-TERM INVESTMENT
(Cost $6,998,000)...................................... 6,998,000
------------
VALUE
------------

TOTAL INVESTMENTS AT VALUE -- 100.7%
(Cost $132,733,018*).................................. $129,241,542
LIABILITIES IN EXCESS OF OTHER ASSETS -- (0.7%).........
(918,979)
------------
NET ASSETS (Applicable to 7,260,406 BEA Shares) --
100.0%................................................ $128,322,563
------------
------------
NET ASSET VALUE AND OFFERING PRICE PER SHARE
($128,322,563 DIVIDED BY 7,260,406).................. $17.67
------------
------------
REDEMPTION PRICE PER SHARE
($17.67 x .9850)...................................... $17.40
------------
------------
</TABLE>

* Cost for Federal income tax purposes at August 31, 1995 is $134,128,138. The
gross appreciation (depreciation) on a tax basis is as follows:

<TABLE>
<S> <C>
Gross Appreciation......................... $ 11,645,354
Gross Depreciation......................... (16,531,950)
-------------
Net Depreciation........................... $ (4,886,596)
-------------
-------------
</TABLE>

** Non-income producing securities.
*** Denotes foreign shares.

INVESTMENT ABBREVIATIONS

<TABLE>
<S> <C>
ADR........................... American Depository Receipts
ADS........................... American Depository Shares
GDR........................... Global Depository Receipts
GDS........................... Global Depository Shares
</TABLE>

CURRENCY ABBREVIATIONS

<TABLE>
<S> <C>
HKD........................... Hong Kong Dollars
</TABLE>

See Accompanying Notes to Financial Statements.

F-13

<PAGE>
THE BEA FAMILY
THE RBB FUND, INC.
BEA EMERGING MARKETS EQUITY PORTFOLIO

STATEMENT OF OPERATIONS
FOR THE YEAR ENDED
AUGUST 31, 1995

<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends............................ $ 1,957,064
Interest............................. 364,052
Foreign taxes withheld............... (369,424)
------------
TOTAL INVESTMENT INCOME............ 1,951,692
------------
EXPENSES
Investment advisory fees............. 1,283,714
Custodian fees....................... 313,760
Administration service fees.......... 192,557
Administration fees.................. 160,467
Registration fees.................... 23,548
Transfer agent fees.................. 22,007
Audit fees........................... 20,425
Miscellaneous fees................... 16,505
Legal fees........................... 11,046
Organization expense................. 10,636
Printing fees........................ 7,121
Insurance expense.................... 3,749
Directors fees....................... 1,167
------------
2,066,702
Less fees waived..................... (141,123)
------------
TOTAL EXPENSES..................... 1,925,579
------------
NET INVESTMENT INCOME.................. 26,113
------------
REALIZED AND UNREALIZED LOSS ON
INVESTMENTS AND FOREIGN CURRENCY
TRANSACTIONS:
Net realized loss from:
Security transactions.............. (13,347,010)
Foreign exchange transactions...... (285,174)
------------
(13,632,184)
------------
Net unrealized depreciation from:
Investments........................ (18,738,223)
Translation of assets and
liabilities in foreign
currencies........................ (14,706)
------------
(18,752,929)
------------
NET LOSS ON INVESTMENTS AND FOREIGN
CURRENCY TRANSACTIONS................ (32,385,113)
------------
NET DECREASE IN NET ASSETS RESULTING
FROM OPERATIONS...................... $(32,359,000)
------------
------------
</TABLE>

STATEMENTS OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
FOR THE FOR THE
YEAR ENDED YEAR ENDED
AUGUST 31,1995 AUGUST 31,1994
-------------- --------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income
(loss)................. $ 26,113 $ (17,188)
Net gain (loss) on
investments and foreign
currency............... (32,385,113) 17,329,056
-------------- --------------
Net increase (decrease)
in net assets resulting
from operations........ (32,359,000) 17,311,868
-------------- --------------
Distribution to
shareholders:
Dividends to shareholders
from net investment
income:
BEA shares ($.07 and
$.09, respectively,
per share)........... (394,002) (291,386)
Distributions to
shareholders from net
realized capital gains:
BEA shares ($.92 and
$.32, respectively,
per share)........... (5,374,023) (1,002,877)
-------------- --------------
Total distributions to
shareholders........... (5,768,025) (1,294,263)
-------------- --------------
Net capital share
transactions............ 25,774,209 102,669,712
-------------- --------------
Total increase (decrease)
in net assets........... (12,352,816) 118,687,317
Net Assets:
Beginning of year....... 140,675,379 21,988,062
-------------- --------------
End of year............. $128,322,563 $140,675,379
-------------- --------------
-------------- --------------
</TABLE>

See Accompanying Notes to Financial Statements.

F-14

<PAGE>
THE BEA FAMILY
THE RBB FUND, INC.
BEA U.S. CORE EQUITY PORTFOLIO
STATEMENT OF NET ASSETS
AUGUST 31, 1995
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
------------- -------------
<S> <C> <C>
COMMON AND CONVERTIBLE STOCKS -- 94.6%
AEROSPACE & DEFENSE -- 3.7%
Lockheed Martin Corp....................... 9,600 $ 584,400
United Technologies Corp................... 7,000 583,625
-------------
1,168,025
-------------
BANKS -- 4.1%
Chase Manhattan Corp....................... 8,900 511,750
First Chicago Corp......................... 5,000 316,875
PNC Financial Corp......................... 12,500 328,125
Southern National Corp..................... 5,000 133,750
-------------
1,290,500
-------------
CHEMICALS -- 4.2%
Dow Chemical Co............................ 9,500 703,000
The Scotts Co. Class A**................... 27,700 623,250
-------------
1,326,250
-------------
CONSTRUCTION -- 3.2%
Falcon Building Products, Inc.**........... 35,000 389,375
USG Corp.**................................ 23,000 623,875
-------------
1,013,250
-------------
DRUGS & MEDICAL PRODUCTS -- 2.3%
McKesson Corp.............................. 17,000 739,500
-------------
ELECTRONICS -- 4.8%
General Electric Co........................ 10,500 618,188
Intel Corp................................. 12,000 736,500
Motorola, Inc.............................. 2,300 171,925
-------------
1,526,613
-------------
ENTERTAINMENT -- 2.3%
Gtech Holdings Corp.**..................... 26,000 754,000
-------------
FINANCIAL SERVICES -- 5.1%
Dean Witter Discover & Co.................. 11,656 594,456
Federal National Mortgage
Association.............................. 5,500 524,562
Student Loan Marketing
Association.............................. 9,000 487,125
-------------
1,606,143
-------------

<CAPTION>
NUMBER
OF SHARES VALUE
------------- -------------
<S> <C> <C>
FOOD -- 2.1%
Coca-Cola Co............................... 5,000 $ 321,250
Nabisco Holdings Corp...................... 12,000 343,500
-------------
664,750
-------------
HOSPITAL MANAGEMENT -- 3.0%
Caremark International, Inc................ 29,900 620,425
Horizon CMS Healthcare Corp.**............. 15,000 328,125
-------------
948,550
-------------
HOTELS AND RESTAURANTS -- 2.9%
Marriot International, Inc................. 16,900 599,950
McDonald's Corp............................ 8,500 310,250
-------------
910,200
-------------
INSURANCE -- 6.3%
Exel Limited............................... 5,700 313,500
Mutual Risk Management, Ltd................ 18,000 686,250
TIG Holdings, Inc.......................... 30,588 783,817
Western National Corp...................... 17,200 215,000
-------------
1,998,567
-------------
INSURANCE-PROPERTY/CASUALTY -- 1.2%
Ace Limited Ordinary Shares................ 13,000 399,750
-------------
MANUFACTURING -- 9.1%
Allied-Signal, Inc......................... 12,000 532,500
Eastman Kodak Co........................... 5,500 316,938
Goodyear Tire & Rubber Co.................. 19,600 784,000
Ingersoll Rand Co.......................... 8,000 303,000
Oakley, Inc.**............................. 29,500 947,687
-------------
2,884,125
-------------
METALS -- 0.9%
Aluminum Co. America
(ALCOA).................................. 5,200 297,050
-------------
MINING -- 1.0%
Vulcan Materials Co........................ 6,000 315,750
-------------
OFFICE & BUSINESS EQUIPMENT -- 1.0%
Harris Corp................................ 5,500 316,938
-------------
</TABLE>

See Accompanying Notes to Financial Statements.

F-15

<PAGE>
THE BEA FAMILY
THE RBB FUND, INC.
BEA U.S. CORE EQUITY PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED)
AUGUST 31, 1995
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
------------- -------------
<S> <C> <C>
COMMON AND CONVERTIBLE STOCKS -- (CONTINUED)
OIL & GAS -- 4.4%
Exxon Corp................................. 9,000 $ 618,750
Mobil Corp................................. 3,200 304,800
Texaco, Inc................................ 7,200 466,200
-------------
1,389,750
-------------
OIL EQUIPMENT & SERVICES -- 2.6%
Schlumberger, Ltd.......................... 5,000 322,500
Tidewater, Inc............................. 20,000 495,000
-------------
817,500
-------------
PACKAGING -- 2.2%
Owens-Illinois, Inc.**..................... 50,100 682,612
-------------
PAPER & FOREST PRODUCTS -- 0.5%
Willamette Industries, Inc................. 2,500 171,875
-------------
PHARMACEUTICAL -- 7.6%
Barr Laboratories, Inc.**.................. 28,000 612,500
Pharmacia Aktiebolag ADR***................ 28,900 798,362
Smithkline Beecham PLC ADR................. 15,000 671,250
Warner Lambert Co.......................... 3,500 316,312
-------------
2,398,424
-------------
PRINTING AND PUBLISHING -- 2.1%
Harcourt General, Inc...................... 16,000 666,000
-------------
RADIO & TV BROADCASTING -- 3.4%
CBS, Inc................................... 1,900 151,525
Granite Broadcasting Corp.**............... 10,000 131,250
Granite Broadcasting Corp. Convertible
Preferred................................ 12,200 805,200
-------------
1,087,975
-------------
<CAPTION>
NUMBER
OF SHARES VALUE
------------- -------------
<S> <C> <C>
REAL ESTATE INVESTMENT TRUST -- 2.5%
Starwood Lodging Trust**................... 12,000 $ 319,500
Trinet Corporate Realty Trust.............. 17,000 465,375
-------------
784,875
-------------
RETAIL DEPARTMENT STORES -- 2.2%
Dayton-Hudson Corp......................... 4,200 307,125
Mac Frugals Bargains
Close-Outs, Inc.**....................... 20,000 335,000
Michael Anthony Jewelers, Inc.**........... 15,400 46,200
-------------
688,325
-------------
RETAIL-SPECIALTY -- 1.8%
Cole National Corp.**...................... 20,300 248,675
Mattel, Inc................................ 10,600 307,400
-------------
556,075
-------------
TELECOMMUNICATION -- 5.5%
American Mobile Satellite Corp., Inc.**.... 13,500 364,500
AT&T Corp.................................. 14,000 791,000
MCI Communications Corp.................... 15,000 360,938
Sprint Corp................................ 6,000 213,000
-------------
1,729,438
-------------
TOBACCO -- 2.6%
American Brands, Inc....................... 7,600 319,200
Philip Morris Companies, Inc............... 6,700 499,988
-------------
819,188
-------------
TOTAL COMMON AND CONVERTIBLE STOCKS
(Cost $26,577,908)..................... 29,951,998
-------------
</TABLE>

See Accompanying Notes to Financial Statements.

F-16

<PAGE>
THE BEA FAMILY
THE RBB FUND, INC.
BEA U.S. CORE EQUITY PORTFOLIO
STATEMENT OF NET ASSETS (CONCLUDED)
AUGUST 31, 1995
<TABLE>
<CAPTION>
PAR
(000) VALUE
------------- -------------
CORPORATE BONDS -- 2.3%
<S> <C> <C>
FINANCIAL -- 0.0%
Alexander & Alexander
Services Subordinated Debentures CV
Sinking Fund (NR, BB-)
11.00% 04/15/07.......................... $ 10 $ 10,250
-------------
TRANSPORTATION -- 2.3%
Santa Fe Pipeline Holding (Baa3, BBB)
11.00% 08/15/10.......................... 575 718,750
-------------
TOTAL CORPORATE BONDS
(Cost $756,000)......................... 729,000
-------------
SHORT-TERM INVESTMENT -- 2.7%
BBH Grand Cayman U.S. Dollar Time Deposit
4.875% 09/01/95.......................... 839 839,000
-------------
TOTAL SHORT-TERM INVESTMENT
(Cost $839,000)......................... 839,000
-------------

TOTAL INVESTMENTS AT VALUE -- 99.6%
(Cost $28,172,908*)...................... $ 31,519,998

OTHER ASSETS IN EXCESS OF
LIABILITIES -- 0.4%........................ 123,778
-------------
NET ASSETS (Applicable to 1,772,254 BEA
Shares) -- 100.0%.......................... $ 31,643,776
-------------
-------------
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE ($31,643,776
DIVIDED BY 1,772,254)..................... $17.86
-------------
-------------
</TABLE>

* Cost for Federal income tax purposes at August 31, 1995 is $28,013,902. The
gross appreciation (depreciation) on a tax basis is as follows:

<TABLE>
<S> <C>
Gross Appreciation......................... $ 3,707,590
Gross Depreciation......................... (201,494)
-----------
Net Appreciation........................... $ 3,506,096
-----------
-----------
</TABLE>

** Non-income producing securities.
*** Irregular dividend.

See Accompanying Notes to Financial Statements.

