BEA
[GRAPHIC OMITTED]
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
ANNUAL REPORT - AUGUST 31, 1997
<PAGE>
BEA INTERNATIONAL EQUITY FUND
PORTFOLIO MANAGER'S LETTER
September 18, 1997
Dear Shareholders:
We are pleased to report on the results of the BEA International Equity Fund
(the "Fund") for the year ended August 31, 1997 and discuss our investment
strategy.
PERFORMANCE REVIEW
At August 31, 1997, the net asset value ("NAV") of the Fund's Institutional
Class was $22.22, compared to an NAV of $19.41 on August 31, 1996. As a result,
the Institutional Class' total return (assuming reinvestment of dividends) was
15.93%. By comparison, the MSCI EAFE Index (the "Index") gained 9.36% during the
same period. For the six months ended August 31, 1997, the Institutional Class
gained 7.09%, versus 6.76% for the Index.
The NAV of the Fund's Advisor Class was $22.17 on August 31, 1997, compared to
an NAV of $19.67 on November 1, 1996 (commencement of operations). As a result,
the Advisor Class' total return (assuming reinvestment of dividends) for the
period was 14.14%, compared to 7.25% for the Index. For the six months ended
August 31, 1997, the Advisor Class gained 6.95% versus 6.76% for the Index.
Japan has had a decidedly negative impact on the results of broad international
equity portfolios thus far in 1997, due both to a slump in Japanese stocks and
weakness in the yen. EAFE's 4.8% return, for instance, would rise to 8.8% if
Japan's performance is excluded. Results have been much better in European
markets, which have positively responded to the fiscal and monetary implications
of the impending European Monetary Union.
Aggregate performance of emerging market equities has reflected the contrast in
fundamentals between Latin America and Asia. Latin markets have dominated their
Asian counterparts, as exhibited by the 34.4% return by the Latin markets and a
drop of 18.6% for Asian markets through August.
Asia has been hurt by two factors: a slowdown in export growth and deteriorating
economic conditions in Thailand, Malaysia and the Philippines. Particularly
negative conditions in the latter three nations and Indonesia, in turn, have
resulted in considerable turmoil among the region's currency markets. With the
problems in Asia dragging stock prices down, emerging equities have
underperformed relative to those of developed markets in recent months and have
posted fairly similar returns for the year to date.
PORTFOLIO REVIEW
We attribute the Fund's outperformance of the EAFE benchmark over the last 12
months to favorable selection of regions, countries and stocks. Our regional
weightings were particularly successful in Japan (the Fund's allocation was less
than half that of EAFE), Latin America (which is not included in EAFE) and
Europe. The most effective country weightings were those of Brazil, Mexico,
Sweden, Spain and France. Stock selection played a notably positive role in Hong
Kong, Indonesia, Sweden and Italy.
The inclusion of exposure to emerging markets (e.g., in Latin America and
Southeast Asia) is an integral element in our approach to international
investing. Although EAFE does not contain any emerging nations, we have chosen
to do so for several reasons. Over a long-term investment horizon, for example,
emerging market equities offer the potential for much greater appreciation than
that of the developed markets. In addition, the low correlation of their returns
with those of developed markets means that they generally help to reduce overall
portfolio risk. The Fund's performance suggests that we are on the right track
in this regard.
1
<PAGE>
BEA INTERNATIONAL EQUITY FUND
PORTFOLIO MANAGER'S LETTER (CONTINUED)
OUTLOOK
Global equity markets continue to operate in a favorable environment of moderate
growth and subdued inflation:
(BULLET) The U.S. economy is running on all cylinders yet not overheating. The
Federal Reserve, furthermore, has chosen not to raise interest rates since
its nominal 25 basis-point hike in March.
(BULLET) The sluggishness of the Japanese economy suggests that interest rates
there will remain stable.
(BULLET) The same applies to Europe, where unemployment in Germany and France
has reached heights not seen in decades.
(BULLET) Among emerging markets, most Latin nations are strongly focused on
achieving fiscal balance and maintaining stable monetary policies. Asian
economies generally still feel the effects of the export slowdown. Much of
Eastern Europe (e.g., Poland, Russia, Bulgaria, Hungary) is in the process
of transitioning to a market-based economy.
What does this mean for our investment strategy?
EUROPE. Despite our expectations that European markets generally will outperform
EAFE, we have opted to realize some of the profits recently generated by our
European holdings. This is due to two factors. First, valuations generally are
at less compelling levels than previously. Second, a higher risk premium for
European equities appears warranted in view of increased uncertainty about the
European Monetary Union. We remain quite positive from a longer-term
perspective, but simply consider it prudent to scale back positions a bit in
light of these circumstances.
JAPAN. We continue to expect Japan's equity market to underperform EAFE over the
next 6-12 months, in view of unappealing valuations and generally poor prospects
for corporate earnings growth. That said, we have modestly increased the Fund's
Japanese exposure to enlarge our holdings of export-oriented companies, which
are reaping the benefits of strong foreign demand and the steady yen.
EMERGING MARKETS. Latin American equities' strong year-to-date outperformance of
Asian stocks is not an accident. While Asia's economic slowdown persists, Latin
markets continue to present the world's most attractive combination of growth
and value. Asia could be turning into a three-tiered market, in which
middle-tier economies like those of Malaysia, Thailand and the Philippines are
squeezed on one side by the region's high-tech powerhouses (Japan, Korea,
Taiwan) and on the other by the low-wage labor forces of the region's developing
giants (China, India).
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 Equity Management Team
William P. Sterling, Executive Director
Richard W. 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 INSTITUTIONAL CLASS AND THE MSCI EAFE INDEX FROM INCEPTION 10/1/92 AND AT
EACH QUARTER END.
[GRAPHIC OMITTED]
PLOT POINTS FOLLOW:
BEA International Morgan Stanley
Equity Institutional Capital International
Class EAFE Index
10/01/1992 10,000 10,000
11/30/1992 9,685 9,571
02/28/1993 9,906 9,918
05/31/1993 11,218 12,062
08/31/1993 12,159 12,962
11/30/1993 12,120 11,928
02/28/1994 13,783 13,841
05/31/1994 12,999 13,735
08/31/1994 13,891 14,405
11/30/1994 13,080 13,732
02/28/1995 11,435 13,258
05/31/1995 12,500 14,451
08/31/1995 12,773 14,517
11/30/1995 12,387 14,815
02/29/1996 13,352 15,539
05/31/1996 13,901 16,041
08/31/1996 13,498 15,706
11/30/1996 14,166 16,606
02/28/1997 14,614 16,090
05/31/1997 15,361 17,303
08/31/1997 15,650 17,179
- ------------------------
AVERAGE ANNUAL
TOTAL RETURN
One Year 15.93%
From Inception 10.36%
- ------------------------
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE BEA INTERNATIONAL
EQUITY ADVISOR CLASS AND THE MSCI EAFE INDEX FROM INCEPTION 11/1/96 AND AT EACH
QUARTER END.
[GRAPHIC OMITTED]
PLOT POINTS FOLLOW:
BEA International Morgan Stanley
Equity Advisor Capital International
Class EAFE Index
11/01/1996 10,000 10,000
02/28/1997 10,716 10,046
05/31/1997 11,254 10,803
08/31/1997 11,461 10,726
- ------------------------
TOTAL RETURN
From Inception 14.14%
- ------------------------
Note: Past performance is not predictive of future performance.
3
<PAGE>
BEA INTERNATIONAL EQUITY FUND
OF THE RBB FUND, INC.
STATEMENT OF NET ASSETS
AUGUST 31, 1997
NUMBER
OF SHARES VALUE
--------- ----------
COMMON STOCKS,
WARRANTS AND RIGHTS -- 93.2%
ARGENTINA -- 0.3%
Sodigas del Sur S.A.(DAGGER) .......... 403,923 $ 745,416
Sodigas Pampeana S.A.(DAGGER) ......... 558,962 844,809
----------
1,590,225
----------
BRAZIL -- 3.2%
Companhia de Saneamento ............... 21,846,000 5,703,394
Companhia Energetica de
Minas Gerais PN ..................... 4,665,740 207,247
Companhia Paranaense de
Energia-Copel ADR ................... 174,000 2,501,250
Companhia Paranaense de
Energia-Copel ....................... 4,091,000 61,834
Petroleo Brasileiro S.A. PN ........... 8,727,380 2,126,582
Petroleo Brasiliero S.A. ADR .......... 108,000 2,709,936
Telecomunicacoes Brasileiras
S.A. ADR ............................ 43,159 5,092,762
----------
18,403,005
------------
CANADA -- 2.0%
Canadian Imperial Bank Of
Commerce ............................ 141,150 3,655,076
INCO, Ltd. ............................ 127,176 3,441,700
Royal Bank of Canada .................. 92,525 4,342,004
----------
11,438,780
----------
CHILE -- 2.0%
Chilectra S.A. ADR .................... 106,100 3,271,275
Chilgener S.A. ADR .................... 185,712 5,060,652
Compania de
Telecomunicaciones de Chile
S.A. ADR ........................... 98,500 2,961,156
----------
11,293,083
----------
DENMARK -- 0.6%
SAS Danmark A/S ....................... 212,818 3,281,839
----------
FINLAND -- 1.7%
Nokia Corp. ADR ....................... 10,140 785,850
Nokia Corp. Cl. A ..................... 86,336 6,666,995
Pohjola Insurance Company
Ltd., Cl. B ......................... 74,020 2,177,499
----------
9,630,344
----------
FRANCE -- 9.2%
Accor ................................. 28,961 4,338,477
Alcatel Alsthom S.A. .................. 48,428 5,931,326
AXA S.A. .............................. 46,153 2,940,311
Carrefour Super Marche ................ 4,444 2,678,281
Christian Dior S.A. ................... 6,550 921,913
Compagnie Francaise d'Etudes
et de Construction Technip .......... 35,607 4,302,429
Compagnie Generale des Eaux ........... 596 66,521
Credit Commercial de France ........... 56,965 2,819,836
Elf Aquitaine S.A. .................... 26,820 2,980,196
Renault S.A. .......................... 155,409 3,939,846
NUMBER
OF SHARES VALUE
--------- ----------
FRANCE -- (CONTINUED)
Rhone Poulenc Ltd., ADR ............... 17,760 $ 672,660
Rhone Poulenc Ltd., Cl. A ............. 169,704 6,224,287
SGS-Thomson Microelectronics
N.V ................................. 54,117 5,026,116
Suez Lyonnaise des Eaux ............... 39,708 3,993,940
Total S.A. Cl. B ...................... 25,205 2,360,920
Usinor Sacilor ........................ 187,816 3,255,692
-----------
52,452,751
-----------
GERMANY -- 8.5%
Commerzbank AG ........................ 143,534 5,002,653
Daimler-Benz AG ....................... 33,430 2,463,673
Degussa AG ............................ 67,600 3,296,282
GEA AG Pfd. ........................... 10,826 3,503,288
Henkel KGaA ........................... 65,844 3,327,408
Kloeckner-Werke AG .................... 23,687 1,470,019
Mannesmann AG ......................... 10,337 4,759,820
RWE AG ................................ 59,240 2,658,857
Schering AG ........................... 21,745 2,126,665
Siemens AG ............................ 119,011 7,286,926
Systeme, Anwendungen,
Produkte in der
Datenverarbeitung AG Pfd. ........... 19,916 4,513,572
Volkswagen AG ......................... 11,006 7,897,584
-----------
48,306,747
-----------
HONG KONG -- 1.4%
Citic Pacific Ltd. .................... 984,900 5,248,902
Hong Kong and China Gas
Company Ltd. ........................ 1,396,800 2,595,512
-----------
7,844,414
-----------
ISRAEL -- 1.1%
ECI Telecommunications
Limited ............................. 61,200 1,824,525
Geotek Communications, Inc.
Series M Cumulative
Convertible Pfd.(DAGGER) ............ 600 2,928,947
Teva Pharmaceutical Industries
Ltd. ADR ............................ 23,500 1,230,812
-----------
5,984,284
-----------
ITALY -- 4.5%
Aeroporti di Roma S.p.A. .............. 187,500 1,540,863
Assicurazioni Generali ................ 291,319 6,137,721
Istituto Mobiliare Italiano
S.p.A. .............................. 390,700 3,627,857
Telecom Italia Mobile S.p.A. .......... 807,784 2,790,747
Telecom Italia Mobile S.p.A.
Non-Convertible Savings
Shares .............................. 1,909,450 3,190,257
Telecom Italia S.p.A. ................. 908,255 5,390,940
Telecom Italia Savings Share
S.p.A. .............................. 872,600 3,078,922
-----------
25,757,307
-----------
See Accompanying Notes to Financial Statements.
4
<PAGE>
BEA INTERNATIONAL EQUITY FUND (CONTINUED)
NUMBER
OF SHARES VALUE
--------- ----------
JAPAN -- 17.8%
Acom Company, Ltd. .................... 36,100 $ 1,700,687
Advantest Corp. ....................... 22,400 2,040,073
Aoyama Trading Company ................ 69,600 1,867,064
Asahi Glass Company,
Limited ............................. 147,000 1,116,071
Bank of Tokyo - Mitsubishi,
Ltd ................................. 217,000 3,934,675
Bridgestone Corp. ..................... 177,000 3,912,817
Canon, Inc. ........................... 115,000 3,170,641
Daiichi Pharmaceutical ................ 116,000 1,968,869
East Japan Railway Company ............ 399 1,816,940
Fuji Bank , Ltd. ...................... 137,000 1,667,412
Fuji Photo Film Company, Ltd. ......... 97,000 3,726,445
Fujitsu Ltd. .......................... 240,000 2,861,401
Honda Motor Company, Ltd. ............. 89,000 2,741,182
Industrial Bank of Japan Ltd. ......... 125,000 1,718,000
Ito Yokado Company, Ltd. .............. 21,000 1,130,154
Konami Co., Ltd. ...................... 45,500 1,408,925
Minebea Company ....................... 313,000 3,109,786
Mitsubishi Estate ..................... 167,000 2,336,728
Mitsubishi Heavy Industries ........... 205,000 1,356,143
Mitsubishi Steel Manufacturing
Co., Ltd.** ......................... 500 998
Mitsubishi Trust and Banking
Corp. ............................... 183,000 2,560,606
Namco Ltd. ............................ 59,900 2,018,488
NEC Corp. ............................. 247,000 2,760,805
Nintendo Co., Ltd. .................... 19,900 1,637,738
Nippon Communication
Systems Corp. ....................... 168,000 2,378,539
Nippon Paper Industries
Company ............................. 217,000 1,254,065
Nippon Steel Corporation .............. 464,000 1,175,559
Nippon Telegraph &
Telephone ........................... 555 5,192,499
Nippon Television Network
Corp. ............................... 8,540 2,990,909
Nomura Securities Company,
Ltd. ................................ 87,000 1,152,509
Ono Pharmaceutical Co., Ltd. .......... 63,000 1,956,036
Promise Co., Ltd ...................... 43,100 2,169,631
Rohm Co., Ltd. ........................ 17,000 1,759,397
SECOM Co., Ltd. ....................... 29,000 2,057,708
Shin-Etsu Chemical Co. ................ 44,000 1,122,040
Sony Corp. ............................ 48,900 4,251,118
Sumitomo Bank, Limited ................ 135,000 1,989,568
Sumitomo Trust & Banking .............. 263,000 2,547,690
Takuma Co., Ltd. ...................... 213,000 2,574,764
TDK Corp. ............................. 32,000 2,453,386
Terumo Corp. .......................... 124,000 2,258,652
Tokyo Electric Power .................. 113,600 2,163,272
Toyota Motor Corp. .................... 196,000 5,111,773
Yamanouchi Pharmaceutical
Co., Ltd. ........................... 83,000 1,979,136
------------
101,100,899
------------
NUMBER
OF SHARES VALUE
--------- ----------
MEXICO -- 4.6%
Cementos Mexicanos S.A.
de C.V .............................. 904,280 $ 4,349,335
Cementos Mexicanos S.A. de
C.V. , Cl. B ........................ 570,230 3,143,833
Fomento Economico Mexicano
S.A. Cl. B .......................... 961,060 6,626,304
Kimberly Clark de Mexico S.A. ......
de C.V. , Cl. A ..................... 1,516,110 6,749,041
Telefonos de Mexico
S.A. ADR ............................ 115,222 5,285,809
Telefonos de Mexico S.A. ..............
Unsponsored ADR ..................... 4,400 10,038
-----------
26,164,360
-----------
NETHERLANDS -- 5.3%
Ahrend Group .......................... 71,636 2,343,810
Asm Lithography ....................... 54,426 4,514,747
Internationale Nederlanden
Groep ............................... 115,130 5,013,041
Philips Electronics N.V ............... 169,365 12,057,631
Philips Electronics N.V. ADR .......... 15,390 1,102,309
Vendex International N.V .............. 16,686 835,737
VNU Verenigd Bezit .................... 215,590 4,497,425
----------
30,364,700
----------
NORWAY -- 0.2%
SAS Norske ASA Cl. B .................. 71,100 1,018,734
----------
PORTUGAL -- 1.1%
Cimentos de Portugal S.A. ............. 129,520 3,113,121
Portugal Telecom S.A. .................
Registered .......................... 82,042 3,047,556
----------
6,160,677
----------
SOUTH AFRICA -- 0.0%
South African Breweries
Limited ............................. 311 9,330
---------
SOUTH KOREA -- 1.4%
Korea Electric Power
Corporation ADR ..................... 109,627 1,788,290
Korea Fund, Inc. ...................... 335,250 4,169,672
Pohang Iron & Steel Company,
Ltd. ADR ............................ 71,588 1,852,340
---------
7,810,302
---------
SPAIN -- 2.1%
Banco de Santander .................. 201,121 5,596,410
Sol Melia S.A. ...................... 53,873 2,032,943
Telefonica de Espana ADR ............ 57,100 4,439,525
----------
12,068,878
----------
SWEDEN -- 4.4%
AB Electrolux ....................... 56,793 4,038,716
ABB AB Cl. A ........................ 44,410 645,724
Ericsson Telephone Company
ADR Cl. B ......................... 76,560 3,191,595
See Accompanying Notes to Financial Statements.
5
<PAGE>
BEA INTERNATIONAL EQUITY FUND (CONCLUDED)
NUMBER
OF SHARES VALUE
--------- ----------
SWEDEN -- (CONTINUED)
Hennes & Mauritz Cl. B ................ 149,545 $ 5,640,126
S.K.F. AB Cl. B ...................... 167,800 4,538,706
Skandia Forsakrings AB ............... 100,326 3,885,741
Sparbanken Sverige AB ................. 140,361 3,047,916
-----------
24,988,524
-----------
SWITZERLAND -- 6.4%
Abb AG Baden Bearer ................... 2,098 3,090,973
Adecco S.A. ........................... 8,031 2,735,450
Kuoni Reisen AG ....................... 1,039 4,275,361
Novartis AG Registered Shares ......... 7,056 9,992,642
Roche Holding AG ...................... 797 6,719,751
Schweizerischer Bankverein ............ 11,428 2,752,394
Swiss Reinsurance Group
Registered Shares ................... 2,030 2,694,847
Swissair AG ........................... 3,710 4,394,175
-----------
36,655,593
-----------
UNITED KINGDOM -- 14.3%
Avis Europe plc ........................... 1,490,600 3,431,305
BG plc .................................... 1,311,058 5,738,462
Boots Company plc ......................... 479,751 6,210,129
British Petroleum plc ..................... 507,058 7,089,679
Compass Group plc ......................... 606,800 6,054,572
Imperial Chemical Industries
plc ..................................... 295,582 4,784,492
J Sainsbury plc .......................... 358,614 2,508,522
JJB Sports plc ............................ 243,589 1,773,021
Lloyds TSB Group plc ...................... 545,503 6,393,597
LucasVarity plc ........................... 1,464,795 4,677,921
Mercury Asset Management
Group plc ............................... 164,735 3,565,143
National Westminster Bank plc ............. 238,971 3,050,743
Railtrack Group plc ....................... 509,423 6,379,514
Standard Chartered Bank plc ............... 368,295 4,934,570
Tesco plc ................................. 364,534 2,416,969
Unilever plc .............................. 174,033 4,820,104
Vodafone Group plc ........................ 405,760 2,085,155
WPP Group plc ............................. 1,246,213 5,585,952
-----------
81,499,850
-----------
VENEZUELA -- 1.1%
Compania Anonima National
Telefonos de Venezuela
ADR ..................................... 154,807 6,385,789
-----------
TOTAL COMMON STOCKS,
WARRANTS AND RIGHTS
(Cost $476,603,116) ..................... 530,210,415
-----------
PAR
(000)
----------
FOREIGN BONDS -- 0.0%
Daimler-Benz AG Subordinated
Convertible Notes
5.750% 06/14/02 ......................... $ 55 $ 44,038
-----------
TOTAL FOREIGN BONDS
(Cost $41,565) .......................... 44,038
-----------
PAR
(000) VALUE
---------- -----------
SHORT-TERM INVESTMENT -- 5.6%
BBH Grand Cayman U.S.
Dollar Time Deposit
5.063% 09/02/97 ......................... $31,722 31,722,000
-----------
TOTAL SHORT-TERM
INVESTMENT
(Cost $31,722,000) ................... 31,722,000
-----------
TOTAL INVESTMENTS -- 98.8%
(Cost $508,366,681) ..................... 561,976,453
------------
OTHER ASSETS IN EXCESS
OF LIABILITIES-- 1.2% ................... 6,681,321
-----------
NET ASSETS (Applicable to
25,586,459 BEA Institutional
Shares and 6,647 BEA
Advisor Shares)-- 100.0% ................ $568,657,774
============
NET ASSET VALUE,
OFFERING PRICE AND
REDEMPTION PRICE PER
BEA INSTITUTIONAL
SHARE
($568,510,409 (DIVIDE) 25,586,459) ...... $22.22
============
NET ASSET VALUE,
OFFERING PRICE AND
REDEMPTION PRICE PER
BEA ADVISOR SHARE
($147,365 (DIVIDE) 6,647) ............... $22.17
============
* Cost for Federal income tax purposes at August 31, 1997 is $508,550,499. The
gross appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation ..................................... $ 73,495,839
Gross Depreciation ..................................... (20,069,885)
------------
Net Appreciation ....................................... $ 53,425,954
============
**Non-income producing securities.
(DAGGER) Not readily marketable securities.
INVESTMENT ABBREVIATIONS
ADR ............................................... American Depository Receipts
AT AUGUST 31, 1997, NET ASSETS CONSISTED OF:
AMOUNT
-------------
Capital Paid-In ............................................... $452,504,536
Accumulated Net Investment Loss ............................... (4,180,509)
Accumulated Net Realized Gain on
Security and Foreign Exchange
Transactions ............................................... 66,845,755
Net Unrealized Appreciation on
Investments and Other ...................................... 53,487,992
- --------------------------------------------------------------------------------
NET ASSETS .................................................... $568,657,774
- --------------------------------------------------------------------------------
See Accompanying Notes to Financial Statements.
6
<PAGE>
BEA EMERGING MARKETS EQUITY FUND
PORTFOLIO MANAGER'S LETTER
September 18, 1997
Dear Shareholders:
We are writing to report on the results of the BEA Emerging Markets Equity Fund
(the "Fund") for the year ended August 31, 1997 and discuss our investment
strategy.
PERFORMANCE REVIEW
At August 31, 1997, the net asset value ("NAV") of the Fund's Institutional
Class was $19.64, compared to an NAV of $18.20 on August 31, 1996. As a result,
the Institutional Class' total return (assuming reinvestment of dividends) was
8.31%. By comparison, the MSCI Emerging Markets Free Index (the "Index") gained
4.59% during the same period. For the six months ended August 31, 1997, the
Institutional Class declined 4.71%, versus a decline of 6.36% for the Index.
The NAV of the Fund's Advisor Class was $19.60 on August 31, 1997, compared to
an NAV of $18.08 on November 1, 1996 (commencement of operations). As a result,
the Advisor Class' total return (assuming reinvestment of dividends) for the
period was 8.76%, compared to 5.89% for the Index. For the six months ended
August 31, 1997, the Advisor Class declined 4.85% versus a decline of 6.36% for
the Index.
Thus far in 1997, aggregate performance of emerging market equities has
reflected the contrast in fundamentals between Latin America and Asia. Latin
markets have dominated their Asian counterparts, as exhibited by the 34.4%
return by the Latin markets and a drop in the Asian markets of 18.6% through
August.
Asia has been hurt by two factors: a slowdown in export growth and deteriorating
economic conditions in Thailand, Malaysia and the Philippines. Particularly
negative conditions in the latter three nations and Indonesia, in turn, have
resulted in considerable turmoil among the region's currency markets. With the
problems in Asia dragging stock prices down, emerging equities have
underperformed relative to those of developed markets in recent months and have
posted fairly similar returns for the year to date.
PORTFOLIO REVIEW
The Fund's outperformance of the Index over the last year is attributable to
regional and country weightings. This was most evident in our Asian holdings,
which contributed most positively to overall results. Asia's portfolio weighting
was nearly half that of the Index. Within Asia, furthermore, we were
significantly underweighted in the poor-performing markets of Malaysia, the
Philippines and Thailand. Returns also benefited from our inclusion of Hong
Kong, which is not a part of the Index.
In the Latin American portion of the portfolio, effective country weightings
were overshadowed by unfavorable stock selection. Exposure to Argentina and
Venezuela was lower than that in the Index while, simultaneously, stock
selection in those markets was much worse. Our longstanding overweighting in
Brazil underperformed due to an ongoing "large-cap effect" among Latin equities
generally, in which performance is disproportionately influenced by the most
liquid stocks.
Stock selection was notably successful in two countries. First was Hong Kong,
whose market has done well both from optimism about the return to Chinese
control and its perception as the "safe haven" among Asian markets. The other
beneficiary of our stock selection was Russia, where the initial public
offerings of some of the nation's largest companies has been met with great
investor enthusiasm.
EMERGING MARKETS OUTLOOK
Overall, we remain optimistic concerning the appreciation potential of emerging
equity markets. Our view is based on several factors, including:
(BULLET) Improving economic conditions (e.g., in Mexico, India, South Africa);
(BULLET) Recent resurgence of the privatization process (notably in Brazil);
(BULLET) Resolution of political uncertainty in several countries (e.g., in Hong
Kong, Mexico, Turkey, India);
(BULLET) Positive fundamentals and valuations for many companies; and
(BULLET) Increased investor appetite for higher-risk assets.
Among emerging regions, we are most favorably disposed toward Latin America,
which continues to offer the most compelling blend of growth and value. Asian
markets are least appealing, although some currently provide attractive
opportunities.
7
<PAGE>
BEA EMERGING MARKETS EQUITY FUND
PORTFOLIO MANAGER'S LETTER (CONTINUED)
Here are our specific thoughts on selected emerging nations and their equity
markets:
BRAZIL. Our confidence (and overweighting) in Brazilian equities has paid off,
as several of our holdings have recorded substantial gains. Accordingly, we have
taken some profits in order to modestly reduce exposure and enhance our
capabilities in other markets. We now expect somewhat lower returns for the rest
of 1997, but do so strictly based on the rapid upward movement of valuation
levels rather than any deterioration in the investment climate.
HONG KONG. Speculation, particularly in "red-chip" companies whose business
focuses on China, has occurred in anticipation of the handover from British to
Chinese sovereignty. As noted earlier, the market also has benefited from
investors' perception of Hong Kong as somewhat of a safe haven among Asian
equity markets. Now that the handover to China finally has taken place, we
expect a return to activity based on fundamentals. Our decision to do some
selling into strength does not change our bullish long-term outlook.
INDIA. The Indian government lately has made tremendous strides toward the
opening of the economy to foreign investment. Combined with historically cheap
valuations and the government's pro-business stance, this is greatly increasing
the attraction of Indian equities. We are expanding our position there.
MEXICO. We like the investment environment and are increasing the Fund's
exposure. In particular, we are encouraged that many companies are making
visibly greater efforts both to raise their profiles among investors and place
more emphasis on increasing shareholder value. With anticipation concerning
July's national elections no longer overhanging the market, furthermore, we
believe there is a solid foundation for gains during the second half of the
year. Our stock selection still focuses on infrastructure and consumer-oriented
companies. Both sectors have lagged the market in recent months and are poised
for much better performance.
RUSSIA. Significant volatility in Russian equities masks the economic progress
being made by the Yeltsin administration. Russia also is achieving foreign stock
listings of its major companies at a particularly rapid pace for a market that
barely has existed for a few years. We see extensive long-term potential here.
