AUGUST 31, 1998 ANNUAL REPORT
CREDIT| ASSET
BEA A member of SUISSE| MANAGEMENT
INTERNATIONAL EQUITY FUND
EMERGING MARKETS EQUITY FUND
U.S. CORE EQUITY FUND
GLOBAL TELECOMMUNICATIONS FUND
SELECT ECONOMIC VALUE EQUITY FUND
LONG-SHORT MARKET NEUTRAL FUND
U.S. CORE FIXED INCOME FUND
STRATEGIC GLOBAL FIXED INCOME FUND
HIGH YIELD FUND
MUNICIPAL BOND FUND
<PAGE>
BEA International Equity Fund
Portfolio Managers' Letter
September 24, 1998
Dear Shareholders:
We are writing to report on the results of the BEA International Equity Fund
(the "Fund") for the fiscal year ended August 31, 1998.
At August 31, 1998, the net asset value ("NAV") of the Fund's Institutional
Class was $22.70, compared to an NAV of $22.22 on August 31, 1997. As a result,
the Institutional Class's total return (assuming reinvestment of dividends and
distributions) was up 16.74%. By comparison, the MSCI EAFE Index (the "Index")
was only up by 0.13% during the same period.
The NAV of the Fund's Advisor Class was $22.56, compared to an NAV of $22.17 on
August 31, 1997. As a result, the Advisor Class's total return (assuming
reinvestment of dividends and distributions) increased by 16.33%. By comparison,
the Index rose by 0.13% during the same period.
Three factors contributed most positively to the Fund's strong outperformance
during the year. The first, by far, was our strategy in Europe, notably stock
selection and, to a lesser extent, regional and country allocation. Stock
selection was most successful in France, the U.K., Italy, the Netherlands and
Germany. Top-performing European stocks in the Fund included Cap Gemini S.A. and
Danone in France; Vodafone Group plc and Compass Group plc in the U.K.; and
Credito Italiano in Italy.
Our decision to overweight Europe as a region versus the Index also added value,
as European markets have been among the world's strongest for some time now.
Country overweights in France and Italy magnified the effectiveness of our stock
selection in those markets.
The second factor driving outperformance was our significant underweighting of
Japan, which we have maintained since late 1996. As the Japanese economy remains
mired in recession and political gridlock, this approach continues to benefit
the Fund's return.
The final main contributor to outperformance was our near-total absence from
Asian markets, whether developed or emerging. This worked to greatest effect in
Hong Kong and Malaysia. We expect to remain minimally exposed to or out of Asia
well into 1999, as there is little indication that the region's severe economic
woes may have run their course.
As other developments occur in the international equity markets or at BEA, we
will be sure to keep you informed. Meanwhile, if you have questions, please feel
free to call upon us at any time.
Sincerely yours,
BEA International Equities Management Team
William P. Sterling, Executive Director
Richard W. Watt, Managing Director
Steven D. Bleiberg, Managing Director
Susan Boland, Senior Vice President
Emily Alejos, Vice President
Robert Hrabchak, Vice President
1
<PAGE>
BEA International Equity Fund
Portfolio Managers' 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. (Unaudited)
[GRAPHIC]
In the printed version of the document, a line graph appears which depicts the
following plot points:
BEA INTERNATIONAL
EQUITY INSTITUTIONAL MSCI
CLASS EAFE INDEX
-------------------- ----------
10/1/92 10,000 10,000
11/30/92 9,685 9,571
2/28/93 9,906 9,918
5/31/93 11,218 12,062
8/31/93 12,159 12,962
11/30/93 12,120 11,928
2/28/94 13,783 13,841
5/31/94 12,999 13,735
8/31/94 13,891 14,405
11/30/94 13,080 13,732
2/28/95 11,435 13,258
5/31/95 12,500 14,451
8/31/95 12,773 14,517
11/30/95 12,387 14,815
2/29/96 13,352 15,539
5/31/96 13,901 16,041
8/31/96 13,498 15,706
11/30/96 14,166 16,606
2/28/97 14,614 16,090
5/31/97 15,361 17,303
8/31/97 15,650 17,179
11/30/97 16,087 16,588
2/28/98 18,109 18,633
5/31/98 20,072 19,278
8/31/98 18,270 17,201
------------------------------
AVERAGE ANNUAL
TOTAL RETURN (UNAUDITED)
One Year 16.74%
Three Years 13.07%
Five Years 8.71%
From Inception 11.41%
------------------------------
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. (Unaudited)
[GRAPHIC]
In the printed version of the document, a line graph appears which depicts the
following plot points:
BEA INTERNATIONAL
EQUITY ADVISOR MSCI
CLASS EAFE INDEX
-------------------- ----------
11/1/96 10,000 10,000
11/30/96 10,398 10,369
2/28/97 10,716 10,046
5/31/97 11,254 10,803
8/31/97 11,461 10,726
11/30/97 11,776 10,357
2/28/98 13,243 11,634
5/31/98 14,656 12,037
8/31/98 13,333 10,740
------------------------------
AVERAGE ANNUAL
TOTAL RETURN (UNAUDITED)
One Year 16.33%
From Inception 16.73%
------------------------------
Note: Past performance is not predictive of future performance.