F-17

<PAGE>
THE BEA FAMILY
THE RBB FUND, INC.
BEA U.S. CORE EQUITY

STATEMENT OF OPERATIONS
FOR THE PERIOD SEPTEMBER 1, 1994 (1) TO
AUGUST 31, 1995

<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends.................................. $ 490,351
Interest................................... 82,406
---------
TOTAL INVESTMENT INCOME.................. 572,757
---------
EXPENSES
Investment advisory fees................... 165,881
Custodian fees............................. 41,690
Administration service fees................ 33,176
Registration fees.......................... 29,227
Administration fees........................ 27,647
Transfer agent fees........................ 18,406
Organization expense....................... 5,194
Printing fees.............................. 4,000
Legal fees................................. 3,233
Miscellaneous fees......................... 2,500
Audit fees................................. 2,324
Insurance expense.......................... 750
Directors fees............................. 200
---------
334,228
Less fees waived........................... (113,054)
---------
TOTAL EXPENSES........................... 221,174
---------
NET INVESTMENT INCOME........................ 351,583
---------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments........... 1,004,252
Net unrealized appreciation on
investments............................... 3,347,090
---------
NET GAIN ON INVESTMENTS...................... 4,351,342
---------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS.................................. $4,702,925
---------
---------
(1) Commencement of Operations.
</TABLE>

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
FOR THE
PERIOD
SEPTEMBER 1,
1994(1)
TO AUGUST 31,
1995
-------------
<S> <C>
Increase in net assets:
Operations:
Net investment income...................... $ 351,583
Net gain on investments.................... 4,351,342
-------------
Net increase in net assets resulting from
operations................................ 4,702,925
-------------
Distributions to shareholders:
Dividends to shareholders from net investment
income:
BEA shares ($.08 per share).............. (102,838)
-------------
Net capital share transactions............... 27,043,539
-------------
Total increase in net assets................. 31,643,626
Net Assets:
Beginning of period........................ 150
-------------
End of period.............................. $ 31,643,776
-------------
-------------
<FN>
(1) Commencement of Operations.
</TABLE>

See Accompanying Notes to Financial Statements.

F-18

<PAGE>
THE BEA FAMILY
THE RBB FUND, INC.
BEA U.S. CORE FIXED INCOME PORTFOLIO
STATEMENT OF NET ASSETS
AUGUST 31, 1995
<TABLE>
<CAPTION>
PAR
(000) VALUE
---------- -------------
<S> <C> <C>
CORPORATE BONDS -- 17.4%
AIR TRANSPORT -- 0.3%
Delta Air Lines, Inc. Debentures (Ba1, BB)
10.375% 02/01/11......................... $ 230 $ 269,388
-------------
BANKS -- 4.9%+++
Christiania Bank og Kreditkasse Perpetual
SubDebentures (NR, NR)+
6.4375%.................................. 600 468,000
Credit Lyonnais Perpetual Sub Variable Rate
Note, Rule 144A (Baa2, NR)
7.00%.................................... 360 333,000
Den Norske Bank A/S Perpetual Sub. FRN (NR,
NR)+
6.125%................................... 380 296,704
Hongkong & Shanghai Banking Corp. Ltd.
Perpetual Sub. FRN (NR, NR)+
6.5625% Series 2......................... 50 40,220
6.25% Series 1........................... 590 476,750
Lloyds Bank Plc Perpetual Sub. FRN (A1,
NR)+
6.0625%.................................. 520 438,776
Midland Bank Plc Perpetual Sub. FRN Series
1 (A2, A-)+
6.125%................................... 750 608,363
Midland Bank Plc Perpetual Sub. FRN Series
2 (A2, BBB+)+
6.6875%.................................. 430 348,580
National Westminster Bank Plc Perpetual
Sub. FRN Series B (A1, A+)+
6.8125%.................................. 590 506,486
Santander Financial Euro Perpetual FRN (A2,
NR)+
6.75%.................................... 1,000 890,000

<CAPTION>
PAR
(000) VALUE
---------- -------------
<S> <C> <C>
BANKS -- (CONTINUED)
Standard Chartered Bank Perpetual Sub. FRN
Series 3 (Baa2, NR)+
5.9625%.................................. $ 580 $ 432,361
-------------
4,839,240
-------------
BUILDING & BUILDING MATERIALS -- 0.4%
J.M. Peters Company, Inc., Senior Notes
(B3, NR)
12.75% 05/01/02.......................... 475 427,500
-------------
CHEMICALS -- 0.2%
UCC Investors Holdings Inc. Senior
Subordinated Notes (B3, B-)++
12.00% 05/01/05.......................... 310 230,950
-------------
COMMUNICATIONS & MEDIA -- 1.0%
Adelphia Communications Corp. Senior Notes
Series B PIK Bonds (B3, B)
9.50% 02/15/04........................... 310 262,269
Summit Communications Group Senior
Subordinated Debentures (B3, BB+)
10.50% 04/15/05.......................... 700 744,625
-------------
1,006,894
-------------
CONSUMER SERVICES -- 0.5%
Falcon Holdings Group L.P. Senior
Subordinated Notes PIK Bonds (NR, NR)
11.00% 09/15/03.......................... 486 467,037
-------------
COSMETICS -- 0.3%
Revlon Worldwide Corp. Senior Secured
Debentures, Series B (B3, B-)
0.00% 03/15/98........................... 480 340,800
-------------
</TABLE>

See Accompanying Notes to Financial Statements.

F-19

<PAGE>
THE BEA FAMILY
THE RBB FUND, INC.
BEA U.S. CORE FIXED INCOME PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED)
AUGUST 31, 1995
<TABLE>
<CAPTION>
PAR
(000) VALUE
---------- -------------
ENVIRONMENTAL SERVICES -- 0.4%
<S> <C> <C>
EnviroSource, Inc. Senior Notes (B3, B)
9.75% 06/15/03........................... $ 405 $ 370,575
-------------
FINANCE -- 1.7%
Ford Motor Credit Corp. Medium Term Notes
(A2, A)
4.80% 07/22/96........................... 25 24,718
General Motors Acceptance Corp. Medium Term
Notes (A3, BBB+)
7.25% 07/20/98........................... 145 147,900
7.375% 04/15/99.......................... 1,160 1,187,550
General Motors Acceptance Corp. Notes (A3,
BBB+)....................................
8.625% 06/15/99.......................... 100 106,375
8.40% 10/15/99........................... 200 212,000
-------------
1,678,543
-------------
FINANCIAL SERVICES -- 0.0%
International Lease Finance Corp. Senior
Notes (A2, A+)
6.75% 08/01/97........................... 30 30,263
-------------
GAS UTILITIES -- 0.1%
Columbia Gas System Inc. Debentures (B3,
D)***/****
10.50% 06/01/12.......................... 95 141,194
-------------
HEALTH -- 0.8%
Columbia/HCA Health Care Corp. Medium Term
Notes (A3, BBB+)
6.63% 07/15/45........................... 750 752,813
-------------
INDUSTRIAL, MANUFACTURING & PROCESSING -- 0.7%
Gaylord Container Corp. Senior Subordinated
Debentures (Caa, B-)++
12.75% 05/15/05.......................... 290 290,000
PDV America, Inc. Guaranteed Senior Notes
(Baa3, BB-)
7.875% 08/01/03.......................... 490 447,738
-------------
737,738
-------------
<CAPTION>
PAR
(000) VALUE
---------- -------------
<S> <C> <C>
METALS & MINING -- 0.4%
Acme Metals Inc. Senior Secured Notes (B1,
B)++
13.25% 08/01/04.......................... $ 475 $ 374,063
-------------
PAPER & FOREST PRODUCTS -- 0.7%
Grupo Industrial Durango, S.A. de C.V.
Yankee Notes
(B1, BB-)
12.00% 07/15/01.......................... 230 207,575
P. T. Indah Kiat Pulp & Paper Corp.
Guaranteed Notes Series B (Ba2, BB)
11.875% 06/15/02......................... 230 237,188
P. T. Indah Kiat Pulp & Paper Corp. Rule
144A Debentures (Ba2, BB)
8.875% 11/01/00.......................... 290 266,438
Stone Container Corp. First Mortgage Notes
(B1, B+)
10.75% 10/01/02.......................... 20 20,900
-------------
732,101
-------------
PUBLISHING -- 1.4%
Time Warner Inc. Notes
(Ba1, BBB-)
8.18% 08/15/07........................... 730 744,600
Time Warner, Inc. Debenture (Ba1, BBB-)
9.15% 02/01/23........................... 645 686,119
-------------
1,430,719
-------------
RETAIL -- 0.3%
Pueblo Xtra International, Inc. Senior
Notes (B2, B-)
9.50% 08/01/03........................... 285 273,600
-------------
STEEL -- 0.2%
Armco, Inc. Senior Notes
(B2, B)
9.375% 11/01/00.......................... 180 178,425
-------------
</TABLE>

See Accompanying Notes to Financial Statements.

F-20

<PAGE>
THE BEA FAMILY
THE RBB FUND, INC.
BEA U.S. CORE FIXED INCOME PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED)
AUGUST 31, 1995
<TABLE>
<CAPTION>
PAR
(000) VALUE
---------- -------------
TELEPHONE -- 1.6%
<S> <C> <C>
New York Telephone Company Debentures (A2,
A)
7.00% 08/15/25........................... $ 800 $ 752,000
Nippon Telephone & Telegraph Corp. Notes
(Aaa, AAA)
9.50% 07/27/98........................... 50 54,250
Pacific Bell Telephone & Telegraph
Debentures (Aa3, AA-)
7.50% 02/01/33........................... 750 741,563
-------------
1,547,813
-------------
TELEVISION -- 0.8%
Turner Broadcasting System, Inc. Senior
Notes (Ba2, BB+)
7.40% 02/01/04........................... 615 588,863
Videotron Holdings Yankee Senior Discount
Notes (B3, B+)++
11.00% 08/15/05.......................... 360 211,500
-------------
800,363
-------------
TRANSPORTATION -- 0.1%
NWA Trust Subordinated Notes Series D (NR,
NR)
13.875% 06/21/08......................... 110 125,400
-------------
UTILITIES -- 0.6%
Long Island Lighting Debentures (Ba1, BB+)
6.25% 07/15/01........................... 260 242,775
8.90% 07/15/19........................... 330 317,213
-------------
559,988
-------------
TOTAL CORPORATE BONDS
(Cost $17,070,529)..................... 17,315,407
-------------
FOREIGN GOVERNMENT BONDS -- 3.9%
Central Bank of Argentina Series 89B Bonex
(B1, BB-)+
5.9375% 12/28/99......................... 110 64,449
<CAPTION>
PAR
(000) VALUE
---------- -------------
<S> <C> <C>
FOREIGN GOVERNMENT BONDS -- (CONTINUED)
Central Bank of the Philippines Par Bonds
Step-Up Coupon, Series B (NR, NR)+
5.75% 12/01/17........................... $ 500 $ 368,438
Federal Republic of Brazil Interest Due
Bonds FRN (B1, NR)+
6.6875% 01/01/01......................... 1,188 981,914
Republic of Argentina (B2, BB-)
7.3125% 03/31/05......................... 500 305,625
Republic of Argentina Step-Up Par Bonds
Series L
(B2, BB-)+
5.00% 03/31/23........................... 500 236,250
Republic of Bulgaria Discount Bonds Tranche
A (NR, NR)+
6.75% 07/28/24........................... 600 300,375
Republic of Ecuador Step-Up Par Bonds (NR,
NR)
3.00% 02/28/25........................... 1,650 534,188
Republic of Italy Global Bond (A1, AA)
6.875% 09/27/23.......................... 855 770,569
Republic of Turkey Yankee Notes (Ba3, B+)
9.00% 06/15/99........................... 30 29,175
The Polish People's Republic Discount Bonds
FRN
(NR, NR)+
7.125% 10/27/24.......................... 425 323,797
-------------
TOTAL FOREIGN GOVERNMENT BONDS
(Cost $3,847,051)...................... 3,914,780
-------------
AGENCY OBLIGATIONS -- 36.0%
FEDERAL HOME LOAN MORTGAGE CORPORATION
FHLMC -- 5.1%
6.00% 05/01/99........................... 412 408,746
6.00% 06/01/99........................... 24 23,907
6.00% 11/01/99........................... 74 73,586
</TABLE>

See Accompanying Notes to Financial Statements.

F-21

<PAGE>
THE BEA FAMILY
THE RBB FUND, INC.
BEA U.S. CORE FIXED INCOME PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED)
AUGUST 31, 1995
<TABLE>
<CAPTION>
PAR
(000) VALUE
---------- -------------
FEDERAL HOME LOAN MORTGAGE CORPORATION -- (CONTINUED)
<S> <C> <C>
7.00% 08/01/00........................... $ 133 $ 134,052
FHLMC 15 Year Gold Balloon TBA**
7.00% 12/15/10........................... 4,350 4,362,234
-------------
5,002,525
-------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- 19.7%
FNMA
7.50% 01/01/00........................... 81 82,395
7.50% 09/01/01........................... 838 853,695
7.50% 09/01/01........................... 549 559,506
6.00% 10/01/01........................... 1,725 1,688,970
6.50% 11/01/01........................... 528 525,507
7.50% 12/01/22........................... 73 74,759
8.00% 12/01/22........................... 629 642,352
6.00% 12/01/23........................... 273 256,088
6.00% 01/01/24........................... 723 678,521
6.00% 04/01/24........................... 324 303,872
8.00% 05/01/24........................... 313 319,505
8.00% 06/01/24........................... 413 421,765
8.00% 11/01/24........................... 874 892,393
6.00% 02/01/25........................... 3,021 2,835,403
8.00% 06/01/25........................... 50 51,038
7.00% 07/01/25........................... 27 26,763
8.00% 07/01/25........................... 5,056 5,164,909
8.00% 08/01/25........................... 172 175,879
7.00% 09/01/25........................... 873 857,650
FNMA (TBA)**
6.50% 01/15/02........................... 1,925 1,914,172
FNMA Balloon
7.50% 07/01/00........................... 85 86,804
7.50% 06/01/01........................... 119 121,549
7.50% 09/01/01........................... 572 583,257
FNMA 1991-165 Class M
8.25% 12/25/21........................... 13 13,390
FNMA 1994-3 Class SA
3.2742% 01/25/24......................... 801 419,097
-------------
19,549,239
-------------
<CAPTION>
PAR
(000) VALUE
---------- -------------
<S> <C> <C>
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -- 9.1%
GNMA
8.25% 08/15/04........................... $ 1 $ 1,444
9.00% 11/15/04........................... 2 2,249
9.00% 12/15/04........................... 2 1,888
8.25% 04/15/06........................... 3 3,042
7.00% 09/01/08........................... 476 479,125
7.00% 11/15/08........................... 446 448,934
6.00% 01/15/09........................... 497 483,160
7.00% 02/01/09........................... 211 212,095
7.00% 03/15/09........................... 469 471,726
6.00% 04/15/09........................... 342 331,802
7.00% 04/15/09........................... 442 444,264
7.00% 05/01/09........................... 361 362,696
6.00% 05/15/09........................... 278 270,047
13.05% 07/15/14.......................... 1 1,603
9.00% 08/15/21........................... 1,299 1,365,212
8.00% 02/15/22........................... 465 476,857
8.00% 03/15/22........................... 319 327,135
8.00% 05/15/22........................... 14 14,676
8.00% 06/15/22........................... 362 371,925
8.00% 09/15/22........................... 484 497,292
8.00% 11/15/22........................... 432 443,077
8.00% 09/15/23........................... 339 348,393
8.00% 08/15/24........................... 480 492,593
8.00% 11/15/24........................... 25 25,712
8.00% 03/15/25........................... 25 25,633
8.00% 07/15/23........................... 1,086 1,114,850
-------------
9,017,430
-------------
MISCELLANEOUS -- 2.1%
Hydro-Quebec Guaranteed Debentures (A2, A+)
13.25% 10/15/10.......................... 100 105,250
National Archive Facility Trust COP (Aaa,
AAA)
8.50% 09/01/19........................... 408 463,409
Tennessee Valley Authority Debentures (NR,
NR)
6.235% 07/15/45.......................... 1,550 1,553,875
-------------
2,122,534
-------------
</TABLE>

See Accompanying Notes to Financial Statements.