SOUTH AFRICA. Following a lengthy period of minimal exposure to this market, we
have begun to build a modest position. Two late-June developments are especially
positive in this regard. First, Gencor Limited, one of the country's biggest
mining companies, announced that it would split into two companies and list one
of them on the London Stock Exchange. Next, the government began to lift
restrictions in place since the early 1960s against any ownership of assets
overseas. Each has symbolic value as a step toward integrating South Africa into
the global economy.
SOUTH KOREA. Fluctuations in the relationship between the dollar and the yen
over the last few months have worked out quite well for the won. The
depreciation of the won has given a great boost to the shares of major
exporters, several of which the Fund owns. We are raising exposure.
THAILAND. Big problems both in the government and the important banking sector
have combined to create a much riskier investment environment than previously.
Our decision to completely liquidate our Thai positions and absorb the resulting
losses proved fortunate, as we were able to avoid taking much larger losses had
we waited further.
TURKEY. Turkish equities reached their highs for 1997 back in late January and
subsequently have been quite volatile. There is reason for optimism, though,
because of a change in government. We are hopeful that the new administration
can implement the badly needed structural reforms that would greatly improve the
macroeconomic outlook. Until its policies are more clearly defined, we likely
will use rallies to take some of the paper profits we have achieved.
Thank you for your support, and please feel free to call upon us at any time if
you have questions.
Sincerely yours,
BEA International Equity Management Team
William P. Sterling, Executive Director
Richard W. Watt, Managing Director
Stephen M. Swift, Portfolio Manager
Steven D. Bleiberg, Senior Vice President
8
<PAGE>
BEA EMERGING MARKETS EQUITY FUND
PORTFOLIO MANAGER'S LETTER (CONCLUDED)
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE BEA EMERGING MARKETS
EQUITY INSTITUTIONAL CLASS AND THE MSCI EMERGING MARKETS FREE INDEX FROM
INCEPTION 2/1/93 AND AT EACH QUARTER END.
[GRAPHIC OMITTED]
PLOT POINTS FOLLOW:
BEA Emerging MSCI Emerging
Markets Equity Markets Free
Institutional Class Index
02/01/1993 10,000 10,000
05/31/1993 10,815 10,923
08/31/1993 12,377 12,443
11/30/1993 14,653 14,648
02/28/1994 17,078 17,058
05/31/1994 14,839 15,724
08/31/1994 16,832 18,257
11/30/1994 15,879 17,189
02/28/1995 11,460 13,765
05/31/1995 12,677 15,243
08/31/1995 12,720 15,263
11/30/1995 11,835 14,349
02/29/1996 12,992 15,795
05/31/1996 13,881 16,481
08/31/1996 13,144 15,846
11/30/1996 13,295 15,817
02/28/1997 14,938 17,699
05/31/1997 14,605 17,759
08/31/1997 14,235 16,573
- -----------------------
AVERAGE ANNUAL
TOTAL RETURN
One Year 8.31%
From Inception 7.77%
- -----------------------
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE BEA EMERGING MARKETS
EQUITY ADVISOR CLASS AND THE MSCI EMERGING MARKETS FREE INDEX FROM INCEPTION
11/1/96 AND AT EACH QUARTER END.
[GRAPHIC OMITTED]
PLOT POINTS FOLLOW:
BEA Emerging MSCI Emerging
Markets Equity Markets Free
Advisor Class Index
11/30/1996 10,000 10,000
02/28/1997 11,451 11,309
05/31/1997 11,190 11,347
08/31/1997 10,896 10,589
- -----------------------
TOTAL RETURN
From Inception 8.76%
- -----------------------
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
AUGUST 31, 1997
NUMBER
OF SHARES VALUE
--------- ----------
COMMON STOCKS,
WARRANTS AND RIGHTS -- 91.4%
ARGENTINA -- 0.6%
Banco Frances del Rio de la
Plata S.A. ADR ..................... 14,000 $ 458,500
-----------
BRAZIL -- 15.2%
Companhia Energetica de
Minas Gerais PN ..................... 15,111,125 671,221
Companhia Paranaense de
Energia ............................. 34,831,200 526,464
Companhia Paranaense de
Energia ADR ......................... 18,700 268,812
Companhia Paulista de Forca e
Luz ON .............................. 11,699,420 2,014,832
Companhia Saneamento .................. 6,450,000 1,683,919
Companhia Tecidos Norte de
Minas Gerais PN ..................... 1,535,582 548,598
Companhia Vale do Rio Doce
PN Cl. B ............................ 39,000 --
Companhia Vale Rio Doce PN ............ 69,000 1,605,460
Encorpar PN ........................... 1,742,582 --
Globex Utilidades S.A. PN ............. 38,100 453,717
Multibras Eletrodo S.A. PN ............ 25,100 19,544
Pao de Acucar ADR ..................... 4,680 95,940
Petroleo Brasileiro S.A. PN ........... 5,366,600 1,307,668
Santista Alimentos S.A. ............... 486,841 1,048,025
Telecomunicacoes Brasileiras
S.A. ................................ 2,100,000 225,072
Telecomunicacoes Brasileiras
S.A. ADR ............................ 5,889 694,902
Telecomunicacoes de Minas
Gerais PN Cl. B ..................... 67,898 10,574
Telecomunicacoes de Sao Paulo
S.A. PN ............................. 1,537,389 457,703
Telecomunicacoes do Rio de
Janeiro S.A. PN ..................... 354,195 47,695
Uniao de Bancos Brasileriros
S.A. GDR ............................ 26,010 910,350
Usinas Siderurgica de Minas
Gerais S.A. PN ...................... 728 7,402
-----------
12,597,898
-----------
CHILE -- 4.0%
Chilectra S.A. ADR**** ................ 32,142 991,002
Chilgener S.A. ADR .................... 31,219 850,718
Compania de
Telecomunicaciones de Chile
S.A. ADR ............................ 11,116 334,175
Empresa Nacional de
Electricidad S.A. ADR .............. 24,700 549,575
Enersis S.A. ADR ...................... 16,000 569,000
-----------
3,294,470
-----------
CHINA -- 0.4%
Huaneng Power International
ADR ................................. 12,800 302,400
-----------
NUMBER
OF SHARES VALUE
--------- ----------
COLOMBIA -- 0.2% Cementos Diamante S.A.
144A ADS**** .......................... 11,207 $ 142,889
Cementos Paz del Rio
144A ADR****/** ....................... 787 13,084
----------
155,973
----------
CZECH REPUBLIC -- 1.2%
SPT Telecom A.S ......................... 7,776 975,062
----------
EGYPT -- 1.6%
Al-Ahram Beverages Co., S.A.E.
144A GDR .............................. 26,100 664,245
Commercial International Bank
GDR ................................... 14,500 362,500
Suez Cement Company
144A GDR .............................. 14,300 297,082
----------
1,323,827
----------
HONG KONG -- 5.8%
Beijing Enterprises Holding
Limited ............................. 75,000 566,166
China Resources Development,
Inc. ................................ 197,000 826,182
Cosco Pacific Ltd. .................... 315,000 611,749
First Tractor Company Limited ......... 609,000 463,656
Guangzhou Shipyard
International Company, Ltd. ......... 1,100,000 447,126
Harbin Power Equipment
Company Limited ..................... 1,436,000 477,153
New World Infrastructure Ltd. ......... 198,200 554,996
Qingling Motors Company ............... 716,000 404,220
Shanghai Industrial Holdings
Limited ............................. 75,000 493,580
----------
4,844,828
----------
HUNGARY -- 0.6%
MOL Magyar Olaj - es Gazipari
GDR 144A ................................ 24,900 512,044
----------
INDIA -- 6.7%
Hindustan Petroleum
Corporation Ltd. Participation
Notes ................................. 34,000 446,420
Larsen & Toubro Ltd.
Participation Notes ................... 123,300 759,528
Mahanagra Telephone Nigam
Ltd. Participation Notes .............. 59,000 390,285
Mahindra & Mahindra Ltd.
Participation Notes ................... 32,800 361,128
Mahindra and Mahindra Ltd.
GDR ................................... 34,790 396,606
Morgan Stanley India
Investment Fund, Inc. ................. 119,831 1,288,183
Ranbaxy Laboratories Ltd.
GDR ................................... 12,800 271,040
See Accompanying Notes to Financial Statements.
10
<PAGE>
BEA EMERGING MARKETS EQUITY FUND (CONTINUED)
NUMBER
OF SHARES VALUE
--------- ----------
INDIA -- (CONTINUED)
Reliance Industries Ltd.
Participation Notes ................. 40,000 $ 362,200
Reliance Industries Ltd.
144A GDR ............................ 22,530 446,094
State Bank of India Ltd. GDR .......... 26,512 523,612
Steel Authority of India GDR .......... 45,400 337,095
----------
5,582,191
----------
INDONESIA -- 2.2%
PT Bank Dagang Nasional
Indonesia*** ........................ 50 11
PT Bank Dagang Nasional
Indonesia Warrants***/** ............ 700 68
PT Bank International
Indonesia*** ........................ 2 1
PT Bank Negara Indonesia*** ........... 213,000 66,788
PT Bimantara Citra*** ................. 316,000 283,864
PT Indah Kiat Pulp &
Paper*** ............................ 1,225,500 477,737
PT Indah Kiat Pulp & Paper
Warrants*** /** ..................... 103,200 --
PT Indorama Synthetics*** ............. 533,000 289,085
PT Jakarta International Hotel
and Development*** .................. 244,000 122,000
PT Lippo Securities*** ................ 1,626,000 248,034
PT Telekomunikasi
Indonesia*** ........................ 385,000 349,110
----------
1,836,698
----------
ISRAEL -- 5.1%
Bank Leumi of Israel Ltd. ............. 554,930 874,911
Blue Square Chain Stores
Properties & Investment
ADR** ............................... 29,300 373,575
ECI Telecom Ltd. ...................... 56,200 1,675,462
First International Bank of
Israel Ltd. ......................... 5,827 781,982
Israel Chemicals Ltd. ................. 427,500 528,272
----------
4,234,202
----------
LEBANON -- 0.6%
Solidere 144A GDR ..................... 31,320 528,525
----------
MEXICO -- 13.6%
Cementos Mexicanos S.A. de
C.V. Cl. B .......................... 253,749 1,398,987
Controladora Comercial
Mexicana S.A. de C.V. ............... 51,315 1,032,714
Corparacion GEO S.A. de
C.V. Cl. B** ........................ 74,602 416,550
Corporacion Industrial SanLuis
S.A. de C.V. CPO .................... 148,174 1,173,261
Fomento Economico Mexicano
S.A. de C.V. Cl. B .................. 163,393 1,126,560
Grupo Carso S.A. de
C.V. Cl. A1 ......................... 54,000 374,391
NUMBER
OF SHARES VALUE
--------- ----------
MEXICO -- (CONTINUED)
Grupo Financiero Banamex
Accival S.A. de C.V. Cl. B .......... 362,683 $ 967,309
Grupo Modelo S.A. de
C.V. Cl. C .......................... 109,475 934,056
Grupo Televisa S.A. de
C.V. GDS ............................ 36,406 1,187,746
Kimberly-Clark de Mexico
S.A. de C.V. Cl. A .................. 426,358 1,897,954
Telefonos de Mexico
S.A. ADR ............................ 17,199 789,004
-----------
11,298,532
-----------
PAKISTAN -- 0.9%
Hub Power Company Limited ............. 652,000 773,132
-----------
PERU -- 1.0%
Credicorp Limited ADR ................. 19,440 409,455
Telefonica del Peru S.A. ADR .......... 16,112 376,618
-----------
786,073
-----------
PHILIPPINES -- 0.0%
Philippine National Bank .............. 6,075 26,206
-----------
POLAND -- 2.1%
Bank Handlowy W. Warszawie ............ 5,940 74,874
Bank Handlowy W. Warszawie
ADR 144A ............................ 5,330 67,558
Elektrim Spolka Akcyjna S.A. .......... 78,100 719,236
Stomil Olsztyn S.A. ................... 35,000 351,531
Zaklady Piwowarskie W Zywcu
S.A. ................................ 7,200 559,457
-----------
1,772,656
-----------
PORTUGAL -- 5.5%
Banco Comercial Portugues
PFD Series A ........................ 13,900 962,575
Banco Comercial Portugues
S.A. Registered Shares .............. 39,500 732,992
Electricidade de Portugal S.A. ........ 66,320 1,035,050
Portugal Telecom S.A. ADR ............. 14,300 525,525
Portugal Telecom S.A.
Registered .......................... 22,200 824,648
Sociedade de Construcoes
Soares Da Costa S.A. ................ 60,200 466,973
-----------
4,547,763
-----------
PUERTO RICO -- 0.5%
CoreComm, Inc.** ...................... 25,300 373,175
-----------
RUSSIA -- 7.6%
Gazprom ADR 144A ...................... 38,970 756,992
JSZ Kas Commerz Bank
144A ADS ............................ 7,800 235,950
Lukoil Holding ADR .................... 12,100 1,095,945
Lukoil Holding ADR Pfd. ............... 6,700 216,108
Mosenergo ADR 144A .................... 38,283 1,758,568
PLD Telekom, Inc. ..................... 45,500 406,656
See Accompanying Notes to Financial Statements.
11
<PAGE>
BEA EMERGING MARKETS EQUITY FUND (CONCLUDED)
NUMBER
OF SHARES VALUE
--------- ----------
RUSSIA -- (CONTINUED)
Surgutneftegaz ADR ...................... 18,950 $ 992,506
Unified Energy Systems .................. 21,800 865,460
----------
6,328,185
----------
SOUTH AFRICA -- 3.2%
Amalgamated Banks of
South Africa Ltd. ..................... 126,634 821,913
Billiton, plc ........................... 201,697 778,155
Gencor Ltd. ............................. 40,339 102,751
South African Breweries
Limited ............................... 31,122 933,693
----------
2,636,512
----------
SOUTH KOREA -- 5.3%
Korea Electric Power ADR ................ 26,949 439,606
Korea Fund, Inc. ........................ 47,960 596,502
L.G. Electronics ........................ 47,000 1,010,305
Pohang Iron & Steel Ltd. ADR ............ 32,396 838,246
Samsung Electro-Mechanics
Company ............................... 30,910 856,233
Samsung Electronics Co., Ltd.
GDR ................................... 12,200 669,475
----------
4,410,367
----------
TAIWAN -- 0.3%
Morgan Stanley Taiwan Opals ............. 1,500 266,925
----------
TURKEY -- 4.4%
Akbank T.A.S. ........................... 13,765,463 882,875
Aksa Akrilik Kimya Sanayii
A.S. .................................. 2,365,393 176,406
Arcelik A.S. ............................ 2,285,850 228,435
Brisa Bridgestone Sabanci
Lastik San. Ve Tic A.S. .............. 272,658 102,485
Erciyas Biracilik Ve Malt
Sanayii ............................... 1,397,962 181,407
Eregli Demir Ve Celik
Fabrikalari T.A.S. .................... 925,500 151,848
Haci Omer Sabanci Holdings
144A .................................. 86,200 705,547
Yapi Ve Kredi Bankasi A.S. .............. 60,664,081 1,248,679
----------
3,677,682
----------
VENEZUELA -- 2.8%
Compania Anonima Nacional
Telefonos de Venezuela
ADR ................................... 16,223 669,199
Electricad de Caracas ................... 342,443 579,612
Mavesa S.A. ADR ......................... 60,313 474,965
Siderurgica Venezolana Sivensa
S.A.C.A. ADR .......................... 110,500 589,186
----------
2,312,962
----------
TOTAL COMMON STOCKS,
WARRANTS AND RIGHTS
(Cost $73,092,682) .................... 75,856,788
----------
PAR
(000) VALUE
--------- ----------
SHORT-TERM INVESTMENT -- 6.4%
BBH Grand Cayman U.S. Dollar
Time Deposit
5.063% 09/02/97 ..................... $ 5,305 $ 5,305,000
-----------
TOTAL SHORT-TERM
INVESTMENT
(Cost $5,305,000) ................ 5,305,000
-----------
TOTAL INVESTMENTS -- 97.8%
(Cost $78,397,682) .................. 81,161,788
-----------
OTHER ASSETS IN EXCESS
OF LIABILITIES-- 2.2% ............... 1,854,184
-----------
NET ASSETS (Applicable to
4,227,236 BEA Institutional
Shares and 183 BEA Advisor
Shares)-- 100.0% .................... $83,015,972
===========
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PRICE PER BEA
INSTITUTIONAL SHARE
($83,012,386 (DIVIDE) 4,227,236) .... $19.64
======
NET ASSET VALUE,
OFFERING PRICE AND
REDEMPTION PRICE PER
BEA ADVISOR SHARE
($3,586 (DIVIDE) 183) ............... $19.60
======
*Cost for Federal income tax purposes at August 31, 1997 is $78,520,122.
The gross appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation .................................... $ 9,075,201
Gross Depreciation .................................... (6,433,535)
-----------
Net Appreciation ...................................... $ 2,641,666
===========
**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 AUGUST 31, 1997, NET ASSETS CONSISTED OF:
AMOUNT
-------------
Capital Paid-In ................................................. $ 90,245,082
Accumulated Net Investment Income ............................... 188,084
Accumulated Net Realized Loss on
Security and Foreign Exchange Transactions ................... (10,167,833)
Net Unrealized Appreciation on
Investments and Other ........................................ 2,750,639
- --------------------------------------------------------------------------------
NET ASSETS ...................................................... $ 83,015,972
- --------------------------------------------------------------------------------
See Accompanying Notes to Financial Statements.
12
<PAGE>
BEA U.S. CORE EQUITY FUND
PORTFOLIO MANAGER'S LETTER
September 18, 1997
Dear Shareholders:
We are pleased to report on the results of the BEA U.S. Core Equity Fund (the
"Fund") for the year ended August 31, 1997 and discuss our investment strategy.
PERFORMANCE REVIEW
At August 31, 1997, the net asset value ("NAV") of the Fund was $24.40, compared
to an NAV of $19.05 on August 31, 1996. As a result, the Fund's total return
(assuming reinvestment of dividends and distributions) was 38.32%. By
comparison, the Standard & Poor's 500 Index (the "Index") gained 40.61% during
the same period. For the six months ended August 31, 1997, the Fund returned
16.02%, versus 14.74% for the Index.
Recent performance for the Fund was driven by its health care holdings, due both
to our overweighting of the sector relative to the S&P 500 and favorable stock
selection:
(BULLET) Generic drug producer BARR LABORATORIES, INC. surged to record highs
as investors anticipated big sales of its new generic anticoagulant.
(BULLET) Pharmaceutical giant WARNER-LAMBERT, CO. exploded in June on news
that sales of Lipitor, a new medication to lower cholesterol, were running
far ahead of expectations.
(BULLET) Following a steep decline when its proposed merger with Bergen
Brunswig Corp. was cancelled, shares of IVAX CORPORATION, another generic
drug producer, sharply rebounded.
Year-to-date underperformance is principally attributable to capitalization
weightings. At a time when large-cap equities were dominating the market, the
portfolio had major positions in several smaller stocks. Some experienced
substantial volatility, notably GTECH Holdings Corporation, Hollinger
International, Inc., I-STAT Corporation and Ivax Corporation. The absence of
some of the top-performing large-caps (e.g., IBM, Coca-Cola) also had a negative
impact on returns.
MARKET COMMENTARY
In recent reports we have expressed concern about an indexation phenomenon that
concentrates market performance in a small group of the largest-capitalization
stocks known as the "mega-caps." These are blue-chip, global powerhouses like
General Electric Co., Coca-Cola, Exxon Corporation, etc. Investors have favored
the mega-caps because they are achieving especially strong, high-quality
operating results. Since such stocks disproportionately affect the movement of
capitalization-weighted indices like the S&P 500, this drives the market higher.
In 1996, indexation caused the S&P's 10 biggest stocks to dramatically
outperform the remaining 490 stocks. This trend continued through the first half
of 1997, as the top 10's 28.3% return substantially exceeded the 18.8% achieved
by the other 490. We also note that half of the S&P's capitalization weight is
in the top 55 stocks, which earned 24% through June, while the remaining 445
stocks earned 17%.
It is reasonable to suggest that indexation's strength may somewhat distort
valuation levels in the near term. Looking ahead into the future, though, we
believe that the market will continue to bestow premium valuations on the
mega-caps because these companies will be the prime beneficiaries of a changed
global marketplace.
The key drivers of the new marketplace are capitalism and globalization.
Communism's demise has enabled capitalism to become the world's single economic
ideology. Since capitalism is based on competition, it means that the global
system of resource allocation will become much more efficient: demand will
naturally flow to where costs are lowest and supply to where returns are
highest.
In this environment, the big winners will be the multinational giants--companies
best able to achieve huge cost efficiencies and economies of scale while
penetrating the world's underdeveloped markets. They will exploit the "labor
arbitrage" resulting from the sizable difference in labor costs between
developed and emerging economies to raise productivity increasingly higher. The
multinationals are uniquely positioned to reconfigure their factors of
production to minimize costs and maximize global reach. The market rewards
companies that succeed in these ways with 1) relatively low costs of capital,
allowing them to borrow at better rates than their competitors; and 2) premium
equity valuations via higher share
prices.
13
<PAGE>
BEA U.S. CORE EQUITY FUND
PORTFOLIO MANAGER'S LETTER (CONTINUED)
Companies with low costs of capital and high share prices are in excellent shape
to acquire other companies. As a result, the mergers and acquisitions business
should thrive in the coming years and more transactions will involve the big
multinationals. Deals valued in the $20-30 billion range will be commonplace.
With capitalism in place nearly everywhere, the financial markets assume a level
of power that transcends government control. This confers on them the role of
unofficial global policeman. For example, the quantity of outstanding global
government debt is so vast that it cannot be ignored, and investors who own the
debt are concerned solely with earning a return on their investment rather than
national politics or central bank issues. Since bond-trading activity forces
market interest rates higher or lower accordingly, the markets effectively serve
as a check on monetary policy.
The combination of the global labor arbitrage, increasing M&A activity and the
markets' assumption of a policing role is decidedly bullish for long-term global
inflation. It means that labor costs are subject to heavy, ongoing downward
pressure; industry consolidation will generate huge cost savings; and monetary
policies worldwide are answerable to investors seeking to maximize their
returns.
In sum, we believe that a singularly favorable set of conditions exists for the
sustainable appreciation of global equities generally and the shares of
multinational giants especially.
OUTLOOK
Our positive outlook on the U.S. economy remains intact. Widespread concern
earlier in the year regarding possible interest-rate hikes has subsided, as data
suggest that the economy is not in imminent danger of overheating. In this
context, we regard the Federal Reserve's decision at its last three meetings not
to raise rates as a clear sign that it does not currently consider inflation a
realistic threat.
U.S. equities have responded to investors' improving perceptions about the
economy by reaching a succession of new highs thus far in 1997. While we are
pleased to see stocks rise, naturally, we also note that the market's surge
leaves little room for valuations to expand. Many investment managers who adhere
to strict buy and sell disciplines are finding it difficult to identify
attractively priced shares and, as a result, must sit with large cash positions
until good opportunities materialize. If the market should give back some of its
gains and restore valuations to lower levels, these managers will have plenty of
cash with which to fuel a new advance.
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 Equity Management Team
William W. Priest, Jr., Chief Executive Officer & Executive Director
John B. Hurford, Executive Director
James A. Abate, Senior Vice President
Todd M. Rice, Senior 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.
[GRAPHIC OMITTED]
PLOT POINTS FOLLOW:
BEA U.S.
Core Equity S&P 500
Fund Index
09/01/1994 10,000 10,000
11/30/1994 9,553 9,615
02/28/1995 10,251 10,398
05/31/1995 11,103 11,455
08/31/1995 11,975 12,149
11/30/1995 12,746 13,168
02/29/1996 13,940 14,007
05/31/1996 14,383 14,720
08/31/1996 14,080 14,421
11/30/1996 16,150 16,837
02/28/1997 16,786 17,672
05/31/1997 17,943 19,049
08/31/1997 19,475 20,275
- -------------------------
AVERAGE ANNUAL
TOTAL RETURN
One Year 38.32%
From Inception 24.86%
- -------------------------
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
AUGUST 31, 1997
NUMBER
OF SHARES VALUE
--------- ----------
COMMON STOCK -- 96.0%
AEROSPACE / DEFENSE -- 1.1%
Coltec Industries** ....................... 41,200 $ 921,850
----------
BUSINESS SERVICES -- 2.2%
Automatic Data Processing ................. 42,000 1,913,625
----------
CHEMICALS -- 2.2%
Crompton & Knowles
Corporation ............................. 36,600 924,150
Imperial Chemical Industries
plc ADR ................................. 15,000 984,375
----------
1,908,525
----------
COMPUTERS, SOFTWARE AND SERVICING -- 7.5%
Compaq Computer
Corporation** ........................... 20,000 1,310,000
DST Systems** ............................. 40,000 1,447,500
Hewlett Packard Co. ....................... 12,000 735,750
Microsoft Corporation** ................... 22,500 2,974,219
----------
6,467,469
----------
CONGLOMERATES -- 4.4%
General Electric Co. ...................... 32,000 2,000,000
Philip Morris Companies ................... 42,000 1,832,250
----------
3,832,250
----------
CONSTRUCTION AND BUILDING MATERIALS-- 3.1%
Caterpillar Inc. .......................... 16,600 963,837
Sherwin Williams Co. ...................... 63,800 1,750,512
----------
2,714,349
----------
CONSUMER PRODUCTS & SERVICES -- 3.7%
Clorox Company ............................ 7,000 918,750
Colgate-Palmolive Co. ..................... 14,000 878,500
Newell Co. ................................ 35,000 1,378,125
----------
3,175,375
----------
ELECTRONICS -- 3.2%
Emerson Electric Co. ...................... 50,000 2,734,375
----------
ENERGY -- 6.2%
Burlington Resources, Inc. ................ 18,800 951,750
Exxon Corporation ......................... 30,000 1,835,625
Mobil Corporation ......................... 18,000 1,309,500
Schlumberger, Ltd. ........................ 16,000 1,219,000
----------
5,315,875
----------
ENTERTAINMENT -- 2.1%
GTECH Holdings Corporation** .............. 60,000 1,803,750
----------
FINANCIAL SERVICES -- 7.3%
ACE Ltd. .................................. 23,600 1,961,750
Allstate Corporation ...................... 12,000 876,750
American International Group,
Inc. .................................... 12,000 1,132,500
BB&T Corporation .......................... 20,000 1,035,000
Charles Schwab Corporation ................ 30,000 1,273,125
----------
6,279,125
----------
NUMBER
OF SHARES VALUE
--------- ----------
FOOD & BEVERAGE -- 1.4%
H.J. Heinz ................................ 30,000 $1,248,750
----------
HEALTH CARE -- 8.7%
Amgen, Inc.** ............................. 22,000 1,090,375
Biomet, Inc. .............................. 44,900 931,675
Humana, Inc. .............................. 35,000 824,687
I-STAT Corporation** ...................... 66,000 1,320,000
Johnson & Johnson, Inc. ................... 14,000 793,625
McKesson Corporation ...................... 27,000 2,529,562
----------
7,489,924
----------
INDUSTRIAL GOODS & MATERIALS -- 5.2%
Dover Corporation ......................... 25,000 1,726,562
Illinois Tool Works Inc. .................. 27,000 1,306,125
Tyco International Ltd. ................... 18,000 1,411,875
----------
4,444,562
----------
PACKAGING/CONTAINERS -- 3.5%
Owens-Illinois, Inc.** .................... 50,000 1,740,625
Sealed Air Corporation .................... 25,000 1,296,875
----------
3,037,500
----------
PAPER & FOREST PRODUCTS -- 2.1%
Kimberly-Clark Corporation ................ 18,000 853,875
Schweitzer-Mauduit
International, Inc. ..................... 23,500 940,000
----------
1,793,875
----------
PHARMACEUTICALS -- 9.0%
Barr Laboratories, Inc.** ................. 50,000 1,962,500
Ivax Corporation .......................... 200,000 1,887,500
Smithkline Beecham plc .................... 46,000 1,992,375
Warner Lambert Co. ........................ 15,000 1,905,938
----------
7,748,313
----------
PUBLISHING & INFORMATION SERVICES -- 4.8%
Gannett Company, Inc. ..................... 13,000 1,266,688
Hollinger International, Inc. ............. 70,000 901,250
Omnicom Group, Inc. ....................... 15,100 1,023,025
Tribune Co. ............................... 20,000 988,750
----------
4,179,713
----------
REAL ESTATE -- 4.8%
Cornerstone Properties Inc. ............... 60,000 1,065,000
Equity Office Properties Trust ............ 30,000 875,625
Starwood Lodging Trust .................... 20,000 923,750
TriNet Corporate Realty Trust,
Inc. .................................... 35,000 1,244,688
----------
4,109,063
----------
RESTAURANTS, HOTELS AND GAMING -- 0.8%
McDonald's Corporation .................... 14,900 704,956
----------
RETAIL -- 1.3%
Home Depot, Inc. ......................... 23,000 1,085,313
----------
See Accompanying Notes to Financial Statements.
