<PAGE>
BEA
[Graphic]
INTERNATIONAL EQUITY FUND
EMERGING MARKETS EQUITY FUND
U.S. CORE EQUITY FUND
U.S. CORE FIXED INCOME FUND
GLOBAL FIXED INCOME FUND
HIGH YIELD FUND
MUNICIPAL BOND FUND
ANNUAL REPORT - AUGUST 31, 1996
<PAGE>
BEA INTERNATIONAL EQUITY FUND
PORTFOLIO MANAGER'S LETTER
October 10, 1996
Dear Shareholders:
We are pleased to report on the results of the BEA International Equity Fund
(the "Fund") for the year ended August 31, 1996.
At August 31, 1996, the net asset value (NAV) of the Fund was $19.41,
compared to an NAV of $18.24 on August 31, 1995. As a result, the Fund's total
return (assuming reinvestment of dividends) for the year was 6.81%. By
comparison, the MSCI EAFE Index ("EAFE") posted a return of 8.19% during the
same period.
WORLD MARKETS
As measured by MSCI's individual country indices in U.S. dollar terms,
two-thirds of global equity markets appreciated over the course of the Fund's
fiscal year. By far, the Russian market did the best, gaining 87.8% both in
anticipation and celebration of Boris Yeltsin's re-election as president. The
four next-highest gainers were emerging markets as well: Poland (+44.7%), Taiwan
(+40.7%), Venezuela (+33.5%) and Portugal (+33.3%). Rounding out the top ten
were five developed-nation markets: Sweden (+30.0%), Switzerland (+27.4%), the
Netherlands (+25.1%), Spain (+22.5%) and Hong Kong (+22.2%). Emerging nations
accounted for most of the markets with negative returns.
Viewed on a global basis (i.e., by the MSCI World Index), stocks rose 10.5%.
Positive performance in the U.S. (+20.2%), Europe (+12.1%) and Latin America
(+6.8%) was somewhat offset by negative returns in the Pacific (-0.4%) and the
Far East (-0.8%).
THE YEAR IN REVIEW
To put the Fund's strategy and performance in perspective, it is helpful to
be familiar with the past year's environment for international equities. The
following is a brief summary of the regional developments and trends we consider
most meaningful for investors:
EUROPE. General sluggishness among European economies prompted several
interest-rate cuts by central banks, most notably the Bundesbank and Bank of
England. Lower rates most positively impacted the region in two ways: currencies
weakened vs. the U.S. dollar, raising the global competitiveness of European
companies; and stock prices were propped up by greater liquidity and
expectations of economic recovery. Equity markets responded well, with five
(Portugal, Sweden, Switzerland, the Netherlands and Spain) among the world's top
10 for the year.
JAPAN. The picture here has progressively deteriorated since late 1995. The
potent combination of a greater-than-expected economic slowdown, weak yen,
persistent banking problems, lack of effective stimulative policies, large
fiscal deficit and crippling political gridlock resulted in a considerably
negative investment environment. Japanese equities were among the year's worst
performers among developed nations.
LATIN AMERICA. As a group, Latin American nations have recovered in a
remarkably short time from the late-1994 peso crisis. Mexico's economic status
has improved to the point at which it is prepaying large amounts of its Brady
debt and easily raising funds in the global capital markets. Brazil has put
hyperinflation behind it and is well along in a program of fiscal and political
reforms. Conditions in Argentina are very harsh, but it appears that the
country's tough Convertibility plan is succeeding in restoring the economy's
health. Most Latin markets achieved gains during the year.
ASIA/PACIFIC. A widespread decline in the rate of export growth,
particularly of electronics and footwear, has hurt most of the region's
economies. The persistence of the decline indicates that its effect is likely to
be felt at least for the next few months. Other negatives include the impact of
a stronger U.S. dollar and political volatility (in Indonesia and Thailand).
PERFORMANCE: PROS AND CONS
Over the year, the main factor affecting performance (both positively and
negatively) was the Fund's regional allocation weightings.
1
<PAGE>
BEA INTERNATIONAL EQUITY FUND
PORTFOLIO MANAGER'S LETTER--(CONTINUED)
As has been the case for much of 1996, our decision to allocate some of the
Fund's assets to Latin America significantly helped performance. The impact of
strong results in most Latin markets was particularly beneficial due to the fact
that the Fund's benchmark, EAFE, does not include any weightings in the region.
We also chose to substantially underweight Japan by about 50% vs. EAFE.
Along with the weak yen, this meaningfully added to performance.
Regional allocations negatively impacted the Fund as well, however. This was
most evident in our underweighting of Europe, whose EAFE component outperformed
the Fund's. Our Asian exposure also hurt, as we nearly doubled EAFE's allocation
but lost ground due to unfavorable country selection.
OUTLOOK
Our current outlook on global equities is somewhat mixed.
In the U.S., both the decision of the Federal Reserve to leave rates
unchanged and recent evidence pointing toward moderation of growth have helped
boost investor sentiment about equities. Nonetheless, the U.S. unemployment rate
is at the low end of its historical range and signs of wage inflation are
becoming evident, indicating the potential for significant rate increases in
1997.
Inaction by the Fed has been good for financial assets this year, but it may
set the stage for more drastic measures down the road. By this, we mean that it
is not so improbable to envision the Fed next tightening rates in 1997 by a
relatively high total of 100-125 basis points. Such Fed behavior could exert
significant pressure on capital markets worldwide.
Should the Fed raise rates, we would not be surprised to see U.S. equities
underperform those of other nations in 1997. While non-U.S. markets may also
experience corrections, there are grounds for optimism that they will outperform
the U.S.
We expect European stocks to be buoyed by two quite positive factors. First,
the region's interest-rate environment is constructive, with rates more likely
easing than tightening. Second, governments are under intense pressure to
reinvigorate their economies in order to meet the strict deficit-reduction
requirements of the European Monetary Union.
Despite the prominent negatives in Japan, some conditions there are becoming
more appealing to equity investors. For example, valuation levels for many
companies have become reasonably attractive relative to local interest rates. In
addition, stimulative monetary policy and yen weakness are expected to
contribute to ongoing economic expansion.
We continue to like Latin America, where economic recovery and
market-oriented reforms are expected to continue. As for Asia/Pacific, the
near-term outlook remains clouded by poor export growth. Against the backdrop of
improved equity valuations, however, we remain optimistic about the region's
long-term investment prospects.
As developments occur in the international equity markets or at BEA that we
believe would be of interest to you, we will be sure to keep you informed.
Meanwhile, if you have questions, please feel free to call upon us at any time.
Sincerely,
BEA International Equity Management Team
William P. Sterling, Managing Director
Stephen M. Swift, Managing Director
Richard Watt, Managing Director
Steven D. Bleiberg, Senior Vice President
2
<PAGE>
BEA INTERNATIONAL EQUITY FUND
PORTFOLIO MANAGER'S LETTER--(CONCLUDED)
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE BEA INTERNATIONAL
EQUITY FUND AND THE MORGAN STANLEY CAPITAL INTERNATIONAL ("MSCI") EAFE INDEX
FROM INCEPTION 10/1/92 AND AT EACH QUARTER END.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
BEA INTERNATIONAL MSCI EAFE
EQUITY FUND INDEX
<S> <C> <C>
10/01/92 $ 10,000 $ 10,000
11/30/92 $ 9,685 $ 9,571
02/28/93 $ 9,906 $ 9,918
05/31/93 $ 11,218 $ 12,062
08/31/93 $ 12,159 $ 12,962
11/30/93 $ 12,120 $ 11,928
02/28/94 $ 13,783 $ 13,841
05/31/94 $ 12,999 $ 13,735
08/31/94 $ 13,891 $ 14,405
11/30/94 $ 13,080 $ 13,732
02/28/95 $ 11,435 $ 13,258
05/31/95 $ 12,500 $ 14,451
08/31/95 $ 12,773 $ 14,517
11/30/95 $ 12,387 $ 14,815
02/29/96 $ 13,352 $ 15,539
5/31/96 $ 13,901 $ 16,041
8/31/96 $ 13,366 $ 15,706
</TABLE>
Note: Past performance is not predictive of future performance. Average Annual
Total Returns are net of 1.00% redemption fees.
<TABLE>
<S> <C>
AVERAGE ANNUAL
TOTAL RETURN
One Year 5.77%
From Inception 8.70%
</TABLE>
3
<PAGE>
BEA INTERNATIONAL EQUITY FUND
OF THE RBB FUND, INC.
STATEMENT OF NET ASSETS
AUGUST 31, 1996
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
----------- ------------
<S> <C> <C>
COMMON AND CONVERTIBLE STOCKS, WARRANTS AND RIGHTS -- 96.4%
ARGENTINA -- 0.2%
Sodigas del Sur S.A.+...................... 403,923 $ 745,416
Sodigas Pampeana S.A.+..................... 558,962 844,809
------------
1,590,225
------------
AUSTRALIA -- 2.0%
Broken Hill Corp. Ltd...................... 240,546 3,273,168
CRA Ltd.................................... 224,900 3,415,701
News Corp. Ltd. ADR........................ 94,000 1,997,500
News Corp. Ltd. Pfd. ADR................... 46,900 832,475
WMC Ltd.................................... 564,500 3,925,398
------------
13,444,242
------------
BRAZIL -- 2.7%
Banco Bradesco S.A. PN..................... 556,077,084 4,705,099
Centrais Eletricas Brasileiras S.A. ON..... 63,836 16,957
Cia. Cervejaria Brahma PN Warrants Expire
9/30/96**................................ 369,916 134,660
Cia. Tecidos Norte de Minas Gerais PN...... 9,556,000 3,243,813
Cia. Vale do Rio Doce ADR.................. 196,900 3,825,570
Lojas Americanas S.A. PN................... 56,034,786 970,299
Telecomunicacoes de Sao Paulo S.A. PN...... 28,410,000 5,450,561
------------
18,346,959
------------
CANADA -- 0.6%
Magna International, Inc. Class A.......... 85,600 4,130,200
------------
DENMARK -- 0.3%
Unidanmark A/S 144A........................ 52,990 2,343,788
------------
FINLAND -- 1.3%
Nokia Corp. ADR............................ 24,000 1,014,000
Nokia Corp. Class A........................ 102,196 4,344,582
UPM-Kymmene Corp........................... 139,020 3,178,986
------------
8,537,568
------------
FRANCE -- 7.6%
Accor...................................... 24,025 2,908,814
AXA S.A.................................... 56,764 3,186,318
Bertrand Faure............................. 118,121 3,884,485
BIC S.A.................................... 35,620 5,199,127
Carrefour Super Marche..................... 14,214 7,184,204
Christian Dior S.A......................... 32,971 3,972,911
Compagnie Generale Des Eaux................ 39,100 3,771,764
Compagnie Generale Des Eaux Certificates... 1,002 96,657
Credit Local de France..................... 52,111 4,291,978
<CAPTION>
NUMBER
OF SHARES VALUE
----------- ------------
<S> <C> <C>
FRANCE -- (CONTINUED)
G.T.M. Entrepose S.A....................... 67,182 $ 4,040,474
G.T.M. Entrepose S.A. Certificates......... 1,912 114,992
Groupe Danone.............................. 6,733 929,561
L'Air Liquide.............................. 8,300 1,413,115
Legrand.................................... 9,764 1,459,875
Michelin Class B........................... 36,558 1,708,399
Technip S.A................................ 49,209 4,461,175
Valeo S.A.................................. 67,691 3,409,284
------------
52,033,133
------------
GERMANY -- 5.4%
Adidas AG.................................. 63,800 5,498,513
Commerzbank AG............................. 7,950 1,832,466
Degussa CN................................. 9,950 3,485,930
Deutsche Bank AG........................... 68,890 3,412,369
GEA AG Non Voting Pfd...................... 10,346 3,356,820
Hoechst AG................................. 172,450 6,026,541
Man AG..................................... 12,260 3,082,817
RWE AG..................................... 55,700 2,028,227
SAP AG..................................... 5,450 905,509
SAP AG 144A ADR............................ 61,500 3,361,959
Volkswagen AG.............................. 10,821 4,015,634
------------
37,006,785
------------
HONG KONG -- 4.5%
Cheung Kong Holdings Ltd................... 757,500 5,315,188
Citic Pacific Ltd.......................... 1,143,900 5,030,408
Hong Kong and China Gas.................... 2,409,000 3,894,781
HSBC Holdings PLC.......................... 409,408 7,069,381
New World Development Company.............. 858,000 4,161,547
Sun Hung Kai Properties Ltd................ 505,300 4,934,379
------------
30,405,684
------------
INDIA -- 0.7%
India Liberalisation Fund Class A 144A
**/****.................................. 276,532 1,960,612
Indian Opportunity Fund Ltd. **............ 320,156 2,958,241
------------
4,918,853
------------
INDONESIA -- 1.1%
PT Astra International***.................. 2,320,100 3,022,125
PT Telekomunikasi***....................... 2,177,500 3,068,866
PT Telekomunikasi Indonesia ADR............ 41,900 1,167,963
------------
7,258,954
------------
ISRAEL -- 1.0%
Geotek Communications, Inc. Series M
Cumulative Convertible Pfd.+............. 600 6,476,842
------------
</TABLE>
See Accompanying Notes to Financial Statements.
4
<PAGE>
BEA INTERNATIONAL EQUITY FUND (CONTINUED)
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
----------- ------------
<S> <C> <C>
ITALY -- 2.7%
Banca Fideuram S.p.A....................... 1,351,600 $ 2,989,236
Edison S.p.A............................... 460,000 2,485,499
Istituto Mobiliare Italiano S.p.A.......... 746,500 5,882,234
Telecom Italia Mobile S.p.A**.............. 1,014,784 2,089,775
Telecom Italia Mobile Non-Convertible
Savings Shares**......................... 1,347,050 1,641,221
Telecom Italia Non-Convertible Savings
Shares................................... 1,347,050 2,163,022
Telecom Italia S.p.A....................... 724,984 1,423,373
------------
18,674,360
------------
JAPAN -- 22.2%
Aida Engineering Ltd....................... 78,000 580,278
Aoki International Company Ltd............. 58,000 1,121,444
Aoyama Trading Company..................... 79,000 2,087,561
Bank of Tokyo - Mitsubshi.................. 137,000 2,787,681
Chudenko Corp.............................. 15,000 480,619
Chugai Pharmaceutical Company Ltd.......... 173,000 1,537,105
Chugoku Bank, Ltd.......................... 98,000 1,570,021
Dai-Ichi Kangyo Bank Ltd................... 244,000 4,043,827
Daiichi Pharmaceutical Company Ltd......... 203,000 3,102,661
Daiwa House................................ 247,000 3,524,998
Daiwa Securities Company Ltd............... 107,000 1,211,767
Danto Corp................................. 47,000 532,271
Fuji Photo Film Company Ltd................ 163,000 4,907,559
Fujitsu Limited............................ 309,000 2,785,296
Higo Bank.................................. 203,000 1,463,484
Hitachi Cable.............................. 153,000 1,119,925
Hitachi Ltd................................ 529,000 4,860,897
Hitachi Metals Ltd......................... 93,000 856,275
Hokuetsu Paper Mills....................... 189,000 1,444,342
House Food Indl............................ 92,000 1,677,194
Industrial Bank of Japan Ltd............... 181,900 3,868,787
Industrial Bank of Japan Ltd. Rights....... 14,552 150,062
Kikkoman................................... 160,000 1,168,217
Kinden Corp................................ 83,000 1,268,576
Kirin Brewery Company Ltd.................. 127,000 1,309,640
Kyocera Corp............................... 25,000 1,698,739
Kyudenko Company Ltd....................... 53,000 678,298
Kyushu Electric Power...................... 171,000 3,668,447
Makita Electric Works...................... 85,000 1,220,882
Maruichi Steel Tube........................ 48,000 817,604
Matsushita Electric Works.................. 127,000 1,262,867
Mitsubishi ElectricCorp.................... 463,000 2,971,283
Mitsubishi Estate Company Ltd.............. 188,000 2,302,182
Mitsubishi Gas and Chemical Company........ 286,000 1,179,707
Mitsubishi Steel Manufacturing **.......... 257,500 1,299,236
<CAPTION>
NUMBER
OF SHARES VALUE
----------- ------------
<S> <C> <C>
JAPAN -- (CONTINUED)
Mitsubishi Trust and Banking Corp.......... 101,000 $ 1,515,790
Mitsui Petrochemical....................... 318,000 2,143,228
Murata Manufacturing Company Ltd........... 50,000 1,767,793
NEC Corp................................... 365,000 3,898,352
Nichicon................................... 212,000 2,908,388
Nippon Chemi-Con Corp...................... 123,000 765,565
Nippon Meat Packers........................ 153,000 2,127,152
Nippon Oil Company......................... 504,000 3,085,904
Nippon Paper Industries Co................. 463,000 2,770,923
Nisshin Steel Company Ltd.................. 504,000 1,832,980
Nomura Securities Company Ltd.............. 188,000 3,271,522
Ricoh Company Ltd.......................... 160,000 1,561,550
Rinnai..................................... 57,000 1,291,041
Sakura Bank Ltd............................ 289,000 2,740,724
Sanwa Bank................................. 214,000 3,783,077
Seino Transportation Company Ltd........... 198,000 2,916,858
Sekisui Chemical Co........................ 250,000 2,716,140
Sekisui House Ltd.......................... 463,000 4,902,403
Shimachu................................... 26,000 742,105
Shimano Inc................................ 76,000 1,406,500
Shin-Etsu Chemical Co...................... 171,000 3,022,926
Shionogi & Company Ltd..................... 193,000 1,508,673
Shiseido Company Ltd....................... 238,000 2,892,551
Sumitomo Bank Ltd.......................... 102,000 1,868,889
SXL Corp................................... 132,000 1,227,511
Takara Standard............................ 63,000 649,664
Tohoku Electric Power Company.............. 169,000 3,641,101
Tokai Bank Ltd............................. 163,000 1,936,010
Tokio Marine and Fire Insurance Company.... 206,000 2,351,901
Tokyo Style Corp. Ltd...................... 81,000 1,297,671
Toppan Printing............................ 341,000 4,301,353
Toshiba Corp............................... 526,000 3,399,797
UNY Company Ltd............................ 95,000 1,670,656
Yakult Honsha.............................. 22,000 1,595,065
Yamaguchi Bank............................. 102,000 1,549,581
Yamanouchi Pharmaceutical.................. 142,000 2,928,644
Yokogawa Bridge Corp....................... 51,000 638,615
------------
151,188,335
------------
MALAYSIA -- 2.3%
Diversified Resources Berhad............... 1,568,700 5,129,350
Malayan Banking Berhad..................... 560,300 5,327,627
Petronas Gas Berhad International.......... 955,000 3,984,754
YTL Corp. Berhad........................... 287,300 1,417,769
------------
15,859,500
------------
</TABLE>
See Accompanying Notes to Financial Statements.
5
<PAGE>
BEA INTERNATIONAL EQUITY FUND (CONTINUED)
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
----------- ------------
<S> <C> <C>
MEXICO -- 2.7%
Cementos Mexicanos CPO, S.A................ 1,134,500 $ 4,147,232
Corporacion GEO S.A. de C.V. Class B **.... 691,600 3,486,522
Corporacion Industrial SanLuis S.A. de C.V.
CPO...................................... 601,894 3,570,457
Grupo Elektra S.A. de C.V. CPO............. 282,600 2,006,451
Grupo Modelo S.A. de C.V. Class C.......... 484,200 2,236,490
Kimberly Clark de Mexico S.A. de C.V. Class
A........................................ 160,600 2,950,250
Telefonos de Mexico S.A. de C.V.
Unsponsored ADR.......................... 4,400 6,875
------------
18,404,277
------------
NETHERLANDS -- 3.3%
Akzo Nobel................................. 36,200 4,209,658
Heineken N.V............................... 15,200 3,383,072
Internationale Nederlanden Groep N.V....... 115,100 3,587,334
Nutricia Verenigde Bedrijven N.V........... 26,100 3,493,007
VNU Verenigd Bezit......................... 15,000 262,659
Wolters Kluwer............................. 60,400 7,591,878
------------
22,527,608
------------
PHILIPPINES -- 1.0%
Ayala Corp. Class B........................ 2,940,600 3,428,452
Philippine Long Distance Telephone Company
ADR...................................... 53,050 3,176,369
------------
6,604,821
------------
PORTUGAL -- 0.6%
Portugal Telecom S.A. ADR **............... 52,380 1,394,617
Portugal Telecom S.A.
Register................................. 103,000 2,755,946
------------
4,150,563
------------
PUERTO RICO -- 0.5%
Cellular Communications of Puerto Rico,
Inc. ADR **.............................. 130,900 3,501,575
------------
RUSSIA -- 0.2%
PLD Telekom, Inc........................... 192,900 1,470,862
------------
SINGAPORE -- 2.2%
DBS Land Ltd............................... 470,600 1,565,878
Overseas-Chinese Banking Corp. Ltd.***..... 458,770 5,512,416
Singapore Press Holdings***................ 168,400 2,921,408
United Overseas Bank
Ltd.***.................................. 488,980 4,693,374
------------
14,693,076
------------
<CAPTION>
NUMBER
OF SHARES VALUE
----------- ------------
<S> <C> <C>
SOUTH AFRICA -- 2.2%
Amalgamated Banks of South Africa Ltd...... 602,443 $ 2,779,886
Anglo American Industrial Corp. Ltd........ 80,658 2,984,670
Gencor Ltd................................. 910,500 3,206,844
South African Breweries Ltd................ 194,412 5,157,162
South African Breweries Ltd. ADR........... 22,813 604,955
------------
14,733,517
------------
SOUTH KOREA -- 1.5%
Korea Fund, Inc............................ 551,525 10,547,916
------------
SPAIN -- 2.3%
Banco Intercontinental Espanol............. 34,400 3,892,212
Banco Popular.............................. 20,000 3,470,334
Repsol S.A. ADR............................ 122,500 3,996,562
Telefonica de Espana ADR................... 81,700 4,524,137
------------
15,883,245
------------
SWEDEN -- 4.8%
Astra AB Fria Class A...................... 168,920 7,145,192
Autoliv AB................................. 140,800 4,647,602
Ericsson Telephone Company ADR Class B..... 249,460 5,753,171
Hennes & Mauritz Fria Class B.............. 70,004 7,275,890
Mo Och Domsjo AB - B Shares................ 138,200 3,998,081
Stora Kopparbergs Bergslags Aktiebolag A
Shares................................... 255,800 3,593,836
------------
32,413,772
------------
SWITZERLAND -- 5.1%
ABB AG..................................... 5,006 6,171,952
Ciba Geigy AG Registered................... 4,484 5,662,938
Holderbank Financiere Glaris AG Class B.... 5,507 4,214,260
Roche Holding AG........................... 665 5,069,544
Sandoz AG Registered....................... 3,250 3,868,790
Schweiz Bankgesellschaft B................. 3,627 3,522,387
Swiss Reinsurance Company Registered....... 6,010 6,497,974
------------
35,007,845
------------
THAILAND*** -- 2.3%
Advanced Information Services Public
Company Ltd.............................. 214,900 2,844,891
Krung Thai Bank Public Company Ltd......... 840,570 3,631,476
Phatra Thanakit Public Company Ltd......... 325,000 1,932,224
Siam Cement Company Ltd.................... 80,500 3,101,308
Thai Farmers Bank Public Company Ltd....... 405,300 4,305,208
</TABLE>
See Accompanying Notes to Financial Statements.
6
<PAGE>
BEA INTERNATIONAL EQUITY FUND (CONCLUDED)
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
----------- ------------
<S> <C> <C>
THAILAND*** -- (CONTINUED)
Thai Farmers Bank Public Company Ltd.