F-22

<PAGE>
THE BEA FAMILY
THE RBB FUND, INC.
BEA U.S. CORE FIXED INCOME PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED)
AUGUST 31, 1995
<TABLE>
<CAPTION>
PAR
(000) VALUE
---------- -------------
MISCELLANEOUS -- (CONTINUED)
<S> <C> <C>
TOTAL AGENCY OBLIGATIONS
(Cost $34,887,855)..................... $ 35,691,728
-------------
ASSET-BACKED SECURITIES -- 1.9%
Goldome Credit Corp. Home Equity Trust
Series 1990-1, Class A (Aa2, AA)
10.00% 07/15/15.......................... $ 17 18,129
Green Tree Financial Corporation
Manufactured Housing Contract Series
1995-5 Class A-3 (Aaa, AAA)
6.25% 10/15/25........................... 390 384,624
Green Tree Financial Corporation
Manufactured Housing Contract Series
1995-6 Class A-2
6.40% 08/15/25........................... 1,450 1,443,823
-------------
TOTAL ASSET-BACKED SECURITIES
(Cost $1,848,229)...................... 1,846,576
-------------
COLLATERALIZED MORTGAGED BACKED SECURITIES -- 0.0%
Collateralized Mortgage Obligation Trust
REMIC Series 54-C (Aaa, AAA)
9.25% 11/01/13........................... 3 3,767
Ryland Acceptance Corp. REMIC Series 1985,
Class D (Aaa, AAA)
9.25% 04/01/12........................... 8 8,105
-------------
TOTAL COLLATERALIZED MORTAGAGE BACKED
SECURITIES
(Cost $11,819) 11,872
-------------
<CAPTION>
PAR
(000) VALUE
---------- -------------
<S> <C> <C>
MUNICIPAL BONDS -- 1.9%
New York State Local Assistance Corp.
Revenue Bonds Series C (A, A)
5.50% 04/01/18........................... $ 950 $ 891,813
Salt River Project Agricultural Improvement
& Power District Revenue Bonds Series C
(Aa, AA)
5.00% 01/01/13........................... 490 450,188
South Carolina State Public Service
Authority Revenue Bonds Series C (Aaa,
AAA)
5.00% 01/01/25........................... 650 566,313
-------------
TOTAL MUNICIPAL BONDS
(Cost $1,918,488) 1,908,314
-------------
UNITED STATES TREASURY OBLIGATIONS -- 39.3%
U.S. TREASURY BILLS -- 5.0%
5.36% 10/12/95........................... 5,000 4,969,478
-------------
U.S. TREASURY BONDS -- 16.5%
11.625% 11/15/04......................... 1,600 2,181,216
10.75% 08/15/05.......................... 5,600 7,372,904
7.875% 02/15/21.......................... 4,570 5,178,677
7.125% 02/15/23.......................... 1,600 1,674,448
-------------
16,407,245
-------------
U.S. TREASURY NOTES -- 17.4%
6.00% 12/31/97........................... 2,600 2,608,684
7.25% 02/15/98........................... 3,000 3,091,890
5.375% 05/31/98.......................... 4,350 4,290,188
6.75% 05/31/99........................... 5,550 5,681,645
7.75% 11/30/99........................... 125 132,789
7.50% 11/15/01........................... 225 240,325
6.25% 02/15/03........................... 1,185 1,184,241
-------------
17,229,762
-------------
U.S. TREASURY STRIP NOTES -- 0.4%
11/15/04..................................... 780 433,641
-------------
</TABLE>

See Accompanying Notes to Financial Statements.

F-23

<PAGE>
THE BEA FAMILY
THE RBB FUND, INC.
BEA U.S. CORE FIXED INCOME PORTFOLIO
STATEMENT OF NET ASSETS (CONCLUDED)
AUGUST 31, 1995
<TABLE>
<CAPTION>
PAR
(000) VALUE
---------- -------------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $38,223,479) $ 39,040,126
<S> <C> <C>
-------------
LOAN PARTICIPATION AGREEMENTS *** -- 0.3%
BANKS -- 0.3%
Bank of Foreign Economic Affairs of the
USSR (Vnesheconombank Bank Participation
Loan).................................... $ 1,350 267,930
-------------
TOTAL LOAN PARTICIPATION AGREEMENTS
(Cost $272,447) 267,930
-------------
SHORT-TERM INVESTMENT -- 4.9%
BBH Grand Cayman U.S. Dollar Time Deposit
4.875% 09/01/95.......................... 4,835 4,835,000
-------------
TOTAL SHORT-TERM INVESTMENT
(Cost $4,835,000) 4,835,000
-------------
<CAPTION>
NUMBER OF
SHARES
----------
<S> <C> <C>
WARRANTS *** -- 0.0%
J.M. Peters Company, Inc. Warrants Expiring
05/01/02................................. 1,817 909
-------------
TOTAL WARRANTS
(Cost $1,000) 909
-------------
TOTAL INVESTMENTS AT VALUE -- 105.6%
(Cost $102,915,897).................................... 104,832,642
INVESTMENT SECURITIES PURCHASED
PAYABLE -- (8.0%).......................... (7,932,468)
OTHER ASSETS IN EXCESS OF LIABILITIES --
2.4%....................................... 2,349,665
-------------
NET ASSETS (Applicable to 6,438,315 BEA Shares) --
100.0%................................................. $ 99,249,839
-------------
-------------
<CAPTION>
VALUE
-------------
<S> <C> <C>
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
($99,249,839 DIVIDED BY 6,438,315) $15.42
-------------
-------------
</TABLE>

* Cost for Federal income tax purposes at August 31, 1995 is $102,933,859.
The gross appreciation (depreciation) on a tax basis is as follows:

<TABLE>
<S> <C>
Gross Appreciation........................... $2,151,794
Gross Depreciation........................... (253,011)
----------
Net Appreciation............................. $1,898,783
----------
----------
</TABLE>

** Securities were acquired on a delayed delivery basis.

*** Non-income producing securities.

**** Securites currently in default.
+ Variable Rate Obligations -- The interest rate shown is the rate as of
August 31, 1995.

++ Step Bonds -- The interest rate as of August 31, 1995 is 0% and will reset
to interest rate shown at a future date.

+++ Securities have no stated final maturity date.

The Moody's Investors Service, Inc. and Standard & Poor's Corporations ratings
indicated the most recent ratings available at August 31, 1995 and are
unaudited.

INVESTMENT ABBREVIATIONS

<TABLE>
<S> <C>
COP........................... Certificates of Participation
FRB........................... Floating Rate Bond
FRN........................... Floating Rate Note
PIK........................... Pay in Kind
TBA........................... To be Announced
</TABLE>

See Accompanying Notes to Financial Statements.

F-24

<PAGE>
THE BEA FAMILY
THE RBB FUND, INC.
BEA U.S. CORE FIXED INCOME PORTFOLIO

STATEMENT OF OPERATIONS
FOR THE YEAR ENDED
AUGUST 31, 1995

<TABLE>
<S> <C>
INVESTMENT INCOME
Interest................................... $ 4,731,575
-----------
EXPENSES
Investment advisory fees................... 254,475
Administration service fees................ 101,790
Administration fees........................ 84,825
Custodian fees............................. 54,084
Registration fees.......................... 29,693
Transfer agent fees........................ 19,852
Audit fees................................. 7,700
Printing fees.............................. 5,476
Miscellaneous fees......................... 5,000
Legal fees................................. 3,930
Organization expense....................... 3,880
Insurance expense.......................... 1,100
Directors fees............................. 800
-----------
572,605
Less fees waived........................... (233,305)
-----------
TOTAL EXPENSES........................... 339,300
-----------
NET INVESTMENT INCOME........................ 4,392,275
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY
TRANSACTIONS:
Net realized gain (loss) from:
Security transactions.................... 1,136,894
Foreign exchange transactions............ (17,441)
-----------
1,119,453
-----------
Net unrealized appreciation from:
Investments.............................. 2,393,992
Translation of assets and liabilities in
foreign currencies...................... 10,933
-----------
2,404,925
-----------
NET GAIN ON INVESTMENTS AND FOREIGN CURRENCY
TRANSACTIONS............................... 3,524,378
-----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS................................. $ 7,916,653
-----------
-----------
</TABLE>

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
FOR THE
PERIOD
FOR THE APRIL 1,
YEAR ENDED 1994(1)
AUGUST 31, TO AUGUST
1995 31, 1994
------------ ------------

<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income...................... $ 4,392,275 $ 859,203
Net gain (loss) on investments and foreign
currency.................................. 3,524,378 (854,633)
------------ ------------
Net increase in net assets resulting from
operations................................ 7,916,653 4,570
------------ ------------
Distributions to shareholders:
Dividends to shareholders from net investment
income:
BEA shares ($.84 and $.25, respectively,
per share).............................. (3,353,829) (491,074)
------------ ------------
Net capital share transactions............... 64,671,197 30,502,172
------------ ------------
Total increase in net assets................. 69,234,021 30,015,668
------------ ------------
Net Assets:
Beginning of year.......................... 30,015,818 150
------------ ------------
End of year................................ $99,249,839 $30,015,818
------------ ------------
------------ ------------

<FN>

(1) Commencement of Operations.
</TABLE>

See Accompanying Notes to Financial Statements.

F-25

<PAGE>
THE BEA FAMILY
THE RBB FUND, INC.
BEA GLOBAL FIXED INCOME PORTFOLIO
STATEMENT OF NET ASSETS
AUGUST 31, 1995
<TABLE>
<CAPTION>
PAR
(000) VALUE
------------- -------------
<S> <C> <C> <C>
INTERNATIONAL BONDS -- 56.0%
ARGENTINA -- 1.6%
Republic of Argentina FRB
(B2, BB-)
7.3125% 03/31/05.................... $ 500 $ 305,625
-------------
AUSTRALIA -- 3.9%
Queensland Treasury Corp. Global Bonds
(NR, NR) 8.00% 07/14/99............. AUD 630 468,615
Treasury Corporation of Victoria
Global Bonds (Aa2, AA) 8.25%
10/15/03............................ 420 297,442
-------------
766,057
-------------
BRAZIL -- 3.1%
Companhia Petroleo Ipiranga Notes,
Step-Up Coupon (NR, NR)
8.625% 02/25/02..................... $ 285 272,175
Federal Republic of Brazil
Capitalization Bonds
(NR, NR)
8.00% 04/15/14...................... 260 129,187
Federal Republic of Brazil Interest
Due Bonds FRN
(B1, NR)+
6.875% 01/01/01..................... 238 196,383
-------------
597,745
-------------
BULGARIA -- 0.6%
Republic of Bulgaria Discount Bonds
Tranche A (NR, NR)+
6.75% 07/28/24...................... 250 125,156
-------------
CANADA -- 2.9%
Government of Canada Debentures (NR,
NR)
8.75% 12/01/05...................... CND 725 567,951
-------------

<CAPTION>
PAR
(000) VALUE
------------- -------------
<S> <C> <C> <C>
DENMARK -- 0.8%
Kingdom of Denmark Government Bonds
(NR, NR)
8.00% 03/15/06...................... $ 915 $ 158,657
-------------
FRANCE -- 6.2%
Republic of France Treasury
Bonds-O.A.T.
(Aaa, NR)
7.25 04/25/05....................... FF 6,050 1,210,671
-------------
GERMANY -- 9.7%
Federal Republic of Germany Eurobonds
(Aaa, NR) 7.25% 10/21/02............ DEM 2,680 1,903,850
-------------
INDONESIA -- 0.9%
P.T. Indah Kiat Pulp & Paper Corp.
Rule 144A Debentures (Ba2, BB)
8.875% 11/01/00..................... $ 200 183,750
-------------
ITALY -- 2.5%
Republic of Italy Bonds (A1, NR)
9.00% 10/01/03...................... ITL 900,000 483,823
-------------
MOROCCO -- 1.6%
The Kingdom of Morocco, Tranche A Bank
Participation Loan (NR, NR)+
6.6875% 01/01/09.................... $ 500 306,562
-------------
POLAND -- 1.3%
The Polish People's Republic Discount
Bonds FRN (NR, NR)+
7.125% 10/27/24..................... 345 262,847
-------------
RUSSIA** -- 0.4%
Bank of Foreign Economic Affairs of the
USSR (Vneshekonombank Bank Participation
Loan)..................................... 450 89,310
-------------
</TABLE>

See Accompanying Notes to Financial Statements.