2
<PAGE>
BEA International Equity Fund
of The RBB Fund, Inc.
Schedule of Investments
August 31, 1998
Number
of Shares Value
---------- -------------
COMMON STOCKS,
WARRANTS AND RIGHTS -- 91.3%
Argentina -- 0.3%
Sodigas del Sur S.A. .................. 403,923 $ 745,416
Sodigas Pampeana S.A. ................. 558,962 844,809
------------
1,590,225
------------
Denmark -- 1.3%
Tele Danmark A/S Cl. B ................ 83,110 8,810,042
------------
Finland -- 2.0%
Nokia Oyj Cl. A ....................... 174,177 12,430,087
------------
France -- 16.3%
Accor# ................................ 20,161 4,646,241
Alcatel Alsthom S.A.# ................. 93,724 15,144,910
AXA S.A.# ............................. 116,140 13,362,978
Banque Nationale de Paris ............. 91,665 6,056,714
Bouygues .............................. 31,990 6,116,531
Cap Gemini S.A.# ...................... 72,792 11,454,579
Etablissements Economiques
du Casino Guichard-
Perrachon S.A.# ..................... 96,400 9,134,349
Groupe Danone ......................... 34,780 9,204,047
LaGardere Groupe ...................... 182,932 6,871,557
Rhone Poulenc Ltd., Cl. A ............. 93,504 4,494,837
Suez Lyonnaise des Eaux ............... 64,840 10,664,041
Total S.A. Cl. B# ..................... 46,000 4,467,682
------------
101,618,466
------------
Germany -- 13.6%
Allianz AG Holding
Registered Shares ................... 19,698 5,785,941
BMW# .................................. 10,061 7,587,782
BMW New# .............................. 2,077 1,531,094
Deutsche Lufthansa AG# ................ 280,350 6,978,903
Henkel KGaA ........................... 122,802 9,818,533
Mannesmann AG ......................... 170,642 15,820,702
Porsche AG Pfd. ....................... 1,846 4,051,023
RWE AG# ............................... 126,662 6,198,394
Siemens AG ............................ 187,590 12,392,464
Systeme, Anwendungen,
Produkte in der
Datenverarbeitung AG Pfd.# .......... 14,263 8,395,186
Tarkett Sommer AG ..................... 9,893 221,588
Volkswagen AG ......................... 91,036 6,710,866
------------
85,492,476
------------
Ireland -- 1.7%
Allied Irish Banks plc ................ 452,000 6,176,129
Bank of Ireland ....................... 297,174 4,692,576
------------
10,868,705
------------
Italy -- 8.4%
Banca di Roma S.p.A ................... 3,117,968 $ 6,020,003
Credito Italiano ...................... 1,915,368 9,204,009
Olivetti S.p.A ........................ 1,472,200 3,294,363
Seat S.p.A ............................ 18,428,538 11,747,486
Telecom Italia Mobile S.p.A ........... 1,196,206 7,851,850
Telecom Italia S.p.A .................. 1,349,736 10,423,987
Telecom Italia Savings
Shares S.p.A ........................ 787,600 3,920,263
------------
52,461,961
------------
Japan -- 15.1%
Acom Company, Ltd. .................... 59,600 2,954,883
Bridgestone Corp. ..................... 117,000 2,577,165
Canon, Inc. ........................... 88,000 1,785,678
Casio Computer Company,
Ltd.# ............................... 404,000 2,832,778
Citizen Watch Co. ..................... 447,000 3,181,776
Dai Nippon Printing Company,
Ltd ................................. 3,000 41,880
Daiichi Pharmaceutical Co.,
Ltd ................................. 252,000 3,123,450
FamilyMart Co., Ltd.# ................. 112,600 4,067,284
Fuji Photo Film Co. ................... 98,000 3,158,155
Ito-Yokado Co., Ltd. .................. 83,000 3,862,242
Merrill Lynch "Honda Motor
Corp." - (CPS) ...................... 3,200 3,536,640
Minebea Company# ...................... 203,000 2,058,899
Mitsubishi Corp. ...................... 591,000 3,193,802
Mitsubishi Heavy Industries,
Ltd ................................. 1,000,000 3,640,484
Mitsubishi Steel Manufacturing
Co., Ltd. ........................... 500 372
Mitsui & Co., Ltd. .................... 398,000 2,139,542
Mitsui Chemicals Industries# .......... 754,700 1,790,668
Morgan Stanley "Cannon
Corp." - (CPS) ...................... 1,860 1,852,107
Morgan Stanley "Sony Corp." -
(CPS) ............................... 1,750 2,695,627
Nintendo Co., Ltd. .................... 34,900 3,235,646
Nippon Express Co., Ltd. .............. 571,000 2,612,550
Nippon Paper Industries
Company# ............................ 514,000 1,667,341
Nippon Telegraph &
Telephone ........................... 304 2,303,845
Promise Co., Ltd. ..................... 67,100 2,803,952
Rohm Co., Ltd. ........................ 50,300 5,130,107
Sankyo Co., Ltd. ...................... 150,000 3,261,562
Sekisui House, Ltd. ................... 523,000 3,959,819
Sony Corp. ............................ 24,200 1,767,136
Sumitomo Corp. ........................ 798,000 3,283,787
Sumitomo Metal Mining Co. ............. 520,000 1,642,609
See Accompanying Notes to Financial Statements.