Warrants Expire 09/15/2002............... 50,663 $ 136,546
------------
15,951,653
------------
UNITED KINGDOM -- 13.1%
Berkeley Group PLC......................... 20,400 185,199
British Petroleum PLC...................... 463,446 4,489,515
British Sky Broadcasting Group PLC ADR**... 95,590 5,126,014
Burton Group PLC........................... 952,800 2,268,455
Dixons Group PLC........................... 294,921 2,490,930
EMI Group PLC.............................. 301,000 6,771,564
Flextech PLC **............................ 162,092 1,301,984
General Cable PLC **....................... 1,198,400 3,330,277
General Cable PLC ADR **................... 339,200 4,621,600
International Cabletel, Inc. **............ 182,842 4,433,918
Land Securities PLC........................ 364,000 3,872,806
Rank Organisation PLC...................... 116,100 812,024
Reuters Holdings PLC Class B............... 249,520 2,906,048
Reuters Holdings PLC ADR Class B........... 56,200 3,926,975
Rolls Royce PLC............................ 2,083,300 7,220,434
Scottish & Newcastle PLC................... 514,100 5,437,703
Standard Chartered Bank PLC................ 941,459 10,435,618
Unilever PLC............................... 104,800 2,077,077
United News & Media PLC.................... 275,000 3,076,149
WPP Group PLC.............................. 2,824,051 10,162,534
Zeneca Group PLC........................... 180,900 4,321,043
------------
89,267,867
------------
TOTAL COMMON AND
CONVERTIBLE STOCKS,
WARRANTS AND RIGHTS
(Cost $610,436,063).................... 657,374,025
------------
<CAPTION>
PAR
(000) VALUE
----------- ------------
<S> <C> <C>
FOREIGN BONDS**** -- 0.4%
SOUTH AFRICA -- 0.4%
Sappi BVI Finance Ltd. Convertible 144A
7.500% 08/01/2002........................ $ 3,240 2,948,400
------------
TOTAL FOREIGN BONDS
(Cost $3,240,000)....................... 2,948,400
------------
SHORT-TERM INVESTMENT -- 2.7%
BBH Grand Cayman U.S. Dollar Time Deposit
4.750% 09/03/1996........................ 18,530 18,530,000
------------
TOTAL SHORT-TERM INVESTMENT
(Cost $18,530,000)...................... 18,530,000
------------
<CAPTION>
VALUE
------------
<S> <C> <C>
SHORT-TERM INVESTMENT -- (CONTINUED)
TOTAL INVESTMENTS AT VALUE -- 99.5%
(Cost $632,206,063*)..................... $678,852,425
OTHER ASSETS IN EXCESS
OF LIABILITIES -- 0.5%................................ 3,418,376
------------
NET ASSETS (Applicable to
35,142,215 BEA Shares) -- 100.0%...................... $682,270,801
------------
------------
NET ASSET VALUE AND OFFERING
PRICE PER SHARE
($682,270,801 DIVIDED BY 35,142,215)................. $19.41
------------
------------
REDEMPTION PRICE PER SHARE
($19.41 X .9900)...................................... $19.22
------------
------------
</TABLE>
* Cost for Federal income tax purposes at August 31, 1996 is $632,398,515. The
gross appreciation (depreciation) on a tax basis is as follows:
<TABLE>
<S> <C>
Gross Appreciation.......... $ 81,589,602
Gross Depreciation.......... (35,135,692)
---------------
Net Appreciation............ $ 46,453,910
---------------
---------------
</TABLE>
** Non-income producing securities.
*** Denotes foreign shares.
**** Certain conditions for public sales may exist.
+ Not readily marketable securities.
INVESTMENT ABBREVIATIONS
<TABLE>
<S> <C>
ADR........................... American Depository Receipts
</TABLE>
AT AUGUST 31, 1996, NET ASSETS CONSISTED OF:
<TABLE>
<CAPTION>
PER
AMOUNT SHARE
------------ ------
<S> <C> <C>
Capital Paid-In............... $655,735,487 $18.66
Accumulated Net Investment
Income....................... 4,139,511 .12
Accumulated Net Realized Loss
on Security and Foreign
Exchange Transactions........ (24,260,422) (.69)
Net Unrealized Appreciation on
Investments and Other........ 46,656,225 1.32
- ----------------------------------------------------
NET ASSETS.................... $682,270,801 $19.41
- ----------------------------------------------------
</TABLE>
See Accompanying Notes to Financial Statements.
7
<PAGE>
BEA EMERGING MARKETS EQUITY FUND
PORTFOLIO MANAGER'S LETTER
October 10, 1996
Dear Shareholders:
We are pleased to report on the results of the BEA Emerging Markets Equity
Fund (the "Fund") for the year ended August 31, 1996.
At August 31, 1996, the net asset value (NAV) of the Fund was $18.20,
compared to an NAV of $17.67 on August 31, 1995. As a result, the Fund's total
return (assuming reinvestment of dividends) was 3.33% for the year. By
comparison, the MSCI Emerging Market Free Index (EMF) posted a return of 3.82%
during the same time period.
PERFORMANCE: PROS AND CONS
The performance of the Fund during the year was most positively impacted by
our strategy for the Latin American markets. Based on our confidence in equities
there, we overweighted the region relative to EMF, most notably in Brazil.
Fortuitous stock selection enabled the Fund to significantly outperform EMF in
the key markets of Brazil and Mexico.
There also were adverse factors, however. The Fund's underperformance in
Asia/Pacific markets was the largest single negative contributor on a general
level, most specifically due to unfavorable stock selection in Malaysia and
Indonesia. The latter's effects, though, were somewhat offset by favorable stock
selection in South Korea and Thailand.
Elsewhere in the world, the Fund benefited from good returns in Russia,
Israel and Croatia and suffered from underperformance in South Africa.
We note that the Fund's results vs. EMF were much stronger in the last six
months than for the entire year, indicating that relative performance is
materially improving.
MARKET COMMENTARY
As represented by MSCI's individual country indices, about two-thirds of
global equity markets recorded gains during the year. Emerging nations accounted
for the five top-performing markets. The Russian market (I.E., the ASP General
Index) was first, surging 87.8% as investors pushed up prices both in
anticipation and celebration of Boris Yeltsin's re-election as president.
Numbers two through five were Poland (+44.7%), Taiwan (+40.7%), Venezuela
(+33.5%) and Portugal (+33.3%). The four worst performers were also emerging
markets: Pakistan (-30.5%), Sri Lanka (-29.8%), South Korea (-23.4%) and
Thailand (-14.5%).
The economic environment for developing nations was mixed over the course of
the 12 months ending in August. For example, POLAND's sovereign debt was raised
to investment-grade status (BBB), a very positive sign for emerging economies.
MEXICO put an exclamation point on its recovery from the December 1994 peso
crisis (the so-called "Tequila crisis") by dramatically refinancing its Brady
debt and partially prepaying bailout loans from the U.S. and the International
Monetary Fund. Conditions in ARGENTINA remained harsh as the government
continued its struggle to implement the Convertibility reform plan. Many ASIAN
countries began to feel the pain of a slowdown in regional exports.
REGIONAL REVIEW
We'd like to take this opportunity to summarize our views on the investment
environment in the Fund's core regions of Latin America and Asia.
LATIN AMERICA: The major theme among Latin American equity markets
continues to be the region's resurgence from the depths of the Tequila crisis.
It was not long ago that many observers publicly wondered how far-reaching the
crisis's impact would be, not simply on Mexico's economy, but on Latin America
as a whole. The possibility of serious adverse consequences for investors was
very real.
The economic climate in Latin America since the Tequila crisis is greatly
improved. Underlying trends are becoming more favorable, so much so that we see
the process of liberalization being deepened throughout the area.
8
<PAGE>
BEA EMERGING MARKETS EQUITY FUND
PORTFOLIO MANAGER'S LETTER--(CONTINUED)
ASIA: A widespread decline in the rate of export growth, particularly of
electronics and footwear, has hurt most of the region's economies. The
persistence of the decline indicates that its effect is likely to be felt at
least for the next few months. Other negatives include the impact of a stronger
U.S. dollar and political volatility (in Indonesia and Thailand).
Brief country comments:
- MEXICO: the recovery from Tequila was very impressive. President Zedillo
has done an excellent job of steering the nation toward prosperity through
a series of hazardous developments.
- BRAZIL: President Cardoso's Real plan is working well. However, we share
local concerns about his political strength and commitment to the reform
agenda.
- ARGENTINA: conditions are very harsh, but it appears that the
Convertibility plan is slowly succeeding in restoring the economy's
health. Some encouraging signs are beginning to appear.
- CHILE: its 'safe haven' status among Latin American markets is intact.
Although activity has slowed in the last few months, Chile's economy
remains the best-managed, most stable in the region. We foresee no
developments to materially change this view.
- PERU: this is becoming an increasingly positive story. The economy is
beginning to show real signs of revival following the corporate
restructuring of the last few years. President Fujimori is successfully
pushing his reform agenda ahead.
- COLOMBIA: the general atmosphere of uncertainty engendered by President
Samper's problems continues. We believe that Samper's departure is
inevitable and that investment prospects in Colombia should be re-examined
at that point.
- HONG KONG: the "hand-off" from British to Chinese sovereignty next year
appears to be proceeding smoothly. There are signs that investors are
already beginning to recognize the market's potential both for 1997 and
beyond. Improving economic fundamentals in China should also help.
- MALAYSIA: some level of uncertainty exists until October's national
elections and budget finalization are over. It is clear that some
corporations need to undergo restructuring, but earnings growth still is
buoyant. Stocks generally appear fairly valued.
- INDONESIA: following recent political unrest and concerns about President
Suharto's health, things are getting back to normal. Inflation is under
control and the economy is in good shape.
- SOUTH KOREA: important transitions are occurring. The economy is slowly
being opened to foreigners, but is being negatively affected by the
increased competitiveness of Japanese exporters as well as the slump in
semiconductor prices.
- THAILAND: major political and economic problems. The prime minister was
forced to resign due to corruption and economic mismanagement, and a steep
decline in exports is being felt throughout the country. Many months will
be needed to restore stability on both fronts.
- PHILIPPINES: GDP is rising and inflation is falling. These are
counterbalanced by a vulnerable export sector and rising speculation in
property (which accounts for about 60% of the stock market). Equities need
new forces to drive them higher.
OUTLOOK
Overall, we continue to feel positive about the prospects for emerging
equity markets. They offer strong diversification benefits to global investors.
The powerful long-term trends of infrastructure development and rising consumer
demand remain very much in place. The markets themselves are growing and
attracting greater investor interest.
In Latin America, we believe that 1997 will see a continuation of the
fundamental economic progress made since the Tequila effect. GDP forecasts are
being raised, inflation is being dramatically reduced and many companies are
increasingly
9
<PAGE>
BEA EMERGING MARKETS EQUITY FUND
PORTFOLIO MANAGER'S LETTER--(CONCLUDED)
integrating themselves into the markets of their regional neighbors and the rest
of the world. Along with improving political developments, these conditions
should maintain the area's status as a source of high potential appreciation for
equity investors.
In the near term, we are somewhat more cautious about most Asian markets.
Economies in the region desperately need some form of stimulus, particularly for
the export sector. The severity of the general downturn, furthermore, is a
painful reminder of the extent to which the economic activity of many Asian
countries is directly dependent on healthy consumer demand in the developed
nations.
Our view on how the downturn is affecting Asian equities contains both
positive and negative elements. It appears that the markets have discounted the
bad news, but not completely. Few are offering the kind of valuation levels that
we consider cheap. With this in mind, we would not be surprised if a correction
of modest magnitude were to occur in the next two to three months. Thereafter,
it's quite possible that investor perceptions could begin to improve, in which
case we could see firming-to-rising stock prices.
As developments occur in the emerging markets or at BEA that we believe
would be of interest to you, we will be sure to keep you informed. Meanwhile, if
you have questions, please feel free to call upon us at any time.
Sincerely,
BEA International Equity Management Team
William P. Sterling, Managing Director
Stephen M. Swift, Managing Director
Richard Watt, Managing Director
Steven D. Bleiberg, Senior Vice President
-----------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE BEA EMERGING MARKETS
EQUITY FUND AND THE MORGAN STANLEY CAPITAL INTERNATIONAL ("MSCI") EMERGING
MARKETS FREE INDEX FROM INCEPTION 2/1/93 AND AT EACH QUARTER END.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
BEA EMERGING MARKETS MSCI EMERGING
EQUITY FUND MARKETS FREE INDEX
<S> <C> <C>
02/01/93 $ 10,000 $ 10,000
02/28/93 $ 10,027 $ 10,159
05/31/93 $ 10,815 $ 10,923
08/31/93 $ 12,377 $ 12,443
11/30/93 $ 14,653 $ 14,648
02/28/94 $ 17,078 $ 17,058
05/31/94 $ 14,839 $ 15,724
08/31/94 $ 16,832 $ 18,257
11/30/94 $ 15,879 $ 17,189
02/28/95 $ 11,460 $ 13,765
05/31/95 $ 12,677 $ 15,243
08/31/95 $ 12,720 $ 15,263
11/30/95 $ 11,835 $ 14,349
02/29/96 $ 12,992 $ 15,795
5/31/96 $ 13,881 $ 16,481
8/31/96 $ 12,950 $ 15,846
</TABLE>
Note: Past performance is not predictive of future performance. Average Annual
Total Returns are net of 1.50% redemption fees.
<TABLE>
<S> <C>
AVERAGE ANNUAL
TOTAL RETURN
One Year 1.80%
From Inception 7.18%
</TABLE>
10
<PAGE>
BEA EMERGING MARKETS EQUITY FUND
OF THE RBB FUND, INC.
STATEMENT OF NET ASSETS
AUGUST 31, 1996
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
----------- ------------
<S> <C> <C>
COMMON AND CONVERTIBLE STOCKS, WARRANTS AND RIGHTS -- 95.6%
BRAZIL -- 15.7%
Banco Bradesco S.A. PN..................... 321,471,549 $ 2,720,047
Centrais Eletricas de Santa Catarin PN
Class B.................................. 842,000 745,573
Cia. Energetica de Minas Gerais 144A
ADS****.................................. 183 5,509
Cia. Energetica de Minas Gerais ADR........ 23,673 712,628
Cia. Energetica de Minas Gerais PN......... 18,320,000 551,547
Cia. Paulista de Forca e Luz ON**.......... 14,527,220 1,307,793
Cia. Tecidos Norte de Minas Gerais PN...... 2,862,000 971,514
Lojas Americanas S.A. PN................... 10,047,000 173,974
Multibras Eletrodo S.A. PN................. 770,000 1,136,364
Refrigeracao Parana S.A. PN................ 573,223,000 1,483,251
Santista Alimentos
S.A.**................................... 722,500 1,329,275
Telecomunicacoes de Minas Gerais PN Class
B........................................ 22,548,000 2,562,273
Telecomunicacoes de Minas Gerais S.A. ON... 280,905 25,150
Telecomunicacoes de Sao Paulo S.A. PN...... 3,430,928 658,236
Telecomunicacoes do Parna S.A. PN.......... 1,565,000 751,397
Telecomunicacoes do Rio de Janeiro S.A.
ON....................................... 2,260,000 240,142
Telecomunicacoes do Rio de Janeiro S.A.
PN....................................... 19,756,000 2,118,658
Usinas Siderurgica de Minas Gerais S.A.
PN....................................... 554,102,395 577,871
------------
18,071,202
------------
CHILE -- 2.8%
Chilectra S.A. 144A ADR****................ 14,849 804,549
Enersis S.A. ADR........................... 19,400 603,825
Madeco S.A. Sponsored ADR.................. 49,600 1,171,800
Maderas y Sinteticos ADR................... 46,500 656,813
------------
3,236,987
------------
COLOMBIA -- 2.0%
Banco Ganadero S.A. PFD ADR 8.75%.......... 19,100 386,775
<CAPTION>
NUMBER
OF SHARES VALUE
----------- ------------
<S> <C> <C>
COLOMBIA -- (CONTINUED)
Banco Industrial Colombiano S.A. ADR....... 19,500 $ 363,187
Carrulla & CIA 144A S.A. ADR****........... 45,400 244,252
Cementos Diamante S.A. 144A ADS****........ 42,300 444,150
Cementos Paz del Rio 144A ADR****.......... 34,200 410,400
Gran Cadena Almacenes ADR.................. 42,300 406,926
------------
2,255,690
------------
CROATIA -- 3.1%
Pliva D.D. GDR 144A****.................... 63,000 2,850,750
Zagrebacka Banka GDR....................... 55,000 704,055
------------
3,554,805
------------
ECUADOR -- 0.5%
Cemento Nacional Ecuador GDR............... 2,896 535,760
------------
GHANA -- 2.6%
Ashanti Goldfields Co. Ltd. Sponsored
GDR...................................... 159,500 2,970,687
------------
HONG KONG -- 9.5%
Cheung Kong Holdings Ltd................... 147,000 1,031,462
Citic Pacific Ltd.......................... 228,000 1,002,651
Hang Seng Bank Ltd......................... 96,000 984,026
Henderson Land Development Co. Ltd......... 130,000 1,017,267
HKR International Ltd...................... 1,153,600 1,454,776
HSBC Holdings PLC.......................... 60,000 1,036,021
Hutchinson Whampoa Ltd..................... 175,000 1,059,303
Sun Hung Kai Properties Ltd................ 90,000 878,872
Swire Pacific Ltd. Class A................. 106,500 947,019
Wharf Holdings Ltd......................... 383,000 1,446,498
------------
10,857,895
------------
INDIA -- 3.2%
Hindalco 144A GDR****...................... 17,900 595,175
India Fund Class B......................... 510,670 872,998
Larsen & Toubro Ltd. GDR Reg. S New........ 80,000 1,300,000
Morgan Stanley India Investment Fund,
Inc...................................... 105,200 959,950
------------
3,728,123
------------
INDONESIA*** -- 4.2%
Bank International Indonesia, PT........... 510,466 1,177,244
</TABLE>
See Accompanying Notes to Financial Statements.
11
<PAGE>
BEA EMERGING MARKETS EQUITY FUND (CONTINUED)
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
----------- ------------
<S> <C> <C>
INDONESIA*** -- (CONTINUED)
Matahari Putra
Prima, PT................................ 385,250 $ 505,934
PT Astra International..................... 494,000 643,476
PT Bank Dagang
Nasional................................. 1,071,000 754,709
PT Hanjaya Mandala Sampoerna............... 82,500 794,523
PT Telekomunikasi.......................... 637,000 897,758
------------
4,773,644
------------
ISRAEL -- 4.9%
ECI Telecom Ltd............................ 64,140 1,322,887
Elscint Ltd. ADR........................... 15,050 137,331
Geotek Communications, Inc.**.............. 167,400 1,527,525
Koor Industries Ltd. ADR**................. 67,300 1,160,925
Tecnomatix Technologies**.................. 38,200 759,225
Teva Pharmaceutical Industries Ltd. ADR.... 19,130 697,049
------------
5,604,942
------------
MALAYSIA -- 7.9%
Diversified Resources Berhad............... 210,000 686,660
Malayan Banking Berhad..................... 296,500 2,819,278
Malaysian Resources Corp. Berhad........... 414,000 1,312,177
New Straits Times Press Berhad............. 244,000 1,370,512
Renong Berhad Holding Company.............. 515,000 752,096
Time Engineering........................... 391,000 831,414
Time Engineering New Class A............... 195,500 415,707
United Engineers Malaysia Ltd.............. 128,000 908,967
------------
9,096,811
------------
MEXICO -- 9.9%
Apasco S.A. de C.V......................... 170,240 1,145,792
Cementos Mexicanos S.A. de C.V. Class B.... 395,000 1,636,820
Corporacion GEO S.A. de C.V. 144A ADR Class
B**/****................................. 38,100 767,334
Corporacion GEO S.A. de C.V. Class B**..... 140,780 709,706
Corporacion Industrial SanLuis S.A. de C.V.
CPO...................................... 414,574 2,459,268
Grupo Elektra S.A. de C.V. CPO............. 228,000 1,618,792
<CAPTION>
NUMBER
OF SHARES VALUE
----------- ------------
<S> <C> <C>
MEXICO -- (CONTINUED)
Grupo Financiero Banamex Accival S.A. de
C.V. Class B............................. 508,900 $ 1,079,922
Grupo Modelo S.A. de C.V. Class C.......... 295,000 1,362,587
Kimberly Clark de Mexico S.A. de C.V. Class
A........................................ 30,770 565,250
------------
11,345,471
------------
PERU -- 1.7%
Backus y Johnson........................... 476,231 476,231
Banco Wiese ADR............................ 54,900 384,300
Credicorp Ltd. ADR......................... 27,800 542,100
Southern Peru Copper Corp. ADR............. 32,800 500,200
------------
1,902,831
------------
PHILIPPINES -- 1.8%
Ayala Corp. Class B........................ 908,400 1,059,105
Philippine National Bank................... 59,000 986,716
------------
2,045,821
------------
PORTUGAL -- 3.0%
Banco Comercial Portugues PFD Series A..... 22,000 1,094,500
Portugal Telecom S.A. ADR**................ 17,300 460,613
Portugal Telecom S.A. Register**........... 27,000 722,432
Sonae Industria e Investimentos S.A........ 42,050 1,211,328
------------
3,488,873
------------
PUERTO RICO -- 0.7%
Cellular Communications of Puerto Rico,
Inc. ADR**............................... 30,700 821,225
------------
RUSSIA -- 0.7%
PLD Telekom, Inc.**........................ 101,900 776,988
------------
SINGAPORE -- 1.7%
Overseas-Chinese Banking Corp. Ltd.***..... 55,000 660,860
Straits Steamship Land Ltd................. 215,000 736,793
United Overseas Bank Ltd.***............... 61,280 588,183
------------
1,985,836
------------
SOUTH AFRICA -- 7.8%
Amalgamated Banks of South Africa Ltd...... 114,959 530,462
</TABLE>
See Accompanying Notes to Financial Statements.
12
<PAGE>
BEA EMERGING MARKETS EQUITY FUND (CONCLUDED)
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
----------- ------------
<S> <C> <C>
SOUTH AFRICA -- (CONTINUED)
Anglo American Industrial Corp. Ltd........ 49,916 $ 1,847,092
Barlow Ltd................................. 65,100 599,338
Gencor Ltd................................. 285,430 1,005,304
Murray and Roberts Holdings................ 283,608 979,921
Nasionale Pers Beperk...................... 55,987 586,578
Nedcor Ltd. Warrants**..................... 7,300 12,775
Pepkor Ltd................................. 381,000 1,528,756
SA Iron & Steel Industrial Corp. Ltd....... 1,848,647 1,108,529
Samancor Ltd............................... 58,500 746,573
------------
8,945,328
------------
SOUTH KOREA -- 4.5%
Korea Asia Fund Ltd. IDR**................. 22,500 500,625
Korea Electric Power ADR New**............. 58,000 1,232,500
Korea Fund, Inc............................ 176,350 3,372,694
------------
5,105,819
------------
THAILAND*** -- 7.4%
Advanced Information Services Public
Company Ltd.............................. 53,700 710,892
Bangkok Bank Ltd........................... 152,000 1,927,864
Krung Thai Bank Public Company Ltd......... 349,980 1,512,002
Phatra Thanakit Public Company Ltd......... 300,700 1,787,753
PTT Exploration & Production Public Company
Ltd...................................... 50,600 693,920
Siam Cement Company Ltd.................... 19,800 762,806
Thai Farmers Bank Public Company Ltd....... 100,000 1,062,227
Thai Farmers Bank Public Company Ltd.
Warrants Expire 09/15/2002............... 12,500 33,690
------------
8,491,154
------------
TOTAL COMMON AND
CONVERTIBLE STOCKS,
WARRANTS AND RIGHTS
(Cost $101,425,342).................... 109,595,892
------------
<CAPTION>
PAR
(000)
-----------
<S> <C> <C>
FOREIGN BONDS**** -- 0.8%
COLOMBIA -- 0.8%
Banco de Colombia Convertible 144A
5.200% 02/01/1999........................ $ 1,100 968,000
------------
TOTAL FOREIGN BONDS
(Cost $1,218,096)........................ $ 968,000
------------
<CAPTION>
PAR
(000) VALUE
----------- ------------
<S> <C> <C>
SHORT-TERM INVESTMENT -- 2.1%
BBH Grand Cayman U.S. Dollar Time Deposit
4.750% 09/03/1996........................ $ 2,388 $ 2,388,000
------------
TOTAL SHORT-TERM INVESTMENT
(Cost $2,388,000)....................... 2,388,000
------------
TOTAL INVESTMENTS AT VALUE -- 98.5% (Cost
$105,031,438*)........................................ $112,951,892
OTHER ASSETS IN EXCESS OF LIABILITIES -- 1.5%...........
1,739,317
------------
NET ASSETS (Applicable to 6,300,570 BEA Shares) --
100.0%................................................ $114,691,209
------------
------------
NET ASSET VALUE AND OFFERING PRICE PER
SHARE($114,691,209 DIVIDED BY 6,300,570)............. $18.20
------------
------------
REDEMPTION PRICE PER SHARE
($18.20 X .9850)...................................... $17.93
------------
------------
</TABLE>
* Cost for Federal income tax purposes at August 31, 1996 is $105,388,350.