F-26

<PAGE>
THE BEA FAMILY
THE RBB FUND, INC.
BEA GLOBAL FIXED INCOME PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED)
AUGUST 31, 1995
<TABLE>
<CAPTION>
PAR
(000) VALUE
------------- -------------
INTERNATIONAL BONDS -- (CONTINUED)
<S> <C> <C> <C>
SPAIN -- 3.0%
Kingdom of Spain Debentures (NR, NR)
10.25% 11/30/98..................... ESP 74,000 $ 587,047
-------------
SUPRANATIONAL -- 9.5%
International Bank For Reconstruction
& Development Eurobonds (Aaa, AAA)
5.25% 03/20/02...................... JPY 161,000 1,868,382
-------------
SWEDEN -- 2.0%
Nordic Investment Bank Global Notes
(Aaa, AAA) 6.25% 02/08/99........... SEK 3,210 392,353
-------------
TURKEY -- 0.1%
Republic of Turkey Yankee Notes (Ba3,
B+)
9.00% 06/15/99...................... $ 25 24,312
-------------
UNITED KINGDOM -- 4.6%
U.K. Treasury Eurobonds (Aaa, NR)
8.50% 07/16/07...................... GBP 563 896,912
-------------
VENEZUELA -- 1.3%
Republic of Venezuela Debt Conversion
Bonds Series DL (Ba2, NR)+
6.8125% 12/18/07.................... $ 500 247,188
-------------
TOTAL INTERNATIONAL BONDS
(Cost $10,849,904)........................ 10,978,198
-------------
UNIITED STATES TREASURY OBLIGATIONS -- 29.3%
U.S. TREASURY BONDS -- 24.2%
11.62% 11/15/04....................... 480 654,365
<CAPTION>
PAR
(000) VALUE
------------- -------------
<S> <C> <C> <C>
U.S. TREASURY BONDS -- (CONTINUED)
10.75% 08/15/05....................... 2,690 3,541,627
7.875% 02/15/21....................... $ 480 $ 543,931
-------------
4,739,923
-------------
U.S. TREASURY STRIP NOTES -- 0.7%
11/15/04.............................. 240 133,428
-------------
U.S. TREASURY NOTES -- 4.4%
5.375% 05/31/98....................... 155 152,869
6.25% 02/15/03........................ 700 699,559
-------------
852,428
-------------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $5,596,809).................... 5,725,779
-------------
SHORT-TERM INVESTMENT -- 11.4%
BBH Grand Cayman U.S. Dollar Time
Deposit
4.875% 09/01/95...................... 2,221 2,221,000
-------------
TOTAL SHORT-TERM
INVESTMENT
(Cost $2,221,000).................... 2,221,000
-------------
TOTAL INVESTMENTS AT VALUE
(Cost $18,667,713*) -- 96.7%............. $ 18,924,977
OTHER ASSETS IN EXCESS OF LIABILITIES --
3.3%..................................... 639,850
-------------
NET ASSETS (Applicable to 1,248,179
BEA Shares) -- 100.0%.................... $ 19,564,827
-------------
-------------
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
($19,564,827 DIVIDED BY 1,248,179)...... $ 15.67
-------------
-------------
</TABLE>

See Accompanying Notes to Financial Statements.

F-27

<PAGE>
THE BEA FAMILY
THE RBB FUND, INC.
BEA GLOBAL FIXED INCOME PORTFOLIO
STATEMENT OF NET ASSETS (CONCLUDED)
AUGUST 31, 1995

* Also cost for Federal income tax
purposes at August 31, 1995. The
gross appreciation on a tax basis
is as follows:

<TABLE>
<S> <C>
Gross Appreciation....................... $ 471,375
Gross Depreciation....................... (214,111)
----------
Net Appreciation......................... $ 257,264
----------
----------
</TABLE>

** Non-Income Producing.

+ Variable Rate Obligations -- The
interest rate shown is the rate as
of August 31, 1995.

The Moody's Investors Service, Inc.
and Standard & Poor's Corporation's
ratings indicated are the most recent
ratings available at August 31,1995
and are unaudited.

CURRENCY ABBREVIATIONS

<TABLE>
<S> <C>
AUD........................... Australian Dollars
CND........................... Canadian Dollars
DEM........................... German Deutschemarks
ESP........................... Spanish Pesetas
FF............................ French Francs
GBP........................... United Kingdom Pounds
ILT........................... Italian Lira
JPY........................... Japanese Yen
SEK........................... Swedish Krona
</TABLE>

See Accompanying Notes to Financial Statements.

F-28

<PAGE>
THE BEA FAMILY
THE RBB FUND, INC.
BEA GLOBAL FIXED INCOME PORTFOLIO

STATEMENT OF OPERATIONS
FOR THE YEAR ENDED
AUGUST 31, 1995

<TABLE>
<S> <C>
INVESTMENT INCOME
Interest................................... $1,402,027
----------
EXPENSES
Investment advisory fees................... 87,472
Custodian fees............................. 39,041
Administration service fees................ 26,242
Administration fees........................ 21,868
Transfer agent fees........................ 19,546
Registration fees.......................... 13,953
Organization expense....................... 5,682
Miscellaneous fees......................... 4,267
Printing fees.............................. 3,499
Audit fees................................. 3,000
Legal fees................................. 2,408
Insurance expense.......................... 350
Directors fees............................. 301
----------
227,629
Less fees waived........................... (93,925)
Less expense reimbursement................. (2,497)
----------
TOTAL EXPENSES........................... 131,207
----------
NET INVESTMENT INCOME........................ 1,270,820
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENT AND FOREIGN CURRENCY
TRANSACTIONS:
Net realized gain (loss) from:
Security transactions.................... 188,940
Foreign exchange transactions............ (23,628)
----------
165,312
----------
Net unrealized appreciation from:
Investments.............................. 315,935
Translation of assets and liabilities in
foreign currencies...................... 85,307
----------
401,242
----------
NET GAIN ON INVESTMENTS AND FOREIGN CURRENCY
TRANSACTIONS............................... 566,554
----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS................................. $1,837,374
----------
----------
</TABLE>

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
FOR THE
PERIOD
FOR THE JUNE 28,
YEAR ENDED 1994(1)
AUGUST 31, TO AUGUST
1995 31, 1994
------------ -----------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income...................... $ 1,270,820 $ 63,522
Net gain (loss) on investments and foreign
currency transactions..................... 566,554 (63,312)
------------ -----------
Net increase in net assets resulting from
operations................................ 1,837,374 210
------------ -----------
Distributions to shareholders:
Dividends to shareholders from net investment
income:
BEA shares ($.88 per share).............. (924,756) --
------------ -----------
Net capital share transactions............... 12,351,849 6,300,000
------------ -----------
Total increase in net assets................. 13,264,467 6,300,210
Net Assets:
Beginning of year.......................... 6,300,360 150
------------ -----------
End of year................................ $19,564,827 $6,300,360
------------ -----------
------------ -----------

<FN>

(1) Commencement of Operations.
</TABLE>

See Accompanying Notes to Financial Statements.

F-29

<PAGE>
THE BEA FAMILY
THE RBB FUND, INC.
BEA STRATEGIC FIXED INCOME PORTFOLIO
STATEMENT OF NET ASSETS
AUGUST 31, 1995
<TABLE>
<CAPTION>
PAR
(000) VALUE
------------ -------------
<S> <C> <C>
CORPORATE BONDS -- 62.6%
BANKS AND SAVINGS & LOANS -- 0.5%
Banco Nacional de Desenvolvimento Economico
e Social Notes (NR, NR)
6.00% 09/15/96........................... $ 810 $ 781,264
-------------
BUILDING & BUILDING MATERIALS -- 2.1%
J.M. Peters Company, Inc. Senior Notes (B3,
NR)
12.75% 05/01/02.......................... 3,600 3,240,000
-------------
COMMUNICATIONS & MEDIA -- 2.9%
Adelphia Communications Corp. Senior Notes,
Series B PIK Bonds (B3, B)
9.50% 02/15/04........................... 5,292 4,478,010
-------------
CONSUMER SERVICES -- 2.1%
Falcon Holdings Group L.P. Senior
Subordinated Notes PIK Bonds (NR, NR)
11.00% 09/15/03.......................... 3,421 3,288,436
-------------
COSMETICS -- 2.1%
Revlon Worldwide Corp. Senior Secured
Debentures, Series B (B3, B-)
0.00% 03/15/98........................... 4,400 3,124,000
-------------
ELECTRIC UTILITIES -- 4.0%
Cleveland Electric Illuminating Company 1st
Mortgage Bonds (Ba2, BB)
9.50% 05/15/05........................... 3,700 3,769,375
Midland Funding Corp. I
Lease-Backed Certificates, Series C-91
(Ba3, BB-)
10.33% 07/23/02.......................... 2,276 2,353,267
-------------
6,122,642
-------------

<CAPTION>
PAR
(000) VALUE
------------ -------------
<S> <C> <C>
ENVIRONMENTAL SERVICES -- 1.9%
EnviroSource, Inc. Senior Notes (B3, B)
9.75% 06/15/03........................... $ 3,155 $ 2,886,825
-------------
FINANCIAL SERVICES -- 1.5%
Fifth Mexican Acceptance Corp. Rule 144A
Notes Tranche A (NR, NR)*
8.00% 12/15/98........................... 5,040 2,268,000
-------------
FOOD & BEVERAGES -- 2.7%
Fresh del Monte Produce Yankee Senior Notes
(B3, CCC+)
10.00% 05/01/03.......................... 5,135 4,217,119
-------------
GAS UTILITIES -- 4.8%
Columbia Gas System, Inc. Debentures (B3,
D)**/*** 10.50% 06/01/12................. 4,445 6,606,381
Columbia Gas System, Inc. Medium Term Notes
(B3, D)**/***
9.07% 01/12/00........................... 350 512,313
9.25% 09/30/04........................... 135 199,294
-------------
7,317,988
-------------
HEALTH CARE -- 2.3%
General Medical Corp. Subordinated
Debentures, Series A PIK Bonds (B3, B-)
12.125% 08/15/05......................... 3,493 3,601,783
-------------
</TABLE>

See Accompanying Notes to Financial Statements.

F-30

<PAGE>
THE BEA FAMILY
THE RBB FUND, INC.
BEA STRATEGIC FIXED INCOME PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED)
AUGUST 31, 1995
<TABLE>
<CAPTION>
PAR
(000) VALUE
------------ -------------
INDUSTRIAL, MANUFACTURING & PROCESSING -- 16.6%
<S> <C> <C>
Arcadian Partners, L.P. Senior Notes,
Series B (B2, BB-)
10.75% 05/01/05.......................... $ 5,330 $ 5,603,163
Bell Cablemedia PLC Yankee Discount Bonds
(B2, B+)++
11.95% 07/15/04.......................... 5,350 3,477,500
Bombril S.A. Notes, Series XW (NR, NR)
8.00% 08/26/98........................... 3,350 2,872,625
Companhia Petroleo Ipiranga Notes Step-Up
Coupon (NR, NR)
8.625% 02/25/02.......................... 850 811,750
Companhia Petroleo Ipiranga Rule 144A Notes
(NR, NR)
8.625% 02/25/02.......................... 2,740 2,616,700
Crown Packaging Holdings Senior
Subordinated Notes, Series B (Caa, NR)++
12.25% 11/01/03.......................... 3,800 1,790,750
Essar Gujarat Rule 144A Debenture FRN (NR,
NR)+
8.40% 07/15/99........................... 1,250 1,243,250
Exide Corp. Senior Subordinated Debentures
(B2, B+)++
12.25% 12/15/04.......................... 2,750 2,244,688
Gaylord Container Corp. Senior
Subordinated Debentures
(Caa, B-)++
12.75% 05/15/05.......................... 4,680 4,680,000
Grupo Mexicano de Desarrollo
Rule 144A Notes (B3, NR)
8.25% 02/17/01........................... 410 200,900
-------------
25,541,326
-------------
METALS & MINING -- 3.4%
Acme Metals Inc.
Secured Notes (B1, B)++
13.50% 08/01/04.......................... 6,725 5,295,938
-------------
<CAPTION>
PAR
(000) VALUE
------------ -------------
<S> <C> <C>
PAPER & FOREST PRODUCTS -- 9.4%
Grupo Industrial Durango, S.A. de C.V.
Yankee Notes (B1, BB-)
12.00% 07/15/01.......................... $ 3,450 $ 3,113,625
P.T. Indah Kiat Pulp & Paper Corp.
Debentures (Ba2, BB)
8.875% 11/01/00.......................... 630 578,807
P.T. Indah Kiat Pulp & Paper Corp.
Guaranteed Notes, Series B (Ba2, BB)
11.875% 06/15/02......................... 1,150 1,185,938
P.T. Indah Kiat Pulp & Paper Corp. Rule
144A Debentures (Ba2, BB)
8.875% 11/01/00.......................... 2,625 2,411,719
Stone Container Corp. Senior Notes (B1, B+)
9.875% 02/01/01.......................... 3,080 3,056,900
Stone Container Corp. Subordinated
Debentures (B3, B)
12.125% 09/15/01......................... 3,975 4,054,500
-------------
14,401,489
-------------
RETAIL -- 0.7%
Pueblo Xtra International, Inc. Senior
Notes (B2, B-)
9.50% 08/01/03........................... 1,060 1,017,600
-------------
STEEL -- 0.0%
Armco, Inc. Senior Notes (B2, B)
9.375% 11/01/00.......................... 70 69,388
-------------
TELECOMMUNICATIONS & EQUIPMENT -- 2.2%
Cablevision Industries Corp.,
Senior Debentures Series B (B1, BB-)
9.25% 04/01/08........................... 3,245 3,378,856
-------------
TRANSPORTATION -- 3.4%
NWA Trust Subordinated Notes, Series D (NR,
NR)
13.875% 06/21/08......................... 4,540 5,175,600
-------------
</TABLE>

See Accompanying Notes to Financial Statements.