3
<PAGE>
BEA International Equity Fund (Concluded)
Number
of Shares Value
---------- -------------
Japan -- (continued)
TDK Corp. ............................. 77,100 $ 5,346,050
Terumo Corp.# ......................... 112,000 2,114,030
Toppan Printing Company,
Ltd ................................. 373,000 3,698,561
Toyota Motor Corp. .................... 142,000 3,027,268
-------------
94,347,695
-------------
Mexico -- 0.0%
Telefonos de Mexico S.A.
Unsponsored ADR ..................... 4,400 7,700
-------------
Netherlands -- 5.6%
Heineken N.V .......................... 101,721 4,467,343
Internationale Nederlanden
Groep# .............................. 125,186 7,372,430
Koninklijke KPN BT N.V. ............... 187,912 8,488,706
Nutreco Holding N.V. .................. 172,908 6,168,800
VNU Verenigd Bezit .................... 198,490 8,358,146
-------------
34,855,425
-------------
South Africa -- 0.0%
South African Breweries
Limited ............................. 311 4,380
-------------
Spain -- 2.2%
Corp. Bancaria de Espana# ............. 194,400 3,725,355
Banco Central
Hispanoamericano S.A.# .............. 538,579 5,052,604
Telefonica S.A. ....................... 134,863 5,159,848
-------------
13,937,807
-------------
Sweden -- 0.7%
Foreningsbanken AB .................... 14,878 336,618
Skandia Forsakrings AB ................ 266,130 3,734,491
-------------
4,071,109
-------------
Switzerland -- 7.5%
Nestle S.A. ........................... 4,866 9,023,198
Novartis AG Registered
Shares .............................. 7,310 11,366,753
Roche Holding AG ...................... 896 9,270,739
Swiss Reinsurance Group
Registered Shares ................... 2,169 4,800,371
UBS AG ................................ 20,778 6,708,883
Zurich Allied AG ...................... 9,208 5,513,315
-------------
46,683,259
-------------
United Kingdom -- 16.6%
Avis Europe plc ....................... 1,802,230 7,303,202
BG plc ................................ 1,284,015 7,955,355
Boots Company plc ..................... 192,903 3,207,569
British Petroleum plc ................. 210,550 2,656,600
Cable & Wireless
Communications plc .................. 1,153,662 10,142,047
CGU plc ............................... 326,299 4,764,529
United Kingdom -- (continued)
Compass Group plc ..................... 1,093,800 $ 9,908,843
Glaxo Wellcome ........................ 238,708 7,194,941
Lloyds TSB Holdings Group plc ......... 360,608 4,305,391
National Grid Group plc ............... 800,511 5,763,994
Orange plc ............................ 352,536 4,191,308
SmithKline Beecham plc ................ 823,664 9,723,596
Unilever plc .......................... 377,132 3,517,518
Vodafone Group plc .................... 1,120,682 15,632,019
WPP Group plc ......................... 1,123,213 6,150,319
Zeneca Group plc ...................... 29,342 1,147,267
-------------
103,564,498
-------------
TOTAL COMMON STOCKS,
WARRANTS AND RIGHTS
(Cost $493,672,542) ................. 570,743,835
-------------
PREFERRED STOCK -- 0.0%
Israel -- 0%
Geotek Communications, Inc. ........... 600 --
-------------
Par
(000)
-----
SHORT-TERM INVESTMENTS -- 6.9%
BBH Grand Cayman U.S
Dollar Time Deposit
4.938% 09/01/98 ..................... $43,178 43,178,000
-------------
TOTAL SHORT-TERM
INVESTMENTS
(Cost $43,178,000) .................. 43,178,000
-------------
TOTAL INVESTMENTS -- 98.2%
(Cost $542,850,542*) ................ 613,921,835
-------------
OTHER ASSETS IN EXCESS
OF LIABILITIES -- 1.8% .............. 11,180,630
-------------
TOTAL NET ASSETS -- 100% ................ $ 625,102,465
=============
*Cost for Federal income tax purposes at August 31, 1998 is $549,191,720.