The gross appreciation (depreciation) on a tax basis is as follows:
<TABLE>
<S> <C>
Gross Appreciation........................... $ 15,753,954
Gross Depreciation........................... (8,190,412)
-------------
Net Appreciation............................. $ 7,563,542
-------------
-------------
</TABLE>
** Non-income producing securities.
*** Denotes foreign shares.
**** Certain conditions for public sales may exist.
INVESTMENT ABBREVIATIONS
<TABLE>
<S> <C>
ADR........................... American Depository Receipts
ADS........................... American Depository Shares
GDR........................... Global Depository Receipts
AT AUGUST 31, 1996, NET ASSETS CONSISTED OF:
PER
AMOUNT SHARE
-------------- -------
Capital Paid-In.................... $129,649,735 $ 20.58
Accumulated Net Investment Loss.... (152,984) (.02)
Accumulated Net Realized Loss on
Security and Foreign Exchange
Transactions...................... (22,726,257) (3.61)
Net Unrealized Appreciation on
Investments and Other............. 7,920,715 1.25
- --------------------------------------------------------------
NET ASSETS $114,691,209 $ 18.20
- --------------------------------------------------------------
</TABLE>
See Accompanying Notes to Financial Statements.
13
<PAGE>
BEA U.S. CORE EQUITY FUND
PORTFOLIO MANAGER'S LETTER
October 10, 1996
Dear Shareholders:
We are pleased to report on the results of the BEA U.S. Core Equity Fund
(the "Fund") for the year ended August 31, 1996.
At August 31, 1996, the net asset value (NAV) of the Fund was $19.05,
compared to an NAV of $17.86 on August 31, 1995. As a result, the Fund's total
return (assuming reinvestment of dividends and distributions) for the year was
17.59%. By comparison, the Standard & Poor's 500 Index (the "S&P") posted a
return of 18.71% during the same period.
MARKET COMMENTARY
To appreciate the U.S. equity market of 1996, one must understand the market
of 1995. U.S. stocks (as represented by the S&P) rose over 35% in 1995. The
principal reason for this strong performance was the year's drop in long-term
interest rates to approximately 6% from roughly 8%, which drove the price
appreciation in bonds and was the impetus for the explosion in common stocks'
price/earnings ratios.
U.S. stocks have continued to reach new highs in 1996. Nevertheless, several
issues are of concern to us:
- EARNINGS. With P/E multiples already high and dividend yields
unattractively low, earnings are left as the strongest fundamental factor
driving stock prices. In the current market, moreover, earnings
expectations are much more important than usual in shaping investor
perceptions. This is reflected both in the selling-off of companies
reporting earnings below expectations and the big gains for companies
whose earnings exceed expectations.
- SPECULATION. The speculative bubble that developed through mid-year has
burst. Driven both by a general fear of an increase in interest rates and
a growing number of earnings shortfalls, investors sold off their holdings
in droves. Speculative issues were hit especially hard in June and July,
pointing the way toward the market's current affinity for large,
established companies with stable businesses.
- LIQUIDITY. Normally, the backup of interest rates that we have experienced
this year would have put sufficient pressure on P/E ratios to cause the
market to fall. This reasonably predictable relationship was negated
during the year's first half, however, as the flood of new cash into U.S.
equity mutual funds forced fund managers to buy stocks despite higher
rates.
The latter point is best illustrated by simple quantification. Money flows
into U.S. equity funds averaged about $10 billion per month during the
three-year period of 1992-94. Starting in 1996, this monthly injection nearly
tripled to about $30 billion, thereby cancelling out the effect of rising rates.
There was a greater flow into U.S. equity funds in the first half of 1996 than
in all of 1995.
We are now seeing a reversal of this trend: fund inflows are slowing or even
turning into outflows, forcing managers to sell stocks in order to raise cash
for fund redemptions. This deceleration should become more pronounced during the
year's second half.
Combined with interest rates currently about a full percentage point higher
than at the beginning of January, the outcome of the deceleration should be a
somewhat lackluster U.S. equity market.
OUTLOOK
By adopting a somewhat more conservative investment stance, the Fund is
well-positioned to weather the ups and downs of a correcting-to-stable
environment for equities. Our emphasis continues to be on companies undergoing
restructurings as well as those benefiting from a global expansion of their
markets and services, with an additional preference for companies with excellent
earnings prospects.
14
<PAGE>
BEA U.S. CORE EQUITY FUND
PORTFOLIO MANAGER'S LETTER--(CONCLUDED)
Looking further ahead, we remain optimistic. Earnings should pick up again,
as the economy seems unlikely to slow down. The "Boomernomics" demographic is
also very positive for stocks, furthermore, and should be viable well into the
next century.
As developments occur that we believe would be of interest to you, we will
be sure to keep you informed. Meanwhile, if you have any questions about the
Fund or the capital markets in general, please feel free to call upon us at any
time.
Sincerely,
BEA Domestic Equity Management Team
William W. Priest, Jr., Chief Executive Officer & Executive Director
John B. Hurford, Executive Director
William P. Sterling, Managing Director
Todd M. Rice, Senior Vice President
James A. Abate, Vice President
Christopher C. Thompson, Vice President
-----------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE BEA U.S. CORE EQUITY
FUND AND THE S&P 500
INDEX FROM INCEPTION 9/1/94 AND AT EACH QUARTER END.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
BEA U.S. CORE
EQUITY FUND S&P 500 INDEX
<S> <C> <C>
09/01/94 $10,000 $10,000
11/30/94 $9,553 $9,615
02/28/95 $10,251 $10,398
05/31/95 $11,103 $11,455
08/31/95 $11,975 $12,149
11/30/95 $12,746 $13,168
02/29/96 $13,940 $14,007
5/31/1996 $14,383 $14,720
8/31/1996 $14,080 $14,421
</TABLE>
Note: Past performance is not predictive of future performance.
<TABLE>
<S> <C>
AVERAGE ANNUAL
TOTAL RETURN
One Year 17.59%
From Inception 18.63%
</TABLE>
15
<PAGE>
BEA U.S. CORE EQUITY FUND
OF THE RBB FUND, INC.
STATEMENT OF NET ASSETS
AUGUST 31, 1996
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
------------- -------------
<S> <C> <C>
COMMON AND CONVERTIBLE STOCKS -- 93.7%
AEROSPACE / DEFENSE -- 6.2%
Coltec Industries, Inc.**.................. 80,700 $ 1,210,500
Lockheed Martin Corp....................... 18,000 1,514,250
Raytheon Company........................... 15,000 772,500
Whittaker Corp.**.......................... 10,000 140,000
-------------
3,637,250
-------------
BROADCASTING -- 0.5%
Providence Journal Company**............... 16,000 310,000
-------------
310,000
-------------
BUSINESS SERVICES -- 5.0%
Automatic Data
Processing, Inc.......................... 35,000 1,456,875
DST Systems, Inc.**........................ 28,000 861,000
Equifax, Inc............................... 25,200 642,600
-------------
2,960,475
-------------
CHEMICALS -- 2.1%
Great Lakes Chemical Corp.................. 12,000 690,000
The Scotts Company Class A**............... 27,000 506,250
-------------
1,196,250
-------------
CONGLOMERATES -- 5.4%
Allied-Signal, Inc......................... 9,500 586,625
General Electric Co........................ 15,000 1,246,875
Philip Morris Companies, Inc............... 7,550 677,612
Whitman Corp............................... 30,000 671,250
-------------
3,182,362
-------------
CONSTRUCTION & BUILDING MATERIALS -- 2.9%
Fluor Corp................................. 10,000 640,000
Masco Corp................................. 20,000 582,500
USG Corporation**.......................... 16,000 456,000
-------------
1,678,500
-------------
CONSUMER PRODUCTS -- 4.1%
Clorox Co.................................. 7,000 655,375
Colgate-Palmolive Co....................... 7,200 585,000
Gillette Co................................ 10,000 637,500
Newell Co.................................. 17,000 529,125
-------------
2,407,000
-------------
ELECTRONICS -- 5.7%
Berg Electronics Corp.**................... 30,000 727,500
Electronic Data Systems Corp............... 11,000 599,500
Emerson Electric Co........................ 22,000 1,842,500
Intel Corp................................. 2,500 199,531
-------------
3,369,031
-------------
<CAPTION>
NUMBER
OF SHARES VALUE
------------- -------------
<S> <C> <C>
ENERGY -- 6.2%
Exxon Corporation.......................... 10,000 $ 813,750
McDermott International, Inc............... 60,000 1,245,000
Mobil Corporation.......................... 6,000 676,500
Schlumberger, Ltd.......................... 11,000 928,125
-------------
3,663,375
-------------
ENTERTAINMENT -- 3.3%
GTech Holdings Corporation**............... 70,000 1,942,500
-------------
FINANCIAL SERVICES -- 13.7%
ACE Limited Ordinary Shares................ 30,000 1,398,750
Allstate Corp.............................. 16,000 714,000
Associates First Capital Corp.............. 20,000 790,000
Citicorp................................... 6,900 574,425
EXEL Limited............................... 24,000 804,000
Federal National Mortgage
Association.............................. 15,000 465,000
H & R Block, Inc........................... 21,500 537,500
J.P. Morgan & Co.,
Incorporated............................. 9,000 788,625
NationsBank Corporation.................... 10,000 851,250
Southern National Corporation.............. 18,000 562,500
State Street Boston Corporation............ 11,400 617,025
-------------
8,103,075
-------------
FOOD & BEVERAGE -- 3.8%
Heinz H.J. Company......................... 55,000 1,732,500
Nabisco Holdings Corporation Class A....... 16,000 538,000
-------------
2,270,500
-------------
HEALTH CARE -- 5.9%
Amgen, Inc.**.............................. 10,200 594,150
Boston Scientific Corporation**............ 12,200 559,675
Humana, Inc.**............................. 46,200 866,250
McKesson Corporation....................... 35,000 1,491,875
-------------
3,511,950
-------------
INDUSTRIAL GOODS & MATERIALS -- 4.5%
Canadian Pacific Limited
Ordinary Shares.......................... 38,000 855,000
Dover Corporation.......................... 13,500 592,313
Illinois Tool Works Inc.................... 9,000 622,125
Tyco International Ltd..................... 14,200 599,950
-------------
2,669,388
-------------
MANUFACTURING -- 1.2%
Eastman Kodak Company...................... 10,000 725,000
-------------
PACKAGING -- 2.0%
Owens-Illinois, Inc.**..................... 75,000 1,153,125
-------------
</TABLE>
See Accompanying Notes to Financial Statements.
16
<PAGE>
BEA U.S. CORE EQUITY FUND (CONCLUDED)
<TABLE>
<CAPTION>
NUMBER
OF SHARES VALUE
------------- -------------
<S> <C> <C>
PAPER & FOREST PRODUCTS -- 1.6%
Schweitzer-Mauduit
International, Inc....................... 30,000 $ 960,000
-------------
PHARMACEUTICALS -- 5.1%
Barr Laboratories, Inc.**.................. 27,000 695,250
Pharmacia & Upjohn, Inc.**................. 20,000 840,000
Smithkline Beecham Plc ADR................. 25,000 1,456,250
-------------
2,991,500
-------------
PUBLISHING & INFORMATION SERVICES -- 3.2%
Hollinger International, Inc............... 85,000 924,375
Tribune Company............................ 13,000 934,375
-------------
1,858,750
-------------
REAL ESTATE -- 2.2%
Starwood Lodging Trust..................... 17,000 646,000
Trinet Corporate Realty Trust Inc.......... 20,000 630,000
-------------
1,276,000
-------------
RESTAURANTS HOTELS & GAMING -- 3.4%
Marriott International, Inc................ 20,000 1,097,500
McDonald's Corporation..................... 20,000 927,500
-------------
2,025,000
-------------
TELECOMMUNICATIONS -- 2.2%
AT&T Corp.................................. 12,600 661,500
Frontier Corp.............................. 22,000 649,000
-------------
1,310,500
-------------
TRANSPORTATION -- 3.5%
AMR Corporation**.......................... 9,000 738,000
Canadian National Railway
Company.................................. 35,000 669,375
Continental Airlines, Inc.
Class B**................................ 30,000 678,750
-------------
2,086,125
-------------
TOTAL COMMON AND
CONVERTIBLE STOCKS
(Cost $51,562,892)....................... 55,287,656
-------------
</TABLE>
<TABLE>
<CAPTION>
PAR
(000)
-------------
<S> <C> <C>
CORPORATE BONDS -- 1.5%
TRANSPORTATION -- 1.5%
Santa Fe Pacific Pipeline Partners L.P.
Conv. Debentures
(Baa3, BB)
11.000% 08/15/2010....................... $ 735 896,700
-------------
TOTAL CORPORATE BONDS
(Cost $952,300).......................... 896,700
-------------
<CAPTION>
PAR
(000) VALUE
------------- -------------
<S> <C> <C>
SHORT TERM INVESTMENT -- 4.7%
BBH Grand Cayman U.S. Dollar Time Deposit
4.750% 09/03/1996........................ 2,775 $ 2,775,000
-------------
TOTAL SHORT TERM
INVESTMENT
(Cost $2,775,000)....................... $ 2,775,000
-------------
TOTAL INVESTMENTS AT VALUE -- 99.9%
(Cost $55,290,192*)..................................... $58,959,356
OTHER ASSETS IN EXCESS OF
LIABILITIES -- 0.1%..................................... 56,078
-------------
NET ASSETS (Applicable to 3,098,175 BEA Shares) --
100.0%.................................................. $59,015,434
-------------
-------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER
SHARE
($59,015,434 DIVIDED BY 3,098,175)..................... $19.05
-------------
-------------
</TABLE>
* Cost for Federal income tax purposes at August 31, 1996 is $55,282,034. The
gross appreciation (depreciation) on a tax basis is as follows:
<TABLE>
<S> <C>
Gross Appreciation........................... $ 4,785,484
Gross Depreciation........................... (1,108,162)
-------------
Net Appreciation............................. $ 3,677,322
-------------
-------------
</TABLE>
** Non-income producing securities.
INVESTMENT ABBREVIATIONS
<TABLE>
<S> <C>
ADR........................... American Depository Receipts
AT AUGUST 31, 1996, NET ASSETS CONSISTED OF:
AMOUNT PER SHARE
----------- ---------
Capital Paid-In................ $50,559,008 $ 16.32
Accumulated Net Investment
Income........................ 410,275 .13
Accumulated Net Realized Gain
on Security Transactions...... 4,376,987 1.41
Net Unrealized Appreciation on
Investments and Other......... 3,669,164 1.19
- -------------------------------------------------------
NET ASSETS $59,015,434 $ 19.05
- -------------------------------------------------------
</TABLE>
See Accompanying Notes to Financial Statements.
17
<PAGE>
BEA U.S. CORE FIXED INCOME FUND
PORTFOLIO MANAGER'S LETTER
October 10, 1996
Dear Shareholders:
We are pleased to report on the results of the BEA U.S. Core Fixed Income
Fund (the "Fund") for the year ended August 31, 1996.
At August 31, 1996, the net asset value (NAV) of the Fund was $15.06,
compared to an NAV of $15.42 on August 31, 1995. As a result, the Fund's total
return (assuming reinvestment of dividends and distributions) for the year was
5.23%. By comparison, the Lehman Brothers Aggregate Bond Index (the "Index")
posted a return of 4.09% during the same period.
MARKET COMMENTARY
U.S. bond markets have been most affected thus far in 1996 by investor
anxiety about interest rates. The surprising strength of the U.S. economy has
generated widespread concern about inflation, prompting investors to
increasingly trade most debt instruments based on the belief that the Federal
Reserve will raise rates. Trading has been quite volatile throughout the year
both in anticipation of Fed meetings at which policy decisions are made and in
response to a constant flow of economic data.
Despite the markets' expectations, the Fed has not yet raised rates (in
fact, its only move of any kind was to lower them by 25 basis points in
January). The yield on the bellwether 30-year Treasury bond, furthermore, has
frequently fluctuated in sharp movements, yet has hardly changed since January.
Our own perspective is fairly positive. Aside from signs of near-full
employment and accelerating wage rates, there are no substantive indicators of
economic troubles ahead. On the contrary, important factors are favorable: the
economy is growing at a moderate pace and inflation is under control. With these
factors in mind, we continue to be overweighted in spread product.
At the same time, however, some near-term caution is appropriate. The
existence of near-full employment means that the Fed must walk a fine line. In
other words, inaction on rates is agreeable now, but it may set the stage for
more drastic measures ahead. If the Fed does not even modestly raise rates this
year, it may be compelled to do so to a much greater extent in 1997. Tightening
of such magnitude would likely produce considerable concern among participants
in the capital markets.
CURRENT STRATEGY
The overall environment that we have described persuades us to maintain our
moderately defensive investment stance. Here is a brief summary of the principal
elements in our approach:
MORE YIELD, LESS PRICE RISK. Spread product has generated strong returns
over the last few years and investors lack conviction concerning the direction
of interest rates. The combination of these factors suggests to us that the
number of opportunities to generate incremental returns related to price
appreciation is waning. Alternatively, we are focused on generating incremental
yield, which should lower volatility and preserve capital.
SECTOR ROTATION. Within our corporate bond positions, we have been rotating
industry sectors to take advantage of favorable investment conditions. This
increases diversification, leaves the Fund somewhat less vulnerable to general
market risk factors and enhances potential total return. Sectors we currently
like include airlines, utilities, financial services, cable/ media and energy.
SMALLER CORPORATE ALLOCATION. The downward path of interest rates in recent
years has compelled many debt investors to seek higher yields. As a result,
demand for spread product is extremely high and most yield spreads have greatly
narrowed. We are reducing the Fund's corporate allocation because the lower
yield spreads between corporates and other instruments have rendered corporates
less attractive. Nevertheless, we continue to see security-specific
opportunities related to balance-sheet improvement.
18
<PAGE>
BEA U.S. CORE FIXED INCOME FUND
PORTFOLIO MANAGER'S LETTER--(CONCLUDED)
LARGER MBS AND HIGH-YIELD ALLOCATIONS. With yield spreads on
investment-grade corporates declining, we consider mortgage-backed securities
and domestic high-yield debt particularly attractive. Each possess a favorable
risk/reward profile and serves to raise the Fund's diversification and income
stream. Accordingly, we are increasing our positions in both categories when
appropriate.
GREATER LIQUIDITY. It is difficult to predict when the current period of
ample investor liquidity will end. Our inclination is to opportunistically sell
into strength in order to buy back securities at cheaper prices should liquidity
conditions change.
As developments occur in the fixed income markets or at BEA that we believe
would be of interest to you, we will be sure to keep you informed. Meanwhile, if
you have questions, please feel free to call upon us at any time.
Sincerely,
BEA Fixed Income Management Team
Robert J. Moore, Executive Director
William P. Sterling, Managing Director
Gregg M. Diliberto, Managing Director
Mark K. Silverstein, Senior Vice President
Robert W. Justich, Senior Vice President
-----------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE BEA U.S. CORE FIXED
INCOME FUND AND THE LEHMAN
BROTHERS AGGREGATE BOND INDEX FROM INCEPTION 4/1/94 AND AT EACH QUARTER END.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
BEA U.S. CORE FIXED LEHMAN BROTHERS
INCOME FUND AGGREGATE BOND INDEX
<S> <C> <C>
04/01/94 $ 10,000 $ 10,000
05/31/94 $ 9,913 $ 9,999
08/31/94 $ 10,017 $ 10,188
11/30/94 $ 9,812 $ 10,007
02/28/95 $ 10,204 $ 10,520
05/31/95 $ 10,864 $ 11,148
08/31/95 $ 11,078 $ 11,342
11/30/95 $ 11,475 $ 11,775
02/29/96 $ 11,590 $ 11,809
5/31/1996 $ 11,464 $ 11,638
8/31/1996 $ 11,658 $ 11,806
</TABLE>
Note: Past performance is not predictive of future performance.
<TABLE>
<S> <C>
AVERAGE ANNUAL
TOTAL RETURN
One Year 5.23%
From Inception 6.54%
</TABLE>
19
<PAGE>
BEA U.S. CORE FIXED INCOME FUND
OF THE RBB FUND, INC.
STATEMENT OF NET ASSETS
AUGUST 31, 1996
<TABLE>
<CAPTION>
PAR
(000) VALUE
---------- -------------
<S> <C> <C>
CORPORATE BONDS -- 23.1%
BANKING -- 3.0%
Citicorp Medium Term Notes (A2, A)
6.750% 10/15/2007........................ $ 555 $ 517,538
Credit Lyonnais Perpetual Sub Variable Rate
Notes, Rule 144A
(Baa2, NR)****/+/+++
6.625%................................... 300 290,055
First Nationwide (Parent) Holdings, Inc.
Sr. Notes (B2, B)
12.500% 04/15/2003....................... 435 451,313
Hongkong & Shanghai Banking Corp Ltd.
Perpetual Sub. FRN Series 1
(Baa1, NR)+/+++
6.000%................................... 580 492,536
Hongkong & Shanghai Banking Corp Ltd.
Perpetual Sub. FRN Series 2
(Baa1, NR)+/+++
5.813%................................... 60 50,619
Midland Bank Plc Perpetual Sub. FRN Series
2 (A1, A-)+/+++
5.750%................................... 390 334,523
National Westminster Bank PLC Perpetual
Sub. FRN Series B (Aa3, A+)+/+++
5.875%................................... 480 418,992
Santander Financial Issuances Perpetual
Sub. FRN
(A2, NR) +/+++
6.525%................................... 500 493,800
Swiss Bank Corp. New York Subordinated
Notes (Aa2, AA)
6.750% 07/15/2005........................ 580 554,625
-------------
3,604,001
-------------
CABLE -- 1.9%
Adelphia Communications Corporation Senior
Notes, Series B PIK Bonds (B3, B)
9.500% 02/15/2004........................ 15 12,209
Falcon Holding Group L.P. Senior
Subordinated Notes PIK Bonds (NR, NR)
11.000% 09/15/2003....................... 877 818,180
Kabelmedia Holding Gmbtt Yankee Senior
Discount Notes (B3, B-)++
13.625% 08/01/2006....................... 900 465,750
Summit Communications Group, Inc. Senior
Subordinated Notes (Ba3, BB+)
10.500% 04/15/2005....................... 865 939,606
-------------
2,235,745
-------------
<CAPTION>
PAR
(000) VALUE
---------- -------------
<S> <C> <C>
CHEMICALS -- 0.9%
Reliance Industries Ltd. 144A Yankee Notes
(NR, NR)
10.500% 08/06/2046....................... $ 780 $ 770,250
UCC Investors Holdings Inc. Subordinated
Discount Notes (B3, B-)++
12.000% 05/01/2005....................... 290 249,763
-------------
1,020,013
-------------
CONSTRUCTION & BUILDING MATERIALS -- 0.3%
J.M. Peters Company, Inc., Senior Notes
(B3, NR)
12.750% 05/01/2002....................... 440 404,800
-------------
ENERGY -- 1.3%
Gulf Canada Resources Ltd. Yankee Senior
Notes (Ba2, BB+)
8.350% 08/01/2006........................ 800 777,000
Gulf Canada Resources Yankee Subordinated
Debentures (Ba3, BB-)
9.625% 07/01/2005........................ 240 246,600
PDV America, Inc. Guaranteed Senior Notes
(Baa3, B)
7.875% 08/01/2003........................ 505 481,644
-------------
1,505,244
-------------
ENTERTAINMENT -- 2.1%
Six Flags Entertainment Notes (Baa3,
BBB-)++
5.293% 12/15/1999........................ 15 11,831
Time Warner, Inc. Debentures (Ba1, BBB-)
6.850% 01/15/2026........................ 2,570 2,451,138
-------------
2,462,969
-------------
ENVIRONMENTAL SERVICES -- 0.3%
EnviroSource, Inc. Senior Notes (B3, B-)
9.750% 06/15/2003........................ 390 361,725
-------------
FINANCIAL SERVICES -- 5.6%
AT&T Capital Corporation Medium Term Notes
Series 3 (Baa3, A)
6.030% 10/27/1997........................ 1,500 1,491,375
Fifth Mexican Acceptance Corp. Rule 144A
Notes Tranche A (NR, NR)****/++++
8.000% 12/15/1998........................ 760 235,600
Ford Holdings, Inc. Guaranteed Notes (A1,
A+)
9.250% 03/01/2000........................ 10 10,638
General Motors Acceptance Corp. Medium Term
Notes (A3, A-)
7.250% 07/20/1998........................ 125 126,250
</TABLE>
See Accompanying Notes to Financial Statements.
