BEA
[GRAPHIC OF GLOBE]
INTERNATIONAL EQUITY FUND
EMERGING MARKETS EQUITY FUND
U.S. CORE EQUITY FUND
GLOBAL TELECOMMUNICATIONS FUND
U.S. CORE FIXED INCOME FUND
STRATEGIC GLOBAL FIXED INCOME FUND
HIGH YIELD FUND
MUNICIPAL BOND FUND
SEMI-ANNUAL REPORT -- FEBRUARY 28, 1997
<PAGE>
BEA INTERNATIONAL EQUITY FUND
PORTFOLIO MANAGER'S LETTER
Dear Shareholders:
We are pleased to report on the results of the BEA International Equity Fund
(the "Fund") and BEA's investment strategy for the six months ended February 28,
1997.
PERFORMANCE REVIEW
At February 28, 1997, the net asset value ("NAV") of the Fund's Institutional
Class was $20.75, compared to an NAV of $19.41 on August 31, 1996. As a result,
the Institutional Class' posted a total return (assuming reinvestment of
dividends) of 8.3%. By comparison, the MSCI EAFE index (the "Index") posted a
return of 2.4% during the same time period. The NAV for the Advisor Class at
February 28, 1997 was $20.73, compared to $19.67 on November 1, 1996
(commencement of operations). As a result, the Advisor Class of shares posted a
return (assuming reinvestment of dividends) of 6.7% for the period November 1,
1996 to February 28, 1997, in comparison with the Index which gained 2.4% during
the same time period.
The performance for the Index over the six months was significantly lower than
that of most equity markets worldwide. As represented by MSCI's World index,
aggregate global equities returned 11.4%, about nine percentage points more than
the Index. The factor mainly responsible for such underperformance was Japan,
whose weak stock prices reflect lingering financial-sector problems and
potential negative effects of deregulation on corporate profits. The impact of
Japan's negative return during the period was greatly magnified by its 36%
weighting in the Index: excluding Japan, the Index rose 13.5%.
The strong U.S. dollar also played a role, as it reduced EAFE's local-currency
return by nearly eight percentage points. The strength of the dollar versus the
yen exacerbated Japan's (and, hence, the Index's) poor showing.
Emerging markets generated much better results. Latin stocks led the way with a
23.3% gain, far higher than the 3.7% produced by shares of developing Asian
nations. The smaller emerging markets were prevalent among the top (I.E.,
Turkey, Venezuela, Hungary) and bottom (I.E., Korea, Thailand) performers.
PORTFOLIO REVIEW
There were three key elements in the Fund's outperformance vs. the benchmark
during the period:
I. COUNTRY SELECTION. Our substantial underweighting of Japan had the highest
impact of any position. Within Europe, we held more than twice the index
weightings in Spain and Finland, both of which significantly outperformed the
index.
II. ALLOCATION TO EMERGING MARKETS. We have long advocated the inclusion
of emerging markets equities in international portfolios. This policy worked
to the Fund's advantage, as our emerging markets holdings substantially
contributed to outperformance.
III. CURRENCY STRATEGIES. In view of the dollar's strength during the period,
our allocation to dollar-linked markets in Latin America and Asia resulted
in underweighted exposure to the deutschemark and yen, which were
particularly weak during the period.
OUTLOOK
Looking ahead, we remain cautiously bullish, with our optimism tempered by
concern over the U.S. interest-rate climate. While rising rates may have a
somewhat negative spillover effect onto non-U.S. equity markets, it is more
likely that U.S. rates will impact other economies less than previously,
suggesting the probability that non-U.S. markets will decouple from the U.S.
Investors in international stocks should profit from this decoupling due to the
more attractive valuations and growth potential to be found overseas,
particularly in Europe and Latin America. The European investment climate
benefits from low and stable interest rates, a general absence of inflationary
pressures and the fiscal discipline imposed by the drive toward European
Monetary Union. In Latin America, the broad-based economic expansion following
the 1994-95 peso crisis appears increasingly robust and the region's markets
collectively are less vulnerable to U.S. rate-tightening than those of other
developing nations.
1
<PAGE>
BEA INTERNATIONAL EQUITY FUND
PORTFOLIO MANAGER'S LETTER (CONTINUED)
Beyond our current concerns about interest rates, we continue to find the
long-term outlook for international equities quite encouraging. At the root of
this optimism is our belief that a number of important trends are coming
together to fuel a wave of global growth that is likely to positively surprise
most market participants. These trends include:
ECONOMIC LIBERALIZATION. A vast expansion of economic freedom and property
rights has been triggered by the collapse of communism, setting the stage for
robust growth among developing nations. In addition, budgetary constraints in
the developed nations have triggered widespread efforts to cut government budget
deficits and boost private-sector savings and investment.
GROWTH IN TRADE AND DIRECT INVESTMENT. Over the past three years, annual growth
in world trade volume has exceeded 8%, or more than double the annual rate of
overall economic growth. The boom in trade has been supported by a growing
consensus among most of the world's governments that free trade and direct
investment provide the surest route to growth. Although occasional setbacks can
be expected, global movement toward greater economic integration and elimination
of controls on international capital appears irreversible.
TECHNOLOGICAL INNOVATION. The information revolution has quickened the pace of
technological change and is creating new industries ranging from computer
networking to biotechnology. New technologies are transforming existing
industries by reducing labor costs, inventory requirements and production
lead-times. They also have the power to turn laggard nations into economic
leaders as developing nations take advantage of new and cheaper capital
equipment to leapfrog their competitors in the developed nations who may be
saddled with old equipment and outmoded work practices.
In our judgment, each of these broad trends alone would be an important spur to
global economic progress. Their combined effects will probably be substantial
and self-reinforcing, providing an excellent economic backdrop for international
equity markets. We additionally believe that this economic backdrop is likely to
be well-suited to our style of international equity investing, which is designed
to take advantage of growth opportunities in the emerging markets as well as the
traditional developed markets.
In an important organizational development, we are pleased to announce that
Susan Boland has joined BEA as Senior Vice President and Portfolio Manager.
Susan will have responsibility for European equities along with Stephen Waite.
She comes to us from Barran & Partners, where she managed the Magus Fund, a
hedge fund invested in European equities. Previously, she specialized in
European equities at Teton Partners and was a portfolio manager at Fidelity
Management and Research both in the U.K. and the U.S. On a separate note,
Stephen Swift will continue to have responsibility for the Southeast Asian
portion of BEA's portfolios, but will do so as an advisor out of the London
office of our affiliate, Credit Suisse Asset Management.
As other developments occur in the international equity markets or at BEA, we
will be sure to keep you informed. Meanwhile, if you have questions, please feel
free to call upon us at any time.
Sincerely yours,
BEA International Equities Management Team
William P. Sterling, Executive Director
Richard Watt, Managing Director
Stephen M. Swift, Portfolio Manager
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")EAFEINDEX FROM
INCEPTION 10/1/92 AND AT EACH QUARTER END.
[LINE GRAPH OMITTED]
BEA International Equity Institutional Class
Total Returns and Graph Plot Points
Morgan Stanley
BEA International Composite Index
DATES EQUITY FUND EAFE INSTITUTIONAL
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
05/31/96 $13,901 $16,041
08/31/96 $13,498 $15,706
11/30/96 $14,166 $16,606
02/28/97 $14,614 $16,090
AVERAGE ANNUAL TOTAL RETURN
One Year 9.45%
From Inception 9.89%
Note: Past performance is not predictive of future performance.
3
<PAGE>
BEA INTERNATIONAL EQUITY FUND
OF THE RBB FUND,INC.
STATEMENT OF NET ASSETS
FEBRUARY 28, 1997
(UNAUDITED)
NUMBER
OF SHARES VALUE
----------- ------------
COMMON AND CONVERTIBLE STOCKS,
WARRANTS AND RIGHTS -- 94.2%
ARGENTINA -- 0.2%
Sodigas del Sur S.A.+ ...... 403,923 $ 745,416
Sodigas Pampeana S.A.+ ..... 558,962 844,809
-----------
1,590,225
-----------
AUSTRALIA -- 2.1%
Broken Hill Corp., Ltd. .... 549,088 7,272,363
CRA Ltd. ................... 224,900 3,370,357
News Corp., Ltd. ADR ....... 163,000 3,463,750
News Corp., Ltd. Pfd. ADR .. 46,900 838,337
-----------
14,944,807
-----------
BRAZIL -- 6.1%
Companhia Cervejaria
Brahma PN ................ 369,916 246,728
Companhia Energetica
de Minas Gerais PN ....... 146,598,010 5,907,161
Companhia Energetica
de Sao Paulo PN .......... 10,160,000 555,852
Companhia Paulista
de Forca e Luz ........... 3,930,000 545,937
Companhia Tecidos Norte
de Minas Gerais PN ....... 9,556,000 4,091,532
Companhia Vale do Rio
Doce ADR ................. 196,900 5,161,733
Light Participacoes S.A.** . 1,837,000 543,759
Lojas Americanas S.A. PN ... 56,034,786 805,067
Telecomunicacoes Brasileiras
S.A. ADR ................. 208,656 20,239,632
Telecomunicacoes de Sao
Paulo S.A. PN ............ 19,060,000 5,241,047
-----------
43,338,448
-----------
CANADA -- 3.1%
Canadian Imperial Bank Of
Commerce ................. 116,000 5,626,454
INCO, Ltd. ................. 163,100 5,728,888
Magna International, Inc.
Cl. A .................... 85,600 4,494,000
Royal Bank Of Canada ....... 139,580 5,631,602
-----------
21,480,944
-----------
DENMARK -- 0.6%
Unidanmark A/S 144A ........ 86,590 4,551,769
-----------
FINLAND -- 1.9%
Amer Group, Ltd. ........... 76,600 1,600,247
Nokia Corp. Cl. A .......... 91,196 5,506,851
Pohjola Insurance Co., Ltd.
Cl. B .................... 93,500 2,864,846
Raision Tehtaat Oy ......... 39,600 3,624,281
-----------
13,596,225
-----------
NUMBER
OF SHARES VALUE
----------- -----------
FRANCE -- 11.0%
Accor ........................ 35,025 $ 4,821,703
AXA S.A ...................... 80,064 5,332,445
Banque Nationale de Paris
Ordinary ................... 114,250 5,185,887
Bertrand Faure ............... 118,121 5,888,420
BIC S.A ...................... 10,168 1,649,733
Carrefour Super Marche ....... 9,134 5,631,163
Compagnie Generale
Des Eaux ................... 60,533 8,428,915
Credit Local de France ....... 52,111 5,206,525
Elf Aquitaine ................ 110,840 10,607,164
Michelin Cl. B ............... 102,849 6,443,639
PSA Peugeot Citroen .......... 4 442
Rhone-Poulenc Cl. A ......... 141,363 4,964,460
SGS-Thomson
Microelectronics N.V ....... 55,610 3,670,260
Societe Television Francaise 1 22,030 2,042,465
Technip S.A .................. 46,999 4,753,542
Valeo S.A .................... 50,262 3,389,044
-----------
78,015,807
-----------
GERMANY -- 7.8%
Adidas AG .................... 28,196 2,700,702
Bayer AG ..................... 114,100 4,797,871
Commerzbank AG ............... 79,500 2,051,035
Daimler-Benz AG .............. 66,100 4,802,355
Degussa CN ................... 9,950 4,225,254
GEA AG Non Voting Pfd. ....... 13,646 4,677,889
Hoechst AG ................... 114,150 4,884,599
Kloeckner-Werke AG ........... 35,800 2,250,638
Mannesmann AG ................ 19,790 7,831,023
RWE AG ....................... 55,700 2,487,521
Thyssen AG ................... 44,350 9,366,606
Volkswagen AG ................ 10,821 5,268,988
-----------
55,344,481
-----------
HONG KONG -- 3.9%
Cheung Kong Holdings Ltd. .... 757,500 7,238,788
Citic Pacific Ltd. ........... 1,143,900 5,834,943
Hong Kong and China Gas ...... 2,409,000 4,573,046
HSBC Holdings plc ............ 409,408 9,992,395
-----------
27,639,172
-----------
INDIA -- 0.6%
India Liberalisation Fund
Cl. A 144A**/**** .......... 276,532 1,822,346
Indian Opportunity Fund Ltd.** 270,155 2,347,655
-----------
4,170,001
-----------
INDONESIA -- 1.6%
PT Astra International*** .... 1,801,100 6,160,175
PT Telekomunikasi Indonesia*** 2,177,500 3,791,893
PT Telekomunikasi Indonesia
ADR ........................ 41,900 1,440,313
-----------
11,392,381
-----------
See Accompanying Notes to Financial Statements.
4
<PAGE>
BEA INTERNATIONAL EQUITY FUND (CONTINUED)
NUMBER
OF SHARES VALUE
----------- ------------
ISRAEL -- 0.6%
Geotek Communications, Inc.
Series M Cumulative
Convertible Pfd.+ .......... 600 $ 4,040,053
------------
ITALY -- 2.7%
Banca Fideuram S.p.A ......... 1,351,600 3,403,870
Istituto Mobiliare Italiano
S.p.A ...................... 521,900 4,553,956
Stet-Societa' Finanziaria
Telefonica S.p.A., Non
Convertible Savings Shares . 1,094,600 3,824,354
Stet-Societa' Finanziaria
Telefonica S.p.A ........... 217,500 932,207
Telecom Italia Mobile S.p.A** 1,014,784 2,654,618
Telecom Italia Mobile Non
Convertible Savings
Shares** ................... 2,395,450 3,660,689
------------
19,029,694
------------
JAPAN -- 7.7%
Advantest Corp. .............. 25,000 1,413,413
Aoyama Trading Co., Ltd. ..... 140,000 3,516,538
Canon, Inc. .................. 163,000 3,405,123
Chugai Pharmaceutical ........ 168,000 1,327,232
Daiichi Pharmaceutical ....... 198,000 3,233,524
Fuji Photo Film Co., Ltd. .... 111,000 3,717,483
Fujitsu, Ltd. ................ 139,000 1,371,218
Higo Bank .................... 111,000 625,715
Hitachi, Ltd. ................ 149,000 1,284,589
Honda Motor Co., Ltd. ........ 51,000 1,576,971
Industrial Bank of Japan, Ltd. 900 10,744
Makita Electric Works ........ 83,000 1,142,170
Matsushita Electric
Industrial Co., Ltd.** ..... 225,000 3,469,286
Mitsubishi Electric Corp. .... 228,000 1,281,472
Mitsubishi Steel Manufacturing
Co., Ltd.** ................ 500 1,720
NEC Corp. .................... 301,000 3,493,327
Nichicon ..................... 122,000 1,405,786
Nikon Corp. .................. 263,000 3,858,990
Rohm Co., Ltd. ............... 20,000 1,434,137
Sharp Corp. .................. 56,000 700,986
Shionogi & Co., Ltd. ......... 188,000 1,170,422
Sony Corp. ................... 49,200 3,552,450
TDK Corp. .................... 54,000 3,617,011
Toshiba Corp. ................ 211,000 1,189,422
Toyota Motor Corp. ........... 131,000 3,355,633
Yamanouchi Pharmaceutical
Co., Ltd. .................. 138,000 2,882,865
------------
54,038,227
------------
MALAYSIA -- 4.6%
Diversified Resources Bhd 1,568,700 6,065,050
Magnum Corp. Bhd ............. 3,540,000 7,342,328
Malayan Banking Bhd .......... 560,300 6,656,806
Malaysian Resources Corp.
Bhd ........................ 1,590,000 6,723,721
NUMBER
OF SHARES VALUE
----------- ------------
MALAYSIA -- (CONTINUED)
Resort World Bhd ............. 789,000 $ 3,686,025
YTL Corp. Bhd ................ 287,300 1,666,178
------------
32,140,108
------------
MEXICO -- 4.2%
Cementos Mexicanos
CPO, S.A ................... 1,134,500 4,538,000
Corparacion GEO S.A. de
C.V., Cl. B ................ 691,600 3,355,460
Corporacion Industrial SanLuis
S.A. de C.V., CPO .......... 601,894 3,683,515
Grupo Elektra S.A. de
C.V., CPO .................. 282,600 2,799,256
Grupo Financiero Banamex
Accival S.A. de C.V., Cl. B 2,657,600 6,257,516
Grupo Financiero Banamex
Accival S.A. de C.V., Cl. L 1,230,000 2,595,028
Grupo Modelo S.A. de
C.V., Cl. C ................ 484,200 3,030,450
Kimberly Clark de Mexico S.A .
de C.V., Cl. A ............. 160,600 3,469,365
Telefonos de Mexico S.A. de
C.V., Unsponsored ADR ...... 4,400 8,525
------------
29,737,115
------------
NETHERLANDS -- 5.7%
Akzo Nobel ................... 36,200 5,216,661
Gucci Group N.V. - New York
Registered Shares .......... 64,260 4,152,803
Internationale Nederlanden
Groep N.V .................. 115,100 4,457,479
Koninklijke Nedlloyd
Groep N.V .................. 114,770 3,374,343
Nutricia Verenigde
Bedrijven N.V .............. 19,030 2,887,739
Philips Electronics N.V ...... 255,325 11,529,244
VNU Verenigd Bezit ........... 424,150 8,782,915
------------
40,401,184
------------
PERU -- 1.1%
Telefonica del Peru S.A. ADR . 346,200 7,616,400
------------
PHILIPPINES -- 0.9%
Ayala Corp. Cl. B ............ 2,940,600 3,350,284
Philippine Long Distance
Telephone Company ADR ...... 53,050 3,076,900
------------
6,427,184
------------
PORTUGAL -- 1.6%
Banco Totta & Acores, S.A .... 97,700 1,451,971
Cimentos de Portugal ......... 162,820 3,549,994
Portugal Telecom S.A. ADR** .. 77,980 2,719,553
Portugal Telecom S.A .........
Registered** ............... 103,000 3,614,408
------------
11,335,926
------------
See Accompanying Notes to Financial Statements.
5
<PAGE>
BEA INTERNATIONAL EQUITY FUND (CONTINUED)
NUMBER
OF SHARES VALUE
----------- ------------
PUERTO RICO -- 0.3%
Cellular Communications of
Puerto Rico, Inc.** ....... 130,900 $ 2,290,750
------------
RUSSIA -- 0.2%
PLD Telekom, Inc. ........... 192,900 1,277,963
-----------
SINGAPORE -- 2.4%
DBS Land Ltd. ............... 470,600 1,832,220
Overseas Chinese Banking
Corp. Ltd.*** ............. 458,770 6,082,605
Singapore Press Holdings*** . 168,400 3,284,125
United Overseas Bank Ltd.***. 488,980 5,556,981
------------
16,755,931
------------
SOUTH AFRICA -- 0.5%
Amalgamated Banks of
South Africa Ltd. ......... 602,443 3,832,933
South African Breweries Ltd.. 306 9,154
------------
3,842,087
------------
SOUTH KOREA -- 0.0%
Korea Fund, Inc. ............ 1 15
------------
SPAIN -- 2.9%
Banco Intercontinental
Espanol ................... 22,460 3,000,516
Banco Popular ............... 27,450 4,988,472
Empresa Nacional de
Electricidad S.A .......... 55,000 3,357,285
Sol Melia S.A ............... 116,778 3,625,254
Telefonica de Espana ADR .... 81,700 5,627,088
------------
20,598,615
------------
SWEDEN -- 4.6%
Electrolux AB ............... 103,400 6,472,592
Astra AB Cl. A .............. 118,670 5,702,014
Autoliv AB .................. 134,600 6,126,103
Ericsson Telephone Co.,
ADR Cl. B ................. 113,060 3,566,690
H&M Cl. B ................... 37,549 5,342,449
SKF AB Cl. B ................ 210,800 5,036,264
------------
32,246,112
------------
SWITZERLAND -- 4.8%
ABB AG ...................... 2,588 2,944,463
Adecco S.A .................. 14,319 4,646,312
Novartis AG Registered Shares 8,906 10,193,141
Novartis Rights ............. 8,906 564,371
Roche Holding AG ............ 752 6,337,710
Sulzer Ltd. Registered ...... 7,864 4,911,330
Swiss Reinsurance Co.
Registered ................ 2,535 2,596,779
Tag Heuer International
S.A. ADR .................. 134,500 1,748,500
------------
33,942,606
------------
NUMBER
OF SHARES VALUE
------------ ------------
UNITED KINGDOM -- 10.5%
British Petroleum plc .......... 584,918 $ 6,475,682
British Sky Broadcasting
Group plc ADR** .............. 5,250 309,750
Cable & Wireless plc ADR ....... 35,300 856,025
Cable & Wireless plc ........... 588,670 4,781,213
Compass Group plc .............. 284,500 3,406,988
EMI Group plc .................. 74,100 1,393,237
Flextech plc** ................. 140,092 1,746,127
General Cable plc** ............ 397,400 1,197,845
General Cable plc ADR** ........ 339,200 5,130,400
General Electric Co. plc ....... 405,480 2,460,916
Land Securities plc ............ 14,000 180,201
Pearson plc .................... 481,900 6,037,878
Railtrack Group Bank plc ....... 1,061,100 7,840,336
Standard Chartered Bank plc .... 465,318 6,379,780
Unilever plc ................... 190,936 4,904,366
United News & Media plc ........ 316,726 3,653,575
WPP Group plc .................. 2,824,051 12,009,334
Zeneca Group plc ............... 180,900 5,320,064
------------
74,083,717
------------
TOTAL COMMON AND
CONVERTIBLE STOCKS,
WARRANTS AND RIGHTS
(Cost $565,070,042) .......... 665,867,947
------------
PAR
(000)
------------
SHORT TERM INVESTMENTS -- 4.4%
BBH Grand Cayman U.S. ........
Dollar Time Deposit
4.719% 03/03/97 ............ $ 31,130 31,130,000
------------
TOTAL SHORT TERM
INVESTMENTS
(Cost $31,130,000) ...... 31,130,000
------------
TOTAL INVESTMENTS AT
VALUE -- 98.6%
(Cost $596,200,042*) ....... 696,997,947
OTHER ASSETS IN EXCESS
OF LIABILITIES-- 1.4% ...... 9,703,191
------------
NET ASSETS (Applicable to
34,060,329 BEA Institutional
Shares and 254 BEA Advisor
Shares) -- 100.0% .......... 706,701,138
============
See Accompanying Notes to Financial Statements.
6
<PAGE>
BEA INTERNATIONAL EQUITY FUND (CONCLUDED)
VALUE
-------------
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PRICE PER BEA
INSTITUTIONAL SHARE
($706,695,873 / 34,060,329) .................$20.75
======
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PRICE PER BEA ADVISOR
SHARE ($5,265 / 254) ..........................$20.73
======
* Cost for Federal income tax purposes at February 28, 1997 is $596,212,906.
The gross appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation ...................$114,951,857
Gross Depreciation ....................(14,166,816)
------------
Net Appreciation .....................$100,785,041
============
** Non-income producing securities.
*** Denotes foreign shares.
**** Certain conditions for public sales may exist.
+ Not readily marketable securities.
INVESTMENT ABBREVIATIONS
ADR ..........................American Depository Receipts
AT FEBRUARY 28, 1997, NET ASSETS CONSISTED OF:
AMOUNT
-------------
Capital Paid-In ..............................$634,132,095
Accumulated Net Investment Loss ................(5,287,477)
Accumulated Net Realized Loss on
Security and Foreign Exchange
Transactions ...............................(22,813,885)
Net Unrealized Appreciation on
Investments and Other ......................100,670,405
- -----------------------------------------------------------
NET ASSETS ...................................$706,701,138
- -----------------------------------------------------------
See Accompanying Notes to Financial Statements.
7
<PAGE>
BEA EMERGING MARKETS EQUITY FUND
PORTFOLIO MANAGER'S LETTER
April 4, 1997
Dear Shareholders:
We are pleased to report on the results of the BEA Emerging Markets Equity Fund
(the "Fund") and BEA's investment strategy for the six months ended February 28,
1997.
At February 28, 1997, the net asset value ("NAV") of the Fund's Institutional
Class was $20.61, compared to an NAV of $18.20 on September 30, 1996. As a
result, the Institutional Class posted a total return (assuming reinvestment of
dividends) of 13.7%. By comparison, the MSCI Emerging Markets Free Index (the
"Index") gained 11.7% during the same time period. The NAV for the Advisor Class
at February 28, 1997 was $20.60, compared to $18.08 on November 1, 1998
(commencement of operations). For the period November 1, 1996 to February 28,
1997 the Advisor Class posted a total return (assuming reinvestment of
dividends) of 14.3% while the Index returned 11.9% during the same period.
PERFORMANCE REVIEW
As a group, emerging market equities were strong over the six months. The Index
significantly outperformed MSCI's EAFE index (+2.4%), a widely recognized
barometer for established-nation markets. The world's nine best-performing
markets during the period were in developing nations. Turkey led with a
scorching 82.9% return, as investors sought to take advantage of some of the
world's lowest valuation levels. Next were Venezuela (+48.1%), which benefited
from a surge in oil revenues; and Hungary (+42.8%), which attracted investor
attention for its positive investment profile among Eastern European markets.
Within the index, the strength of Latin American markets (+23.3%) far exceeded
that of the Asian sub-index (+3.7%).
Notable negative factors for the Index during the period included the reduction
of local-currency returns by the effect of the rising U.S. dollar; and the
substantial political and economic difficulties in Thailand and South Korea,
which were reflected in those markets' performance.
PORTFOLIO REVIEW
Country selection was the primary contributor to the portfolio's outperformance
of the Index during the period. Relative to the Index, our underweighting of
emerging Asian nations generally and Thailand specifically, as well as our
overweighting of Turkey, were most effective in this regard. Stock selection in
Indonesia also played a positive role.
Performance was negatively impacted by our emphasis within the Fund's Brazilian
allocation on telephone companies and electric utilities, which experienced
heavy selling; stock selection in Israel; and overexposure to the strong U.S.
dollar relative to the Index.
EMERGING MARKETS OUTLOOK
We maintain our general optimism about the prospects for emerging equity
markets, based on our perception of strong and improving fundamentals;
compellingly attractive relative valuations; and the absence of meaningful
negative elements in the global macroeconomic environment. On a regional basis,
we consider Latin America and Emerging Europe most appealing and believe that
Asian markets should be approached with selectivity.
LATIN AMERICA: Our overall investment thesis for Latin America continues to be
its dramatic recovery from the depths of the late-1994 peso crisis, which
severely impacted the region's economies and markets. Since the crisis, economic
stabilization measures have been implemented in most Latin nations and have
achieved results well beyond expectations. Investors have expressed their
approval by actively buying Latin sovereign debt, yet have not extended the same
level of enthusiasm to stocks. We consider this a market inefficiency that
should be more widely recognized and exploited. Among the major markets, we are
most favorably inclined toward Brazil and Mexico. Both are experiencing some
near-term economic inertia in response to political considerations but remain
quite attractive for the long term. We are somewhat more cautious about Chile,
where we believe the implementation of needed interest-rate cuts may take some
time.