The gross appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation ............... $ 97,794,595
Gross Depreciation ............... (33,064,480)
------------
Net Appreciation ................. $ 64,730,115
============
#Security or a portion thereof is out on loan.
INVESTMENT ABBREVIATIONS
ADR ...................................... American Depository Receipts
CPS ...................................... Currency Protected Shares
See Accompanying Notes to Financial Statements.
4
<PAGE>
BEA International Equity Fund
of The RBB Fund, Inc.
Statement of Assets and Liabilities
August 31, 1998
<TABLE>
<S> <C>
ASSETS
Investments at value (Cost $542,850,542) ..................... $ 613,921,835
Collateral received for securities loaned .................... 88,971,334
Investments sold receivable .................................. 12,189,860
Tax Reclaim receivable ....................................... 712,439
Dividend receivable .......................................... 600,164
Interest receivable .......................................... 54,807
Prepaid expenses ............................................. 51,417
-------------
Total Assets ............................................... 716,501,856
LIABILITIES
Payable upon return of securities loaned ..................... 88,971,334
Accrued expenses payable ..................................... 1,425,889
Investments purchased payable ................................ 982,591
Other liabilities ............................................ 19,577
-------------
Total Liabilities .......................................... 91,399,391
NET ASSETS (Applicable to 27,471,070 BEA Institutional Shares and
71,823 BEA Advisor Shares) ................................... $ 625,102,465
=============
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE
PER BEA INSTITUTIONAL SHARE ($623,482,335 divided
by 27,471,070) ............................................... $ 22.70
=============
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE
PER BEA ADVISOR SHARE ($1,620,130 divided by 71,823) ......... $ 22.56
=============
NET ASSETS CONSISTED OF:
Capital Paid-In .............................................. $ 499,946,470
Accumulated Net Investment Loss .............................. (3,213,146)
Accumulated Net Realized Gain on
Security and Foreign Exchange Transactions ................. 57,163,781
Net Unrealized Appreciation on
Investments and Other ...................................... 71,205,360
-------------
NET ASSETS ...................................................... $ 625,102,465
=============
</TABLE>
See Accompanying Notes to Financial Statements.
5
<PAGE>
BEA Emerging Markets Equity Fund
Portfolio Managers' Letter
September 24, 1998
Dear Shareholders:
We are writing to report on the results of the BEA Emerging Markets Equity Fund
(the "Fund") for the fiscal year ended August 31, 1998.
At August 31, 1998, the net asset value ("NAV") of the Fund's Institutional
Class was $10.44, compared to an NAV of $19.64 on August 31, 1997. As a result,
the Institutional Class's total return (assuming reinvestment of dividends and
distributions) was down 42.96%. By comparison, the MSCI Emerging Markets Free
Index (the "Index") fell by 49.56% during the same period.
The NAV of the Fund's Advisor Class was $10.48, compared to an NAV of $19.60 on
August 31, 1997. As a result, the Advisor Class's total return (assuming
reinvestment of dividends and distributions) was down 42.86%. By comparison, the
Index fell by 49.56% during the same period.
Given the high level of volatility in emerging equity markets due to the
"contagion" effect of Asian currency devaluations that began in the summer of
1997, most equity funds that focus on emerging markets have experienced large
declines. While the fact that this is true of the Fund is a matter of concern,
we note that the Fund has fared better than its Index and many of its
contemporaries as well.
Three factors contributed to the Fund declining less than the Index:
o We raised a substantial level of cash toward the end of the fiscal year.
This helped us to avoid some of the turbulence in Latin American and EMEA
(i.e., Europe, Middle East and Africa) markets, which is still going on as
we write.
o We maintained a very underweighted exposure to Asia relative to the Index.
Our analysis continues to suggest that Asian fundamentals are deteriorating
rather than improving. There is also a serious decline in social conditions
that, in turn, has raised existing political tensions.
o We overweighted EMEA markets that we felt were reasonably well-insulated
from global contagion. This group included Portugal, Greece, Israel and
Egypt. Each does little business with Asia or Russia, and their stock
markets have enjoyed the benefits of strong domestic liquidity trends for
some time now.
Thank you for your support, and please feel free to call upon us at any time if
you have questions.