16
<PAGE>
BEA U.S. CORE EQUITY FUND (CONCLUDED)
NUMBER
OF SHARES VALUE
--------- ----------
TELECOMMUNICATIONS -- 4.7%
Airtouch Communications,
Inc.** .............................. 40,000 $1,352,500
Newbridge Networks
Corporation** ....................... 30,000 1,365,000
Teleglobe, Inc. ....................... 40,000 1,300,000
----------
4,017,500
----------
TRANSPORTATION -- 6.7%
AMR Corporation** ..................... 10,000 1,007,500
Canadian National Railway
Company ............................. 30,000 1,490,625
Canadian Pacific Ltd. ................. 45,000 1,313,438
Federal Express Corporation** ......... 30,000 1,993,125
----------
5,804,688
----------
TOTAL COMMON STOCK
(Cost $63,610,811) .................. 82,730,725
----------
PAR
(000)
------
SHORT TERM INVESTMENT -- 4.2%
BBH Grand Cayman
U.S. Dollar Time Deposit
5.063% 09/02/97 .................. $3,618 3,618,000
------------
TOTAL SHORT TERM
INVESTMENT
(Cost $3,618,000) ............. 3,618,000
------------
TOTAL INVESTMENTS -- 100.2%
(Cost $67,228,811) ............... 86,348,725
------------
LIABILITIES IN EXCESS
OF ASSETS-- (0.2%) ............... (166,984)
------------
NET ASSETS (Applicable to
3,532,014 BEA Institutional
Shares)-- 100.0% ................. $ 86,181,741
============
NET ASSET VALUE,
OFFERING PRICE AND
REDEMPTION PRICE PER
BEA INSTITUTIONAL
SHARE
($86,181,741 (DIVIDE) 3,532,014) . $24.40
======
*Cost for Federal income tax purposes at August 31, 1997 is $67,236,261.
The gross appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation ....................................... $20,053,559
Gross Depreciation ....................................... (941,095)
-----------
Net Appreciation ......................................... $19,112,464
===========
**Non-income producing securities.
AT AUGUST 31, 1997, NET ASSETS CONSISTED OF:
AMOUNT
-----------
Capital Paid-In .................................................. $59,265,306
Accumulated Net Investment Income ................................ 257,839
Accumulated Net Realized Gain on
Security and Foreign Exchange Transactions .................... 7,538,682
Net Unrealized Appreciation on
Investments and Other ......................................... 19,119,914
- --------------------------------------------------------------------------------
NET ASSETS ....................................................... $86,181,741
- --------------------------------------------------------------------------------
See Accompanying Notes to Financial Statements.
17
<PAGE>
BEA GLOBAL TELECOMMUNICATIONS FUND
PORTFOLIO MANAGER'S LETTER
September 18, 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 August 31, 1997.
PERFORMANCE REVIEW
At August 31, 1997, the net asset value ("NAV") of the Fund was $17.30, compared
to an original NAV of $15.00 on December 4, 1996. As a result, the Fund's total
return was 15.33%. For the period January 1, 1997 to August 31, 1997, the Fund's
total return was 15.49%, versus a gain of 7.29% for the MSCI Telecommunications
Index (the "Index").
There were two keys to the Fund's success since its inception: favorable
weightings of regions and countries, and superior stock selection.
We attribute the Fund's outperformance of the Index primarily to our holdings in
emerging market telecommunications companies. The best-performing stocks in this
group were from Latin America (i.e., Compania de Telecomunicaciones de Chile,
S.A. ("CTC"), Telecomunicacoes Brasileiras S.A. ("Telebras"), Telefonica del
Peru S.A., Telecomunicacoes de Sao Paulo S.A. ("Telesp")), Portugal (i.e.,
Portugal Telecom S.A.) and Russia (i.e., Vimpel Communications). Since shares in
emerging markets companies represent approximately one-third of the Fund's total
assets, their impact on the portfolio has been disproportionately positive.
Among domestic holdings, we fared best in several sectors. These were
internet-related companies (America Online, Inc. was our top domestic
performer), cellular (notably Airtouch Communications, Inc., which is growing
overseas) and paging (we profited from buying some paging stocks on an
opportunistic basis).
MARKET COMMENTARY
Much has happened in the global telecommunications business since our last
report. Several developments are particularly significant for the industry:
WORLD TRADE ORGANIZATION AGREEMENT. Under the auspices of the World Trade
Organization ("WTO"), 68 nations ratified a landmark agreement in February. The
agreement legally obligates all signers to open their telecommunications markets
to competition (most of which should occur by 2000). Most nations agreed to drop
their prohibition against foreign ownership of a controlling interest in their
domestic telecom provider. This should reinforce the trend toward industry
consolidation via numerous mergers and global alliances, allowing for the
creation of seamless "end-to-end" networks that make telephony cheaper and
simpler for customers.
ADDITIONS TO CONCERT. In April, Telefonica de Espana ("Telefonica") and Portugal
Telecom, S.A. joined the global Concert alliance headed up by British Telecom
("BT") and MCI Communications ("MCI"). Telefonica gives the alliance unfettered
access to the Spanish domestic market and, perhaps more important, an immediate
presence in Latin America, where its international subsidiary, Telefonica
Internacional S.A. ("TISA"), holds valuable equity stakes in many leading
telecom companies. Portugal Telecom contributes its own domestic market as well
as its strong historical links with Portuguese-speaking Brazil (Latin America's
largest and, perhaps, most vital market). All at once, then, Concert gains an
extraordinary capability to realize the huge potential of the Latin American
market for telecom services and makes substantial progress in the construction
of its global end-to-end network.
STRENGTHENING OF TISA. Telefonica became the 100% owner of TISA by purchasing
the Spanish government's 24% stake in August. TISA is the largest foreign
investor in Latin American telephony, with operations in Argentina, Brazil,
Chile, and Peru as well as equity holdings in Colombia, Puerto Rico and
Venezuela. The purchase strengthens TISA's financial condition and eliminates
any direct government input into its operation. In addition, MCI acquired an
option to buy 10% of TISA from Telefonica and formed a joint venture with TISA
to integrate TISA's Latin business into the Concert global network.
18
<PAGE>
BEA GLOBAL TELECOMMUNICATIONS FUND
PORTFOLIO MANAGER'S LETTER (CONTINUED)
PROGRESS TOWARD TELEBRAS PRIVATIZATION. Over the last few months, Brazil's
Telebras government-owned telecom monopoly has made great strides toward
eventual privatization. A major milestone was reached with the passage of the
long-awaited General Telecommunications Law, which establishes a new regulatory
framework and gives the government the necessary legal authority to privatize
the Telebras system. The government unveiled an informal privatization plan and
announced its intention to complete the process around mid-1998.
OUTLOOK
We anticipate that our general investment strategy will remain in place in the
foreseeable future. This means that we will endeavor to maintain a beneficial
balance between emerging and developed markets and, among the latter, continue
to have a strong bias toward the U.S. As for emerging markets, we currently are
most positive about Latin America and generally avoiding Asia. Although many
Asian telecom stocks now appear more attractively valued as a result of recent
volatility in Asian equity markets, we suspect that valuations may fall even
further.
The best opportunities on the domestic telecom scene should continue to be among
the "Davids" (i.e., smaller companies in sectors with strong growth potential)
rather than the "Goliaths" (i.e., the larger, traditional telephone companies,
for whom competition is rising while growth is relatively limited). The
generally declining fortunes of the Goliaths are exemplified by MCI, whose
purchase price by BT recently was revised downward in response to lowered growth
expectations. We particularly foresee consolidation in the internet sector, in
which we own America Online, Inc. (which should survive and prosper) and NETCOM
On-Line Communications Services, Inc. (an attractive takeover candidate).
Looking further ahead, we remain decidedly optimistic about the future of the
global telecommunications sector. Our optimism rests on the large universe of
companies with attractive fundamentals and valuations; the growing number of
privatizations expected in the next few years (e.g., France Telecom, Israel's
Bezeq and Telkom South Africa) and the high growth potential of emerging markets
based on their increasing integration into the global economy and the growing
recognition of their strategic value.
It also should be noted that the scope for value-added services like cellular,
wireless transmission of data, paging and related services such as cable
television is equally immense. Such an environment suggests huge opportunities
for profit growth among providers, equipment manufacturers, software developers
and the broad universe of ancillary businesses. Our goal is to find these
opportunities and, in so doing, give investors a unique vehicle for
participation in one of the world's fastest-growing industry sectors.
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
William P. Sterling, Executive Director
Richard W. Watt, Managing Director
Todd M. Rice, Senior Vice President
Stephen R. Waite, Vice President
19
<PAGE>
BEA GLOBAL TELECOMMUNICATIONS FUND
PORTFOLIO MANAGER'S LETTER (CONCLUDED)
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE BEA GLOBAL
TELECOMMUNICATIONS ADVISOR CLASS AND THE MSCI TELECOMMUNICATIONS INDEX FROM
INCEPTION 12/4/96 AND AT EACH QUARTER END.
[GRAPHIC OMITTED]
PLOT POINTS FOLLOW:
BEA Global Morgan Stanley
Telecommunications Composite Index
Fund Telecommunications
12/04/1996 10,000 10,000
02/28/1997 10,787 10,253
05/31/1997 11,460 10,727
08/31/1997 11,533 10,729
- ------------------------
TOTAL RETURN
From Inception 15.33%
- ------------------------
Note: Past performance is not predictive of future performance.
20
<PAGE>
BEA GLOBAL TELECOMMUNICATIONS FUND
OF THE RBB FUND, INC.
STATEMENT OF NET ASSETS
AUGUST 31, 1997
NUMBER
OF SHARES VALUE
--------- ----------
COMMON STOCKS,
WARRANTS AND RIGHTS -- 95.4%
BRAZIL -- 5.6%
Telecomunicacoes Brasileiras
S.A. ADR .................................... 265 $31,270
Telecomunicacoes de Sao Paulo
S.A. PN ..................................... 1,438 428
-------
31,698
-------
CANADA -- 1.8%
BCE Mobile Communications,
Inc. ........................................ 100 3,569
Teleglobe, Inc. ............................... 200 6,500
-------
10,069
-------
CHILE -- 2.4%
Compania de Telecomunicaciones
de Chile S.A. ADR .......................... 450 13,528
-------
GERMANY -- 3.6%
Deutsche Telekom AG ........................... 450 9,014
Mannesmann AG ................................. 25 11,512
-------
20,526
-------
HONG KONG -- 3.3%
Hong Kong Telecommunications
Ltd. ADR .................................... 900 19,069
-------
INDIA -- 3.6%
Videsh Sanchar Nigam Ltd. ..................... 1,400 20,650
-------
INDONESIA -- 2.1%
PT Indosat*** ................................. 6,000 12,203
-------
ISRAEL -- 5.3%
ECI Telecommunications Ltd. ................... 468 13,952
Gilat Satellite Networks Ltd.
ADR ......................................... 500 16,250
-------
30,202
-------
ITALY -- 5.1%
Telecom Italia Mobile S.p.A. .................. 1,600 5,528
Telecom Italia Mobile S.p.A.
Non Convertible Savings
Shares ...................................... 4,700 7,853
Telecom Italia Savings Share
S.p.A. ...................................... 4,400 15,525
-------
28,906
-------
PERU -- 3.3%
Telefonica del Peru S.A. ADR .................. 800 18,700
-------
POLAND -- 3.1%
Elektrim Spolka Akcyjna S.A. .................. 1,900 17,497
-------
PORTUGAL -- 3.8%
Portugal Telecom S.A. ADR ..................... 600 22,050
-------
NUMBER
OF SHARES VALUE
--------- ----------
RUSSIA -- 6.0%
PLD Telekom, Inc. ....................... 500 $ 4,469
Vimpel Communications
ADR ................................... 863 29,558
--------
34,027
--------
SOUTH KOREA -- 1.7%
SK Telecom Co. Ltd. ADR ................. 1,100 9,900
--------
SPAIN -- 4.1%
Telefonica de Espana ADR ................ 300 23,325
--------
UNITED KINGDOM -- 5.6%
COLT Telecom Group plc
ADR ................................... 900 24,862
General Cable plc ADR ................... 200 1,825
M.A.I.D. plc ADR ........................ 400 5,200
--------
31,887
--------
UNITED STATES -- 35.0%
360 Communications
Company ............................... 700 12,862
Airtouch Communications,
Inc. .................................. 400 13,525
America Online, Inc. .................... 200 12,900
Ameritech Corporation ................... 200 12,537
Bell Atlantic Corporation ............... 200 14,475
Compuserve Corp. ........................ 400 5,050
Cox Radio, Inc. ......................... 200 5,350
Individual, Inc. ........................ 1,000 2,687
MCI Communications ...................... 200 5,700
Metricom, Inc. .......................... 400 2,325
NETCOM On-Line
Communications Services,
Inc. .................................. 900 11,756
PageMart Wireless, Inc. ................. 1,400 13,475
Paging Network, Inc. .................... 1,300 13,163
Sprint Corp. ............................ 200 9,400
Superior Telecom, Inc. .................. 400 15,125
Teleport Communications,
Inc. Cl. A ............................ 100 3,638
U.S. West Communications
Group ................................. 400 14,325
U.S. WEST Media Group ................... 500 10,000
United States Satellite
Broadcasting Company, Inc. ............ 400 3,575
Viatel, Inc. ............................ 2,400 11,400
WorldCom, Inc. .......................... 200 5,988
--------
199,256
--------
TOTAL COMMON STOCKS,
WARRANTS AND RIGHTS
(Cost $512,783) ....................... 543,493
--------
See Accompanying Notes to Financial Statements.
21
<PAGE>
BEA GLOBAL TELECOMMUNICATIONS FUND (CONCLUDED)
PAR
(000) VALUE
--------- ----------
SHORT-TERM INVESTMENT -- 9.7%
BBH Grand Cayman
U.S. Dollar Time Deposit
5.063% 09/02/97 .................... $55 $ 55,000
---------
TOTAL SHORT-TERM
INVESTMENT
(Cost $55,000) .................. 55,000
---------
TOTAL INVESTMENTS -- 105.1%
(Cost $567,783*) ................... 598,493
---------
LIABILITIES IN EXCESS
OF ASSETS-- (5.1%) ................. (29,021)
---------
NET ASSETS (Applicable to
32,926 BEA Advisor
Shares)-- 100.0% ................... $ 569,472
=========
NET ASSET VALUE,
OFFERING PRICE AND
REDEMPTION PRICE PER
BEA ADVISOR SHARE
($569,472 (DIVIDE) 32,926) ......... $17.30
======
*Also cost for Federal income tax purposes at August 31, 1997. The gross
appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation ...................................... $ 63,122
Gross Depreciation ...................................... (32,412)
--------
Net Appreciation ........................................ $ 30,710
========
**Non-income producing securities.
***Denotes foreign shares.
INVESTMENT ABBREVIATIONS
ADR ............................................... American Depository Receipts
AT AUGUST 31, 1997, NET ASSETS CONSISTED OF:
AMOUNT
---------
Capital Paid-In .................................................... $508,538
Accumulated Net Investment Loss .................................... (167)
Accumulated Net Realized Gain on
Security and Foreign Exchange
Transactions .................................................... 30,391
Net Unrealized Appreciation on
Investments and Other ........................................... 30,710
- --------------------------------------------------------------------------------
NET ASSETS ......................................................... $569,472
- --------------------------------------------------------------------------------
See Accompanying Notes to Financial Statements.
22
<PAGE>
BEA U.S. CORE FIXED INCOME FUND
PORTFOLIO MANAGER'S LETTER
September 18, 1997
Dear Shareholders:
We are pleased to report on the results of the BEA U.S. Core Fixed Income Fund
(the "Fund") for the year ended August 31, 1997 and discuss our investment
strategy.
PERFORMANCE REVIEW
At August 31, 1997, the net asset value ("NAV") of the Fund was $15.65, 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 11.53%. By
comparison, the Lehman Brothers Aggregate Bond Index (the "Index") posted a
return of 10.02% during the same period. For the six months ended August 31,
1997, the Fund returned 4.68% (assuming reinvestment of dividends), versus 4.41%
for the Index.
Performance of fixed income markets in recent months was broadly positive.
Prices of most debt subcategories, which had fallen in March over concern about
a hike in interest rates, erased March's losses and rose even higher.
The market's turnaround is attributable to two factors. First, the Federal
Reserve chose not to raise interest rates at its Open Market Committee meetings
in May, July and August. Second, government data increasingly suggested an
absence of inflationary pressures on the economy.
Many market observers consider the macroeconomic climate so benign that they are
declaring the birth of a "new economic paradigm." The essence of this idea is
that the economy has lost its historical cyclicality and negated the inverse
correlation between growth and inflation. Instead, a combination of productivity
gains, cost efficiency, global competition and other elements will keep
inflation low while supporting strong growth.
It is too soon to determine whether the new paradigm is more than a concept.
Nonetheless, the market appears to be saying that today's favorable conditions
should be in place well into 1998. This has positive implications for the
"spread products" (i.e., debt securities whose market valuation is greatly
driven by the spreads between their yields and those of U.S. Treasury debt) that
currently are the Fund's primary investment vehicles.
PORTFOLIO REVIEW
The following investment strategies were in place over the past few months:
(BULLET) We revised the portfolio's weighting in the mortgage-backed
securities sector ("MBS") to neutral from overweight by selling into its
rally. We will look to restore MBS to an overweight when the opportunity
arises.
(BULLET) We took a conservative approach to investment-grade corporate bonds
and used their price weakness in April to add to the position.
(BULLET) Emerging market debt continued to outperform most fixed income
sectors. Our largest positions are in Russia and Mexico.
(BULLET) We maintained the portfolio's domestic high-yield component at a
relatively high quality level. High-yield should continue to add value
without a meaningful increase in risk.
23
<PAGE>
BEA U.S. CORE FIXED INCOME FUND
PORTFOLIO MANAGER'S LETTER (CONTINUED)
OUTLOOK
In light of the Fed's decision to leave interest rates unchanged, we view the
fundamental environment for financial assets as remaining positive through the
remainder of 1997. Technical factors, however, may present some danger for
certain sectors within the bond market. The potentially large expansion of
supply from prepayments, refinancings and new issues of high-yield paper is most
significant in this regard. We believe that a moderately defensive stance is
best and are monitoring market conditions accordingly.
As we begin the Fund's new fiscal year, we see several new areas of opportunity.
There are pockets of value in the AA and AAA-rated corporate sectors, which have
been overlooked due to investors' preference for higher-yielding securities. Our
favored industries are cable and media, energy, transportation and electric
utilities. We also like mortgage-backed bonds, which are attractive at the
current low level of interest-rate volatility; taxable municipals; AA and
AAA-rated corporates of intermediate maturity; and securitizations of non-viable
utility company assets.
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
24
<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.
[GRAPHIC OMITTED]
PLOT POINTS FOLLOW:
BEA U.S. Lehman Brothers
Core Fixed Aggregate Bond
Income Fund Index
04/01/1994 10,000 10,000
05/31/1994 9,913 9,999
08/31/1994 10,017 10,188
11/30/1994 9,812 10,007
02/28/1995 10,204 10,520
05/31/1995 10,864 11,148
08/31/1995 11,078 11,342
11/30/1995 11,475 11,775
02/29/1996 11,590 11,809
05/31/1996 11,464 11,638
08/31/1996 11,658 11,806
11/30/1996 12,328 12,488
02/28/1997 12,420 12,442
05/31/1997 12,567 12,607
08/31/1997 13,001 12,991
- -----------------------
AVERAGE ANNUAL
TOTAL RETURN
One Year 11.53%
From Inception 7.97%
- -----------------------
Note: Past performance is not predictive of future performance.
25
<PAGE>
BEA U.S. CORE FIXED INCOME FUND
OF THE RBB FUND, INC.
STATEMENT OF NET ASSETS
AUGUST 31, 1997
PAR
(000) VALUE
--------- ----------
CORPORATE BONDS -- 30.3%
BANKING -- 2.8%
Credit Lyonnais
Perpetual Sub. Variable Rate
Notes, Rule 144A
(Baa2, NR)****/(DAGGER)/(DAGGER)(DAGGER)(DAGGER)
6.813% ...................................... $ 520 $ 518,180
Midland Bank PLC
Perpetual Sub. FRN,
Series 2 (A1, A-)(DAGGER)/(DAGGER)(DAGGER)(DAGGER)
6.063% ...................................... 390 360,750
National Westminster Bank
Perpetual Sub. FRN,
Series A (Aa3, A+)(DAGGER)/(DAGGER)(DAGGER)(DAGGER)
6.063% ...................................... 620 569,532
Santander Financial Issuances
Perpetual Sub. FRN
(A2, NR)(DAGGER)/(DAGGER)(DAGGER)(DAGGER)
6.775% ...................................... 500 500,750
Skandinaviska Enskilda
Banken AB:
Perpetual Sub. FRN
(Baa1, NR)(DAGGER)/(DAGGER)(DAGGER)(DAGGER)
6.625% ................................... 1,470 1,458,828
Perpetual Sub. FRN
(NR, NR)(DAGGER)/(DAGGER)(DAGGER)(DAGGER)
7.500% ................................... 1,100 1,100,440
Sovereign Bancorp
Sr. Notes (NR, BBB-)
6.750% 07/01/00 ............................. 110 108,487
Trans Financial Bank N.A.
Notes (Baa3, BBB-)
6.480% 10/23/98 ............................. 305 305,827
-----------
4,922,794
-----------
CABLE -- 1.1%
Bell Cablemedia plc Yankee
Sr. Discount Notes
(Baa3, BBB+)(DAGGER)(DAGGER)
11.875% 09/15/05 ............................ 960 825,600
Summit Communications
Group, Inc.
Sr. Sub. Notes (Ba3, BB+)
10.500% 04/15/05 ............................ 980 1,053,500
-----------
1,879,100
-----------
CHEMICALS -- 0.2%
UCC Investors Holdings Inc.
Sub. Discount Notes
(B3, B-)(DAGGER)(DAGGER)
12.000% 05/01/05 ............................ 290 272,600
-----------
ENTERTAINMENT -- 2.2%
Time Warner, Inc.
Debentures (Ba1, BBB-):
9.150% 02/01/23 ............................. 875 999,687
6.850% 01/15/26 ............................. 2,945 2,967,087
-----------
3,966,774
-----------
PAR
(000) VALUE
--------- ----------
ENVIRONMENTAL SERVICES -- 0.1% EnviroSource, Inc.
Sr. Notes (B3, B)
9.750% 06/15/03 ............................. $ 225 $ 224,719
-----------
FINANCIAL SERVICES -- 8.2%
American General Institutional
Capital Trust Co.
144A Gtd. Notes,
Series B (A2, A+)****
8.125% 03/15/46 ............................. 1,765 1,809,125
AT&T Capital Corp.
Medium Term Notes
(Baa3, BBB)
6.275% 06/09/98 ............................. 1,795 1,797,082
Fifth Mexican Acceptance Corp.
Rule 144A Notes Tranche A
(NR, NR)****/(DAGGER)(DAGGER)(DAGGER)(DAGGER)/*****
8.000% 12/15/98 ............................. 1,510 362,400
Ford Holdings, Inc.
Gtd. Notes (A1, A+)
9.250% 03/01/00 ............................. 10 10,637
General Electric Capital Services
Gtd. Sub. Notes (Aaa, AAA)
7.500% 08/21/35 ............................. 165 170,981
General Motors Acceptance Corp.
Medium Term Notes (A3, A-)
7.250% 07/20/98 ............................. 125 126,527
7.375% 04/15/99 ............................. 1,150 1,170,125
6.625% 04/24/00 ............................. 1,290 1,296,450
6.900% 07/05/00 ............................. 290 293,262
L'Auxiliare du Credit
Foncier de France:
Gtd. Unsub. Notes
(Ba1, NR)(DAGGER)/(DAGGER)(DAGGER)(DAGGER)
5.750% 09/25/97 .......................... 740 707,810
Sr. Unsub. Notes (Baa1, A)
8.000% 01/14/02 .......................... 830 864,237
Norwest Financial Inc.
Sr. Notes (Aa3, AA-)
7.500% 04/15/05 ............................. 200 208,250
Prudential Insurance Co. of
America
144A Capital Notes
(A3, A-)****
6.875% 04/15/03 ............................. 1,000 995,000
Residential Reinsurance Ltd.,
144A VRN, Series 1997
Class A2 (NR, NR)(DAGGER)
11.408% 12/15/08 ............................ 1,500 1,507,500
Torchmark Corp.
Notes (Baa1, A)
7.375% 08/01/13 ............................. 85 81,387
Travelers Capital Trust
Preferred II Bonds (Aa3, A+)
7.750% 12/01/36 ............................. 1,840 1,823,900
See Accompanying Notes to Financial Statements.
26
<PAGE>
BEA U.S. CORE FIXED INCOME FUND (CONTINUED)
PAR
(000) VALUE
--------- -----------
FINANCIAL SERVICES -- (CONTINUED)
Travelers Group Inc.
Sr. Notes (Aa3, AA-)
6.625% 09/15/05 ......................... $ 10 $ 9,850
Travelers Property Casualty Corp.
Sr. Notes (A1, A+)
7.750% 04/15/26 ........................ 1,000 1,038,550
United Companies Financial Corp.
Sr. Notes (Ba1, BBB-)
7.000% 07/15/98 ......................... 270 269,662
-----------
14,542,735
-----------
FOOD & BEVERAGE -- 0.4%
Fresh del
Monte Produce N.V.
Sr. Notes Series B (B2, B+)
10.000% 05/01/03 ........................ 610 645,837
-----------
HEALTH CARE -- 2.6%
Merck & Co., Inc.
Medium Term Notes
Series B (NR, AAA)
5.760% 05/03/37 ......................... 2,900 2,918,125
Tenet Healthcare Corp.
Sr. Notes (Ba1, BB)
9.625% 09/01/02 ......................... 180 196,650
7.875% 01/15/03 ......................... 550 563,062
8.625% 12/01/03 ......................... 850 886,125
-----------
4,563,962
-----------
INDUSTRIAL GOODS & MATERIALS -- 1.3%
Dresser Industries, Inc.
Debentures (Aa3, A)
7.600% 08/15/49 ......................... 170 173,612
Fox/Liberty Networks L.L.C.,
144A Sr. Notes (B1, B)****
9.750% 08/15/07 ....................... 240 148,800
Sr. Discount Notes (B1, B)(DAGGER)(DAGGER)
8.875% 08/15/07 ....................... 440 434,500
Seagate Technology, Inc.
Sr. Debentures (Baa3, BBB)
7.450% 03/01/37 ......................... 1,500 1,520,625
---------
2,277,537
---------
METALS & MINING -- 0.2%
Armco, Inc.
Sr. Notes (B2, B+)
9.375% 11/01/00 ......................... 330 341,138
---------
PACKAGING/CONTAINERS -- 0.2%
Crown Packaging Enterprises Ltd.
Sr. Secured Discount
Notes (Ca, NR)(DAGGER)(DAGGER)
14.000% 08/01/06 ........................ 350 17,500
Gaylord Container Corp.
Sr. Sub. Debentures (Caa, B-)
12.750% 05/15/05 ........................ 300 328,125
---------
345,625
---------
PAR
(000) VALUE
--------- ----------
PUBLISHING & INFORMATION SERVICES -- 0.8%
Belo (A.H.) Corp.
Sr. Notes (Baa2, BBB-)
6.875% 06/01/02 ................................. $ 1,450 $1,466,313
----------
TELECOMMUNICATIONS -- 2.9%
BellSouth Capital Funding
Debentures (Aa1, AAA)
6.040% 11/15/26 ................................. 1,370 1,358,013
BellSouth
Telecommunications, Inc.