8
<PAGE>
BEA EMERGING MARKETS EQUITY FUND
PORTFOLIO MANAGER'S LETTER (CONCLUDED)
ASIA: There are indications that a decoupling process is occurring among
emerging Asian equity markets. Although the area's slowing rate of export growth
is still hurting some nations, others are faring better. We include Indonesia,
Malaysia, India and the Philippines in the latter group. Thailand and South
Korea, by contrast, are experiencing severe structural problems that are likely
to persist for at least another few years. We suspect that such problems will
remain a major factor in Thai and Korean equity prices, and, therefore, will
continue to be a drag on the performance of emerging Asian equities generally.
OTHER EMERGING NATIONS: Among the world's remaining emerging markets, we think
the outlook is most promising for Turkey and Portugal. Despite Turkey's
difficulties in achieving needed structural reforms, its equity market contains
some world-class companies selling at extremely low valuations. With regard to
Portugal, we believe that the macroeconomic environment continues to be among
the most favorable in continental Europe.
In closing, we note the likelihood that the Federal Reserve will raise U.S.
interest rates again this year. We do not, however, consider this to be a
serious threat to emerging equity markets: today's environment is very different
from the last time rates were raised (in 1994), which triggered extreme
volatility in global markets. We are confident that prospects for emerging
markets remain promising.
Please feel free to call upon us at any time if you have questions.
Sincerely yours,
BEA Emerging Markets Equities Management Team
William P. Sterling, Executive Director
Richard Watt, Managing Director
Stephen M. Swift, Portfolio Manager
Stephen 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.
[LINE GRAPH OMITTED]
BEA Emerging Markets Institutional Class
Total Returns and Graph Plot Points
Morgan Stanley
Composite Index-
BEA Emerging Markets Free Emerging
DATES EQUITY INSTITUTIONAL FUND MARKETS INSTITUTIONAL
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
05/31/96 $13,881 $16,481
08/31/96 $13,144 $15,846
11/30/96 $13,295 $15,817
02/28/97 $14,938 $17,699
AVERAGE ANNUAL TOTAL RETURN
One Year 14.98%
From Inception 10.07%
Note: Past performance is not predictive of future performance.
9
<PAGE>
BEA EMERGING MARKETS EQUITY FUND
OF THE RBB FUND,INC.
STATEMENT OF NET ASSETS
FEBRUARY 28, 1997
(UNAUDITED)
NUMBER
OF SHARES VALUE
----------- -------------
COMMON AND CONVERTIBLE STOCKS,
WARRANTS AND RIGHTS -- 96.2%
BRAZIL -- 26.6%
Centrais Eletricas Brasileiras
S.A. ON .................... 2,550,000 $ 1,120,932
Centrais Eletricas de Santa
Catarin PN Cl. B ........... 1,508,693 2,095,806
Companhia Brasileira de
Distribuicao Grupo Pao de
Acucar - Preferred ......... 45,316,600 991,705
Companhia Energetica de
Minas Gerais 144A
ADS**** .................... 183 7,317
Companhia Energetica de
Minas Gerais ADR ........... 20,473 818,572
Companhia Energetica de
Minas Gerais PN ............ 55,068,000 2,218,963
Companhia Energetica de
Sao Paulo PN ............... 5,460,000 298,715
Companhia Paulista de
Forca e Luz ON** ........... 16,687,220 2,318,110
Companhia Tecidos Norte de
Minas Gerais PN ............ 2,862,000 1,225,404
Companhia Vale do
Rio Doce PN ................ 41,000 1,088,392
Globex Utilidades PN ......... 79,400 1,601,598
Light Participacoes S.A. ..... 1,012,000 299,556
Lojas Americanas S.A. PN ..... 8,527,000 122,510
Multibras S.A.
Eletrodomesticas PN ........ 770,000 959,753
Petroleo Brasileiro S.A. PN .. 1,528,100 312,599
Refrigeracao Parana S.A. PN ..573,223,000 1,145,355
Santista Alimentos S.A.** .... 722,500 1,512,369
Telecomunicacoes Brasileiras
S.A. ADR ................... 36,040 3,495,880
Telecomunicacoes de Minas
Gerais PN Cl. B ............ 11,539,677 1,694,170
Telecomunicacoes do Parana
S.A. PN .................... 658,000 431,989
Telecomunicacoes do Rio de
Janeiro S.A. PN ............ 11,483,000 1,737,200
Usinas Siderurgicas de
Minas Gerais S.A. PN .......856,902,395 986,538
Usinas Siderurgicas de
Minas Gerais S.A.
144A ADR ................... 10,000 116,090
----------
26,599,523
----------
CHILE -- 3.3%
Chilectra S.A. 144A ADR**** .. 12,849 811,466
Enersis S.A. ADR ............. 16,800 556,500
Madeco S.A. ADR .............. 43,000 1,290,000
Maderas y Sinteticos
S.A. ADR ................... 40,300 669,987
----------
3,327,953
----------
NUMBER
OF SHARES VALUE
----------- -------------
COLOMBIA -- 2.5%
Banco Ganadero
PFD ADR 8.75% .............. 16,600 $ 410,850
Banco Industrial Colombiano S.A.
ADR ........................ 34,500 625,312
Carrulla & CIA 144A S.A.
ADR ........................ 39,400 157,600
Cementos Diamante S.A. 144A
ADS**** .................... 36,700 532,150
Cementos Paz del Rio S.A.
144A ADR**** ............... 29,600 384,800
Gran Cadena Almacenes
Colombianos S.A. ADR ....... 36,700 376,175
----------
2,486,887
----------
ECUADOR -- 0.6%
Cemento Nacional Ecuador
GDR ........................ 2,496 571,584
----------
GREECE -- 0.1%
Delta Dairy .................. 10,097 131,377
----------
HONG KONG -- 3.6%
Cheung Kong Holdings Ltd. .... 61,400 586,748
Hang Seng Bank Ltd. .......... 35,200 406,834
Henderson Land
Development Co., Ltd. ...... 56,700 507,054
HSBC Holdings plc ............ 26,000 634,580
Hutchison Whampoa Ltd. ....... 68,700 523,432
Swire Pacific Ltd., Cl. A .... 47,604 408,805
Wharf Holdings Ltd. .......... 112,300 498,873
----------
3,566,326
----------
INDIA -- 1.8%
India Fund Cl. B ............. 510,670 815,394
Morgan Stanley India
Investment Fund, Inc. ...... 91,200 1,003,200
----------
1,818,594
----------
INDONESIA -- 7.8%
Astra International .......... 161,400 552,025
Bank Dagang Nasional
Indonesia .................. 1,904,700 1,966,270
Bank Dagang Nasional
Indonesia Warrants** ....... 272,100 0
Bank Internasional Indonesia
PT ......................... 1,415,892 1,181,140
Bank Negara PT ............... 889,000 639,635
PT Citra Marga Nusaphala
Persada .................... 200,000 185,610
PT Hanjaya Mandala
Sampoerna .................. 143,000 709,781
PT Telekomunikasi ............ 963,200 1,677,314
Semen Gresik PT .............. 290,400 856,968
----------
7,768,743
----------
See Accompanying Notes to Financial Statements.
10
<PAGE>
BEA EMERGING MARKETS EQUITY FUND (CONTINUED)
NUMBER
OF SHARES VALUE
------------ ------------
ISRAEL -- 5.7%
Bank Leumi of Israel Ltd. .... 317,000 $ 523,199
Blue Square Chain Stores
Properties & Investments
ADR** ...................... 30,800 492,800
ECI Telecom Ltd. ............. 75,840 1,801,200
First International Bank of
Isreal Ltd. ................ 5,336 696,608
Geotek Communications,
Inc.** ..................... 145,100 861,531
Israel Chemicals Ltd. ........ 450,000 503,214
Tecnomatix Technologies
Ltd.** ..................... 34,000 837,250
----------
5,715,802
----------
MALAYSIA -- 8.9%
Arab-Malaysian Corp. Bhd. .... 190,700 1,159,714
Commerce Asset Holdings
Bhd. ....................... 100,100 770,000
Diversified Resources Bhd. ... 182,000 703,665
Magnum Corp. Bhd. ............ 501,900 1,040,993
Malayan Banking Bhd. ......... 100,000 1,188,079
Malaysian Resources Corp.
Bhd. ....................... 249,900 1,056,766
New Straits Times Press Bhd. . 149,500 951,309
United Engineers Malaysia
Bhd. ....................... 111,000 1,023,721
YTL Corp. Bhd. ............... 182,000 1,055,497
----------
8,949,744
----------
MEXICO -- 10.8%
Apasco S.A. de C.V. .......... 56,540 411,654
Cementos Mexicanos S.A. de
C.V., Cl. B ................ 342,400 1,501,375
CIFRA S.A. de C.V., Cl. B
ADR ........................ 700,500 1,094,882
Corporacion GEO S.A. de C.V.,
144A ADR Cl. B**/**** ...... 33,000 637,626
Corporacion GEO S.A. de C.V.,
Cl. B** .................... 122,080 592,300
Corporacion Industrial
San Luis S.A. de C.V., CPO . 359,374 2,199,324
Grupo Elektra S.A. de
C.V., CPO .................. 34,700 343,716
Grupo Financiero Banamex
Accival S.A. de C.V., Cl. B 741,900 1,746,859
Grupo Financiero Banamex
Accival S.A. de C.V., Cl. L 50,300 106,122
Grupo Modelo S.A. de C.V.,
Cl. C ...................... 255,700 1,600,343
Kimberly Clark de Mexico
S.A. de C.V., Cl. A ........ 26,670 576,139
----------
10,810,340
----------
NUMBER
OF SHARES VALUE
----------- -------------
PERU -- 1.7%
Cerveceria Backus y Johnson
S.A. ....................... 412,831 $ 351,113
Banco Wiese Ltd. ADR ......... 85,400 523,075
Credicorp Ltd. ADR ........... 24,100 554,300
Telefonica del Peru S.A. ADR . 11,500 253,000
----------
1,681,488
----------
PHILIPPINES -- 1.8%
Ayala Corp., Cl. B ........... 935,600 1,065,948
Philippine National Bank ..... 67,600 789,435
----------
1,855,383
----------
POLAND -- 2.0%
Elektrim ..................... 60,000 608,082
Polifarb Wroclaw ............. 6,900 41,281
Stomil Olsztyn S.A. .......... 51,000 683,601
Zaklady Piwowarskie W Zywcu
S.A. ....................... 11,000 683,274
----------
2,016,238
----------
PORTUGAL -- 5.4%
Banco Comercial Portugues
S.A. PFD Series A .......... 19,100 1,083,925
Banco Comercial Portugues
S.A. Registered Shares ..... 41,600 597,402
Banco Totta & Acores S.A. .... 42,000 624,184
Portugal Telecom S.A. ADR** .. 15,000 523,125
Portugal Telecom S.A.
Registered** ............... 23,400 821,137
Sociedade de Construcoes
Soares da Costa S.A. ....... 76,500 719,019
Sonae Industria S.A. ......... 31,950 1,015,547
----------
5,384,339
----------
PUERTO RICO -- 0.5%
Cellular Communications of
Puerto Rico, Inc.** ........ 26,600 465,500
----------
RUSSIA -- 2.7%
Gazprom ADR 144A** ........... 20,900 364,705
Lukoil Holding ADR** ......... 9,100 550,541
Mosenergo ADR 144A ........... 12,300 507,375
PLD Telekom, Inc. ............ 88,300 584,988
Surgutneftegaz ADR** ......... 16,100 652,050
----------
2,659,659
----------
SOUTH AFRICA -- 3.3%
Barlow Ltd. .................. 56,400 594,910
Murray & Roberts Holdings
Ltd. ....................... 348,176 777,265
Nasionale Pers Beperk ........ 48,487 454,616
Nedcor Ltd. Warrants** ....... 6,300 37,013
Pepkor Ltd. .................. 335,751 1,461,579
----------
3,325,383
----------
See Accompanying Notes to Financial Statements.
11
<PAGE>
BEA EMERGING MARKETS EQUITY FUND (CONCLUDED)
NUMBER
OF SHARES VALUE
----------- -------------
TURKEY -- 7.1%
Akbank T.A.S. ................ 6,790,000 $ 1,187,401
Aksa Akrilik Kimya Sanayii
A.S. ....................... 5,125,400 854,615
Arcelik A.S. ................. 5,690,300 948,808
Brisa Bridgestone Sabanci
Lastik San. ve Tic A.S. .... 1,142,600 594,790
Ege Biracilik ve
Malt Sanayii A.S. .......... 2,534,744 773,134
Erciyas Biracilik ve
Malt Sanayii A.S. .......... 1,156,800 124,670
Eregli Demir ve Celik
Fabrikalari T.A.S. ......... 3,633,300 627,985
Yapi ve Kredi Bankasi A.S. ... 43,116,700 2,034,055
----------
7,145,458
----------
TOTAL COMMON AND
CONVERTIBLE STOCKS,
WARRANTS AND RIGHTS
(Cost $82,106,277) ........ 96,280,321
----------
PAR
(000)
----------
FOREIGN BONDS -- 0.9%
COLOMBIA -- 0.9%
Banco de Colombia
Convertible 144A
5.200% 02/01/99 ............ $ 960 878,400
----------
TOTAL FOREIGN BONDS
(Cost $1,031,839) .......... 878,400
----------
SHORT TERM INVESTMENTS -- 2.6%
BBH Grand Cayman U.S.
Dollar Time Deposit
4.719% 03/03/97 ............ 2,633 2,633,000
----------
TOTAL SHORT TERM
INVESTMENTS
(Cost $2,633,000) ....... 2,633,000
----------
TOTAL INVESTMENTS AT
VALUE -- 99.7%
(Cost $85,771,116*) ....... 99,791,721
OTHER ASSETS IN EXCESS
OF LIABILITIES -- 0.3% .... 301,685
----------
NET ASSETS (Applicable to
4,855,385 BEA Institutional
Shares and 266 BEA Advisor
Shares) -- 100.0% ......... $100,093,406
============
VALUE
-------------
NET ASSET VALUE, OFFERING PRICE
AND REDEMPTION PRICE PER
BEA INSTITUTIONAL SHARE
($100,087,926 / 4,855,385) . $20.61
======
NET ASSET VALUE, OFFERING PRICE
AND REDEMPTION PRICE PER
BEA ADVISOR SHARE
($5,480 / 266) ............. $20.60
======
* Cost for Federal income tax purposes at February 28, 1997 is $86,228,937.
The gross appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation ...... $17,847,248
Gross Depreciation ...... (4,284,464)
-----------
Net Appreciation ........ $13,562,784
===========
** Non-income producing securities.
*** Denotes foreign shares.
**** Certain conditions for public sales may exist.
INVESTMENT ABBREVIATIONS
ADR ..........................American Depository Receipts
ADS ............................American Depository Shares
GDR ............................Global Depository Receipts
AT FEBRUARY 28, 1997, NET ASSETS CONSISTED OF:
AMOUNT
-------------
Capital Paid-In ................. $102,917,306
Accumulated Net Investment Loss . (756,157)
Accumulated Net Realized Loss on
Security and Foreign Exchange
Transactions ................. (16,057,135)
Net Unrealized Appreciation on
Investments and Other ........ 13,989,392
- ---------------------------------------------------------
NET ASSETS ...................... $100,093,406
- ---------------------------------------------------------
See Accompanying Notes to Financial Statements.
12
<PAGE>
BEA U.S. CORE EQUITY FUND
PORTFOLIO MANAGER'S LETTER
April 4, 1997
Dear Shareholders:
We are pleased to report on the results of the BEA U.S. Core Equity Fund (the
"Fund") and BEA's investment strategy for the six months ended February 28,
1997.
PERFORMANCE REVIEW
At February 28, 1997, the net asset value ("NAV") of the Fund was $21.03, after
a distribution of $1.61, compared to an NAV of $19.05 on August 31, 1996. As a
result, the Fund's total return (assuming reinvestment of dividends) was 19.2%.
By comparison, the Standard & Poor's 500 Index (the "Index") gained 22.6% and
the broader Wilshire 5000 Index rose 18.6% during the same period.
Performance for the period lagged that of the benchmark S&P 500 largely due to
the absence in the portfolio of the largest-capitalization U.S. stocks. As we
will explain in the next section, this group had a substantial positive impact
on the Index's return. The Fund held four of the top 10 stocks, but their
collective portfolio weighting was only about 6%.
MARKET COMMENTARY
It is our belief that the appropriate view of the U.S. equity market at present
is one of caution. Perhaps the most widely publicized factors supporting this
view are that 1) valuations are pushing their historical limits and 2) the
perceived threat of higher interest rates remains ever-present. We would like to
take this opportunity to discuss two other, less apparent factors which, we
feel, also justify a cautious perspective.
INDEXATION. A new mania currently developing in the stock market is similar to
those present in the market in 1972 and 1980.
In 1972, an extremely popular approach was investment in what were variously
known as "one-decision stocks" or the "Nifty Fifty." These were among the
biggest companies of the period (E.G., Avon, Xerox, Polaroid) and were widely
deemed to have such strong long-term growth potential that they were the only
stocks one needed to own. They were dubbed "one-decision" because it was felt
that investors had only to choose whether to buy them; to sell, simply would not
be necessary. The bear market of 1974 disproved this thesis within 18 months.
The other mania to which we refer focused on energy stocks, which had a sizable
upward move in the late 1970s from their lows of 1973. At the time, oil
shortages had driven gasoline prices to extreme levels. The Iran-Iraq war began
in the summer of 1980 and pushed energy stocks to a substantial top by November
of that year. This was the last time the energy sector significantly
outperformed the market.
The latest fashion is a type of indexation. Since a meaningful portion of the
market's recent strength has come from the largest-capitalization stocks
(so-called "mega-caps"), the market rises when they rise. Because the stocks are
so prominently represented in the broad market averages, in turn, they rise when
the market rises. This pattern has occurred so often that investors have flocked
to the small group of mega-caps as a proxy for the overall market.
As evidence, we cite two statistics for 1996. First, the top 50 stocks
contributed 65% of the market's strong return, up from 58% in 1995. Second, the
10 biggest stocks (I.E., General Electric, Coca-Cola, Exxon, Intel, Microsoft,
Merck, Royal Dutch Petroleum, Philip Morris, IBM and Procter & Gamble)
overwhelmingly outperformed the broad market averages: they rose 44.9%, compared
to 18.8% for the remaining 490 stocks in the S&P 500. The success of the
indexation strategy has been almost automatic for about the last year, so much
so that it is akin to one-decision stocks and $50-per-barrel oil in the summer
of 1980. Valuations for most of the mega-caps simply make no sense.
13
<PAGE>
BEA U.S. CORE EQUITY FUND
PORTFOLIO MANAGER'S LETTER (CONTINUED)
MANAGEMENT INEXPERIENCE. An additional cause for concern is the fairly low level
of market experience among today's mutual fund managers, whose decisions affect
Americans' financial well-being more than ever before. Consider these statistics
recently generated by the Investment Company Institute, the trade association
for mutual funds:
[BULLET] There are approximately 6300 mutual funds in the marketplace now.
[BULLET] The average fund portfolio manager is 29 years old.
[BULLET] The average manager has been in the industry for 3.7 years.
[BULLET] 20% of current managers were present during the 1987 market crash.
[BULLET] 14% of current managers were present during the bear market of
1973-74.
[BULLET] 15% of current managers change jobs annually.
In short: As increasingly huge amounts of cash pour into mutual funds, most of
those same funds are being entrusted to people who have never experienced the
severity of a true, lasting market downturn. Should such a downturn occur, this
group will be ill-equipped both to understand it in a broader context and make
the resulting tough choices.
OUTLOOK
We maintain our positive outlook on the U.S. economy. The economic climate is
supportive, as it includes a benign combination of moderate GDP growth, fairly
stable interest rates and little danger of inflation. The recent hike in rates,
in our judgment, will not prove disruptive of this scenario.
The key to the market is earnings growth. Stock prices generally are driven by
any or all of three factors: in addition to earnings growth, these are valuation
and dividend yields. Currently, standard valuation measures like the
price/earnings and price/book ratios are relatively high while dividend yields
are near their all-time lows. What this means is that two of the main drivers of
equity returns are indicating that there is little room left for further
appreciation. The remaining factor, earnings growth, thus becomes paramount in
determining the outlook for stock prices.
We believe that earnings should benefit from current economic conditions. It is
quite possible, however, that their growth rate will begin to slow, perhaps to
the high single digits. The pace of stock-price movements should respond
accordingly.
Our focus is on the shares of larger, more stable companies and the potential
for positive earnings surprises. A portfolio consisting entirely of such stocks
ought to be less volatile than the market in general and more effectively
weather a broad-based downturn.
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 yours,
BEA Domestic Equities Management Team
William W. Priest, Jr., Chief Executive Officer & Executive Director
John B. Hurford, Executive Director
Todd M. Rice, Senior Vice President
James A. Abate, Senior Vice President
Christopher C. Thompson, Vice President
14
<PAGE>
BEA U.S. CORE EQUITY FUND
PORTFOLIO MANAGER'S LETTER (CONCLUDED)
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.
[LINE GRAPH OMITTED]
BEA U.S. Core Equity Fund
Total Returns and Graph Plot Points
S & P 500
BEA U.S. Core Weighted Yield
DATES EQUITY FUND AVERAGE INDEX
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
05/31/96 $14,383 $14,720
08/31/96 $14,080 $14,421
11/30/96 $16,150 $16,837
02/28/97 $16,786 $17,672
AVERAGE ANNUAL TOTAL RETURN
One Year 20.42%
From Inception 23.04%
Note: Past performance is not predictive of future performance.
15
<PAGE>
BEA U.S. CORE EQUITY FUND
OF THE RBB FUND,INC.
STATEMENT OF NET ASSETS
FEBRUARY 28, 1997
(UNAUDITED)
NUMBER
OF SHARES VALUE
------------ -------------
COMMON AND CONVERTIBLE STOCKS -- 97.7%
AEROSPACE / DEFENSE -- 3.2%
Coltec Industries** .......... 85,000 $ 1,551,250
Lockheed Martin .............. 10,000 885,000
-----------
2,436,250
-----------
AUTOMOBILES & AUTO PARTS -- 1.0%
General Motors Corp. ......... 13,000 752,375
-----------
BUSINESS SERVICES -- 2.0%
Automatic Data Processing .... 35,000 1,491,875
-----------
COMPUTERS-SOFTWARE & SERVICES -- 3.2%
DST Systems** ................ 25,000 821,875
Microsoft Corp.** ............ 16,500 1,608,750
-----------
2,430,625
-----------
CONGLOMERATES -- 6.0%
General Electric Co. ......... 17,000 1,748,875
Philip Morris Companies ...... 15,000 2,026,875
RJR Nabisco Holdings Corp. ... 20,200 739,825
-----------
4,515,575
-----------
CONSUMER PRODUCTS & SERVICES -- 4.6%
Colgate-Palmolive Co. ........ 8,000 828,000
Gillette Co. ................. 9,000 712,125
Newell Co. ................... 30,000 1,113,750
The Clorox Company ........... 7,000 836,500
-----------
3,490,375
-----------
ELECTRONICS -- 5.0%
Emerson Electric Co. ......... 26,000 2,574,000
Intel Corp. .................. 8,500 1,205,937
-----------
3,779,937
-----------
ENERGY -- 6.5%
Exxon Corp. .................. 15,000 1,498,125
Helmerich & Payne ............ 19,000 802,750
Mobil Corp. .................. 9,000 1,104,750
Schlumberger Ltd. ............ 7,000 704,375
USX-Marathon Group, Inc. ..... 30,000 798,750
-----------
4,908,750
-----------
ENTERTAINMENT -- 2.7%
GTECH Holdings** ............. 65,000 2,039,375
-----------
FINANCIAL SERVICES -- 11.1%
ACE Ltd. ..................... 30,000 1,950,000
Allstate Corp. ............... 15,000 950,625
Associates First Capital Corp. 20,000 965,000
Citicorp ..................... 7,000 817,250
J.P. Morgan & Co. ............ 10,000 1,051,250
NationsBank .................. 14,000 838,250
Southern National Corp. ...... 20,000 777,500
State Street Boston .......... 13,000 1,044,875
-----------
8,394,750
-----------
NUMBER
OF SHARES VALUE
------------ -----------
FOOD & BEVERAGE -- 3.0%
HJ Heinz Co. ................. 55,000 $ 2,289,375
-----------
HEALTH CARE -- 7.1%
Bergen Brunswig .............. 25,100 806,338
Boston Scientific** .......... 12,200 808,250
Humana, Inc.** ............... 40,000 785,000
McKesson Corp. ............... 45,100 2,987,875
-----------
5,387,463
-----------
INDUSTRIAL GOODS & MATERIALS -- 4.5%
Dover Corp. .................. 20,000 992,500
Illinois Tool Works .......... 10,000 843,750
Tyco International, Ltd. ..... 26,300 1,551,700
-----------
3,387,950
-----------
INSURANCE -- 1.2%
EXEL Ltd. .................... 20,000 882,500
-----------
METALS & MINING -- 0.7%
Oregon Metallurgical Corp.** . 25,000 550,000
-----------
PACKAGING/CONTAINERS -- 2.4%
Owens-Illinois** ............. 75,000 1,809,375
-----------
PAPER & FOREST PRODUCTS -- 2.7%
Rock-Tenn Company ............ 40,800 805,800
Schweitzer-Mauduit
International, Inc. ........ 35,000 1,194,375
-----------
2,000,175
-----------
PHARMACEUTICALS, DRUGS & BIOTECH-- 9.9%
Amgen, Inc.** ................ 20,000 1,222,500
Barr Laboratories** .......... 37,000 1,341,250
Ivax Corp. ................... 150,000 1,837,500
Pharmacia & Upjohn, Inc. ..... 33,000 1,216,875
Smithkline Beecham plc ....... 25,000 1,856,250
-----------
7,474,375
-----------
PHOTOGRAPHY/IMAGING EQUIPMENT & SUPPLY -- 1.1%
Eastman Kodak ................ 9,000 806,625
-----------
PUBLISHING & INFORMATION SERVICES-- 5.7%
Gannett Co. .................. 18,300 1,459,425
Hollinger International ...... 150,000 1,518,750
Tribune Co. .................. 34,000 1,334,500
-----------
4,312,675
-----------
REAL ESTATE -- 3.3%
Starwood Lodging Trust ....... 33,000 1,291,125
TriNet Corporate Realty
Trust, Inc. ................ 35,000 1,194,375
-----------
2,485,500
-----------
See Accompanying Notes to Financial Statements.