Sincerely yours,
BEA Emerging Markets Equities Management Team
William P. Sterling, Executive Director
Richard W. Watt, Managing Director
Steven D. Bleiberg, Managing Director
Susan Boland, Senior Vice President
Emily Alejos, Vice President
Robert Hrabchak, Vice President
6
<PAGE>
BEA Emerging Markets Equity Fund
Portfolio Managers' 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. (Unaudited)
[GRAPHIC]
In the printed version of the document, a line graph appears which depicts the
following plot points:
BEA EMERGING MSCI EMERGING
MARKETS EQUITY MARKETS EQUITY
INDEX INSTITUTIONAL CLASS
-------------- -------------------
2/1/93 10,000 10,000
2/28/93 10,027 10,159
5/31/93 10,815 10,923
8/31/93 12,377 12,443
11/30/93 14,653 14,648
2/28/94 17,078 17,058
5/31/94 14,839 15,724
8/31/94 16,832 18,257
11/30/94 15,879 17,189
2/28/95 11,460 13,765
5/31/95 12,677 15,243
8/31/95 12,720 15,263
11/30/95 11,835 14,349
2/29/96 12,992 15,795
5/31/96 13,881 16,481
8/31/96 13,144 15,846
11/30/96 13,295 15,817
2/28/97 14,938 17,699
5/31/97 14,605 17,759
8/31/97 14,235 16,573
11/30/97 12,683 13,717
2/28/98 12,894 14,298
5/31/98 11,634 12,734
8/31/98 8,120 8,360
------------------------------
AVERAGE ANNUAL
TOTAL RETURN (UNAUDITED)
One Year (42.96)%
Three Years (13.90)%
Five Years (8.08)%
From Inception (3.83)%
------------------------------
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. (Unaudited)
[GRAPHIC]
In the printed version of the document, a line graph appears which depicts the
following plot points:
BEA EMERGING MSCI EMERGING
MARKETS EQUITY MARKETS FREE
ADVISOR CLASS INDEX
-------------- -------------
11/1/96 10,000 10,000
11/30/96 10,200 10,106
2/28/97 11,451 11,309
5/31/97 11,190 11,347
8/31/97 10,896 10,589
11/30/97 9,701 8,765
2/28/98 9,869 9,135
5/31/98 8,913 8,136
8/31/98 6,227 5,341
------------------------------
AVERAGE ANNUAL
TOTAL RETURN (UNAUDITED)
One Year (42.86)%
From Inception (22.85)%
------------------------------
Note: Past performance is not predictive of future performance.
7
<PAGE>
BEA Emerging Markets Equity Fund
of The RBB Fund, Inc.
Schedule of Investments
August 31, 1998
Number
of Shares Value
---------- -------------
COMMON STOCKS,
WARRANTS AND RIGHTS -- 75.8%
Argentina -- 2.5%
Banco de Galicia y Buenos Aires
S.A. de C.V. ADR# ................... 8,300 $ 95,450
Perez Companc S.A. .................... 67,500 267,343
Telefonica de Argentina S.A. ..........
ADR# ................................ 11,900 266,262
----------
629,055
----------
Brazil -- 13.7%
Banco Bradesco S.A. PN ................ 31,182,222 175,039
Banco Bradesco S.A. Rights ............ 67,339 7
Banco Itau S.A. PN .................... 722,224 307,133
Ceval Alimentos S.A. .................. 47,548,688 112,426
Companhia Energetica de Minas
Gerais PN ........................... 6,943,013 129,914
Companhia Paranaense de
Energia ADR ......................... 25,400 139,700
Companhia Paranaense de
Energia PN Cl. B .................... 15,429,900 91,864
Companhia Saneamento .................. 2,307,489 194,294
Companhia Vale do Rio Doce
PN .................................. 26,398 350,252
Encorpar PN ........................... 1,055,582 1,742
Companhia Brasileira de
Distribuicao Grupo Pao
de Acucar ........................... 15,000 202,500
Santista Alimentos S.A. ............... 223,907 114,263
Telecomunicacoes Brasileiras
S.A. ADR# ........................... 10,208 721,578
Telecomunicacoes do Rio de
Janeiro S.A. PN ..................... 8,733 316
Telecomunicacoes do Sao Paulo,
S.A. ON ............................. 2,079,900 229,970
Telecomunicacoes de Sao Paulo,
S.A. PN ............................. 1,493,285 212,102
Uniao de Bancos Brasileriros
S.A. GDR ............................ 9,400 141,000
Usinas Siderurgica de Minas
Gerais S.A. PN ...................... 65,028 271,008
----------
3,395,108
----------
Chile -- 2.7%
Chilectra S.A. ADR .................... 7,617 122,478
Compania de Telecomunicaciones
de Chile S.A. ADR ................... 11,210 171,653
Distribucion Y Servicio D & S
S.A. ADR ............................ 11,145 101,698
Empresa Nacional de Electricidad
S.A. ADR ............................ 12,158 110,182
Enersis S.A. ADR ...................... 9,552 173,130
----------
679,141
----------
Colombia -- 0.0%
Cementos Paz del Rio ADR .............. 118 $ 1,104
----------
Croatia -- 1.1%
Pliva D.D. GDR 144A ................... 32,200 277,619
----------
Czech Republic -- 0.8%
SPT Telecom A.S ....................... 18,045 199,729
----------
Egypt -- 4.4%
Al-Ahram Beverages Co.,
S.A.E. 144A GDR ..................... 29,450 941,072
Suez Cement Company
144A GDR ............................ 10,800 158,784
----------
1,099,856
----------
Greece -- 6.5%
Alpha Credit Bank ..................... 6,811 502,442
Ergo Bank S.A ......................... 4,230 337,759
Hellenic Bottling Co. S.A. ............ 4,610 101,689
Hellenic Telecommunications
Organization S.A. ................... 22,856 264,199
STET Hellas Telecommunications
S.A. ADR ............................ 5,000 146,250
Titan Cement Company S.A. ............. 4,248 262,309
----------
1,614,648
----------
Hungary -- 3.7%
Matav RT ADR# ......................... 20,061 406,235
MOL Magyar Olaj - es Gazipari
Rt. GDR 144A ........................ 20,000 391,920
Richter ............................... 3,800 128,683
----------
926,838
----------
India -- 7.0%
Bharat Heavy Electricals Ltd.