Debentures (Aaa, AAA)
5.850% 11/15/45 ................................. 1,810 1,791,900
7.000% 12/01/45 ................................. 125 121,406
ICG Holdings, Inc.
Gtd. Sr. Discount Notes
(NR, NR)(DAGGER)(DAGGER)
11.625% 03/15/07 ................................ 555 349,650
Nextel Communications, Inc.
Sr. Discount Notes (B3, CCC-)(DAGGER)(DAGGER)
11.500% 09/01/03 ................................ 245 233,056
Rogers Cantel Inc.
Yankee Sr. Secured
Debentures (Ba3, BB+)
9.375% 06/01/08 ................................. 590 632,775
Videotron Holdings Plc
Yankee Discount Notes
(Baa3, B+)(DAGGER)(DAGGER)
11.000% 08/15/05 ................................ 730 627,800
----------
5,114,600
----------
TRANSPORTATION -- 4.0%
Continental Airlines, Inc.
Sr. Notes (Ba3, B)
9.500% 12/15/01 ................................. 1,000 1,053,750
Delta Air Lines, Inc.
Debentures (Baa3, BB+)
10.375% 02/01/11 ................................ 665 817,950
Greater Beijing First
Expressways Ltd.
144A Sr. Notes (Ba1, BB)
9.250% 06/15/04 ................................. 870 878,700
Grupo Transportacion Ferroviaria
Mexicana, S.A. de C.V.:
144A Gtd. Sr. Discount
Debentures (B2, B+)****
0.000% 06/15/09 ............................... 1,000 625,000
144A Gtd. Sr. Notes
(B2, B+)****
10.250% 06/15/07 .............................. 310 320,850
Norfolk Southern Corp.
Notes (Baa1, BBB+)
6.950% 05/01/02 ................................. 750 767,813
7.875% 02/15/04 ................................. 5 5,238
7.050% 05/01/37 ................................. 1,250 1,285,938
See Accompanying Notes to Financial Statements.
27
<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 $ 290,000
US Air, Inc.
Gtd. Sr. Notes (B3, CCC+)
10.000% 07/01/03 ........................ 1,025 1,066,000
-----------
7,111,239
-----------
UTILITIES -- 3.3%
Beaver Valley Funding Corp.
Secured Lease Obligation
Bonds (Ba3, BB-)
9.000% 06/01/17 ......................... 2,305 2,457,314
Long Island Lighting Co.
Debentures (Ba3, BB+)
7.500% 03/01/07 ......................... 320 322,800
9.000% 11/01/22 ......................... 1,150 1,273,625
Niagara Mohawk Power Corp.
First Mortgage Bonds (Ba3, BB)
5.875% 09/01/02 ......................... 465 434,775
6.875% 04/01/03 ......................... 210 203,438
North Atlantic Energy Corp.
Secured First Mortgage Notes,
Series A (B1, B+)
9.050% 06/01/02 ......................... 270 271,013
TU Electric Capital Trust V,
Jr. Sub. Debentures (Baa2, BBB)
8.175% 01/30/37 ......................... 950 959,500
-----------
5,922,465
-----------
TOTAL CORPORATE BONDS
(Cost $52,687,612) ...................... 53,597,438
-----------
MUNICIPAL BONDS -- 1.1%
New Jersey Economic
Development Authority,
Pension Fund Revenue Bond:
Series A (Aaa, AAA)
7.425% 02/15/29 ....................... 1,450 1,492,152
Series B (Aaa, A1)
0.000% 02/15/08 ....................... 850 415,489
-----------
TOTAL MUNICIPAL BONDS
(Cost $1,856,273) ....................... 1,907,641
-----------
PAR
(000) VALUE
-------- -----------
FOREIGN BONDS -- 4.1%
Bank of Foreign Economic
Affairs of the USSR
(Vnesheconombank)
(When Issued) (Ba3, BB+)
12.000% 12/31/16 .............................. $ 1,350 $ 1,064,812
Canadian Treasury Bill (NR, NR)
0.000% 02/15/25 ............................... 3,700 2,633,522
Federal Republic of Brazil
Eligible Interest Bonds,
Series L (B1, BB-)
6.875% 04/15/06 ............................... 1,445 1,341,512
Federal Republic of
Brazil MYDFA Trust
Certificates (NR, NR)(DAGGER)
6.563% 09/15/07 ............................... 437 401,212
International Bank for
Reconstruction &
Development U.S. Dollar
Bonds (Aaa, AAA)
7.625% 01/19/23 ............................... 330 359,700
The Polish People's Republic
Discount Bonds FRN
(Baa3, BBB-)(DAGGER)
6.938% 10/27/24 ............................... 695 680,231
United Mexican States
Global Bonds (Ba2, BB)
11.375% 09/15/16 .............................. 720 837,000
-----------
TOTAL FOREIGN BONDS
(Cost $6,992,605) ............................. 7,317,989
-----------
AGENCY OBLIGATIONS -- 28.7%
FEDERAL HOME LOAN MORTGAGE CORPORATION -- 13.6%
7.000% 03/01/11 ............................... 1,268 1,274,930
7.000% 05/01/12 ............................... 2,295 2,307,648
FHLMC (TBA)**
6.500% 09/01/12 ............................... 7,150 7,049,453
7.000% 09/01/27 ............................... 1,200 1,188,000
7.000% 09/01/27 ............................... 8,963 8,859,365
FHLMC Series 1014 Class E
7.950% 02/15/20 ............................... 555 563,156
FHLMC Series 1860
Principle Only
0.000% 02/15/24 ............................... 1,624 914,711
FHLMC Series 1934, Class AB
6.000% 08/15/07 ............................... 1,950 1,931,370
-----------
24,088,633
-----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- 12.0%
10.000% 02/01/05 .............................. 43 45,952
7.000% 12/01/09 .............................. 827 829,588
10.000% 01/01/10 .............................. 15 16,583
7.000% 03/01/11 .............................. 3,243 3,254,041
See Accompanying Notes to Financial Statements.
28
<PAGE>
BEA U.S. CORE FIXED INCOME FUND (CONTINUED)
PAR
(000) VALUE
-------- -----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- (CONTINUED)
FNMA (TBA)**
6.500% 09/01/27 .............................. $ 2,700 $ 2,606,344
7.000% 12/31/26 .............................. 14,550 14,359,031
FNMA 1991-165 Class M
8.250% 12/25/21 .............................. 13 13,344
FNMA Series 1996-5 Class PX
Principle Only
0.000% 11/25/23 .............................. 160 89,400
-----------
21,214,283
-----------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -- 0.9%
8.250% 08/15/04 .............................. 1 809
9.000% 11/15/04 .............................. 1 1,389
9.000% 12/15/04 .............................. 1 1,136
8.250% 04/15/06 .............................. 2 1,758
13.500% 07/15/14 .............................. 1 936
9.000% 06/15/16 .............................. 93 99,050
8.000% 04/15/17 .............................. 164 168,988
9.000% 10/15/17 .............................. 428 454,508
9.000% 08/15/21 .............................. 657 697,952
9.000% 01/15/25 .............................. 137 145,625
-----------
1,572,151
-----------
MISCELLANEOUS -- 2.2%
Government Trust Certificates
Collateral Trust Series 1C
(Aaa, AAA)
9.250% 11/15/01 ............................... 604 635,384
National Archive Facility Trust
COP (Aaa, AAA)
8.500% 09/01/19 ............................... 736 843,888
Tennessee Valley Authority
Debentures Series C
(NR, AAA)
5.880% 04/01/36 ............................... 2,565 2,571,413
-----------
4,050,685
-----------
TOTAL AGENCY
OBLIGATIONS
(Cost $50,787,813) ............................ 50,925,752
-----------
ASSET BACKED SECURITIES -- 7.0%
Advanta Credit Card Master
Trust, Visa and MasterCard
Credit Card Receivables,
Series 1995-F Class A2
(Aaa, AAA)
5.842% 09/15/97 ............................... 3,450 3,456,210
AESOP Funding II L.L.C.
RentalCar Asset Backed Notes,
Series 1997-1, Class A2
(Aaa, AAA)
6.400% 10/20/03 ............................... 2,200 2,186,938
PAR
(000) VALUE
-------- -----------
ASSET BACKED SECURITIES -- (CONTINUED)
Fleetwood Credit Corporation
Grantor Trust, RV Retail
Installment Sale Contracts:
Series 1993-B, Class A
(Aaa, AAA)
4.950% 08/15/08 ...................... $ 6 $ 5,833
Series 1994-B, Class A
(Aaa, AAA)
6.750% 03/15/10 ...................... 288 289,117
Goldome Credit Corporation
Home Equity Trust
Series 1990-1, Class A
(Aa2, AA)
10.000% 07/15/05 .......................... 33 33,504
Green Tree Financial Corporation
Manufactured Housing Retail
Installment Sales Contracts:
Series 1993-4, Class A-2
(Aa2, NR)
5.850% 01/15/19 ...................... 78 78,078
Series 1995-5, Class A-3
(Aaa, AAA)
6.250% 09/15/26 ...................... 495 494,479
Series 1995-6, Class A-3
(Aaa, AAA)
6.650% 09/15/26 ...................... 130 130,832
Series 1995-7, Class A-2
(Aaa, AAA)
6.150% 11/15/26 ...................... 129 129,783
Series 1995-8, Class A-2
(Aaa, AAA)
6.150% 12/15/26 ...................... 110 110,269
Green Tree Securitized Net
Interest Margin Trust, REMIC,
Series 1994-A, Class A
(Baa3, NR)
6.900% 02/15/04 ........................... 114 114,428
Mellon Bank Credit Card Master
Trust, Series 1995-A, Class A
(Aaa, AAA)
5.870% 04/15/03 ........................... 2,550 2,559,690
Merrill Lynch Mortgage
Investors, Inc., Manufactured
Housing Retail Installment
Sales Contracts, Series 1991-C,
Class A (Aaa, AAA)
9.000% 07/15/11 ........................... 99 104,491
Metris Master Trust, MasterCard
Credit Card Receivables
Series 1997-1, Class A
(Aaa, AAA)
6.870% 10/20/05 ........................... 1,500 1,523,400
See Accompanying Notes to Financial Statements.
29
<PAGE>
BEA U.S. CORE FIXED INCOME FUND (CONTINUED)
PAR
(000) VALUE
-------- -----------
ASSET BACKED SECURITIES -- (CONTINUED)
New York City Tax Lien
Collateralized Bonds,
Series 1996-1, Class C
(NR, A)
7.110% 05/25/05 ........................... $ 543 $ 548,083
Standard Credit Card Master
Trust, Visa and MasterCard
Credit Card Receivables
Series 1993-2 Class A
(Aaa, AAA)
5.950% 10/07/04 ........................... 330 320,258
Vanderbilt Mortgage Finance,
Manufactured Housing Retail
Installment Sales Contracts,
Series 1995-B, Class A3
(Aaa, NR)
6.675% 05/07/06 ........................... 240 240,110
World Omni Automobile Lease
Securitization Trust, Retail
Closed-End Lease Contracts
Series 1995-A, Class A
(Aaa, AAA)
6.050% 11/25/01 ........................... 84 84,524
-----------
TOTAL ASSET BACKED
SECURITIES
(Cost $12,384,675) ........................ 12,410,027
-----------
COLLATERIZED MORTGAGED
BACKED SECURITIES -- 5.0%
Asset Securitization Corporation:
Series 1994-MD2, Class A1
(Aaa, AAA)
6.921% 07/07/03 ........................ 56 57,490
Series 1996-MD6, Class A1C
(Aaa, AAA)
7.040% 11/13/26 ........................ 1,100 1,117,359
Series 1996-MD6, Class A6
(Aa2, BBB)
7.375% 11/13/26 ........................ 650 666,961
Carousel Center Finance Inc.
Series 1, Class C, 144A
(NR, BBB+)
7.527% 11/15/07 ........................... 421 426,786
Chase Commercial Mortgage
Securities Corp. Series 1996-2,
Class A2 (NR, AAA)
6.900% 09/19/06 ........................... 100 102,000
Collateralized Mortgage
Obligation Trust, REMIC
Series 54, Class C (Aaa, AAA)
9.250% 11/19/28 ........................... 2 2,163
Kidder Peabody Acceptance
Corporation Series 1994-C1,
Class A (NR, AAA)
6.650% 02/01/06 ........................... 170 170,922
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 $ 970,800
Morgan Stanley Capital I Inc.
Series 1996-WF1, Class X
Interest Only (Aaa, AAA)
1.418% 01/15/13 ............................. 4,715 353,625
Morgan Stanley Capital I Inc.
Series 1997-HF1, Class A2
(Aaa, NR)
7.270% 06/15/29 ............................. 600 618,375
Morgan Stanley Capital I Inc.
Series 1997-WF1, Class A2
(Aaa, AAA)
7.220% 05/15/07 ............................. 800 827,000
Morserv Inc. REMIC,
Series 1994-A, Class 1A2
(Aaa, AAA)
7.000% 10/25/25 ............................. 124 124,551
PaineWebber Mortgage
Acceptance Corp. IV
Multifamily Mortgage
Pass-Throughs 144A:
Series 1995-M1,
Class A (NR, NR)****
6.700% 01/15/07 ........................ 1,200 1,211,063
Series 1995-M1,
Class D 144A (NR, NR)****
7.300% 01/15/07 ........................ 420 425,906
Salomon Brothers Mortgage
Securities VII, 144A
Series 1997-TZH, Class A2
(NR, NR)
7.174% 03/25/22 ............................. 800 810,720
Structured Asset Securities
Corporation Series 1996-CFL,
Class A1C (NR, AAA)
5.944% 02/25/28 ............................. 890 884,916
----------
TOTAL COLLATERIZED
MORTGAGED BACKED
SECURITIES
(Cost $8,719,282) ........................... 8,770,637
----------
NUMBER
OF SHARES
---------
COMMON STOCK -- 0.0%
PACKAGING/CONTAINERS -- 0.0%
Crown Packaging Enterprises,
Ltd. ........................................ 45,500 455
----------
TOTAL COMMONSTOCK
(Cost $0.00) ................................ 455
----------
See Accompanying Notes to Financial Statements.
30
<PAGE>
BEA U.S. CORE FIXED INCOME FUND (CONCLUDED)
NUMBER
OF SHARES VALUE
--------- ----------
PREFERRED STOCK -- 1.7%
BANKING -- 1.0%
California Federal Preferred
Capital Corp. 9.125%
Noncum. Exchangeable,
Series A ................................ 73,600 $1,927,400
----------
REAL ESTATE -- 0.4%
American Real Estate Corp.
8.50% Cumulative,
Series A ................................ 23,700 617,681
----------
UTILITIES -- 0.3%
Long Island Lighting Co. 7.05%
Cumulative, Series QQ ................... 18,650 475,575
----------
TOTAL PREFERRED STOCK
(Cost $2,932,150) ....................... 3,020,656
----------
PAR
(000)
-------
U.S. TREASURY OBLIGATIONS -- 17.1%
U.S. TREASURY BONDS -- 7.5%
9.375% 02/15/06 ......................... $ 120 143,369
8.875% 08/15/17 ......................... 1,250 1,549,950
7.625% 02/15/25 ......................... 10,315 11,533,408
-------------
13,226,727
-------------
U.S. TREASURY NOTES -- 9.6%
8.500% 02/15/00 ......................... 220 232,155
6.625% 06/30/01 ......................... 13,510 13,710,622
7.875% 11/15/04 ......................... 2,940 3,197,309
-------------
17,140,086
-------------
TOTAL U.S. TREASURY
OBLIGATIONS
(Cost $30,453,099) ...................... 30,366,813
-------------
SHORT TERM INVESTMENT -- 20.7%
BBH Grand Cayman
U.S. Dollar Time Deposit
5.063% 09/03/97 ......................... 36,655 36,655,000
-------------
TOTAL SHORT TERM
INVESTMENT
(Cost $36,655,000) ................... 36,655,000
-------------
WARRANTS -- 0.0%
Capital Pacific Holdings
Group, Inc. ............................. 1,817 1,363
-------------
TOTAL WARRANTS
(Cost $1,000) ........................... 1,363
-------------
TOTAL INVESTMENTS -- 115.7%
(Cost $203,469,509*) .................... 204,973,771
-------------
LIABILITIES IN EXCESS
OF ASSETS -- (15.7%) .................... (27,755,189)
-------------
VALUE
-------------
NET ASSETS (Applicable to
11,321,399 BEA Institutional
Shares) -- 100.0% ........................ $177,218,582
============
NET ASSET VALUE,
OFFERING PRICE AND
REDEMPTION PRICE PER
BEA INSTITUTIONAL
SHARE
($177,218,582 (DIVIDE) 11,321,399) ....... $15.65
======
* Also cost for Federal income tax purposes at August 31, 1997. The gross
appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation ................................. $2,223,947
Gross Depreciation ................................. (719,685)
----------
Net Appreciation ................................... $1,504,262
==========
** Securities were acquired on a delayed delivery basis.
*** Non-income producing securities.
**** Certain conditions for public sales may exist.
***** Non-income producing securities which are in default.
(DAGGER)Variable rate obligations -- The interest shown is the rate as of August
31, 1997.
(DAGGER)(DAGGER) Step Bond -- The interest rate as of August 31, 1997 is 0% and
will reset to interest shown at a future date.
(DAGGER)(DAGGER)(DAGGER) Securities have no stated maturity date.
(DAGGER)(DAGGER)(DAGGER)(DAGGER) Guaranteed by Grupo Sidek, S.A. de C.V. and
Grupo Situr S.A. de C.V.
The Moody's Investors Service, Inc. and Standard & Poor's Ratings Group ratings
indicated are the most recent rating available at August 31, 1997 and are
unaudited.
INVESTMENT ABBREVIATIONS
COP ............................................... Certificate of Participation
FRN ......................................................... Floating Rate Note
TBA ............................................................ To Be Announced
VRN ........................................................ Variable Rate Notes
AT AUGUST 31, 1997, NET ASSETS CONSISTED OF:
AMOUNT
-------------
Capital Paid-In ................................................. $171,170,618
Accumulated Net Investment Income ............................... 2,336,444
Accumulated Net Realized Gain on
Security and Foreign Exchange
Transactions ................................................. 2,197,965
Net Unrealized Appreciation on
Investments and Other ........................................ 1,513,555
- --------------------------------------------------------------------------------
NET ASSETS ...................................................... $177,218,582
- --------------------------------------------------------------------------------
See Accompanying Notes to Financial Statements.
31
<PAGE>
BEA STRATEGIC GLOBAL FIXED INCOME FUND
PORTFOLIO MANAGER'S LETTER
September 18, 1997
Dear Shareholders:
We are pleased to report on the results of the BEA Strategic Global Fixed Income
Fund (the "Fund") for the year ended August 31, 1997 and discuss our investment
strategy.
PERFORMANCE REVIEW
At August 31, 1997, the net asset value ("NAV") of the Fund was $15.41, compared
to an NAV of $15.75 on August 31, 1996. As a result, the Fund's total return
(assuming reinvestment of dividends and distributions) was 4.48%. By comparison,
the unhedged J.P. Morgan Global Government Bond Index (the "Index") returned
1.66% during the same period. For the six months ended August 31, 1997, the Fund
returned 1.22% (assuming reinvestment of dividends), versus 1.66% for the Index.
MARKET REVIEW
Developed bond markets bounced back from heavy selling pressure early in 1997 to
generate much better returns in the second quarter. Each of the two trends that
had kept prices down earlier completely reversed, and bonds rallied accordingly.
First, widespread fears that the Federal Reserve would raise U.S. interest rates
dissipated after the Fed tightened in March. The yield on the bellwether 30-year
U.S. Treasury bond fell to 6.60% at August 31st from 6.83% on March 1st. Second,
the yen rallied against the dollar enough for Japan to become one of the
top-performing developed debt markets.
A combination of factors fueled an even stronger performance among emerging debt
markets. These include the benign global interest-rate environment; improving
sovereign and corporate fundamentals; the actual or prospective repurchase of
outstanding Brady bonds; and rising concerns about the viability of the European
Monetary Union ("EMU").
PORTFOLIO REVIEW
We attribute the Fund's outperformance of the Index over the last year primarily
to the inclusion of several emerging market securities. At the end of August,
the portfolio held sovereign instruments of Russia, Mexico, Venezuela, Brazil
and Argentina, each of which has enjoyed good news in recent months. The Fund
also gained from our avoidance of exposure to several currencies (e.g., the
Philippine peso and Thai baht) that are at the center of recent volatility among
Asian currencies more generally.
Performance was somewhat dampened by our decisions to overweight the deutsche
mark, which weakened against the dollar, and underweight the yen, whose strength
we have noted. The deutsche mark has considerably fallen in response to
investors' perception that the euro, which largely reflects the status of the
deutsche mark, will be a "soft" currency at its 1999 debut.
In the late spring, we began to make several adjustments that should position
the Fund for upside movement. For example, we concentrated European holdings
into a core position in German debt. Our rationale is that the market has
overreacted to concerns about EMU and Germany should garner much of what we
believe will be a reversal of such pessimism. We also reduced the Fund's
exposure to individual emerging market currencies by investing in a
multicurrency basket issued by Deutsche Bank.
32
<PAGE>
BEA STRATEGIC GLOBAL FIXED INCOME FUND
PORTFOLIO MANAGER'S LETTER (CONTINUED)
OUTLOOK
The environment for global fixed income continues to be a favorable mix of
moderate growth and subdued inflation:
(BULLET) The U.S. economy is running on all cylinders yet not overheating. The
Federal Reserve has not utilized any of its opportunities to raise interest
rates since it last did so in March.
(BULLET) The sluggishness of the Japanese economy suggests that interest rates
there will remain stable.
(BULLET) The same applies to Europe, where unemployment in Germany and France
has reached heights not seen in decades and both nations are struggling to
meet the requirements for participation in EMU.
(BULLET) Among emerging markets, most Latin nations are strongly focused on
achieving fiscal balance and maintaining stable monetary policies. Asian
economies are being hit by the harsh coincidence of currency turmoil,
banking-sector problems and a slowdown in export growth. Much of Eastern
Europe (e.g., Poland, Russia, Bulgaria, Hungary) is making progress in
transitioning to a market-based economy.
Against this backdrop, we see healthy prospects for global debt. In our view,
there are potentially attractive opportunities that may develop in peripheral
Europe (i.e., Italy, Spain, Sweden) as well as some remaining upside in the
dollar. We also believe that our position in Russian loans is likely to be
refinanced by the end of the year.
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
33
<PAGE>
BEA STRATEGIC GLOBAL FIXED INCOME FUND
PORTFOLIO MANAGER'S LETTER (CONCLUDED)
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE BEA STRATEGIC GLOBAL
FIXED INCOME FUND AND THE JP MORGAN GLOBAL GOVERNMENT BOND INDEX (UNHEDGED) FROM
INCEPTION 6/28/94, PERIOD ENDED 7/31/94, AND AT EACH QUARTER END.
[GRAPHIC OMITTED]
PLOT POINTS FOLLOW:
BEA Strategic JP Morgan Global
Global Fixed Govt. Bond Index
Income Fund (Unhedged)
06/28/1994 10,000 10,000
07/31/1994 10,027 10,115
08/31/1994 10,001 10,089
11/30/1994 10,045 10,161
02/28/1995 10,274 10,659
05/31/1995 11,156 11,696
08/31/1995 11,072 11,496
11/30/1995 11,574 12,003
02/29/1996 11,668 11,957
05/31/1996 11,831 11,907
08/31/1996 12,140 12,283
11/30/1996 12,815 12,776
02/28/1997 12,531 12,284
05/31/1997 12,673 12,408
08/31/1997 12,684 12,487
- ------------------------
AVERAGE ANNUAL
TOTAL RETURN
One Year 4.48%
From Inception 7.76%
- ------------------------
Note: Past performance is not predictive of future performance.
34
<PAGE>
BEA STRATEGIC GLOBAL FIXED INCOME FUND
OF THE RBB FUND, INC.
STATEMENT OF NET ASSETS
AUGUST 31, 1997
PAR
(000) VALUE
-------- -----------
INTERNATIONAL BONDS -- 44.0%
ARGENTINA -- 0.4%
Republic of Argentina
Step Up Par Bonds, Series L-GP
(Ba3, BB)
5.250% 03/31/23 .............................$ 250 $ 183,594
----------
AUSTRALIA -- 1.1%
Queensland Treasury Corp.
Global Bonds (Aaa, NR)
8.000% 07/14/99 .............................AUD 630 485,293
----------
BRAZIL -- 1.0%
Federal Republic of Brazil
MYDFA Trust Certificates
(NR, NR)(DAGGER)
6.563% 09/15/07 .............................$ 485 445,791
----------
CANADA -- 1.9%
Government of Canada
Debentures (Aa1, AAA)
8.750% 12/01/05 .............................CND 1,000 853,771
----------
FRANCE -- 1.5%
Republic of France
Treasury Bonds (Aaa, NR)
7.500% 04/25/05 .............................FF 3,600 674,296
----------
GERMANY -- 6.1%
Federal Republic of Germany
Eurobonds (Aaa, NR)
7.250% 10/21/02 .............................DEM 2,000 1,221,366
6.000% 02/16/06 ............................. 2,630 1,499,859
----------
2,721,225
----------
ITALY -- 2.7% Republic of Italy:
Bonds (Aa3, AAA)
6.250% 03/01/02 ..........................ITL 1,000,000 568,063
Debentures (Aa3, AAA)
8.500% 01/01/04 .......................... 1,025,000 637,124
----------
1,205,187
----------
MEXICO -- 2.0%
United Mexican States:
Par Bond Series W-A
(Ba2, BB)
6.250% 12/31/19 ..........................$ 750 600,938
Certificado de Tesoreria
(NR, NR)
0.000% 04/02/98 .......................... 2,634 293,294
----------
894,232
----------
NETHERLANDS -- 2.6%
Kingdom of Netherlands
Government Bonds
(NR, NR)
5.750% 01/15/04 .............................NLG 2,250 1,138,561
----------
PAR
(000) VALUE
-------- -----------
NEW ZEALAND -- 2.2%
Government of New Zealand
Bonds (Aaa, AAA)
8.000% 02/15/01 .............................NZD 1,000 $ 655,703
8.000% 04/15/04 ............................. 500 333,784
----------
989,487
----------
RUSSIA -- 1.5%
Bank of Foreign Economic
Affairs of The USSR
(Vnesheconombank)
(When Issued) (NR, NR)
13.000% 01/15/21 ............................$ 900 644,625
----------
SPAIN -- 1.6%
Kingdom of Spain
Debentures (Aa2, NR)
7.350% 03/31/07 .............................ESP 99,000 695,128
----------
SUPRANATIONAL -- 6.6%
International Bank for
Reconstruction & Development
Japanese Yen Global Bonds
(Aaa, AAA)
5.250% 03/20/02 .............................JPY 300,000 2,910,768
----------
SWEDEN -- 4.2%
Kingdom of Sweden
Debentures (Aa1, NR)
6.500% 10/25/06 .............................SEK 5,000 632,638
Nordic Investment Bank
Swedish Kronor Notes
(Aaa, AAA)
6.250% 02/08/99 .............................SEK 4,500 580,729
Skandinaviska Enskilda
Banken AB
Perpetual Sub. FRN (NR, NR)
7.500% ......................................$ 650 650,260
----------
1,863,627
----------
UNITED KINGDOM -- 7.5%
U.K. Treasury Gilt Bonds
(Aaa, NR)
7.500% 12/07/06 .............................GBP 2,000 3,325,281
----------
VENEZUELA -- 1.1%
Republic of Venezuela
Debt Conversion Bonds,
Series DL (Ba2, B+)
6.750% 12/18/07 .............................$ 500 468,125
----------
TOTAL INTERNATIONAL
BONDS
(Cost $20,596,853) .......................... 19,498,991
----------
See Accompanying Notes to Financial Statements.
35
<PAGE>
BEA STRATEGIC GLOBAL FIXED INCOME FUND (CONTINUED)
PAR
(000) VALUE
-------- -----------
DOMESTIC BONDS -- 49.4%
CORPORATE BONDS -- 5.1%
CABLE -- 0.5%
Bell Cablemedia plc Yankee
Senior Discount Notes
(Baa3, BBB+)(DAGGER)(DAGGER)
11.875% 09/15/05 .......................... $ 225 $ 193,500
----------
FINANCIAL SERVICES -- 0.7%
AT&T Capital Corporation
Medium Term Notes
Series 4 (Baa3, BBB)
6.920% 04/29/99 ........................... 320 323,200
----------
INDUSTRIAL GOODS AND MATERIALS -- 1.0%
Seagate Technology, Inc.