16
<PAGE>
BEA U.S. CORE EQUITY FUND (CONCLUDED)
NUMBER
OF SHARES VALUE
----------- -----------
TELECOMMUNICATIONS -- 5.4%
Airtouch Communications** .... 30,000 $ 817,500
Frontier Corp. ............... 22,000 486,750
Newbridge Networks Corp.** ... 32,400 1,032,750
Teleglobe, Inc. .............. 60,000 1,751,408
-----------
4,088,408
-----------
TEXTILES/APPAREL -- 1.7%
Nine West Group, Inc.** ...... 27,000 1,269,000
-----------
TRANSPORTATION -- 3.7%
AMR Corp.** .................. 9,000 707,625
Canadian National Railway .... 30,000 1,091,250
Canadian Pacific Ltd. ........ 40,000 990,000
-----------
2,788,875
-----------
TOTAL COMMON AND
CONVERTIBLE STOCKS
(Cost $60,332,193) ......... 73,772,183
-----------
PAR
(000)
----------
CORPORATE BONDS -- 1.2%
TRANSPORTATION -- 1.2%
Santa Fe Pacific Pipeline
Partners L.P. Conv. Debentures
(Baa3, BB)
11.000% 08/15/10 ........... $ 735 911,400
-----------
TOTAL CORPORATE BONDS
(Cost $952,300) 911,400
-----------
SHORT TERM INVESTMENTS -- 2.3%
BBH Grand Cayman
U.S. Dollar Time Deposit
4.719% 03/03/97 ............ 1,775 1,775,000
-----------
TOTAL SHORT TERM
INVESTMENTS
(Cost $1,775,000) ....... 1,775,000
-----------
TOTAL INVESTMENTS AT
VALUE -- 101.2%
(Cost $63,059,493*) ........ 76,458,583
LIABILITIES IN EXCESS OF
OTHER ASSETS-- (1.2%) ...... (917,023)
-----------
NET ASSETS (Applicable to
3,592,569 BEA Institutional
Shares)-- 100.0% ........... $75,541,560
===========
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PRICE PER BEA
INSTITUTIONAL SHARE
($75,541,560 / 3,592,569) .. $21.03
======
* Cost for Federal income tax purposes at February 28, 1997 is $62,987,182. The
gross appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation ...... $14,593,295
Gross Depreciation ...... (1,121,894)
-----------
Net Appreciation ........ $13,471,401
===========
** Non-income producing securities.
AT FEBRUARY 28, 1997, NET ASSETS CONSISTED OF:
AMOUNT
-------------
Capital Paid-In ................. $60,651,255
Accumulated Net Investment Income 75,588
Accumulated Net Realized Gain on
Security and Foreign Exchange
Transactions ................. 1,415,627
Net Unrealized Appreciation on
Investments and Other ........ 13,399,090
- ----------------------------------------------------------
NET ASSETS ...................... $75,541,560
- ----------------------------------------------------------
See Accompanying Notes to Financial Statements.
17
<PAGE>
BEA GLOBAL TELECOMMUNICATIONS FUND
PORTFOLIO MANAGER'S LETTER
April 4, 1997
Dear Shareholders:
We are pleased to report on the results of the BEA Global Telecommunications
Fund (the "Fund") and BEA's investment strategy for the period of December 4,
1996 (commencement of operations) through February 28, 1997.
At February 28, 1997, the net asset value ("NAV") of the Fund was $16.18,
compared to an NAV of $15.00 on its commencement of operations on December 4,
1996. As a result, the Fund's total return was 7.9%. For the two-month period of
January and February 1997, the Fund returned 8.0%, versus the 2.5% gain achieved
by the MSCI Telecommunications Index.
PORFOLIO REVIEW
The Fund's approach of adding value via superior stock selection is illustrated
by its good performance during the period, which was primarily a result of two
factors. First, we utilized our capability to allocate an above-average portion
of total assets to companies based in emerging markets. This latter group
performed especially well. Our more notable emerging markets holdings in this
regard included Telebras (the government-controlled telephony provider in
Brazil) and several of the Brazilian regional phone companies, Vimpelcom
(Russia), CTC (Chile), Elektrim S.A. (Poland) and Telecel (Portugal). Second, we
avoided investment in AT&T, whose performance has been among the most
disappointing in the broad telecom sector for some time now.
MARKET COMMENTARY
The worldwide telecommunications industry is experiencing a period of tremendous
change that is being felt in developed and emerging nations alike. Powerful
trends are forcing companies to increase competitiveness and profitability more
rapidly than ever before. Foremost among these trends are globalization, market
liberalization, the changing needs of large multinational corporations and
advancements in technology.
GLOBALIZATION. As competition within their own markets reduces domestic
profitability, many developed-nation large telecom providers are looking
elsewhere for new revenue sources. Corporate customers, moreover, are
increasingly demanding global telecom services from a single carrier (see
below). The leading providers must have global capability to survive this
evolution in the telecom business.
LIBERALIZATION. The telecom industry model is moving from regulation-based
domestic monopoly to market-based global competition. Analysts forecast that 80%
of the world's telecom market will be in a state of complete or substantial
deregulation by 1999, vs. just 20% today. The open competition fostered by such
liberalization will force changes in ownership of telecom assets.
Strong drivers of worldwide liberalization include: the U.S. Telecommunications
Act of 1996; directives to European nations from the European Union; World Trade
Organization efforts to devise a standardized framework for regulation and
tariffs (I.E., rates); and privatization by emerging nations.
MULTINATIONAL CORPORATIONS. Anecdotal evidence suggests that the world's top
5,000 multinationals account for an estimated 15-20% of global telecom revenues
and an even higher share of profits. Accordingly, major providers regard them as
the most desirable customers and fiercely vie for their business.
In order to meet multinationals' growing need for single-source telecom service,
providers must have the ability to control message transmission from point of
origination to point of destination. This "end-to-end" level of control delivers
convenience and cost-savings to the customer as well as potentially higher
profit margins to the provider.
TECHNOLOGY. Technology is a double-edged sword. As it advances, providers can
offer their customers increasingly sophisticated and cheaper services. These
same characteristics, however, enable smaller competitors to seize market share
and more efficiently deploy relatively scarcer capital.
18
<PAGE>
BEA GLOBAL TELECOMMUNICATIONS FUND
PORTFOLIO MANAGER'S LETTER (CONCLUDED)
Both individually and collectively, the trends we have discussed are
accelerating the industry's consolidation. In 1996 alone, four major mergers
were announced. Three were between U.S. companies: SBC Communications with
Pacific Telesis, Bell Atlantic with NYNEX and MFS Communications with WorldCom.
The fourth proposed transaction, British Telecom's acquisition of MCI
Communications, is highly significant in several ways. Should the deal close, it
would be:
[BULLET] the first combination of mainstream telecom companies from different
nations and create the world's first global super-carrier;
[BULLET] the world's fourth-largest telecom provider (in revenue), exceeded
only by Nippon Telegraph & Telephone, Deutsche Telekom and AT&T;
[BULLET] the first time a foreign company has taken over a major American
telephone company; and
[BULLET] the largest-ever foreign takeover of any U.S. corporation.
Our sense is that a British Telecom - MCI Communications union would be the
opening salvo in a long-term barrage of global telecom consolidation.
With regard to emerging markets, their telecom companies represent a much purer
equity play on the growth of basic telephony as they build out their networks
more fully and reach higher levels of teledensity (I.E., the level of telephone
penetration within the population). Many are linked to leading U.S., European
and Japanese telecom companies via strategic alliances.
Such alliances offer significant benefits, including access both to management
skills and, most notably, otherwise-unavailable technology. The latter typically
allows development to proceed at a much more rapid pace, particularly as the
industry grows into other telecom-related areas such as mobile,
wireless/cellular and services; and can result in higher relative rates of
operating efficiency (E.G., by greatly raising digitalization levels).
OUTLOOK
The future holds great promise for investors in telecommunications equities. As
the rate and intensity of competition are rising, however, stock selection
becomes an increasingly vital ingredient in performance. We believe that the
Fund's ability to choose both from a variety of telecom-related sectors across
the globe and a growing number of publicly traded telecom companies will
positively impact performance over the long term.
Privatization will play a major role in shaping industry dynamics in the next
few years. This is especially true among the emerging markets, whose telecom
networks will dramatically increase both in terms of the quantity and quality of
services provided. We note in this context the enthusiastic response by a
variety of the world's top telecom companies to Brazil's recently announced
auction of mobile telephone service concessions. Developed nations will also
make a substantial contribution to the privatization trend. Toward the end of
1996, for example, Germany's initial sale of shares in Deutsche Telekom was
extremely successful and became the second-largest initial public offering in
history. Offerings of France Telecom and Italy's STET Societa Finanziaria
Telefonica S.p.A. are expected later this year.
Among domestic companies, we are finding opportunities in several sectors. These
include the regional Bell operating companies, which are proving to be much
stronger competitors than many analysts had previously expected; Internet access
providers such as America Online and NETCOM On-Line Communications Services,
whose growing pains are attracting far more investor attention than the surging
growth in Internet usage; and cellular companies, which are finally starting to
generate operating profits and free cash flow after years of building their
infrastructures.
As developments occur in the telecommunications industry 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 yours,
BEA Global Telecommunications Management Team
Richard Watt, Managing Director
William P. Sterling, Executive Director
Todd M. Rice, Senior Vice President
Stephen R. Waite, Vice President
19
<PAGE>
BEA GLOBAL TELECOMMUNICATIONS FUND
OF THE RBB FUND,INC.
STATEMENT OF NET ASSETS
FEBRUARY 28, 1997
(UNAUDITED)
NUMBER
OF SHARES VALUE
------------ ----------
COMMON AND CONVERTIBLE STOCKS,
WARRANTS AND RIGHTS -- 89.0%
BRAZIL -- 11.3%
Telecomunicacoes Brasileiras
S.A. ADR ................... 200 $ 19,400
Telecomunicacoes de Minas
Gerais PN Cl. B ............ 60,000 8,809
Telecomunicacoes de Sao Paulo
S.A. PN .................... 33,000 9,074
Telecomunicacoes do Parana
S.A. PN .................... 15,000 9,848
Telecomunicacoes do Rio de
Janeiro S.A. PN ............ 57,000 8,623
----------
55,754
----------
CANADA -- 3.7%
BCE Mobile Communications .... 100 3,212
Sprint Corp. ................. 200 9,100
Teleglobe .................... 200 5,831
----------
18,143
----------
CHILE -- 2.7%
Companhia de
Telecomunicaciones ADR ..... 450 13,162
----------
GERMANY -- 1.6%
Deutsche Telekom ............. 200 3,843
Mannesmann AG ................ 10 3,957
----------
7,800
----------
HONG KONG -- 3.2%
Hong Kong Telecommunications
Ltd. ADR ................... 900 15,637
----------
INDONESIA -- 3.4%
PT Indosat *** ............... 6,000 16,955
----------
ITALY -- 5.4%
Stet Societa Finanziaria
Telefonica S.p.A. .......... 4,400 15,373
Telecom Italia Mobile S.p.A. . 1,600 4,186
Telecom Italia Mobile
Non-Convertible Savings
Shares ..................... 4,700 7,182
----------
26,741
----------
PERU -- 3.6%
Telefonica del Peru S.A. ADR . 800 17,600
----------
POLAND -- 2.1%
Elektrim Spolka Akcyjna S.A. . 1,000 10,135
----------
PORTUGAL -- 9.6%
Portugal Telecom S.A. ADR** .. 600 20,925
Telecel-Comunicacaoes
Pessoais S.A. .............. 320 26,496
----------
47,421
----------
NUMBER
OF SHARES VALUE
------------ ------------
RUSSIA -- 3.5%
Vimpel Communications ADR .... 500 $ 17,188
----------
SOUTH KOREA -- 2.8%
Korea Mobile
Telecommunications ADR ..... 1,100 13,612
----------
SPAIN -- 1.4%
Telefonica de Espana ADR ..... 100 6,887
----------
UNITED KINGDOM -- 8.0%
Cable & Wireless plc ADR ..... 150 3,637
Colt Telecom Group plc ADR ... 900 17,888
EMAP plc ..................... 200 2,509
General Cable plc ADR** ...... 200 3,025
M.A.I.D. plc ADR ............. 400 4,600
TeleWest plc ................. 1,500 2,908
Vodafone Group ADR ........... 100 4,750
----------
39,317
----------
UNITED STATES -- 26.7%
360 Communications Company ... 500 10,813
Airtouch Communications, Inc. 400 10,900
America Online, Inc. ......... 300 11,250
Compuserve Corp. ............. 400 4,050
Cox Communications, Inc. ..... 200 4,025
Cox Radio, Inc. .............. 200 3,825
Individual, Inc. ............. 1,000 7,125
LCC International, Inc. ...... 200 1,950
MCI Communications ........... 200 7,150
NETCOM On-Line
Communications Services,
Inc. ....................... 1,400 14,700
PageMart Wireless, Inc. ...... 800 5,500
Paging Network, Inc. ......... 400 6,025
Superior Telecom, Inc. ....... 400 10,050
Tele-Communications, Inc.
Cl. A ...................... 100 1,188
Teleport Communications
Group, Inc. ................ 100 3,000
U.S. West Media Group ........ 500 9,188
United States Satellite
Broadcasting Company, Inc. . 400 4,800
Viatel, Inc. ................. 1,300 10,075
WorldCom, Inc. ............... 200 5,325
----------
130,939
----------
TOTAL COMMON AND
CONVERTIBLE STOCKS,
WARRANTS AND RIGHTS
(Cost $412,707) ............ 437,291
----------
See Accompanying Notes to Financial Statements.
20
<PAGE>
BEA GLOBAL TELECOMMUNICATIONS FUND (CONCLUDED)
PAR
(000) VALUE
--------- -------------
SHORT TERM INVESTMENTS -- 11.2%
BBH Grand Cayman U.S.
Dollar Time Deposit
4.719% 03/03/97 ............ $ 55 $ 55,000
----------
TOTAL SHORT TERM
INVESTMENTS
(Cost $55,000) .......... 55,000
----------
TOTAL INVESTMENTS AT
VALUE -- 100.2%
(Cost $467,707*) ........... 492,291
LIABILITIES IN EXCESS OF
OTHER ASSETS-- (0.2%) ...... (798)
----------
NET ASSETS (Applicable to
30,374 BEA Advisor
Shares)-- 100.0% ........... 491,493
==========
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PRICE PER BEAADVISOR
SHARE
($491,493 / 30,374) ........ $16.18
======
* Also cost for Federal income tax purposes at February 28, 1997.
The gross appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation ...... $ 44,305
Gross Depreciation ...... (19,721)
--------
Net Appreciation ........ $ 24,584
========
** Non-income producing securities.
INVESTMENT ABBREVIATIONS
ADR ..........................American Depository Receipts
AT FEBRUARY 28, 1997, NET ASSETS CONSISTED OF:
AMOUNT
---------
Capital Paid-In ................. $463,251
Accumulated Net Investment Loss . (126)
Accumulated Net Realized Gain on
Security and Foreign Exchange
Transactions ................. 3,784
Net Unrealized Appreciation on
Investments and Other ........ 24,584
- ----------------------------------------------------------
NET ASSETS ...................... $491,493
- ----------------------------------------------------------
21
<PAGE>
BEA U.S. CORE FIXED INCOME FUND
PORTFOLIO MANAGER'S LETTER
April 4, 1997
Dear Shareholders:
We are pleased to report on the results of the BEA U.S. Core Fixed Income Fund
(the "Fund") and BEA's investment strategy for the six months ended February 28,
1997.
PERFORMANCE REVIEW
At February 28, 1997, the net asset value ("NAV") of the Fund was $15.36
compared to an NAV of $15.06 on August 31, 1996. As a result, the Fund's total
return (assuming reinvestment of dividends and distributions) was 6.6%. By
comparison, the Lehman Brothers Aggregate Bond Index gained 5.4% during the same
period.
1996 was a great year for "spread product," I.E., debt securities whose market
valuation is greatly driven by the spreads between their yields and those of
U.S. Treasury debt. Throughout the year, Treasuries experienced great volatility
due to fears of rising interest rates. Accordingly, spreads narrowed and spread
product thrived as investors sought stability in relatively higher yields, and
stronger corporate profits and stable economic growth lessened credit concerns.
Within the Lehman Aggregate benchmark, Treasuries returned 2.7% for the year,
significantly lower than returns on most other non-Treasury investment-grade
categories, including corporate bonds (3.3%), mortgage-backed securities (5.4%)
and asset-backed securities (5.1%).
The strength of spread product persisted through most of 1997's first quarter.
Corporate and mortgage-backed bond spreads continued to contract, despite
statements by Fed chairman Alan Greenspan warning that an increase in interest
rates was becoming much more likely. After the Fed finally raised rates in late
March (the first such increase since early 1995), spreads began to widen in
response.
PORTFOLIO REVIEW
The Fund outperformed the benchmark by 1.2% in the six months ended February 28,
1997. The principal driver of outperformance during the period was our decision
to de-emphasize Treasuries in favor of certain spread product sectors. In making
this decision, several factors played important roles:
[BULLET] OVERWEIGHTING OF CORPORATE BONDS: Both investment-grade and
below-investment-grade corporate debt generated strong results. Our
general decision to overweight corporates relative to the benchmark
meaningfully contributed to our ability to achieve incremental returns.
During 1996, we identified three compelling investment themes for
corporates that were fundamental to the Fund's success:
[BULLET] The improvements in the balance sheets of conglomerates as
they disposed of non-core operations;
[BULLET] The desire of many companies to pay off debt in order to
raise their stock price; and
[BULLET] The belief that technological advances would greatly benefit
the banking industry.
These themes enabled us to concentrate corporate holdings in specific industry
sectors, primarily banking and industrials, all of which performed well.
[BULLET] INCLUSION OF EMERGING MARKET DEBT AND HIGH YIELD: Sovereign
and corporate bonds of emerging nations performed extremely well in
1996. Positions both in emerging market and high yield debt were able
to add significant value to performance without affecting the
portfolio's average rating, which was AA as of year-end.
[BULLET] OVERWEIGHTING OF MORTGAGES: For most of the period, we were
overweight mortgages through positions both in conventional and
commercial mortgage-backed securities. Both helped to generate higher
yield while maintaining a bias toward good credit quality.
22
<PAGE>
BEA U.S. CORE FIXED INCOME FUND
PORTFOLIO MANAGER'S LETTER (CONTINUED)
OUTLOOK
Much of the strength in fixed income markets during 1996 and early 1997 was due
to the Federal Reserve's decision not to raise interest rates. Now that the Fed
has tightened, however, marketplace sentiment has become more negative and bonds
have endured considerable selling.
Our view is that caution is most appropriate. We have observed over the years
that, when an anticipated development is generally felt to be reflected in
current prices, this often is not the case. On this basis, we tend to agree with
those who expect further Fed tightening and would not be surprised to see rates
additionally increased 25-50 basis points in the second and/or third quarters of
1997. With this in mind, we have adopted a more defensive management posture.
Our approach to each of the major debt sectors is as follows:
GOVERNMENT SECURITIES. We have raised the Fund's holdings in order both to put
greater emphasis on high-quality instruments during this time of volatility and
maintain liquidity as other opportunities arise.
CORPORATE BONDS. We are overweighting corporates as well. Having successfully
identified several "crossover credits," (I.E., companies whose financial
condition is improving enough to merit a ratings upgrade), we have lately taken
some profits in such issues. We also have narrowed the Fund's industry focus to
highlight two sectors. These are utilities, whose competitive landscape is in
the midst of dramatic change; and energy, which is benefiting from a variety of
favorable supply-and-demand factors. Overall, we expect a higher proportion of
the Fund's incremental returns for the year to come from selection of individual
securities rather than sector rotation. Thorough research continues to provide
us with unique opportunities of this nature.
HIGH YIELD & EMERGING MARKETS. In light of our defensive focus on higher-quality
instruments, we have reduced the Fund's positions in domestic high yield and
emerging markets debt securities. Within high yield, we continue to favor bonds
that are relatively senior in the corporate capital structure or are maturing in
two to five years. The Fund's weighting in emerging market debt is at its lowest
level in several years.
MORTGAGE-BACKED SECURITIES ("MBS"). We overweighted conventional pass-through
MBS in the portfolio in late 1996 in the belief that yield-hungry and
value-conscious investors would opt to increase their exposure. This approach
proved effective, as MBS enjoyed a solid rally in December and January. We have
since reduced the Fund's MBS allocation to neutral by selling into strength.
Although we consider prices somewhat high, MBS remain fundamentally attractive,
so we are keeping alert for further buying opportunities.
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 yours,
BEA Fixed Income Management Team
Robert J. Moore, Executive Director
Gregg M. Diliberto, Managing Director
Mark K. Silverstein, Senior Vice President
Robert W. Justich, Senior Vice President
William P. Sterling, Executive Director
23
<PAGE>
BEA U.S. CORE FIXED INCOME FUND
PORTFOLIO MANAGER'S LETTER (CONCLUDED)
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.
[LINE GRAPH]
BEA U.S. Core Fixed Income Fund
Total Returns and Graph Plot Points
BEA U.S. Core Fixed Lehman Brothers
DATES INCOME FUND AVERAGE INDEX
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
05/31/96 $11,464 $11,638
08/31/96 $11,658 $11,806
11/30/96 $12,328 $12,488
02/28/97 $12,420 $12,442
AVERAGE ANNUAL TOTAL RETURN
One Year 7.16%
From Inception 7.71%
Note: Past performance is not predictive of future performance.
24
<PAGE>
BEA U.S. CORE FIXED INCOME FUND
OF THE RBB FUND,INC.
STATEMENT OF NET ASSETS
FEBRUARY 28, 1997
(UNAUDITED)
PAR
(000) VALUE
----------- ------------
CORPORATE BONDS -- 33.5%
BANKING -- 5.1%
Chase Manhattan Corp.
Subordinated Notes (A2, A-)
7.125% 02/01/07 ............ $ 450 $ 450,562
Citicorp Subordinated Notes
(A2, A)
7.625% 05/01/05 ............ 140 145,250
6.750% 08/15/05 ............ 70 68,862
7.125% 09/01/05 ............ 650 653,250
Credit Lyonnais 144A Perpetual
Sub. Variable Rate Notes,
(Baa2, NR) ****/+/+++
6.625% ..................... 520 513,812
Hong Kong & Shanghai Banking
Corp. Ltd. Perpetual Sub.
FRN Series 1 (Baa1, NR)+/+++
5.875% ..................... 580 515,649
Hong Kong & Shanghai Banking
Corp. Ltd. Perpetual Sub.
FRN Series 2 (Baa, NR)+/+++
5.812% ..................... 60 52,875
Lloyds Bank PLC Perpetual
Sub. FRN, Series 2
(Aa3, NR)+/+++ 5.688% ...... 770 703,587
Midland Bank PLC Perpetual
Sub. FRN Series 2
(A1, A-)+/+++
6.063% ..................... 390 353,925
National Westminster Bank
Perpetual Sub. FRN Series A
(Aa3, A+)+/+++
5.938% ..................... 750 685,313
Royal Bank of Canada Sub.
Debentures (Aa3, NR)
5.750% 03/17/97 ............ 600 544,500
Santander Financial Issuances
Perpetual Sub. FRN
(A2, NR)+/+++
6.525% ..................... 500 498,375
Skandinaviska Enskilda Banken
AB Perpetual Sub. FRN
(Baa1, NR)+/+++
6.625% ..................... 1,470 1,444,422
Sovereign Bancorp Senior
Notes (NR, BBB-)
6.750% 07/01/00 ............ 110 107,800
Trans Financial Bank N.A.
Notes (Baa3, BBB-)
6.480% 10/23/98 ............ 290 290,191
------------
7,028,373
------------
CABLE -- 0.8%
Summit Communications Group,
Inc. Senior Subordinated
Notes (Ba3, BB+)
10.500% 04/15/05 ........... 980 1,071,875
------------
PAR
(000) VALUE
---------- -----------
CHEMICALS -- 0.2%
UCC Investors Holdings Inc.
Subordinated Discount
Notes (B3, B-)++
12.000% 05/01/05 ........... $ 290 $ 263,900
------------
CONSTRUCTION & BUILDING MATERIALS -- 0.3%
K Hovnanian Enterprises Inc.
Gtd. Subordinated
Notes (B2, B)
11.250% 04/15/02 ........... 400 419,000
------------
ENERGY -- 1.4%
Gulf Canada Resources Ltd.
Yankee Senior Subordinated
Debentures (Ba3, BB-)
9.250% 01/15/04 ............ 350 371,875
Gulf Canada Resources Ltd.
Yankee Senior Notes
(Ba2, BB+)
8.350% 08/01/06 ............ 960 1,011,600
PDV America, Inc. Guaranteed
Senior Notes (Baa3, B)
7.875% 08/01/03 ............ 505 511,312
------------
1,894,787
------------
ENTERTAINMENT -- 2.1%
Time Warner, Inc. Debentures
(Ba1, BBB-)
6.850% 01/15/26 ............ 2,945 2,915,550
------------
ENVIRONMENTAL SERVICES -- 0.2%
EnviroSource, Inc. Senior
Notes (B3, B)
9.750% 06/15/03 ............ 225 221,062
------------
FINANCIAL SERVICES -- 8.8%
AFC Capital Trust I 144A Bonds
(A3, BBB+)
8.207% 02/03/27 ............ 1,450 1,466,312
AT&T Capital Corporation
Medium Term Notes
(Baa3, BBB)
5.440% 01/16/98 ............ 280 278,351
AT&T Capital Corporation
Medium Term Notes
Series 3 (Baa3, BBB)
6.030% 10/27/97 ............ 1,500 1,499,670
Bank of Foreign Economic
Affairs of the USSR
(Vnesheconombank Bank)
(When Issued) (NR, NR)
12.000% 12/31/16 ........... 1,240 892,800
Fifth Mexican Acceptance Corp.
Rule 144A Notes Tranche A
(NR, NR)****/++++
8.000% 12/15/98 ............ 760 182,400
See Accompanying Notes to Financial Statements
25
<PAGE>
BEA U.S. CORE FIXED INCOME FUND (CONTINUED)
PAR
(000) VALUE
--------- ------------
FINANCIAL SERVICES -- (CONTINUED)
Ford Holdings, Inc. Guaranteed
Notes (A1, A+)
9.250% 03/01/00 ............ $ 10 $ 10,687
General Motors Acceptance Corp.