F-31

<PAGE>
THE BEA FAMILY
THE RBB FUND, INC.
BEA STRATEGIC FIXED INCOME PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED)
AUGUST 31, 1995
<TABLE>
<CAPTION>
PAR
(000) VALUE
------------ -------------
TOTAL CORPORATE BONDS (Cost $97,754,220)... $ 96,206,264
<S> <C> <C>
-------------
FOREIGN GOVERNMENT BONDS -- 22.0%
Central Bank of Nigeria Par Bonds (NR, NR)+
6.25% 11/15/20........................... $ 6,500 2,843,750
Central Bank of the Philippines Par Bonds
Step-Up Coupon, Series B (NR, NR)+
5.75% 12/01/17........................... 6,500 4,789,688
Federal Republic of Brazil Capitalization
Bonds (NR, NR)
8.00% 04/15/14........................... 3,120 1,550,250
Federal Republic of Brazil Interest Due
Bonds FRN (B1, NR)
6.6875% 01/01/01......................... 6,650 5,498,719
Republic of Argentina FRB (B2, BB)+
7.3125% 03/31/05......................... 4,500 2,750,625
Republic of Argentina Step-Up Par Bonds
Series L (B2, BB-)+
5.00% 03/31/23........................... 3,500 1,653,750
Republic of Bulgaria Discount Bonds,
Tranche A (NR, NR)+
6.75% 0728/24............................ 5,250 2,628,281
Republic of Ecuador Discount Bonds FRN (NR,
NR)
6.8125% 02/28/25......................... 4,150 2,062,031
Republic of Turkey Yankee Notes (Ba3, B+)
9.00% 06/15/99........................... 1,515 1,473,338
Republic of Venezuela Debt Conversion Bonds
Series DL (Ba2, NR)+
6.8125% 12/18/07......................... 6,250 3,089,844
<CAPTION>
PAR
(000) VALUE
------------ -------------
<S> <C> <C>
FOREIGN GOVERNMENT BONDS -- (CONTINUED)
The Polish People's Republic Discount Bonds
FRN (NR, NR)+
7.125% 10/27/24.......................... $ 3,825 $ 2,914,172
United Mexican States Par Bonds, Series B
(Ba3, BB)
6.25% 12/31/19........................... 750 455,156
United Mexican States Rule 144A Debentures
FRN (Ba2, BB)
11.1875% 07/21/97........................ 2,040 2,083,350
-------------
TOTAL FOREIGN
GOVERNMENT BONDS
(Cost $35,596,846)........................ 33,792,954
-------------
LOAN PARTICIPATION AGREEMENTS -- 3.9%
The Kingdom of Morocco Tranche A Bank
Participation Loan (NR, NR)+
6.6875% 01/01/09......................... 6,000 3,678,750
Bank of Foreign Economic Affairs of the
USSR (Vneshekonombank Bank Participation
Loan)**................................... 8,000 2,377,500
-------------
TOTAL LOAN PARTICIPATION AGREEMENTS
(Cost $6,718,565)......................... 6,056,250
-------------
UNITED STATES TREASURY OBLIGATIONS -- 9.4%
U.S. TREASURY BILLS -- 1.3%
5.41% 09/21/95............................. 2,000 1,993,989
-------------
</TABLE>

See Accompanying Notes to Financial Statements.

F-32

<PAGE>
THE BEA FAMILY
THE RBB FUND, INC.
BEA STRATEGIC FIXED INCOME PORTFOLIO
STATEMENT OF NET ASSETS (CONCLUDED)
AUGUST 31, 1995
<TABLE>
<CAPTION>
PAR
(000) VALUE
------------ -------------
U.S. TREASURY BONDS -- 7.8%
<S> <C> <C>
11.625% 11/15/04........................... $ 950 $ 1,295,097
10.75% 08/15/05............................ 7,700 10,137,743
7.125% 02/15/23............................ 600 627,918
-------------
12,060,758
-------------
U.S. TREASURY NOTES -- 0.1%
6.25 02/15/03.............................. 80 79,950
-------------
U.S. TREASURY STRIP NOTES -- 0.2%
11/15/04................................... 480 266,856
-------------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $13,752,073)....................... 14,401,553
-------------
SHORT-TERM INVESTMENT -- 0.3%
BBH Grand Cayman U.S. Dollar Time Deposit
4.875% 09/01/95........................... 467 467,000
-------------
TOTAL SHORT-TERM
INVESTMENT
(Cost $467,000)........................... 467,000
-------------
<CAPTION>
NUMBER
OF SHARES
------------
<S> <C> <C>
RIGHTS/WARRANTS ** -- 0.1%
J.M. Peters Company, Inc. Warrants
Expiring 05/01/02......................... 28,440 14,220
Uniroyal Technology Warrants Expiring
06/01/03.................................. 43,500 130,500
-------------
TOTAL RIGHTS/WARRANTS (Cost $102,644)...... 144,720
-------------
TOTAL INVESTMENTS AT VALUE
(Cost $154,391,348) -- 98.3%............................. $ 151,068,741
OTHER ASSETS IN EXCESS OF
LIABILITIES -- 1.7%...................................... 2,552,216
-------------
<CAPTION>
VALUE
-------------
<S> <C> <C>
NET ASSETS (Applicable to
9,774,166 BEA Shares) -- 100.0%.......................... $ 153,620,957
-------------
-------------
NET ASSET VALUE AND OFFERING PRICE PER SHARE
($153,620,957 DIVIDED BY 9,774,166)...................... $15.72
-------------
-------------
REDEMPTION PRICE PER SHARE
($15.72 X .9975)......................................... $15.68
-------------
-------------
</TABLE>

* Cost for Federal income tax purposes at August 31, 1995 is $154,659,321. The
gross appreciation (depreciation) on a tax basis is as follows:

<TABLE>
<S> <C>
Gross Appreciation......................... $ 5,105,077
Gross Depreciation......................... (8,695,657)
------------
Net Depreciation........................... $ (3,590,580)
------------
------------
</TABLE>

* Guaranteed by Grupo Sidek, S.A. de C.V. and Grupo Situr, S.A. de C.V.

** Non-income Producing Securities.

*** Securities currently in Default

+ Variable Rate Obligations -- The rate shown is the rate as of August 31,
1995.

++ Step Bonds -- The interest rate as of August 31, 1995 is 0% and will reset
to interest rate shown at a future date.

The Moody's Investors Service, Inc. and Standard & Poor's Corporation's ratings
indicated are the most recent ratings available at August 31, 1995 and are
unaudited.

INVESTMENT ABBREVIATIONS

<TABLE>
<S> <C>
FRB....................... Floating Rate Bonds
FRN....................... Floating Rate Notes
PIK....................... Pay in Kind
</TABLE>

See Accompanying Notes to Financial Statements.

F-33

<PAGE>
THE BEA FAMILY
THE RBB FUND, INC.
BEA Strategic Fixed Income Portfolio

STATEMENT OF OPERATIONS
FOR THE YEAR ENDED
AUGUST 31, 1995

<TABLE>
<S> <C>
INVESTMENT INCOME
Interest................................... $ 14,842,996
--------------
EXPENSES
Investment advisory fees................... 1,002,002
Administration Service fees................ 214,715
Administration fees........................ 179,304
Custodian fees............................. 35,057
Registration fees.......................... 22,100
Audit fees................................. 21,617
Transfer agent fees........................ 20,899
Printing expense........................... 14,840
Legal fees................................. 11,430
Organization expense....................... 10,636
Insurance expense.......................... 4,236
Miscellaneous fees......................... 1,478
Directors fees............................. 1,289
--------------
1,539,603
Less fees waived........................... (108,172)
--------------
TOTAL EXPENSES........................... 1,431,431
--------------
NET INVESTMENT INCOME........................ 13,411,565
--------------
REALIZED AND UNREALIZED LOSS
ON INVESTMENTS AND FOREIGN
CURRENCY TRANSACTIONS
Net realized loss from:
Security transactions.................... (5,648,311)
Foreign exchange transactions............ (67,803)
--------------
(5,716,114)
--------------
Net unrealized appreciation (depreciation)
from:
Investments.............................. 3,383,850
Translation of assets and liabilities in
foreign currencies...................... (35,172)
--------------
3,348,678
--------------
NET LOSS ON INVESTMENTS AND FOREIGN CURRENCY
TRANSACTIONS................................ (2,367,436)
--------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS.................................. $ 11,044,129
--------------
--------------
</TABLE>

STATEMENTS OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
FOR THE FOR THE
YEAR ENDED YEAR ENDED
AUGUST 31, AUGUST 31,
1995 1994
-------------- --------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income...................... $ 13,411,565 $ 9,673,516
Net loss on investments and foreign
currency.................................. (2,367,436) (9,133,121)
-------------- --------------
Net increase in net assets resulting from
operations................................ 11,044,129 540,395
-------------- --------------
Distribution to shareholders:
Dividends to shareholders from net investment
income:
BEA shares ($1.34 and $1.43, respectively,
per share)................................ (12,388,703) (10,126,549)
-------------- --------------
Net capital share transactions............... 11,448,059 54,747,035
-------------- --------------
Total increase in net assets................. 10,103,485 45,160,881
Net Assets:
Beginning of year.......................... 143,517,472 98,356,591
-------------- --------------
End of year................................ $ 153,620,957 $ 143,517,472
-------------- --------------
-------------- --------------
</TABLE>

See Accompanying Notes to Financial Statements.

F-34

<PAGE>
THE BEA FAMILY
THE RBB FUND, INC.
BEA MUNICIPAL BOND PORTFOLIO
STATEMENT OF NET ASSETS
AUGUST 31, 1995
<TABLE>
<CAPTION>
PAR
(000) VALUE
------------ -------------
<S> <C> <C>
MUNICIPAL BONDS -- 98.7%
ALABAMA -- 0.8%
Birmingham AL Industrial Water Board
Revenue (NR, AAA)
6.00% 07/01/07........................... $ 75 $ 79,219
Jefferson County AL
Sanitary Sewer Construction RAW (Aaa, NR)
6.75% 03/01/07........................... 270 296,325
-------------
375,544
-------------
ARIZONA -- 3.3%
Salt River AZ Agricultural
Improvement & Power
Distribution Electric System
Revenue (Aa, AA)
5.375% 01/01/11.......................... 600 579,750
5.50% 01/01/25........................... 1,085 1,017,188
-------------
1,596,938
-------------
ARKANSAS -- 0.9%
Greene County AR Residential Housing
Facility Board, Single Family Mortgage
Revenue (MBIA Insured) (Aaa, AAA)
7.40% 09/01/11........................... 365 422,944
-------------
CALIFORNIA -- 8.6%
California State GO (Aaa, AAA)
5.125% 10/01/17.......................... 1,650 1,458,187
Los Angeles CA Department of Water & Power
Water Revenue (Aa, AA)
4.50% 05/15/23........................... 675 525,656
Sacramento CA Municipal
Utilities District Electric Revenue (MBIA
Insured) (Aaa, AAA)
6.20% 08/15/05........................... 100 108,125
San Diego CA Sewer
Revenue Series A (AMBAC Insured) (Aaa,
AAA)
5.00% 05/15/23........................... 1,000 861,250

<CAPTION>
PAR
(000) VALUE
------------ -------------
<S> <C> <C>
CALIFORNIA -- (CONTINUED)
Southern California Public Power Authority
Power Project Revenue Series A (AMBAC
Insured) (Aa, AA-)
5.00% 07/01/17........................... $ 705 $ 607,181
Southern California Public Power Authority
Transmission Project Revenue Series B
(AMBAC Insured) (Aa, AA-)
5.50% 07/01/23........................... 740 670,625
-------------
4,231,024
-------------
COLORADO -- 1.1%
Colorado Springs CO Utility Revenue (Aaa,
AAA)
5.875 11/15/17........................... 525 546,000
-------------
FLORIDA -- 9.5%
Florida State Board of Education Public
Education Capital Outlay GO (Aa, AA)
5.125% 06/01/22.......................... 1,610 1,444,975
Florida State GO (Aa, AA)
5.50% 10/01/08........................... 740 686,350
Jacksonville FL Electric Authority Revenue
(Aaa, AAA)
6.00% 07/01/12........................... 910 982,800
Orlando FL Utilities Commission Water &
Electric Revenue (Aaa, AAA)
6.30% 04/01/07........................... 685 743,225
Tallahassee FL Electric Revenue First Lien
(Aaa, AAA)
6.10% 10/01/06........................... 730 790,225
-------------
4,647,575
-------------
GEORGIA -- 0.9%
DeKalb County GA Water & Sewer Revenue
(Aaa, AAA)
5.25% 10/01/02........................... 430 439,675
-------------
</TABLE>

See Accompanying Notes to Financial Statements.

F-35

<PAGE>
THE BEA FAMILY
THE RBB FUND, INC.
BEA MUNICIPAL BOND PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED)
AUGUST 31, 1995
<TABLE>
<CAPTION>
PAR
(000) VALUE
------------ -------------
ILLINOIS -- 5.9%
<S> <C> <C>
Illinois State Sales Tax Revenue (A1, AAA)
5.75% 06/15/14........................... $ 1,050 $ 1,031,625
5.50% 06/15/18........................... 1,500 1,415,625
Lombard IL Multifamily Housing Revenue
(Clover Creek) (NR, A+)
6.50% 12/15/06........................... 420 425,250
-------------
2,872,500
-------------
INDIANA -- 2.0%
Indianapolis IN Local Public Improvement
Bond Bank Revenue Series 93A
(Aaa, AA+)
6.00% 01/10/18........................... 965 965,000
-------------
KENTUCKY -- 1.0%
Kentucky State Turnpike Authority Resource
Recovery Road Revenue (Aaa, AAA)
6.125% 07/01/07.......................... 480 502,800
-------------
LOUISIANA -- 1.6%
New Orleans LA Home Mortgage Authority SOB
(Aaa, AAA)
6.25% 01/15/11........................... 635 662,781
Shreveport LA Home Mortgage Authority
Single Family Mortgage Revenue (FHA
Insured/VA Gtd. Mtge. Lease) (Aaa, AA)
6.75% 09/01/10........................... 126 137,812
-------------
800,593
-------------
MARYLAND -- 2.0%
Baltimore MD New Public Housing Revenue
(Aaa, AAA)
5.00% 07/01/98........................... 25 25,031
<CAPTION>
PAR
(000) VALUE
------------ -------------
<S> <C> <C>
MARYLAND -- (CONTINUED)
Maryland State Transportation Authority
Project Revenue (Aaa, AAA)
6.80% 07/01/16........................... $ 850 $ 950,937
-------------
975,968
-------------
MASSACHUSETTS -- 0.9%
Massachusetts State Water Resources
Authority General Revenue Series 92A (A,
A)
6.50% 07/15/19........................... 420 455,700
-------------
MISSISSIPPI --- 3.4%
Mississippi State GO (Aaa, AAA)
6.20% 02/01/08........................... 1,550 1,658,500
-------------
NEW YORK -- 30.9%
New York State Dormitory Authority Revenue
(Episcopal Health Services) (GNMA Coll.)
(NR, AAA)
7.55% 08/01/29........................... 1,335 1,443,469
New York State Dormitory Authority Revenue
(Judicial Facilities Lease) (MBIA In-
sured) (Aaa, AAA)
7.375% 07/01/16.......................... 605 718,438
New York State Dormitory Authority Revenue
(State University Educational Facili-
ties) (Baa1, BBB+)**
5.90% 05/15/04........................... 75 47,344
New York State Energy Research &
Development Authority Revenue (A1, NR)
9.00% 08/15/20........................... 900 918,369
New York State Energy Research &
Development Authority Revenue (Brooklyn
Union Gas Co. Project) (A1, A)
9.00% 05/15/96........................... 1,015 1,042,913
</TABLE>

See Accompanying Notes to Financial Statements.