Sr. Debentures (Baa3, BBB)
7.450% 03/01/37 ........................... 440 446,050
----------
REAL ESTATE -- 0.7%
Health and Retirement Properties
Trust, RemarketedReset Notes
(Baa2, BBB)
6.200% 10/09/97 ........................... 310 310,000
----------
TELECOMMUNICATIONS -- 0.3%
Videotron Holdings plc
Yankee Discount Notes
(Baa3, B+)(DAGGER)(DAGGER)
11.000% 08/15/05 .......................... 175 150,500
----------
TRANSPORTATION -- 0.8%
Delta Air Lines, Inc.
Debentures (Baa3, BB+)
10.375% 02/01/11 .......................... 125 153,750
US Air, Inc.
Gtd. Sr. Notes (B3, B-)
10.000% 07/01/03 .......................... 175 182,000
----------
335,750
----------
UTILITIES -- 1.1%
Beaver Valley Funding Corp.
Secured Lease Obligation
Bonds (Ba3, BB-)
9.000% 06/01/17 ........................... 460 490,397
----------
TOTAL CORPORATE BONDS
(Cost $2,275,579) ......................... 2,249,397
----------
ASSET BACKED SECURITIES -- 2.0%
Advanta Credit Card Master Trust
Visa and MasterCard
Credit Card Receivables
Series 1995-F Class A2
(Aaa, AAA)
5.842% 08/01/03 ........................... 490 490,882
PAR
(000) VALUE
--------- -----------
ASSET BACKED SECURITIES -- (CONTINUED)
Mellon Bank Credit Card Master
Trust, Visa and MasterCard
Credit Card Receivables
Series 1995-A Class A
(Aaa, AAA)
5.870% 04/15/03 ............................. $ 390 $ 391,482
-----------
TOTAL ASSET BACKED
SECURITIES
(Cost $881,987) ............................. 882,364
-----------
STRUCTURED NOTES -- 2.0%
Deutsche Morgan Grenfell, Inc.
Emerging Market Currency
Basket Structured Notes
0.000% 10/02/97 ............................. 930 880,245
-----------
TOTAL STRUCTURED NOTES
(Cost $892,103) ............................. 880,245
-----------
U.S. TREASURY OBLIGATIONS -- 29.6%
U.S. TREASURY BONDS -- 7.2%
7.625% 2/15/25 .............................. 2,860 3,197,823
-----------
U.S. TREASURY NOTES -- 22.4%
6.625% 06/30/01 ............................. 2,500 2,537,125
6.375% 09/30/01 ............................. 2,000 2,012,300
6.125% 12/31/01 ............................. 640 637,894
6.250% 02/28/02 ............................. 2,000 2,001,520
7.250% 05/15/04 ............................. 1,700 1,786,955
7.000% 07/15/06 ............................. 900 935,406
-----------
9,911,200
-----------
TOTAL U.S. TREASURY
OBLIGATIONS
(Cost $13,114,178) .......................... 13,109,023
-----------
AGENCY OBLIGATIONS -- 10.7%
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- 8.5%
FNMA (TBA)**
6.500% 09/01/27 ............................. 390 376,471
7.000% 12/31/25 ............................. 3,450 3,404,719
-----------
3,781,190
-----------
FEDERAL HOME LOAN MORTGAGE ASSOCIATION -- 2.2%
FHLMC (TBA)**
6.500% 08/01/12 ............................. 1,000 985,937
-----------
TOTAL AGENCY
OBLIGATIONS
(Cost $4,769,281) ........................... 4,767,127
-----------
TOTAL DOMESTIC BONDS
(Cost $21,933,128) .......................... 21,888,156
-----------
See Accompanying Notes to Financial Statements.
36
<PAGE>
BEA STRATEGIC GLOBAL FIXED INCOME FUND (CONCLUDED)
PAR
(000) VALUE
--------- -----------
SHORT-TERM INVESTMENT -- 18.0%
BBH Grand Cayman U.S. Dollar
Time Deposit
5.063% 09/02/97 ...................... $ 7,943 $ 7,943,000
------------
TOTAL SHORT-TERM
INVESTMENT
(Cost $7,943,000) ................. 7,943,000
------------
TOTAL INVESTMENTS -- 111.4%
(Cost $50,472,981*) .................. 49,330,147
------------
LIABILITIES IN EXCESS
OF ASSETS-- (11.4%) .................. (5,044,746)
------------
NET ASSETS (Applicable to
2,873,591 BEA Institutional
Shares)-- 100.0% ..................... $ 44,285,401
============
NET ASSET VALUE,
OFFERING PRICE AND
REDEMPTION PRICE PER
BEA INSTITUTIONAL
SHARE
($44,285,401 (DIVIDE) 2,873,591) ..... $15.41
======
* Also cost for Federal income tax purposes at August 31, 1997. The gross
appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation ..................................... $ 275,823
Gross Depreciation ..................................... (1,418,657)
-----------
Net Appreciation ....................................... $(1,142,834)
===========
** Securities were acquired on a delayed delivery basis.
(DAGGER) ariable rate obligations -- The interest shown is the rate as of August
31, 1997.
(DAGGER)(DAGGER Step Bond -- The interest rate as of August 31, 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 August 31, 1997 and are
unaudited.
CURRENCY ABBREVIATIONS
AUD ........................................................ Australian Dollars
CND .......................................................... Canadian Dollars
DEM ....................................................... German Deutschmarks
ESP ........................................................... Spanish Pesetas
FF .............................................................. French Francs
GBP ..................................................... United Kingdom Pounds
ITL .............................................................. Italian Lira
JPY .............................................................. Japanese Yen
NLG ........................................................ Netherland Guilder
NZD ....................................................... New Zealand Dollars
SEK ............................................................. Swedish Krona
INVESTMENT ABBREVIATIONS
FRN ........................................................ Floating Rate Note
AT AUGUST 31, 1997, NET ASSETS CONSISTED OF:
AMOUNT
-------------
Capital Paid-In .................................................. $44,200,696
Accumulated Net Investment Income ................................ 914,790
Accumulated Net Realized Gain on
Security and Foreign Exchange
Transactions .................................................. 984,817
Net Unrealized Depreciation on
Investments and Other ......................................... (1,814,902)
- --------------------------------------------------------------------------------
NET ASSETS ....................................................... $44,285,401
- --------------------------------------------------------------------------------
See Accompanying Notes to Financial Statements.
37
<PAGE>
BEA HIGH YIELD FUND
PORTFOLIO MANAGER'S LETTER
September 18, 1997
Dear Shareholders:
We are pleased to report on the results of the BEA High Yield Fund (the "Fund")
for the year ended August 31, 1997.
PERFORMANCE REVIEW
At August 31, 1997, the net asset value ("NAV") of the Fund's Institutional
Class was $17.08, compared to an NAV of $16.09 on August 31, 1996. As a result,
the Institutional Class' total return (assuming reinvestment of dividends) was
15.17%. By comparison, the Credit Suisse First Boston High Yield Index (the
"Index") gained 15.43% during the same period. For the six months ended August
31, 1997, the Institutional Class returned 6.02% (assuming reinvestment of
dividends), versus 5.90% for the Index.
The NAV of the Fund's Advisor Class was $17.08 on August 31, 1997, compared to
an NAV of $16.21 on November 1, 1996 (commencement of operations). As a result,
the Advisor Class' total return (assuming reinvestment of dividends) for the
period was 11.49%, compared to 12.53% for the Index. For the six months ended
August 31, 1997, the Advisor Class' return (assuming reinvestment of dividends)
was 5.91% return versus 5.90% for the Index.
MARKET REVIEW
Performance of fixed income markets in recent months has been broadly positive.
Prices of most debt subcategories, which had fallen in March over concern about
a hike in interest rates, erased March's losses and rose even higher.
The market's turnaround is attributable to two factors. First, the Federal
Reserve chose not to raise interest rates at its Open Market Committee meetings
in May, July and August. Second, government data increasingly suggested an
absence of inflationary pressures on the economy.
High yield has generated the best returns of any U.S. debt subcategory
year-to-date, with the yield spreads between high yield and Treasury instruments
narrowing to record lows. The vitality of the high yield market is reflected by
several meaningful indicators:
(BULLET) MUTUAL FUND INFLOWS. According to Chase Securities, individuals poured
$13.4 billion of net new cash into high yield mutual funds through August,
compared to $9.2 billion in the same period in 1996. The $13.4 billion
year-to-date total is within close reach of the $15.9 billion inflow for
all of 1996.
(BULLET) NEW ISSUES. The decline in interest rates in 1997 has made terms more
attractive both for new issues and refinancings of outstanding paper. Chase
Securities calculates total new supply at $82.5 billion through August.
This figure is well in excess both of the $50.7 billion recorded during the
same period last year and the $73.6 billion in new supply for all of 1996.
(BULLET) YIELDS. Lower market yields mean that prices are strengthening. The
average market-weighted new-issue offer yield in August was 9.87%, down
from 10.62% for 1996 as a whole. The average yield for the overall high
yield market dropped to 8.89%, versus 10.16% on August 1, 1996.
(BULLET) MARKET SIZE. The size of the high yield market at August 31st was
estimated by Chase Securities at $419 billion, the highest such level ever.
PORTFOLIO REVIEW
Our general strategy during 1997 has been to maintain existing positions and
adjust the portfolio only as necessary. The Fund's outperformance of the Credit
Suisse First Boston benchmark since February, then, is primarily attributable to
the strength of its individual holdings and sector weightings.
Portfolio weightings were responsible for the outperformance by the Fund's five
most heavily weighted sectors, of their corresponding subgroups within the
benchmark. Since four subgroups (I.E., cable and media, telecommunications,
gaming and metals/mining) all generated higher returns than the overall
benchmark, for example, our overweighting of these sectors relative to the
benchmark resulted in outperformance. The subgroup corresponding to the
portfolio's fifth-largest sector (energy) returned less than the overall
benchmark, meaning that we outperformed because we underweighted the sector
versus the benchmark.
See Accompanying Notes to Financial Statements.
38
<PAGE>
BEA HIGH YIELD FUND
PORTFOLIO MANAGER'S LETTER (CONTINUED)
OUTLOOK
In light of the Fed's decision to leave interest rates unchanged, we view the
fundamental environment for high yield securities as remaining positive through
the balance of 1997. Technical factors, however, may present some danger. These
include the potential for excess supply in the market from new issues,
refinancings and prepayments; and the strong equity market, which creates
additional downside risk for issuers whose earnings do not meet expectations. We
are monitoring market conditions accordingly.
The longer-term outlook remains bright. As long as interest rates and the threat
of inflation continue to be relatively low, investors should have ample
liquidity and will seek out the highest yields available in the marketplace. Two
other auspicious factors that we have previously noted are worthy of
reiteration. These are the need for greater diversification of retirement plan
assets as cash inflows rise, and the increasing comfort level of many
institutional investors with below-investment-grade fixed income in their asset
mixes.
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
39
<PAGE>
BEA HIGH YIELD FUND
PORTFOLIO MANAGER'S LETTER (CONCLUDED)
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE BEA HIGH YIELD
INSTITUTIONAL CLASS AND THE CS FIRST BOSTON HIGH YIELD INDEX FROM INCEPTION
3/1/93 AND AT EACH QUARTER END.
[GRAPHIC OMITTED]
PLOT POINTS FOLLOW:
CS First Boston BEA High Yield
High Yield Fund Fund
Institutional Class Institutional Class
03/01/1993 10,000 10,000
05/31/1993 10,607 10,419
08/31/1993 11,294 10,809
11/30/1993 11,872 11,209
02/28/1994 12,128 11,570
05/31/1994 11,484 11,143
08/31/1994 11,539 11,201
11/30/1994 11,449 11,123
02/28/1995 10,961 11,638
05/31/1995 12,010 12,370
08/31/1995 12,439 12,680
11/30/1995 12,784 13,029
02/29/1996 13,665 13,516
05/31/1996 13,990 13,662
08/31/1996 13,984 13,965
11/30/1996 14,571 14,547
02/28/1997 15,190 15,219
05/31/1997 15,350 15,488
08/31/1997 16,105 16,119
- ------------------------
AVERAGE ANNUAL
TOTAL RETURN
One Year 15.17%
From Inception 11.17%
- ------------------------
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE BEA HIGH YIELD
ADVISOR CLASS AND THE CS FIRST BOSTON HIGH YIELD INDEX FROM INCEPTION 11/1/96
AND AT EACH QUARTER END.
[GRAPHIC OMITTED]
PLOT POINTS FOLLOW:
BEA High CS First Boston
Yield Fund High Yield Fund
Advisor Class Advisor Class
11/30/1996 10,000 10,000
02/28/1997 10,541 10,625
05/31/1997 10,646 10,813
08/31/1997 11,164 11,253
- -----------------------
TOTAL RETURN
From Inception 11.49%
- -----------------------
Note: Past performance is not predictive of future performance.
40
<PAGE>
BEA HIGH YIELD FUND
OF THE RBB FUND, INC.
STATEMENT OF NET ASSETS
AUGUST 31, 1997
PAR
(000) VALUE
--------- -----------
CORPORATE BONDS -- 93.2%
AUTOMOTIVE -- 4.5%
Cambridge Industries, Inc.
144A Gtd. Sr. Sub. ........................
Notes (B3, B-)
10.250% 07/15/07 .......................... $ 400 $ 417,000
Collins & Aikman Products Corp.
Gtd. Sr. Sub. Notes (B3, B)
11.500% 04/15/06 .......................... 700 798,000
Consorcio G Grupo Dina S.A./
MCII Holdings (U.S.A.), Inc.
144A Sr. Secured Notes
(NR, NR)
9.875% 11/15/02 ........................... 800 722,000
Delco Remy International, Inc.
144A Gtd. Sr. Sub. Notes
(B2, B-)
10.625% 08/01/06 .......................... 500 532,500
Hayes Wheels International Inc.
144A Gtd. Sr. Sub. Notes
(B3, B)
9.125% 07/15/07 ........................... 350 355,250
LDM Technologies, Inc.
144A Sr. Sub. Notes (B3, B-)
10.750% 01/05/07 .......................... 400 429,000
Oxford Automotive, Inc.
144A Gtd. Sr. Sub. Notes
(NR, B-)
10.125% 06/15/07 .......................... 300 308,250
Safelite Glass Corp.
144A Sr. Sub. Notes (B3, B)
9.875% 12/15/06 ........................... 350 371,000
Titan Wheel International, Inc.
Sr. Sub. Notes (B1, BB-)
8.750% 04/01/07 ........................... 250 259,687
----------
4,192,687
----------
BROADCASTING -- 6.0%
Allbritton Communications
Company
Sr. Sub. Notes, Series B
(B3, B-)****
9.750% 11/30/07 ........................... 500 490,000
American Radio Systems Corp.
Gtd. Sr. Sub. Notes (B2, B-)
9.000% 02/01/06 ........................... 500 525,000
Australis Holdings PTY Ltd.
144A Yankee Units (NR, NR)(DAGGER)
15.000% 11/01/02 .......................... 294 230,790
Australis Media Ltd.
Yankee Gtd. Sr. Sub. Discount
Notes (NR, NR)
15.750% 05/15/03 .......................... 908 721,777
PAR
(000) VALUE
--------- -----------
BROADCASTING -- (CONTINUED)
Capstar Broadcasting Partners, Inc.
144A Sr. Discount
Notes (NR, NR)(DAGGER)
12.750% 02/01/09 ............................ $ 500 $ 330,000
Chancellor Radio Broadcasting
Company
Sr. Sub. Notes (B3, B-)
9.375% 10/01/04 ............................. 500 520,000
EchoStar Communications Corp.
Gtd. Sr. Discount Notes (B2, B)(DAGGER)
12.875% 06/01/04 ............................ 600 522,000
Granite Broadcasting Corp.
Sr. Sub. Notes (B3, B-)
9.375% 12/01/05 ............................. 450 441,000
Jacor Communications Co.
Sr. Sub. Notes (B2, B)
9.750% 12/15/06 ............................. 500 531,250
Sinclair Broadcast Group
Sr. Sub. Notes (B2, B)
10.000% 09/30/05 ............................ 500 523,750
Spanish Broadcasting System, Inc.
144A Sr. Notes (B2, B)
11.000% 03/15/04 ............................ 300 324,000
Young Broadcasting, Inc.
Gtd. Sr. Sub. Notes,
Series B (B2, B)
9.000% 01/15/06 ............................. 500 495,000
----------
5,654,567
----------
CABLE -- 10.1%
Adelphia Communications Corp.
144A Sr. Notes (B3, B)
10.500% 07/15/04 ............................ 400 418,000
Cablevision Systems Corp.
Sr. Sub. Debentures (B2, B)
9.875% 02/15/13 ............................. 750 804,375
Charter Communications
Southeast, L.P. .............................
Sr. Notes Series B (B2, B)
11.250% 03/15/06 ............................ 900 978,750
Comcast U.K. Cable Partners Ltd.,
Yankee Sr. Debentures
(B2, B-)(DAGGER)
11.200% 11/15/07 ............................ 750 575,625
DIVA Systems Corporation
144A Units (NR, NR)(DAGGER)
10.750% 05/15/06 ............................ 2,250 1,355,625
Falcon Holding Group L.P.
Sr. Sub. Notes
PIK Bonds (NR, NR)
11.000% 09/15/03 ............................ 719 738,622
See Accompanying Notes to Financial Statements.
41
<PAGE>
BEA HIGH YIELD FUND (CONTINUED)
PAR
(000) VALUE
--------- -----------
CABLE -- (CONTINUED)
Helicon Group L.P.
Sr. Secured Notes Series B
(B1, B)(DAGGER)
11.000% 11/01/03 ............................ $ 500 $ 526,875
International CableTel, Inc.
Sr. Deferred Coupon Notes
Series A (B3, B-)(DAGGER)
11.000% 04/15/05 ............................ 750 597,187
James Cable Partners, L.P./James
Cable Finance Corp.
144A Sr. Notes (B2, B+)
10.750% 08/15/04 ............................ 250 254,375
Lenfest Communications, Inc.
Sr. Notes (Ba3, BB+)
8.375% 11/01/05 ............................. 500 495,000
Marcus Cable L.P.
Sr. Discount Notes (Caa, B)(DAGGER)
14.250% 12/15/05 ............................ 950 776,625
Rifkin Acquisition Partners L.P.
Sr. Sub. Notes (B3, B-)
11.125% 01/15/06 ............................ 500 537,500
Rogers Communications, Inc.
Yankee Sr. Notes (B2, BB-)
9.125% 01/15/06 ............................. 550 563,750
United International Holdings, Inc.
Sr. Secured Discount Notes
Series B (B3, B-)
0.000% 11/15/99 ............................. 1,000 792,500
----------
9,414,809
----------
CHEMICALS -- 1.6%
Freedom Chemical Company
Sr. Sub. Notes (B3, B-)
10.625% 10/15/06 ............................ 500 527,500
Harris Chemical North America
Sr. Secured Debentures
(B2, B+)(DAGGER)
10.250% 07/15/01 ............................ 400 416,000
Sterling Chemical Holdings, Inc.
Sr. Discount Notes (Caa, B+)(DAGGER)
9.750% 08/15/08 ............................. 700 481,250
----------
1,424,750
----------
COMPUTERS, SOFTWARE & SERVICES -- 1.0%
Advanced Micro Devices, Inc.
Sr. Secured Notes (Ba1, BB-)
11.000% 08/01/03 ............................ 500 562,500
Verio, Inc.
144A Units (NR, NR)
13.500% 06/15/04 ............................ 350 373,625
----------
936,125
----------
PAR
(000) VALUE
--------- -----------
CONSTRUCTION & BUILDING MATERIALS -- 2.1%
Collins & Aikman
Floorcoverings, Inc.
Sr. Sub. Notes Series B
(B3, B-)
10.000% 01/15/07 ............................ $ 250 $ 251,875
Nortek, Inc.
144A Sr. Notes (B1, B+)
9.125% 09/01/07 ............................. 250 249,375
Omega Cabinets, Ltd.
144A Gtd. Sr. Sub.
Notes (NR, NR)
10.500% 06/15/07 ............................ 300 302,250
Southdown, Inc.
144A Sr. Sub. Notes (B1, B+)
10.000% 03/01/06 ............................ 500 543,750
Waxman Industries, Inc.
Sr. Notes, Series B
(Caa, CCC+)(DAGGER)
12.750% 06/01/04 ............................ 600 519,750
----------
1,867,000
----------
CONSUMER PRODUCTS & SERVICE -- 2.2%
Coinstar, Inc.
Sr. Discount Notes (NR, NR)(DAGGER)
9.500% 10/01/06 ............................. 525 399,656
Hosiery Corp. of America, Inc.
Sr. Sub. Notes (B3, B-)
13.750% 08/01/02 ............................ 400 449,500
Jordan Industries, Inc.
144A Sr. Notes (B3, B+)
10.375% 08/01/07 ............................ 400 400,000
Renaissance Cosmetics, Inc.
Sr. Notes (B3, B-)
11.750% 02/15/04 ............................ 500 499,375
Signature Brands USA, Inc.
Sr. Sub. Notes (B3, B-)
13.000% 08/15/02 ............................ 250 268,437
---------
2,016,968
---------
ELECTRONICS -- 1.5%
Exide Electronics Group, Inc.
Sr. Sub. Notes,
Series B (B3, B)
11.500% 03/15/06 ............................ 550 635,250
Unisys Corporation
Sr. Notes, Series B (B1, B+)
12.000% 04/15/03 ............................ 700 773,500
---------
1,408,750
---------
ENERGY -- 5.7%
Bellwether Exploration Company
Gtd. Sr. Sub. Notes (B3, B-)
10.875% 04/01/07 ........................... 500 540,000
Cliffs Drilling Co.
Sr. Notes, Series B (B1, B)
10.250% 05/15/03 ........................... 600 645,000
See Accompanying Notes to Financial Statements.
42
<PAGE>
BEA HIGH YIELD FUND (CONTINUED)
PAR
(000) VALUE
--------- -----------
ENERGY -- (CONTINUED)
Dailey Petroleum Services Corp.
144A Gtd. Sr. Notes (B1, B+)
9.750% 08/15/07 ......................... $ 400 $ 408,000
Forcenergy, Inc.
Sr. Sub. Notes (B2, B)
9.500% 11/01/06 ......................... 250 260,625
HS Resources Inc.
144A Sr. Sub. Notes (B2, B)
9.250% 11/15/06 ......................... 400 405,500
Kelley Oil & Gas Corp.
144A Sr. Sub. Notes (B3, B-)
10.375% 10/15/06 ........................ 400 417,000
Mesa Operating Co.
Gtd. Sr. Sub. Discount Notes
(Ba2, BB+)(DAGGER)
11.625% 07/01/06 ........................ 650 508,625
Mesa Operating Co.
Gtd. Sr. Sub. Notes (Ba2, BB+)
10.625% 07/01/06 ........................ 250 286,562
National Energy Group, Inc.
144A Gtd. Sr. Notes,
Series C (NR, B)
10.750% 11/01/06 ........................ 250 258,125
Nuevo Energy Company
Sr. Sub. Notes (B1, B+)
9.500% 04/15/06 ......................... 500 528,750
Plains Resources, Inc.
Sr. Sub. Notes, Series B
(B2, B-)****
10.250% 03/15/06 ........................ 500 533,750
Pride Petroleum Services, Inc.
Sr. Notes (Ba3, BB-)
9.375% 05/01/07 ......................... 300 316,500
TransAmerican Energy Corp.
Sr. Secured Discount
Notes (NR, NR)(DAGGER)
13.000% 06/15/02 ........................ 200 152,000
----------
5,260,437
----------
ENTERTAINMENT -- 3.3%
AMF Group, Inc. :
Gtd. Sr. Sub. Notes Series B
(B2, B-)
10.875% 03/15/06 ..................... 600 663,000
Gtd. Sr. Discount Notes,
Series B (B2, B-)(DAGGER)
12.250% 03/15/06 ..................... 750 535,312
American Skiing Co.
Sr. Sub. Notes, Series B
(B3, CCC+)
12.000% 07/15/06 ........................ 400 438,000
Booth Creek Ski Holdings, Inc.
Sr. Notes, Series B (Caa, B-)
12.500% 03/15/07 ........................ 400 409,000
PAR
(000) VALUE
--------- -----------
ENTERTAINMENT -- (CONTINUED)
Hollywood Theaters, Inc.
144A Gtd. Sr. Sub.
Notes (B3, B-)
10.625% 08/01/07 ........................ $ 500 $ 517,500
Premier Parks, Inc.
Gtd. Sr. Notes (B2, B+)
9.750% 01/15/07 ......................... 500 525,625
----------
3,088,437
----------
FINANCIAL SERVICES -- 0.8%
Arcadia Financial, Ltd. Units
(B2, BB-)
11.500% 03/15/07 ........................ 500 501,250
Fifth Mexican Acceptance Corp.
144A Notes (NR, NR)**/****
8.000% 12/15/98 ......................... 1,040 249,600
----------
750,850
----------
FOOD & BEVERAGE -- 2.5%
Archibald Candy Corp.
144A Gtd. Sr. Secured
Notes (B2, NR)
10.250% 07/01/04 ........................ 300 307,875
Delta Beverage Group, Inc.
Sr. Notes (B2, B+)
9.750% 12/15/03 ......................... 500 523,750
Fleming Companies Inc.
144A Gtd. Sr. Sub.
Notes (B3, B+)
10.500% 12/01/04 ........................ 400 406,000
Fresh Del Monte Produce N.V.
Yankee Sr. Notes,
Series B (B2, B+)
10.000% 05/01/03 ........................ 500 529,375
International Home Foods, Inc.
Gtd. Sr. Sub.
Notes (B2, B-)
10.375% 11/01/06 ........................ 500 522,500
----------
2,289,500
----------
HEALTH CARE -- 4.3%
Beverly Enterprises, Inc.
Gtd. Sr. Notes (B1, B+)
9.000% 02/15/06 ......................... 300 313,500
Integrated Health Services, Inc.
144A Sr. Sub. ...........................
Notes (B1, B)
9.500% 09/15/07 ......................... 250 257,500
Mariner Health Group, Inc.
Sr. Sub. Notes (B2, B)
9.500% 04/01/06 ......................... 500 512,500
Paracelsus Healthcare Corp.
Sr. Sub. Notes (B1, B)
10.000% 08/15/06 ........................ 400 406,000
See Accompanying Notes to Financial Statements.
43
<PAGE>
BEA HIGH YIELD FUND (CONTINUED)
PAR
(000) VALUE
--------- -----------
HEALTH CARE -- (CONTINUED)
Quest Diagnostic, Inc.
Sr. Sub. Notes (B2, B+)
10.750% 12/15/06 ........................ $ 500 $ 543,750
Regency Health Services, Inc.
Sub. Notes (B3, B-)
12.250% 07/15/03 ........................ 650 747,500
Tenet Healthcare Corp.
Sr. Sub. Notes (Ba3, B+)
8.625% 01/15/07 ......................... 500 521,875
UROHEALTH Systems, Inc.
144A Units (B3, NR)
12.500% 04/01/04 ........................ 250 241,875
Vencor Inc.,
144A Sr. Sub. Notes (B1, B)
8.625% 07/15/07 ......................... 400 400,500
----------
3,945,000
----------
INDUSTRIAL GOODS & MATERIALS -- 1.4%
Derlan Manufacturing, Inc.
Yankee Sr. Notes (B3, B+)
10.000% 01/15/07 ........................ 250 255,000
Golden Ocean Group Ltd.
Units (NR, NR)
10.000% 08/31/01 ........................ 688 503,960
Haynes International, Inc.
Sr. Notes (B3, B-)
11.625% 09/01/04 ........................ 500 548,750
----------
1,307,710
----------
METALS & MINING -- 4.0%
Acme Metals, Inc.
Sr. Secured Debentures
(NR, NR)
13.500% 08/01/04 ........................ 1,000 1,127,500
Gulf States Steel, Inc.
First Mortgage Notes (B1, B-)
13.500% 04/15/03 ........................ 400 412,500
Ivaco, Inc.
Yankee Sr. Notes (B1, B+)
11.500% 09/15/05 ........................ 500 560,000
Kaiser Aluminum and
Chemical Corp.
Sr. Sub. Notes (B2, CCC+)
12.750% 02/01/03 ........................ 500 541,250
NS Group, Inc.