Medium Term Notes (A3, A-)
7.250% 07/20/98 ............ 125 126,921
7.375% 04/15/99 ............ 1,000 1,020,000
6.625% 04/24/00 ............ 1,290 1,291,612
6.900% 07/05/00 ............ 290 292,175
Guangdong International Trust
& Investment Corp. 144A
Yankee Bonds (Baa2, BBB-)
8.750% 10/24/16 ............ 1,400 1,452,500
L'Auxiliare du Credit Foncier de
France Guaranteed
Subordinated FRN
(Baa3, NR)+
5.727% 09/25/02 ............ 420 402,570
L'Auxiliare du Credit Foncier de
France Sr. Unsubordinated
Notes (A3, A)
8.000% 01/14/02 ............ 1,115 1,163,781
Norwest Financial Inc. Senior
Notes (Aa3, AA-)
7.500% 04/15/05 ............ 200 206,000
Torchmark Corp. Notes (Baa1, A)
7.375% 08/01/13 ............ 85 80,006
Torchmark Corp. Senior
Notes (Baa1, A)
7.875% 05/15/23 ............ 70 69,037
Travelers Capital Trust
Preferred II Bonds (A1, A)
7.750% 12/01/36 ............ 1,500 1,455,000
United Companies Financial
Corp. Senior Notes
(Ba1, BBB-)
7.000% 07/15/98 ............ 270 270,000
------------
12,159,822
------------
FOOD & BEVERAGE -- 0.4%
Fresh del Monte Produce N.V.
Yankee Senior Notes
Series B (Caa, CCC+)
10.000% 05/01/03 ........... 610 611,525
------------
HEALTHCARE -- 1.1%
Tenet Healthcare Corp. Senior
Notes (Ba1, BB)
7.875% 01/15/03 ............ 550 556,875
8.625% 09/17/07 ............ 850 892,500
------------
1,449,375
------------
PAR
(000) VALUE
----------- ------------
INDUSTRIAL GOODS & MATERIALS -- 2.0%
Dresser Industries, Inc.
Debentures (Aa3, A)
7.600% 08/15/49 ............ $ 170 $ 169,575
Seagate Technology, Inc. Senior
Debentures (Baa3, BBB)
7.450% 03/01/37 ............ 1,500 1,500,000
Tevecap S.A. 144A Yankee
Senior Notes (B2, B)
12.625% 11/26/04 ........... 1,000 1,075,000
------------
2,744,575
------------
METALS & MINING -- 0.2%
Armco, Inc. Senior Notes (B2, B)
9.375% 11/01/00 ............ 330 338,250
------------
PACKAGING/CONTAINERS -- 0.3%
Crown Packaging Enterprises
Ltd. 144A Units (Ca, NR)++
14.000% 08/01/06 ........... 350 77,000
Gaylord Container Corp. Senior
Subordinated Discount
Debentures (Caa, B-)
12.750% 05/15/05 ........... 300 333,000
------------
410,000
------------
REAL ESTATE -- 0.6%
Chelsea GCA Realty Inc.
Guaranteed Notes (Ba1, BB+)
7.750% 01/26/01 ............ 750 765,938
------------
TELECOMMUNICATIONS -- 2.6%
BellSouth Capital Funding
Debentures (Aa1, AAA)
6.040% 11/15/26 ............ 1,010 992,325
BellSouth Telecommunications,
Inc. Debentures (Aaa, AAA)
5.850% 11/15/45 ............ 1,795 1,770,319
Rogers Cantel, Inc. Yankee
Senior Secured Debentures
(Ba3, BB+)
9.375% 06/01/08 ............ 590 626,875
Videotron Holdings Plc Yankee
Discount Notes (B3, B+)++
11.000% 08/15/05 ........... 325 261,625
------------
3,651,144
------------
TRANSPORTATION -- 3.7%
Continental Airlines, Inc. Senior
Notes (Ba3, B)
9.500% 12/15/01 ............ 2,275 2,383,062
Delta Air Lines, Inc. Debentures
(Baa3, BB+)
10.375% 02/01/11 ........... 665 801,325
See Accompanying Notes to Financial Statements
26
<PAGE>
BEA U.S. CORE FIXED INCOME FUND (CONTINUED)
PAR
(000) VALUE
----------- ------------
TRANSPORTATION -- (CONTINUED)
NWA Trust Mezzanine Aircraft
Notes Series D (Ba1, BB+)
13.875% 06/21/08 ........... $ 250 $ 295,625
Transportacion Maritima
Mexicana Yankee Sr. Notes
(Ba2, BB)
10.000% 11/15/06 ........... 1,000 995,000
US Air, Inc. Gtd. Senior Notes
(B3, CCC)
10.000% 07/01/03 ........... 600 604,500
------------
5,079,512
------------
UTILITIES -- 3.5%
Beaver Valley Funding Corp.
Secured Lease Obligation
Bonds (B1, B+)
8.625% 06/01/07 ............ 225 214,594
9.000% 06/01/17 ............ 1,045 1,050,225
Israel Electric Corp. Ltd. 144A
Senior Notes (A3, A-)
7.250% 12/15/06 ............ 550 540,375
Long Island Lighting Co.
Debentures (Ba3, BB+)
9.000% 11/01/22 ............ 915 976,763
Niagara Mohawk Power Corp.
First Mortgage Bonds
(Ba3, BB-)
6.875% 04/01/03 ............ 665 629,256
5.875% 09/01/02 ............ 465 421,988
TU Electric Capital Trust V,
Junior Subordinated
Debentures (Baa2, BBB)
8.175% 02/01/37 ............ 950 952,375
Toledo Edison Co. Debentures
(B1, B+)
8.700% 09/01/02 ............ 45 44,550
------------
4,830,126
------------
WASTE MANAGEMENT -- 0.2%
WMX Technologies Inc. Senior
Notes (A1, A)
7.100% 08/01/26 ............ 290 297,613
------------
TOTAL CORPORATE
BONDS
(Cost $45,550,188) ......... 46,152,427
------------
FOREIGN BONDS -- 3.3%
Federal Republic of Brazil
MYDFA Trust Certificates
(NR, NR)+
6.688% 09/17/07 ............ 1,950 1,748,906
PAR
(000) VALUE
----------- ------------
FOREIGN BONDS -- (CONTINUED)
Republic of South Africa
Consolidation Bonds,
Series 153 (Baa1, BBB+)
13.000% 08/31/10 ........... $ 3,700 $ 726,785
The Polish People's Republic
Discount Bonds FRN
(Baa3, BBB-)++
6.500% 10/27/24 ............ 695 677,625
United Mexican States Global
Bonds (Ba2, BB) (a)
11.375% 09/15/16 ........... 1,315 1,438,281
------------
TOTAL FOREIGN BONDS
(Cost $4,313,878) .......... 4,591,597
------------
AGENCY OBLIGATIONS -- 36.0%
FEDERAL HOME LOAN MORTGAGE CORPORATION-- 9.7%
7.000% 08/01/00 ............ 217 217,852
7.000% 09/01/01 ............ 18 18,070
6.500% 12/01/11 ............ 6,296 6,171,682
8.000% 04/01/25 ............ 622 634,771
8.000% 04/01/25 ............ 137 139,622
8.000% 04/01/25 ............ 160 163,419
8.000% 06/01/25 ............ 104 106,100
8.000% 08/01/25 ............ 113 115,246
6.500% 12/01/25 ............ 651 620,876
8.000% 12/01/25 ............ 131 133,960
8.000% 12/01/25 ............ 156 159,419
8.000% 01/01/26 ............ 359 366,120
8.000% 05/01/26 ............ 377 384,664
8.000% 06/01/26 ............ 601 614,153
8.000% 06/01/26 ............ 145 147,946
8.000% 06/01/26 ............ 546 557,165
8.000% 06/01/26 ............ 649 662,523
8.000% 06/01/26 ............ 422 430,960
FHLMC (TBA)**
8.000% 12/31/25 ............ 300 305,906
FHLMC Series 1014 Class E
7.950% 02/15/20 ............ 645 654,328
FHLMC Series 1860 Principal Only
0.000% 02/15/24 ............ 1,624 783,748
------------
13,388,530
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION-- 17.0%
5.500% 04/01/01 ............ 246 234,901
5.500% 04/01/01 ............ 24 22,808
6.000% 10/01/01 ............ 1,833 1,782,499
6.000% 10/01/02 ............ 163 158,202
10.000% 02/01/05 ........... 50 53,253
10.000% 01/01/10 ........... 8 8,411
6.500% 09/01/25 ............ 2,088 1,985,974
7.000% 11/01/25 ............ 2,308 2,252,176
7.000% 12/01/25 ............ 5,050 4,927,377
7.000% 12/01/25 ............ 1,129 1,101,207
See Accompanying Notes to Financial Statements
27
<PAGE>
BEA U.S. CORE FIXED INCOME FUND (CONTINUED)
PAR
(000) VALUE
----------- ------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- (CONTINUED)
FNMA (TBA)**
7.000% 01/01/03 ............ $ 5,165 $ 5,173,070
7.500% 12/31/26 ............ 5,645 5,629,123
FNMA 1991-165 Class M
8.250% 12/25/21 ............ 13 13,318
FNMA Series 1996-5 Class PX
Principal Only
0.000% 11/25/23 ............ 160 83,800
------------
23,426,119
------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -- 7.3%
8.250% 08/15/04 ............ 1 1,023
9.000% 11/15/04 ............ 2 1,678
9.000% 12/15/04 ............ 1 1,262
8.250% 04/15/06 ............ 2 2,001
13.500% 07/15/14 ........... 1 946
9.000% 06/15/16 ............ 99 104,885
8.000% 04/15/17 ............ 178 181,672
9.000% 10/15/17 ............ 461 486,354
9.000% 08/15/21 ............ 754 795,971
9.000% 01/15/25 ............ 151 159,866
GNMA (TBA)**
8.000% 01/15/25 ............ 8,230 8,384,313
------------
10,119,971
------------
MISCELLANEOUS -- 2.0%
National Archive Facility Trust
COP (Aaa, AAA)
8.500% 09/01/19 ............ 433 477,327
Tennessee Valley Authority
Debentures (NR, AAA)
6.090% 04/01/36 ............ 2,195 2,219,694
------------
2,697,021
------------
TOTAL AGENCY
OBLIGATIONS
(Cost $49,950,749) ......... 49,631,641
------------
ASSET BACKED SECURITIES -- 2.0%
Fleetwood Credit Corporation
Grantor Trust, RV Retail
Installment Sale Contracts
Series 1993-B, Class A
(Aaa, AAA)
4.950% 08/15/08 ............ 7 6,692
Fleetwood Credit Corporation
Grantor Trust, RV Retail
Installment Sale Contracts
Series 1994-A, Class A
(Aaa, AAA)
4.700% 07/15/09 ............ 45 43,463
Fleetwood Credit Corporation
Grantor Trust, RV Retail
Installment Sale Contracts
Series 1994-B,
Class A (Aaa, AAA)
6.750% 03/15/10 ............ 225 226,222
PAR
(000) VALUE
---------- ------------
ASSET BACKED SECURITIES -- (CONTINUED)
Goldome Credit Corporation
Home Equity Trust Series
1990-1, Class A (Aa2, AA)
10.000% 07/15/05 ........... $ 17 $ 17,744
Green Tree Financial Corporation,
Manufactured Housing Retail
Installment Sales Contracts,
Series 1993-4, Class A-2
(Aa2, NR)
5.850% 01/15/19 ............ 105 104,738
Green Tree Financial Corporation,
Manufactured Housing Retail
Installment Sales Contracts,
Series 1995-5, Class A-3
(Aaa, AAA)
6.250% 10/15/25 ............ 495 492,754
Green Tree Financial Corporation,
Manufactured Housing Retail
Installment Sales Contracts,
Series 1995-6, Class A-3
(Aaa, AAA)
6.650% 11/15/25 ............ 130 129,698
Green Tree Financial Corporation,
Manufactured Housing Retail
Installment Sales Contracts,
Series 1995-7, Class A-2
(Aaa, AAA)
6.150% 11/15/26 ............ 165 165,056
Green Tree Financial Corporation,
Manufactured Housing Retail
Installment Sales Contracts,
Series 1995-8, Class A-2
(Aaa, AAA)
6.150% 12/15/26 ............ 135 134,911
Green Tree Securitized Net
Interest Margin Trust, REMIC,
Series 1994-A, Class A
(Baa3, NR)
6.900% 02/15/04 ............ 125 124,961
Merrill Lynch Mortgage Investors,
Inc., Manufactured Housing
Retail Installment Sales
Contracts, Series 1991-C,
Class A (Aaa, AAA)
9.000% 07/15/11 ............ 121 125,623
New York City Tax Lien
Collateralized Bonds, Series
1996-1, Class C (NR, A)
7.110% 02/25/05 ............ 844 850,318
Vanderbilt Mortgage Finance,
Manufactured Housing Retail
Installment Sales Contracts,
Series 1995-B, Class A3
(Aaa, NR)
6.675% 05/07/06 ............ 185 184,246
See Accompanying Notes to Financial Statements
28
<PAGE>
BEA U.S. CORE FIXED INCOME FUND (CONTINUED)
PAR
(000) VALUE
----------- -----------
ASSET BACKED SECURITIES -- (CONTINUED)
World Omni Automobile Lease
Securitization Trust, Retail
Closed-End Lease Contracts
Series 1995-A, Class A
(Aaa, AAA)
6.050% 11/25/01 ............ $ 111 $ 111,025
------------
TOTAL ASSET BACKED
SECURITIES
(Cost $2,719,627) .......... 2,717,451
------------
COLLATERIZED MORTGAGED BACKED
SECURITIES -- 7.8%
Asset Securitization Corporation
Series 1994-MD2, Class A1
(NR, NR)
6.703% 07/07/03 ............ 51 51,983
Asset Securitization Corporation
Series 1995-MD4, Class A1
(NR, AAA)
7.100% 08/13/29 ............ 1,459 1,441,734
Asset Securitization Corporation
Series 1996-D3, Class A1B
(Aaa, AAA)
7.210% 10/13/26 ............ 1,290 1,319,428
Asset Securitization Corporation,
Series 1996-MD6, Class A1C
(Aaa, AAA)
7.040% 10/11/11 ............ 1,100 1,104,469
Asset Securitization Corporation,
Series 1996-MD6, Class A6
(Baa2, BBB)
6.767% 11/13/26+ ........... 650 652,438
Carousel Center Finance Inc.
Series 1, Class C, Rule 144A
(NR, BBB+)
7.527% 11/15/07 ............ 440 444,856
CBM Funding Corporation
Series 1996-1, Class B (NR, A)
7.480% 02/01/08 ............ 1,000 1,015,938
Chase Commercial Mortgage
Securities Corp. Series 1996-2,
Class A2 (NR, AAA)
6.900% 09/19/06 ............ 100 98,969
Collateralized Mortgage
Obligation Trust, REMIC
Series 54, Class C (Aaa, AAA)
9.250% 11/01/13 ............ 2 2,418
Kidder Peabody Acceptance
Corporation Series 1993-M3,
Class A (Aaa, AAA)
6.500% 11/25/25 ............ 28 28,241
Kidder Peabody Acceptance
Corporation Series 1994-C1,
Class A (NR, AAA)
6.650% 02/01/06 ............ 170 168,710
PAR
(000) VALUE
----------- ------------
COLLATERIZED MORTGAGED BACKED
SECURITIES -- (CONTINUED)
Kidder Peabody Acceptance
Corporation Series 1994-C1,
Class B (NR, AA)
6.850% 02/01/06 ............ $ 960 $ 965,512
Merrill Lynch Mortgage
Investors, Inc. Series 1996-C2,
Class A2 (NR, AAA)
6.820% 11/21/28 ............ 450 446,766
Morgan Stanley Capital I Series
1996-WF1, Class X Interest
Only (Aaa, NR)
1.424% 01/01/13 ............ 4,715 363,998
Morserv Inc. REMIC Series
1994-1, Class 1A2 (Aaa, AAA)
7.000% 10/25/25 ............ 190 189,521
PaineWebber Mortgage
Acceptance Corp. IV
Multifamily Mortgage
Pass-Throughs Series 1995-M1,
Class A 144A (NR, NR)****
6.700% 01/15/07 ............ 1,200 1,201,875
PaineWebber Mortgage
Acceptance Corp. IV
Multifamily Mortgage
Pass-Throughs Series 1995-M1,
Class D 144A (NR, NR)****
7.300% 12/15/02 ............ 420 420,049
Structured Asset Securities
Corporation Series 1996-CFL,
Class A1C (NR, AAA)
5.944% 02/25/28 ............ 880 856,645
U.S. Dept. of Veterans Affairs,
Vendee Mortgage Trust
REMIC, Series 1995-2B,
Class 2C (NR, NR)
7.500% 10/15/15 ............ 10 10,075
------------
TOTAL COLLATERIZED
MORTGAGED BACKED
SECURITIES
(Cost $10,887,995) ......... 10,783,625
------------
DISCOUNTED COMMERCIAL PAPER -- 12.7%
Cargill Inc.
5.220% 03/18/97 ............ 3,500 3,491,373
Dresdmer US Finance Co.
5.220% 03/13/97 ............ 3,500 3,493,910
E. I. DuPont de Nemours
5.200% 03/19/97 ............ 3,500 3,490,900
Kimberly-Clark Co.
5.220% 03/14/97 ............ 3,500 3,493,403
Pitney Credit Corp.
5.220% 03/18/97 ............ 3,500 3,491,373
------------
TOTAL DISCOUNTED
COMMERCIAL PAPER
(Cost $17,460,956) ......... 17,460,959
------------
See Accompanying Notes to Financial Statements
29
<PAGE>
BEA U.S. CORE FIXED INCOME FUND (CONCLUDED)
NUMER
OF SHARES VALUE
------------ -----------
PREFERRED STOCK -- 2.7%
BANKING -- 1.5%
California Federal Preferred
Capital Corp. 9.125%
Noncum. Exchangeable,
Series A ................... 78,500 $ 2,001,750
FINANCIAL SERVICES -- 0.5%
NBCapital TrustI,
7.84% Cumulative ........... 27,250 679,547
REAL ESTATE -- 0.4%
American Real Estate Corp.
8.50% Cumulative,
SeriesA .................... 23,700 616,200
UTILITIES -- 0.3%
Long Island Lighting Co.
7.05% Cumulative,
Series QQ .................. 18,650 459,256
------------
TOTAL PREFERRED STOCK
(Cost $3,724,183) ............ 3,756,753
------------
WARRANTS***-- 0.0%
Capital Pacific Holdings Group,
Inc. Warrants expiring
05/01/02 ................... 1,817 1,181
------------
TOTAL WARRANTS
(Cost $1,000) .............. 1,181
------------
PAR
(000)
----------
U.S. TREASURY OBLIGATIONS -- 8.7%
U.S. TREASURY BONDS -- 6.5%
7.625% 02/15/25 ............ $ 8,255 8,980,696
------------
U.S. TREASURY NOTES -- 2.2%
6.625% 06/30/01 ............ 2,090 2,110,398
7.875% 11/15/04 ............ 900 972,207
------------
3,082,605
------------
TOTAL U.S. TREASURY
OBLIGATIONS
(Cost $12,290,785) ......... 12,063,301
------------
SHORT TERM INVESTMENTS -- 6.1%
BBH Grand Cayman U.S.
Dollar Time Deposit
4.719% 03/03/97 ............ 8,414 8,414,000
------------
TOTAL SHORT TERM
INVESTMENTS
(Cost $8,414,000) ....... 8,414,000
------------
TOTAL INVESTMENTS
AT VALUE -- 112.8%
(Cost $155,313,361*) ....... $155,572,935
LIABILITIES IN EXCESS OF
OTHER ASSETS -- (12.8%) .... (17,598,677)
------------
VALUE
-----------
NET ASSETS (Applicable to
8,983,762 BEA Institutional
Shares)-- 100.0% ........... $137,974,258
============
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION PRICE
PER BEAINSTITUTIONAL SHARE
($137,974,258 / 8,983,762) . $15.36
======
* Also cost for Federal income tax purposes at February 28, 1997.
The gross appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation ...... $ 1,506,242
Gross Depreciation ...... (1,246,668)
------------
Net Appreciation ........ $ 259,574
============
** Securities 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 February
28, 1997.
++ Step Bond -- The interest rate as of February 28, 1997 is 0% and will reset
to interest shown at a future date.
+++ Securities have no stated maturity date.
++++ Guaranteed by Grupo Sidek, S.A. de C.V. and Grupo Situr S.A. de C.V.
(a) With 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 February 28, 1997 and are
unaudited.
INVESTMENT ABBREVIATIONS
COP ..........................Certificate of Participation
FRN ....................................Floating Rate Note
TBA .......................................To Be Announced
AT FEBRUARY 28, 1997, NET ASSETS CONSISTED OF:
AMOUNT
------------
Capital Paid-In ................. $135,330,257
Accumulated Net Investment Income 1,446,334
Accumulated Net Realized Gain on
Security and Foreign Exchange
Transactions ................. 928,804
Net Unrealized Appreciation on
Investments and Other ........ 268,863
- -----------------------------------------------------------
NET ASSETS ...................... $137,974,258
- -----------------------------------------------------------
See Accompanying Notes to Financial Statements
30
<PAGE>
BEA STRATEGIC GLOBAL INCOME FUND
PORTFOLIO MANAGER'S LETTER
April 4, 1997
Dear Shareholders:
We are pleased to report on the results of the BEA Strategic Global Fixed Income
Fund (the "Fund") and BEA's investment strategy for the six months ended
February 28, 1997.
PERFORMANCE REVIEW
At February 28, 1997, the net asset value ("NAV") of the Fund was $15.56,
compared to an NAV of $15.82 on August 31, 1996. As a result, the Fund's total
return (assuming reinvestment of dividends and distributions) was 3.2%. By
comparison, the unhedged J.P. Morgan Global Government Bond Index (GBI) gained
0.01% during the same period.
MARKET REVIEW
Within the GBI benchmark, the U.K. and dollar-based nations generated the
highest results over the six months. Driven by the strength of the pound, the
U.K. returned 12.0%, while Canada rose 8.8%, the U.S. 4.6% and Australia 3.4%.
All other markets posted negative results, with Germany (-6.8%), the Netherlands
(-6.6%) and Japan (-6.2%) at GBI's bottom. Both collectively and individually,
emerging markets performed dramatically better: J.P. Morgan's Emerging Market
Bond Index rose 20% and its 10 country markets posted returns ranging from 40.8%
(Bulgaria) to 16.7% (Brazil).
PORTFOLIO REVIEW
We attribute the Fund's outperformance during the period to two principal
factors. The first is country selection, which was beneficial in several ways: o
We took profits in markets whose prices, we felt, had reached unsustainable
levels. Most notable in this regard were the high-yielding European nations,
which we reduced to a neutral allocation relative to GBI from an overweight; and
Argentina, whose credit profile showed great improvement; o We overweighted the
U.K., which greatly benefited from the appreciation of the pound; o We
completely exited from Japan; and o We included a modest allocation to emerging
markets, which performed very well. The second factor is our view on world
currencies. We overweighted the Fund's U.S. dollar position based on our belief
that the dollar would significantly appreciate against the yen and deutschemark
(which did occur). Although we continue to be optimistic about the dollar's
strength, we chose to realize some gains and somewhat reduce our dollar
exposure.
OUTLOOK
We do not currently sense any firm direction for global fixed income. Looking
ahead, it appears unlikely that the strong performance of 1996 will persist
throughout 1997. This scenario is even more probable now that the Federal
Reserve has altered the investment landscape by raising short-term U.S. interest
rates. For the time being, then, we feel it is most appropriate to exercise
caution and pursue opportunities with greater selectivity. Our near-term
approach will likely include raising the Fund's allocation to emerging markets,
whose economic development is generating twin benefits of improving fiscal
conditions and higher creditworthiness; and increasing exposure to "second-tier"
local currencies such as the Portuguese escudo and the Australian dollar.
31
<PAGE>
BEA STRATEGIC GLOBAL INCOME FUND (CONTINUED)
PORTFOLIO MANAGER'S LETTER
We are more optimistic on a longer-term basis, with our optimism tempered by
concern over the U.S. interest-rate climate. While rising rates may have a
somewhat negative spillover effect onto non-U.S. financial markets, it is more
likely that U.S. rates will impact other economies less than in the past,
suggesting the probability that non-U.S. markets will decouple from the U.S. In
our judgment, the potential for investors in global debt to profit from this
decoupling is highest in Europe, Latin America and selected other emerging
markets:
[BULLET] The European investment climate benefits from the fiscal discipline
imposed by the drive toward European Monetary Union, low and stable
interest rates and a general absence of inflationary pressures.
[BULLET] In Latin America, the broad-based economic expansion following the
1994-95 peso crisis appears increasingly robust and the region's
markets collectively are less vulnerable to U.S. rate-tightening than
those of other developing nations.
[BULLET] Other emerging markets that we find especially attractive include
Russia, whose upcoming loan refinancing could be quite profitable for
investors; and South Africa, whose economy is beginning an extended
recovery process that should prove beneficial for holders of the
nation's debt and currency.
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 yours,
BEA Fixed Income Management Team
Robert J. Moore, Executive Director
Gregg M. Diliberto, Managing Director
Mark K. Silverstein, Senior Vice President
Robert W. Justich, Senior Vice President
William P. Sterling, Executive Director
32
<PAGE>
BEA STRATEGIC GLOBAL INCOME FUND
PORTFOLIO MANAGER'S LETTER (CONCLUDED)
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.
[LINE GRAPH]
BEA Strategic Global Fixed Income Fund
Total Returns and Graph Plot Points
J.P. Morgan
BEA Strategic Global Fixed Govt. Bond Index
DATES 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
05/31/96 $11,831 $11,907
08/31/96 $12,140 $12,283
11/30/96 $12,815 $12,776
02/28/97 $12,531 $12,284
AVERAGE ANNUAL TOTAL RETURN
One Year 7.39%
From Inception 8.79%
Note: Past performance is not predictive of future performance.
33
<PAGE>
BEA STRATEGIC GLOBAL FIXED INCOME FUND
OF THE RBB FUND,INC.
STATEMENT OF NET ASSETS
FEBRUARY 28, 1997
(UNAUDITED)
PAR
(000) VALUE
---------- -------------
INTERNATIONAL BONDS -- 41.9%
ARGENTINA -- 1.3%
Republic of Argentina FRB
(B1, BB-)+
6.625% 03/31/05 .........$ 588 $ 531,405
------------
AUSTRALIA -- 2.7%
Queensland Treasury Corp.