Participation Notes ................. 32,135 172,843
Hindustan Petroleum Corporation
Ltd. Participation Notes ............ 51,900 341,646
ITC Agro-Tech, Ltd. GDR ............... 10,700 158,663
Larsen & Toubro Ltd.
Participation Notes ................. 2,093 8,535
Mahanagar Telephone Nigam
Ltd. 144A GDR# ...................... 17,400 164,341
Mahindra and Mahindra Ltd.
Participation Notes ................. 7,750 28,853
Mahindra and Mahindra Ltd.
144A GDR ............................ 27,158 101,109
Morgan Stanley India
Investment Fund, Inc. ............... 86,756 504,269
Ranbaxy Laboratories, Ltd.
144A GDR ............................ 8,100 96,820
Ranbaxy Laboratories, Ltd.
GDR ................................. 1,600 20,640
State Bank of India, Ltd. GDR ......... 15,605 130,614
----------
1,728,333
----------
See Accompanying Notes to Financial Statements.
8
<PAGE>
BEA Emerging Markets Equity Fund (Continued)
Number
of Shares Value
---------- -------------
Israel -- 4.4%
Bank Leumi of Israel Ltd. ............. 115,730 $ 185,090
Blue Square Chain Stores
Properties & Investment
ADR ................................. 17,700 245,587
ECI Telecommunications Ltd. ........... 13,500 371,250
First International Bank of
Israel Ltd. ......................... 70,104 81,273
Koor Industries Ltd., ADR ............. 11,200 200,200
----------
1,083,400
----------
Lebanon -- 0.8%
Solidere 144A GDR ..................... 18,920 198,660
----------
Mexico -- 9.8%
Cementos Mexicanos S.A. de
C.V. ................................ 5,725 11,678
Cementos Mexicanos S.A. de
C.V. Cl. B .......................... 77,849 189,781
Cifra S.A. de CV Class V
ADR# ................................ 20,689 224,958
Coca-Cola Femsa S.A. ADR# ............. 20,100 218,587
Corparacion GEO S.A. de
C.V. Cl. B .......................... 32,802 83,229
Corporacion Industrial San Luis
S.A. de C.V. CPO .................... 53,174 71,957
Fomento Economico Mexicano,
S.A. de C.V. ADR# ................... 13,639 233,561
Grupo Modelo S.A. de C.V. .............
Cl. C ............................... 37,735 267,337
Grupo Televisa S.A. de C.V. ...........
GDS ................................. 10,871 187,525
Kimberly-Clark de Mexico S.A. .........
de C.V. Cl. A ....................... 78,310 170,646
Telefonos de Mexico S.A. ..............
ADR# ................................ 22,005 785,303
----------
2,444,562
----------
Peru -- 0.5%
Credicorp Limited ADR ................. 11,800 112,838
----------
Poland -- 1.9%
Elektrim Spolka Akcyjna S.A ........... 57,220 476,187
----------
Portugal -- 1.2%
Electricidade de Portugal S.A. ........ 13,148 $ 306,444
----------
Russia -- 1.9%
Global TeleSystem Group, Inc.# ........ 6,500 208,000
Lukoil Holding ADR Pfd. ............... 4,100 15,674
Mosenergo ADR 144A .................... 8,429 10,080
PLD Telekom, Inc. ..................... 27,600 65,550
Surgutneftegaz ADR# ................... 39,130 112,080
Unified Energy Systems ................ 21,158 58,904
----------
470,288
----------
Singapore -- 0.8%
Singapore Airlines Ltd. *** ........... 14,062 60,174
Singapore Press Holdings Ltd. ......... 9,710 68,340
Singapore Telecommunications
Ltd. ................................ 47,713 69,579
----------
198,093
----------
South Africa -- 2.0%
Anglo American Corporation of
South Africa Ltd. ................... 8,380 211,285
Liberty Life Association of
Africa Limited ...................... 9,989 116,598
South African Breweries
Limited ............................. 12,407 174,753
----------
502,636
----------
Taiwan -- 5.6%
Morgan Stanley Taiwan Opals ........... 16,400 1,377,600
----------
Turkey -- 4.5%
Akbank T.A.S. ......................... 11,849,958 217,712
Eregli Demir Ve Celik
Fabrikalari T.A.S. .................. 2,880,200 246,424
Haci Omer Sabanci Holdings
144A ................................ 28,614 373,665
Yapi Ve Kredi Bankasi A.S. ............ 14,830,849 277,821
----------
1,115,622
----------
TOTAL COMMON STOCKS,
WARRANTS AND RIGHTS
(Cost $29,253,491) .................. 18,837,761
----------
See Accompanying Notes to Financial Statements.