F-36

<PAGE>
THE BEA FAMILY
THE RBB FUND, INC.
BEA MUNICIPAL BOND PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED)
AUGUST 31, 1995
<TABLE>
<CAPTION>
PAR
(000) VALUE
------------ -------------
NEW YORK -- (CONTINUED)
<S> <C> <C>
New York State Housing Finance Agency
Revenue (State University Construction)
(Aaa, AAA)
8.30% 11/01/97........................... $ 565 $ 625,031
New York State Medical Care Facility
Finance Agency Hospital Nursing Home In-
sured Mortgage Revenue (NR, AAA)
5.75% 08/15/19........................... 1,695 1,642,031
5.50% 02/15/22........................... 1,600 1,504,000
10.50% 01/15/24.......................... 900 903,375
New York State Power Authority General
Purpose Electric Revenue (Aaa, AA-)
7.375% 01/01/18.......................... 570 587,813
5.625% 01/01/10.......................... 475 498,156
New York State Power Authority Revenue
Series V (MBIA Insured) (Aaa, AAA)
7.875% 01/01/13.......................... 790 871,962
Rome NY Housing Development Corp. Mortgage
Revenue (ParkDrive Manor) (MBIA Insured)
(Aaa, AAA)
7.00% 01/01/26........................... 410 393,600
Suffolk County NY Water Authority
Waterworks Revenue Series V
(NR, AAA)
6.75% 06/01/12........................... 1,160 1,281,800
Triborough Bridge & Tunnel Authority NY
Revenue
Series L (Aa, A+)
8.125% 06/01/12.......................... 525 570,281
Triborough Bridge & Tunnel Authority NY
Mortgage Recording Tax SOB
(Aaa, AAA)
7.125% 01/01/00.......................... 1,865 2,086,469
-------------
15,135,051
-------------
<CAPTION>
PAR
(000) VALUE
------------ -------------
<S> <C> <C>
NORTH CAROLINA -- 3.5%
North Carolina Municipal Power Agency I,
Catawba Electric Revenue (Aaa, AAA)
10.50% 01/01/10.......................... $ 1,180 $ 1,699,200
-------------
OREGON -- 0.2%
Portland OR Hospital Facilities Authority
Legacy Health Systems Hospital Revenue
Series 91A (AMBAC Insured) (Aaa, AAA)
6.70% 05/01/21........................... 115 123,338
-------------
PUERTO RICO -- 7.3%
Commonwealth of Puerto Rico Aqueduct &
Sewer Authority Revenue (Aaa, AAA)
8.25% 07/01/96........................... 150 155,438
4.50% 07/01/02........................... 158 160,370
Commonwealth of Puerto Rico Aqueduct &
Sewer Authority Revenue (Commonwealth
Guaranteed) (Baa1, A)
7.875% 07/01/17.......................... 1,540 1,707,475
Commonwealth of Puerto Rico GO (Baa1, A)
5.40% 07/01/07........................... 1,310 1,300,175
University of Puerto Rico
Revenue Series L (Aaa, A)
7.75% 06/01/07........................... 225 235,969
-------------
3,559,427
-------------
SOUTH DAKOTA -- 5.9%
Heartland Consumers Power District SD
Electric Revenue (Aaa, AAA)
6.375% 01/01/16.......................... 525 559,781
7.00% 01/01/16........................... 2,035 2,347,881
-------------
2,907,662
-------------
</TABLE>

See Accompanying Notes to Financial Statements.

F-37

<PAGE>
THE BEA FAMILY
THE RBB FUND, INC.
BEA MUNICIPAL BOND PORTFOLIO
STATEMENT OF NET ASSETS (CONCLUDED)
AUGUST 31, 1995
<TABLE>
<CAPTION>
PAR
(000) VALUE
------------ -------------
TEXAS -- 5.1%
<S> <C> <C>
Austin TX Utilities Systems Revenue (NR,
NR)
5.375% 05/15/00.......................... $ 415 $ 426,931
Dallas-Fort Worth TX International Airport
Revenue (Baa2, BB+)
7.25% 11/01/30........................... 280 291,900
Houston TX Airport Systems Revenue (Aaa,
AAA)
5.80% 07/01/10........................... 400 415,000
Houston TX Water Systems Revenue (Aaa, AAA)
5.50% 12/01/09........................... 155 156,356
Lower Colorado River Authority Revenue
(Aaa, NR)
9.25% 01/01/05........................... 350 363,125
9.50% 01/01/13........................... 725 752,187
Lower Colorado River Authority Priority
Revenue (Aaa, AAA)
9.375% 01/01/05.......................... 85 88,188
-------------
2,493,687
-------------
UTAH -- 2.0%
Intermountain Power Agency UT Power Supply
Revenue
Series B (Aa, AA-)
6.00% 07/01/21........................... 420 417,375
Utah State School District
Finance Cooperative
Revenue (NR, AA+)
8.375% 08/15/10.......................... 535 585,156
-------------
1,002,531
-------------
VIRGINIA -- 1.9%
Fairfax County VA Redevelopment & Housing
Authority Mortgage Revenue (FHA Insured)
(NR, AAA)
7.10% 04/01/19........................... 830 949,313
-------------
<CAPTION>
PAR
(000) VALUE
------------ -------------
<S> <C> <C>

TOTAL MUNICIPAL BONDS
(Cost 46,365,057)...................... 48,360,970
-------------
SHORT-TERM INVESTMENT -- 0.1%
Smith Barney Tax Free Money Market Fund.... $ 37 $ 36,963
-------------
TOTAL SHORT-TERM INVESTMENT
(Cost $36,963)......................... 36,963
-------------
TOTAL INVESTMENTS AT VALUE -- 98.8%
(Cost $46,402,020*)........................ $ 48,397,933
OTHER ASSETS IN EXCESS OF
LIABILITIES -- 1.2%........................ 579,904
-------------
NET ASSETS (Applicable to 3,168,671 BEA
shares) -- 100.0%.......................... $ 48,977,837
-------------
-------------
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
($48,977,837 DIVIDED BY 3,168,671)........ $15.46
-------------
-------------
</TABLE>

* Cost for Federal income tax purposes at August 31, 1995 is $46,065,541. The
gross appreciation (depreciation) on a tax basis is as follows:

<TABLE>
<S> <C>
Gross Appreciation............ $2,370,727
Gross Depreciation............ (38,335)
----------
Net Appreciation.............. $2,332,392
----------
----------
</TABLE>

** Zero Coupon Bonds. Rate shown is the effective yield.

The Moody's Investors Service, Inc. and Standard & Poor's Corporation's ratings
indicated are the most recent ratings available at August 31, 1995 and are
unaudited.

INVESTMENT ABBREVIATIONS

<TABLE>
<S> <C>
GO............................ General Obligations
RAW........................... Revenue Anticipation Warrant
SOB........................... Special Obligation Bonds
</TABLE>

See Accompanying Notes to Financial Statements.

F-38

<PAGE>
THE BEA FAMILY
THE RBB FUND, INC.
BEA MUNICIPAL BOND FUND PORTFOLIO

STATEMENT OF OPERATIONS
FOR THE YEAR ENDED
AUGUST 31, 1995

<TABLE>
<S> <C>
INVESTMENT INCOME
Interest................................... $2,750,682
-----------
EXPENSES
Investment advisory fees................... 334,116
Administration service fees................ 71,596
Administration fees........................ 59,664
Registration fees.......................... 22,561
Transfer agent fees........................ 21,143
Custodian fees............................. 17,278
Miscellaneous fees......................... 12,000
Printing fees.............................. 8,499
Audit fees................................. 8,250
Organization expense....................... 7,646
Legal fees................................. 4,100
Insurance expense.......................... 1,100
Directors fees............................. 600
-----------
568,553
Less fees waived........................... (91,244)
-----------
TOTAL EXPENSES........................... 477,309
-----------
NET INVESTMENT INCOME........................ 2,273,373
-----------
REALIZED AND UNREALIZED GAIN(LOSS) ON
INVESTMENTS:
Net realized loss on investments........... (230,566)
Net unrealized appreciation on
investments............................... 2,065,632
-----------
NET GAIN ON INVESTMENTS...................... 1,835,066
-----------
NET INCREASE IN NET ASSETS RESULTING FFROM
OPERATIONS.................................. $4,108,439
-----------
-----------
</TABLE>

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
FOR THE
PERIOD
FOR THE JUNE 20,
YEAR ENDED 1994(1) TO
AUGUST 31, AUGUST 31,
1995 1994
------------- -------------

<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income.................... $ 2,273,373 $ 240,189
Net gain(loss) on investments............ 1,835,066 (60,805)
------------- -------------
Net increase in net assets resulting from
operations.............................. 4,108,439 179,384
------------- -------------
Distributions to shareholders:
Dividends to shareholders from net
investment income:
BEA shares ($.76 per share).............. (2,400,128) --
Distributions to shareholders from net
realized capital gains:
BEA shares ($.05 per share)................ (174,436) --
------------- -------------
Total distributions to shareholders........ (2,574,564) --
------------- -------------
Net capital share transactions............... 5,134,026 42,130,402
------------- -------------
Total increase in net assets................. 6,667,901 42,309,786
Net Assets:
Beginning of year.......................... 42,309,936 150
------------- -------------
End of year................................ $ 48,977,837 $ 42,309,936
------------- -------------
------------- -------------

<FN>

(1) Commencement of Operations.
</TABLE>

See Accompanying Notes to Financial Statements.

F-39

<PAGE>
THE BEA FAMILY
THE RBB FUND, INC.
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
BEA INTERNATIONAL EQUITY PORTFOLIO BEA EMERGING MARKETS EQUITY PORTFOLIO
----------------------------------------------------- ------------------------------------------------------
FOR THE FOR THE FOR THE PERIOD FOR THE FOR THE FOR THE PERIOD
YEAR ENDED YEAR ENDED OCTOBER 1, 1992* TO YEAR ENDED YEAR ENDED FEBRUARY 1, 1993* TO
AUGUST 31, 1995 AUGUST 31, 1994 AUGUST 31, 1993 AUGUST 31, 1995 AUGUST 31, 1994 AUGUST 31, 1993
--------------- --------------- ------------------- --------------- --------------- --------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of
period.............. $ 20.73 $ 18.73 $ 15.00 $ 24.58 $ 18.38 $ 15.00
--------------- --------------- ------------------- --------------- --------------- --------------------
Income from
investment
operations
Net investment
income.......... .06 .05 .04 .02 (.03) .02
Net gain (loss)
on securities
(both realized
and
unrealized)..... (1.75) 2.60 3.69 (5.94) 6.64 3.36
--------------- --------------- ------------------- --------------- --------------- --------------------
Total from
investment
operations...... (1.69) 2.65 3.73 (5.92) 6.61 3.38
--------------- --------------- ------------------- --------------- --------------- --------------------
Less Distributions
Dividends from
net investment
income.......... -- (.05) -- (.07) (.09) --
Distributions
from capital
gains........... (.80) (.60) -- (.92) (.32) --
--------------- --------------- ------------------- --------------- --------------- --------------------
Total
distributions... (.80) (.65) -- (.99) (.41) --
--------------- --------------- ------------------- --------------- --------------- --------------------
Net asset value,
end of period... $ 18.24 $ 20.73 $ 18.73 $ 17.67 $ 24.58 $ 18.38
--------------- --------------- ------------------- --------------- --------------- --------------------
--------------- --------------- ------------------- --------------- --------------- --------------------
Total return......... (8.06%)(d) 14.23%(d) 24.87%(c)(d) (24.42%)(d) 35.99%(d) 22.53%(c)(d)
Ratio/Supplemental
Data
Net assets, end
of period....... $773,254,630 $767,189,791 $268,403,524 $128,322,563 $140,675,379 $21,988,062
Ratio of expenses
to average net
assets.......... 1.25%(a) 1.25%(a) 1.25%(a)(b) 1.50%(a) 1.50%(a) 1.50%(a)(b)
Ratio of net
investment
income (loss) to
average net
assets.......... .35% .33% .41%(b) .02% (.02%) .28%(b)
Portfolio
turnover rate... 78% 104% 106%(c) 79% 54% 38%(c)

<FN>

(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 1.26% and 1.30% for the years ended August 31, 1995 and
1994, respectively, and 1.46% annualized for the period ended August 31,
1993. Without the waiver of advisory fees and 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 1.61% and 2.01% for the years ended August 31, 1995 and 1994,
respectively, 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.
</TABLE>

F-40

<PAGE>
THE BEA FAMILY
THE RBB FUND, INC.
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
BEA U.S. CORE FIXED INCOME
BEA U.S. CORE PORTFOLIO
EQUITY PORTFOLIO ------------------------------
------------------- FOR THE PERIOD
FOR THE PERIOD FOR THE APRIL 1, 1994*
SEPTEMBER 1, 1994* YEAR ENDED TO
TO AUGUST 31, AUGUST 31,
AUGUST 31, 1995 1995 1994
------------------- -------------- --------------
<S> <C> <C> <C>
Net asset value, beginning of period........................ $ 15.00 $ 14.77 $ 15.00
------------------- -------------- --------------
Income from investment operations
Net investment income................................... .22 .88 .42
Net gain(loss) on securities (both realized and
unrealized)............................................ 2.72 .61 (.40)
------------------- -------------- --------------
Total from investment operations........................ 2.94 1.49 .02
------------------- -------------- --------------
Less Distributions
Dividends from net investment income.................... (.08) (.84) (.25)
Distributions from capital gains........................ -- -- --
------------------- -------------- --------------
Total distributions..................................... (.08) (.84) (.25)
------------------- -------------- --------------
Net asset value, end of period.......................... $ 17.86 $ 15.42 $ 14.77
------------------- -------------- --------------
------------------- -------------- --------------
Total return................................................ 19.75% 10.60% 0.17%(c)
Ratio/Supplemental Data
Net assets, end of period............................... $ 31,643,776 $ 99,249,839 $ 30,015,818
Ratio of expenses to average net assets................. 1.00%(a) 0.50%(a) 0.50%(a)(b)
Ratio of net investment income to average net assets.... 1.59% 6.47% 6.04%(b)
Portfolio turnover rate................................. 123% 304% 186%(c)

<FN>

(b) Annualized.