Global Bonds (NR, NR)
8.000% 07/14/99 .........AUD 630 502,441
Treasury Corporation of Victoria
Global Bonds (Aa1, AA+)
8.250% 10/15/03 ......... 770 617,202
------------
1,119,643
------------
BRAZIL -- 0.5%
Federal Republic of Brazil
Interest Due Bonds FRN
Series A (B1, NR)+
6.500% 01/01/01 .........$ 218 213,286
------------
CANADA -- 2.1%
Government of Canada
Debentures (Aa1, AAA)
8.750% 12/01/05 .........CND 1,000 850,238
------------
FRANCE -- 1.8%
Republic of France Treasury
Bonds-O.A.T. (Aaa, NR)
7.500% 04/25/05 .........FF 3,600 730,177
------------
GERMANY -- 7.2%
Federal Republic of Germany
Eurobonds (Aaa, NR)
7.250% 10/21/02 .........DEM 2,000 1,328,865
6.000% 02/16/06 ......... 2,630 1,623,921
------------
2,952,786
------------
ITALY -- 1.5%
Republic of Italy Debentures
(Aa3, AAA)
8.500% 01/01/04 .........ITL 1,025,000 639,280
------------
MEXICO -- 1.4%
United Mexican States Par Bond
Series A (Ba2, BB)(a)
6.250% 12/31/19 .........$ 750 574,219
------------
NETHERLANDS -- 3.0%
Netherlands Government Bonds
(NR, NR)
5.750% 01/15/04 .........NLG 2,250 1,232,942
------------
PAR
(000) VALUE
----------- ------------
RUSSIA -- 0.8%
Bank of Foreign Economic
Affairs of The USSR
(Vneshekonombank Bank)
(When Issued) (NR, NR)
13.000% 01/15/21 ........$ 575 $ 349,672
------------
SPAIN -- 1.8%
Kingdom of Spain Debentures
(Aa2, NR)
8.000% 05/30/04 .........ESP 99,000 738,986
------------
SUPRANATIONAL -- 9.0%
International Bank For
Reconstruction & Development
Japanese Yen Global Bonds
(Aaa, AAA)
5.250% 03/20/02 .........JPY 379,500 3,700,463
------------
SWEDEN -- 1.5%
Nordic Investment Bank
Global Notes (Aaa, AAA)
6.250% 02/08/99 .........SEK 4,500 619,386
------------
UNITED KINGDOM -- 7.3%
U.K. Treasury Gilt Bonds
(Aaa, NR)
7.500% 12/07/06 .........GBP 1,800 2,992,311
------------
TOTAL INTERNATIONAL
BONDS
(Cost $17,728,661) ...... 17,244,794
------------
U.S. TREASURY OBLIGATIONS -- 36.1%
U.S. TREASURY NOTES -- 36.1%
5.375% 05/31/98 .........$ 155 154,186
6.625% 06/30/01 ......... 1,200 1,211,712
6.375% 09/30/01 ......... 2,000 1,999,480
6.125% 12/31/01 ......... 1,000 989,430
7.250% 05/15/04 ......... 2,610 2,720,768
7.500% 02/15/05 ......... 4,000 4,234,920
7.000% 07/15/06 ......... 1,500 1,542,300
6.500% 10/15/06 ......... 2,000 1,987,120
------------
14,839,916
------------
TOTAL U.S. TREASURY
OBLIGATIONS
(Cost $15,182,244) ...... 14,839,916
------------
SHORT TERM INVESTMENTS -- 21.7%
BBH Grand Cayman U.S. Dollar
Time Deposit
4.719% 03/03/97 ......... 8,931 8,931,000
------------
TOTAL SHORT TERM
INVESTMENTS
(Cost $8,931,000) ....... 8,931,000
------------
See Accompanying Notes to Financial Statements.
\ 34
<PAGE>
BEA STRATEGIC GLOBAL FIXED INCOME FUND (CONCLUDED)
VALUE
-------------
TOTAL INVESTMENTS
AT VALUE -- 99.7%
(Cost $41,841,905*) ..... $41,015,710
OTHER ASSETS IN EXCESS
OF LIABILITIES -- 0.3% ... 140,740
------------
NET ASSETS (Applicable to
2,644,733 BEA Institutional
Shares) -- 100.0% ........ $41,156,450
============
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PRICE PER BEA
INSTITUTIONAL SHARE
($41,156,450 / 2,644,733) $15.56
======
* Also cost for Federal income tax purposes at February 28, 1997.
The gross appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation ... $ 511,611
Gross Depreciation ... (1,337,806)
----------
Net Depreciation ..... $ (826,195)
==========
+ Variable rate obligations -- The interest shown is the rate as of February
28, 1997.
(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 February 28, 1997 and are
unaudited.
CURRENCY ABBREVIATIONS
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
INVESTMENT ABBREVIATIONS
FRB ....................................Floating Rate Bond
FRN Floating Rate Note
AT FEBRUARY 28, 1997, NET ASSETS CONSISTED OF:
AMOUNT
--------------
Capital Paid-In .............. $40,715,899
Accumulated Net Investment Income 572,467
Accumulated Net Realized Gain on
Security and Foreign Exchange
Transactions .............. 771,224
Net Unrealized Depreciation on
Investments, Foreign Currency
Contracts and Other ....... (903,140)
- ----------------------------------------------------------
NET ASSETS ................... $41,156,450
- ----------------------------------------------------------
See Accompanying Notes to Financial Statements.
35
<PAGE>
BEA HIGH YIELD FUND
PORTFOLIO MANAGER'S LETTER
April 4, 1997
Dear Shareholders:
We are pleased to report on the results of the BEA High Yield Fund (the "Fund")
and BEA's investment strategy for the six months ended February 28, 1997.
PERFORMANCE REVIEW
At February 28, 1997, the net asset value ("NAV") of the Institutional Class of
Shares was $16.70, compared to an NAV of $16.09 on August 31, 1996. As a result,
the Institutional Class ofShares generated a total return (assuming reinvestment
of dividends) of 8.6%. By comparison, the CS First Boston High Yield Index (the
"Index") gained 9.0% during the same period. The NAV of the Advisor Class of
Shares was $16.69 at February 28, 1997 compared to an NAV of $16.21 on 11/1/96
(commencement of operations). As a result, the total return for the Advisor
Class ofShares was 5.28% for the period November 1, 1996 through February 28,
1997. By comparison the Index gained 6.26% during the same period.
MARKET REVIEW
The strength of the high yield market in 1996 continued through the first two
months of 1997:
[BULLET] Demand for high yield instruments remained robust, resulting both from
the search by investors for more yield than is available from
investment-grade instruments and the increasing acceptance of high
yield as a mainstream asset class.
[BULLET] Investment in high yield mutual funds by individuals maintained its
blistering pace. According to AMG Data Services, net fund inflows
for January and February totaled $4.2 billion, 133% higher than the
$1.8 billion generated during the same period in 1996.
[BULLET] Institutional demand also was strong, as evidenced by aggregate new
issuance of $15.0 billion, a 65% jump over last year's two-month total
of $9.1 billion. The average market-weighted new-issue offer yield was
10.55% at the end of February, versus 10.01% in January and 10.62% for
1996 as a whole.
[BULLET] The overall U.S. macroeconomic environment remains positive, with
moderate growth, little near-term threat of inflation and relatively
stable interest rates. Under such conditions, demand should continue
to be strong and issuer defaults should stay below historical averages.
PORTFOLIO REVIEW
The Fund outperformed the general high yield market (as represented by the
benchmark CS First Boston High Yield Index) for most of the period. Overall
underperformance can be attributed to several developments that occurred during
1996's fourth quarter:
[BULLET] The return of the CS First Boston index in December was substantially
overstated relative to that of the other widely used high yield
indices (I.E., Salomon Brothers, Merrill Lynch, Lehman Brothers) due
to differences in the composition of its BB-rated holdings. This
unusual discrepancy caused the Fund's results to appear unwarrantedly
low in comparison.
[BULLET] Our holdings in wireless cable were hurt by the news that NYNEX and
Bell Atlantic, minority owners of CAI Wireless, were no longer
interested in pursuing entry into the video field through the use of
wireless technologies.
[BULLET] The paging sector was hurt by problems reported by MobileMedia, the
second-largest domestic paging company.
In managing the Fund, our general investment approach remains the allocation of
overweighted positions to industries that we believe have a good operating
outlook and could benefit from consolidation trends. Within the industries, we
favor companies that we believe offer operating performance improvement and
deleveraging potential over the longer term; those whose core operations should
perform relatively well regardless of the state of the economy; and those which
may be desirable candidates for future mergers and acquisitions (M&A) activity.
36
<PAGE>
BEA HIGH YIELD FUND
PORTFOLIO MANAGER'S LETTER (CONTINUED)
Over the last few months, we have revised our views on several of the
portfolio's industry concentrations. Although we still consider the broad
TELECOMMUNICATIONS field (the Fund's largest industry overweighting relative to
the benchmark) attractive, for example, we have reduced positions in selected
sectors, notably wireless communications, paging and cable TV. Our intention is
to sharpen the Fund's focus on providers of traditional telephone service. The
brisk M&A activity in the latter sector over the last few months (E.G., British
Telecom/MCI Communications, WorldCom/MFS Communications, SBC
Communications/Pacific Telesis) has been positive for the securities of many
associated companies.
After telecommunications, the portfolio's next-highest sector allocation is to
the GAMING industry. Although our investment thesis regarding gaming is very
much intact (I.E., it is growing and consolidating and is relatively less
affected by the macroeconomic environment), we have taken a more cautious view
on the industry's presence in Atlantic City. Recent declines in casino operating
margins and cash flows there indicate that operating performance is experiencing
some deterioration. For the time being, then, we consider it most appropriate to
maintain existing positions without replacing bonds that have been redeemed.
We have slightly increased the Fund's exposure to two industry sectors during
the period. One sector is health care, which we favor for its generally stable
operating profile. The other is energy (I.E., the exploration and production of
oil and gas), whose long-term fundamentals are strong despite a recent slide in
oil and gas prices.
OUTLOOK
Like most fixed income markets, high yield became increasingly volatile as 1997
began, in anticipation of a long-expected increase in interest rates by the
Federal Reserve. Such volatility continued even after the Fed finally raised
short-term rates by a modest 25 basis points in late March. Our near-term view,
therefore, is one of caution, and we are closely monitoring economic and
financial news accordingly.
A cautious approach is particularly appropriate in light of high yield
instruments' sensitivity not only to the interest-rate environment, but also to
investor perceptions of corporate earnings as reflected by fluctuations in the
prices of specific equities. With this in mind, we note that near-term
volatility on an individual-credit basis should also be driven by the high
seasonal level of equity-related earnings announcements.
Longer-term, the picture remains bright. The macroeconomic climate continues to
be favorable, default risk ought to stay low and generally positive corporate
performance should persist. We consider two other factors notably auspicious, as
well. First, the rapid growth of retirement plan assets is compelling
institutions to seek new ways of diversifying their portfolios' overall risk.
Second, many institutions have already added emerging markets debt (whose credit
quality is similar to that of high yield) to their asset mixes and, therefore,
are becoming more comfortable with the concept of below-investment-grade fixed
income.
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 yours,
BEA High Yield Management Team
Richard J. Lindquist, CFA, Executive Director
Misia Dudley, Senior Vice President
Marianne Rossi, CFA, Senior Vice President
John Tobin, CFA, Senior Vice President
37
<PAGE>
BEA HIGH YIELD FUND
PORTFOLIO MANAGER'S LETTER (CONCLUDED)
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.
[LINE GRAPH]
BEA High Yield Fund
Total Returns and Graph Plot Points
First Boston
BEA High High Yield
Dates Yield Fund Institutional Index Institutional
03/01/93 $10,000 $10,000
04/31/93 $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
05/31/96 $13,990 $13,662
08/31/96 $13,984 $13,965
11/30/96 $14,571 $14,547
02/28/97 $15,190 $15,219
AVERAGE ANNUAL TOTAL RETURN
One Year 11.17%
From Inception 11.02%
Note: Past performance is not predictive of future performance.
38
<PAGE>
BEA HIGH YIELD FUND
OF THE RBB FUND,INC.
STATEMENT OF NET ASSETS
FEBRUARY 28, 1997
(UNAUDITED)
PAR
(000) VALUE
----------- ------------
CORPORATE BONDS -- 96.5%
BROADCASTING -- 7.2%
Allbritton Communications
Company Senior Subordinated
Debentures, Series B (B3, B-)****
9.750% 11/30/07 ............ $ 700 $ 700,000
American Radio Systems Corp.
Gtd. Senior Subordinated
Notes (B2, B-)
9.000% 02/01/06 ............ 500 515,000
Australis Holdings PTY Ltd.
144A Yankee Units (B2, NR)+
15.000% 11/01/02 ........... 294 173,460
Australis Media Ltd. Yankee Gtd.
Senior Subordinated Discount
Notes (NR, NR)+
0.000% 05/15/03 ............ 900 522,000
Capstar Broadcasting Partners, Inc.
144A Senior Discount Notes
(NR, NR)+
12.750% 02/01/09 ........... 500 292,500
Chancellor Radio Broadcasting
Company Senior Subordinated
Notes (B3, B-)
9.375% 10/01/04 ............ 500 513,750
EchoStar Communications Corp.
Gtd. Senior Discount Notes
(B2, B)+
12.875% 06/01/04 ........... 1,100 954,250
Granite Broadcasting Corp.
Senior Subordinated Notes
(B3, B-)****
9.375% 12/01/05 ............ 450 448,875
Jacor Communications Co. Senior
Subordinated Notes (B2, B)
9.750% 12/15/06 ............ 500 532,500
NWCG Holding Corp. Senior
Discount Notes Series B
(Ba2, BBB-)
15.000% 06/15/99 ........... 1,000 858,750
Sinclair Broadcast Group Senior
Subordinated Notes (B2, B)
10.000% 09/30/05 ........... 800 832,000
Young Broadcasting, Inc. Gtd.
Senior Subordinated Notes
Series B (B2, B)****
9.000% 01/15/06 ............ 500 493,750
------------
6,836,835
------------
BUSINESS SERVICES -- 0.4%
Intertek Finance Plc 144A Yankee
Senior Subordinated Notes
(B2, NR)
10.250% 11/01/06 ........... 400 422,500
------------
PAR
(000) VALUE
----------- ------------
CABLE -- 11.4%
Adelphia Communications Corp.
144A Senior Notes (NR, NR)
9.875% 03/01/07 ............ $ 350 $ 341,250
Bell Cablemedia Plc Yankee
Discount Bonds (B2, BB-)+
11.950% 07/15/04 ........... 1,000 880,000
Cablevision Systems Corp.
Senior Subordinated
Debentures (B2, B)
9.875% 02/15/13 ............ 1,000 1,001,250
Charter Communications
Southeast, L.P. Senior Notes,
Series B (B3, B)
11.250% 03/15/06 ........... 900 969,750
Comcast U.K. Cable Partners Ltd.,
Yankee Senior Debentures
(B2, B)+
11.200% 11/15/07 ........... 1,000 717,500
Diamond Cable Communications Plc
144A Senior Discount Notes
(NR, NR)+
10.750% 02/15/07 ........... 500 306,250
DIVA Systems Corporation Units
144A (NR, NR)+
13.000% 05/15/06 ........... 2,250 1,206,562
Falcon Holding Group L.P.
Senior Subordinated Notes
PIK Bonds (NR, NR)
11.000% 09/15/03 ........... 969 871,968
Helicon Group L.P. Senior
Secured Notes Series B (B1, B)
11.000% 11/01/03 ........... 850 871,250
International CableTel, Inc.
Senior Deferred Coupon
Notes Series A (B3, B)+
12.750% 04/15/05 ........... 750 564,375
Lenfest Communications, Inc.
Senior Notes (Ba3, BB+)
8.375% 11/01/05 ............ 500 485,625
Marcus Cable L.P. Senior
Discount Notes (Caa, B)+
14.250% 12/15/05 ........... 950 705,375
Rifkin Acquisition Partners L.P.
Senior Subordinated Notes
(B3, NR)****
11.125% 01/15/06 ........... 500 531,875
Rogers Communications, Inc.
Yankee Senior Notes (B2, BB-)
9.125% 01/15/06 ............ 550 551,375
See Accompanying Notes to Financial Statements.
39
<PAGE>
BEA HIGH YIELD FUND (CONTINUED)
PAR
(000) VALUE
----------- -----------
CABLE -- (CONTINUED)
United International Holdings,
Inc. Senior Secured Discount
Notes, Series B (B3, B-)
0.000% 11/15/99 ............ $ 1,150 $ 856,750
------------
10,861,155
------------
CHEMICALS -- 2.1%
Freedom Chemicals, Inc. 144A
Senior Subordinated Notes
(B3, B-)
10.625% 10/15/06 ........... 500 531,250
Harris Chemical North America
Senior Secured Debentures
(B2, B+)
10.250% 07/15/01 ........... 400 421,000
International Specialty Products,
Inc. 144A Senior Notes
(Ba3, B+)
9.750% 02/15/02 ............ 389 413,312
Sterling Chemical Holdings
Senior Discount Notes
(Caa, B+)+
13.500% 08/15/08 ........... 1,000 661,250
------------
2,026,812
------------
COMPUTERS -- 0.9%
Advanced Micro Devices, Inc.
Senior Secured Notes
(Ba1, BB-)
11.000% 08/01/03 ........... 750 842,812
------------
CONSTRUCTION & BUILDING
MATERIALS -- 1.1%
Southdown, Inc. 144A Senior
Subordinated Notes (B1, B+)
10.000% 03/01/06 ........... 500 532,500
Waxman Industries, Inc. Senior
Notes, Series B (Caa, CCC+)+
12.750% 06/01/04 ........... 600 493,500
------------
1,026,000
------------
CONSUMER PRODUCTS & SERVICES -- 2.0%
Coinstar, Inc. 144A Units
(NR, NR)+
13.000% 10/01/06 ........... 525 368,812
Jordan Industries, Inc. Senior
Notes (B3, B+)
10.375% 08/01/03 ........... 750 755,625
Renaissance Cosmetics, Inc. 144A
Senior Notes (B3, B-)
11.750% 02/15/04 ........... 500 518,750
PAR
(000) VALUE
----------- ------------
CONSUMER PRODUCTS & SERVICES -- (CONTINUED)
E&S Holdings Corporation Senior
Subordinated Notes, Series B
(B3, B-)
10.375% 10/01/06 ........... $ 250 $ 263,125
------------
1,906,312
------------
ELECTRONICS -- 1.8%
Exide Electronics Group, Inc.
Units 144A (B3, B)****
11.500% 03/15/06 ........... 550 585,750
Unisys Corporation Senior
Notes Series B (B1, B+)
12.000% 04/15/03 ........... 1,000 1,097,500
------------
1,683,250
------------
ENERGY -- 4.3%
Cliffs Drilling Co. Senior Notes
Series B (B1, NR)****
10.250% 05/15/03 ........... 600 645,000
Forcenergy, Inc. Senior
Subordinated Notes (B2, B)
9.500% 11/01/06 ............ 500 527,500
HS Resources, Inc. 144A Senior
Subordinated Notes (B2, B)
9.250% 11/15/06 ............ 500 518,125
Kelley Oil & Gas Corp. 144A
Senior Subordinated Notes
(B3, B-)
10.375% 10/15/06 ........... 500 533,750
Mesa Operating Co. Gtd. Senior
Subordinated Discount Notes
(B2, B)+
11.625% 07/01/06 ........... 750 543,750
Mesa Operating Co. Senior
Subordinated Notes (B2, B)
10.625% 07/01/06 ........... 250 277,500
Nuevo Energy Company Senior
Subordinated Notes (B1, B+)
9.500% 04/15/06 ............ 500 532,500
Plains Resources, Inc. Senior
Subordinated Notes, Series B
(B2, B-)****
10.250% 03/15/06 ........... 500 542,500
------------
4,120,625
------------
ENTERTAINMENT -- 2.2%
American Skiing Company Senior
Subordinated Notes, Series B
(B3, CCC+)
12.000% 07/15/06 ........... 400 418,000
AMF Group, Inc. Senior
Discount Notes Series B
(B2, B-)+
12.250% 03/15/06 ........... 750 537,187
See Accompanying Notes to Financial Statements.
40
<PAGE>
BEA HIGH YIELD FUND (CONTINUED)
PAR
(000) VALUE
----------- ------------
ENTERTAINMENT -- (CONTINUED)
AMF Group, Inc. Senior
Subordinated Notes,
(B2, B-)****
10.875% 03/15/06 ........... $ 600 $ 657,000
Premier Parks Inc. Senior
Notes (B2, B+)
9.750% 01/15/07 ............ 500 525,000
------------
2,137,187
------------
FINANCIAL SERVICES -- 0.8%
Fifth Mexican Acceptance Corp.
Rule 144A Notes (NR, NR)
8.000% 12/15/98**/**** ..... 1,040 249,600
Imperial Credit Industries, Inc.
144A Senior Notes (B1, B+)
9.875% 01/15/07 ............ 500 517,500
------------
767,100
------------
FOOD & BEVERAGE -- 3.2%
CFP Holdings, Inc. 144A
Guaranteed Senior
Notes (B3, B+)
11.625% 01/15/04 ........... 500 530,000
Delta Beverage Group 144A
Senior Notes (B2, B+)
9.750% 12/15/03 ............ 500 525,000
Fresh Del Monte Produce N.V.
Yankee Senior Notes, Series B
(CAA, CCC)
10.000% 05/01/03 ........... 1,500 1,503,750
International Home Foods, Inc.
144A Senior Subordinated
Notes (B2, B-)
10.375% 11/01/06 ........... 500 527,500
------------
3,086,250
------------
HEALTH CARE -- 5.5%
Beverly Enterprises, Inc. Gtd.
Senior Notes (B1, B+)
9.000% 02/15/06 ............ 300 305,250
General Medical Corp.
Subordinated Debentures,
Series A PIK Bonds
(CAA, B-)
12.125% 08/15/05 ........... 1,125 1,271,160
Health O Meter, Inc. Units
(B3, B-)
13.000% 08/15/02 ........... 250 281,250
Mariner Health Group, Inc.
Senior Subordinated Notes
(B2, B)
9.500% 04/01/06 ............ 500 510,000
PAR
(000) VALUE
---------- -------------
HEALTH CARE -- (CONTINUED)
Paracelsus Healthcare Corp.
Senior Subordinated Notes
(B1, B)
10.000% 08/15/06 ........... $ 600 $ 589,500
Quest Diagnostics, Inc. Senior
Subordinated Notes (B2, B+)
10.750% 12/15/06 ........... 500 525,625
Regency Health Services, Inc.
Gtd. Senior Subordinated
Notes (B2, B-)
9.875% 10/15/02 ............ 250 259,375
Regency Health Services, Inc.
Subordinated Notes (B3, B-)
12.250% 07/15/03 ........... 650 699,563
Tenet Healthcare Corp. Senior
Subordinated Notes (Ba3, B+)
8.625% 01/15/07 ............ 500 513,125
Unison HealthCare Corp. 144A
Gtd. Senior Notes (B3, B)
12.250% 11/01/06 ........... 250 270,313
------------
5,225,161
------------
INDUSTRIAL GOODS & MATERIALS -- 4.7%
Alvey Systems, Inc. 144A Senior
Subordinated Notes (B3, B-)
11.375% 01/31/03**** ....... 100 106,000
CSK Auto, Inc. 144A Senior
Subordinated Notes (B3, B-)
11.000% 11/01/06 ........... 500 525,000
Delco Remy International, Inc.
144A Gtd. Senior Subordinated
Notes (B2, B-)****
10.625% 08/01/06 ........... 500 536,250
Derlan Manufacturing, Inc. 144A
Yankee Senior Notes (B3, B+)
10.000% 01/15/07 ........... 500 518,750
Haynes International, Inc. Senior
Notes (B3, B-)
11.625% 09/01/04 ........... 500 548,750
LDM Technologies, Inc. 144A
Senior Subordinated Notes
(B3, B-)
10.750% 01/05/07 ........... 400 423,000
Loomis, Fargo & Co.144A Senior
Subordinated Notes (B3, B)
10.000% 01/15/04 ........... 400 414,000
Safelite Glass Corp. 144A Senior
Subordinated Notes
(B3, B)
9.875% 12/15/06 ............ 350 369,250
See Accompanying Notes to Financial Statements.
41
<PAGE>
BEA HIGH YIELD FUND (CONTINUED)
PAR
(000) VALUE
----------- -------------
INDUSTRIAL GOODS & MATERIALS -- (CONTINUED)
Venture Holdings Trust Gtd.
Senior Subordinated Notes
(B3, B)
9.750% 04/01/04 ............ $ 781 $ 736,093
------------
4,177,093
------------
METALS & MINING -- 4.3%
Acme Metals, Inc. Senior
Secured Debentures (B1, B)+
13.500% 08/01/04 ........... 1,000 1,075,000
Gulf States Steel, Inc.
First Mortgage Notes (B1, B)
13.500% 04/15/03 ........... 300 288,750
Ivaco, Inc. Yankee Senior Notes
(B1, B+)
11.500% 09/15/05 ........... 500 537,500
Kaiser Aluminum and Chemical
Corp. 144A Senior Notes
(B1, B)
10.875% 10/15/06 ........... 400 434,000
Kaiser Aluminum and Chemical
Corp. Senior Subordinated
Notes (B2, CCC+)
12.750% 02/01/03 ........... 500 551,250
NS Group, Inc. Senior Secured
Notes (B3, B-)
13.500% 07/15/03 ........... 400 433,000
Republic Engineered Steel, Inc.
First Mortgage Bonds
(Caa, B)
9.875% 12/15/01 ............ 500 455,625
Weirton Steel Corporation Senior
Notes (B2, B)
11.375% 07/01/04 ........... 600 624,000
------------
4,399,125
------------
OFFICE EQUIPMENT & SUPPLIES -- 0.6%
Knoll, Inc. 144A Senior Subordinated
Notes (B3, B+)****
10.875% 03/15/06 ........... 500 552,500
------------
PACKAGING/CONTAINERS -- 5.2%
BPC Holding Corporation
Senior Secured Notes,
Series B (Caa, B-)****
12.500% 06/15/06 ........... 500 535,000
Crown Packaging Enterprises Ltd.
144A Units (Ca, NR)****/+
14.000% 08/01/06 ........... 775 170,500
Crown Packaging Holdings Ltd.