20
<PAGE>
BEA U.S. CORE FIXED INCOME FUND (CONTINUED)
<TABLE>
<CAPTION>
PAR
(000) VALUE
---------- -------------
<S> <C> <C>
FINANCIAL SERVICES -- (CONTINUED)
General Motors Acceptance Corp. Medium Term
Notes (A3, A-)
7.375% 04/15/1999........................ $ 1,120 $ 1,134,000
General Motors Acceptance Corp. Medium Term
Notes (A3, A-)
6.625% 04/24/2000........................ 1,290 1,273,875
General Motors Acceptance Corp. Medium Term
Notes (A3, A-)
6.900% 06/06/2000........................ 140 139,300
General Motors Acceptance Corp. Medium Term
Notes (A3, A-)
6.900% 07/05/2000........................ 165 163,969
Gentra Inc. Subordinated Debentures (NR,
NR)
7.500% 12/31/2001........................ 800 667,982
L'Auxiliare du Credit Foncier de France
Guaranteed FRN (Ba1, NR)
5.332% 09/25/2002........................ 420 403,116
L'Auxiliare du Credit Foncier de France Sr.
Unsubordinated Notes (Baa1, A)
8.000% 01/14/2002........................ 930 960,806
-------------
6,606,911
-------------
FOOD & BEVERAGE -- 0.3%
Fresh del Monte Produce Senior Notes Series
B (Caa, CCC+)
10.000% 05/01/2003....................... 400 375,000
-------------
INDUSTRIAL GOODS & MATERIALS -- 0.9%
Specialty Equipment Companies Inc. Senior
Subordinated Note (B3, B-)
11.375% 12/01/2003....................... 300 317,250
Tenneco, Inc. Debentures (Baa2, BBB-)
7.250% 12/15/2025........................ 840 768,600
-------------
1,085,850
-------------
PACKAGING -- 0.4%
Crown Packaging 144A Units (NR, NR)++
14.000% 08/01/2006....................... 350 136,500
Gaylord Container Corp. Senior Subordinated
Debentures (Caa, B-)
12.750% 05/15/2005....................... 300 321,750
Stone Container Corp. First Mortgage Notes
(B1, BB-)
10.750% 10/01/2002....................... 20 20,650
-------------
478,900
-------------
PAPER & FOREST PRODUCTS -- 0.7%
P.T. Indah Kiat Pulp & Paper Corp.
Guaranteed Notes, Series B (Ba2, BB)
11.875% 06/15/2002....................... 190 198,550
<CAPTION>
PAR
(000) VALUE
---------- -------------
<S> <C> <C>
PAPER & FOREST PRODUCTS -- (CONTINUED)
P.T. Indah Kiat Pulp & Paper Corp. Sr.
Secured Debentures (Ba2, BB)
8.875% 11/01/2000........................ $ 610 $ 593,225
-------------
791,775
-------------
REAL ESTATE -- 0.6%
Chelsea GCA Realty Inc. Guaranteed Notes
(Ba2, BB+)
7.750% 01/26/2001........................ 750 741,563
-------------
RETAIL -- 0.5%
Hills Stores, Inc. Senior Notes Series B
(B1, NR)
12.500% 07/01/2003....................... 320 297,600
Pueblo Xtra International, Inc. Senior
Notes (B2, B-)
9.500% 08/01/2003........................ 275 247,500
-------------
545,100
-------------
STEEL -- 0.3%
Armco, Inc. Senior Notes (B2, B)
9.375% 11/01/2000........................ 330 326,287
-------------
326,287
-------------
TELECOMMUNICATIONS -- 2.0%
BellSouth Telecommunications, Inc.
Debentures (Aaa, AAA)
5.850% 11/15/2045........................ 1,495 1,444,544
Nippon Telegraph & Telephone Corp. Yankee
Notes (Aaa, AAA)
9.500% 07/27/1998........................ 70 73,587
Rogers Cantel Mobile Communications Inc.
Yankee Senior Secured Debentures (Ba3,
BB+)
9.375% 06/01/2008........................ 710 696,687
Videotron Holdings Plc Yankee Senior
Discount Notes (B3, B+)++
11.000% 08/15/2005....................... 325 214,094
-------------
2,428,912
-------------
TRANSPORTATION -- 0.7%
Delta Air Lines, Inc. Debentures (Ba1, BB)
10.375% 02/01/2011....................... 585 691,031
NWA Trust Mezzanine Aircraft Notes Series D
(Ba1, BB+)
13.875% 06/21/2008....................... 90 105,300
-------------
796,331
-------------
UTILITIES -- 1.3%
Long Island Lighting Co. Debentures (Ba3,
BB+)
9.000% 11/01/2022........................ 990 899,662
Niagara Mohawk Power Corp. First Mortgage
Bonds (Ba3, BB-)
5.875% 09/01/2002........................ 420 352,275
</TABLE>
See Accompanying Notes to Financial Statements.
21
<PAGE>
BEA U.S. CORE FIXED INCOME FUND (CONTINUED)
<TABLE>
<CAPTION>
PAR
(000) VALUE
---------- -------------
<S> <C> <C>
UTILITIES -- (CONTINUED)
Niagara Mohawk Power Corp. First Mortgage
Bonds (Ba3, BB-)
7.375% 08/01/2003........................ $ 305 $ 273,356
Toledo Edison Co. Debentures (B1, B+)
8.700% 09/01/2002........................ 45 41,175
-------------
1,566,468
-------------
TOTAL CORPORATE BONDS
(Cost $27,665,451)..................... 27,337,594
-------------
FOREIGN GOVERNMENT BONDS -- 2.2%
Federal Republic of Brazil Interest Due
Bonds FRN
(B1, NR)+
6.688% 01/01/2001........................ 683 655,200
Republic of Argentina Step-Up Par Bonds
Non-U.S. Tranche Series L-G-P (B1, BB-)
5.250% 03/31/2023........................ 500 268,125
Republic of Colombia Yankee Notes (Baa3,
BBB-)
7.250% 02/15/2003........................ 410 381,813
Republic of Turkey Trust
Series T-2 (Aaa, AAA)
9.400% 11/15/1996........................ 1 528
The Polish People's Republic Discount Bonds
FRN
(Baa3, BBB-)+
6.438% 10/27/2024........................ 610 587,506
United Mexican States Par Bonds Series A
(Ba2, BB)(a)
6.250% 12/31/2019........................ 1,000 662,500
-------------
TOTAL FOREIGN GOVERNMENT BONDS (Cost
$2,386,785)............................ 2,555,672
-------------
AGENCY OBLIGATIONS -- 32.7%
FEDERAL HOME LOAN MORTGAGE CORP -- 9.6%
FHLMC
6.000% 06/01/1999........................ 20 19,522
6.000% 11/01/1999........................ 59 56,948
7.000% 08/01/2000........................ 101 99,898
6.000% 01/01/2001........................ 272 264,233
6.000% 02/01/2001........................ 214 207,922
7.000% 04/01/2008........................ 29 28,075
7.000% 08/01/2010........................ 267 262,750
7.000% 09/01/2010........................ 2,907 2,850,162
7.000% 11/01/2010........................ 208 204,324
7.000% 12/01/2010........................ 256 250,740
7.000% 01/01/2011........................ 351 344,491
7.000% 04/01/2011........................ 39 38,393
7.000% 05/01/2011........................ 743 728,772
7.000% 06/01/2011........................ 380 372,652
8.000% 04/01/2025........................ 967 968,109
8.000% 06/01/2025........................ 109 109,398
8.000% 08/01/2025........................ 122 121,979
8.000% 12/01/2025........................ 289 288,652
8.000% 01/01/2026........................ 369 369,231
<CAPTION>
PAR
(000) VALUE
---------- -------------
<S> <C> <C>
FEDERAL HOME LOAN MORTGAGE CORP -- (CONTINUED)
6.000% 03/01/2026........................ $ 229 $ 205,894
8.000% 05/01/2026........................ 378 378,717
8.000% 06/01/2026........................ 2,459 2,461,559
FHLMC Series 1014 Class E
7.950% 02/15/2020........................ 768 780,958
-------------
11,413,379
-------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- 15.8%
FNMA
7.500% 01/01/2000........................ 54 54,274
7.500% 04/01/2000........................ 563 565,206
7.500% 07/01/2000........................ 68 68,247
5.500% 04/01/2001........................ 24 22,503
7.500% 06/01/2001........................ 101 101,692
7.500% 09/01/2001........................ 731 734,781
6.000% 10/01/2001........................ 1,727 1,652,415
7.500% 12/01/2001........................ 47 47,183
6.000% 10/01/2002........................ 177 169,246
7.500% 06/01/2003........................ 413 414,973
7.500% 07/01/2003........................ 733 735,970
10.00% 02/01/2005........................ 58 61,268
10.00% 01/01/2010........................ 9 9,211
6.000% 11/01/2010........................ 237 222,503
6.000% 01/01/2011........................ 1,356 1,271,683
6.000% 02/01/2025........................ 211 189,465
7.000% 07/01/2025........................ 26 24,616
7.000% 09/01/2025........................ 729 694,243
7.000% 10/01/2025........................ 728 692,838
6.000% 01/01/2026........................ 102 91,170
6.000% 02/01/2026........................ 1,172 1,052,136
7.000% 04/01/2026........................ 7,087 6,748,205
7.000% 10/01/2026........................ 646 615,152
FNMA (TBA)**
7.000% 01/01/2003........................ 2,550 2,522,906
FNMA 1991-165 Class M
8.250% 12/25/2021........................ 13 13,307
-------------
18,775,193
-------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -- 5.0%
GNMA
8.250% 08/15/2004........................ 1 1,074
9.000% 11/15/2004........................ 2 1,838
9.000% 12/15/2004........................ 1 1,339
8.250% 04/15/2006........................ 2 2,265
7.000% 09/01/2008........................ 342 336,632
7.000% 11/15/2008........................ 296 291,533
7.000% 02/01/2009........................ 150 147,455
7.000% 03/15/2009........................ 368 361,754
7.000% 04/15/2009........................ 349 343,046
7.000% 05/01/2009........................ 273 268,765
7.000% 01/15/2011........................ 787 774,410
7.000% 02/15/2011........................ 529 520,033
13.50% 07/15/2014........................ 1 924
9.000% 06/15/2016........................ 105 109,845
8.000% 04/15/2017........................ 191 190,830
9.000% 10/15/2017........................ 483 504,247
9.000% 08/15/2021........................ 829 865,106
GNMA (TBA)**
8.000% 01/15/2025........................ 1,130 1,129,294
-------------
5,850,390
-------------
</TABLE>
See Accompanying Notes to Financial Statements.
22
<PAGE>
BEA U.S. CORE FIXED INCOME FUND (CONTINUED)
<TABLE>
<CAPTION>
PAR
(000) VALUE
---------- -------------
<S> <C> <C>
MISCELLANEOUS -- 2.3%
National Archive Facility Trust COP (Aaa,
AAA)
8.500% 09/01/2019........................ $ 436 $ 468,688
Tennessee Valley Authority Debentures (NR,
AAA)
5.980% 04/01/2036........................ 2 2,289,262
-------------
2,757,950
-------------
TOTAL AGENCY OBLIGATIONS (Cost
$39,434,857)............................. 38,796,912
-------------
ASSET BACKED SECURITIES -- 3.0%
Fleetwood Credit Corporation Grantor Trust
Retail Installment Sale Contracts Series
1993-B, Class A (Aaa, AAA)
4.950% 08/15/2008........................ 8 7,514
Fleetwood Credit Corporation Grantor Trust
Retail Installment Sale Contracts Series
1994-A, Class A (Aaa, AAA)
4.700% 07/15/2009........................ 8 8,075
Fleetwood Credit Corporation Grantor Trust
Retail Installment Sale Contracts Series
1994-B, Class A (Aaa, AAA)
6.750% 03/15/2010........................ 89 88,329
Goldome Credit Corporation Home Equity
Trust Series 1990-1, Class A (Aa2, AA)
10.000% 07/15/2005....................... 22 22,313
Green Tree Financial Corporation
Manufactured Housing Contracts Series
1993-4, Class A-2 (Aa2, NR)
5.850% 01/15/2019........................ 105 103,348
Green Tree Financial Corporation
Manufactured Housing Contracts Series
1995-5, Class A-3 (Aaa, AAA)
6.250% 10/15/2025........................ 420 407,001
Green Tree Financial Corporation
Manufactured Housing Contracts Series
1995-6, Class A-2 (Aaa, AAA)
6.400% 08/15/2025........................ 1,210 1,201,315
Green Tree Financial Corporation
Manufactured Housing Contracts Series
1995-6, Class A-3 (Aaa, AAA)
6.650% 11/15/2025........................ 130 127,770
<CAPTION>
PAR
(000) VALUE
---------- -------------
<S> <C> <C>
ASSET BACKED SECURITIES -- (CONTINUED)
Green Tree Financial Corporation
Manufactured Housing Contracts Series
1995-7, Class A-2 (Aaa, AAA)
6.150% 11/15/2026........................ $ 165 $ 164,250
Green Tree Financial Corporation
Manufactured Housing Contracts Series
1995-8, Class A-2 (Aaa, AAA)
6.150% 12/15/2026........................ 135 133,636
New York City Tax Lien Collateralized
Bonds, Series 1996-1, Class C (NR, A)
7.110% 02/25/2005........................ 1,212 1,209,096
World Omni Automobile Lease Securitization
Trust, Retail Closed-End Lease Contracts
Series 1995-A, Class A
(Aaa, AAA)
6.050% 11/25/2001........................ 125 124,487
-------------
TOTAL ASSET BACKED SECURITIES (Cost
$3,629,688)............................ 3,597,134
-------------
COLLATERIZED MORTGAGED BACKED SECURITIES -- 4.3%
Asset Securitization Corporation Series
1995-MD4, Class A1 (NR, AAA)
7.100% 08/13/2029........................ 119 114,470
CBM Funding Corporation Series 1996-1,
Class B (NR, A)
7.480% 02/01/2008........................ 1,000 983,750
Carousel Center Finance Inc. Series, 1
Class C Rule 144A (NR, BBB+)
7.527% 11/15/2007........................ 463 450,368
Collateralized Mortgage Obligation Trust,
REMIC Series 54, Class C (Aaa, AAA)
9.250% 11/01/2013........................ 3 2,643
Kidder Peabody Acceptance Corporation
Series 1993-C1, Class A-3 (NR, NR)
6.800% 09/01/2006........................ 535 512,367
Kidder Peabody Acceptance Corporation
Series 1994-C1, Class B (NR, AA)
6.850% 02/01/2006........................ 790 775,033
PaineWebber Mortgage Acceptance Corp. IV
Multifamily Mortgage Pass-Throughs Series
1995-M1, Class A 144A (NR, NR)****
6.700% 01/15/2007........................ 1,200 1,170,750
</TABLE>
See Accompanying Notes to Financial Statements.
23
<PAGE>
BEA U.S. CORE FIXED INCOME FUND (CONCLUDED)
<TABLE>
<CAPTION>
PAR
(000) VALUE
---------- -------------
<S> <C> <C>
COLLATERIZED MORTGAGED BACKED SECURITIES -- (CONTINUED)
PaineWebber Mortgage Acceptance Corp. IV
Multifamily Mortgage Pass-Throughs Series
1995-M1, Class D 144A (NR, NR)****
7.300% 12/15/2002........................ $ 420 $ 404,742
Structured Asset Securities Corporation
Series 1996-CFL, Class A1C (NR, AAA)
5.944% 02/25/2028........................ 670 640,137
U.S. Dept. of Veterans Affairs, Vendee
Mortgage Trust REMIC, Series 1995-2B,
Class 2C (NR, NR)
7.500% 10/15/2015........................ 10 9,921
-------------
TOTAL COLLATERIZED MORTGAGED BACKED
SECURITIES (Cost $5,256,450)........... 5,064,181
-------------
MUNICIPAL BONDS -- 0.0%
South Carolina State Public Service
Authority Revenue Bonds Series C (Aaa,
AAA)
5.125% 01/01/2021........................ 30 26,925
-------------
TOTAL MUNICIPAL BONDS (Cost $28,440)..... 26,925
-------------
U.S. TREASURY OBLIGATIONS--32.8%
U.S. TREASURY BONDS--11.4%
8.750% 08/15/2020.......................... 2,610 3,041,746
7.875% 02/15/2021.......................... 9,810 10,471,585
-------------
13,513,331
-------------
U.S. TREASURY NOTES -- 21.4%
5.375% 05/31/1998.......................... 100 98,516
6.750% 05/31/1999.......................... 30 30,182
7.750% 11/30/1999.......................... 16,050 16,592,329
7.250% 05/15/2004.......................... 4,645 4,745,704
7.500% 02/15/2005.......................... 3,765 3,902,723
-------------
25,369,454
-------------
TOTAL U.S. TREASURY OBLIGATIONS (Cost
$40,128,991)........................... 38,882,785
-------------
SHORT-TERM INVESTMENT -- 3.5%
BBH Grand Cayman U.S. Dollar Time Deposit
4.750% 09/03/1996........................ 4,179 4,179,000
-------------
TOTAL SHORT-TERM INVESTMENT
(Cost $4,179,000)...................... 4,179,000
-------------
<CAPTION>
NUMBER
OF SHARES VALUE
---------- -------------
<S> <C> <C>
WARRANTS*** -- 0.0%
Capital Pacific Holdings Group, Inc.
Warrants expiring 05/01/02............... 1,817 $ 1,181
-------------
TOTAL WARRANTS (Cost $1,000)............. 1,181
-------------
TOTAL INVESTMENTS AT VALUE -- 101.6%
(Cost $122,710,662*)................................... $120,441,384
LIABILITIES IN EXCESS OF OTHER ASSETS -- (1.6%)..........
(1,845,109)
-------------
NET ASSETS (Applicable to 7,873,570 BEA SHARES) --
100.0%................................................. $118,596,275
-------------
-------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER
SHARE
($118,596,275 DIVIDED BY 7,873,570)................... $15.06
-------------
-------------
</TABLE>
* Also cost for Federal income tax purposes at August 31, 1996. The gross
appreciation (depreciation) on a tax basis is as follows:
<TABLE>
<S> <C>
Gross Appreciation........................... $ 562,416
Gross Depreciation........................... (2,831,694)
-------------
Net Appreciation............................. $ (2,269,278)
-------------
-------------
</TABLE>
** Securites were acquired on a delayed delivery basis.
*** Non-income producing securities.
**** Certain conditions for public sales may exist.
+ Variable rate obligations -- The interest shown is the rate as of August
31, 1996.
++ Step Bond -- The interest rate as of August 31, 1996 is 0% and will reset
to interest shown at a future date.
+++ Securities have no stated final maturity date.
++++ Guaranteed by Grupo Sidek, S.A. de C.V. and Grupo Situr S.A. de C.V.
(a) With an additional 1,000,000 rights attached, expiring 06/03/2006, with no
market value.
The Moody's Investors Service, Inc. and Standard & Poor's Ratings Group ratings
indicated are the most recent ratings available at August 31, 1996 and are
unaudited.
INVESTMENT ABBREVIATIONS
<TABLE>
<S> <C>
FRN........................... Floating Rate Note
PIK........................... Pay In Kind
TBA........................... To Be Announced
AT AUGUST 31, 1996, NET ASSETS CONSISTED OF:
AMOUNT PER SHARE
----------- ---------
Capital Paid-In................. $118,137,940 $ 15.00
Accumulated Net Investment
Income......................... 1,925,440 .25
Accumulated Net Realized Gain on
Security and Foreign Exchange
Transactions................... 795,189 .10
Net Unrealized Depreciation on
Investments and Other.......... (2,262,294) (.29)
- --------------------------------------------------------
NET ASSETS $118,596,275 $ 15.06
- --------------------------------------------------------
</TABLE>
See Accompanying Notes to Financial Statements.
24
<PAGE>
BEA GLOBAL FIXED INCOME FUND
PORTFOLIO MANAGER'S LETTER
October 10, 1996
Dear Shareholders:
We are pleased to report on the results of the BEA Global Fixed Income Fund
(the "Fund") for the year ended August 31, 1996.
At August 31, 1996, the net asset value (NAV) of the Fund was $15.75,
compared to an NAV of $15.67 on August 31, 1995. As a result, the Fund's total
return (assuming reinvestment of dividends and distributions) for the year was
9.65%. By comparison, the unhedged J.P. Morgan Global Bond Index (GBI) posted a
return of 6.83% during the same period.
GLOBAL MARKETS IN REVIEW
The Fund's fiscal year ended with positive performance by almost all global
bond markets. The lone exception was Japan, which lost 4.45%. [Note: all
country-market returns cited are those of J.P. Morgan's country indices,
expressed in U.S. dollar terms.] Among developed nations, the Swedish (+ 31.59%)
and Italian markets (+29.04%) were the strongest. All developed markets
outperformed GBI's 6.8% appreciation, except for the U.S. (+3.84%) and Japan.
Emerging debt markets achieved much higher performance during the year. As
measured by the J.P. Morgan Emerging Market Bond Index, aggregate emerging debt
markets rose 34.46%, higher than all developed markets. By far, the top
performer was the Russian market, which soared 97.79% both in response to
budding capitalism and in anticipation of the re-election of Boris Yeltsin as
president. The worst-performing emerging debt market was Bulgaria, whose 15.72%
gain would have ranked it higher than all but four of the developed markets
included in GBI.
When developed and emerging markets are combined, eight of the year's top
ten performers were in emerging markets. Sweden and Italy were the only
developed markets in this group, and they ranked seventh and ninth,
respectively.
These results indicate a reversal of the historical synchronization by which
most of the fluctuation among the world's debt markets has been strongly tied to
U.S. interest-rate movements and U.S. economic developments more generally. We
refer to this change as "decoupling," and its occurrence, starting in early
1996, has caught many global investors off-guard. Bonds now trade far more on
the basis of domestic and regional factors than previously.
FUND STRATEGY
We attribute the Fund's outperformance of GBI over the fiscal year to the
success of our opportunistic strategies both for debt instruments and
currencies:
- DEBT: we generated healthy gains in emerging markets. Considering the
especially strong performance of these markets during the year, we felt it
prudent to take profits and trim our exposure a bit. We also dealt
cautiously in U.S. and Japanese government instruments, which paid off as
1996 progressed, and shifted some of our European holdings around to
exploit what we regarded as areas of undervaluation.
- CURRENCIES: In conjunction with our debt holdings, we overweighted
European currencies vs. GBI and underweighted the U.S. dollar for much of
1995. We reversed this pattern in 1996, achieving gains by shifting into
higher-yielding European currencies (E.G., those of Spain, Italy and
Sweden) from positions in lower-yielding core European markets (E.G., the
Dutch guilder). We also overweighted the strengthening dollar.
Going forward, we will likely retain our cautious stance toward U.S. and
Japanese debt and overweight holdings in Europe. Among currencies, we expect to
remain overweighted in the dollar and underweighted both in the Japanese yen and
European currencies generally.
OUTLOOK
Our overall near-term view of the global fixed income marketplace is one of
uncertainty. We are somewhat more confident that the current outperformance of
U.S.-dollar-bloc debt by non-dollar-bloc debt will continue, but at a slower
pace.
25
<PAGE>
BEA GLOBAL FIXED INCOME FUND
PORTFOLIO MANAGER'S LETTER--(CONTINUED)
Looking further ahead to the next year or so, we are more optimistic. In the
U.S. market, we believe returns will be positive, primarily based on two
factors. First, we suspect that investors will shrug off any modest tightening
by the Federal Reserve and turn their attention forward to the benefits of an
enduringly healthy economy. Second, our analysis indicates that, as an asset
class, bonds represent real value relative to equities.
In Europe, we regard the approaching implementation of the European Monetary
Union as a positive force that will compel governments to get their economic
houses in order. To do so, they must maintain fairly easy monetary policy, which
would be favorable for fixed income.
More broadly, our sense is that inflation fears in many nations will
dissipate. This, in turn, should have a stabilizing effect on their fixed income
markets.
As developments occur in the global fixed income markets or at BEA that we
believe would be of interest to you, we will be sure to keep you informed.
Meanwhile, if you have questions, please feel free to call upon us at any time.
Sincerely,
BEA Fixed Income Management Team
Robert J. Moore, Executive Director
William P. Sterling, Managing Director
Gregg M. Diliberto, Managing Director
Mark K. Silverstein, Senior Vice President
Robert W. Justich, Senior Vice President
-----------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE BEA GLOBAL FIXED
INCOME FUND AND THE JP MORGAN
GLOBAL GOVERNMENT BOND INDEX (UNHEDGED) FROM INCEPTION 6/28/94, PERIOD ENDED
7/31/94, AND AT EACH QUARTER END.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
JP MORGAN GLOBAL
BEA GLOBAL FIXED GOVT. BOND INDEX
<S> <C> <C>
Income Fund (unhedged)
06/28/94 $ 10,000 $ 10,000
07/31/94 $ 10,027 $ 10,115
08/31/94 $ 10,001 $ 10,089
11/30/94 $ 10,045 $ 10,161
02/28/95 $ 10,274 $ 10,659
05/31/95 $ 11,156 $ 11,696
08/31/95 $ 11,072 $ 11,496
11/30/95 $ 11,574 $ 12,003
02/29/96 $ 11,668 $ 11,957
5/31/1996 $ 11,831 $ 11,907
8/31/1996 $ 12,140 $ 12,283
</TABLE>
Note: Past performance is not predictive of future performance.