* Commencement of operations
</TABLE>

F-41

<PAGE>
THE BEA FAMILY
THE RBB FUND, INC.
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
BEA GLOBAL FIXED INCOME
PORTFOLIO BEA STRATEGIC FIXED INCOME PORTFOLIO
------------------------------- -------------------------------------------------
FOR THE FOR THE PERIOD FOR THE FOR THE FOR THE PERIOD
YEAR ENDED JUNE 28, 1994* YEAR ENDED YEAR ENDED MARCH 31, 1993*
AUGUST 31, TO AUGUST 31, AUGUST 31, TO
1995 AUGUST 31, 1994 1995 1994 AUGUST 31, 1993
-------------- --------------- -------------- -------------- -----------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
period............................... $ 15.00 $ 15.00 $ 15.94 $ 16.94 $ 15.00
-------------- --------------- -------------- -------------- -----------------
Income from investment operations
Net investment income............. 1.06 .15 1.42 1.20 .52
Net gains(losses) on securities
(both realized and unrealized)... .49 (.15) (.30) (.77) 1.42
-------------- --------------- -------------- -------------- -----------------
Total from investment
operations....................... 1.55 -- 1.12 0.43 1.94
-------------- --------------- -------------- -------------- -----------------
Less Distributions
Dividends from net investment
income........................... (.88) -- (1.34) (1.43) --
Distributions from capital
gains............................ -- -- -- -- --
-------------- --------------- -------------- -------------- -----------------
Total distributions............... (.88) -- (1.34) (1.43) --
-------------- --------------- -------------- -------------- -----------------
Net asset value, end of period.... $ 15.67 $ 15.00 $ 15.72 $ 15.94 $ 16.94
-------------- --------------- -------------- -------------- -----------------
-------------- --------------- -------------- -------------- -----------------
Total return.......................... 10.72% 0.00%(c) 7.79%(d) 2.24%(d) 12.93%(c)(d)
Ratio/Supplemental Data
Net assets, end of period......... $ 19,564,827 $ 6,300,360 $153,620,957 $143,517,472 $ 98,356,591
Ratio of expenses to average net
assets........................... 0.75%(a) 0.75%(a)(b) 1.00%(a) 1.00%(a) 1.00%(a)(b)
Ratio of net investment income to
average net assets............... 7.26% 5.64%(b) 9.37% 7.73% 7.56%(b)
Portfolio turnover rate........... 91% 0%(c) 70% 121% 72%(c)
<FN>

(a) 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 Global Fixed Income Portfolio would have been 1.29% for
the year ended August 31, 1995 and 1.92% annualized for the period ended
August 31, 1994. 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 1.08% and 1.13% for the years ended
August 31, 1995 and 1994, respectively, and 1.17% annualized for the period
ended August 31, 1993.

(b) Annualized.

(d) Redemption fees not reflected in total return.

* Commencement of operations
</TABLE>

F-42

<PAGE>
THE BEA FAMILY
THE RBB FUND, INC.
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
BEA MUNICIPAL BOND FUND
PORTFOLIO
-------------------------------
FOR THE FOR THE PERIOD
YEAR ENDED JUNE 20, 1994*
AUGUST 31, TO
1995 AUGUST 31, 1994
-------------- ---------------
<S> <C> <C>
Net asset value, beginning of period............................................... $ 15.06 $ 15.00
-------------- ---------------
Income from investment operations
Net investment income.......................................................... .71 .09
Net gains(losses) on securities (both realized and unrealized)................. .50 (.03)
-------------- ---------------
Total from investment operations............................................... 1.21 0.06
-------------- ---------------
Less Distributions
Dividends from net investment income........................................... (.76) --
Distributions from capital gains............................................... (.05) --
-------------- ---------------
Total distributions............................................................ (.81) --
-------------- ---------------
Net asset value, end of period................................................. $ 15.46 $ 15.06
-------------- ---------------
-------------- ---------------
Total return....................................................................... 8.42% 0.40%(c)
Ratio/Supplemental Data
Net assets, end of period...................................................... $ 48,977,837 $ 42,309,936
Ratio of expenses to average net assets........................................ 1.00%(a) 1.00%(a)(b)
Ratio of net investment income (loss) to average net assets.................... 4.76% 3.27%(b)
Portfolio turnover rate........................................................ 25% 9%(c)
<FN>

(b) Annualized.

* Commencement of operations
</TABLE>

F-43

<PAGE>
THE BEA FAMILY
THE RBB FUND, INC.
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 1995

NOTE 1.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The RBB Fund, Inc. (the "Fund") is registered under the Investment Company
Act of 1940, as amended, as an open-end management investment company. The Fund
was incorporated in Maryland on February 29, 1988, and currently has seventeen
investment Portfolios, seven of which are included in these financial
statements.

The Fund has authorized capital of thirty billion shares of common stock of
which 12.2 billion are currently classified into sixty-one classes. Each class
represents an interest in one of seventeen investment portfolios of the Fund
fifteen of which are currently in operation. The classes have been grouped into
fifteen separate "families", eight of which have begun investment operations:
the BEA Family, the RBB Family, the Sansom Street Family, the Bedford Family,
the Cash Preservation Family, the Jamey Montgomery Scott Money Funds, the
Warburg Pincus Family and the Bradford Family. The BEA Family represents
interests in nine portfolios, seven of which are currently in operation and
covered by this report.

A) SECURITY VALUATION -- Portfolio securities for which market
quotations are readily available are valued at market value, which is
currently determined using the last reported sales price. If no sales are
reported, as in the case of some securities traded over-the-counter,
portfolio securities are valued at the mean between the last reported bid
and asked prices. All other securities and assets are valued as determined
in good faith by the Board of Directors. Short-term obligations with
maturities of 60 days or less are valued at amortized cost which
approximates market value.

B) FOREIGN CURRENCY TRANSACTIONS -- Transactions denominated in
foreign currencies are recorded in the Portfolio's records at the current
prevailing exchange rates. Asset and liability accounts that are denominated
in a foreign currency are adjusted daily to reflect current exchange rates.
Transaction gains or losses resulting from changes in exchange rates during
the reporting period or upon settlement of the foreign currency transaction
are reported in operations for the current period. It is not practical to
isolate that portion of both realized and unrealized gains and losses on
investments in the statement of operations that result from fluctuations in
foreign currency exchange rates. The Fund reports certain foreign currency
related transactions as components of realized gains for financial reporting
purposes, whereas such components are treated as ordinary income (loss) for
Federal income tax purposes.

C) SECURITY TRANSACTIONS AND INVESTMENT INCOME -- Security
transactions are accounted for on the trade date. The cost of investments
sold is determined by use of the specific identification method for both
financial reporting and income tax purposes. Interest income is recorded on
the accrual basis. Dividends are recorded on the ex-dividend date. Certain
expenses, principally transfer agent and printing, are class specific
expenses and vary by class. Expenses not directly attributable to a specific
portfolio or class are allocated based on relative net assets of each
portfolio and class, respectively.

D) DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- Dividends from net
investment income and net realized capital gains will be declared and paid
at least annually. The character of distributions made during the year for
net investment income or net realized gains may differ from their ultimate
characterization for federal income tax purposes due to GAAP/tax differences
in the character of income and expense recognition. These differences are
primarily due to differing treatments for net operating losses,
mortgage-backed securities, passive foreign investment companies, and
forward foreign currency contracts.

E) FEDERAL INCOME TAXES -- No provision is made for Federal taxes as
it is the Fund's intention to have each portfolio to continue to qualify for
and elect the tax treatment applicable to regulated investment companies
under the Internal Revenue Code and make the requisite distributions to its
shareholders which will be sufficient to relieve it from Federal income and
excise taxes.

F) OTHER -- Securities denominated in currencies other than U.S.
dollars are subject to changes in value due to fluctuations in exchange
rates.

F-44

<PAGE>
THE BEA FAMILY
THE RBB FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
AUGUST 31, 1995

NOTE 1.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Some countries in which the portfolios invest require governmental approval
for the repatriation of investment income, capital or the proceeds of sales of
securities by foreign investors. In addition, if there is a deterioration in a
country's balance of payments or for other reasons, a country may impose
temporary restrictions on foreign capital remittances abroad.

The securities exchanges of certain foreign markets are substantially
smaller, less liquid and more volatile than the major securities markets in the
United States. Consequently, acquisition and deposition of securities by the
portfolios may be inhibited. In addition, a significant proportion of the
aggregate market value of equity securities listed on the major securities
exchanges in emerging markets are held by a smaller number of investors. This
may limit the number of shares available for acquisition or disposition by the
Fund.

NOTE 2.TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
Pursuant to Investment Advisory Agreements, BEA Associates ("BEA"), a U.S.
investment advisory firm, serves as investment advisor for each of the seven
portfolios described herein.

For its advisory services, BEA is entitled to receive the following fees,
computed daily and payable monthly on a portfolio's average daily net assets:

<TABLE>
<CAPTION>
PORTFOLIO ANNUAL RATE
- -------------------------------------- --------------------------------------
<S> <C>
BEA International Equity Portfolio 0.80% of average daily net assets
BEA Emerging Markets Equity Portfolio 1.00% of average daily net assets
BEA U.s. Core Equity Portfolio 0.75% of average daily net assets
BEA U.S. Core Fixed Income Portfolio 0.375% of average daily net assets
BEA Global Fixed Income Portfolio 0.50% of average daily net assets
BEA Strategic Fixed Income Portfolio 0.70% of average daily net assets
BEA Municipal Bond Fund Portfolio 0.70% of average daily net assets
</TABLE>

BEA may, at its discretion, voluntarily waive all or any portion of its
advisory fee for either of the portfolios. For the year ended August 31, 1995,
advisory fees and waivers for each of the seven investment portfolios were as
follows:

<TABLE>
<CAPTION>
GROSS NET
ADVISORY FEE WAIVER ADVISORY FEE
-------------- -------------- --------------
<S> <C> <C> <C>
BEA International Equity Portfolio $ 6,012,837 $ 0 $ 6,012,837
BEA Emerging Markets Equity
Portfolio 1,283,714 (33,702) 1,250,012
BEA U.S. Core Equity Portfolio 165,881 (88,725) 77,156
BEA U.S. Core Fixed Income
Portfolio 254,475 (121,336) 133,139
BEA Global Fixed Income Portfolio 87,472 (68,558) 18,914
BEA Strategic Fixed Income
Portfolio 1,002,002 0 1,002,002
BEA Municipal Bond Fund Portfolio 334,116 (38,740) 295,376
</TABLE>

PFPC Inc. ("PFPC"), an indirect wholly owned subsidiary of PNC Bank Corp.,
serves as each portfolio's transfer and dividend disbursing agent. In addition,
PFPC serves as administrator for each of the seven portfolios. PFPC's
administration fee is computed daily and payable monthly at an annual rate of
.125% of each Portfolio's average daily net assets.

F-45

<PAGE>
THE BEA FAMILY
THE RBB FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
AUGUST 31, 1995

NOTE 2.TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (CONTINUED)
PFPC may, at its discretion, voluntarily waive all or any portion of its
administration fee for any of the portfolios. For the year ended August 31,
1995, administration fees for each of the seven investment portfolios were as
follows:

<TABLE>
<CAPTION>
GROSS NET
ADMINISTRATION ADMINISTRATION
FEE WAIVER FEE
-------------- --------- ---------------
<S> <C> <C> <C>
BEA International Equity Portfolio $ 939,506 $(31,334) $ 908,172
BEA Emerging Markets Equity Portfolio 160,467 (13,100) 147,367
BEA U.S. Core Equity Portfolio 27,647 -- 27,647
BEA U.S. Core Fixed Income Portfolio 84,825 (27,144) 57,681
BEA Global Fixed Income Portfolio 21,868 (4,374) 17,494
BEA Strategic Fixed Income Portfolio 179,304 (6,060) 173,244
BEA Municipal Bond Fund Portfolio 59,664 -- 59,664
</TABLE>

Counsellors Funds Service, Inc. ("Counsellors Service"), a wholly-owned
subsidiary of Counsellors Securities Inc., serves as administrative services
agent. An administrative service fee is computed daily and payable monthly at an
annual rate of .15% of each portfolio's average daily net assets.

NOTE 3.PURCHASES AND SALES OF SECURITIES
For the year ended August 31, 1995, purchases and sales of investment
Securities (other than short-term investments) were as follows:

<TABLE>
<CAPTION>
INVESTMENT SECURITIES U.S. GOVERNMENT OBLIGATIONS
----------------------------- ---------------------------
PURCHASES SALES PURCHASES SALES
------------- ------------- ------------ ------------
<S> <C> <C> <C> <C>
BEA International Equity Portfolio $617,181,288 $573,180,379 $ -- $ --
BEA Emerging Markets Equity Portfolio 114,628,576 97,313,228 -- --
BEA U.S. Core Equity Portfolio 52,780,847 26,487,722 -- --
BEA U.S. Core Fixed Income Portfolio 107,672,185 92,069,914 128,659,829 100,800,133
BEA Global Fixed Income Portfolio 21,535.609 11,718,908 2,527,679 2,086,574
BEA Strategic Fixed Income Portfolio 110,184,261 89,532,851 18,143,359 1,534,174
BEA Municipal Bond Fund Portfolio 18,720,170 10,114,9 -- --
</TABLE>

For the year ended August 31, 1995, purchases include $15,177,455,
$9,617,719, $16,440,611, $15,460,482, $1,845,979, $1,801,901, and $10,370,586 of
investment securities received from shareholders in exchange for 800,255 shares,
568,745 shares, 1,074,769 shares, 1,044,980 shares, 123,891 shares, 128,341
shares, and 713,800 shares sold by the BEA International Equity Portfolio, BEA
Emerging Markets Equity Portfolio, BEA U.S. Core Equity Portfolio, BEA U.S. Core
Fixed Income Portfolio, BEA Global Fixed Income Portfolio, BEA Strategic Fixed
Income Portfolio and BEA Municipal Bond Fund Portfolio, respectively.