Senior Subordinated Discount
Notes, Series B (Ca, NR)+
12.250% 11/01/03 ........... 3,300 1,171,500
PAR
(000) VALUE
----------- -------------
Gaylord Container Corp. Senior
Subordinated Debentures
(Caa, B-)
12.750% 05/15/05 ........... $ 900 $ 999,000
Plastic Containers, Inc. 144A Senior
Secured Notes (B1, B+)
10.000% 12/15/06 ........... 500 522,500
Spinnaker Industries, Inc. 144A
Senior Secured Notes (B3, B)
10.750% 10/15/06 ........... 500 525,000
Stone Container Finance Co. Gtd.
Senior Notes (B1, B+)
11.500% 08/15/06 ........... 1,000 1,022,500
------------
4,946,000
------------
PAPER & FOREST PRODUCTS -- 3.4%
Crown Paper Co. Senior
Subordinated Notes (B3, B)
11.000% 09/01/05 ........... 750 731,250
Florida Coast Paper Co. LLC
144A First Mortgage Notes
(B3, B)
12.750% 06/01/03 ........... 700 749,000
MAXXAM Group Holdings Inc.
Senior Secured Notes Series B
(NR, NR)
12.000% 08/01/03 ........... 400 420,000
Printpack, Inc. 144A Senior
Subordinated Notes (B3, B+)
10.625% 08/15/06 ........... 600 633,000
Repap New Brunswick, Inc.
Yankee 2nd Priority Senior
Notes (B3, B+)
10.625% 04/15/05 ........... 500 495,000
Specialty Paperboard, Inc. 144A
Senior Notes (B1, BB-)
9.375% 10/15/06 ............ 250 256,875
------------
3,285,125
------------
PUBLISHING & INFORMATION SERVICES -- 1.5%
Gray Communications Systems Gtd.
Senior Subordinated Notes
(B3, B-)
10.625% 10/01/06 ........... 200 215,500
InterAct Systems, Inc. 144A Senior
Discount Notes (NR, NR)+
14.000% 08/01/03 ........... 700 352,625
Sun Media Corp. 144A Yankee
Senior Subordinated Notes
(B3, B-)
9.500% 02/15/07 ............ 300 306,750
Universal Outdoor, Inc. 144A
Senior Subordinated Notes
(B1, B)
9.750% 10/15/06 ............ 500 526,250
------------
1,401,125
------------
See Accompanying Notes to Financial Statements.
42
<PAGE>
BEA HIGH YIELD FUND (CONTINUED)
PAR
(000) VALUE
---------- -------------
RESTAURANTS, HOTELS & GAMING -- 8.4%
AmeriKing, Inc. Gtd. Senior
Notes (B3, B-)
10.750% 12/01/06 ........... $ 400 $ 419,000
Casino America, Inc. Senior
Notes (B1, B)
12.500% 08/01/03 ........... 500 513,125
Casino Magic Finance Corp.
First Mortgage Notes
(B1, B+)
11.500% 10/15/01 ........... 500 450,000
Coast Hotels and Casinos, Inc.
Gtd. First Mortgage Notes,
Series B (B3, B)****
13.000% 12/15/02 ........... 600 675,000
G.B. Property Funding
First Mortgage (B3, B)
10.875% 01/15/04 ........... 300 240,000
Griffin Gaming & Entertainment,
Inc. Senior Notes (NR, NR)
11.000% 09/15/03 ........... 750 815,625
Mohegan Tribal Gaming
Authority Senior Secured
Notes, Series B
(NR, BB+)****
13.500% 11/15/02 ........... 650 864,500
Players International, Inc. Gtd.
Senior Notes (Ba3, BB)
10.875% 04/15/05 ........... 500 526,250
Prime Hospitality Corp. Secured
First Mortgage Notes
(Ba3, BB)
9.250% 01/15/06 ............ 750 780,000
Red Roof Inns, Inc. Senior
Exchange Notes (B2, B)
9.625% 12/15/03 ............ 400 409,000
Showboat, Inc. First Mortgage
Bonds (Ba3, BB-)
9.250% 05/01/08 ............ 250 258,438
Showboat Marina Casino
Partnership First Mortgage
Notes, Series B (B2, B)
13.500% 03/15/03 ........... 450 514,125
The Majestic Star Casino LLC
Senior Secured Notes
(B2, B)****
12.750% 05/15/03 ........... 500 547,500
Trump Atlantic City Associates,
Inc. First Mortgage Notes
(B1, BB-)
11.250% 05/01/06 ........... 250 241,875
Trump's Castle Funding, Inc.
Mortgage Bonds (Caa, NR)
11.750% 11/15/03 ........... 250 222,500
PAR
(000) VALUE
---------- -----------
RESTAURANTS, HOTELS & GAMING -- (CONTINUED)
Waterford Gaming LLC/
Waterford Gaming Finance
Corp. 144A Senior Notes
(NR, NR)
12.750% 11/15/03 ........... $ 500 $ 535,000
------------
8,011,938
------------
RETAIL TRADE -- 2.7%
Farm Fresh, Inc. Senior Notes
(CAA, CCC+)
12.250% 10/01/00 ........... 600 520,500
Hills Stores Company Senior
Notes (B2, NR)
12.500% 07/01/03 ........... 400 320,000
Jitney-Jungle Stores of America,
Inc. Gtd. Senior Notes (B2, B)
12.000% 03/01/06 ........... 500 557,500
K Mart Corp. Debentures
(Ba3, B+)
7.750% 10/01/12 ............ 750 661,875
Parisian, Inc. Senior
Subordinated Notes (B1, B-)
9.875% 07/15/03 ............ 500 511,250
------------
2,571,125
------------
TELECOMMUNICATIONS -- 18.0%
American Communication
Services, Inc. Senior Discount
Notes (NR, NR)****/+
13.000% 11/01/05 ........... 1,500 991,875
Brooks Fiber Properties, Inc.
144A Senior Discount Notes
(NR, NR)****/+
11.875% 11/01/06 ........... 900 588,375
Brooks Fiber Properties, Inc.
Senior Discount Notes
(NR, NR)
10.875% 03/01/06 ........... 1,000 683,750
Diamond Cable Communications
Plc Senior Discount Notes
(B3, B-)
11.750% 12/15/05 ........... 1,000 697,500
Dobson Communications Corp.
144A Senior Notes (NR, NR)
11.750% 04/15/07 ........... 500 506,250
Geotek Communications, Inc.
Convertible Senior Subordinated
Notes (Caa, NR)****
12.000% 02/15/01 ........... 1,600 1,400,000
Globalstar, L.P./Globalstar Capital
Corp. 144A Units (NR, NR)
11.375% 02/15/04 ........... 300 312,000
GST USA, Inc. Gtd. Senior
Discount Notes (NR, NR)+
13.875% 12/15/05 ........... 250 150,000
See Accompanying Notes to Financial Statements.
43
<PAGE>
BEA HIGH YIELD FUND (CONTINUED)
PAR
(000) VALUE
----------- -------------
TELECOMMUNICATIONS -- (CONTINUED)
IntelCom Group (U.S.A.), Inc.
Gtd. Senior Exchangable
Discount Notes (NR, NR)+
12.500% 05/01/06 ........... $ 1,000 $ 677,500
InterCel, Inc. Units (B2, B-)+
12.000% 02/01/06 ........... 1,300 872,625
IXC Communications Inc. Gtd.
Senior Secured Notes,
Series B (B3, B)
12.500% 10/01/05 ........... 500 570,000
MFS Communications Co., Inc.
Discount Notes (Ba3, B)
9.375% 01/15/04 ............ 800 714,000
Nextel Communications, Inc.
Senior Discount Notes
(B3, CCC-)+
9.750% 08/15/04 ............ 1,500 1,102,500
Orion Network Systems Inc.
Units (B2, B)
11.250% 01/15/07 ........... 500 515,000
Pagemart Nationwide, Inc.
Senior Discount Notes
(NR, NR)+
15.000% 02/01/05 ........... 750 540,000
People's Telephone Co., Inc.
Senior Notes (B2, B-)
12.250% 07/15/02 ........... 450 475,313
Petersburg Long Distance, Inc.
144A Convertible Subordinated
Notes (NR, NR)****
9.000% 06/01/06 ............ 230 255,300
Petersburg Long Distance, Inc.
144A Units (NR, NR)****
14.000% 06/01/04 ........... 1,610 1,320,200
PriCellular Wireless Corp.
Discount Notes (B3, CCC+)+
12.250% 10/01/03 ........... 1,000 860,000
Sprint Spectrum L.P./Sprint
Spectrum Finance Corp.
Senior Notes (B2, B+)
11.000% 08/15/06 ........... 500 542,500
Teleport Communications Group,
Inc. Senior Discount Notes
(B1, B)+
11.125% 07/01/07 ........... 500 355,000
Teleport Communications Group, Inc.
Senior Notes (B1, B)
9.875% 07/01/06 ............ 300 321,375
Telewest Communications Group
Plc Yankee Senior Discount
Debentures (B1, BB)+
11.000% 10/01/07 ........... 800 560,000
PAR
(000) VALUE
---------- ------------
TCI Satellite Entertainment, Inc.
144A Senior Subordinated
Discount Notes (B3, B-)
12.250% 02/15/07 ........... $ 250 $ 138,750
TCI Satellite Entertainment, Inc.
144A Senior Subordinated Notes
(NR, NR)
10.875% 02/15/07 ........... 250 253,125
UNIFI Communications, Inc.
144A Units (NR, NR)
14.000% 03/01/04 ........... 500 520,000
Vanguard Cellular Systems, Inc.
Senior Debentures (B1, B+)
9.375% 04/15/06 ............ 500 515,625
Videotron Holdings Plc Yankee
Senior Discount Notes
(B3, B+)+
11.000% 08/15/05 ........... 1,000 805,000
------------
17,243,563
------------
TEXTILES & APPAREL -- 1.6%
Collins & Aikman Products Corp.
144A Senior Subordinated
Notes (B3, B-)
10.000% 01/15/07 ........... 250 257,813
Collins & Aikman Products Corp.
Gtd. Senior Subordinated
Notes (B3, B)
11.500% 04/15/06 ........... 700 785,750
William Carter Co. 144A Senior
Subordinated Notes (B3, B-)
10.375% 12/01/06 ........... 450 475,313
------------
1,518,876
------------
TRANSPORTATION -- 2.4%
Atlantic Express Transportation
Corp. Gtd. Senior Notes (B2, B)
10.750% 02/01/04 ........... 500 520,000
Consorcio G Grupo Dina S.A./
MCII Holdings (U.S.A.), Inc.
Sr. Secured Notes (NR, NR)+
12.000% 11/15/02 ........... 1,000 862,500
US Air, Inc. Senior Notes
(B3, CCC+)
10.000% 07/01/03 ........... 900 906,750
------------
2,289,250
------------
WASTE MANAGEMENT -- 0.8%
Allied Waste Industries, Inc.
144A Senior Subordinated
Notes (B3, B+)
10.250% 12/01/06 ........... 700 756,000
------------
TOTAL CORPORATE BONDS
(Cost $89,112,081) ......... 92,093,719
------------
See Accompanying Notes to Financial Statements.
44
<PAGE>
BEA HIGH YIELD FUND (CONCLUDED)
PAR
(000) VALUE
---------- -------------
ASSET BACKED SECURITIES -- 0.7%
Airplanes Pass Through Trust
Series 1, Class D (Ba2, BB)
10.875% 03/15/19 ........... $ 600 $ 671,900
------------
TOTAL ASSET BACKED
SECURITIES
(Cost $600,000) ............ 671,900
------------
RIGHTS / WARRANTS*** -- 0.2%
CHEMICALS -- 0.1%
Uniroyal Technology Corp.
Warrants ................... 43,500 65,250
------------
CONSTRUCTION & BUILDING MATERIALS -- 0.0%
Capital Pacific Holdings
Group, Inc. ................ 12,640 8,216
------------
ELECTRONICS -- 0.0%
Exide Electronic Warrants
144A ....................... 550 24,750
------------
PUBLISHING &INFORMATION SERVICES -- 0.0%
Inter Act Systems Warrants 144A
Expires 08/01/03 ........... 700 0
------------
TELECOMMUNICATIONS -- 0.1%
American Communication
Services, Inc. Warrants .... 1,500 97,500
------------
TOTAL RIGHTS / WARRANTS
(Cost $112,167) ............ 195,716
------------
PREFERRED STOCKS -- 3.1%
AEROSPACE/DEFENSE -- 1.4%
GPA Group Plc 7% Convertible
Cumulative Second
Preference Shares .......... 2,750,000 1,328,250
------------
CABLE -- 0.0%
DIVA Systems Corporation
Series C ................... 5,945 52,019
------------
CONSUMER PRODUCTS & SERVICES -- 0.6%
Renaissance Cosmetics Inc. 144A 14%
Senior Redeemable, Series B 35 30,975
Renaissance Cosmetics Inc.
144A Units ................. 500 500,000
------------
530,975
------------
RESTAURANTS, HOTELS & GAMING -- 0.7%
Lady Luck Gaming Corporation
Series A ................... 20,000 640,000
------------
TELECOMMUNICATIONS -- 0.4%
NEXTLINK Communications Inc.
144A Units ................. 8,000 409,000
------------
PAR
(000) VALUE
---------- -------------
TOTAL PREFERRED
STOCKS
(Cost $2,509,877) .......... $ 2,960,244
------------
TOTAL INVESTMENTS
AT VALUE -- 100.5%
(Cost $92,334,125*) ........ 95,921,579
LIABILITIES IN EXCESS OF
OTHER ASSETS -- (0.5%) ..... (447,797)
------------
NET ASSETS (Applicable to
5,711,023 BEA Institutional
Shares and 5,022 BEA
Advisor Shares)-- 100.0% ... 95,473,782
============
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PRICE PER BEA
INSTITUTIONAL SHARE
($95,389,951 / 5,711,023) .. $16.70
======
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PRICE PER BEA ADVISOR
SHARE ($83,831 / 5,022) .... $16.69
======
* Also cost for Federal income tax purposes at February 28, 1997.
The gross appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation ...... $ 6,145,572
Gross Depreciation ...... (2,558,118)
-----------
Net Appreciation ........ $ 3,587,454
===========
** 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 February 28, 1997 is 0% and will reset
to interest rate shown at a future date.
The Moody's Investors Service,Inc. and Standard & Poor's Ratings Group
ratings indicated are the most recent rating available at February 28, 1997
and are unaudited.
INVESTMENT ABBREVIATIONS
PIK ...........................................Pay In Kind
AT FEBRUARY 28, 1997, NET ASSETS CONSISTED OF:
AMOUNT
-------------
Capital Paid-In ................. $107,664,630
Accumulated Net Investment Income 1,392,873
Accumulated Net Realized Loss on
Security and Foreign Exchange
Transactions ................. (17,171,175)
Net Unrealized Appreciation on
Investments and Other ........ 3,587,454
- ----------------------------------------------------------
NET ASSETS ...................... $ 95,473,782
- ----------------------------------------------------------
See Accompanying Notes to Financial Statements.
45
<PAGE>
BEA MUNICIPAL BOND FUND
PORTFOLIO MANAGER'S LETTER
April 4, 1997
Dear Shareholders:
We are pleased to report on the results of the BEA Municipal Bond Fund (the
"Fund") and BEA's investment strategy for the six months ended February 28,
1997.
PERFORMANCE REVIEW
At February 28, 1997, the net asset value ("NAV") of the Fund was $14.60,
compared to an NAV of $14.65 on August 31, 1996. As a result, the Fund's total
return (assuming reinvestment of dividends and distributions) was 5.4%. By
comparison, the Lehman Brothers Municipal Bond Index posted a return of 5.1%
during the same period.
MARKET REVIEW
To place the period's municipal activity in perspective, it is helpful to review
the overall fixed income market for 1996 as a whole. 1996 was a great year for
"spread product," which is broadly defined as debt securities whose market
valuation is greatly driven by the "spreads" between their yields and those of
U.S. Treasury debt. Most investment-grade spread-product categories outperformed
Treasuries, which returned 2.7%. In addition to municipals (+4.4%), the former
include corporate bonds (+3.3%), mortgage-backed securities (+5.4%) and
asset-backed securities (+5.1%). (Returns are those of the corresponding Lehman
Brothers indices.)
For most of 1996, the environment for Treasuries was negative as stronger growth
and inflationary fears prompted investors to speculate that the Federal Reserve
would raise rates. Changing expectations kept Treasuries very volatile, as seen
in the yield of the bellwether 30-year Treasury bond, which ranged from a low of
5.95% to a high of 7.20%. By contrast, spread product thrived as investors
sought stability in higher yields, and stronger corporate profits and stable
economic growth lessened credit concerns.
The relative success of municipals was largely driven by two factors. First,
investors were relieved when the idea of a flat income-tax rate (which would
have considerably lessened munis' attractiveness) lost public and legislative
support. Second, as described above, was the positive climate for spread product
during much of the year.
OUTLOOK
On balance, we look for municipals to outperform most taxable fixed income
instruments through the rest of 1997. This is principally because munis' tax
advantages make them very attractive relative to taxables at current yield
levels; the size of the new-issue market is expected to decline while demand
remains steady, meaning that pricing should continue to be tight; and valuations
of competing asset categories, particularly equities and other taxables, are
fairly high.
We also note that, unlike most other fixed income categories, munis stand to
benefit from rising interest rates. This is due to several factors, including
the greater value of the tax advantages derived from munis as rates go up; the
increasing willingness of institutions to invest available cash at higher
yields; and the tightening of new supply as rate-sensitive refunding issues
appear relatively unattractive. These factors are of particular interest in the
context of anticipated rate hikes over the next few months by the Federal
Reserve.
The primary elements of our investment strategy are the following:
(BULLET) We are keeping the portfolio's risk level comparatively low by
focusing on bonds of high quality, good liquidity and longer
maturities. In this context, we favor pre-refunded and serial issues,
both of which generally offer an appealing combination of relatively
high quality and yield.
(BULLET) We also favor non-callable or discounted bonds, which we regard as
cheap because many investors are concentrating on obtaining higher
yields.
(BULLET) We are overweighting the portfolio in favor of New York State issues,
which we believe are undervalued.
(BULLET) We are including taxable high-yield instruments in the portfolio on an
opportunistic basis. During the six-month period ended in February,
this served to improve the Fund's performance and diversification.
46
<PAGE>
BEA MUNICIPAL BOND FUND
PORTFOLIO MANAGER'S LETTER (CONCLUDED)
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 yours,
BEA Fixed Income Management Team
Robert J. Moore, Executive Director
Gregg M. Diliberto, Managing Director
Mark K. Silverstein, Senior Vice President
Robert W. Justich, Senior Vice President
William P. Sterling, Executive Director
------------------------------------------
COMPARISON OF CHANGE IN VALUE OF $10,000 iNVESTMENT IN THE BEA MUMICIPAL BOND
FUND AND THE LEHMAN BROTHERS MUNICIPAL BOND INDEX FROM INCEPTION 6/20/94, PERIOD
ENDED 7/31/94 AND AT EACH QUARTER END.
[LINEGRAPH]
BEA MUNICIPAL BOND FUND
TOTAL RETURNS AND GRAPH PLOT POINTS
LEHMAN BROTHERS
BEA MUNICIPAL BOND MUNICIPAL BOND
DATES 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
05/31/96 $10,937 $11,314
08/31/96 $11,134 $11,539
11/30/96 $11,643 $12,049
02/28/97 $11,731 $12,132
AVERAGE ANNUAL
TOTAL RETURN
One Year 4.60%
From Inception 6.08%
Note:Past performance is not predictive of future performance.
47
<PAGE>
BEA MUNICIPAL BOND FUND
OF THE RBB FUND, INC.
STATEMENT OF NET ASSETS
FEBRUARY 28, 1997
(UNAUDITED)
PAR
(000) VALUE
------------ -----------
MUNICIPAL BONDS -- 88.8%
ALABAMA -- 0.1%
Jefferson County AL Sanitary Sewer
Construction Warrant Bonds
(Aaa, NR)
6.750% 03/01/07 ........................... $ 15 $ 16,819
----------
CALIFORNIA -- 6.9%
California State GO (Aaa, AAA)
5.125% 10/01/17 ........................... 825 770,344
Los Angeles CA Department of
Water & Power Water RB
(Aa, AA)
4.500% 05/15/23 ........................... 705 575,456
----------
1,345,800
----------
COLORADO -- 3.2%
Colorado Springs CO Utility
RB (Aaa, AAA)
5.875% 11/15/17 ........................... 595 611,362
----------
FLORIDA -- 11.1%
Florida State Board of Education
GO (Aa2, AA)
5.125% 06/01/22 ........................... 30 27,750
Florida State GO (Aa, AA)
5.500% 10/01/08 ........................... 710 710,887
Jacksonville FL Electric
Authority RB, 2nd
Installment (Aaa, AAA)
6.000% 07/01/12 ........................... 610 647,362
Tallahassee FL Electric RB,
First Lien (Aaa, AAA)
6.100% 10/01/06 ........................... 730 772,887
----------
2,158,886
----------
ILLINOIS -- 6.7%
Chicago IL GO Series 1993
(FGIC Insured)
(Aaa, AAA)
5.250% 01/01/18 ........................... 705 660,937
Illinois State Sales Tax RB
Series Q (Aa3, AAA)
5.750% 06/15/14 ........................... 650 650,000
----------
1,310,937
----------
INDIANA -- 0.1%
Indianapolis IN Public
Improvement Board RB
(Aaa, AA+)
6.000% 01/10/18 ........................... 25 25,500
----------
LOUISIANA -- 3.5%
New Orleans LA Home Mortgage
Authority SOB (Aaa, AAA)
6.250% 01/15/11 ........................... 635 686,594
----------
PAR
(000) VALUE
------------ -----------
MARYLAND -- 5.0%
Maryland State Transportation
Authority Project RB
(Aaa, AAA)
6.800% 07/01/16 ............................. $ 850 $967,937
----------
MASSACHUSETTS -- 3.2%
Massachusetts State Water
Resources Authority General
RB, Series 92A (A, A)
6.500% 07/15/19 ............................. 20 22,125
Massachusetts State Water
Resources RB
(Aaa, AAA)
5.000% 12/01/25 ............................. 660 601,425
----------
623,550
----------
NEW YORK -- 32.8%
New York NY GO Series B
(Baa1, BBB+)
7.250% 08/15/19 ............................. 375 414,844
New York NY GO Series D
(Baa1, BBB+)
6.000% 02/15/25 ............................. 15 14,569
New York NY GO Series H
(Baa1, BBB+)
7.200% 02/01/13 ............................. 600 654,750
New York State Dormitory
Authority RB (Elizabeth
Church Manor Nursing Home)
(FHA Insured) (NR, AA)
5.400% 08/01/23 ............................. 60 57,675
New York State Dormitory
Authority RB (Episcopal
Health Services)
(GNMA Coll.) (NR, AAA)
7.550% 08/01/29 ............................. 435 469,800
New York State Dormitory
Authority RB (Judicial
Facilities Lease) (MBIA
Insured) (Aaa, AAA)
7.375% 07/01/16 ............................. 630 735,525
New York State Dormitory
Authority RB (Judicial
Facilities Lease) (Aaa, AAA)
7.375% 07/01/16 ............................. 40 47,450
New York State Dormitory
Authority RB (Park
Ridge Housing Inc. Project)
(NR, AAA)
7.850% 02/01/29 ............................. 530 567,100
New York State Medical Care
Facility Finance Agency
Hospital & Nursing Home
Insured Mortgage RB
(NR, AAA)
5.500% 02/15/22 ............................. 780 765,375
See Accompanying Notes to Financial Statements
48
<PAGE>
BEA MUNICIPAL BOND FUND (CONTINUED)
PAR
(000) VALUE
------------ -----------
NEW YORK -- (CONTINUED)
New York State Power Authority
Revenue & General Purpose
Electric RB, Series R
(Aaa, AAA)
7.000% 01/01/10 ...................... $ 360 $ 417,600
New York State Power Authority
Revenue & General Purpose
1970 Project, Series G (Aaa, AAA)
5.375% 01/01/10 ...................... 40 40,800
New York State Power Authority
Revenue & General Purpose
Electric RB, Series V (MBIA
Insured) (Aaa, AAA)
7.875% 01/01/98 ...................... 790 833,063
New York State Throughway
Authority General Revenue
Series B (MBIA Ins.)
(Aaa, AAA)
5.000% 01/01/20 ...................... 30 27,750
Suffolk County NY Water
Authority Waterworks
RB, Series V (NR, AAA)
6.750% 06/01/12 ...................... 580 653,225
Triborough Bridge & Tunnel
Authority NY Mortgage
Recording Tax SOB
(Aaa, AAA)
7.125% 01/01/00 ...................... 625 678,125
----------
6,377,651
----------
PUERTO RICO -- 4.6%
Commonwealth of Puerto Rico GO (Baa1, A)
5.400% 07/01/07 ...................... 730 747,337
Puerto Rico Electric Power
Authority RB, Series N
(Baa1, BBB+)
7.125% 07/01/14 ...................... 135 143,944
----------
891,281
----------
SOUTH DAKOTA -- 0.2%
Heartland Consumers Power
District SD Electric RB
(Aaa, AAA)
6.375% 01/01/16 ...................... 30 32,550
----------
VIRGIN ISLANDS -- 3.8%
Virgin Islands Public Finance
Authority RB (NR, BBB)
7.700% 10/01/04 ...................... 690 745,200
----------
VIRGINIA -- 3.8%
Fairfax County VA
Redevelopment & Housing
Authority Mortgage RB
(FHA Insured) (NR, AAA)
7.100% 04/01/19 ...................... 630 743,400
----------
PAR
(000) VALUE
------------ -----------
WASHINGTON -- 3.8%
King County WA Series A GO
(Aa1, AA+)
6.200% 01/01/24 ............................... $ 40 $ 42,051
Seattle WA Water System
RB (Aa, AA)
5.250% 12/01/23 ............................... 735 689,982
-----------
732,033
-----------
TOTAL MUNICIPAL BONDS
(Cost $16,450,897) ............................ 17,269,500
-----------
CORPORATE BONDS -- 6.0%
ENERGY -- 1.0%
Gulf Canada Resources Ltd.