9
<PAGE>
Par
(000) Value
---------- -----------
SHORT-TERM INVESTMENTS -- 14.3%
BBH Grand Cayman U.S.
Dollar Time Deposit
4.938% 09/01/98 ................. $ 3,553 $ 3,553,000
-----------
TOTAL SHORT-TERM
INVESTMENTS
(Cost $3,553,000) ............... 3,553,000
-----------
BONDS -- 8.4%
Banco Nacional de Desenvolvimento
Economico 144A Bonds
(B1, BB-)
10.300% 12/16/98 ................ 1,106 876,505
Government of Bulgaria Discount
FRN, Series A (B2, NR)
6.688% 07/28/24 .................BGL 500 284,063
Cia. Petroleos Mexicanos
Guarantee Notes (Ba2, BB)
8.656% 07/15/05 ................. 300 261,000
Republic of Poland Discount
Bond (Baa3, BBB-)
6.688% 10/27/24 .................PLZ 600 570,000
United Mexican States Certificado
de Tesoreria (NR, NR)
0.000% 12/17/98 ................. 1,115 104,466
-----------
TOTAL BONDS
(Cost $2,438,228) ............... 2,096,034
-----------
TOTAL INVESTMENTS -- 98.5%
(Cost $35,244,719*) ............. 24,486,795
-----------
OTHER ASSETS IN EXCESS
OF LIABILITIES -- 1.5% .......... 367,270
-----------
TOTAL NET ASSETS -- 100% ............ $24,854,065
===========
*Cost for Federal income tax purposes at August 31, 1998 is $35,943,070.
The gross appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation ............ $ 228,583
Gross Depreciation ............ (11,684,858)
------------
Net Appreciation .............. $(11,456,275)
============
#Security or a portion thereof is out on loan.
CURRENCY ABBREVIATIONS
BGL .................................. Bulgarian Lev
PLZ .................................. Polish Zloty
INVESTMENT ABBREVIATIONS
ADR .................................. American Depository Receipts
ADS .................................. American Depository Shares
GDR .................................. Global Depository Receipts
See Accompanying Notes to Financial Statements.
10
<PAGE>
BEA Emerging Markets Equity Fund
of The RBB Fund, Inc.
Statement of Assets and Liabilities
August 31, 1998
<TABLE>
<S> <C>
ASSETS
Investments at value (Cost $35,244,719) ..................... $ 24,486,795
Collateral received for securities loaned ................... 3,331,400
Dividend receivable ......................................... 121,310
Interest receivable ......................................... 85,866
Investments sold receivable ................................. 10,501
Prepaid expenses ............................................ 5,819
Other assets ................................................ 332,016
------------
Total Assets .............................................. 28,373,707
LIABILITIES
Payable upon return of securities loaned .................... 3,331,400
Accrued expenses payable .................................... 165,399
Other liabilities ........................................... 22,843
------------
Total Liabilities ......................................... 3,519,642
NET ASSETS (Applicable to 2,319,065 BEA Institutional Shares and
60,696 BEA Advisor Shares) .................................. $ 24,854,065
============
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE
PER BEA INSTITUTIONAL SHARE ($24,217,996 divided
by 2,319,065) ............................................... $ 10.44
============
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE
PER BEA ADVISOR SHARE ($636,069 divided by 60,696) .......... $ 10.48
============
NET ASSETS CONSISTED OF:
Capital Stock (Par .001 per share) .......................... $ 2,380
Paid-In Capital ............................................. 59,766,486
Accumulated Net Investment Loss ............................. (281,648)
Accumulated Net Realized Loss on
Security and Foreign Exchange Transactions ................ (23,872,754)
Net Unrealized Depreciation on
Investments and Other ..................................... (10,760,399)
------------
NET ASSETS ..................................................... $ 24,854,065
============
</TABLE>
See Accompanying Notes to Financial Statements.