Sr. Secured Notes (B3, B-)
13.500% 07/15/03 ........................ 400 464,000
Weirton Steel Corporation
Sr. Notes (B2, B)
11.375% 07/01/04 ........................ 600 648,000
----------
3,753,250
----------
PAR
(000) VALUE
--------- -----------
OFFICE EQUIPMENT & SUPPLIES -- 0.4%
Knoll, Inc.
Sr. Sub. Notes (B1, B+)****
10.875% 03/15/06 ........................ $ 325 $ 360,750
----------
PACKAGING & CONTAINERS -- 2.7%
BPC Holding Corporation
Sr. Secured Notes, Series B
(Caa, B-)****
12.500% 06/15/06 ........................ 500 547,500
Crown Packaging Enterprises Ltd.
Sr. Secured Discount
Notes (Ca, NR)****/(DAGGER)
14.000% 08/01/06 ........................ 775 38,750
Four M Corp.
Sr. Secured Notes, Series B
(B2, B)
12.000% 06/01/06 ........................ 400 433,000
Gaylord Container Corp.
Sr. Sub. Discount
Debentures (Caa, B-)(DAGGER)
12.750% 05/15/05 ........................ 400 437,500
Plastic Containers, Inc.
144A Sr. Secured Notes
(B1, B+)
10.000% 12/15/06 ........................ 500 522,500
Stone Container Finance Co.
Gtd. Sr. Notes (B1, B+)
11.500% 08/15/06 ........................ 500 522,500
----------
2,501,750
----------
PAPER & FOREST PRODUCTS -- 2.5%
Ainsworth Lumber Co. Ltd.
144A Yankee Sr. Secured PIK
Notes (B3, B)
12.500% 07/15/07 ........................ 300 294,750
Crown Paper Co.
Sr. Sub. Notes (B3, B)
11.000% 09/01/05 ........................ 650 687,375
MAXXAM Group Holdings, Inc.
144A Sr. Secured Notes,
Series B (NR, NR)
12.000% 08/01/03 ........................ 400 429,000
Printpack, Inc.
144A Sr. Sub. Notes (B3, B+)
10.625% 08/15/06 ........................ 600 645,000
Fibermark, Inc.
Sr. Notes (B1, BB-)
9.375% 10/15/06 ......................... 250 259,687
---------
2,315,812
---------
PUBLISHING & INFORMATION SERVICES -- 2.2%
Gray Communications Systems
Gtd. Sr. Sub. Notes (B3, B-)
10.625% 10/01/06 ........................ 200 214,500
See Accompanying Notes to Financial Statements.
44
<PAGE>
BEA HIGH YIELD FUND (CONTINUED)
PAR
(000) VALUE
--------- ----------
PUBLISHING & INFORMATION SERVICES -- (CONTINUED)
Hollinger International
Publishing Inc.
Sr. Sub. Notes (B1, BB-)
9.250% 03/15/07 ................................. $ 500 $ 516,875
InterAct Systems Inc.
144A Sr. Discount Notes
(NR, NR)(DAGGER)
14.000% 08/01/03 ................................ 700 322,000
Sun Media Corp.:
144A Yankee Sr. Sub. Notes
(B3, B-)
9.500% 02/15/07 .............................. 300 310,500
Yankee Sr. Sub. Notes
(B3, B-)
9.500% 05/15/07 .............................. 100 103,500
Universal Outdoor, Inc.
Sr. Sub. Notes, Series B
(B1, B)
9.750% 10/15/06 ................................. 500 533,750
----------
2,001,125
----------
RESTAURANTS, HOTELS & GAMING -- 9.6%
AmeriKing, Inc.
Gtd. Sr. Notes (B3, B-)
10.750% 12/01/06 ................................ 400 421,500
Ameristar Casinos, Inc.
144A Gtd. Sr. Sub.
Notes (B3, B1)
10.500% 08/01/04 ................................ 250 246,875
CapStar Hotel Company
144A Sr. Sub. Notes (B1, B)
8.750% 08/15/07 ................................. 500 500,000
Casino America, Inc.
Gtd. Sr. Notes (B1, B)
12.500% 08/01/03 ................................ 500 527,500
Casino Magic Finance Corp.
First Mortgage Notes (B1, B+)
11.500% 10/15/01 ................................ 250 230,000
Casino Magic of Louisiana Corp.
144A First Mortgage Notes
(B3, B-)
13.000% 08/15/03 ................................ 350 301,000
Coast Hotels and Casinos, Inc.
Gtd. First Mortgage Notes,
Series B (B3, B)****
13.000% 12/15/02 ................................ 600 671,250
G.B. Property Funding Corp
First Mortgage Notes (B3, B)
10.875% 01/15/04 ................................ 300 270,000
HMH Properties, Inc.
144A Gtd. Sr. Notes (NR, NR)
8.875% 07/15/07 ................................. 500 508,750
Horseshoe Gaming L.L.C.
144A Sr. Sub. Notes (B3, B)
9.375% 06/15/07 ................................. 250 253,750
PAR
(000) VALUE
--------- -----------
RESTAURANTS, HOTELS & GAMING -- (CONTINUED)
KSL Recreation Group, Inc.
144A Sr. Sub. Notes (B3, B-)
10.250% 05/01/07 ............................ $ 350 $ 368,375
Mohegan Tribal Gaming Authority
Sr. Secured Notes, Series B
(Ba1, BB+)****
13.500% 11/15/02 ............................ 650 851,500
Players International, Inc.
Gtd. Sr. Notes (Ba3, BB)
10.875% 04/15/05 ............................ 500 525,000
Prime Hospitality Corp.
Secured First Mortgage Notes
(Ba3, BB)
9.250% 01/15/06 ............................. 500 522,500
Red Roof Inns, Inc.
Sr. Exchange Notes (B2, B)
9.625% 12/15/03 ............................. 400 413,000
Showboat Inc.
First Mortgage Bonds (Ba3, BB-)
9.250% 05/01/08 ............................. 250 258,125
Showboat Marina Casino
Partnership
First Mortgage Notes,
Series B (B2, B)
13.500% 03/15/03 ............................ 450 518,625
Sun International Hotels
Gtd. Sr. Sub. Notes (Ba3, B+)
9.000% 03/15/07 ............................. 400 412,000
The Majestic Star Casino L.L.C.
Sr. Secured Notes (B2, B)****
12.750% 05/15/03 ............................ 500 552,500
Waterford Gaming L.L.C./
Waterford Gaming Finance Corp.
144A Sr. Notes (NR, NR)
12.750% 11/15/03 ............................ 500 552,500
----------
8,904,750
----------
RETAIL TRADE -- 2.7%
Farm Fresh, Inc.
Sr. Notes (Caa, CCC+)
12.250% 10/01/00 ............................ 400 334,000
Hills Stores Company
Gtd. Sr. Notes (B2, B-)
12.500% 07/01/03 ............................ 400 340,000
Jitney-Jungle Stores
of America, Inc.
Gtd. Sr. Notes (B2, B)
12.000% 03/01/06 ............................ 500 575,000
K Mart Corp. Debentures
(Ba3, B+)
7.750% 10/01/12 ............................. 750 690,000
Parisian, Inc.
Sr. Sub. Notes (B1, B-)
9.875% 07/15/03 ............................. 500 521,875
----------
2,460,875
----------
See Accompanying Notes to Financial Statements.
45
<PAGE>
BEA HIGH YIELD FUND (CONTINUED)
PAR
(000) VALUE
--------- --------
TELECOMMUNICATIONS -- 19.0%
Advanced Radio
Telecommunications Corp.
Sr. Notes (Caa, C+)
14.000% 02/15/07 .................................... $ 350 $303,625
American Communication
Services, Inc.
Sr. Discount Notes
(NR, NR)****/(DAGGER)
13.000% 11/01/05 .................................... 1,100 698,500
Brooks Fiber Properties, Inc.:
Sr. Discount Notes
(NR, NR)****/(DAGGER)
11.875% 11/01/06 ................................. 500 347,500
Sr. Discount Notes (NR, NR)(DAGGER)
10.875% 03/01/06 ................................. 500 362,500
Sr. Notes (NR, NR)
10.000% 06/01/07 ................................. 250 263,750
Comcast Cellular Corp.
144A Sr. Notes (Ba3, BB+)
9.500% 05/01/07 ..................................... 400 413,000
Diamond Cable
Communications plc
Sr. Discount Notes (B3, B-)(DAGGER)
11.750% 12/15/05 .................................... 1,000 715,000
Fox/Liberty Networks L.L.C.,
144A Sr. Notes (B1, B)
8.875% 08/15/07 ..................................... 300 296,250
GST Equipment Funding
144A Sr. Notes (NR, NR)
13.250% 05/01/07 .................................... 250 274,375
GST USA, Inc.
Gtd. Sr. Discount Notes
(NR, NR)(DAGGER)
13.875% 12/15/05 .................................... 250 165,625
Geotek Communications, Inc.
Convertible Sr. Sub. Notes
(Caa, NR)****
12.000% 02/15/01 .................................... 1,000 850,000
Globalstar, L.P. / Globalstar
Capital Corp.
144A Units (B3, B)
11.375% 02/15/04 .................................... 200 201,500
Hermes Europe Railtel B.V.
144A Sr. Notes (NR, B)
11.500% 08/15/07 .................................... 250 263,750
Hyperion Telecommunications, Inc.
144A Sr. Notes (NR, NR)
12.250% 09/01/04 .................................... 250 257,500
ITC DeltaCom Inc.
144A Sr. Notes (B3, B)
11.000% 06/01/07 .................................... 250 263,750
IXC Communications Inc.
Sr. Secured Notes, Series B
(B3, B)
12.500% 10/01/05 .................................... 500 572,500
PAR
(000) VALUE
--------- -----------
TELECOMMUNICATIONS -- (CONTINUED)
Intelcom Group (U.S.A.), Inc.
Gtd. Sr. Exchangeable
Discount Notes (NR, NR)(DAGGER)
11.250% 05/01/06 .............................. $ 1,000 $700,000
Intermedia Communications Inc.
144A Sr. Discount Notes
(B2, B)(DAGGER)
13.000% 07/15/07 .............................. 500 315,000
Jordan Telecommunication
Products, Inc.
144A Sr. Discount Notes
(B3, NR)(DAGGER)
9.000% 08/01/07 ............................... 400 289,500
McCaw International Ltd.
144A Units (NR, NR)(DAGGER)
11.250% 04/15/07 .............................. 500 266,875
McLeodUSA Inc.:
144A Sr. Notes
(NR, NR)
9.250% 07/15/07 ............................ 300 305,250
144A Sr. Discount Notes
(B3, B)(DAGGER)
11.750% 03/01/07 ........................... 400 264,000
MetroNet Communications Corp.
Yankee Units (NR, NR)
12.000% 08/15/07 .............................. 400 428,000
Microcell Telecommunications, Inc.
Yankee Sr. Discount Notes,
Series B (NR, NR)(DAGGER)
9.125% 06/01/06 ............................... 400 255,000
NEXTLINK Communications, Inc.
Sr. Notes (NR, NR)
12.500% 04/15/06 .............................. 250 276,875
Nextel Communications, Inc.
Sr. Discount Notes (B3, CCC-)(DAGGER)
10.125% 08/15/04 .............................. 900 749,250
Orion Network Systems, Inc.
Units (B2, B)
11.250% 01/15/07 .............................. 300 327,000
Pagemart Nationwide, Inc.
Sr. Discount Notes (NR, NR)(DAGGER)
15.000% 02/01/05 .............................. 750 599,550
People's Telephone Co., Inc.
Sr. Notes (B2, B-)
12.250% 07/15/02 .............................. 450 469,687
Petersburg Long Distance, Inc.:
144A Convertible
Sub. Notes (NR, NR)****
9.000% 06/01/06 ............................ 230 256,738
144A Units (NR, NR)****/(DAGGER)
11.000% 06/01/04 ........................... 1,010 876,175
Price Communications
Wireless, Inc.
144A Sr. Sub. Notes (B3, NR)
11.750% 07/15/07 .............................. 250 260,625
See Accompanying Notes to Financial Statements.
46
<PAGE>
BEA HIGH YIELD FUND (CONTINUED)
PAR
(000) VALUE
--------- -----------
TELECOMMUNICATIONS -- (CONTINUED)
Price Communications Corp./
Price Communications
Cellular Holdings, Inc.
144A Units (Caa1, NR)(DAGGER)
12.250% 08/01/07 .......................... $ 500 $ 268,750
PriCellular Wireless Corp.
Discount Notes (B3, CCC+)(DAGGER)
11.125% 10/01/03 .......................... 500 485,000
Qwest Communications
International, Inc.
Sr. Notes Series B (B2, B+)
10.875% 04/01/07 .......................... 350 389,375
Sprint Spectrum L.P./Sprint
Spectrum Finance Corp.
Sr. Notes (B2, B+)
11.000% 08/15/06 .......................... 500 555,000
TCI Satellite Entertainment Inc.
144A Sr. Sub. Notes (B3, B-)
10.875% 02/15/07 .......................... 450 465,750
Teleport Communications
Group, Inc.:
Sr. Discount Notes (B1, B)(DAGGER)
11.125% 07/01/07 ....................... 500 372,500
Sr. Notes (B1, B)(DAGGER)
9.875% 07/01/06 ....................... 300 322,500
Telesystem International
Wireless Inc.
Sr. Discount Notes (NR, NR)(DAGGER)
13.750% 06/30/07 .......................... 500 293,750
Telewest Communications
Group plc
Yankee Sr. Discount
Debentures (B1, BB)(DAGGER)
11.000% 10/01/07 .......................... 800 592,000
UNIFI Communications, Inc.
Sr. Notes (NR, NR)
14.000% 03/01/04 .......................... 500 494,375
Vanguard Cellular Systems, Inc.
Sr. Debentures (B1, B+)
9.375% 04/15/06 ........................... 500 516,250
-----------
17,643,900
-----------
TEXTILES & APPAREL -- 0.5%
William Carter Company
Sr. Sub. Notes, Series A
(B3, B-)
10.375% 12/01/06 .......................... 450 474,188
-----------
TRANSPORTATION -- 1.8%
Atlantic Express
Transportation Corp.
144A Gtd. Sr. Secured Notes
(B2, B)
10.750% 02/01/04 .......................... 500 520,000
PAR
(000) VALUE
--------- -----------
TRANSPORTATION -- (CONTINUED)
US Air, Inc.
Sr. Notes (B3, CCC+)
10.000% 07/01/03 .......................... $ 600 $ 624,000
ValuJet Airlines, Inc,
144A Gtd. Sr. Secured Notes
(NR, NR)
10.500% 04/15/01 .......................... 500 501,250
-----------
1,645,250
-----------
WASTE MANAGEMENT -- 0.8%
Allied Waste Industries, Inc.
Sr. Sub. Notes (B3, B+)
10.250% 12/01/06 .......................... 700 763,000
-----------
TOTAL CORPORATE BONDS
(Cost $82,366,757) ........................ 86,382,240
-----------
ASSET BACKED SECURITIES -- 0.7%
Airplanes Pass Through Trust
Series 1, Class D (Ba2, BB)
10.875% 03/15/19 .......................... 600 698,149
-----------
TOTAL ASSET BACKED
SECURITIES
(Cost $600,000) ........................... 698,149
-----------
WARRANTS*** -- 0.4%
BROADCASTING -- 0.0%
Australis Holdings, PTY Ltd. ................ 294 294
-----------
CHEMICALS -- 0.1%
Uniroyal Technology Corp. ................... 43,500 81,563
-----------
CONSTRUCTION & BUILDING MATERIALS -- 0.0%
Capital Pacific Holdings
Group, Inc. ............................... 12,640 9,480
-----------
CONSUMER PRODUCTS & SERVICES -- 0.1%
Coinstar, Inc. .............................. 525 3,885
Renaissance Cosmetics, Inc. ................. 500 50,000
Signature Brands USA, Inc. .................. 250 --
-----------
53,885
-----------
ELECTRONICS -- 0.0%
Exide Electronics Group, Inc. ............... 550 24,750
-----------
PUBLISHING &INFORMATION SERVICES-- 0.0%
InterAct Systems, Inc. ...................... 700 --
-----------
TELECOMMUNICATIONS -- 0.2%
Advanced Radio
Telecommunications Corp. .................. 5,250 51,188
American Communication
Services, Inc. ............................ 1,500 90,000
Globalstar
Telecommunciations Ltd. ................... 200 12,000
McCaw International Ltd. .................... 500 125
Microcell
Telecommunications, Inc. .................. 1,600 20,000
See Accompanying Notes to Financial Statements.
47
<PAGE>
BEA HIGH YIELD FUND (CONTINUED)
PAR
(000) VALUE
--------- -----------
TELECOMMUNICATIONS -- (CONTINUED)
Microcell Telecomm, Inc. .................. $ 1,600 $ 1,000
NEXTLINK
Communications, Inc. .................... 6,000 60
UNIFI Communications, Inc. ................ 500 5
----------
174,378
----------
TOTAL WARRANTS
(Cost $213,567) ......................... 344,350
----------
COMMON STOCK -- 0.0%
PACKAGING/CONTAINERS -- 0.0%
Crown Packaging
Enterprises, Ltd. ....................... 100,750 1,008
----------
TOTAL COMMON STOCK
(Cost $0.00) ............................ 1,008
----------
PREFERRED STOCKS -- 4.0%
AEROSPACE/DEFENSE -- 1.5%
GPA Group Plc 7% Convertible
Cum. Second Preference
Shares .................................. 2,750,000 1,430,000
----------
CABLE -- 0.1%
DIVA Systems Corporation
Series C ................................ 5,945 56,478
----------
CONSUMER PRODUCTS & SERVICES -- 0.5%
Renaissance Cosmetics, Inc.
14% Cumulative .......................... 572 469,040
----------
RESTAURANTS, HOTELS, & GAMING -- 0.9%
AmeriKing, Inc. 13% Cum.
Exchangeable ............................ 5,000 140,000
Lady Luck Gaming Corporation
Series A ................................ 20,000 720,000
----------
860,000
----------
RETAIL TRADE -- 0.3%
Jitney-Jungle Stores of
America, Inc.
144A 15% Class A ........................ 1,750 255,500
----------
TELECOMMUNICATIONS -- 0.7%
NEXTLINK
Communications, Inc.
144A 14% Cum.
Exchangeable PIK ........................ 6,429 374,489
Nextel Communication, Inc.
13.00% Series D
Exchangeable PIK ........................ 250 269,375
----------
643,864
----------
TOTAL PREFERRED STOCKS
(Cost $3,023,092) ....................... 3,714,882
----------
PAR
(000) VALUE
--------- -----------
SHORT-TERM INVESTMENT -- 0.6%
BBH Grand Cayman U.S. Dollar
Time Deposit
5.063% 09/02/97 ....................... $ 568 $ 568,000
-----------
TOTAL SHORT-TERM
INVESTMENT
(Cost $568,000) .................... 568,000
-----------
TOTAL INVESTMENTS -- 98.9%
(Cost $86,771,416*) ................... 91,708,629
-----------
OTHER ASSETS IN EXCESS
OF LIABILITIES-- 1.1% ................. 1,008,183
-----------
NET ASSETS (Applicable to
5,422,963 BEA Institutional
Shares and 5,057 BEA
Advisor Shares)-- 100.0% .............. $92,716,812
===========
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PRICE PER BEA
INSTITUTIONAL SHARE
($92,630,437 (DIVIDE) 5,422,963) ...... $17.08
======
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PRICE PER BEA ADVISOR
SHARE ($86,375 (DIVIDE) 5,057) ........ $17.08
======
See Accompanying Notes to Financial Statements.
48
<PAGE>
BEA HIGH YIELD FUND (CONCLUDED)
* Also cost for Federal income tax purposes at August 31, 1997. The gross
appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation ...................................... $ 6,581,070
Gross Depreciation ...................................... (1,643,857)
-----------
Net Appreciation ........................................ $ 4,937,213
===========
** 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.
(DAGGER) Step Bond - The interest rate as of August 31, 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 August 31, 1997 and are
unaudited.
INVESTMENT ABBREVIATIONS
PIK ................................................................ Pay In Kind
AT AUGUST 31, 1997, NET ASSETS CONSISTED OF:
AMOUNT
-------------
Capital Paid-In ................................................. $102,892,816
Accumulated Net Investment Income ............................... 1,755,697
Accumulated Net Realized Loss on
Security and Foreign Exchange
Transactions ................................................. (16,868,914)
Net Unrealized Appreciation on
Investments and Other ........................................ 4,937,213
- --------------------------------------------------------------------------------
NET ASSETS ...................................................... $ 92,716,812
- --------------------------------------------------------------------------------
See Accompanying Notes to Financial Statements.
49
<PAGE>
BEA MUNICIPAL BOND FUND
PORTFOLIO MANAGER'S LETTER
September 18, 1997
Dear Shareholders:
We are pleased to report on the results of the BEA Municipal Bond Fund (the
"Fund") for the year ended August 31, 1997 and discuss our investment strategy.
PERFORMANCE REVIEW
At August 31, 1997, the net asset value ("NAV") of the Fund was $14.84, 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 9.74%. By comparison,
the Lehman Brothers Municipal Bond Index (the "Index") posted a return of 9.25%
during the same period. For the six months ended August 31, 1997, the Fund
returned 4.15% (assuming reinvestment of dividends), versus 3.91% for the Index.
Lipper Analytical Services ranks the Fund's performance among the top 20% of all
municipal funds during the 12 month period ending in August 1997.
PORTFOLIO REVIEW
The municipal bond market experienced a seasonal rally in June, as investors
were awash in cash from coupon payments, early redemptions and bond maturities.
Historically, the market tends to be strong at this time because investors want
to stay invested in municipals and will use the cash to make new purchases.
We attribute the Fund's outperformance of the Index over the last few months
primarily to the fact that the portfolio holds discounted and call-protected
securities that were not subject to early redemption in the rally. This helped
performance in two ways. First, it meant that the Fund's holdings gained in
value because they would not be called. Second, we were not forced to throw cash
at a rapidly rising market, which would have reduced the overall portfolio
yield.
Performance also benefited from the Fund's modest positions in high-yielding
taxable securities. We intend to participate in these markets on an
opportunistic basis.
OUTLOOK
Looking ahead, we consider the general climate for fixed income a favorable mix
of moderate growth and subdued inflation. As a result, municipal instruments
should perform well.
Our investment strategy remains based on the passive collection of the
portfolio's relatively high coupon income and avoidance of taxable events. We
maintain our bias toward issues of states with the highest tax rates (notably
New York and California) because we believe that the market does not fully
recognize their value.
In our view, there are potential downside risks in today's muni environment. For
example, the recent rally was so strong that, at current levels, the market is
fully priced relative to Treasury bonds. It is easier for prices to fall than
rise, particularly if fears of higher interest rates reappear. We also would not
be surprised to see a reversal of the supply/demand dynamic that has helped to
sustain current valuations. Yields have become low enough that little new money
is flowing into munis and supply is likely to build. Prices could suffer if
these conditions persist for an extended period of time.
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
50
<PAGE>
BEA MUNICIPAL BOND FUND
PORTFOLIO MANAGER'S LETTER (CONCLUDED)
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE BEA MUNICIPAL BOND
FUND AND THE LEHMAN BROTHERS MUNICIPAL BOND INDEX FROM INCEPTION 6/20/94, PERIOD
ENDED 7/31/94 AND AT EACH QUARTER END.
[GRAPHIC OMITTED]
PLOT POINTS BELOW
Lehman
BEA Brothers
Municipal Municipal
Bond Bond
Fund Index
06/20/1994 10,000 10,000
07/31/1994 10,040 10,038
08/31/1994 10,040 10,073
11/30/1994 9,647 9,571
02/28/1995 10,350 10,354
05/31/1995 10,846 10,820
08/31/1995 10,886 10,965
11/30/1995 11,193 11,079
02/29/1996 11,216 11,498
05/31/1996 10,937 11,314
08/31/1996 11,134 11,539
11/30/1996 11,643 12,049
02/28/1997 11,731 12,132
05/31/1997 11,835 12,252
08/31/1997 12,218 12,606
- -----------------------
AVERAGE ANNUAL
TOTAL RETURN
One Year 9.74%
From Inception 6.44%
- -----------------------
Note: Past performance is not predictive of future performance.
51
<PAGE>
BEA MUNICIPAL BOND FUND
OF THE RBB FUND, INC.
STATEMENT OF NET ASSETS
AUGUST 31, 1997
PAR
(000) VALUE
--------- -----------
MUNICIPAL BONDS -- 86.3%
CALIFORNIA -- 7.0%
California State GO (Aaa, AAA)
5.125% 10/01/17 ......................... $ 825 $ 789,937
Los Angeles CA, Department of
Water & Power, Water RB
(Aa, AA)
4.500% 05/15/23 ......................... 705 601,012
----------
1,390,949
----------
COLORADO -- 3.2%
Colorado Springs CO, Utility
RB (Aaa, AAA)
5.875% 11/15/17 ......................... 595 622,519
----------
FLORIDA -- 11.0%
Florida State Board of Education
GO (Aa2, AA+)
5.125% 06/01/22 ......................... 30 28,612
Florida State GO (Aa, AA+)
5.500% 10/01/08 ......................... 710 715,900
Jacksonville FL, Electric
Authority RB, 2nd Installment
(Aaa, AAA)
6.000% 07/01/12 ......................... 610 656,512
Tallahassee FL, Electric RB,
First Lien (Aaa, AAA)
6.100% 10/01/06 ......................... 730 780,187
----------
2,181,211
----------
ILLINOIS -- 6.8%
Chicago IL GO, Series 1993
(FGIC Insured) (Aaa, AAA)
5.250% 01/01/18 ......................... 705 677,681
Illinois State Sales Tax RB,
Series Q (Aa3, AAA)
5.750% 06/15/14 ......................... 650 661,375
----------
1,339,056
----------
INDIANA -- 0.1%
Indianapolis IN, Public
Improvement Board RB
(Aaa, AA+)
6.000% 01/10/18 ......................... 25 25,687
----------
LOUISIANA -- 3.5%
New Orleans LA, Home
Mortgage Authority SOB
(Aaa, AAA)
6.250% 01/15/11 ......................... 635 696,119
----------
MARYLAND -- 5.0%
Maryland State Transportation
Authority Project RB
(Aaa, AAA)
6.800% 07/01/16 ......................... 850 983,875
----------
PAR
(000) VALUE
--------- -----------
MASSACHUSETTS -- 3.2%
Massachusetts State Water
Resources Authority, General
RB, Series 92A (Aaa, AAA)
6.500% 07/15/19 ........................... $ 20 $ 22,725
Massachusetts State Water
Resources RB (Aaa, AAA)
5.000% 12/01/25 ........................... 660 613,800
--------
636,525
--------
NEW YORK -- 30.5%
New York State Dormitory
Authority RB (Elizabeth
Church Manor Nursing Home)
(NR, AA)
5.400% 08/01/23 ........................... 60 59,325
New York State Dormitory
Authority RB
(Episcopal Health Services)
(GNMA Coll.) (NR, AAA)
7.550% 08/01/29 ........................... 435 468,712
New York State Dormitory
Authority RB
(Judicial Facilities Lease)
(MBIA Insured) (Aaa, AAA)
7.375% 07/01/16 ........................... 630 746,550
New York State Dormitory
Authority RB
(Judicial Facilities Lease)
(Aaa, AAA)
7.375% 07/01/16 ........................... 40 48,650
New York State Dormitory
Authority RB (Park Ridge
Housing Inc. Project)
(NR, AAA)
7.850% 02/01/29 ........................... 530 562,462
New York State Medical Care
Facility Finance Agency,
Hospital & Nursing Home
Insured Mortgage RB
(NR, AAA)
5.500% 02/15/22 ........................... 765 767,869
New York State Power Authority
General Purpose Electric RB,
(1970 Project), Series G
(Aaa, AAA)
5.375% 01/01/10 ........................... 40 41,000
New York State Power Authority
General Purpose Electric RB,
Series R (Aaa, AAA)
7.000% 01/01/10 ........................... 360 423,900
New York State Power Authority
General Purpose Electric RB,
Series V (MBIA Insured)
(Aaa, AAA)
7.875% 01/01/13 ........................... 790 815,936
See Accompanying Notes to Financial Statements.