Yankee Senior Subordinated
Debentures (Ba3, BB-)
9.250% 01/15/04 ............................... 185 196,563
-----------
FINANCIAL SERVICES -- 1.1%
Bank of Foreign Economic
Affairs of the USSR
(Vnesheconombank Bank)
(When Issued) (NR, NR)
12.000% 12/31/16 .............................. 175 126,000
First Nationwide (Parent)
Holdings, Inc. Senior Notes
144A (B3, B)
12.500% 04/15/03 .............................. 70 79,450
-----------
205,450
-----------
FOOD & BEVERAGE -- 0.6%
Fresh del Monte Produce N.V
Yankee Senior Notes
Series B (Caa, CCC+)
10.000% 05/01/03 .............................. 95 95,238
-----------
TELECOMMUNICATIONS -- 0.7%
Rogers Cantel, Inc. Yankee
Senior Secured Debentures
(Ba3, BB+)
9.375% 06/01/08 ............................... 95 100,937
Videotron Holdings Plc Yankee
Senior Discount Notes (B3, B+)
11.125% 07/01/04 .............................. 50 43,750
-----------
144,687
-----------
TRANSPORTATION -- 0.2%
NWA Trust Mezzanine Aircraft
Notes Series D (Ba1, BB+)
13.875% 06/21/08 .............................. 40 47,300
-----------
UTILITIES -- 2.4%
Beaver Valley Funding Corp.
Secured Lease
Obligation Bonds (B1, B+)
8.625% 06/01/07 ............................... 160 152,600
See Accompanying Notes to Financial Statements
49
<PAGE>
BEA MUNICIPAL BOND FUND (CONCLUDED)
PAR
(000) VALUE
------------ -----------
UTILITIES -- (CONTINUED)
Beaver Valley Funding Corp.
Subordinated Debentures
(B1, B+)
9.000% 06/01/17 .................. $ 30 $ 30,150
Long Island Lighting Co.
Debentures (Bb3, BB+)
9.000% 11/01/22 .................. 130 138,774
Niagara Mohawk Power First
Mortgage Bonds (Ba3, BB+)
6.875% 04/01/03 .................. 160 151,400
----------
472,924
----------
TOTAL CORPORATE BONDS
(Cost $1,129,021) ................ 1,162,162
----------
FOREIGN BONDS -- 1.4%
Federal Republic of Brazil
MYDFA Trust Certificates
(NR, NR)
6.688% 09/15/07 .................. 100 89,688
United Mexican States Global
Bonds (Ba2, BB)
11.375% 09/15/16 ................. 160 175,000
----------
TOTAL FOREIGN BONDS
(Cost $257,395) .................. 264,688
----------
U.S. TREASURY OBLIGATIONS -- 2.0%
U.S. Treasury Bonds -- 1.5%
7.625% 02/15/25 .................. 270 293,736
----------
U.S. Treasury Notes -- 0.5%
6.625% 06/30/01 .................. 50 50,488
7.875% 11/15/04 .................. 50 54,012
----------
104,500
----------
TOTAL U.S. TREASURY
OBLIGATIONS
(Cost $398,417) .................. 398,236
----------
PAR
(000) VALUE
------------ -----------
SHORT TERM INVESTMENTS -- 1.0%
Smith Barney Tax Free Money
Market Fund ............... $ 198 $ 197,598
-----------
TOTAL SHORT TERM
INVESTMENTS
(Cost $197,598) ........ 197,598
-----------
TOTAL INVESTMENTS
AT VALUE -- 99.2%
(Cost $18,433,328*) ....... 19,292,184
OTHER ASSETS IN EXCESS
OF LIABILITIES-- 0.8% ..... 162,330
-----------
NET ASSETS (Applicable to
1,332,456 BEA Institutional
Shares) -- 100.0% ......... 19,454,514
===========
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PRICE PER BEA
INSTITUTIONAL SHARE
($19,454,514 / 1,332,456) . $14.60
======
* Cost for Federal income tax purposes at February 28, 1997 is $18,485,753.
The gross appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation ................................. $ 834,175
Gross Depreciation ................................. (27,744)
==========
Net Appreciation ................................... $ 806,431
==========
The Moody's Investors Service, Inc. and Standard & Poor's Rating Group ratings
indicated are the most recent ratings available at February 28, 1997 and are
unaudited.
INVESTMENT ABBREVIATIONS
GO ..........................................................General Obligations
RB .................................................................Revenue Bond
SOB ....................................................Special Obligations Bond
AT FEBRUARY 28, 1997, NET ASSETS CONSISTED OF:
AMOUNT
------------
Capital Paid-In .......................................... $18,443,424
Accumulated Net Investment Income ........................ 37,242
Accumulated Net Realized Gain on
Security and Foreign Exchange
Transactions .......................................... 71,694
Net Unrealized Appreciation on
Investments and Other ................................. 902,154
- --------------------------------------------------------------------------------
NET ASSETS ............................................... $19,454,514
- --------------------------------------------------------------------------------
See Accompanying Notes to Financial Statements.
50
<PAGE>
THE BEA FUNDS
OF THE RBB FUND, INC.
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED FEBRUARY 28, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
BEA INTERNATIONAL BEA EMERGING BEA U.S. BEA GLOBAL
EQUITY MARKETS EQUITY CORE EQUITY TELECOMMUNICATIONS
FUND FUND FUND FUND
----------------- -------------- ------------ ------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends .................................................. $ 4,046,496 $ 721,687 $ 551,554 $ 204
Interest ................................................... 469,872 72,770 114,469 1,131
Foreign taxes withheld ..................................... (250,762) (24,497) -- (40)
------------ ------------ ------------ ------------
Total Investment Income .................................. 4,265,606 769,960 666,023 1,295
------------ ------------ ------------ ------------
EXPENSES
Investment advisory fees ................................... 2,758,183 539,110 257,039 991
Administration service fees ................................ 517,159 80,867 51,408 50
Administration fees ........................................ 430,966 67,389 42,840 124
Custodian fees ............................................. 406,026 129,372 23,905 --
Audit fees ................................................. 34,694 6,319 2,964 17
Miscellaneous fees ......................................... 18,586 7,325 1,614 21
Printing fees .............................................. 20,194 2,190 -- 76
Registration fees .......................................... 21,265 11,796 15,831 1,246
Legal fees ................................................. 19,824 4,443 621 14
Transfer agent fees ........................................ 37,027 9,298 9,537 --
Insurance expense .......................................... 7,939 1,362 422 7
Directors fees ............................................. 6,443 1,239 372 7
Organization expense ....................................... 5,274 5,274 2,575 --
Distribution fees .......................................... 4 4 -- 248
------------ ------------ ------------ ------------
4,283,584 865,988 409,128 2,801
Less fees waived ........................................... (297,221) (64,706) (66,409) (1,165)
------------ ------------ ------------ ------------
Total Expenses ........................................... 3,986,363 801,282 342,719 1,636
------------ ------------ ------------ ------------
Net Investment Income (Loss) .................................. 279,243 (31,322) 323,304 (341)
------------ ------------ ------------ ------------
Realized and Unrealized Gain on Investments
and Foreign Currency Transactions:
Net realized gain(loss) from:
Security transactions .................................... 1,478,403 6,698,860 1,697,405 3,784
Foreign exchange transactions ............................ (1,076,620) (223,079) -- 215
------------ ------------ ------------ ------------
401,783 6,475,781 1,697,405 3,999
------------ ------------ ------------ ------------
Net unrealized appreciation(depreciation):
Investments .............................................. 54,151,543 6,100,151 9,729,926 24,584
Translation of assets and liabilities
in foreign currencies ................................. (137,363) (31,474) -- --
------------ ------------ ------------ ------------
54,014,180 6,068,677 9,729,926 24,584
------------ ------------ ------------ ------------
Net Gain On Investments And Foreign
Currency Transactions ...................................... 54,415,963 12,544,458 11,427,331 28,583
------------ ------------ ------------ ------------
Net Increase In Net Assets Resulting
From Operations ............................................ $ 54,695,206 $ 12,513,136 $ 11,750,635 $ 28,242
============ ============ ============ ============
</TABLE>
See Accompanying Notes to Financial Statements
51
<PAGE>
THE BEA FUNDS
OF THE RBB FUND, INC.
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED FEBRUARY 28, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
BEA U.S. CORE BEA STRATEGIC
FIXED INCOME GLOBAL FIXED BEA HIGH BEA MUNICIPAL
FUND INCOME FUND YIELD FUND BOND FUND
------------ ------------- ----------- -------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends .................................................. $ 44,713 $ -- $ 32,930 $ --
Interest ................................................... 4,409,590 1,184,717 4,068,373 560,492
Foreign taxes withheld ..................................... -- -- -- --
----------- ----------- ----------- -----------
Total Investment Income .................................. 4,454,303 1,184,717 4,101,303 560,492
----------- ----------- ----------- -----------
EXPENSES
Investment advisory fees ................................... 239,641 98,459 297,460 66,949
Administration service fees ................................ 95,856 29,538 63,741 14,346
Administration fees ........................................ 79,880 24,615 53,118 11,955
Custodian fees ............................................. 29,823 19,538 17,938 9,090
Audit fees ................................................. 5,941 2,133 4,992 1,567
Miscellaneous fees ......................................... 8,083 497 2,988 3,167
Printing fees .............................................. 6,363 -- 745 0
Registration fees .......................................... 14,084 11,493 9,927 14,480
Legal fees ................................................. 2,317 -- 3,285 0
Transfer agent fees ........................................ 10,083 6,083 8,913 6,360
Insurance expense .......................................... 1,610 360 991 249
Directors fees ............................................. 1,239 335 866 198
Organization expense ....................................... 2,045 2,675 5,274 3,676
Distribution fees .......................................... -- -- 38 --
----------- ----------- ----------- -----------
496,965 195,726 470,276 132,037
Less fees waived ........................................... (177,444) (48,038) (172,778) (36,395)
----------- ----------- ----------- -----------
Total Expenses ........................................... 319,521 147,688 297,498 95,642
----------- ----------- ----------- -----------
Net Investment Income ......................................... 4,134,782 1,037,029 3,803,805 464,850
----------- ----------- ----------- -----------
Realized and Unrealized Gain on Investments
and Foreign Currency Transactions:
Net realized gain(loss) from:
Security transactions .................................... 1,163,521 880,808 (943,255) 162,895
Foreign exchange transactions ............................ 4,654 14,713 -- --
----------- ----------- ----------- -----------
1,168,175 895,521 (943,255) 162,895
----------- ----------- ----------- -----------
Net unrealized appreciation(depreciation):
Investments .............................................. 2,528,854 (805,300) 4,322,261 389,098
Translation of assets and liabilities
in foreign currencies ................................. 2,303 97,703 -- --
----------- ----------- ----------- -----------
2,531,157 (707,597) 4,322,261 389,098
----------- ----------- ----------- -----------
Net Gain On Investments And Foreign
Currency Transactions ...................................... 3,699,332 187,924 3,379,006 551,993
----------- ----------- ----------- -----------
Net Increase In Net Assets Resulting
From Operations ............................................ $ 7,834,114 $ 1,224,953 $ 7,182,811 $ 1,016,843
=========== =========== =========== ===========
</TABLE>
See Accompanying Notes to Financial Statements
52
<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 FOR THE YEAR FOR THE FOR THE YEAR
SIX MONTHS ENDED ENDED SIX MONTHS ENDED ENDED
FEBRUARY 28, 1997 AUGUST 31, 1996 FEBRUARY 28, 1997 AUGUST 31, 1996
----------------- --------------- ----------------- ---------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income (loss) ............................... $ 279,243 $ 6,274,654 $ (31,322) $ 806,634
Net gain on investments and foreign
currency transactions .................................... 54,415,963 44,060,328 12,544,458 3,144,494
------------- ------------- ------------- -------------
Net increase in net assets resulting
from operations .......................................... 54,695,206 50,334,982 12,513,136 3,951,128
------------- ------------- ------------- -------------
Distributions to shareholders:
Dividends to shareholders from net investment
income:
BEA Institutional shares.................................. (8,629,576) (2,649,123) (348,763) (401,495)
BEA Advisor shares........................................ (35) -- (9) --
Distributions to shareholders from net realized capital gains:
BEA Institutional shares ................................. -- -- -- --
BEA Advisor shares ....................................... -- -- -- --
------------- ------------- ------------- -------------
Total distributions to shareholders ........................... (8,629,611) (2,649,123) (348,772) (401,495)
------------- ------------- ------------- -------------
Net capital share transactions ................................ (21,635,258) (138,669,688) (26,762,167) (17,180,987)
------------- ------------- ------------- -------------
Total increase (decrease) in net assets ....................... 24,430,337 (90,983,829) (14,597,803) (13,631,354)
Net Assets:
Beginning of period ........................................ 682,270,801 773,254,630 114,691,209 128,322,563
------------- ------------- ------------- -------------
End of period .............................................. $ 706,701,138 $ 682,270,801 $ 100,093,406 $ 114,691,209
============= ============= ============= =============
</TABLE>
See Accompanying Notes to Financial Statements
53
<PAGE>
THE BEA FUNDS
OF THE RBB FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
BEA U.S.CORE BEA GLOBAL
EQUITY FUND TELECOMMUNICATIONS FUND
---------------------------------- -------------------------------
FOR THE FOR THE YEAR FOR THE PERIOD
SIX MONTHS ENDED ENDED DECEMBER 4, 1996(1)
FEBRUARY 28, 1997 AUGUST 31, 1996 TO FEBRUARY 28, 1997
----------------- --------------- --------------------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
Increase in net assets:
Operations:
Net investment income (loss) .............................. $ 323,304 $ 546,030 $ (341)
Net gain on investments and foreign
currency transactions ................................... 11,427,331 5,368,162 28,583
------------ ------------ ------------
Net increase in net assets resulting
from operations ......................................... 11,750,635 5,914,192 28,242
------------ ------------ ------------
Distributions to shareholders:
Dividends to shareholders from net investment
income:
BEA Institutional shares ................................ (657,991) (384,500) --
BEA Advisor shares ...................................... -- -- --
Distributions to shareholders from net realized capital gains:
BEA Institutional shares ................................ (4,630,225) (2,961,757) --
BEA Advisor shares ...................................... -- -- --
------------ ------------ ------------
Total distributions to shareholders .......................... (5,288,216) (3,346,257) --
------------ ------------ ------------
Net capital share transactions ............................... 10,063,707 24,803,723 463,251
------------ ------------ ------------
Total increase in net assets ................................. 16,526,126 27,371,658 491,493
Net Assets:
Beginning of period ....................................... 59,015,434 31,643,776 --
------------ ------------ ------------
End of period ............................................. $ 75,541,560 $ 59,015,434 $ 491,493
============ ============ ============
<FN>
(1) Commencement of Operations ...............................
</FN>
</TABLE>
See Accompanying Notes to Financial Statements.
54
<PAGE>
THE BEA FUNDS
OF THE RBB FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
BEA U.S. CORE FIXED BEA STRATEGIC GLOBAL
INCOME FUND FIXED INCOME FUND
--------------------------------- ----------------------------------
FOR THE FOR THE YEAR FOR THE FOR THE YEAR
SIX MONTHS ENDED ENDED SIX MONTHS ENDED ENDED
FEBRUARY 28, 1997 AUGUST 31, 1996 FEBRUARY 28, 1997 AUGUST 31, 1996
----------------- --------------- ----------------- ----------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Increase in net assets:
Operations:
Net investment income ...................................... $ 4,134,782 $ 7,734,594 $ 1,037,029 $ 1,844,286
Net gain (loss) on investments and foreign
currency transactions .................................... 3,699,332 (2,908,833) 187,924 737,649
------------- ------------- ------------- -------------
Net increase in net assets resulting
from operations .......................................... 7,834,114 4,825,761 1,224,953 2,581,935
------------- ------------- ------------- -------------
Distributions to shareholders:
Dividends to shareholders from net investment
income:
BEA Institutional shares ................................. (4,628,520) (7,217,136) (916,573) (2,322,498)
BEA Advisor shares ....................................... -- -- -- --
Distributions to shareholders from net realized capital gains:
BEA Institutional shares ................................. (1,019,928) (1,598,598) (772,491) (267,603)
BEA Advisor shares ....................................... -- -- -- --
------------- ------------- ------------- -------------
Total distributions to shareholders ........................... (5,648,448) (8,815,734) (1,689,064) (2,590,101)
------------- ------------- ------------- -------------
Net capital share transactions ................................ 17,192,317 23,336,409 3,273,061 18,790,839
------------- ------------- ------------- -------------
Total increase in net assets .................................. 19,377,983 19,346,436 2,808,950 18,782,673
Net Assets:
Beginning of period ........................................ 118,596,275 99,249,839 38,347,500 19,564,827
------------- ------------- ------------- -------------
End of period .............................................. $ 137,974,258 $ 118,596,275 $ 41,156,450 $ 38,347,500
============= ============= ============= =============
</TABLE>
See Accompanying Notes to Financial Statements
55
<PAGE>
THE BEA FUNDS
OF THE RBB FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
BEA HIGH BEA MUNICIPAL
YIELD FUND BOND FUND
--------------------------------- ---------------------------------
FOR THE FOR THE YEAR FOR THE FOR THE YEAR
SIX MONTHS ENDED ENDED SIX MONTHS ENDED ENDED
FEBRUARY 28, 1997 AUGUST 31, 1996 FEBRUARY 28, 1997 AUGUST 31, 1996
----------------- --------------- ----------------- ---------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income ...................................... $ 3,803,805 $ 8,200,490 $ 464,850 $ 1,066,671
Net gain (loss) on investments and foreign
currency transactions .................................... 3,379,006 2,062,819 551,993 (616,117)
------------- ------------- ------------- -------------
Net increase in net assets resulting
from operations .......................................... 7,182,811 10,263,309 1,016,843 450,554
------------- ------------- ------------- -------------
Distributions to shareholders:
Dividends to shareholders from net investment
income:
BEA Institutional shares ................................. (3,741,729) (10,165,849) (470,538) (1,137,175)
BEA Advisor shares ....................................... (1,826) -- -- --
Distributions to shareholders from net realized capital gains:
BEA Institutional shares ................................. -- -- (594,155) (629,414)
BEA Advisor shares ....................................... -- -- -- --
------------- ------------- ------------- -------------
Total distributions to shareholders ........................... (3,743,555) (10,165,849) (1,064,693) (1,766,589)
------------- ------------- ------------- -------------
Net capital share transactions ................................ 16,185,968 (77,869,859) (78,890) (28,080,548)
------------- ------------- ------------- -------------
Total increase (decrease) in net assets ....................... 19,625,224 (77,772,399) (126,740) (29,396,583)
Net Assets:
Beginning of period ........................................ 75,848,558 153,620,957 19,581,254 48,977,837
------------- ------------- ------------- -------------
End of period .............................................. $ 95,473,782 $ 75,848,558 $ 19,454,514 $ 19,581,254
============= ============= ============= =============
</TABLE>
See Accompanying Notes to Financial Statements
56
<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 SIX FOR THE PERIOD
MONTHS ENDED FOR THE FOR THE FOR THE FOR THE PERIOD NOVEMBER 1, 1996*
FEBRUARY 28, YEAR ENDED YEAR ENDED YEAR ENDED OCTOBER 1, 1992* TO FEBRUARY 28,
1997 AUGUST 31, AUGUST 31, AUGUST 31, TO AUGUST 31, 1997
(UNUADITED) 1996 1995 1994 1993 (UNAUDITED)
------------- ------------- ------------- ------------- --------------- -----------------
INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL ADVISOR
------------- ------------- ------------- ------------- --------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period ........... $ 19.41 $ 18.24 $ 20.73 $ 18.73 $ 15.00 $ 19.67
------------ ------------ ------------ ------------ ------------ ------------
Income from investment
operations
Net investment
income (loss) ............. 0.02 0.19 0.06 0.05 0.04 0.08
Net gain (loss) on securities
(both realized and
unrealized) ............... 1.58 1.05 (1.75) 2.60 3.69 1.24
------------ ------------ ------------ ------------ ------------ ------------
Total from investment
operations ................ 1.60 1.24 (1.69) 2.65 3.73 1.32
------------ ------------ ------------ ------------ ------------ ------------
Less Distributions
Dividends from net
investment income ......... (0.26) (0.07) -- (0.05) -- (0.26)
Distributions from
capital gains ............. -- -- (0.80) (0.60) -- --
------------ ------------ ------------ ------------ ------------ ------------
Total distributions ......... (0.26) (0.07) (0.80) (0.65) -- (0.26)
------------ ------------ ------------ ------------ ------------ ------------
Net asset value,
end of period ................. $ 20.75 $ 19.41 $ 18.24 $ 20.73 $ 18.73 $ 20.73
============ ============ ============ ============ ============ ============
Total return ..................... 8.26%(c)(d) 6.81%(d) (8.06%)(d) 14.23%(d) 24.87%(c)(d) 6.73%(c)(d)
Ratio/Supplemental Data
Net assets,
end of period ............. $706,695,873 $682,270,801 $773,254,630 $767,189,791 $268,403,524 $5,265
Ratio of expenses to
average net assets ........ 1.16%(a)(b) 1.19%(a) 1.25%(a) 1.25%(a) 1.25%(a)(b) 1.41%(a)(b)
Ratio of net investment
income (loss) to
average net assets ........ 0.08%(b) 0.84% 0.35% 0.33% 0.41%(b) (0.67)%(b)
Fund turnover rate .......... 50%(c) 86% 78% 104% 106%(c) 50%(c)
Average commission rate(e) .. $ .0028 $ .0007 N/A N/A N/A --
<FN>
(a) Without the voluntary waiver of advisory fees and administration fees, the
ratios of expenses to average net assets for the BEA International
Institutional Class would have been 1.24% annualized for the six months
ended February 29, 1997 and 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. Without the voluntary waiver of advisory fees
and administration fees, the ratios of expenses to average net assets for
the BEA International Advisor Class would have been 1.49% annualized for
the period November 1, 1996 to February 28, 1997.
(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.
</FN>
</TABLE>
See Accompanying Notes to Financial Statements.
57
<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 SIX FOR THE PERIOD
MONTHS ENDED FOR THE FOR THE FOR THE FOR THE PERIOD NOVEMBER 1, 1996*
FEBRUARY 28, YEAR ENDED YEAR ENDED YEAR ENDED FEBRUARY 1, 1993* TO FEBRUARY 28,
1997 AUGUST 31, AUGUST 31, AUGUST 31, TO AUGUST 31, 1997
(UNUADITED) 1996 1995 1994 1993 (UNAUDITED)
------------- ------------- ------------- ------------- --------------- -----------------
INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL ADVISOR
------------- ------------- ------------- ------------- --------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period ........... $ 18.20 $ 17.67 $ 24.58 $ 18.38 $ 15.00 $ 18.08
------------ ------------ ------------ ------------ ------------ ------------
Income from investment
operations
Net investment
income (loss) ............. (0.02) 0.10 0.02 (0.03) 0.02 (0.03)
Net gain (loss) on securities
(both realized and
unrealized) ............... 2.50 0.48 (5.94) 6.64 3.36 2.61
------------ ------------ ------------ ------------ ------------ ------------
Total from investment
operations ................ 2.48 0.58 (5.92) 6.61 3.38 2.58
------------ ------------ ------------ ------------ ------------ ------------
Less Distributions
Dividends from net
investment income ......... (0.07) (0.05) (0.07) (0.09) -- (0.06)
Distributions from
capital gains ............. -- -- (0.92) (0.32) -- --
------------ ------------ ------------ ------------ ------------ ------------
Total distributions ......... (0.07) (0.05) (0.99) (0.41) -- (0.06)
------------ ------------ ------------ ------------ ------------ ------------
Net asset value,
end of period ................. $ 20.61 $ 18.20 $ 17.67 $ 24.58 $ 18.38 $ 20.60
============ ============ ============ ============ ============ ============
Total return ..................... 13.66%(c)(d) 3.33%(d) (24.42%)(d) 35.99%(d) 22.53%(c)(d) 14.31%(c)(d)
Ratio/Supplemental Data
Net assets,
end of period ............. $100,087,926 $114,691,209 $128,322,563 $140,675,379 $21,988,062 $5,480
Ratio of expenses to
average net assets ........ 1.49%(a)(b) 1.49%(a) 1.50%(a) 1.50%(a) 1.50%(a)(b) 1.74%(a)(b)
Ratio of net investment
income (loss) to
average net assets ........ (0.06)%(b) 0.63% 0.02% (0.02)% 0.28%(b) (1.03)%(b)
Fund turnover rate .......... 45%(c) 79% 79% 54% 38%(c) 45%(c)
Average commission rate(e) .. $ .0005 $ .0005 N/A N/A N/A --
<FN>
(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 Institutional Class would
have been 1.61% annualized for the six months ended February 28, 1997 and
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.
Without the voluntary waiver of advisory fees and administration fees, the
ratios of expenses to average net assets for the BEA Emerging Markets
Advisor Class would have been 1.86% annualized for the period November 1,
1996 to February 28, 1997.
(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.
</FN>
</TABLE>
See Accompanying Notes to Financial Statements.
58
<PAGE>
THE BEA FUNDS
OF THE RBB FUND, INC.
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
BEA GLOBAL
BEA U.S. CORE EQUITY FUND TELECOMMUNICATIONS FUND
------------------------------------------------------ -----------------------
FOR THE SIX FOR THE PERIOD
MONTHS ENDED FOR THE FOR THE PERIOD DECEMBER 4, 1996* TO
FEBRUARY 28, 1997 YEAR ENDED SEPTEMBER 1, 1994* FEBRUARY 28, 1997
(UNAUDITED) AUGUST 31, 1996 TO AUGUST 31, 1995 (UNAUDITED)
----------------- --------------- ------------------ --------------------
INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL ADVISOR
----------------- --------------- ------------------ --------------------
<S> <C> <C> <C> <C>
Net asset value,
beginning of period ........... $ 19.05 $ 17.86 $ 15.00 $ 15.00
----------- ----------- ----------- --------
Income from investment
operations
Net investment
income (loss) ............. 0.09 0.20 0.22 (0.01)
Net gain (loss) on securities
(both realized and
unrealized) ............... 3.50 2.81 2.72 1.19
----------- ----------- ----------- --------
Total from investment
operations ................ 3.59 3.01 2.94 1.18
----------- ----------- ----------- --------
Less Distributions
Dividends from net
investment income ........ (0.20) (0.21) (0.08) --
Distributions from
capital gains ............ (1.41) (1.61) -- --
----------- ----------- ----------- --------
Total distributions ......... (1.61) (1.82) (0.08) --
----------- ----------- ----------- --------
Net asset value,
end of period ................. $ 21.03 $ 19.05 $ 17.86 $ 16.18
=========== =========== =========== ========
Total return ..................... 17.59%(c) 17.59% 19.75% 7.87%(c)
Ratio/Supplemental Data
Net assets,
end of period ............. $75,541,560 $59,015,434 $31,643,776 $491,493
Ratio of expenses to
average net assets ........ 1.00%(a)(b) 1.00%(a) 1.00%(a) 1.65%(a)(b)
Ratio of net investment
income (loss) to
average net assets ........ 0.94%(b) 1.25% 1.59% (0.34)%(b)
Fund turnover rate .......... 35%(c) 127% 123% 13%(c)
Average commission rate(d) .. $ .0593 $ .0614 N/A $ .0037
<FN>
(a) Without the voluntary 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 1.19% annualized for the six months ended February 28, 1997
and 1.34% and 1.51% for the years ended August 31, 1996 and 1995. Without
the voluntary waiver of advisory fees and administration fees, the ratios
of expenses to average net assets for the BEA Global Telecommunications
Fund would have been 2.83% annualized for period ended February 28, 1997.