F-46

<PAGE>
THE BEA FAMILY
THE RBB FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
AUGUST 31, 1995

NOTE 4.CAPITAL SHARES
Transactions in capital shares for each period were as follows:

<TABLE>
<CAPTION>
BEA INTERNATIONAL EQUITY BEA EMERGING MARKETS EQUITY
PORTFOLIO PORTFOLIO
------------------------------------------------------ ------------------------------------------------------
FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED
AUGUST 31, 1995 AUGUST 31, 1994 AUGUST 31, 1995 AUGUST 31, 1994
-------------------------- -------------------------- -------------------------- --------------------------
SHARES VALUE SHARES VALUE SHARES VALUE SHARES VALUE
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------

<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold 7,555,790 $141,210,504 24,447,890 $481,771,890 2,740,756 $ 45,977,774 4,675,645 $105,692,908
Shares issued in
reinvestment of
dividends 1,783,551 31,977,179 512,147 10,268,548 290,750 5,614,374 41,695 1,032,357
Shares
repurchased, net
of redemption
fees (3,955,727) (69,857,127) (2,274,120) (44,138,125) (1,493,908) (25,817,939) (190,598) (4,055,553)
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
Net increase 5,383,614 $103,330,556 22,685,917 $447,902,313 1,537,598 $ 25,774,209 4,526,742 $102,669,712
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
BEA Shares
Authorized 500,000,000 500,000,000 500,000,000 500,000,000
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>

<TABLE>
<CAPTION>
BEA U.S. CORE EQUITY BEA U.S. CORE FIXED INCOME
PORTFOLIO PORTFOLIO
-------------------------------- ----------------------------------------------------------
FOR THE PERIOD
SEPTEMBER 1, 1994 FOR THE FOR THE PERIOD APRIL 1, 1994
(COMMENCEMENT OF OPERATIONS) TO YEAR ENDED (COMMENCEMENT OF OPERATIONS) TO
AUGUST 31, 1995 AUGUST 31, 1995 AUGUST 31, 1994
-------------------------------- ------------------------- -------------------------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 1,883,469 $ 28,923,460 4,372,374 $64,282,193 2,905,078 $43,523,808
Shares issued in reinvestment
of dividends 7,112 102,838 229,407 3,338,279 33,914 491,074
Shares repurchased (118,327) (1,982,759) (195,402) (2,949,275) (907,066) (13,512,710)
------------ ------------ ------------ ----------- ------------ -----------
Net increase 1,772,254 $ 27,043,539 4,406,379 $64,671,197 2,031,926 $30,502,172
------------ ------------ ------------ ----------- ------------ -----------
------------ ------------ ------------ ----------- ------------ -----------
BEA Shares Authorized 500,000,000 500,000,000 500,000,000
------------ ------------ ------------
------------ ------------ ------------
</TABLE>

F-47

<PAGE>
THE BEA FAMILY
THE RBB FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
AUGUST 31, 1995

NOTE 4.CAPITAL SHARES (CONTINUED)
Transactions in Capital Shares for each period were as follows:
<TABLE>
<CAPTION>
BEA GLOBAL FIXED INCOME BEA STRATEGIC FIXED INCOME
PORTFOLIO PORTFOLIO
------------------------------------------------------------- ----------------------------------------
FOR THE
FOR THE FOR THE PERIOD JUNE 28, 1994 FOR THE YEAR ENDED
YEAR ENDED (COMMENCEMENT OF OPERATIONS) TO YEAR ENDED AUGUST 31,
AUGUST 31, 1995 AUGUST 31, 1994 AUGUST 31, 1995 1994
------------------------- ---------------------------------- -------------------------- ------------

<S> <C> <C> <C> <C> <C> <C> <C>
Shares sold 766,650 $11,427,093 420,000 $ 6,300,000 580,982 $ 8,824,836 2,707,420
Shares issued in
reinvestment of
dividends 61,519 924,756 -- -- 825,245 12,285,993 603,424
Shares repurchased,
net of redemption
fees -- -- -- -- (632,837) (9,662,770) (116,840)
------------ ----------- --------------- --------------- ------------ ------------ ------------
Net increase 828,169 $12,351,849 420,000 $ 6,300,000 773,390 $ 11,448,059 3,194,004
------------ ----------- --------------- --------------- ------------ ------------ ------------
------------ ----------- --------------- --------------- ------------ ------------ ------------
BEA Shares
Authorized 500,000,000 500,000,000 500,000,000 500,000,000
------------ --------------- ------------ ------------
------------ --------------- ------------ ------------

<CAPTION>
<S> <C>
Shares sold $46,530,464
Shares issued in
reinvestment of
dividends 10,123,281
Shares repurchased,
net of redemption
fees (1,906,710)
-----------
Net increase $54,747,035
-----------
-----------
BEA Shares
Authorized
</TABLE>

<TABLE>
<CAPTION>
BEA MUNICIPAL BOND
PORTFOLIO
----------------------------------------------------
FOR THE PERIOD
JUNE 20, 1994
FOR THE (COMMENCEMENT OF
YEAR ENDED OPERATIONS) TO
AUGUST 31, 1995 AUGUST 31, 1994
-------------------------- ------------------------

<S> <C> <C> <C> <C>
Shares sold 935,296 $ 13,666,897 2,820,340 $42,291,402
Shares issued in
reinvestment of
dividends 123,547 1,831,054 -- --
Shares repurchased (699,839) (10,363,925) (10,683) (161,000)
------------ ------------ ----------- -----------
Net increase 359,004 $ 5,134,026 2,809,657 $42,130,402
------------ ------------ ----------- -----------
------------ ------------ ----------- -----------
BEA Shares
Authorized 500,000,000 500,000,000
------------ -----------
------------ -----------
</TABLE>

F-48

<PAGE>
THE BEA FAMILY
THE RBB FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
AUGUST 31, 1995

NOTE 5.NET ASSETS
At August 31, 1995, net assets consisted of the following:

<TABLE>
<CAPTION>
BEA EMERGING BEA U.S.
BEA INTERNATIONAL MARKETS BEA U.S. CORE FIXED BEA GLOBAL BEA STRATEGIC BEA MUNICIPAL
EQUITY EQUITY CORE EQUITY INCOME FIXED INCOME FIXED INCOME BOND FUND
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------------- ------------ ------------ ------------ ------------ ------------- -------------

<S> <C> <C> <C> <C> <C> <C> <C>
Capital Paid-In $785,573,566 $146,837,410 $ 25,908,426 $ 95,173,520 $ 18,651,999 $ 169,539,044 $46,989,743
Accumulated Net
Investment Income
(Loss) (1,320,328) (456,390) 248,745 1,399,516 386,244 3,297,982 113,434
Accumulated Net
Realized Gain
(Loss) on Security
and Foreign
Exchange
Transactions (49,729,636) (14,567,615) 2,139,515 743,786 188,940 (15,893,459) (162,902)
Net Unrealized
Appreciation
(Depreciation) on
Investments and
Foreign Currency
Contracts 38,731,028 (3,490,842) 3,347,090 1,933,017 337,644 (3,322,610) 2,037,562
----------------- ------------ ------------ ------------ ------------ ------------- -------------
$773,254,630 $128,322,563 $ 31,643,776 $ 99,249,839 $ 19,564,827 $ 153,620,957 $48,977,837
----------------- ------------ ------------ ------------ ------------ ------------- -------------
----------------- ------------ ------------ ------------ ------------ ------------- -------------
</TABLE>

NOTE 6.RESTRICTED SECURITIES
Certain of the BEA International Equity Portfolio's investments are
restricted as to resale and are valued at the direction of the Fund's Board of
Directors in good faith, at fair value, after taking into consideration
appropriate indications of value available. The table below shows the number of
shares held, the acquisition date, value as of August 31, 1995, percentage of
net assets which the securities comprise, aggregate cost and unit value of the
securities.

<TABLE>
<CAPTION>
NUMBER OF ACQUISITION 08/31/95 PERCENTAGE OF VALUE PER
SHARES DATE FAIR VALUE NET ASSETS SECURITY COST UNIT
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Sodigas Pampeana 55 1/14/93 $ 841,061 0.1% $ 566,038 $15,292
Sodigas del Sur 55 1/14/93 742,112 0.1% 384,038 13,493
Geotek Communications,
Inc. 600 5/26/95 5,817,814 0.8% 6,000,000 9,696
------------- -------------
$ 7,400,987 $ 6,950,076
------------- -------------
------------- -------------
</TABLE>

NOTE 7.CAPITAL LOSS CARRYOVER
At August 31, 1995, capital loss carryovers were available to offset future
realized gains as follows: $15,475,847 in the BEA Strategic Fixed Income
Portfolio of which $10,489,826 expires in 2001 and $4,986,021 expires in 2003.
In addition, deferred post-October 31, 1994 losses were available to offset
future net capital gains through August 31, 1996 as follows: $18,823,744 in the
BEA Emerging Markets Equity Portfolio and $204,088 in the BEA Municipal Bond
Fund Portfolio.

F-49

<PAGE>
THE BEA FAMILY
THE RBB FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
AUGUST 31, 1995

NOTE 8.FORWARD FOREIGN CURRENCY CONTRACTS
The Funds will generally enter into forward foreign currency exchange
contracts as a way of managing foreign exchange rate risk. A Fund may enter into
these contracts to fix the U.S. dollar value of a security that it has agreed to
buy or sell for the period between the date the trade was entered into and the
date the security is delivered and paid for. A Fund may also use these contracts
to hedge the U.S. dollar value of securities it already owns denominated in
foreign currencies.

Forward foreign currency contracts are valued at the forward rate, and are
marked-to-market daily. The change in market value is recorded by the Fund as an
unrealized gain or loss. When the contract is closed, the Fund records a
realized gain or loss equal to the difference between the value of the contract
at the time it was opened and the value at the time it was closed.

The use of forward foreign currency contracts does not eliminate
fluctuations in the underlying prices of the Fund's Portfolio Securities, but it
does establish a rate of exchange that can be achieved in the future. Although
forward foreign currency contracts limit the risk of loss due to a decline in
the value of the hedged currency, they also limit any potential gain that might
result should the value of the currency increase. In addition, the Funds could
be exposed to risks if the counterparties to the contracts are unable to meet
the terms of their contracts. During the year ended August 31, 1995, the BEA
U.S. Core Fixed Income Portfolio and the BEA Global Fixed Income Portfolio
entered into forward foreign currency contracts.

The BEA U.S. Core Fixed Income Portfolio's open Forward Foreign Currency
Contract at August 31, 1995 was as follows:

<TABLE>
<CAPTION>
FOREIGN UNREALIZED
CURRENCY FOREIGN
FORWARD CURRENCY EXPIRATION TO BE CONTRACT CONTRACT EXCHANGE
CONTRACT DATE SOLD AMOUNT VALUE GAIN
- --------------------- --------- --------- --------- --------- ---------------
<S> <C> <C> <C> <C> <C>
German Deutschemarks 09/15/95 350,000 $249,670 $238,737 $ 10,933
--------- --------- -------
--------- --------- -------
</TABLE>

The BEA Global Fixed Income Portfolio's open Forward Foreign Currency
Contracts at August 31, 1995 were as follows:

<TABLE>
<CAPTION>
UNREALIZED
FOREIGN FOREIGN
FORWARD CURRENCY EXPIRATION CURRENCY CONTRACT CONTRACT EXCHANGE
CONTRACT DATE TO BE SOLD AMOUNT VALUE GAIN/LOSS
- --------------------- --------- ----------- ----------- ----------- ---------------
<S> <C> <C> <C> <C> <C>
Australian Dollars 09/15/95 580,000 $415,367 $435,566 $ (20,199)
Denmark Krone 12/15/95 525,000 95,229 92,342 2,887
Denmark Krone 12/15/95 1,295,000 238,358 227,777 10,581
French Francs 12/15/95 2,300,000 444,659 456,219 (11,560)
French Francs 12/15/95 7,400,000 1,457,697 1,467,833 (10,136)
German Deutschemarks 09/15/95 1,320,000 941,344 900,379 40,965
Japanese Yen 09/18/95 20,000,000 240,961 205,263 35,698
Japanese Yen 09/18/95 50,000,000 575,771 513,156 62,615
Spanish Pesetas 09/15/95 20,000,000 162,668 159,840 2,828
Swedish Krona 11/15/95 3,900,000 540,780 531,755 9,025
----------- ----------- ---------------
$5,112,834 $4,990,130 $ 122,704
----------- ----------- ---------------
----------- ----------- ---------------
</TABLE>

F-50

<PAGE>
THE BEA FAMILY
THE RBB FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
AUGUST 31, 1995

NOTE 8. FORWARD FOREIGN CURRENCY CONTRACTS (CONTINUED)

<TABLE>
<CAPTION>
FOREIGN UNREALIZED
CURRENCY FOREIGN
FORWARD CURRENCY EXPIRATION TO BE CONTRACT CONTRACT EXCHANGE
CONTRACT DATE PURCHASED AMOUNT VALUE GAIN/LOSS
- --------------------- --------- ------------ ----------- ----------- ---------------
<S> <C> <C> <C> <C> <C>
Denmark Krone 12/15/95 950,000 $165,439 $167,095 $ 1,656
French Francs 12/15/95 400,000 78,833 79,342 509
French Francs 12/15/95 1,000,000 197,083 198,356 1,273
French Francs 12/15/95 1,000,000 202,388 198,356 (4,032)
French Francs 12/15/95 8,300,000 1,636,903 1,646,355 9,452
German Deutschemarks 09/15/95 1,050,000 710,900 716,210 5,310
Italian Lira 09/15/95 155,000,000 92,098 95,288 3,190
Japanese Yen 09/18/95 60,000,000 614,754 615,787 1,033
Japanese Yen 09/18/95 70,000,000 776,191 718,419 (57,772)
Swedish Krona 11/15/95 3,200,000 431,162 436,312 5,150
----------- ----------- ---------------
$4,905,751 $4,871,520 $ (34,231)
----------- ----------- ---------------
----------- ----------- ---------------
</TABLE>

F-51