52
<PAGE>
BEA MUNICIPAL BOND FUND (CONTINUED)
PAR
(000) VALUE
--------- -----------
NEW YORK -- (CONTINUED)
New York State Throughway
Authority General RB
Series B (MBIA Insured)
(Aaa, AAA)
5.000% 01/01/20 ............................. $ 30 $ 28,163
New York, NY GO, Series D
(Baa1, BBB+)
8.000% 08/01/03 ............................. 650 728,813
6.000% 02/15/25 ............................. 15 15,281
New York, NY GO, Series H
(NR, BBB+)
7.200% 02/01/13 ............................. 225 251,719
New York, NY GO, Series H
(Baa1, BBB+)
7.200% 02/01/13 ............................. 375 412,969
Suffolk County NY Water
Authority, Waterworks RB,
Series V (NR, AAA)
6.750% 06/01/12 ............................. 580 662,650
----------
6,033,999
----------
PUERTO RICO -- 4.5%
Commonwealth of Puerto Rico
GO (Baa1, A)
5.400% 07/01/07 ............................. 730 754,638
Puerto Rico Electric Power
Authority, RB Series N
(Baa1, BBB+)
7.125% 07/01/14 ............................. 135 143,100
----------
897,738
----------
SOUTH DAKOTA -- 0.2%
Heartland Consumers Power
District SD Electric RB
(Aaa, AAA)
6.375% 01/01/16 ............................. 30 33,075
----------
VIRGIN ISLANDS -- 3.7%
Virgin Islands Public Finance
Authority RB (NR, BBB)
7.700% 10/01/04 ............................. 690 739,163
----------
VIRGINIA -- 3.8%
Fairfax County VA
Redevelopment & Housing
Authority, Mortgage RB
(FHA Insured) (NR, AAA)
7.100% 04/01/19 ............................. 630 757,575
----------
PAR
(000) VALUE
--------- -----------
WASHINGTON -- 3.8%
King County WA GO, Series A
(Aa1, AA+)
6.200% 01/01/24 ............................. $ 40 $ 42,150
Seattle WA Water System RB
(Aa2, AA)
5.250% 12/01/23 ............................. 735 710,194
-----------
752,344
-----------
TOTAL MUNICIPAL BONDS
(Cost $16,076,294) .......................... 17,089,835
-----------
CORPORATE BONDS -- 6.0%
CABLE -- 0.5%
Bell Cablemedia plc Yankee
Sr. Discount Notes
(Baa3, BBB+)(DAGGER)(DAGGER)
11.875% 09/15/05 ............................ 125 107,500
-----------
FINANCIAL SERVICES -- 0.4%
First Nationwide (Parent)
Holdings, Inc.
144A Sr. Notes (B3, B)
12.500% 04/15/03 ............................ 70 78,575
-----------
FOOD & BEVERAGE -- 0.5%
Fresh del Monte Produce N. V.
Sr. Notes Series B (B2, B+)
10.000% 05/01/03 ............................ 95 100,581
-----------
TELECOMMUNICATIONS -- 1.0%
Intelcom Group (U.S.A.), Inc.
Gtd. Sr. Exchangeable
Discount Notes (NR, NR)(DAGGER)(DAGGER)
12.500% 05/01/06 ............................ 60 42,000
Nextel Communications, Inc.
Sr. Discount Notes
(B3, CCC-)(DAGGER)(DAGGER)
11.500% 09/01/03 ............................ 25 23,781
Rogers Cantel Inc. Yankee
Sr. Secured Debentures
(Ba3, BB+)
9.375% 06/01/08 ............................. 95 101,888
Videotron Holdings Plc
Yankee Discount Notes
(Baa3, B+)(DAGGER)(DAGGER)
11.000% 08/15/05 ............................ 45 38,700
-----------
206,369
-----------
See Accompanying Notes to Financial Statements.
53
<PAGE>
BEA MUNICIPAL BOND FUND (CONCLUDED)
PAR
(000) VALUE
--------- -----------
TRANSPORTATION -- 0.7%
NWA Trust Mezzanine Aircraft
Notes, Series D (Ba1, BB+)
13.875% 06/21/08 .......................... $ 40 $ 46,400
US Air, Inc.
Gtd. Sr. Notes (B3, CCC+)
10.000% 07/01/03 .......................... 85 88,400
----------
134,800
----------
UTILITIES -- 2.9%
Beaver Valley Funding Corp.
Secured Lease Obligation
Bonds (Ba3, BB-)
9.000% 06/01/17 ........................... 270 287,842
Long Island Lighting Co.
Debentures (Ba3, BB+)
7.500% 03/01/07 ........................... 40 40,350
9.000% 11/01/22 ........................... 135 149,513
Niagara Mohawk Power Corp.
First Mortgage Bonds
(Ba3, BB)
6.875% 04/01/03 ........................... 90 87,188
----------
564,893
----------
TOTAL CORPORATE BONDS
(Cost $1,153,650) ......................... 1,192,718
----------
FOREIGN BONDS -- 1.7%
Bank of Foreign Economic
Affairs of the USSR
(Vnesheconombank)
(When Issued) (NR, NR)
12.000% 12/31/16 .......................... 175 138,031
Republic of Brazil Eligible
Interest Bonds (B1, BB-)(DAGGER)
6.875% 04/15/06 ........................... 99 91,884
United Mexican States
Global Bonds (Ba2, BB)
11.375% 09/15/16 .......................... 95 110,438
----------
TOTAL FOREIGN BONDS
(Cost $308,895) ........................... 340,353
----------
U.S. TREASURY OBLIGATIONS -- 2.9%
U.S. TREASURY BONDS -- 2.2%
7.625% 02/15/25 ........................... 385 430,476
----------
U.S. TREASURY NOTES -- 0.7%
6.625% 06/30/01 ........................... 140 142,079
----------
TOTAL U.S. TREASURY
OBLIGATIONS
(Cost $555,976) ........................... 572,555
----------
PAR
(000) VALUE
--------- -----------
SHORT-TERM INVESTMENT -- 2.5%
BBH Grand Cayman U.S. Dollar
Time Deposit
5.063% 09/02/97 ....................... $ 500 $ 500,000
-----------
TOTAL SHORT-TERM
INVESTMENT
(Cost $500,000) .................... 500,000
-----------
TOTAL INVESTMENTS -- 99.4%
(Cost $18,594,815) .................... 19,695,461
-----------
OTHER ASSETS IN EXCESS
OF LIABILITIES -- 0.6% ................ 114,657
-----------
NET ASSETS (Applicable to
1,334,939 BEA Institutional
Shares) -- 100.0% ..................... $19,810,118
===========
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PRICE PER BEA
INSTITUTIONAL SHARE
($19,810,118 (DIVIDE) 1,334,939) ...... $14.84
======
* Cost for Federal income tax purposes at August 31, 1997 is $18,642,968. The
gross appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation ...................................... $1,094,096
Gross Depreciation ...................................... (41,603)
----------
Net Appreciation ........................................ $1,052,493
==========
(DAGGER) Variable rate obligations -- The interest shown is the rate as of
August 31, 1997.
(DAGGER)(DAGGER) Step Bond -- The interest rate as of August 31, 1997 is 0% and
will reset to the 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 August 31, 1997 and are
unaudited.
INVESTMENT ABBREVIATIONS
GO ........................................................ General Obligation
RB .............................................................. Revenue Bond
SOB ................................................... Special Obligations Bond
AT AUGUST 31, 1997, NET ASSETS CONSISTED OF:
AMOUNT
-----------
Capital Paid-In ................................................... $18,494,590
Accumulated Net Investment Income ................................. 44,855
Accumulated Net Realized Loss on
Security and Foreign Exchange
Transactions ................................................... 122,688
Net Unrealized Appreciation on
Investments and Other .......................................... 1,147,985
- --------------------------------------------------------------------------------
NET ASSETS ........................................................ $19,810,118
- --------------------------------------------------------------------------------
See Accompanying Notes to Financial Statements.
54
<PAGE>
THE BEA FUNDS
OF THE RBB FUND, INC.
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 1997
<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 .................................... $12,265,605 $ 2,461,481 $ 1,070,324 $ 5,613
Interest ..................................... 834,054 176,582 188,382 1,596
Foreign taxes withheld ....................... (678,732) (146,354) -- (412)
----------- ----------- ----------- --------
Total Investment Income .................... 12,420,927 2,491,709 1,258,706 6,797
----------- ----------- ----------- --------
EXPENSES
Investment advisory fees ..................... 5,300,316 1,006,500 564,863 3,745
Administration service fees .................. 993,809 150,975 112,973 187
Administration fees .......................... 828,175 125,813 94,144 468
Custodian fees ............................... 721,119 256,343 40,644 6,999
Audit fees ................................... 71,322 12,351 8,151 100
Miscellaneous fees ........................... 33,082 4,301 3,406 2,300
Printing fees ................................ 64,255 8,245 800 301
Registration fees ............................ 40,367 23,764 30,751 15,000
Legal fees ................................... 47,067 11,706 1,365 100
Transfer agent fees .......................... 123,149 20,517 21,466 1,299
Insurance expense ............................ 15,202 2,532 1,264 24
Directors fees ............................... 17,222 2,425 1,197 24
Organization expense ......................... 10,636 10,636 5,194 --
Distribution fees ............................ 151 9 -- 936
----------- ----------- ----------- --------
8,265,872 1,636,117 886,218 31,483
Less fees waived ............................. (573,192) (139,290) (133,067) (25,304)
----------- ----------- ----------- --------
Total Expenses ............................. 7,692,680 1,496,827 753,151 6,179
----------- ----------- ----------- --------
Net Investment Income ........................... 4,728,247 994,882 505,555 618
----------- ----------- ----------- --------
Realized and Unrealized Gain on Investments
and Foreign Currency Transactions:
Net realized gain (loss) from:
Security transactions ...................... 91,138,043 12,541,045 7,781,617 30,391
Foreign exchange transactions .............. (4,418,656) (305,042) -- (785)
----------- ----------- ----------- --------
86,719,387 12,236,003 7,781,617 29,606
----------- ----------- ----------- --------
Net unrealized appreciation (depreciation):
Investments ................................ 6,963,410 (5,156,348) 15,450,750 30,710
Translation of assets and
liabilities in foreign currencies ....... (131,643) (13,728) -- --
----------- ----------- ----------- --------
6,831,767 (5,170,076) 15,450,750 30,710
----------- ----------- ----------- --------
Net Gain On Investments And Foreign
Currency Transactions ........................ 93,551,154 7,065,927 23,232,367 60,316
----------- ----------- ----------- --------
Net Increase In Net Assets Resulting
From Operations .............................. $98,279,401 $ 8,060,809 $23,737,922 $ 60,934
=========== =========== =========== ========
</TABLE>
See Accompanying Notes to Financial Statements.
55
<PAGE>
THE BEA FUNDS
OF THE RBB FUND, INC.
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 1997
<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 ..................................... $ 148,961 $ -- $ 32,930 $ --
Interest ...................................... 9,566,651 2,522,028 8,153,660 1,140,866
Foreign taxes withheld ........................ -- -- -- --
----------- ----------- ----------- ----------
Total Investment Income ..................... 9,715,612 2,522,028 8,186,590 1,140,866
----------- ----------- ----------- ----------
EXPENSES
Investment advisory fees ...................... 534,735 208,250 627,177 135,884
Administration service fees ................... 213,894 62,475 134,395 29,118
Administration fees ........................... 178,245 52,062 111,996 24,265
Custodian fees ................................ 60,987 38,411 39,552 19,026
Audit fees .................................... 14,622 6,382 10,113 2,950
Miscellaneous fees ............................ 21,040 948 17,939 5,928
Printing fees ................................. 14,964 900 1,745 970
Registration fees ............................. 28,675 21,035 19,666 29,401
Legal fees .................................... 5,133 -- 9,628 --
Transfer agent fees ........................... 25,879 10,870 22,233 10,315
Insurance expense ............................. 3,480 841 1,660 456
Directors fees ................................ 3,444 833 1,608 362
Organization expense .......................... 4,125 5,395 10,636 7,413
Distribution fees ............................. -- -- 143 --
----------- ----------- ----------- ----------
1,109,223 408,402 1,008,491 266,088
Less fees waived .............................. (396,243) (96,027) (381,171) (71,968)
----------- ----------- ----------- ----------
Total Expenses .............................. 712,980 312,375 627,320 194,120
----------- ----------- ----------- ----------
Net Investment Income ............................ 9,002,632 2,209,653 7,559,270 946,746
----------- ----------- ----------- ----------
Realized and Unrealized Gain (Loss) on
Investments and Foreign Currency Transactions:
Net realized gain (loss) from:
Security transactions ....................... 2,440,730 1,095,480 (640,994) 232,663
Foreign exchange transactions ............... 81,202 67,593 -- --
----------- ----------- ----------- ----------
2,521,932 1,163,073 (640,994) 232,663
----------- ----------- ----------- ----------
Net unrealized appreciation (depreciation):
Investments ................................. 3,773,540 (1,121,939) 5,672,020 634,929
Translation of assets and
liabilities in foreign currencies ........ 2,309 (497,420) -- --
----------- ----------- ----------- ----------
3,775,849 (1,619,359) 5,672,020 634,929
----------- ----------- ----------- ----------
Net Gain (Loss) On Investments And Foreign
Currency Transactions ......................... 6,297,781 (456,286) 5,031,026 867,592
----------- ----------- ----------- ----------
Net Increase In Net Assets Resulting
From Operations ............................... $15,300,413 $ 1,753,367 $12,590,296 $1,814,338
=========== =========== =========== ==========
</TABLE>
See Accompanying Notes to Financial Statements.
56
<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
YEAR ENDED ENDED YEAR ENDED ENDED
AUGUST 31, 1997 AUGUST 31, 1996 AUGUST 31, 1997 AUGUST 31, 1996
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Decrease in net assets:
Operations:
Net investment income ............................... $ 4,728,247 $ 6,274,654 $ 994,882 $ 806,634
Net gain on investments and foreign
currency transactions ............................. 93,551,154 44,060,328 7,065,927 3,144,494
------------- ------------- ------------ ------------
Net increase in net assets
resulting from operations ......................... 98,279,401 50,334,982 8,060,809 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 ......................... (203,262,817) (138,669,688) (39,387,274) (17,180,987)
------------- ------------- ------------ ------------
Total decrease in net assets ........................... (113,613,027) (90,983,829) (31,675,237) (13,631,354)
Net Assets:
Beginning of year ................................... 682,270,801 773,254,630 114,691,209 128,322,563
------------- ------------- ------------ ------------
End of year ......................................... $ 568,657,774 $ 682,270,801 $ 83,015,972 $114,691,209
============= ============= ============ ============
</TABLE>
See Accompanying Notes to Financial Statements.
57
<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
YEAR ENDED ENDED DECEMBER 4, 1996(1)
AUGUST 31, 1997 AUGUST 31, 1996 TO AUGUST 31, 1997
--------------- --------------- -------------------
<S> <C> <C> <C>
Increase in net assets:
Operations:
Net investment income ............................... $ 505,555 $ 546,030 $ 618
Net gain on investments and foreign
currency transactions ............................. 23,232,367 5,368,162 60,316
----------- ----------- -----------
Net increase in net assets
resulting from operations ......................... 23,737,922 5,914,192 60,934
----------- ----------- -----------
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 ......................... 8,716,601 24,803,723 508,538
----------- ----------- -----------
Total increase in net assets ........................... 27,166,307 27,371,658 569,472
Net Assets:
Beginning of period ................................. 59,015,434 31,643,776 --
----------- ----------- -----------
End of period ....................................... $86,181,741 $59,015,434 $ 569,472
=========== =========== ===========
<FN>
(1) Commencement of Operations.
</FN>
</TABLE>
See Accompanying Notes to Financial Statements.
58
<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
YEAR ENDED ENDED YEAR ENDED ENDED
AUGUST 31, 1997 AUGUST 31, 1996 AUGUST 31, 1997 AUGUST 31, 1996
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Increase in net assets:
Operations:
Net investment income .............................. $ 9,002,632 $ 7,734,594 $ 2,209,653 $ 1,844,286
Net gain (loss) on investments and foreign
currency transactions ............................ 6,297,781 (2,908,833) (456,286) 737,649
------------ ------------ ----------- -----------
Net increase in net assets resulting
from operations .................................. 15,300,413 4,825,761 1,753,367 2,581,935
------------ ------------ ----------- -----------
Distributions to shareholders:
Dividends to shareholders from net investment
income:
BEA Institutional shares ......................... (8,690,856) (7,217,136) (1,800,833) (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 ................... (9,710,784) (8,815,734) (2,573,324) (2,590,101)
------------ ------------ ----------- -----------
Net capital share transactions ........................ 53,032,678 23,336,409 6,757,858 18,790,839
------------ ------------ ----------- -----------
Total increase in net assets .......................... 58,622,307 19,346,436 5,937,901 18,782,673
Net Assets:
Beginning of year .................................. 118,596,275 99,249,839 38,347,500 19,564,827
------------ ------------ ----------- -----------
End of year ........................................ $177,218,582 $118,596,275 $44,285,401 $38,347,500
============ ============ =========== ===========
</TABLE>
See Accompanying Notes to Financial Statements.
59
<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
YEAR ENDED ENDED YEAR ENDED ENDED
AUGUST 31, 1997 AUGUST 31, 1996 AUGUST 31, 1997 AUGUST 31, 1996
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income ............................... $ 7,559,270 $ 8,200,490 $ 946,746 $ 1,066,671
Net gain (loss) on investments and foreign
currency transactions ............................. 5,031,026 2,062,819 867,592 (616,117)
----------- ------------ ----------- ------------
Net increase in net assets resulting
from operations ................................... 12,590,296 10,263,309 1,814,338 450,554
----------- ------------ ----------- ------------
Distributions to shareholders:
Dividends to shareholders from net investment
income:
BEA Institutional shares .......................... (7,131,514) (10,165,849) (944,821) (1,137,175)
BEA Advisor shares ................................ (4,682) -- -- --
Distributions to shareholders from net
realized capital gains:
BEA Institutional shares .......................... -- -- (594,155) (629,414)
BEA Advisor shares ................................ -- -- -- --
----------- ------------ ----------- ------------
Total distributions to shareholders .................... (7,136,196) (10,165,849) (1,538,976) (1,766,589)
----------- ------------ ----------- ------------
Net capital share transactions ......................... 11,414,154 (77,869,859) (46,498) (28,080,548)
----------- ------------ ----------- ------------
Total increase (decrease) in net assets ................ 16,868,254 (77,772,399) 228,864 (29,396,583)
Net Assets:
Beginning of year ................................... 75,848,558 153,620,957 19,581,254 48,977,837
----------- ------------ ----------- ------------
End of year ......................................... $92,716,812 $ 75,848,558 $19,810,118 $ 19,581,254
=========== ============ =========== ============
</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 INTERNATIONAL EQUITY FUND
----------------------------------------------------------------------------------------------------
FOR THE FOR THE
FOR THE FOR THE FOR THE FOR THE PERIOD OCTOBER 1, PERIOD NOVEMBER 1,
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED 1992* TO 1996* TO
AUGUST 31, 1997 AUGUST 31, 1996 AUGUST 31, 1995 AUGUST 31, 1994 AUGUST 31, 1993 AUGUST 31, 1997
--------------- --------------- --------------- --------------- ----------------- ------------------
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 .................. 0.18 0.19 0.06 0.05 0.04 0.36
Net gain (loss) on securities
(both realized and
unrealized) ............. 2.89 1.05 (1.75) 2.60 3.69 2.40
------------ ------------ ------------ ------------ ------------ --------
Total from investment
operations .............. 3.07 1.24 (1.69) 2.65 3.73 2.76
------------ ------------ ------------ ------------ ------------ --------
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 ............... $ 22.22 $ 19.41 $ 18.24 $ 20.73 $ 18.73 $ 22.17
============ ============ ============ ============ ============ ========
Total return ................... 15.93% 6.81%(d) (8.06)%(d) 14.23%(d) 24.87%(c)(d) 14.14%(c)
Ratio/Supplemental Data
Net assets,
end of period ........... $568,510,409 $682,270,801 $773,254,630 $767,189,791 $268,403,524 $147,365
Ratio of expenses to
average net assets ...... 1.16%(a) 1.19%(a) 1.25%(a) 1.25%(a) 1.25%(a)(b) 1.43%(a)(b)
Ratio of net investment
income to average
net assets .............. 0.71% 0.84% 0.35% 0.33% 0.41%(b) 1.15%(b)
Fund turnover rate ........ 126% 86% 78% 104% 106%(c) 126%
Average commission rate(e). $0.0039 $0.0007 N/A N/A N/A $0.0039
<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 1.25%, 1.22%, 1.26% and 1.30% for the
years ended August 31, 1997, 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
1.53% annualized for the period ended August 31, 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.
61
<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 FOR THE PERIOD
FOR THE FOR THE FOR THE FOR THE PERIOD FEBRUARY 1, NOVEMBER 1,
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED 1993* TO 1996* TO
AUGUST 31, 1997 AUGUST 31, 1996 AUGUST 31, 1995 AUGUST 31, 1994 AUGUST 31, 1993 AUGUST 31, 1997
--------------- --------------- --------------- --------------- ----------------- ------------------
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) ............ 0.21 0.10 0.02 (0.03) 0.02 0.18
Net gain (loss) on securities
(both realized and
unrealized) .............. 1.30 0.48 (5.94) 6.64 3.36 1.40
----------- ------------ ------------ ------------ ----------- ------
Total from investment
operations ............... 1.51 0.58 (5.92) 6.61 3.38 1.58
----------- ------------ ------------ ------------ ----------- ------
Less Distributions
Dividends from net
investment income ........ (0.07) (0.05) (0.07) (0.09) -- (0.06)
Distributions from
capital gains ............ -- 0.00 (0.92) (0.32) -- --
----------- ------------ ------------ ------------ ----------- ------
Total distributions ........ (0.07) (0.05) (0.99) (0.41) -- (0.06)
----------- ------------ ------------ ------------ ----------- ------
Net asset value,
end of period ................ $ 19.64 $ 18.20 $ 17.67 $ 24.58 $ 18.38 $19.60
=========== ============ ============ ============ =========== ======
Total return .................... 8.31% 3.33%(d) (24.42)%(d) 35.99%(d) 22.53%(c)(d) 8.76%(c)
Ratio/Supplemental Data
Net assets,
end of period ............ $83,012,386 $114,691,209 $128,322,563 $140,675,379 $21,988,062 $3,586
Ratio of expenses to
average net assets ....... 1.49%(a) 1.49%(a) 1.50%(a) 1.50%(a) 1.50%(a)(b) 1.75%(a)(b)
Ratio of net investment
income (loss)
to average net assets .... 0.99% 0.63% 0.02% (0.02)% 0.28%(b) 0.88%(b)
Fund turnover rate ......... 147% 79% 79% 54% 38%(c) 147%
Average commission rate(e) . $0.0004 $0.0005 N/A N/A N/A $0.0004
<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 1.63%, 1.62%, 1.61% and 2.01% for the years ended August 31,
1997, 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 1.92% annualized for
the period ended August 31, 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 GLOBAL
BEA U.S. CORE EQUITY FUND TELECOMMUNICATIONS FUND
--------------------------------- -------------------------------------------
FOR THE FOR THE FOR THE PERIOD FOR THE PERIOD
YEAR ENDED YEAR ENDED SEPTEMBER 1, 1994* TO DECEMBER 4, 1996* TO
AUGUST 31, 1997 AUGUST 31, 1996 AUGUST 31, 1995 AUGUST 31, 1997
--------------- --------------- --------------------- --------------------
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 ............ 0.14 0.20 0.22 0.02
Net gain on securities
(both realized and
unrealized) .................... 6.82 2.81 2.72 2.28
----------- ----------- ----------- --------
Total from investment
operations ..................... 6.96 3.01 2.94 2.30
----------- ----------- ----------- --------
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 ...................... $ 24.40 $ 19.05 $ 17.86 $ 17.30
=========== =========== =========== ========
Total return .......................... 38.32% 17.59% 19.75% 15.33%(c)
Ratio/Supplemental Data
Net assets,
end of period .................. $86,181,741 $59,015,434 $31,643,776 $569,472
Ratio of expenses to
average net assets ............. 1.00%(a) 1.00%(a) 1.00%(a) 1.65%(a)(b)
Ratio of net investment
income to average
net assets ..................... 0.67% 1.25% 1.59% 0.16%(b)
Fund turnover rate ............... 93% 127% 123% 43%(c)
Average commission rate(d) ....... $0.0592 $0.0614 N/A $0.0035
<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
Institutional Class would have been 1.18%, 1.34% and 1.51% for the years
ended August 31, 1997, 1996 and 1995. Without the voluntary waiver of
advisory fees and administration fees and without the reimbursement of
operating expenses, the ratios of expenses to average net assets for the
BEA Global Telecommunications Fund Advisor Class would have been 8.38%
annualized for the period ended August 31, 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.
63
<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 FOR THE FOR THE FOR THE PERIOD
YEAR ENDED YEAR ENDED YEAR ENDED APRIL 1, 1994* TO
AUGUST 31, 1997 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 .............. 0.92 0.95 0.88 0.42
Net gain (loss) on securities
(both realized and
unrealized) ...................... 0.76 (0.16) 0.61 (0.40)
------------ ------------ ----------- -----------
Total from investment
operations ....................... 1.68 0.79 1.49 0.02
------------ ------------ ----------- -----------
Less Distributions
Dividends from net
investment income ................ (0.97) (0.93) (0.84) (0.25)
Distributions from
capital gains .................... (0.12) (0.22) -- --
------------ ------------ ----------- -----------
Total distributions ................ (1.09) (1.15) (0.84) (0.25)
------------ ------------ ----------- -----------
Net asset value,
end of period ........................ $ 15.65 $ 15.06 $ 15.42 $ 14.77
============ ============ =========== ===========
Total return ....................... 11.53% 5.23%(c) 10.60% 0.17%(c)
Ratio/Supplemental Data
Net assets,
end of period .................... $177,218,582 $118,596,275 $99,249,839 $30,015,818
Ratio of expenses to
average net assets ............... 0.50%(a) 0.50%(a)(b) 0.50%(a) 0.50%(a)(b)
Ratio of net investment
income (loss)
to average net assets ............ 6.31% 6.43%(b) 6.47% 6.04%(b)
Fund turnover rate ................. 372%(c) 201%(c) 304% 186%(c)
<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 Fixed Income
Fund Institutional Class would have been .78%, .78% and .84% for the years
ended August 31, 1997, 1996 and 1995, respectively, and .99% annualized for
the period ended August 31, 1994.
(b) Annualized.
(c) Not annualized.
* Commencement of operations.
</FN>
</TABLE>
64
<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 FOR THE FOR THE FOR THE PERIOD
YEAR ENDED YEAR ENDED YEAR ENDED JUNE 28, 1994* TO
AUGUST 31, 1997 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 .............. 0.85 0.87 1.06 0.15
Net gains (losses) on securities
(both realized and
unrealized) ...................... (0.16) 0.58 0.49 (0.15)
----------- ----------- ----------- ----------
Total from investment
operations ....................... 0.69 1.45 1.55 --
----------- ----------- ----------- ----------
Less Distributions
Dividends from net
investment income ................ (0.71) (1.22) (0.88) --
Distributions from
capital gains .................... (0.32) (0.15) -- --
----------- ----------- ----------- ----------
Total distributions ................ (1.03) (1.37) (0.88) --
----------- ----------- ----------- ----------
Net asset value,
end of period ........................ $ 15.41 $ 15.75 $ 15.67 $ 15.00
=========== =========== =========== ==========
Total return ............................ 4.48% 9.65% 10.72% 0.00%(c)
Ratio/Supplemental Data
Net assets,
end of period .................... $44,285,401 $38,347,500 $19,564,827 $6,300,360
Ratio of expenses to
average net assets ............... 0.75%(a) 0.75%(a) 0.75%(a) 0.75%(a)(b)
Ratio of net investment
income (loss) to
average net assets ............... 5.31% 7.37% 7.26% 5.64%(b)
Fund turnover rate ................. 98% 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
Institutional Class would have been 0.98%, 1.07%, and 1.29% for the years
ended August 31, 1997, 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.