(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.
</FN>
</TABLE>
See Accompanying Notes to Financial Statements.
59
<PAGE>
THE BEA FUNDS
OF THE RBB FUND, INC.
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
BEA U.S. CORE FIXED INCOME FUND
-----------------------------------------------------------------------------
FOR THE SIX
MONTHS ENDED FOR THE FOR THE FOR THE PERIOD
FEBRUARY 28, 1997 YEAR ENDED YEAR ENDED APRIL 1, 1994* TO
(UNAUDITED) AUGUST 31, 1996 AUGUST 31, 1995 AUGUST 31, 1994
----------------- --------------- --------------- -----------------
INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL
----------------- --------------- --------------- -----------------
<S> <C> <C> <C> <C>
Net asset value,
beginning of period ........... $ 15.06 $ 15.42 $ 14.77 $ 15.00
------------ ------------ ----------- -----------
Income from investment
operations
Net investment
income .................... 0.47 0.95 0.88 0.42
Net gain (loss) on securities
(both realized and
unrealized) ............... 0.50 (0.16) 0.61 (0.40)
------------ ------------ ----------- -----------
Total from investment
operations ................ 0.97 0.79 1.49 0.02
------------ ------------ ----------- -----------
Less Distributions
Dividends from net
investment income ........ (0.55) (0.93) (0.84) (0.25)
Distributions from
capital gains ............ (0.12) (0.22) -- --
------------ ------------ ----------- -----------
Total distributions ......... (0.67) (1.15) (0.84) (0.25)
------------ ------------ ----------- -----------
Net asset value,
end of period ................. $ 15.36 $ 15.06 $ 15.42 $ 14.77
============ ============ =========== ===========
Total return ..................... 6.54%(c) 5.23% 10.60% 0.17%(c)
Ratio/Supplemental Data
Net assets,
end of period ............. $137,974,258 $118,596,275 $99,249,839 $30,015,818
Ratio of expenses to
average net assets ........ 0.50%(a)(b) 0.50%(a) 0.50%(a) 0.50%(a)(b)
Ratio of net investment
income to average
net assets ................ 6.47%(b) 6.43% 6.47% 6.04%(b)
Fund turnover rate .......... 186%(c) 201% 304% 186%(c)
<FN>
(a) 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% annualized for the six months ended February 28, 1997
and .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.
* Commencement of operations.
</FN>
</TABLE>
See Accompanying Notes to Financial Statements.
60
<PAGE>
THE BEA FUNDS
OF THE RBB FUND, INC.
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
BEA STRATEGIC GLOBAL FIXED INCOME FUND
-----------------------------------------------------------------------------
FOR THE SIX
MONTHS ENDED FOR THE FOR THE FOR THE PERIOD
FEBRUARY 28, 1997 YEAR ENDED YEAR ENDED JUNE 28, 1994* TO
(UNAUDITED) AUGUST 31, 1996 AUGUST 31, 1995 AUGUST 31, 1994
----------------- --------------- --------------- -----------------
INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL
----------------- --------------- --------------- -----------------
<S> <C> <C> <C> <C>
Net asset value,
beginning of period ........... $ 15.75 $ 15.67 $ 15.00 $ 15.00
----------- ----------- ----------- ----------
Income from investment
operations
Net investment
income (loss) ............. 0.42 0.87 1.06 0.15
Net gain (loss) on securities
(both realized and
unrealized) ............... 0.09 0.58 0.49 (0.15)
----------- ----------- ----------- ----------
Total from investment
operations ................ 0.51 1.45 1.55 --
----------- ----------- ----------- ----------
Less Distributions
Dividends from net
investment income ........ (0.38) (1.22) (0.88) --
Distributions from
capital gains ............ (0.32) (0.15) -- --
----------- ----------- ----------- ----------
Total distributions ......... (0.70) (1.37) (0.88) --
----------- ----------- ----------- ----------
Net asset value,
end of period ................. $ 15.56 $ 15.75 $ 15.67 $ 15.00
=========== =========== =========== ==========
Total return ..................... 3.21%(c) 9.65% 10.72% 0.00%(c)
Ratio/Supplemental Data
Net assets,
end of period ............. $41,156,450 $38,347,500 $19,564,827 $6,300,360
Ratio of expenses to
average net assets ........ 0.75%(a)(b) 0.75%(a) 0.75%(a) 0.75%(a)(b)
Ratio of net investment
income to average
net assets ................ 5.27%(b) 7.37% 7.26% 5.64%(b)
Fund turnover rate .......... 48%(c) 87% 91% 0%(c)
<FN>
(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 Strategic Global Fixed Income Fund would
have been .99% annualized for the six months ended February 28, 1997 and
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.
</FN>
</TABLE>
See Accompanying Notes to Financial Statements.
61
<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 SIX FOR THE PERIOD
MONTHS ENDED FOR THE FOR THE FOR THE FOR THE PERIOD NOVEMBER 1, 1996*
FEBRUARY 28, YEAR ENDED YEAR ENDED YEAR ENDED OCTOBER 1, 1993* TO FEBRUARY 28,
1997 AUGUST 31, AUGUST 31, AUGUST 31, TO AUGUST 31, 1997
(UNUADITED) 1996 1995 1994 1993 (UNAUDITED)
------------- ------------- ------------- ------------- --------------- -----------------
INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL ADVISOR
------------- ------------- ------------- ------------- --------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period ........... $ 16.09 $ 15.72 $ 15.94 $ 16.94 $ 15.00 $ 16.21
----------- ----------- ------------ ------------ ----------- -------
Income from investment
operations
Net investment
income .................... 0.69 1.47 1.42 1.20 0.52 0.28
Net gain (loss) on securities
(both realized and
unrealized) ............... 0.66 0.40 (0.30) (0.77) 1.42 0.56
----------- ----------- ------------ ------------ ----------- -------
Total from investment
operations ................ 1.35 1.87 1.12 0.43 1.94 0.84
----------- ----------- ------------ ------------ ----------- -------
Less Distributions
Dividends from net
investment income ........ ( 0.74) (1.50) (1.34) (1.43) -- (0.36)
Distributions from
capital gains ............ -- -- -- -- -- --
----------- ----------- ------------ ------------ ----------- -------
Total distributions ......... (0.74) (1.50) (1.34) (1.43) -- (0.36)
----------- ----------- ------------ ------------ ----------- -------
Net asset value,
end of period ................. $ 16.70 $ 16.09 $ 15.72 $ 15.94 $ 16.94 $ 16.69
=========== =========== ============ ============ =========== =======
Total return ..................... 12.42%(c) 12.42% 7.79%(d) 2.24%(d) 12.93%(c)(d) 12.42%(c)
Ratio/Supplemental Data
Net assets,
end of period ............. $95,389,951 $75,848,558 $153,620,957 $143,517,472 $98,356,591 $83,831
Ratio of expenses to
average net assets ........ 0.70%(a)(b) 0.88%(a) 1.00%(a) 1.00%(a) 1.00%(a)(b) 0.95%(a)(b)
Ratio of net investment
income to average
net assets ................ 8.95%(b) 8.92% 9.37% 7.73% 7.56%(b) 9.25%(b)
Fund turnover rate .......... 38%(c) 143% 70% 121% 72%(c) 38%(c)
Average commission rate(e) .. $ .0625 N/A N/A N/A N/A N/A
<FN>
(a) Without the waiver of advisory fees and administration fees, the ratios of
expenses to average net assets for the BEA High Yield Institutional Class
would have been 1.11% annualized for the six months ended February 28, 1997
and 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. Without the waiver of advisory fees and administration fees, the
ratios of expenses to average net assets for BEA High Yield Advisor Class
would have been 1.36% annualized for the period November 1, 1996 to
February 28, 1997.
(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.
</FN>
</TABLE>
See Accompanying Notes to Financial Statements.
62
<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 SIX
MONTHS ENDED FOR THE FOR THE FOR THE PERIOD
FEBRUARY 28, 1997 YEAR ENDED YEAR ENDED JUNE 20, 1994* TO
(UNAUDITED) AUGUST 31, 1996 AUGUST 31, 1995 AUGUST 31, 1994
----------------- --------------- --------------- -----------------
INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL
----------------- --------------- --------------- -----------------
<S> <C> <C> <C> <C>
Net asset value,
beginning of period ............. $ 14.65 $ 15.46 $ 15.06 $ 15.00
----------- ----------- ----------- -----------
Income from investment
operations
Net investment
income ...................... 0.35 0.73 0.71 0.09
Net gain (loss) on securities
(both realized and
unrealized) ................. 0.42 (0.37) 0.50 (0.03)
----------- ----------- ----------- -----------
Total from investment
operations .................. 0.77 0.36 1.21 0.06
----------- ----------- ----------- -----------
Less Distributions
Dividends from net
investment income .......... (0.36) (0.74) (0.76) --
Distributions from
capital gains .............. (0.46) (0.43) (0.05) --
----------- ----------- ----------- -----------
Total distributions ........... (0.82) (1.17) (0.81) --
----------- ----------- ----------- -----------
Net asset value,
end of period ................... $ 14.60 $ 14.65 $ 15.46 $ 15.06
=========== =========== =========== ===========
Total return ....................... 5.37%(c) 2.27% 8.42% 0.40%(c)
Ratio/Supplemental Data
Net assets,
end of period ............... $19,454,514 $19,581,254 $48,977,837 $42,309,936
Ratio of expenses to
average net assets .......... 1.00%(a)(b) 1.00%(a) 1.00%(a) 1.00%(a)(b)
Ratio of net investment
income to average
net assets .................. 4.86%(b) 4.62% 4.76% 3.27%(b)
Fund turnover rate ............ 23%(c) 34% 25% 9%(c)
<FN>
(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 1.38% annualized for the six months ended February 28, 1997
and 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.
</FN>
</TABLE>
See Accompanying Notes to Financial Statements.
63
<PAGE>
THE BEA FUNDS
OF THE RBB FUND, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
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 nineteen
investment Portfolios, eight of which are included in these financial
statements.
RBB has authorized capital of thirty billion shares of common stock of
which 13.48 billion are currently classified into seventy-seven classes. Each
class represents an interest in one of nineteen investment portfolios of RBB.
The classes have been grouped into sixteen separate "families," nine of which
have begun investment operations. The BEA Funds represent interests in eight
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, Fund
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 Fund or class are allocated based on relative net assets of each
Fund and class, respectively.
D) DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- Dividends from
net investment income and net realized capital gains will be declared and
paid at least annually. The character of distributions made during the year
for net investment income or net realized gains may differ from their
ultimate characterization for federal income tax purposes due to GAAP/tax
differences in the character of income and expense recognition. These
differences are primarily due to differing treatments for net operating
losses, mortgage-backed securities, passive foreign investment companies,
and forward foreign currency contracts.
E) FEDERAL INCOME TAXES -- No provision is made for Federal taxes
as it is the Fund's intention to have each Fund 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.
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.
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.
64
<PAGE>
THE BEA FUNDS
OF THE RBB FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 inerest rates, highly leveraged issuers may experience financial stress
which would adversely affect their ability to service their principal and
interest paymnet 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"), an
indirect, wholly-owned subsidiary of Credit Suisse Group, serves as investment
advisor for each of the eight 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:
FUND ANNUAL RATE
------------------------------------ ---------------------------------
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 Global Telecommunications Fund 1.00% of average daily net assets
BEA U.S. Core Fixed Income Fund 0.375% of average daily net assets
BEA Strategic 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
BEA may, at its discretion, voluntarily waive all or any portion of its
advisory fee for any of the Funds. For the six months ended February 28, 1997,
advisory fees and waivers for each of the eight investment Funds were as
follows:
GROSS NET
ADVISORY FEE WAIVER ADVISORY FEE
------------ ----------- ------------
BEA International Equity Fund $2,758,183 $ -- $2,758,183
BEA Emerging Markets Equity Fund 539,110 -- 539,110
BEA U.S. Core Equity Fund 257,039 (18,428) 238,611
BEA Global Telecommunications Fund 991 (991) --
BEA U.S. Core Fixed Income Fund 239,641 (76,115) 163,526
BEA Strategic Global Fixed Income Fund 98,459 (15,547) 82,912
BEA High Yield Fund 297,460 (102,662) 194,798
BEA Municipal Bond Fund 66,949 (23,006) 43,943
Boston Financial Data Services, Inc. ("BFDS"), a 50% owned subsidiary of
State Street Bank and Trust Company, serves as each Fund's transfer and dividend
disbursing agent.
65
<PAGE>
THE BEA FUNDS
OF THE RBB FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (CONTINUED)
PFPC Inc. ("PFPC"), an indirect, wholly-owned subsidiary of PNC Bank Corp.,
serves as administrator for each of the eight 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. PFPC may, at its discretion, voluntarily waive
all or any portion of its administration fee for any of the Funds. For the six
months ended February 28, 1997, administration fees for each of the eight
investment Funds were as follows:
GROSS NET
ADMINISTRATION ADMINISTRATION
FEE WAIVER FEE
-------------- --------- --------------
BEA International Equity Fund $430,966 $(21,403) $409,563
BEA Emerging Markets Equity Fund 67,389 (12) 67,377
BEA U.S. Core Equity Fund 42,840 -- 42,840
BEA Global Telecommunications Fund 124 (124) --
BEA U.S. Core Fixed Income Fund 79,880 (11,864) 68,016
BEA Strategic Global Fixed Income Fund 24,615 (4,923) 19,692
BEA High Yield Fund 53,118 (10,624) 42,494
BEA Municipal Bond Fund 11,955 -- 11,955
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 six months ended February 28, 1997, purchases and sales of
investment securities (other than short-term investments) were as follows:
INVESTMENT SECURITIES U.S. GOVERNMENT OBLIGATIONS
------------------------- ---------------------------
PURCHASES SALES PURCHASES SALES
------------ ------------ ------------ -----------
BEA International
Equity Fund $340,513,216 $390,597,147 $ -- $ --
BEA Emerging Markets
Equity Fund 47,340,797 73,521,397 -- --
BEA U.S. Core Equity Fund 30,322,816 23,257,384 -- --
BEA Global
Telecommunications Fund 454,870 45,948 -- --
BEA U.S. Core Fixed
Income Fund 175,029,372 135,310,481 67,104,596 94,933,481
BEA Strategic Global
Fixed Income Fund 8,262,429 14,295,197 7,807,875 1,536,759
BEA High Yield Fund 47,244,172 29,706,261 -- --
BEA Municipal Bond Fund 3,973,651 3,022,475 547,600 1,414,546
For the six months ended February 28, 1997, purchases include $12,229,956
and $5,525 of investment securities received from shareholders in exchange for
784,474 shares and 268 shares sold by BEA U.S. Core Fixed Income Fund and BEA
U.S. Core Equity Fund, respectively. For the six months ended February 28, 1997,
sales include $11,242,512 of investment securities delivered to shareholders in
exchange for 624,237 shares redeemed by the BEA Emerging Markets Equity Fund.
This resulted in a gain of $29,738 for the BEA Emerging Markets Equity Fund.
66
<PAGE>
THE BEA FUNDS
OF THE RBB FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 4. CAPITAL SHARES
Transactions in capital shares for each period were as follows:
<TABLE>
<CAPTION>
BEA INTERNATIONAL EQUITY FUND
--------------------------------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED FOR THE PERIOD NOVEMBER 1, 1996*
FEBRUARY 28, 1997 FOR THE YEAR ENDED THROUGH FEBRUARY 28, 1997
(UNAUDITED) AUGUST 31, 1996 (UNAUDITED)
------------------------------ ----------------------------- --------------------------------
INSTITUTIONAL INSTITUTIONAL ADVISOR
------------------------------ ----------------------------- --------------------------------
SHARES VALUE SHARES VALUE SHARES VALUE
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 1,235,631 $ 24,807,931 8,492,355 $ 158,914,042 381 $7,650
Shares issued in reinvestment
of dividends 407,411 8,213,395 137,894 2,523,456 2 33
Shares repurchased, net of
redemption fees (2,724,928) (54,661,619) (15,886,499) (300,107,186) (129) (2,648)
----------- ------------ ----------- ------------- ------------ ------
Net increase (decrease) (1,081,886) $(21,640,293) (7,256,250) $(138,669,688) 254 $5,035
=========== ============ =========== ============= ============ ======
BEA Shares Authorized 500,000,000 500,000,000 100,000,000
=========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
BEA EMERGING MARKETS EQUITY FUND
--------------------------------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED FOR THE PERIOD NOVEMBER 1, 1996*
FEBRUARY 28, 1997 FOR THE YEAR ENDED THROUGH FEBRUARY 28, 1997
(UNAUDITED) AUGUST 31, 1996 (UNAUDITED)
------------------------------ ----------------------------- --------------------------------
INSTITUTIONAL INSTITUTIONAL ADVISOR
------------------------------ ----------------------------- --------------------------------
SHARES VALUE SHARES VALUE SHARES VALUE
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 169,732 $ 3,387,919 1,930,842 $ 33,432,364 405 $7,650
Shares issued in reinvestment
of dividends 11,536 216,755 19,043 323,156 -- 9
Shares repurchased, net of
redemption fees (1,626,453) (30,371,696) (2,909,721) (50,936,507) (139) (2,804)
----------- ------------ ----------- ------------ ------------ ------
Net increase (decrease) (1,445,185) $(26,767,022) (959,836) $(17,180,987) 266 $4,855
=========== ============ =========== ============ ============ ======
BEA Shares Authorized 500,000,000 500,000,000 100,000,000
=========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
BEA GLOBAL
BEA U.S. CORE EQUITY FUND TELECOMMUNICATIONS FUND
--------------------------------------------------------------- --------------------------------
FOR THE SIX MONTHS ENDED FOR THE PERIOD DECEMBER 4, 1996*
FEBRUARY 28, 1997 FOR THE YEAR ENDED THROUGH FEBRUARY 28, 1997
(UNAUDITED) AUGUST 31, 1996 (UNAUDITED)
------------------------------ ----------------------------- --------------------------------
INSTITUTIONAL INSTITUTIONAL ADVISOR
------------------------------ ----------------------------- --------------------------------
SHARES VALUE SHARES VALUE SHARES VALUE
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 373,653 $ 7,714,611 1,435,791 $27,128,776 30,987 $473,251
Shares issued in reinvestment
of dividends 247,726 4,994,154 188,415 3,346,258 -- --
Shares repurchased (126,985) (2,645,056) (298,285) (5,671,311) (613) (10,000)
----------- ----------- ----------- ----------- ------------ -------
Net increase 494,394 $10,063,707 1,325,921 $24,803,723 30,374 $463,251
=========== =========== =========== =========== ============ ========
BEA Shares Authorized 50,000,000 50,000,000 100,000,000
=========== =========== ===========
<FN>
*Commencement of operations.
</FN>
</TABLE>
67
<PAGE>
THE BEA FUNDS
OF THE RBB FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 4. CAPITAL SHARES (CONTINUED)
<TABLE>
<CAPTION>
BEA U.S. CORE FIXED INCOME FUND
-----------------------------------------------------------
FOR THE SIX MONTHS ENDED
FEBRUARY 28, 1997 FOR THE YEAR ENDED
(UNAUDITED) AUGUST 31, 1996
---------------------------- ----------------------------
INSTITUTIONAL INSTITUTIONAL
---------------------------- ----------------------------
SHARES VALUE SHARES VALUE
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Shares sold 1,265,216 $19,636,172 4,441,435 $ 68,996,273
Shares issued in reinvestment
of dividends 370,271 5,609,924 576,935 8,756,243
Shares repurchased (525,295) (8,053,779) (3,583,115) (54,416,107)
----------- ----------- ----------- ------------
Net increase 1,110,192 $17,192,317 1,435,255 $ 23,336,409
=========== =========== =========== ============
BEA Shares Authorized 50,000,000 50,000,000
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
BEA STRATEGIC GLOBAL FIXED INCOME FUND
-----------------------------------------------------------
FOR THE SIX MONTHS ENDED
FEBRUARY 28, 1997 FOR THE YEAR ENDED
(UNAUDITED) AUGUST 31, 1996
---------------------------- ----------------------------
INSTITUTIONAL INSTITUTIONAL
---------------------------- ----------------------------
SHARES VALUE SHARES VALUE
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Shares sold 191,445 $ 3,012,150 1,105,942 $17,551,485
Shares issued in reinvestment
of dividends 100,391 1,585,880 162,519 2,519,968
Shares repurchased (81,865) (1,324,969) (81,878) (1,280,614)
----------- ----------- ----------- -----------
Net increase 209,971 $ 3,273,061 1,186,583 $18,790,839
=========== =========== =========== ===========
BEA Shares Authorized 50,000,000 50,000,000
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
BEA HIGH YIELD FUND
--------------------------------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED FOR THE PERIOD NOVEMBER 1, 1996*
FEBRUARY 28, 1997 FOR THE YEAR ENDED THROUGH FEBRUARY 28, 1997
(UNAUDITED) AUGUST 31, 1996 (UNAUDITED)
---------------------------- --------------------------- --------------------------------
INSTITUTIONAL INSTITUTIONAL ADVISOR
---------------------------- --------------------------- --------------------------------
SHARES VALUE SHARES VALUE SHARES VALUE
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 1,327,528 $21,626,633 3,372,093 $ 54,558,056 5,176 $85,150
Shares issued in reinvestment
of dividends 225,111 3,614,273 629,920 9,902,559 4 58
Shares repurchased, net of
redemption fees (555,355) (9,137,577) (9,062,440) (142,330,474) (158) (2,569)
----------- ----------- ----------- ------------- ----------- -------
Net increase (decrease) 997,284 $16,103,329 (5,060,427) $ (77,869,859) 5,022 $82,639
=========== =========== =========== ============= =========== =======
BEA Shares Authorized 500,000,000 500,000,000 100,000,000
=========== =========== ===========
<FN>
*Commencement of operations.
</FN>
</TABLE>
68
<PAGE>
THE BEA FUNDS
OF THE RBB FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 4. CAPITAL SHARES (CONTINUED)
<TABLE>
<CAPTION>
BEA MUNICIPAL BOND FUND
-----------------------------------------------------------
FOR THE SIX MONTHS ENDED
FEBRUAARY 28, 1997 FOR THE YEAR ENDED
(UNAUDITED) AUGUST 31, 1996
---------------------------- ----------------------------
INSTITUTIONAL INSTITUTIONAL
---------------------------- ----------------------------
SHARES VALUE SHARES VALUE
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Shares sold 714 $ 10,523 315,445 $ 4,700,422
Shares issued in reinvestment
of dividends 71,258 1,042,698 109,160 1,656,622
Shares repurchased (76,336) (1,132,111) (2,256,456) (34,437,592)
----------- ---------- ----------- ------------
Net decrease (4,364) $ (78,890) (1,831,851) $(28,080,548)
=========== ========== =========== ============
BEA Shares Authorized 50,000,000 50,000,000
=========== ===========
</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 Fund's Board of Directors in
good faith, at fair value, after taking into consideration appropriate
indications of value available. The table below shows the number of shares held,
the acquisition date, value as of February 28, 1997, percentage of net assets
which the securities comprise, aggregate cost and unit value of the securities.
<TABLE>
<CAPTION>
Number of Acquisition 02/28/97 Percentage of Security Value Per
Shares Date Fair Value Net Assets 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 4,040,053 0.6% 6,000,000 6,733
---------- ----------
$5,630,278 $6,950,076
========== ==========
</TABLE>
NOTE 6. 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 Fund 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 six months ended February 28, 1997, the
BEA Strategic Global Fixed Income Fund entered into forward foreign currency
contracts.
69
<PAGE>
THE BEA FUNDS
OF THE RBB FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
(UNAUDITED)
NOTE 6. FORWARD FOREIGN CURRENCY CONTRACTS (CONTINUED)
The BEA Strategic Global Fixed Income Fund's open Forward Foreign Currency
Contracts at February 28, 1997 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>
Australian Dollars 03/17/97 $ 121,890 $ 96,933 $ 94,656 $ 2,277
Australian Dollars 03/17/97 1,250,000 988,650 970,715 17,935
German Deutschemarks 03/17/97 4,523,999 2,916,357 2,685,642 230,715
Great Britain Pound 03/17/97 893,213 1,447,005 1,454,722 (7,717)
Italian Lira 03/17/97 1,562,000,000 1,014,153 922,687 91,466
Japanese Yen 03/17/97 84,101,250 750,000 698,988 51,012
Netherlands Guilder 03/17/97 2,504,000 1,439,908 1,320,851 119,057
Swedish Krona 03/17/97 368,000 54,209 49,159 5,050
---------- ---------- --------
$8,707,215 $8,197,420 $509,795
========== ========== ========
</TABLE>
<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>
German Deutschemarks 03/17/97 $ 2,435,355 $ 1,500,000 $ 1,445,732 $ (54,268)
German Deutschemarks 03/17/97 815,100 500,000 483,879 (16,121)
German Deutschemarks 03/17/97 3,230,400 2,000,000 1,917,706 (82,294)
German Deutschemarks 03/17/97 1,636,080 1,000,000 971,248 (28,752)
German Deutschemarks 03/17/97 2,044,125 1,250,000 1,213,481 (36,519)
German Deutschemarks 03/17/97 1,224,608 750,000 726,980 (23,020)
German Deutschemarks 03/17/97 1,239,900 750,000 736,058 (13,942)
Italian Lira 03/17/97 579,250,000 376,083 342,168 (33,915)
Italian Lira 03/17/97 1,895,638,850 1,216,752 1,119,770 (96,982)
Italian Lira 03/17/97 868,333,360 537,192 512,932 (24,260)
Italian Lira 03/17/97 1,562,000,000 1,014,141 922,687 (91,454)
Japanese Yen 03/17/97 88,782,750 750,000 737,899 (12,101)
Japanese Yen 03/17/97 90,277,500 750,000 750,322 322
Japanese Yen 03/17/97 118,250,000 1,000,000 982,809 (17,191)
Japanese Yen 03/17/97 147,337,500 1,250,000 1,224,564 (25,436)
Swedish Krona 03/17/97 3,469,284 480,311 463,443 (16,868)
----------- ----------- ---------
$15,124,479 $14,551,678 $(572,801)
=========== =========== =========
</TABLE>
70
<PAGE>
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71
<PAGE>
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72