<TABLE>
<S> <C>
AVERAGE ANNUAL
TOTAL RETURN
One Year 9.65%
From Inception 9.30%
</TABLE>
26
<PAGE>
BEA GLOBAL FIXED INCOME FUND
OF THE RBB FUND, INC.
STATEMENT OF NET ASSETS
AUGUST 31, 1996
<TABLE>
<CAPTION>
PAR
(000) VALUE
------------- -------------
<S> <C> <C>
INTERNATIONAL BONDS -- 61.1%
ARGENTINA -- 1.0%
Republic of Argentina FRB
(B1, BB-)
6.313% 03/31/2005................... $ 495 $ 384,862
-------------
AUSTRALIA -- 2.9%
Queensland Treasury Corp. Guaranteed
Bonds
(NR, NR)
8.000% 07/14/1999................... AUD 630 506,896
Treasury Corporation of Victoria
Guaranteed Bonds
(Aa2, AA+)
8.250% 10/15/2003................... 770 614,158
-------------
1,121,054
-------------
BRAZIL -- 0.7%
Federal Republic of Brazil Interest
Due Bonds FRN Series A
(B1, NR)+
6.688% 01/01/2001................... $ 228 218,400
-------------
BULGARIA -- 0.3%
Republic of Bulgaria Discount Bonds
Tranche A
(B3, NR)+
6.688% 07/28/2004................... 250 127,500
-------------
CANADA -- 5.4%
Export Development Corporation Senior
Unsubordinated Eurobonds
(Aa2, AA+)
7.600% 02/14/2001................... ITL 800,000 501,258
Government of Canada Debentures
(Aa1, AAA)
8.750% 12/01/2005................... CND 1,960 1,565,651
-------------
2,066,909
-------------
FRANCE -- 2.0%
Republic of France Treasury Bonds --
O.A.T.
(Aaa, NR)
7.500% 04/25/2005................... FF 3,600 763,089
-------------
<CAPTION>
PAR
(000) VALUE
------------- -------------
<S> <C> <C>
GERMANY -- 8.8%
Federal Republic of Germany Eurobonds
(Aaa, NR)
7.250% 10/21/2002................... DEM 4,630 $ 3,371,882
-------------
ITALY -- 8.0%
Republic of Italy Debentures
(Aa3, AAA)
8.500% 01/01/2004................... ITL 4,775,000 3,063,184
-------------
MEXICO -- 1.3%
United Mexican States Par Bond Series
A
(Ba2, BB)(a)
6.250% 12/31/2019................... $ 750 496,875
-------------
NETHERLANDS -- 6.0%
Netherlands Government Bonds
(NR, NR)
9.000% 05/15/2000................... NLG 3,360 2,307,114
-------------
SPAIN -- 3.3%
Kingdom of Spain Debentures
(NR, NR)
10.250% 11/30/1998.................. ESP 99,000 834,763
Kingdom of Spain Debentures
(NR, NR)
10.100% 02/28/2001.................. 49,800 427,995
-------------
1,262,758
-------------
SUPRANATIONAL -- 10.5%
International Bank for Reconstruction
& Development Japanese Yen Global
Bonds
(Aaa, AAA)
5.250% 03/20/2002................... JPY 379,500 4,044,482
-------------
SWEDEN -- 3.3%
Nordic Investment Bank Sr.
Unsubordinated
(Aaa, AAA)
6.250% 02/08/1999................... SEK 4,500 676,411
Swedish Government Debentures
(Aa1, NR)
11.000% 01/21/1999.................. 3,600 597,634
-------------
1,274,045
-------------
</TABLE>
See Accompanying Notes to Financial Statements.
27
<PAGE>
BEA GLOBAL FIXED INCOME FUND (CONCLUDED)
<TABLE>
<CAPTION>
PAR
(000) VALUE
------------- -------------
<S> <C> <C>
UNITED KINGDOM -- 7.6%
U.K. Treasury Gilt Bonds
(Aaa, NR)
8.500% 07/16/2007................... GBP 1,800 $ 2,913,574
-------------
TOTAL INTERNATIONAL BONDS
(Cost $22,947,330).................. 23,415,728
-------------
U.S. TREASURY OBLIGATIONS -- 22.0%
U.S. TREASURY BONDS -- 3.8%
7.875% 02/15/2021..................... $ 1,380 1,473,067
-------------
1,473,067
-------------
U.S. TREASURY NOTES -- 18.2%
5.375% 05/31/1998..................... 155 152,700
7.250% 05/15/2004..................... 2,610 2,666,585
7.500% 02/15/2005..................... 4,000 4,146,320
-------------
6,965,605
-------------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $8,927,965)................... 8,438,672
-------------
SHORT-TERM INVESTMENT -- 15.4%
BBH Grand Cayman U.S. Dollar Time
Deposit
4.750% 09/03/1996................... 5,901 5,901,000
-------------
TOTAL SHORT-TERM INVESTMENT
(Cost $5,901,000)................... 5,901,000
-------------
TOTAL INVESTMENTS
AT VALUE -- 98.5%
(Cost $37,776,295*)................................ $37,755,400
OTHER ASSETS IN EXCESS OF LIABILITIES -- 1.5%........
592,100
-------------
NET ASSETS (Applicable to 2,434,762 BEA Shares) --
100.0%............................................. $38,347,500
-------------
-------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE
PER SHARE
($38,347,500 DIVIDED BY 2,434,762)................ $15.75
-------------
-------------
</TABLE>
* Also cost for Federal income tax purposes at August 31, 1996. The gross
appreciation (depreciation) on a tax basis is as follows:
<TABLE>
<S> <C>
Gross Appreciation....................... $ 500,231
Gross Depreciation....................... (521,126)
----------
Net Appreciation......................... $ (20,895)
----------
----------
</TABLE>
+ Variable rate obligations -- The interest shown is the rate as of August 31,
1996.
(a) With an additional 750,000 rights attached, expiring 06/03/2006, with no
market value.
The Moody's Investors Service, Inc. and Standard & Poor's Ratings Group ratings
indicated are the most recent ratings available at August 31, 1996 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
ITL........................... Italian Lira
JPY........................... Japanese Yen
NLG........................... Netherlands Guilder
SEK........................... Swedish Krona
</TABLE>
INVESTMENT ABBREVIATIONS
<TABLE>
<S> <C>
FRB........................... Floating Rate Bond
FRN........................... Floating Rate Note
</TABLE>
AT AUGUST 31, 1996, NET ASSETS CONSISTED OF:
<TABLE>
<CAPTION>
AMOUNT PER SHARE
------------ ---------
<S> <C> <C>
Capital Paid-In..................... $ 37,442,838 $ 15.38
Accumulated Net Investment Income... 434,739 .18
Accumulated Net Realized Gain on
Security and Foreign Exchange
Transactions....................... 665,466 .27
Net Unrealized Depreciation on
Investments, Forward Currency
Contracts and Other................ (195,543) (.08)
- -------------------------------------------------------------
NET ASSETS $ 38,347,500 $ 15.75
- -------------------------------------------------------------
</TABLE>
See Accompanying Notes to Financial Statements.
28
<PAGE>
BEA HIGH YIELD FUND
PORTFOLIO MANAGER'S LETTER
October 10, 1996
Dear Shareholders:
We are pleased to report on the results of the BEA High Yield Fund (the
"Fund") for the year ended August 31, 1996.
At August 31, 1996, the net asset value (NAV) of the Fund was $16.09,
compared to an NAV of $15.72 on August 31, 1995. As a result, the Fund's
(assuming reinvestment of dividends) total return for the year was 12.42%. By
comparison, the CS First Boston High Yield Index posted a return of 10.15%
during the same period.
FUND COMMENTARY
Currently, the high yield market is being propelled forward by an auspicious
combination of technical and fundamental factors. For example, interest rates
are both stable and relatively low, each of which is beneficial to high yield
performance. A stable economy suggests that issuer defaults should remain below
historical averages, while low rates help to attract income-oriented investors
looking for more yield than is available from investment-grade instruments.
Our strategy continues to be focused on opportunistic investment in
companies that we believe offer operating performance improvement and
deleveraging potential over the longer term. We also favor companies whose core
operations should perform relatively well regardless of the state of the
economy, as well as those which may be desirable candidates for future mergers
and acquisitions activity. We assign overweighted allocations to industries that
we believe have a good operating outlook and could benefit from consolidation
trends.
This approach is particularly reflected by several of our sector
concentrations:
TELECOMMUNICATIONS. This industry should benefit from the landmark
telecommunications legislation enacted in early 1996.
The wireless communications segment is poised for tremendous growth over the
near term as the Information Highway takes shape. Therefore, we believe that
this segment, which is in the early phase of its growth cycle, will be able to
grow even through an economic downturn.
Going forward, we expect the broad telecom industry to continue to
consolidate, a trend from which high yield issuers should benefit. Accordingly,
telecom is among our largest industry exposures. Its 19.0% weighting in the Fund
(as of August 31st) is more than 2.5 times its 7.0% concurrent weighting in the
Salomon Brothers High Yield Market Index.
GAMING. We are attracted to this sector for much the same reasons that we
like telecom. It is growing and consolidating and is relatively less affected by
the macroeconomic environment. Although we believe that Atlantic City may become
overbuilt over the next few years, the sector's current prospects remain bright.
CABLE AND MEDIA. As with telecom, we expect cable/media's recent
consolidation trend to continue. Cable TV companies need to become larger, with
more contiguous systems, in order to both offer local phone service in the
future and to compete against the regional Bell operating companies.
FUND FLOWS AND NEW ISSUES
Interest in high yield instruments both from individual and institutional
investors continues to be very strong.
Individuals have been pouring cash into high yield mutual funds at a record
pace in 1996. August witnessed the highest monthly net inflows on record ($1.68
billion), eclipsing the previous high in November 1992 ($1.58 billion). Seen in
larger perspective, high yield accounted for nearly all of the $1.7 billion
invested in all types of fixed income funds during August. [Data taken from the
Investment Company Institute and AMG Data Services.]
Year to date through August, high yield fund net inflows totaled about $9
billion, versus $7.3 billion for the same period in 1995. Given this trend, net
inflows for the year should exceed the previous annual record of $9.6 billion
set in 1986.
As reflected by the level of new issuance, institutions also are finding
high yield very attractive. New issuance for 1996 thus far totaled $50.2 billion
at the end of August, nearly double last year's $27.9 billion for the same
period. The average market-weighted new-issue offer yield was 11.15% at
month-end, versus 10.93% for 1995 as a whole.
29
<PAGE>
BEA HIGH YIELD FUND
PORTFOLIO MANAGER'S LETTER--(CONCLUDED)
OUTLOOK
Looking ahead, we expect the high yield market to continue to track the
directional movements of the debt and equity markets for the remainder of 1996.
We also expect the market to remain volatile on an individual-credit basis as
bonds react quickly to news releases, particularly negative ones.
The strong cash inflows to high yield over the past year are among the
principal factors driving the market in 1996. Net inflows have remained strong
despite much volatility in the overall U.S. fixed income and equity markets. We
will be watching carefully to see how high-yield investors react to instability
in interest rates and equities.
On the new-issue front, we expect activity to remain brisk during the next
few months. Rising new-issue levels increase the size and liquidity of the
overall high yield market.
Our positive long-term view on the credit fundamentals of many high yield
issuers still applies. We are maintaining our favorable views on several
industry sectors, including gaming companies; health care; cable and media;
telecommunications; and selected cyclical sectors such as paper and specialty
chemicals.
As developments occur that we believe would be of interest to you, we will
be sure to keep you informed. Meanwhile, if you have questions, please feel free
to call upon us at any time.
Sincerely,
BEA High Yield Management Team
Richard J. Lindquist, Managing Director
Misia Dudley, Senior Vice President
Marianne Rossi, Senior Vice President
John M. Tobin, Vice President
-----------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE BEA HIGH YIELD FUND
AND THE CS FIRST BOSTON
HIGH YIELD INDEX FROM INCEPTION 3/1/93 AND AT EACH QUARTER END.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CS FIRST BOSTON
BEA HIGH HIGH YIELD
<S> <C> <C>
Yield Fund Index
03/01/93 $ 10,000 $ 10,000
05/31/93 $ 10,607 $ 10,419
08/31/93 $ 11,294 $ 10,809
11/30/93 $ 11,872 $ 11,209
02/28/94 $ 12,128 $ 11,570
05/31/94 $ 11,484 $ 11,143
08/31/94 $ 11,539 $ 11,201
11/30/94 $ 11,449 $ 11,123
02/28/95 $ 10,961 $ 11,638
05/31/95 $ 12,010 $ 12,370
08/31/95 $ 12,439 $ 12,680
11/30/95 $ 12,784 $ 13,029
02/29/96 $ 13,665 $ 13,516
5/31/1996 $ 13,990 $ 13,662
8/31/1996 $ 13,984 $ 13,965
</TABLE>
Note: Past performance is not predictive of future performance.
<TABLE>
<S> <C>
AVERAGE ANNUAL
TOTAL RETURN
One Year 12.42%
From Inception 10.05%
</TABLE>
30
<PAGE>
BEA HIGH YIELD FUND
OF THE RBB FUND, INC.
STATEMENT OF NET ASSETS
AUGUST 31, 1996
<TABLE>
<CAPTION>
PAR
(000) VALUE
------------ -------------
<S> <C> <C>
CORPORATE BONDS -- 93.7%
BROADCASTING -- 7.3%
Allbritton Communications Company Senior
Subordinated Debentures 144A, Series B
(B3, B-)****
9.750% 11/30/2007........................ $ 700 $ 656,250
Australis Media Limited Unit Yankee
(CAA, CCC)+
14.000% 05/15/2003....................... 900 495,000
EchoStar Communications Corp. Gtd. Senior
Discount Notes (B2, B)+
12.875% 06/01/2004....................... 1,100 797,500
Granite Broadcasting Corp. Senior
Subordinated
Notes 144A (B3, NR)****
9.375% 12/01/2005........................ 950 891,813
NWCG Holding Corp. Senior Discount Notes
Series B
(Caa, B)
8.555% 06/15/1999........................ 1,000 788,750
Park Broadcasting, Inc. 144A Senior Notes
(B2, B)
11.750% 05/15/2004....................... 500 569,375
Sinclair Broadcast Group Senior
Subordinated Notes (B2, B)
10.000% 09/30/2005....................... 700 691,250
Young Broadcasting, Inc. Senior
Subordinated Notes Series B 144A (B2,
B)****
9.000% 01/15/2006........................ 750 690,000
-------------
5,579,938
-------------
BUSINESS SERVICES -- 0.6%
Inter Act Systems Incorporated 144A Units
(NR, NR)****
14.000% 08/01/2003....................... 700 474,250
-------------
CABLE -- 13.6%
American Telecasting, Inc. Senior Discount
Notes
(Caa, CCC+)+
14.500% 06/15/2004....................... 900 639,000
Bell Cablemedia PLC Yankee Discount Bonds
(B2, BB-)+
11.950% 07/15/2004....................... 1,000 750,000
<CAPTION>
PAR
(000) VALUE
------------ -------------
<S> <C> <C>
CABLE -- (CONTINUED)
Cablevision Systems Corp. Senior
Subordinated Debentures (B2, B)
9.875% 02/15/2013........................ $ 1,000 $ 943,750
Charter Communications Southeast, L.P.
Senior Notes (B3, B)
11.250% 03/15/2006....................... 900 893,250
Comcast U.K. Cable Partners Ltd., Yankee
Senior Debentures (B2, B)+
11.200% 11/15/2007....................... 1,000 625,000
DIVA Systems Corporation Units 144A (NR,
NR)
13.000% 05/15/2006....................... 2,250 1,203,750
Falcon Holdings Group L.P. Senior
Subordinated Notes PIK Bonds (NR, NR)
11.000% 09/15/2003....................... 1,202 1,121,072
Helicon Group Ltd. Senior Secured Notes
Series B
(B1, B)
9.000% 11/01/2003........................ 850 854,250
Marcus Cable Company Senior Discount Notes
(Caa, B)+
14.250% 12/15/2005....................... 950 611,563
People's Choice TV Corp. Units (Caa, CCC+)+
13.125% 06/01/2004....................... 950 555,750
Rifkin Acquisition Partners L.P. Senior
Subordinated Notes (B3, B-)****
11.125% 01/15/2006....................... 500 502,500
Rogers Communications, Inc. Yankee Senior
Notes
(B2, BB-)
9.125% 01/15/2006........................ 550 517,688
United International Holdings,Inc. Senior
Secured Debentures, Series B (B3, B-)
9.454% 11/15/1999........................ 1,650 1,080,750
-------------
10,298,323
-------------
CHEMICALS -- 1.9%
Harris Chemical North America Senior
Secured Debentures (B2, B+)
10.250% 07/15/2001....................... 400 399,500
</TABLE>
See Accompanying Notes to Financial Statements.
31
<PAGE>
BEA HIGH YIELD FUND (CONTINUED)
<TABLE>
<CAPTION>
PAR
(000) VALUE
------------ -------------
<S> <C> <C>
CHEMICALS -- (CONTINUED)
Kaiser Aluminum & Chemical Corp. Senior
Subordinated Notes
(B2, B-)
12.750% 02/01/2003....................... $ 1,000 $ 1,078,750
-------------
1,478,250
-------------
COMPUTERS -- 1.0%
Advanced Micro Devices, Inc. Senior Secured
Notes
(Ba1, BB-)
11.000% 08/01/2003....................... 750 761,250
-------------
CONSTRUCTION & BUILDING MATERIALS**** -- 1.2%
Southdown, Inc. 144A Senior Subordinated
Notes
(B2, B+)
10.000% 03/01/2006....................... 500 498,125
Waxman Industries, Inc. 144A (Caa, CCC+)
12.750% 06/01/2004....................... 600 401,250
-------------
899,375
-------------
CONSUMER PRODUCTS -- 2.3%
Jordan Industries, Inc. Senior Notes (B3,
B+)
10.375% 08/01/2003....................... 700 675,500
Revlon Worldwide Corp. Senior Secured
Discount Notes Series B (B3, B-)
10.795% 03/15/1998....................... 1,250 1,062,500
-------------
1,738,000
-------------
ELECTRONICS -- 2.1%
Exide Electronics Group, Inc.
Units 144A (B3, B)****
11.500% 03/15/2006....................... 550 559,625
Unisys Corporation 144A Senior Notes (B1,
B+)
12.000% 04/15/2003....................... 1,000 1,025,000
-------------
1,584,625
-------------
ENERGY -- 2.7%
Cliffs Drilling Company 144A Senior Notes
(B1, B)****
10.250% 05/15/2003....................... 600 609,000
Mesa Operating Co. Senior Subordinated
Discount Notes (B2, B)
11.625% 07/01/2006....................... 750 469,687
Nuevo Energy Company Senior Subordinated
Notes (B2, B+)
9.500% 04/15/2006........................ 500 501,250
<CAPTION>
PAR
(000) VALUE
------------ -------------
<S> <C> <C>
ENERGY -- (CONTINUED)
Plains Resources, Inc. 144A Senior
Subordinated Notes
(B2, B-)****
10.250% 03/15/2006....................... $ 500 $ 512,500
-------------
2,092,437
-------------
ENTERTAINMENT -- 1.3%
American Skiing Company 144A Senior
Subordinated Notes (B3, CCC+)
12.000% 07/15/2006....................... 400 390,000
AMF Group Inc. Senior Subordinated Notes
144A
(B2, B-)****
10.875% 03/15/2006....................... 600 601,500
-------------
991,500
-------------
FINANCIAL SERVICES -- 0.4%
Fifth Mexican Acceptance Corp. Rule 144A
Notes
(NR, NR)**/****
8.000% 12/15/1998........................ 1,040 322,400
-------------
FOOD & BEVERAGES -- 2.2%
Foodbrands America, Inc. Senior
Subordinated Notes
(B3, B)
10.750% 05/15/2006....................... 250 252,812
Fresh Del Monte Produce Yankee Senior
Notes, Series B (Caa, CCC+)
10.000% 05/01/2003....................... 1,500 1,406,250
-------------
1,659,062
-------------
HEALTH CARE -- 3.0%
General Medical Corp. Subordinated
Debentures, Series A PIK Bonds
(Caa, B-)
12.125% 08/15/2005....................... 1,061 1,061,951
Health O Meter Units
(B3, B-)
13.000% 08/15/2002....................... 250 270,000
Paracelsus Healthcare Corp. Senior
Subordinated Notes
(B1, B)
10.000% 08/15/2006....................... 400 403,500
Regency Health Services, Inc. 144A
Subordinated Notes
(B3, B-)
12.250% 07/15/2003....................... 500 520,625
-------------
2,256,076
-------------
</TABLE>
See Accompanying Notes to Financial Statements.
32
<PAGE>
BEA HIGH YIELD FUND (CONTINUED)
<TABLE>
<CAPTION>
PAR
(000) VALUE
------------ -------------
<S> <C> <C>
INDUSTRIAL GOODS & MATERIALS -- 5.7%
Alpine Group, Inc. Senior Notes, Series B
(B3, B)
12.250% 07/15/2003....................... $ 750 $ 778,125
Alvey Systems, Inc. 144A Senior
Subordinated Notes
(B3, B-)****
11.375% 01/31/2003....................... 100 102,875
BPC Holding Corporation 144A Senior Secured
Notes
(Caa, NR)****
12.500% 06/15/2006....................... 500 508,125
Collins & Aikman Products Co. Gtd. Senior
Subordinated Notes
(B3, B)
11.500% 04/15/2006....................... 700 721,000
Delco Remy International, Inc. 144A Senior
Subordinated Notes (B2, B-)****
10.625% 08/01/2006....................... 500 513,125
G-I Holdings, Inc. Senior Notes 144A (Ba3,
B+)
10.000% 02/15/2006....................... 389 378,789
Haynes International, Inc. Senior Notes
(B3, B-)
11.625% 09/01/2004....................... 500 495,000
Venture Holdings Trust Gtd. Senior
Subordinated Notes (B3, B)
9.750% 04/01/2004........................ 1,000 830,000
-------------
4,327,039
-------------
METALS & MINING -- 1.2%
Acme Metals, Inc. Senior Secured Debentures
(B1, B)+
13.500% 08/01/2004....................... 1,000 916,250
-------------
OFFICE EQUIPMENT & SUPPLIES -- 0.7%
Knoll Inc. 144A Senior Subordinated Notes
(B3, B+)****
10.875% 03/15/2006....................... 500 518,750
-------------
PAPER & FOREST PRODUCTS -- 7.5%
Crown Packaging 144A Units Senior Discount
Notes
(NR, NR)****
14.000% 08/01/2006....................... 775 302,250
Crown Packaging Holdings Senior
Subordinated Notes, Series B (Caa, NR)+
12.250% 11/01/2003....................... 3,300 1,278,750
<CAPTION>
PAR
(000) VALUE
------------ -------------
<S> <C> <C>
PAPER & FOREST PRODUCTS -- (CONTINUED)
Crown Paper Co. Senior Subordinated Notes
(B3, B)
11.000% 09/01/2005....................... $ 750 $ 714,375
Florida Coast Paper Company L.L.C. 144A
First Mortgage Notes (B3, B)
12.750% 06/01/2003....................... 700 735,000
Gaylord Container Corp. Senior Subordinated
Debentures (Caa, B-)+
12.750% 05/15/2005....................... 1,000 1,072,500
Printpack, Inc. 144A Senior Subordinated
Notes
(B3, B+)
10.625% 08/15/2006....................... 600 609,000
Stone Container Corporation Senior Notes
(NR, NR)
11.500% 08/15/2006....................... 1,000 993,750
-------------
5,705,625
-------------
PUBLISHING & INFORMATION SERVICES -- 0.8%
Park Newspapers, Inc. 144A Senior Notes
(B2, B)****
11.875% 05/15/2004....................... 500 569,375
-------------
RESTAURANTS, HOTELS & CASINOS -- 12.4%
Argosy Gaming Company 144A First Mortgage
Notes
(B1, B+)****
13.250% 06/01/2004....................... 750 723,750
Bally's Casino Holdings Senior Discount
Notes
(B2, B+)
7.640% 06/15/1998........................ 500 435,625
Casino America Senior Notes
(B1, B)
12.500% 08/01/2003....................... 200 200,500
Casino Magic Finance Corp. First Mortgage
Notes (B1, B+)
11.500% 10/15/2001....................... 1,000 942,500
Coast Hotels and Casinos, Inc. 144A Gtd.