65
<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 FOR THE PERIOD
FOR THE FOR THE FOR THE FOR THE PERIOD MARCH 31, NOVEMBER 1,
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED 1993* TO 1996* TO
AUGUST 31, 1997 AUGUST 31, 1996 AUGUST 31, 1995 AUGUST 31, 1994 AUGUST 31, 1993 AUGUST 31, 1997
--------------- --------------- --------------- --------------- ----------------- ------------------
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 ..... 1.37 1.47 1.42 1.20 0.52 0.93
Net gains (losses) on securities
(both realized and
unrealized) ............. 0.96 0.40 (0.30) (0.77) 1.42 0.87
----------- ------------ ------------ ------------ ----------- ------
Total from investment
operations .............. 2.33 1.87 1.12 0.43 1.94 1.80
----------- ------------ ------------ ------------ ----------- ------
Less Distributions
Dividends from net
investment income ....... (1.34) (1.50) (1.34) (1.43) -- (0.93)
Distributions from
capital gains ........... -- -- -- -- -- --
----------- ------------ ------------ ------------ ----------- ------
Total distributions ....... (1.34) (1.50) (1.34) (1.43) -- (0.93)
----------- ------------ ------------ ------------ ----------- ------
Net asset value,
end of period ............... $ 17.08 $ 16.09 $ 15.72 $ 15.94 $ 16.94 $ 17.08
=========== ============ ============ ============ =========== ======
Total return ................... 15.17% 12.42% 7.79%(d) 2.24%(d) 12.93%(c)(d) 11.49%(c)
Ratio/Supplemental Data
Net assets,
end of period ........... $92,630,437 $75,848,558 $153,620,957 $143,517,472 $98,356,591 $86,375
----------- ----------- ------------ ------------ ----------- -------
Ratio of expenses to
average net assets ...... 0.70%(a) 0.88%(a) 1.00%(a) 1.00%(a) 1.00%(a)(b) 0.96%(a)(b)
Ratio of net investment
income (loss) to average
net assets .............. 8.44% 8.92% 9.37% 7.73% 7.56%(b) 8.13%(b)
Fund turnover rate ........ 84% 143% 70% 121% 72%(c) 84%(c)
<FN>
(a) Without the voluntary waiver of advisory fees and administration fees, the
ratios of expenses to average net assets for the BEA High Yield Fund
Institutional Class would have been 1.13%, 1.11%, 1.08%, and 1.13% for the
years ended August 31, 1997, 1996, 1995, and 1994, respectively and 1.17%
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 High Yield Fund Advisor Class would have
been 1.47% annualized for the period ended August 31, 1997.
(b) Annualized.
(c) Not annualized.
(d) Redemption fees not reflected in total return
* Commencement of operations.
</FN>
</TABLE>
See Accompanying Notes to Financial Statements.
66
<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 FOR THE FOR THE FOR THE PERIOD
YEAR ENDED YEAR ENDED YEAR ENDED JUNE 20, 1994* TO
AUGUST 31, 1997 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 .............. 0.72 0.73 0.71 0.09
Net gains (losses) on securities
(both realized and
unrealized) ...................... 0.65 (0.37) 0.50 (0.03)
----------- ----------- ----------- -----------
Total from investment
operations ....................... 1.37 0.36 1.21 0.06
----------- ----------- ----------- -----------
Less Distributions
Dividends from net
investment income ................ (0.72) (0.74) (0.76) --
Distributions from
capital gains .................... (0.46) (0.43) (0.05) --
----------- ----------- ----------- -----------
Total distributions ................ (1.18) (1.17) (0.81) --
----------- ----------- ----------- -----------
Net asset value,
end of period ........................ $ 14.84 $ 14.65 $ 15.46 $ 15.06
=========== =========== =========== ===========
Total return ............................ 9.74% 2.27% 8.42% 0.40%(c)
Ratio/Supplemental Data
Net assets,
end of period .................... $19,810,118 $19,581,254 $48,977,837 $42,309,936
Ratio of expenses to
average net assets ............... 1.00%(a) 1.00%(a) 1.00%(a) 1.00%(a)(b)
Ratio of net investment
income (loss) to
average net assets ............... 4.88% 4.62% 4.76% 3.27%(b)
Fund turnover rate ................. 43% 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 Municipal Bond Fund
Institutional Class would have been 1.37%, 1.42%, and 1.19% for the years
ended August 31, 1997, 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.
67
<PAGE>
THE BEA FUNDS
OF THE RBB FUND, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The RBB Fund, Inc. (the "Fund") is registered under the Investment Company
Act of 1940, as amended, as an open-end management investment company. The Fund
was incorporated in Maryland on February 29, 1988, and currently has nineteen
investment Portfolios, eight of which are included in these financial
statements.
The Fund has authorized capital of thirty billion shares of common stock of
which 13.67 billion are currently classified into seventy-nine classes. Each
class represents an interest in one of twenty investment portfolios of RBB. The
classes have been grouped into sixteen separate "families," nine of which have
begun investment operations. The BEA Family represents interests in eight 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) USE OF ESTIMATES -- The preparation of financial statements in
conformity with generally accepted accounting principals 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.
G) OTHER -- Securities denominated in currencies other than U.S.
dollars are subject to changes in value due to fluctuations in exchange
rates.
68
<PAGE>
THE BEA FUNDS
OF THE RBB FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Some countries in which the Funds invest require governmental approval for
the repatriation of investment income, capital or the proceeds of sales of
securities by foreign investors. In addition, if there is a deterioration in a
country's balance of payments or for other reasons, a country may impose
temporary restrictions on foreign capital remittances abroad.
The securities exchanges of certain foreign markets are substantially
smaller, less liquid and more volatile than the major securities markets in the
United States. Consequently, acquisition and disposition of securities by the
Funds may be inhibited. In addition, a significant proportion of the aggregate
market value of equity securities listed on the major securities exchanges in
emerging markets are held by a smaller number of investors. This may limit the
number of shares available for acquisition or disposition by the Fund.
Lower-rated debt securities (commonly known as "junk bonds") possess
speculative characteristics and are subject to greater market fluctuations and
risk of lost income and principal than higher-rated debt securities for a
variety of reasons. Also, during an economic downturn or substantial period of
rising interest rates, highly leveraged issuers may experience financial stress
which would adversely affect their ability to service their principal and
interest payment obligations, to meet projected business goals and to obtain
additional financing.
In addition, periods of economic uncertainty and changes can be expected to
result in increased volatility of market prices of lower-rated debt securities
and a Fund's net asset value.
NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
Pursuant to Investment Advisory Agreements, BEA Associates ("BEA"), 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 year ended August 31, 1997, advisory
fees and waivers for each of the eight investment Funds were as follows:
<TABLE>
<CAPTION>
GROSS NET
ADVISORY FEE WAIVER ADVISORY FEE
------------ --------- ------------
<S> <C> <C> <C>
BEA International Equity Fund $5,300,316 $ -- $5,300,316
BEA Emerging Markets Equity Fund 1,006,500 (18,498) 988,002
BEA U.S. Core Equity Fund 564,863 (27,626) 537,237
BEA Global Telecommunications Fund 3,745 (3,745) --
BEA U.S. Core Fixed Income Fund 534,735 (177,539) 357,196
BEA Global Fixed Income Fund 208,250 (27,305) 180,945
BEA High Yield Fund 627,177 (233,336) 393,841
BEA Municipal Bond Fund 135,884 (44,791) 91,093
</TABLE>
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.
69
<PAGE>
THE BEA FUNDS
OF THE RBB FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 year
ended August 31, 1997, administration fees for each of the eight investment
Funds were as follows:
<TABLE>
<CAPTION>
GROSS NET
ADMINISTRATION FEE WAIVER ADMINISTRATION FEE
------------------ --------- ------------------
<S> <C> <C> <C>
BEA International Equity Fund $828,175 $(43,161) $785,014
BEA Emerging Markets Equity Fund 125,813 (12) 125,801
BEA U.S. Core Equity Fund 94,144 -- 94,144
BEA Global Telecommunications Fund 468 (468) --
BEA U.S. Core Fixed Income Fund 178,245 (19,068) 159,177
BEA Global Fixed Income Fund 52,062 (10,412) 41,650
BEA High Yield Fund 111,996 (22,399) 89,597
BEA Municipal Bond Fund 24,265 -- 24,265
</TABLE>
Counsellors Funds Service, Inc. ("Counsellors Service"), a wholly-owned
subsidiary of Counsellors Securities Inc., serves as administrative services
agent. An administrative service fee is computed daily and payable quarterly at
an annual rate of .15% of each Fund's average daily net assets.
The BEA International Equity Fund, BEA Emerging Markets Fund, BEA Global
Telecommunications Fund, and the BEA High Yield Fund have each entered into
Distribution Agreements with Counsellors Securities pursuant to their
Distribution Plans under Rule 12b-1 of the 1940 Act. In consideration for
Services, the Distribution agreement provides that the Funds will each pay
Counsellors Securities a fee calculated at an annual rate of .25% of the average
daily net assets of the Advisor Shares of the Funds.
Expenses include legal fees paid to counsel to the Company, a partner of
which is secretary of the Company.
Expenses include Administrative and 12b-1 fees paid to Counsellors whose
secretary is also a director of the Company.
NOTE 3. PURCHASES AND SALES OF SECURITIES
For the year ended August 31, 1997, purchases and sales of investment
securities (other than short-term investments) were as follows:
<TABLE>
<CAPTION>
INVESTMENT SECURITIES U.S. GOVERNMENT OBLIGATIONS
---------------------------- -----------------------------
PURCHASES SALES PURCHASES SALES
------------ -------------- ------------ ------------
<S> <C> <C> <C> <C>
BEA International Equity Fund $802,279,083 $1,030,447,335 $ -- $ --
BEA Emerging Markets Equity Fund 142,182,573 184,242,518 -- --
BEA U.S. Core Equity Fund 70,288,760 66,974,758 -- --
BEA Global Telecommunications Fund 691,678 209,286 -- --
BEA U.S. Core Fixed Income Fund 141,304,540 87,797,733 430,864,981 411,909,684
BEA Strategic Global Fixed Income Fund 28,275,640 23,047,678 15,181,366 10,784,544
BEA High Yield Fund 78,371,533 67,760,600 -- --
BEA Municipal Bond Fund 7,016,087 6,415,426 1,080,449 1,787,884
</TABLE>
For the year ended August 31, 1997, purchases include $22,558,250 and
$5,525 of investment securities received from shareholders in exchange for
1,462,838 shares and 268 shares sold by BEA U.S. Core Fixed Income Fund and BEA
U.S. Core Equity Fund, respectively. For the year ended August 31, 1997, sales
include $11,242,494 of investment securities delivered to shareholders in
exchange for 624,236 shares redeemed by the BEA Emerging Markets Equity Fund.
This resulted in a gain of $29,738 for the BEA Emerging Markets Equity Fund.
70
<PAGE>
THE BEA FUNDS
OF THE RBB FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 4. CAPITAL SHARES
Transactions in capital shares for each period were as follows:
<TABLE>
<CAPTION>
BEA INTERNATIONAL EQUITY FUND
-------------------------------------------------------------------------------------------
FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE PERIOD NOVEMBER 1, 1996*
AUGUST 31, 1997 AUGUST 31, 1996 THROUGH AUGUST 31, 1997
--------------------------- --------------------------- --------------------------------
INSTITUTIONAL INSTITUTIONAL ADVISOR
--------------------------- --------------------------- --------------------------------
SHARES VALUE SHARES VALUE SHARES VALUE
----------- ------------- ----------- ------------- -------------- --------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 2,106,657 $ 43,959,322 8,492,355 $ 158,914,042 7,020 $142,126
Shares issued in reinvestment
of dividends 407,411 8,213,395 137,894 2,523,456 2 33
Shares repurchased, net of
redemption fees (12,069,824) (255,570,149) (15,886,499) (300,107,186) (375) (7,544)
----------- ------------- ----------- ------------- ----------- --------
Net increase (decrease) (9,555,756) $(203,397,432) (7,256,250) $(138,669,688) 6,647 $134,615
=========== ============= =========== ============= =========== ========
BEA Shares Authorized 500,000,000 500,000,000 100,000,000
=========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
BEA EMERGING MARKETS EQUITY FUND
-------------------------------------------------------------------------------------------
FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE PERIOD NOVEMBER 1, 1996*
AUGUST 31, 1997 AUGUST 31, 1996 THROUGH AUGUST 31, 1997
--------------------------- --------------------------- --------------------------------
INSTITUTIONAL INSTITUTIONAL ADVISOR
--------------------------- --------------------------- --------------------------------
SHARES VALUE SHARES VALUE SHARES VALUE
----------- ------------- ----------- ------------- -------------- --------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 300,734 $ 6,118,794 1,930,842 $ 33,432,364 580 $ 6,252
Shares issued in reinvestment
of dividends 11,536 216,755 19,043 323,156 -- 9
Shares repurchased, net of
redemption fees (2,385,604) (45,726,259) (2,909,721) (50,936,507) (397) (2,825)
----------- ------------ ----------- ------------ ----------- --------
Net increase (decrease) (2,073,334) $(39,390,710) (959,836) $(17,180,987) 183 $ 3,436
=========== ============ =========== ============ =========== ========
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 YEAR ENDED FOR THE YEAR ENDED FOR THE PERIOD DECEMBER 4, 1996*
AUGUST 31, 1997 AUGUST 31, 1996 THROUGH AUGUST 31, 1997
--------------------------- --------------------------- --------------------------------
INSTITUTIONAL INSTITUTIONAL ADVISOR
--------------------------- --------------------------- --------------------------------
SHARES VALUE SHARES VALUE SHARES VALUE
----------- ------------- ----------- ------------- -------------- --------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 629,948 $ 13,787,909 1,435,791 $27,128,776 35,439 $550,787
Shares issued in reinvestment
of dividends 247,726 4,994,154 188,415 3,346,258 -- --
Shares repurchased, net of
redemption fees (443,835) (10,065,462) (298,285) (5,671,311) (2,513) (42,249)
---------- ------------- ---------- ----------- ----------- --------
Net increase 433,839 $ 8,716,601 1,325,921 $24,803,723 32,926 $508,538
========== ============= ========== =========== =========== ========
BEA Shares Authorized 50,000,000 50,000,000 100,000,000
========== ========== ===========
<FN>
*Commencement of operations.
</FN>
</TABLE>
71
<PAGE>
THE BEA FUNDS
OF THE RBB FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 4. CAPITAL SHARES (CONTINUED)
<TABLE>
<CAPTION>
BEA U.S. CORE FIXED INCOME FUND
---------------------------------------------------------
FOR THE YEAR ENDED FOR THE YEAR ENDED
AUGUST 31, 1997 AUGUST 31, 1996
--------------------------- ---------------------------
INSTITUTIONAL INSTITUTIONAL
--------------------------- ---------------------------
SHARES VALUE SHARES VALUE
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Shares sold 3,766,118 $ 57,992,720 4,441,435 $ 68,996,273
Shares issued in reinvestment
of dividends 635,289 9,648,554 576,935 8,756,243
Shares repurchased, net of
redemption fees (953,578) (14,608,596) (3,583,115) (54,416,107)
---------- ------------ ---------- ------------
Net increase 3,447,829 $ 53,032,678 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 YEAR ENDED FOR THE YEAR ENDED
AUGUST 31, 1997 AUGUST 31, 1996
--------------------------- ---------------------------
INSTITUTIONAL INSTITUTIONAL
--------------------------- ---------------------------
SHARES VALUE SHARES VALUE
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Shares sold 583,542 $ 9,015,150 1,105,942 $17,551,485
Shares issued in reinvestment
of dividends 155,630 2,420,275 162,519 2,519,968
Shares repurchased, net of
redemption fees (300,343) (4,677,567) (81,878) (1,280,614)
---------- ----------- ---------- -----------
Net increase 438,829 $ 6,757,858 1,186,583 $18,790,839
========== =========== ========== ===========
BEA Shares Authorized 50,000,000 50,000,000
========== ==========
</TABLE>
<TABLE>
<CAPTION>
BEA HIGH YIELD FUND
-------------------------------------------------------------------------------------------
FOR THE YEAR ENDED FOR THE YEAR ENDED FOR THE PERIOD NOVEMBER 1, 1996*
AUGUST 31, 1997 AUGUST 31, 1996 THROUGH AUGUST 31, 1997
--------------------------- --------------------------- --------------------------------
INSTITUTIONAL INSTITUTIONAL ADVISOR
--------------------------- --------------------------- --------------------------------
SHARES VALUE SHARES VALUE SHARES VALUE
----------- ------------- ----------- ------------- -------------- --------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 1,921,993 $ 31,537,039 3,372,093 $ 54,558,056 5,206 $85,650
Shares issued in reinvestment
of dividends 425,311 6,905,890 629,920 9,902,559 9 148
Shares repurchased, net of
redemption fees (1,638,080) (27,112,004) (9,062,440) (142,330,474) (158) (2,569)
----------- ------------ ----------- ------------ ----------- -------
Net increase (decrease) 709,224 $ 11,330,925 (5,060,427) $ (77,869,859) 5,057 $83,229
=========== ============ =========== ============ =========== =======
BEA Shares Authorized 500,000,000 500,000,000 100,000,000
=========== =========== ===========
<FN>
*Commencement of operations.
</FN>
</TABLE>
72
<PAGE>
THE BEA FUNDS
OF THE RBB FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 4. CAPITAL SHARES (CONTINUED)
<TABLE>
<CAPTION>
BEA MUNICIPAL BOND FUND
---------------------------------------------------------
FOR THE YEAR ENDED FOR THE YEAR ENDED
AUGUST 31, 1997 AUGUST 31, 1996
--------------------------- ---------------------------
INSTITUTIONAL INSTITUTIONAL
--------------------------- ---------------------------
SHARES VALUE SHARES VALUE
---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Shares sold 7,719 $ 111,603 315,445 $ 4,700,422
Shares issued in reinvestment
of dividends 101,853 1,488,998 109,160 1,656,622
Shares repurchased, net of
redemption fees (111,453) (1,647,099) (2,256,456) (34,437,592)
---------- ----------- ---------- ------------
Net increase (decrease) (1,881) $ (46,498) (1,831,851) $(28,080,548)
========== =========== ========== ============
BEA Shares Authorized 50,000,000 50,000,000
========== ==========
</TABLE>
On August 31, 1997, five shareholders held approximately 30% of the
outstanding shares of the BEA International Equity Institutional Class, three
shareholders held approximately 85% of the outstanding shares of the BEA
Emerging Markets Institutional Class, five shareholders held approximately 82%
of the outstanding shares of the BEA U.S. Core Equity Institutional Class, four
shareholders held approximately 81% of the outstanding shares of the BEA Global
Telecommunications Advisor Class, seven shareholders held approximately 68% of
the outstanding shares of the BEA U.S. Core Fixed Income Institutional Class,
four shareholders held 88% of the outstanding shares of the BEA Global Strategic
Fixed Income Institutional Class, five shareholders held 52% of the outstanding
shares of the BEA High Yield Institutional Class, and three shareholders held
59% of the outstanding shares of the BEA Municipal Bond Institutional Class.
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 August 31, 1997, percentage of net assets
which the securities comprise, aggregate cost and unit value of the securities.
<TABLE>
<CAPTION>
NUMBER OF ACQUISITION 08/31/97 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 2,928,947 0.5% 6,000,000 4.882
---------- ----------
$4,519,172 $6,950,076
========== ==========
</TABLE>
NOTE 6. CAPITAL LOSS CARRYOVER
At August 31, 1997, Capital loss carryovers were available to offset future
realized gains as follows: $9,917,959 in the Emerging Markets Equity Fund which
expires in 2004 and $16,868,912 in the BEA High Yield Fund of which $8,528,142
expires in 2001, $4,986,021 expires in 2003, and $3,354,749 expires in 2005.
NOTE 7. FORWARD FOREIGN CURRENCY CONTRACTS
The Funds will generally enter into forward foreign currency exchange
contracts as a way of managing foreign exchange rate risk. A Fund may enter into
these contracts to fix the U.S. dollar value of a security that it has agreed to
buy or sell for the period between the date the trade was entered into and the
date the security is delivered and paid for. A Fund may also use these contracts
to hedge the U.S. dollar value of securities it already owns denominated in
foreign currencies. The Fund may enter into these contracts for the purchase or
sale of a specific foreign currency at a fixed price on a future date as a hedge
or cross-hedge against either transactions or portfolio positions.
73
<PAGE>
THE BEA FUNDS
OF THE RBB FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
NOTE 7. FORWARD FOREIGN CURRENCY CONTRACTS (CONTINUED)
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 Fund's
policy is to include this portion of realized and unrealized gains and losses on
investments that results from foreign currency changes with other foreign
currency gains and losses on the Statement of Operations.
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 year ended August 31, 1997, the BEA
Strategic Global Fixed Income Fund entered into forward foreign currency
contracts.
The BEA Strategic Global Fixed Income Fund's open Forward Foreign Currency
Contracts at August 31, 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 09/17/97 $ 1,371,888 $ 1,042,086 $ 1,007,652 $ 34,434
German Deutschemarks 09/17/97 1,854,680 1,000,000 1,028,994 (28,994)
German Deutschemarks 09/19/97 1,802,400 1,000,000 1,000,122 (122)
German Deutschemarks 09/17/97 4,000,000 2,226,400 2,219,239 7,161
Great Britain Pounds 09/17/97 855,713 1,397,379 1,385,733 11,646
Italian Lira 09/17/97 988,535,890 580,911 559,539 21,372
Japanese Yen 12/12/97 89,242,500 750,000 750,220 (220)
Netherlands Guilder 09/17/97 2,504,000 1,299,429 1,233,364 66,065
New Zealand Dollars 09/17/97 1,605,587 1,046,843 1,025,810 21,033
Swedish Krona 09/17/97 1,866,174 240,797 237,307 3,490
----------- ----------- --------
$10,583,845 $10,447,980 $135,865
=========== =========== ========
</TABLE>
<TABLE>
<CAPTION>
FOREIGN UNREALIZED
FORWARD CURRENCY EXPIRATION CURRENCY CONTRACT CONTRACT FOREIGN EXCHANGE
CONTRACT DATE TO BE PURCHASED AMOUNT VALUE GAIN/(LOSS)
--------------------- ---------- --------------- ----------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
Australian Dollars 09/17/97 $ 837,466 $ 629,691 $ 615,119 $ (14,572)
Canadian Dollars 09/17/97 1,349,300 977,753 972,973 (4,780)
German Deutschemarks 09/17/97 8,592,250 5,000,000 4,767,063 (232,937)
German Deutschemarks 09/17/97 11,323,688 6,606,585 6,282,491 (324,094)
German Deutschemarks 09/17/97 1,739,300 1,000,000 964,980 (35,020)
German Deutschemarks 09/17/97 1,871,200 1,000,000 1,038,160 38,160
German Deutschemarks 09/17/97 1,782,500 1,000,000 988,948 (11,052)
German Deutschemarks 09/19/97 1,830,750 1,000,000 1,015,853 15,853
German Deutschemarks 09/19/97 1,881,420 1,000,000 1,043,969 43,969
German Deutschemarks 09/19/97 1,808,400 1,000,000 1,003,451 3,451
Japanese Yen 09/17/97 114,300,000 1,000,000 948,835 (51,165)
Japanese Yen 09/17/97 133,320,000 1,200,000 1,106,726 (93,274)
Japanese Yen 09/17/97 119,389,346 1,061,238 991,083 (70,155)
New Zealand Dollar 09/17/97 1,000,000 639,980 638,901 (1,079)
Spanish Pesetas 09/17/97 337,760,000 2,226,400 2,216,592 (9,808)
Swiss Francs 09/17/97 2,503,408 1,733,662 1,685,706 (47,956)
----------- ----------- ---------
$27,075,309 $26,280,850 $(794,459)
=========== =========== =========
</TABLE>
74
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS OF THE RBB FUND, INC.:
We have audited the accompanying statements of net assets of the BEA
International Equity Fund, BEA Emerging Markets Equity Fund, BEA U.S. Core
Equity Fund, BEA U.S. Core Fixed Income Fund, BEA Strategic Global Fixed Income
Fund, BEA Global Telecommunications Fund, BEA High Yield Fund and BEA Municipal
Bond Fund of The RBB Fund, Inc., as of August 31, 1997 and the related
statements of operations, for the year then ended or period from December 4,
1996 (commencement of operations) to August 31, 1997 for the BEA Global
Telecommunications Fund, the statements of changes in net assets for each of the
two years in the period then ended, or the period from December 4, 1996
(commencement of operations) to August 31, 1997 for the BEA Global
Telecommunications Fund, and the financial highlights for each of the periods
presented. These financial statements and financial highlights are the
responsibility of the Fund's management.Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of investments owned as of
August 31, 1997, by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of the
BEA International Equity Fund, BEA Emerging Markets Equity Fund, BEA U.S.Core
Equity Fund, BEA U.S. Core Fixed Income Fund, BEA Strategic Global Fixed Income
Fund, BEA Fund, BEA High Yield Fund and BEA Municipal Bond Fund of The RBB Fund,
INC., as of August 31, 1997 and the results of their operations for the year
then ended or the period from December 4, 1996 (commencement of operations) to
August 31, 1997 for the BEA Global Telecommunications Fund, the changes in their
net assets for each of the two years in the period then ended, or for the period
from December 4, 1996 (commencement of operations) to August 31, 1997 for the
BEA Global Telecommunications Fund and their financial highlights for each of
the periods presented, in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
October 17, 1997
75
<PAGE>
TAX INFORMATION LETTERS
IMPORTANT TAX INFORMATION FOR SHAREHOLDERS OF BEA INTERNATIONAL EQUITY FUND
(UNAUDITED)
During the fiscal year ended August 31, 1997, the International Equity Fund
- - Institutional Class distributed $7,868,059 of foreign source income on which
the Fund paid foreign taxes of $1,389,751. This information is being furnished
to you pursuant to notice requirements of Sections 853(a) and 855(d) of the
Internal Revenue Code, as amended, and the Treasury Regulations thereunder.
During the fiscal year ended August 31, 1997, the International Equity Fund
- - Advisor Class distributed $32 of foreign source income on which the Fund paid
foreign taxes of $6. This information is being furnished to you pursuant to
notice requirements of Sections 853(a) and 855(d) of the Internal Revenue Code,
as amended, and the Treasury Regulations thereunder.
IMPORTANT TAX INFORMATION FOR SHAREHOLDERS OF BEA EMERGING MARKETS EQUITY FUND
(UNAUDITED)
During the fiscal year ended August 31, 1997, the Emerging Markets Equity
Fund - Institutional Class distributed $543,034 of foreign source income on
which the Fund paid foreign taxes of $178,578. This information is being
furnished to you pursuant to notice requirements of Sections 853(a) and 855(d)
of the Internal Revenue Code, as amended, and the Treasury Regulations
thereunder.
During the fiscal year ended August 31, 1997, the Emerging Markets Equity
Fund - Advisor Class distributed $14 of foreign source income on which the Fund
paid foreign taxes of $5. This information is being furnished to you pursuant to
notice requirements of Sections 853(a) and 855(d) of the Internal Revenue Code,
as amended, and the Treasury Regulations thereunder.
IMPORTANT TAX INFORMATION FOR CORPORATE SHAREHOLDERS OF BEA U.S. CORE EQUITY
FUND (UNAUDITED)
Corporate shareholders should note that for the fiscal year ended August
31, 1997, 35.6% of the Fund's investment income (i.e., net investment income
plus short-term capital gains) qualifies for the intercorporate dividends
received deduction.
IMPORTANT TAX INFORMATION FOR SHAREHOLDERS OF BEA MUNICIPAL BOND FUND
(UNAUDITED)
In the twelve months ended August 31, 1997 (the end of the fiscal year),
88% of the dividends paid by the Fund were exempt-interest dividends for
purposes of federal income taxes and free from such taxes. In addition, none of
such dividends was attributable to interest on private activity bonds which must
be included in federal alternative minimum taxable income for purposes of
determining liability for federal alternative minimum tax.
In January 1998, you will be furnished with a schedule showing the yearly
percentage breakdown by State or U.S. possession of the source of interest
earned by the Fund in 1997. It is suggested that you consult your tax adviser
concerning the applicability of State and local taxes to dividends paid by the
Fund during the year.
IMPORTANT TAX INFORMATION FOR SHAREHOLDERS (UNAUDITED)
During the year ended August 31, 1997, the BEA Funds declared the following
dividends from realized capital gains:
SHORT-TERM LONG-TERM
CAPITAL GAIN CAPITAL GAIN
PER SHARE PER SHARE
------------ ------------
BEA U.S. Core Equity Fund $0.47 $0.94
BEA U.S. Core Fixed Income Fund 0.06 0.05
BEA Strategic Global Fixed Income Fund 0.19 0.14
BEA Municipal Bond Fund -- 0.46
76