First Mortgage Notes
(B3, B)****
13.000% 12/15/2002....................... 1,000 1,070,000
GNF Corp. First Mortgage Notes, Series B
(B1, BB)
10.625% 04/01/2003....................... 1,000 1,097,500
Griffin Games & Enertainment, Inc. Senior
Notes (NR, NR)
11.000% 09/15/2003....................... 750 804,375
</TABLE>
See Accompanying Notes to Financial Statements.
33
<PAGE>
BEA HIGH YIELD FUND (CONTINUED)
<TABLE>
<CAPTION>
PAR
(000) VALUE
------------ -------------
<S> <C> <C>
RESTAURANTS, HOTELS & CASINOS -- (CONTINUED)
The Majestic Star Casino, LLC 144A Senior
Secured Notes (NR, NR)****
12.750% 05/15/2003....................... $ 450 $ 483,750
Mohegan Tribal Gaming Authority Senior
Secured Notes, Series B 144A
(NR, NR)****
13.500% 11/15/2002....................... 1,000 1,237,500
Showboat Marina Casino Partnership 144A
First Mortgage Notes
(B2, B)****
13.500% 03/15/2003....................... 450 484,875
Trump Atlantic City Associates, First
Mortgage Notes (B1, BB-)
11.250% 05/01/2006....................... 1,000 960,000
Trump's Castle Funding, Inc. Mortgage Bonds
(Caa, NR)
11.750% 11/15/2003....................... 1,000 947,500
-------------
9,387,875
-------------
RETAIL TRADE -- 4.3%
Farm Fresh, Inc. Senior Notes (B2, B-)
12.250% 10/01/2000....................... 1,100 844,250
Hills Stores Company Senior Notes (B1, NR)
12.500% 07/01/2003....................... 900 837,000
Jitney-Jungle Stores of America, Inc.
Senior Notes
(B2, B)
12.000% 03/01/2006....................... 1,000 1,051,250
Parisian, Inc. Senior Subordinated Notes
(Caa, B-)
9.875% 07/15/2003........................ 500 488,750
-------------
3,221,250
-------------
STEEL -- 0.8%
Weirton Steel Corporation 144A Senior Notes
(NR, B)****
11.375% 07/01/2004....................... 600 579,000
-------------
TELECOMMUNICATIONS -- 19.0%
American Communication Services, Inc. Unit
144A Notes (NR, NR)****/+
13.000% 11/01/2005....................... 1,500 802,500
<CAPTION>
PAR
(000) VALUE
------------ -------------
<S> <C> <C>
TELECOMMUNICATIONS -- (CONTINUED)
Arch Communications Group, Inc. Senior
Discount Notes (B3, B-)
10.875% 03/15/2008....................... $ 500 $ 266,250
Brooks Fiber Properties, Inc. Senior
Discount Notes 144A (NR, NR)****/+
10.875% 03/01/2006....................... 1,000 572,500
CAI Wireless Systems, Inc. Discount Notes
(B3, BB-)
12.250% 09/15/2002....................... 350 363,125
CS Wireless Systems, Inc. Units 144A
(NR, NR)****/+
11.375% 03/01/2006....................... 1,000 490,000
Diamond Cable Communications Plc Senior
Discount Notes (B3, B-)
11.750% 12/15/2005....................... 1,000 620,000
Geotek Communications, Inc. 144A
Convertible Senior Subordinated Notes
(Caa, NR)****
12.000% 02/15/2001....................... 1,600 1,816,000
IntelCom Group (U.S.A.), Inc. Senior
Discount Notes (NR, NR)
12.500% 05/01/2006....................... 1,000 558,750
InterCel, Inc. Units
(B2, B-)+
12.000% 02/01/2006....................... 1,300 793,000
International CableTel, Inc. Senior Notes
(B3, B)+
12.750% 04/15/2005....................... 750 495,000
Metrocall, Inc. Senior Subordinated Notes
(B3, B-)
10.375% 10/01/2007....................... 500 382,500
Mobile Telecommunication Technologies Corp.
Senior Notes (B2, B-)
13.500% 12/15/2002....................... 675 688,500
Nextel Communications Inc. Senior Discount
Notes
(B3, CCC-)+
9.750% 08/15/2004........................ 1,500 885,000
Pagemart Nationwide Senior Discount Notes
(NR, NR)+
15.000% 02/01/2005....................... 1,000 670,000
People's Telephone Co., Inc. Senior Notes
(B2, B-)
12.250% 07/15/2002....................... 450 452,250
</TABLE>
See Accompanying Notes to Financial Statements.
34
<PAGE>
BEA HIGH YIELD FUND (CONTINUED)
<TABLE>
<CAPTION>
PAR
(000) VALUE
------------ -------------
<S> <C> <C>
TELECOMMUNICATIONS -- (CONTINUED)
Petersburg Long Distance, Inc. 144A
Convertible Subordinated Notes (NR,
NR)****
9.000% 06/01/2006........................ $ 230 $ 276,000
Petersburg Long Distance, Inc. Units 144A
(NR, NR)****
9.000% 06/01/2004........................ 1,610 1,263,850
PriCellular Wireless Corp. Senior Discount
Notes
(B3, CCC+)
12.250% 10/01/2003....................... 1,000 792,500
Sprint Spectrum L.P. Senior Notes (B2, B+)
11.000% 08/15/2006....................... 500 507,500
Teleport Communications Group, Inc. Senior
Discount Notes (B1, B)
11.125% 07/01/2007....................... 500 306,250
Teleport Communications Group, Inc. Senior
Notes
(B1, B)
9.875% 07/01/2006........................ 300 300,000
Vanguard Cellular Systems, Inc. Senior
Debentures (B1, B+)
9.375% 04/15/2006........................ 500 486,875
Videotron Holdings Yankee plc Senior
Discount Notes
(B3, B+)+
11.000% 08/15/2005....................... 1,000 658,750
-------------
14,447,100
-------------
TRANSPORTATION -- 1.7%
Consorscio G Grupo Dina S.A. / MCII
Holdings (USA), Inc. 144A Senior Secured
Notes
(NR, NR)+
12.000% 11/15/2002....................... 750 592,500
US Air, Inc. Senior Notes
(B3, CCC+)
10.000% 07/01/2003....................... 750 701,250
-------------
1,293,750
-------------
TOTAL CORPORATE BONDS
(Cost $72,057,715)....................... 71,101,500
-------------
<CAPTION>
PAR
(000) VALUE
------------ -------------
<S> <C> <C>
ASSET-BACKED SECURITIES -- 0.8%
TRANSPORTATION -- 0.8%
Airplanes Pass Through Trust Series 1,
Class D
(Ba2, BB)
10.875% 03/15/2019....................... $ 600 $ 633,000
-------------
TOTAL ASSET-BACKED SECURITIES
(Cost $600,000)........................... 633,000
-------------
<CAPTION>
NUMBER
OF SHARES VALUE
------------ -------------
<S> <C> <C>
RIGHTS / WARRANTS*** -- 0.2%
CONSTRUCTION & BUILDING MATERIALS -- 0.0%
Capital Pacific Holdings Group, Inc........ 13,000 8,216
-------------
INDUSTRIAL GOODS & MATERIALS -- 0.1%
Uniroyal Technology Corp. Warrants......... 44,000 78,844
-------------
ELECTRONICS -- 0.0%
Exide Electronic Warrants 144A............. 1,000 3,265
-------------
TELECOMMUNICATIONS -- 0.1%
American Communication Services, Inc.
Warrants................................. 2,000 97,500
-------------
TOTAL RIGHTS / WARRANTS
(Cost $104,467).......................... 187,825
-------------
PREFERRED STOCKS -- 3.0%
AEROSPACE / DEFENSE -- 1.4%
GPA Group plc Convertible Cumulative Second
Preference Shares........................ 27,500 1,045,000
-------------
CABLE -- 0.1%
DIVA Systems Corporation Series C.......... 5,945 49,997
-------------
CONSUMER PRODUCTS -- 0.7%
Renaissance Cosmetics 144A................. 500 500,000
-------------
RESTAURANTS, HOTELS & CASINOS -- 0.8%
Lady Luck Gaming Corporation Series A...... 20,000 587,000
-------------
TOTAL PREFERRED STOCKS
(Cost $2,076,947)...................... 2,181,997
-------------
</TABLE>
See Accompanying Notes to Financial Statements.
35
<PAGE>
BEA HIGH YIELD FUND (CONCLUDED)
<TABLE>
<CAPTION>
PAR
(000) VALUE
------------ -------------
SHORT-TERM INVESTMENT -- 0.6%
<S> <C> <C>
BBH Grand Cayman U.S. Dollar Time Deposit
4.750% 09/03/1996........................ $ 433 $ 433,000
-------------
TOTAL SHORT-TERM INVESTMENT
(Cost $433,000)........................ 433,000
-------------
TOTAL INVESTMENTS -- 98.3%
(Cost $75,272,129*).................................... $74,537,322
OTHER ASSETS IN EXCESS OF
LIABILITIES -- 1.7%.................................... 1,311,236
-------------
NET ASSETS (Applicable to 4,713,739 BEA Shares) --
100.0%................................................. $75,848,558
-------------
-------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER
SHARE
($75,848,558 DIVIDED BY 4,713,739).................... $16.09
-------------
-------------
</TABLE>
* Cost for Federal income tax purposes at August 31, 1996 is $75,291,159. The
gross appreciation (depreciation) on a tax basis is as follows:
<TABLE>
<S> <C>
Gross Appreciation........................... $ 2,072,489
Gross Depreciation........................... (2,826,326)
-------------
Net Appreciation............................. $ (753,837)
-------------
-------------
</TABLE>
** Guaranteed by Grupo Sidek, S.A. de C.V. and Grupo Situr, S.A. de C.V.
*** Non-income Producing Securities.
**** Certain conditions for public sales may exist.
+ Step Bond -- The interest rate as of August 31, 1996 is 0% and will reset
to interest shown at a future date.
The Moody's Investors Service, Inc. and Standard & Poor's Ratings Group ratings
indicated are the most recent ratings available at August 31, 1996 and are
unaudited.
INVESTMENT ABBREVIATIONS
<TABLE>
<S> <C>
PIK........................... Pay In Kind
AT AUGUST 31, 1996, NET ASSETS CONSISTED OF:
AMOUNT PER SHARE
----------- ---------
Capital Paid-In................ $91,478,662 $ 19.40
Accumulated Net Investment
Income........................ 1,332,623 .28
Accumulated Net Realized Loss
on Security Transactions...... (16,227,920) (3.44)
Net Unrealized Depreciation on
Investments and Other......... (734,807) (.15)
- -------------------------------------------------------
NET ASSETS $75,848,558 $ 16.09
- -------------------------------------------------------
</TABLE>
See Accompanying Notes to Financial Statements.
36
<PAGE>
BEA MUNICIPAL BOND FUND
PORTFOLIO MANAGER'S LETTER
October 10, 1996
Dear Shareholders:
We are pleased to report on the results of the BEA Municipal Bond Fund (the
"Fund") for the year ended August 31, 1996.
At August 31, 1996, the net asset value (NAV) of the Fund was $14.65,
compared to an NAV of $15.46 on August 31, 1995. As a result, the Fund's total
return (assuming reinvestment of dividends and distributions) for the year was
2.27%. By comparison, the Lehman Brothers Municipal Bond Index (the "Index")
posted a return of 5.24% during the same period.
FIXED INCOME COMMENTARY
U.S. bond markets have been most affected thus far in 1996 by investor
anxiety about interest rates. The surprising strength of the U.S. economy has
generated widespread concern about inflation, prompting investors to
increasingly trade most debt instruments based on the belief that the Federal
Reserve will raise rates. Trading has been quite volatile throughout the year
both in anticipation of Fed meetings at which policy decisions are made and in
response to a constant flow of economic data.
Despite the markets' expectations, the Fed has not yet raised rates (in
fact, its only move of any kind was to lower them by 25 basis points in
January). The yield on the bellwether 30-year Treasury bond, furthermore, has
frequently fluctuated in sharp movements, yet has hardly changed since January.
Our own perspective is fairly positive. Aside from signs of near-full
employment and accelerating wage rates, there are no substantive indicators of
economic troubles ahead. On the contrary, important factors are favorable: the
economy is growing at a moderate pace and inflation is under control.
At the same time, however, some near-term caution is appropriate. The
existence of near-full employment means that the Fed must walk a fine line. In
other words, inaction on rates is agreeable now, but it may set the stage for
more drastic measures ahead. If the Fed does not even modestly raise rates this
year, it may be compelled to do so to a much greater extent in 1997. Tightening
of such magnitude would likely produce considerable concern among participants
in the capital markets.
CURRENT STRATEGY
Conditions in the municipal market over the last few months suggest that the
environment is becoming somewhat riskier:
- Simple supply and demand dynamics continue to drive the market. Since
1993, issuance of long-term municipal debt has steadily declined, yet
total debt outstanding has increased only minimally (source: THE BOND
BUYER). This means that supply is tightening, so demand rises accordingly.
Investors are eagerly devouring new offerings, even those of issuers
best-known for their financial difficulties (most notably among recent
issuers: Orange County, California and the Washington Public Power Supply
System).
- Widespread fear of an interest-rate hike by the Federal Reserve has set a
generally uncertain tone for debt markets (see previous section). This has
reduced municipal trading activity.
- In the heavy June-July period of maturations, interest payments and
redemptions, investors raised an unusually high level of cash. Much of it
remains uninvested.
- Market forces have eliminated the extremely cheap pricing that was present
in the market earlier in the year. Munis have reverted to historically
fair valuation levels.
- Credit and liquidity spreads have significantly narrowed, reducing munis'
attractiveness for buyers of spread products.
37
<PAGE>
BEA MUNICIPAL BOND FUND
PORTFOLIO MANAGER'S LETTER--(CONCLUDED)
While our general approach remains opportunistic, we have taken a somewhat
more defensive stance, restricting our new purchases to high-quality, highly
liquid issues. During the summer, for example, we took positions in two
high-coupon New York issues whose prices should rise in anticipation of expected
pre-refunding.
OUTLOOK
Looking further ahead, we are cautiously optimistic:
- The municipal market faces some large question marks in the next few
months, including uncertainty over the direction of interest rates; the
upcoming presidential election and how investors will react to its
outcome; and increasing investigation and scrutiny by regulators, law
enforcement authorities and the courts.
- Nevertheless, we are encouraged by the likelihood of coordinated global
growth in 1997; lower inflation via reductions in wage rates and unit
labor costs; and the ongoing integration of emerging markets into the
global economy.
As developments occur in the fixed income markets or at BEA that we believe
would be of interest to you, we will be sure to keep you informed. Meanwhile, if
you have questions, please feel free to call upon us at any time.
Sincerely,
BEA Fixed Income Management Team
Robert J. Moore, Executive Director
William P. Sterling, Managing Director
Gregg M. Diliberto, Managing Director
Mark K. Silverstein, Senior Vice President
Robert W. Justich, Senior Vice President
-----------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE BEA MUNICIPAL BOND
FUND AND THE LEHMAN BROTHERS
MUNICIPAL BOND INDEX FROM INCEPTION 6/20/94, PERIOD ENDED 7/31/94 AND AT EACH
QUARTER END.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
LEHMAN BROTHERS
BEA MUNICIPAL BOND MUNICIPAL BOND
<S> <C> <C>
Fund Index
06/20/94 $ 10,000 $ 10,000
07/31/94 $ 10,040 $ 10,038
08/31/94 $ 10,040 $ 10,073
11/30/94 $ 9,647 $ 9,571
02/28/95 $ 10,350 $ 10,354
05/31/95 $ 10,846 $ 10,820
08/31/95 $ 10,886 $ 10,965
11/30/95 $ 11,193 $ 11,079
02/29/96 $ 11,216 $ 11,498
5/31/1996 $ 10,937 $ 11,314
8/31/1996 $ 11,134 $ 11,539
</TABLE>
Note: Past performance is not predictive of future performance.
<TABLE>
<S> <C>
AVERAGE ANNUAL
TOTAL RETURN
One Year 2.27%
From Inception 4.98%
</TABLE>
38
<PAGE>
BEA MUNICIPAL BOND FUND
OF THE RBB FUND, INC.
STATEMENT OF NET ASSETS
AUGUST 31, 1996
<TABLE>
<CAPTION>
PAR
(000) VALUE
----------- ------------
<S> <C> <C>
MUNICIPAL BONDS -- 92.4%
ALABAMA -- 0.1%
Jefferson County AL Sanitation & Sewer
(Aaa, NR)
6.750% 03/01/2007........................ $ 15 $ 16,631
------------
CALIFORNIA -- 9.8%
California State GO
(Aaa, AAA)
5.125% 10/01/2017........................ 825 744,563
Los Angeles CA Department of Water & Power
Water Revenue (Aa, AA)
4.500% 05/15/2023........................ 705 553,425
Southern California Public Power Authority
Power Project Revenue Series A (AMBAC
Insured) (Aa, AA-)
5.000% 07/01/2017........................ 705 610,706
------------
1,908,694
------------
COLORADO -- 3.0%
Colorado Springs CO Utility Revenue (Aaa,
AAA)
5.875% 11/15/2017........................ 595 587,563
------------
FLORIDA -- 10.8%
Florida State Board of Education GO (Aa,
AA)
5.125% 06/01/2022........................ 30 26,925
Florida State GO (Aa, AA)
5.500% 10/01/2008........................ 710 710,000
Jacksonville FL Electric Authority Revenue
2nd Installment (Aaa, AAA)
6.000% 07/01/2012........................ 610 611,525
Tallahassee FL Electric Revenue First Lien
(Aaa, AAA)
6.100% 10/01/2006........................ 730 756,463
------------
2,104,913
------------
ILLINOIS -- 3.2%
Illinois State Sales Tax Revenue Series Q
(A1, AAA)
5.750% 06/15/2014........................ 650 629,688
------------
<CAPTION>
PAR
(000) VALUE
----------- ------------
<S> <C> <C>
INDIANA -- 0.1%
Indianapolis IN Public Improvement Board
Revenue (Aaa, AA+)
6.000% 01/10/2018........................ $ 25 $ 25,031
------------
LOUISIANA -- 3.4%
New Orleans LA Home Mortgage Authority SOB
(Aaa, AAA)
6.250% 01/15/2011........................ 635 674,687
------------
MARYLAND -- 4.7%
Maryland State Transportation Authority
Project Revenue (Aaa, AAA)
6.800% 07/01/2016........................ 850 922,250
------------
MASSACHUSETTS -- 3.0%
Massachusetts State Water Resources
Authority General Revenue Series 92A (A,
A)
6.500% 07/15/2019........................ 20 21,500
Massachusetts State Water Resources Revenue
(Aaa, AAA)
5.000% 12/01/2025........................ 660 569,250
------------
590,750
------------
NEW YORK -- 30.2%
New York NY Series D GO (Baa1, BBB+)
6.000% 02/15/2025........................ 15 13,969
New York NY Series H GO (Baa1, BBB+)
7.200% 02/01/2013........................ 600 637,500
New York State Dormitory Authority Revenue
(Episcopal Health Services) (GNMA Coll.)
(NR, AAA)
7.550% 08/01/2029........................ 435 468,713
New York State Dormitory Authority Revenue
(Judicial Facilities Lease) (MBIA
Insured) (Aaa, AAA)
7.375% 07/01/2016........................ 630 728,437
New York State Dormitory Authority Revenue
(Judicial Facilities Lease) (Aaa, AAA)
7.375% 07/01/2016........................ 40 46,250
</TABLE>
See Accompanying Notes to Financial Statements.
39
<PAGE>
BEA MUNICIPAL BOND FUND (CONTINUED)
<TABLE>
<CAPTION>
PAR
(000) VALUE
----------- ------------
<S> <C> <C>
NEW YORK -- (CONTINUED)
New York State Dormitory Authority Revenue
(Park Ridge Housing Inc. Project) (NR,
AA)
7.850% 02/01/2029........................ $ 530 $ 570,412
New York State Medical Care Facility
Finance Agency Hospital & Nursing Home
Insured Mortgage Revenue (NR, AAA)
5.500% 02/15/2022........................ 795 758,231
New York State Medical Care Facility
Financial Agency Revenue (NR, AAA)
5.750% 08/15/2019........................ 60 57,900
New York State Power Authority Revenue &
General Purpose Electric Revenue Series R
(Aaa, AAA)
7.000% 01/01/2010........................ 360 411,750
New York State Power Authority Revenue &
General Purpose Series G (Aaa, AAA)
5.375% 01/01/2010........................ 40 39,900
New York State Power Authority Revenue
Series V (MBIA Insured) (NR, AAA)
7.875% 01/01/1998........................ 790 843,325
New York State Throughway Authority General
Revenue Series B (MBIA Ins.)
(Aaa, AAA)
5.000% 01/01/2020........................ 30 26,775
Suffolk County NY Water Authority
Waterworks Revenue Series V
(NR, AAA)
6.750% 06/01/2012........................ 580 641,625
Triborough Bridge & Tunnel Authority NY
Mortgage Recording Tax SOB
(Aaa, AAA)
7.125% 01/01/2000........................ 625 678,125
------------
5,922,912
------------
<CAPTION>
PAR
(000) VALUE
----------- ------------
<S> <C> <C>
PUERTO RICO -- 4.5%
Commonwealth of Puerto Rico GO (Baa1, A)
5.400% 07/01/2007........................ $ 730 $ 728,175
Puerto Rico Electric Power Authority
Revenue Series N (Baa1, A-)
7.125% 07/01/2014........................ 135 143,944
------------
872,119
------------
SOUTH DAKOTA -- 5.6%
Heartland Consumers Power District SD
Electric Revenue (Aaa, AAA)
6.375% 01/01/2016........................ 30 30,375
Heartland Consumers Power District SD
Electric Revenue (Aaa, AAA)
7.000% 01/01/2016........................ 970 1,064,575
------------
1,094,950
------------
UTAH -- 2.9%
Utah State School District Finance
Cooperative Revenue (Capital Imp.
Financing Pool) (NR, AA+)
8.375% 08/15/1998........................ 535 567,769
------------
VIRGIN ISLANDS -- 3.8%
Virgin Islands Public Finance Authority
Revenue
(NR, BBB)
7.700% 10/01/2004........................ 690 746,925
------------
VIRGINIA -- 3.7%
Fairfax County VA Redevelopment & Housing
Authority Mortgage Revenue (FHA Insured)
(NR, AAA)
7.100% 04/01/2019........................ 630 726,862
------------
WASHINGTON -- 3.6%
King County WA Series A GO (Aa1, AA+)
6.200% 01/01/2024........................ 40 40,900
</TABLE>
See Accompanying Notes to Financial Statements.
40
<PAGE>
BEA MUNICIPAL BOND FUND (CONCLUDED)
<TABLE>
<CAPTION>
PAR
(000) VALUE
----------- ------------
<S> <C> <C>
WASHINGTON -- (CONTINUED)
Seattle WA Water System Revenue (Aa, AA)
5.250% 12/01/2023........................ $ 735 $ 664,256
------------
705,156
------------
TOTAL MUNICIPAL BONDS
(Cost $17,599,756)...................... 18,096,900
------------
U.S. TREASURY
OBLIGATIONS -- 2.0%
U.S. Treasury Bonds
8.750% 08/15/2020........................ 335 390,205
------------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $408,315)........................ 390,205
------------
SHORT TERM INVESTMENT -- 4.4%
Smith Barney Tax Free Money Market Fund.... 867 867,178
------------
TOTAL SHORT TERM INVESTMENT
(Cost $867,178)........................ 867,178
------------
TOTAL INVESTMENT AT VALUE -- 98.8%
(Cost $18,875,249*)........................ $ 19,354,283
OTHER ASSETS IN EXCESS OF LIABILITIES -- 1.2%.............
226,971
------------
NET ASSETS (Applicable to 1,336,820 BEA Shares) --
100.0%.................................................... $ 19,581,254
------------
------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE PER
SHARE
($19,581,254 DIVIDED BY 1,336,820)....................... $14.65
------------
------------
</TABLE>
* Cost for Federal income tax purposes at August 31, 1996 is $18,850,672. The
gross appreciation (depreciation) on a tax basis is as follows:
<TABLE>
<S> <C>
Gross Appreciation........................... $ 603,124
Gross Depreciation........................... (99,513)
-------------
Net Appreciation............................. $ 503,611
-------------
-------------
</TABLE>
The Moody's Investors Service, Inc. and Standard & Poor's Ratings Group ratings
indicated are the most recent ratings available at August 31, 1996 and are
unaudited.
INVESTMENT ABBREVIATIONS
<TABLE>
<S> <C>
GO............................ General Obligations
SOB........................... Special Obligations Bonds
AT AUGUST 31, 1996, NET ASSETS CONSISTED OF:
AMOUNT PER SHARE
----------- ---------
Capital Paid-In................ $18,602,539 $ 13.92
Accumulated Net Investment
Income........................ 42,930 .03
Accumulated Net Realized Gain
on Security Transactions...... 422,729 .32
Net Unrealized Appreciation on
Investments and Other......... 513,056 .38
- -------------------------------------------------------
NET ASSETS $19,581,254 $ 14.65
- -------------------------------------------------------
</TABLE>
See Accompanying Notes to Financial Statements.
41
<PAGE>
THE BEA FUNDS
OF THE RBB FUND, INC.
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 1996
<TABLE>
<CAPTION>
BEA EMERGING
BEA INTERNATIONAL MARKETS EQUITY BEA U.S. CORE
EQUITY FUND FUND EQUITY FUND
----------------- -------------- -------------
<S> <C> <C> <C>
INVESTMENT INCOME
Dividends............................................................. $ 14,577,259 $ 2,544,973 $ 781,813
Interest.............................................................. 1,714,487 403,084 201,977
Foreign taxes withheld................................................ (1,099,411) (226,107) --
----------------- -------------- -------------
Total Investment Income............................................. 15,192,335 2,721,950 983,790
----------------- -------------- -------------
EXPENSES
Investment advisory fees.............................................. 5,993,072 1,289,739 328,320
Administration service fees........................................... 1,123,701 193,461 65,664
Administration fees................................................... 936,418 161,218 54,720
Custodian fees........................................................ 776,762 320,568 57,798
Audit fees............................................................ 73,807 12,000 4,201
Miscellaneous fees.................................................... 45,000 32,000 2,750
Printing fees......................................................... 37,722 8,000 2,500
Registration fees..................................................... 35,000 27,337 38,361
Legal fees............................................................ 33,125 1,950 1,500
Transfer agent fees................................................... 21,129 22,113 22,241
Insurance expense..................................................... 18,931 2,700 776
Directors fees........................................................ 12,500 2,200 796
Organization expense.................................................. 10,665 10,665 5,208
----------------- -------------- -------------
9,117,832 2,083,951 584,835
Less fees waived...................................................... (200,151) (168,635) (147,075)
----------------- -------------- -------------
Total Expenses...................................................... 8,917,681 1,915,316 437,760
----------------- -------------- -------------
Net Investment Income................................................... 6,274,654 806,634 546,030
----------------- -------------- -------------
Realized and Unrealized Gain (Loss) on Investments and Foreign Currency
Transactions:
Net realized gain (loss) from:
Security transactions............................................... 34,300,823 (8,165,330) 5,046,088
Foreign exchange transactions....................................... 1,834,308 (101,733) --
----------------- -------------- -------------
36,135,131 (8,267,063) 5,046,088
----------------- -------------- -------------
Net unrealized appreciation(depreciation):
Investments......................................................... 7,908,456 11,411,914 322,074
Translation of assets and liabilities in foreign currencies......... 16,741 (357) --
----------------- -------------- -------------
7,925,197 11,411,557 322,074
----------------- -------------- -------------
Net Gain On Investments And Foreign Currency Transactions............... 44,060,328 3,144,494 5,368,162
----------------- -------------- -------------
Net Increase In Net Assets Resulting From Operations.................... $ 50,334,982 $ 3,951,128 $ 5,914,192
----------------- -------------- -------------
----------------- -------------- -------------
</TABLE>
See Accompanying Notes to Financial Statements.
42
<PAGE>
THE BEA FUNDS
OF THE RBB FUND, INC.
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 1996
<TABLE>
<CAPTION>
BEA U.S. CORE BEA GLOBAL
FIXED INCOME FIXED INCOME BEA HIGH BEA MUNICIPAL
FUND FUND YIELD FUND BOND FUND
------------- ------------ ------------ --------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends.................................................. $ -- $ -- $ 42,222 $ --
Interest................................................... 8,335,642 2,079,874 8,967,348 1,297,791
------------- ------------ ------------ --------------
Total Investment Income.................................. 8,335,642 2,079,874 9,009,570 1,297,791
------------- ------------ ------------ --------------
EXPENSES
Investment advisory fees................................... 450,786 157,059 643,353 161,784
Administration service fees................................ 180,314 47,118 137,861 34,668
Administration fees........................................ 150,262 39,265 114,885 28,890
Custodian fees............................................. 66,892 39,448 40,862 19,545
Audit fees................................................. 9,200 3,250 5,000 5,731
Miscellaneous fees......................................... 12,000 1,110 4,750 9,000
Printing fees.............................................. 1,162 236 10,058 5,357
Registration fees.......................................... 39,323 22,754 22,000 31,384
Legal fees................................................. 2,500 544 1,878 2,158
Transfer agent fees........................................ 21,643 20,701 19,603 19,850
Insurance expense.......................................... 1,600 450 2,737 750
Directors fees............................................. 875 250 2,173 700
Organization expense....................................... 4,136 5,409 10,665 7,433
------------- ------------ ------------ --------------
940,693 337,594 1,015,825 327,250
Less fees waived........................................... (339,645) (102,006) (206,745) (96,130)
------------- ------------ ------------ --------------
Total Expenses......................................... 601,048 235,588 809,080 231,120
------------- ------------ ------------ --------------
Net Investment Income........................................ 7,734,594 1,844,286 8,200,490 1,066,671
------------- ------------ ------------ --------------
Realized and Unrealized Gain (Loss) on Investments and
Foreign Currency Transactions:
Net realized gain (loss) from:
Security transactions.................................... 1,269,541 746,851 (524,984) 908,389
Foreign exchange transactions............................ 16,937 523,986 -- --
------------- ------------ ------------ --------------
1,286,478 1,270,837 (524,984) 908,389
------------- ------------ ------------ --------------
Net unrealized appreciation(depreciation):
Investments.............................................. (4,182,075) (278,160) 2,587,803 (1,524,506)
Translation of assets and liabilities in foreign
currencies.............................................. (13,236) (255,028) -- --
------------- ------------ ------------ --------------
(4,195,311) (533,188) 2,587,803 (1,524,506)
------------- ------------ ------------ --------------
Net Gain (Loss) On Investments And Foreign Currency
Transactions................................................ (2,908,833) 737,649 2,062,819 (616,117)
------------- ------------ ------------ --------------
Net Increase In Net Assets Resulting From Operations......... $ 4,825,761 $2,581,935 $ 10,263,309 $ 450,554
------------- ------------ ------------ --------------
------------- ------------ ------------ --------------
</TABLE>
See Accompanying Notes to Financial Statements.
43
<PAGE>
THE BEA FUNDS
OF THE RBB FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
BEA INTERNATIONAL BEA EMERGING MARKETS
EQUITY FUND EQUITY FUND
------------------------------ ------------------------------
FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR
ENDED AUGUST ENDED AUGUST ENDED AUGUST ENDED AUGUST
31, 1996 31, 1995 31, 1996 31, 1995
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income................................. $ 6,274,654 $ 2,606,678 $ 806,634 $ 26,113
Net gain (loss) on investments and foreign currency
transactions......................................... 44,060,328 (67,759,705) 3,144,494 (32,385,113)
-------------- -------------- -------------- --------------
Net increase (decrease) in net assets resulting from
operations........................................... 50,334,982 (65,153,027) 3,951,128 (32,359,000)
-------------- -------------- -------------- --------------
Distributions to shareholders:
Dividends to shareholders from net investment income:
BEA shares............................................ (2,649,123) -- (401,495) (394,002)
Distributions to shareholders from net realized capital
gains:
BEA shares............................................ -- (32,112,690) -- (5,374,023)
-------------- -------------- -------------- --------------
Total distributions to shareholders..................... (2,649,123) (32,112,690) (401,495) (5,768,025)
-------------- -------------- -------------- --------------
Net capital share transactions.......................... (138,669,688) 103,330,556 (17,180,987) 25,774,209
-------------- -------------- -------------- --------------
Total increase (decrease) in net assets................. (90,983,829) 6,064,839 (13,631,354) (12,352,816)
Net Assets:
Beginning of year..................................... 773,254,630 767,189,791 128,322,563 140,675,379
-------------- -------------- -------------- --------------
End of year........................................... $ 682,270,801 $773,254,630 $114,691,209 $128,322,563
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
</TABLE>
See Accompanying Notes to Financial Statements.
44
<PAGE>
THE BEA FUNDS
OF THE RBB FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
BEA U.S. CORE EQUITY FUND BEA U.S. CORE FIXED INCOME
----------------------------------- FUND
FOR THE PERIOD ------------------------------
FOR THE YEAR SEPTEMBER 1, FOR THE YEAR FOR THE YEAR
ENDED AUGUST 1994(1) TO AUGUST ENDED AUGUST ENDED AUGUST
31, 1996 31, 1995 31, 1996 31, 1995
-------------- ------------------- -------------- --------------
<S> <C> <C> <C> <C>
Increase in net assets:
Operations:
Net investment income............................ $ 546,030 $ 351,583 $ 7,734,594 $ 4,392,275
Net gain (loss) on investments and foreign
currency transactions........................... 5,368,162 4,351,342 (2,908,833) 3,524,378
-------------- ------------------- -------------- --------------
Net increase in net assets resulting from
operations...................................... 5,914,192 4,702,925 4,825,761 7,916,653
-------------- ------------------- -------------- --------------
Distributions to shareholders:
Dividends to shareholders from net investment
income:
BEA shares....................................... (384,500) (102,838) (7,217,136) (3,353,829)
Distributions to shareholders from net realized
capital gains:
BEA shares....................................... (2,961,757) -- (1,598,598) --
-------------- ------------------- -------------- --------------
Total distributions to shareholders................ (3,346,257) (102,838) (8,815,734) (3,353,829)
-------------- ------------------- -------------- --------------
Net capital share transactions..................... 24,803,723 27,043,539 23,336,409 64,671,197
-------------- ------------------- -------------- --------------
Total increase in net assets....................... 27,371,658 31,643,626 19,346,436 69,234,021
Net Assets:
Beginning of year................................ 31,643,776 150 99,249,839 30,015,818
-------------- ------------------- -------------- --------------
End of year...................................... $ 59,015,434 $ 31,643,776 $118,596,275 $ 99,249,839
-------------- ------------------- -------------- --------------
-------------- ------------------- -------------- --------------
</TABLE>
(1) Commencement of Operations.
See Accompanying Notes to Financial Statements.
45
<PAGE>
THE BEA FUNDS
OF THE RBB FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
BEA GLOBAL FIXED INCOME FUND BEA HIGH YIELD FUND
------------------------------ ------------------------------
FOR THE YEAR FOR THE YEAR FOR THE YEAR FOR THE YEAR
ENDED AUGUST ENDED AUGUST ENDED AUGUST ENDED AUGUST
31, 1996 31, 1995 31, 1996 31, 1995
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income................................. $ 1,844,286 $ 1,270,820 $ 8,200,490 $ 13,411,565
Net gain (loss) on investments and foreign currency
transactions......................................... 737,649 566,554 2,062,819 (2,367,436)
-------------- -------------- -------------- --------------
Net increase in net assets resulting from
operations........................................... 2,581,935 1,837,374 10,263,309 11,044,129
-------------- -------------- -------------- --------------
Distributions to shareholders:
Dividends to shareholders from net investment income:
BEA shares............................................ (2,322,498) (924,756) (10,165,849) (12,388,703)
Distributions to shareholders from net realized capital
gains:
BEA shares............................................ (267,603) -- -- --
-------------- -------------- -------------- --------------
Total distributions to shareholders..................... (2,590,101) (924,756) (10,165,849) (12,388,703)
-------------- -------------- -------------- --------------
Net capital share transactions.......................... 18,790,839 12,351,849 (77,869,859) 11,448,059
-------------- -------------- -------------- --------------
Total increase (decrease) in net assets................. 18,782,673 13,264,467 (77,772,399) 10,103,485
Net Assets:
Beginning of year..................................... 19,564,827 6,300,360 153,620,957 143,517,472
-------------- -------------- -------------- --------------
End of year........................................... $ 38,347,500 $ 19,564,827 $ 75,848,558 $153,620,957
-------------- -------------- -------------- --------------
-------------- -------------- -------------- --------------
</TABLE>
See Accompanying Notes to Financial Statements.
46
<PAGE>
THE BEA FUNDS
OF THE RBB FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
BEA MUNICIPAL BOND FUND
------------------------------
FOR THE YEAR FOR THE YEAR
ENDED AUGUST ENDED AUGUST
31, 1996 31, 1995
-------------- --------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income................................................................... $ 1,066,671 $ 2,273,373
Net gain (loss) on investments and foreign currency transactions........................ (616,117) 1,835,066
-------------- --------------
Net increase in net assets resulting from operations.................................... 450,554 4,108,439
-------------- --------------
Distributions to shareholders:
Dividends to shareholders from net investment income:
BEA shares.............................................................................. (1,137,175) (2,400,128)
Distributions to shareholders from net realized capital gains:
BEA shares.............................................................................. (629,414) (174,436)
-------------- --------------
Total distributions to shareholders....................................................... (1,766,589) (2,574,564)
-------------- --------------
Net capital share transactions............................................................ (28,080,548) 5,134,026
-------------- --------------
Total increase (decrease) in net assets................................................... (29,396,583) 6,667,901
Net Assets:
Beginning of year....................................................................... 48,977,837 42,309,936
-------------- --------------
End of year............................................................................. $ 19,581,254 $ 48,977,837
-------------- --------------
-------------- --------------
</TABLE>
See Accompanying Notes to Financial Statements.
47
<PAGE>
THE BEA FUNDS
OF THE RBB FUND, INC.
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
BEA INTERNATIONAL EQUITY FUND
-----------------------------------------------------------------------------
FOR THE PERIOD
FOR THE FOR THE FOR THE OCTOBER 1, 1992*
YEAR ENDED YEAR ENDED YEAR ENDED TO
AUGUST 31, 1996 AUGUST 31, 1995 AUGUST 31, 1994 AUGUST 31, 1993
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Net asset value, beginning of
period............................ $ 18.24 $ 20.73 $ 18.73 $ 15.00
----------------- ----------------- ----------------- -----------------
Income from investment operations
Net investment income.......... 0.19 0.06 0.05 0.04
Net gain (loss) on securities
(both realized and
unrealized)................... 1.05 (1.75) 2.60 3.69
----------------- ----------------- ----------------- -----------------
Total from investment
operations.................... 1.24 (1.69) 2.65 3.73
----------------- ----------------- ----------------- -----------------
Less Distributions
Dividends from net investment
income........................ (0.07) -- (0.05) --
Distributions from capital
gains......................... -- (0.80) (0.60) --
----------------- ----------------- ----------------- -----------------
Total distributions............ (0.07) (0.80) (0.65) --
----------------- ----------------- ----------------- -----------------
Net asset value, end of period..... $ 19.41 $ 18.24 $ 20.73 $ 18.73
----------------- ----------------- ----------------- -----------------
----------------- ----------------- ----------------- -----------------
Total return....................... 6.81%(d) (8.06%)(d) 14.23%(d) 24.87%(c)(d)
Ratio/Supplemental Data
Net assets, end of period...... $ 682,270,801 $ 773,254,630 $ 767,189,791 $ 268,403,524
Ratio of expenses to average
net assets.................... 1.19%(a) 1.25%(a) 1.25%(a) 1.25%(a)(b)
Ratio of net investment income
to average net assets......... 0.84% 0.35% 0.33% 0.41%(b)
Fund turnover rate............. 86% 78% 104% 106%(c)
Average commission rate (e).... $ .0007 N/A N/A N/A
</TABLE>
(a) Without the voluntary waiver of advisory fees and administration fees, the
ratios of expenses to average net assets for the BEA International Equity
Fund would have been 1.22%, 1.26% and 1.30% for the years ended August 31,
1996, 1995 and 1994, respectively, and 1.46% annualized for the period ended
August 31, 1993.
(b) Annualized.
(c) Not Annualized.
(d) Redemption fees not reflected in total return.
(e) Computed by dividing the total amount of brokerage commissions paid by the
total shares of investment securities purchased and sold during the period
for which commissions were charged, as required by the SEC for fiscal years
beginning after September 1, 1995.
* Commencement of operations
See Accompanying Notes to Financial Statements.
48
<PAGE>
THE BEA FUNDS
OF THE RBB FUND, INC.
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
BEA EMERGING MARKETS EQUITY FUND
---------------------------------------------------------------------
FOR THE PERIOD
FOR THE FOR THE FOR THE FEBRUARY 1,
YEAR ENDED YEAR ENDED YEAR ENDED 1993* TO
AUGUST 31, 1996 AUGUST 31, 1995 AUGUST 31, 1994 AUGUST 31, 1993
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Net asset value, beginning of
period............................ $ 17.67 $ 24.58 $ 18.38 $ 15.00
--------------- --------------- --------------- ---------------
Income from investment operations
Net investment income (loss)... 0.10 0.02 (0.03) 0.02
Net gain (loss) on securities
(both realized and
unrealized)................... 0.48 (5.94) 6.64 3.36
--------------- --------------- --------------- ---------------
Total from investment
operations.................... 0.58 (5.92) 6.61 3.38
--------------- --------------- --------------- ---------------
Less Distributions
Dividends from net investment
income........................ (0.05) (0.07) (0.09) --
Distributions from capital
gains......................... -- (0.92) (0.32) --
--------------- --------------- --------------- ---------------
Total distributions............ (0.05) (0.99) (0.41) --
--------------- --------------- --------------- ---------------
Net asset value, end of period..... $ 18.20 $ 17.67 $ 24.58 $ 18.38
--------------- --------------- --------------- ---------------
--------------- --------------- --------------- ---------------
Total return....................... 3.33%(d) (24.42%)(d) 35.99%(d) 22.53%(c)(d)
Ratio/Supplemental Data
Net assets, end of period...... $ 114,691,209 $ 128,322,563 $ 140,675,379 $ 21,988,062
Ratio of expenses to average
net assets.................... 1.49%(a) 1.50%(a) 1.50%(a) 1.50%(a)(b)
Ratio of net investment income
(loss) to average net
assets........................ 0.63% 0.02% (0.02)% 0.28%(b)
Fund turnover rate............. 79% 79% 54% 38%(c)
Average commission rate (e).... $ .0005 N/A N/A N/A
</TABLE>
(a) Without the voluntary 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 Fund would have been
1.62%, 1.61% and 2.01% for the years ended August 31, 1996, 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.
(e) Computed by dividing the total amount of brokerage commissions paid by the
total shares of investment securities purchased and sold during the period
for which commissions were charged, as required by the SEC for fiscal years
beginning after September 1, 1995.
* Commencement of operations
See Accompanying Notes to Financial Statements.
49
<PAGE>
THE BEA FUNDS
OF THE RBB FUND, INC.
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
BEA U.S. CORE EQUITY FUND BEA U.S. CORE FIXED INCOME FUND
--------------------------------- ---------------------------------------------------
FOR THE PERIOD FOR THE PERIOD
FOR THE SEPTEMBER 1, FOR THE FOR THE APRIL 1, 1994*
YEAR ENDED 1994* TO YEAR ENDED YEAR ENDED TO
AUGUST 31, 1996 AUGUST 31, 1995 AUGUST 31, 1996 AUGUST 31, 1995 AUGUST 31, 1994
--------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
period............................ $ 17.86 $ 15.00 $ 15.42 $ 14.77 $ 15.00
--------------- --------------- --------------- --------------- ---------------
Income from investment operations
Net investment income.......... 0.20 0.22 0.95 0.88 0.42
Net gain (loss) on securities
(both realized and
unrealized)................... 2.81 2.72 (0.16) 0.61 (0.40)
--------------- --------------- --------------- --------------- ---------------
Total from investment
operations.................... 3.01 2.94 0.79 1.49 0.02
--------------- --------------- --------------- --------------- ---------------
Less Distributions
Dividends from net investment
income........................ (0.21) (0.08) (0.93) (0.84) (0.25)
Distributions from capital
gains......................... (1.61) -- (0.22) -- --
--------------- --------------- --------------- --------------- ---------------
Total distributions............ (1.82) (0.08) (1.15) (0.84) (0.25)
--------------- --------------- --------------- --------------- ---------------
Net asset value, end of period..... $ 19.05 $ 17.86 $ 15.06 $ 15.42 $ 14.77
--------------- --------------- --------------- --------------- ---------------
--------------- --------------- --------------- --------------- ---------------
Total return....................... 17.59% 19.75% 5.23% 10.60% 0.17%(c)
Ratio/Supplemental Data
Net assets, end of period...... $ 59,015,434 $ 31,643,776 $ 118,596,275 $ 99,249,839 $ 30,015,818
Ratio of expenses to average
net assets.................... 1.00%(a) 1.00%(a) 0.50%(a) 0.50%(a) 0.50%(a)(b)
Ratio of net investment income
to average net assets......... 1.25% 1.59% 6.43% 6.47% 6.04%(b)
Fund turnover rate............. 127% 123% 201% 304% 186%(c)
Average commission rate (d).... $ .0614 N/A N/A N/A N/A
</TABLE>
(a) Without the waiver of advisory fees and administration fees, the ratios of
expenses to average net assets for the BEA U.S. Core Equity Fund would have
been 1.34% and 1.51% for the years ended August 31, 1996 and 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 Fund would have
been .78% and .84% for the years ended August 31, 1996 and 1995,
respectively, and .99% annualized for the period ended August 31, 1994.
(b) Annualized.
(c) Not annualized.
(d) Computed by dividing the total amount of brokerage commissions paid by the
total shares of investment securities purchased and sold during the period
for which commissions were charged, as required by the SEC for fiscal years
beginning after September 1, 1995.
* Commencement of operations
See Accompanying Notes to Financial Statements.
50
<PAGE>
THE BEA FUNDS
OF THE RBB FUND, INC.
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
BEA GLOBAL FIXED INCOME FUND
---------------------------------------------------
FOR THE PERIOD
FOR THE FOR THE JUNE 28, 1994*
YEAR ENDED YEAR ENDED TO
AUGUST 31, 1996 AUGUST 31, 1995 AUGUST 31, 1994
--------------- --------------- ---------------
<S> <C> <C> <C>
Net asset value, beginning of
period............................ $ 15.67 $ 15.00 $ 15.00
--------------- --------------- ---------------
Income from investment operations
Net investment income.......... 0.87 1.06 0.15
Net gains (losses) on
securities (both realized and
unrealized)................... 0.58 0.49 (0.15)
--------------- --------------- ---------------
Total from investment
operations.................... 1.45 1.55 --
--------------- --------------- ---------------
Less Distributions
Dividends from net investment
income........................ (1.22) (0.88) --
Distributions from capital
gains......................... (0.15) -- --
--------------- --------------- ---------------
Total distributions............ (1.37) (0.88) --
--------------- --------------- ---------------
Net asset value, end of period..... $ 15.75 $ 15.67 $ 15.00
--------------- --------------- ---------------
--------------- --------------- ---------------
Total return....................... 9.65% 10.72% 0.00%(c)
Ratio/Supplemental Data
Net assets, end of period...... $ 38,347,500 $ 19,564,827 $ 6,300,360
Ratio of expenses to average
net assets.................... 0.75%(a) 0.75%(a) 0.75%(a)(b)
Ratio of net investment income
to average net assets......... 7.37% 7.26% 5.64%(b)
Fund turnover rate............. 87% 91% 0%(c)
</TABLE>
(a) Without the voluntary 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 Fund would have been
1.07% and 1.29% for the years ended August 31, 1996 and 1995, respectively,
and 1.92% annualized for the period ended August 31, 1994.
(b) Annualized.
(c) Not annualized.
* Commencement of operations
See Accompanying Notes to Financial Statements.
51
<PAGE>
THE BEA FUNDS
OF THE RBB FUND, INC.
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
BEA HIGH YIELD FUND
---------------------------------------------------------------------
FOR THE PERIOD
FOR THE FOR THE FOR THE MARCH 1, 1993*
YEAR ENDED YEAR ENDED YEAR ENDED TO
AUGUST 31, 1996 AUGUST 31, 1995 AUGUST 31, 1994 AUGUST 31, 1993
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Net asset value, beginning of
period............................ $ 15.72 $ 15.94 $ 16.94 $ 15.00
--------------- --------------- --------------- ---------------
Income from investment operations
Net investment income.......... 1.47 1.42 1.20 0.52
Net gains (losses) on
securities (both realized and
unrealized)................... 0.40 (0.30) (0.77) 1.42
--------------- --------------- --------------- ---------------
Total from investment
operations.................... 1.87 1.12 0.43 1.94
--------------- --------------- --------------- ---------------
Less Distributions
Dividends from net investment
income........................ (1.50) (1.34) (1.43) --
Distributions from capital
gains......................... -- -- -- --
--------------- --------------- --------------- ---------------
Total distributions............ (1.50) (1.34) (1.43) --
--------------- --------------- --------------- ---------------
Net asset value, end of period..... $ 16.09 $ 15.72 $ 15.94 $ 16.94
--------------- --------------- --------------- ---------------
--------------- --------------- --------------- ---------------
Total return....................... 12.42% 7.79%(d) 2.24%(d) 12.93%(c)(d)
Ratio/Supplemental Data
Net assets, end of period...... $ 75,848,558 $ 153,620,957 $ 143,517,472 $ 98,356,591
Ratio of expenses to average
net assets.................... 0.88%(a) 1.00%(a) 1.00%(a) 1.00%(a)(b)
Ratio of net investment income
to average net assets......... 8.92% 9.37% 7.73% 7.56%(b)
Fund turnover rate............. 143% 70% 121% 72%(c)
</TABLE>
(a) Without the voluntary waiver of advisory fees and administration fees, the
ratios of expenses to average net assets for the BEA High Yield Fund would
have been 1.11%, 1.08% and 1.13% for the years ended August 31, 1996, 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.
* Commencement of operations
See Accompanying Notes to Financial Statements.
52
<PAGE>
THE BEA FUNDS
OF THE RBB FUND, INC.
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
BEA MUNICIPAL BOND FUND
---------------------------------------------------
FOR THE PERIOD
FOR THE FOR THE JUNE 20, 1994*
YEAR ENDED YEAR ENDED TO
AUGUST 31, 1996 AUGUST 31, 1995 AUGUST 31, 1994
--------------- --------------- ---------------
<S> <C> <C> <C>
Net asset value, beginning of
period............................ $ 15.46 $ 15.06 $ 15.00
--------------- --------------- ---------------
Income from investment operations
Net investment income.......... 0.73 0.71 0.09
Net gains(losses) on securities
(both realized and
unrealized)................... (0.37) 0.50 (0.03)
--------------- --------------- ---------------
Total from investment
operations.................... 0.36 1.21 0.06
--------------- --------------- ---------------
Less Distributions
Dividends from net investment
income........................ (0.74) (0.76) --
Distributions from capital
gains......................... (0.43) (0.05) --
--------------- --------------- ---------------
Total distributions............ (1.17) (0.81) --
--------------- --------------- ---------------
Net asset value, end of period..... $ 14.65 $ 15.46 $ 15.06
--------------- --------------- ---------------
--------------- --------------- ---------------
Total return....................... 2.27% 8.42% 0.40%(c)
Ratio/Supplemental Data
Net assets, end of period...... $ 19,581,254 $ 48,977,837 $ 42,309,936
Ratio of expenses to average
net assets.................... 1.00%(a) 1.00%(a) 1.00%(a)(b)
Ratio of net investment income
to average net assets......... 4.62% 4.76% 3.27%(b)
Fund turnover rate............. 34% 25% 9%(c)
</TABLE>
(a) Without the voluntary waiver of advisory fees and administration fees, the
ratios of expenses to average net assets for the BEA Municipal Bond Fund
would have been 1.42% and 1.19% for the years ended August 31, 1996 and
1995, respectively, and 1.34% annualized for the period ended August 31,
1994.
(b) Annualized.
(c) Not annualized.
* Commencement of operations
See Accompanying Notes to Financial Statements.
53
<PAGE>
THE BEA FUNDS
OF THE RBB FUND, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The RBB Fund, Inc. ("RBB") is registered under the Investment Company Act of
1940, as amended, as an open-end management investment company. RBB was
incorporated in Maryland on February 29, 1988, and currently has seventeen
investment portfolios, seven of which are included in these financial
statements.
RBB has authorized capital of thirty billion shares of common stock of which
12.35 billion are currently classified into sixty-six classes. Each class
represents an interest in one of seventeen investment portfolios of RBB. The
classes have been grouped into fifteen separate "families", eight of which have
begun investment operations. The BEA Funds represents interests in seven
portfolios ("Funds") which are covered by this report.
A) SECURITY VALUATION -- Fund 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 Fund'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 RBB's intention to have each portfolio 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.
G) USE OF ESTIMATES -- The preparation of financial statements in
conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets
and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
54
<PAGE>
THE BEA FUNDS
OF THE RBB FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 1.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Some countries in which the Funds 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 disposition of securities by the
Funds 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.
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. 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.
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 Fund's net asset value.
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
Funds described herein.
For its advisory services, BEA is entitled to receive the following fees,
computed daily and payable quarterly on a Fund's average daily net assets:
<TABLE>
<CAPTION>
FUND ANNUAL RATE
- -------------------------------------- --------------------------------------
<S> <C>
BEA International Equity Fund 0.80% of average daily net assets
BEA Emerging Markets Equity Fund 1.00% of average daily net assets
BEA U.S. Core Equity Fund 0.75% of average daily net assets
BEA U.S. Core Fixed Income Fund 0.375% of average daily net assets
BEA Global Fixed Income Fund 0.50% of average daily net assets
BEA High Yield Fund 0.70% of average daily net assets
BEA Municipal Bond Fund 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 Funds. For the year ended August 31, 1996,
advisory fees and waivers for each of the seven investment Funds were as
follows:
<TABLE>
<CAPTION>
GROSS NET
ADVISORY FEE WAIVER ADVISORY FEE
-------------- -------------- --------------
<S> <C> <C> <C>
BEA International Equity Fund $ 5,993,072 $ -- $ 5,993,072
BEA Emerging Markets Equity Fund 1,289,739 -- 1,289,739
BEA U.S. Core Equity Fund 328,320 (93,430) 234,890
BEA U.S. Core Fixed Income Fund 450,786 (134,639) 316,147
BEA Global Fixed Income Fund 157,059 (53,915) 103,144
BEA High Yield Fund 643,353 (100,763) 542,590
BEA Municipal Bond Fund 161,784 (68,790) 92,994
</TABLE>
PFPC Inc. ("PFPC"), an indirect wholly owned subsidiary of PNC Bank Corp.,
serves as each Fund's transfer and dividend disbursing agent. In addition, PFPC
serves as administrator for each of the seven Funds. PFPC's administration fee
is computed daily and payable quarterly at an annual rate of .125% of each
Fund's average daily net assets.
55
<PAGE>
THE BEA FUNDS
OF THE RBB FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 Funds. For the year ended August 31, 1996,
administration fees for each of the seven investment Funds were as follows:
<TABLE>
<CAPTION>
GROSS NET
ADMINISTRATION ADMINISTRATION
FEE WAIVER FEE
-------------- -------------- --------------
<S> <C> <C> <C>
BEA International Equity Fund $ 936,418 $(5,204) $ 931,214
BEA Emerging Markets Equity Fund 161,218 (8,509) 152,709
BEA U.S. Core Equity Fund 54,720 -- 54,720
BEA U.S. Core Fixed Income Fund 150,262 (48,084) 102,178
BEA Global Fixed Income Fund 39,265 (7,853) 31,412
BEA High Yield Fund 114,885 (12,483) 102,402
BEA Municipal Bond Fund 28,890 -- 28,890
</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 quarterly at
an annual rate of .15% of each Fund's average daily net assets.
NOTE 3.PURCHASES AND SALES OF SECURITIES
For the year ended August 31, 1996, 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 Fund $620,162,213 $730,006,726 $ -- $ --
BEA Emerging Markets Equity Fund 96,948,942 111,827,920 -- --
BEA U.S. Core Equity Fund 72,478,392 52,344,258 -- --
BEA U.S. Core Fixed Income Fund 162,070,786 121,353,161 113,926,558 105,129,232
BEA Global Fixed Income Fund 20,983,511 9,433,901 16,996,868 14,091,064
BEA High Yield Fund 115,438,832 181,333,821 8,941,087 21,682,861
BEA Municipal Bond Fund 6,047,590 36,230,309 1,525,89 1,090,739
</TABLE>
For the year ended August 31, 1996, purchases include $6,926,876, $753,018,
$13,122,108, and $992,174 of investment securities received from shareholders in
exchange for 413,792 shares, 40,650 shares, 833,800 shares, and 68,007 shares
sold by the BEA Emerging Markets Equity Fund, BEA U.S. Core Equity Fund, BEA
U.S. Core Fixed Income Fund and BEA Municipal Bond Fund, respectively. For the
year ended August 31, 1996, sales include $93,483,064, and $22,092,445 of
investment securities delivered to shareholders in exchange for 4,928,316
shares, and 1,470,868 shares redeemed by the BEA International Equity Fund and
BEA U.S. Core Fixed Income Fund, respectively. This resulted in a gain of
$8,745,063 for the BEA International Equity Fund and a loss of $371,989 for the
BEA U.S. Core Fixed Income Fund.
56
<PAGE>
THE BEA FUNDS
OF THE RBB FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 4.CAPITAL SHARES
Transactions in capital shares for each period were as follows:
<TABLE>
<CAPTION>
BEA INTERNATIONAL EQUITY BEA EMERGING MARKETS EQUITY
FUND FUND
----------------------------------------------------- ----------------------------------------------------
FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED
AUGUST 31, 1996 AUGUST 31, 1995 AUGUST 31, 1996 AUGUST 31, 1995
-------------------------- ------------------------- ------------------------- -------------------------
SHARES VALUE SHARES VALUE SHARES VALUE SHARES VALUE
----------- ------------- ----------- ------------ ----------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold 8,492,355 $ 158,914,042 7,555,790 $141,210,504 1,930,842 $ 33,432,364 2,740,756 $ 45,977,774
Shares issued in
reinvestment of
dividends 137,894 2,523,456 1,783,551 31,977,179 19,043 323,156 290,750 5,614,374
Shares
repurchased, net
of redemption
fees (15,886,499) (300,107,186) (3,955,727) (69,857,127) (2,909,721) (50,936,507) (1,493,908) (25,817,939)
----------- ------------- ----------- ------------ ----------- ------------ ----------- ------------
Net increase
(decrease) (7,256,250) $(138,669,688) 5,383,614 $103,330,556 (959,836) $(17,180,987) 1,537,598 $ 25,774,209
----------- ------------- ----------- ------------ ----------- ------------ ----------- ------------
----------- ------------- ----------- ------------ ----------- ------------ ----------- ------------
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
FUND FUND
-------------------------------------------------- ---------------------------------------------------
FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED
AUGUST 31, 1996 AUGUST 31, 1995 AUGUST 31, 1996 AUGUST 31, 1995
------------------------ ------------------------ ------------------------- ------------------------
SHARES VALUE SHARES VALUE SHARES VALUE SHARES VALUE
----------- ----------- ----------- ----------- ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold 1,435,791 $27,128,776 1,883,469 $28,923,460 4,441,435 $ 68,996,273 4,372,374 $64,282,193
Shares issued in
reinvestment of
dividends 188,415 3,346,258 7,112 102,838 576,935 8,756,243 229,407 3,338,279
Shares repurchased (298,285) (5,671,311) (118,327) (1,982,759) (3,583,115) (54,416,107) (195,402) (2,949,275)
----------- ----------- ----------- ----------- ----------- ------------ ----------- -----------
Net increase 1,325,921 $24,803,723 1,772,254 $27,043,539 1,435,255 $ 23,336,409 4,406,379 $64,671,197
----------- ----------- ----------- ----------- ----------- ------------ ----------- -----------
----------- ----------- ----------- ----------- ----------- ------------ ----------- -----------
BEA Shares
Authorized 500,000,000 500,000,000 500,000,000 500,000,000
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
57
<PAGE>
THE BEA FUNDS
OF THE RBB FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 4.CAPITAL SHARES (CONTINUED)
<TABLE>
<CAPTION>
BEA GLOBAL FIXED INCOME BEA HIGH YIELD
FUND FUND
-------------------------------------------------- -----------------------------------------------------
FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE YEAR ENDED
AUGUST 31, 1996 AUGUST 31, 1995 AUGUST 31, 1996 AUGUST 31, 1995
------------------------ ------------------------ -------------------------- -------------------------
SHARES VALUE SHARES VALUE SHARES VALUE SHARES VALUE
----------- ----------- ----------- ----------- ----------- ------------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold 1,105,942 $17,551,485 766,650 $11,427,093 3,372,093 $ 54,558,056 580,982 $ 8,824,836
Shares issued in
reinvestment of
dividends 162,519 2,519,968 61,519 924,756 629,920 9,902,559 825,245 12,285,993
Shares
repurchased, net
of redemption
fees (81,878) (1,280,614) -- -- (9,062,440) (142,330,474) (632,837) (9,662,770)
----------- ----------- ----------- ----------- ----------- ------------- ------------ -----------
Net increase
(decrease) 1,186,583 $18,790,839 828,169 $12,351,849 (5,060,427) $ (77,869,859) 773,390 $11,448,059
----------- ----------- ----------- ----------- ----------- ------------- ------------ -----------
----------- ----------- ----------- ----------- ----------- ------------- ------------ -----------
BEA Shares
Authorized 500,000,000 500,000,000 500,000,000 500,000,000
----------- ----------- ----------- ------------
----------- ----------- ----------- ------------
</TABLE>
<TABLE>
<CAPTION>
BEA MUNICIPAL BOND
FUND
-------------------------------------------------------
FOR THE YEAR ENDED FOR THE YEAR ENDED
AUGUST 31, 1996 AUGUST 31, 1995
-------------------------- --------------------------
SHARES VALUE SHARES VALUE
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Shares sold 315,445 $ 4,700,422 935,296 $ 13,666,897
Shares issued in reinvestment of dividends 109,160 1,656,622 123,547 1,831,054
Shares repurchased (2,256,456) (34,437,592) (699,839) (10,363,925)
----------- ------------ ----------- ------------
Net increase (decrease) (1,831,851) $(28,080,548) 359,004 $ 5,134,026
----------- ------------ ----------- ------------
----------- ------------ ----------- ------------
BEA Shares Authorized 500,000,000 500,000,000
----------- -----------
----------- -----------
</TABLE>
NOTE 5.RESTRICTED SECURITIES
Certain of the BEA International Equity Fund's investments are restricted as
to resale and are valued at the direction of the Board of Directors of RBB 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, 1996, percentage of net assets
which the securities comprise, aggregate cost and unit value of the securities.
<TABLE>
<CAPTION>
NUMBER OF ACQUISITION 08/31/96 FAIR PERCENTAGE OF VALUE PER
SHARES DATE VALUE NET ASSETS SECURITY COST UNIT
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Sodigas Pampeana 558,962 1/14/93 $ 844,809 0.1% $ 566,038 $ 1.511
Sodigas del Sur 403,923 1/14/93 745,416 0.1% 384,038 1.845
Geotek Communications, Inc. 600 5/26/95 6,476,842 0.8% 6,000,000 10,795
------------- -------------
$ 8,067,067 $ 6,950,076
------------- -------------
------------- -------------
</TABLE>
NOTE 6.CAPITAL LOSS CARRYOVER
At August 31, 1996, capital loss carryovers were available to offset future
realized gains as follows: $26,922,032 in the BEA International Equity Fund
which expires in 2003, $22,315,875 in the Emerging Markets Equity Fund which
58
<PAGE>
THE BEA FUNDS
OF THE RBB FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 6.CAPITAL LOSS CARRYOVER (CONTINUED)
expires in 2004 and $13,514,163 in the BEA High Yield Fund of which $8,528,142
expires in 2001 and $4,986,021 expires in 2003. In addition, deferred
post-October 31, 1995 losses were available to offset future net capital gains
through August 31, 1997 as follows: $2,694,725 in the BEA High Yield Fund.
NOTE 7.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 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, 1996, the BEA
International Equity Fund, the BEA U.S. Core Fixed Income Fund and the BEA
Global Fixed Income Fund entered into forward foreign currency contracts.
The BEA U.S. Core Fixed Income Fund's open Forward Foreign Currency
Contracts at August 31, 1996 were as follows:
<TABLE>
<CAPTION>
FOREIGN UNREALIZED
FORWARD CURRENCY EXPIRATION CURRENCY CONTRACT CONTRACT FOREIGN EXCHANGE
CONTRACT DATE TO BE SOLD AMOUNT VALUE GAIN/(LOSS)
- ------------------------ --------- ---------- --------- --------- ----------------
<S> <C> <C> <C> <C> <C>
Canadian Dollars 09/17/96 932,000 $ 678,852 $ 681,586 $ (2,734)
German Deutschemarks 09/17/96 350,000 229,358 236,823 (7,465)
--------- --------- --------
$ 908,210 $ 918,409 $ (10,199)
--------- --------- --------
--------- --------- --------
<CAPTION>
FOREIGN
CURRENCY UNREALIZED
FORWARD CURRENCY EXPIRATION TO BE CONTRACT CONTRACT FOREIGN EXCHANGE
CONTRACT DATE PURCHASED AMOUNT VALUE GAIN/(LOSS)
- ------------------------ --------- ---------- --------- --------- ----------------
<S> <C> <C> <C> <C> <C>
German Deutschemarks 09/17/96 350,000 $ 237,649 $ 236,823 $ (826)
--------- --------- --------
--------- --------- --------
</TABLE>
59
<PAGE>
THE BEA FUNDS
OF THE RBB FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
NOTE 7.FORWARD FOREIGN CURRENCY CONTRACTS (CONTINUED)
The BEA Global Fixed Income Fund's open Forward Foreign Currency Contracts
at August 31, 1996 were as follows:
<TABLE>
<CAPTION>
UNREALIZED
FORWARD CURRENCY EXPIRATION FOREIGN CURRENCY CONTRACT CONTRACT FOREIGN EXCHANGE
CONTRACT DATE TO BE SOLD AMOUNT VALUE GAIN/(LOSS)
- ------------------------ --------- ---------------- ------------ ------------ ----------------
<S> <C> <C> <C> <C> <C>
Australian Dollars 09/17/96 355,000 $ 280,450 $ 280,495 $ (45)
Australian Dolars 09/17/96 1,005,000 793,649 794,077 (428)
Canadian Dollars 09/17/96 740,000 543,970 541,173 2,797
German Deutschemarks 09/17/96 94,000 61,599 63,604 (2,005)
German Deutschemarks 09/17/96 1,900,000 1,250,000 1,285,608 (35,608)
German Deutschemarks 09/17/96 4,424,000 2,897,753 2,993,437 (95,684)
Italian Lira 09/17/96 1,562,000,000 1,009,110 1,032,495 (23,385)
Italian Lira 09/17/96 1,880,000,000 1,214,550 1,189,815 24,735
Japanese Yen 09/17/96 163,620,000 1,500,000 1,509,660 (9,660)
Netherlands Guilder 09/17/96 611,500 358,577 369,081 (10,504)
Netherlands Guilder 09/17/96 6,204,000 3,634,446 3,744,523 (110,077)
Swedish Krona 09/17/96 368,000 54,498 55,572 (1,074)
------------ ------------ ----------------
$ 13,598,602 $ 13,859,540 $ (260,938)
------------ ------------ ----------------
------------ ------------ ----------------
</TABLE>
<TABLE>
<CAPTION>
UNREALIZED
FORWARD CURRENCY EXPIRATION FOREIGN CURRENCY CONTRACT CONTRACT FOREIGN EXCHANGE
CONTRACT DATE TO BE PURCHASED AMOUNT VALUE GAIN/(LOSS)
- ------------------------ --------- ---------------- ----------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
French Francs 09/17/96 273,000 $ 52,665 $ 53,963 $ 1,298
French Francs 09/17/96 4,250,000 820,622 840,080 19,458
French Francs 09/17/96 5,987,000 1,155,792 1,183,427 27,635
German Deutschemarks 09/17/96 94,000 62,499 63,604 1,105
German Deutschemarks 09/17/96 1,800,000 1,196,188 1,217,944 21,756
Great Britain Pounds 09/17/96 220,000 336,600 343,449 6,849
Italian Lira 09/17/96 1,880,000,000 1,203,046 1,189,815 (13,231)
Japanese Yen 09/17/96 175,000,000 1,638,960 1,614,659 (24,301)
Netherlands Guilder 09/17/96 611,500 362,983 369,081 6,098
Netherlands Guilder 09/17/96 1,950,000 1,150,266 1,176,953 26,687
Spanish Pesetas 09/17/96 52,200,000 401,322 416,860 15,538
----------- ----------- --------
$ 8,380,943 $ 8,469,835 $ 88,892
----------- ----------- --------
----------- ----------- --------
</TABLE>
NOTE 8.SUBSEQUENT EVENTS
Effective October 15, 1996, the redemption fees of 1.00% and 1.50% for the
BEA International Equity and BEA Emerging Markets Equity Funds, respectively,
have been eliminated.
On October 24, 1996, the Board of Directors of RBB approved a name change
for the BEA Global Fixed Income Fund. The new name will be the BEA Strategic
Global Fixed Income Fund.
60
<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 High Yield and BEA
Municipal Bond Portfolios of The RBB Fund Inc., as of August 31, 1996 and the
related statements of operations for the year then ended, the statements of
changes in net assets for each of the two years in the 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 by the
custodian and brokers as of August 31, 1996. 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 High Yield and BEA
Municipal Bond Portfolios of The RBB Fund Inc., as of August 31, 1996 and the
results of their operations for the year then ended, the changes in their net
assets for each of the two years in the 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 11, 1996
61
<PAGE>
TAX INFORMATION LETTERS
IMPORTANT TAX INFORMATION FOR SHAREHOLDERS OF BEA INTERNATIONAL EQUITY FUND
(UNAUDITED)
During the fiscal year ended August 31, 1996, the International Equity Fund
distributed $3,619,557 of foreign source income on which the Fund paid foreign
taxes of $1,339,400. This information is being furnished to you pursuant to
notice requirements of Sections 853(a) and 855(d) of the Internal Revenue Code,
as amended, and the Treasury Regulations thereunder.
IMPORTANT TAX INFORMATION FOR SHAREHOLDERS OF BEA EMERGING MARKETS EQUITY FUND
(UNAUDITED)
During the fiscal year ended August 31, 1996, the Emerging Markets Equity
Fund distributed $808,683 of foreign source income on which the Fund paid
foreign taxes of $267,147. This information is being furnished to you pursuant
to notice requirements of Sections 853(a) and 855(d) of the Internal Revenue
Code, as amended, and the Treasury Regulations thereunder.
IMPORTANT TAX INFORMATION FOR CORPORATE SHAREHOLDERS OF BEA U.S. CORE EQUITY
FUND (UNAUDITED)
Corporate shareholders should note that for the fiscal year ended August 31,
1996, 28.9% of the Fund's investment income (i.e., dividend income plus
short-term capital gains) qualifies for the intercorporate dividends received
deduction.
IMPORTANT TAX INFORMATION FOR SHAREHOLDERS OF BEA MUNICIPAL BOND FUND
(UNAUDITED)
In the twelve months ended August 31, 1996 (the end of the fiscal year), 98%
of the dividends paid by the Fund were exempt-interest dividends for purposes of
federal income taxes and free from such taxes. In addition, none of such
dividends was attributable to interest on private activity bonds which must be
included in federal alternative minimum taxable income for purposes of
determining liability for federal alternative minimum tax.
In January 1997, you will be furnished with a schedule showing the yearly
percentage breakdown by State or U.S. possession of the source of interest
earned by the Fund in 1996. It is suggested that you consult your tax adviser
concerning the applicability of State and local taxes to dividends paid by the
Fund during the year.
IMPORTANT TAX INFORMATION FOR SHAREHOLDERS (UNAUDITED)
During the year ended August 31, 1996, the BEA Funds declared the following
dividends from realized capital gains:
<TABLE>
<CAPTION>
SHORT-TERM LONG-TERM
CAPITAL GAIN CAPITAL GAIN
PER SHARE PER SHARE
------------- -------------
<S> <C> <C>
BEA U.S. Core Equity Fund..................................................... $ 0.99 $ 0.62
BEA U.S. Core Fixed Income Fund............................................... 0.21 0.01
BEA Global Fixed Income Fund.................................................. 0.13 0.02
BEA Municipal Bond Fund....................................................... 0.16 0.27
</TABLE>
62
<PAGE>
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63
<PAGE>
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64