11
<PAGE>
BEA U.S. Core Equity Fund
Portfolio Managers' Letter
September 24, 1998
Dear Shareholders:
We are writing to report on the results of the BEA U.S. Core Equity Fund (the
"Fund") for the fiscal year ended August 31, 1998.
Performance Review At August 31, 1998, the net asset value ("NAV") of the Fund
was $21.73, compared to an NAV of $24.40 on August 31, 1997. As a result, the
Fund's total return (assuming reinvestment of dividends and distributions) was
3.18%. By comparison, the S&P 500 Index (the "Index") gained 8.11% during the
same period.
The Fund underperformed the Index primarily due to unfavorable selection of
industry sectors and the stocks within them. This was most notable in
commodity-oriented areas like basic materials and energy, in which we emphasized
metals, paper, and explorers, producers and distributors of oil and natural gas.
We shifted to an overweight position in these sectors relative to the Index in
early 1998 as a result of our belief that their valuations were irrationally low
and were already discounting a significant amount of bad news. Our overweights
performed well during the year's first quarter, but experienced heavy selling
pressure toward mid-year as investors returned their buying focus to the small
group of big-name "mega-cap" stocks that have powered the bull market for
several years now.
Returns were most positive among consumer and health care stocks. Our
top-performing consumer names included stable earners such as Clorox Company,
Hershey Foods and Newell Co., as well as major retailers like Home Depot, Inc.
and Wal-Mart Stores. In health care, selection was most successful in
pharmaceutical companies, particularly Smithkline Beecham, Johnson & Johnson and
Pharmacia & Upjohn.
As developments occur that we believe would be of interest to you, we will keep
you informed. Meanwhile, if you have any questions about your portfolio or the
capital markets generally, please feel free to call upon us at any time.
Sincerely yours,
BEA Domestic Equities Management Team
William W. Priest, Jr., Chief Executive Officer & Executive Director
John B. Hurford, Executive Director
Eric N. Remole, Managing Director
James A. Abate, Senior Vice President
Marc E. Bothwell, Vice President
Michael A. Welhoelter, Vice President
12
<PAGE>
BEA U.S. Core Equity Fund
Portfolio Managers' 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.
(Unaudited)
[GRAPHIC]
In the printed version of the document, a line graph appears which depicts the
following plot points:
BEA
U.S. CORE S&P 500
EQUITY FUND INDEX
----------- -------
09/01/94 10,000 10,000
11/30/94 9,553 9,615
02/28/95 10,251 10,398
05/31/95 11,103 11,455
08/31/95 11,975 12,149
11/30/95 12,746 13,168
02/29/96 13,940 14,007
05/31/96 14,383 14,720
08/31/96 14,080 14,421
11/30/96 16,150 16,837
02/28/97 16,786 17,672
05/31/97 17,943 19,049
08/31/97 19,475 20,275
11/30/97 22,338 21,625
02/28/98 24,994 23,838
05/31/98 25,226 24,880
08/31/98 21,934 21,917
------------------------------
AVERAGE ANNUAL
TOTAL RETURN (UNAUDITED)
One Year 3.18%
Three Years 18.84%
From Inception 19.05%
------------------------------
Note: Past performance is not predictive of future performance.
13
<PAGE>
BEA U.S. Core Equity Fund
of The RBB Fund, Inc.
Schedule of Investments
August 31, 1998
Number
of Shares Value
--------- -----
COMMON STOCKS -- 83.9%
Advertising -- 1.1%
Interpublic Group of Companies ................ 12,170 $ 693,690
---------
Aerospace -- 0.7%
Textron, Inc. ................................. 2,700 169,425
United Technologies ........................... 3,600 261,225
---------
430,650
---------
Agriculture -- 0.6%
Archer-Daniels-Midland ........................ 24,565 368,471
---------
Airlines -- 0.1%
Delta Air Lines ............................... 400 40,800
---------
Automotive-- 1.0%
Ford Motor .................................... 10,400 457,600
General Motors ................................ 1,900 109,725
Johnson Controls, Inc. ........................ 2,300 98,469
---------
665,794
---------
Chemicals -- 0.3%
Lyondell Petrochemical ........................ 8,000 172,500
---------
Computers, Software & Servicing-- 8.2%
Autodesk, Inc. ................................ 1,900 44,412
Ceridian Corp. ................................ 7,600 368,600
Cisco Systems ................................. 2,100 171,937
Compaq Computer Corporation ................... 1,900 53,081
Dell Computer Corp. ........................... 3,000 300,000
EMC Corp. ..................................... 3,200 144,600
Gateway 2000 .................................. 8,300 392,694
I2 Technologies ............................... 22,315 315,199
International Business Machines ............... 3,500 394,187
Metacreations Corp. ........................... 18,255 58,188
Microsoft Corporation ......................... 30,900 2,964,469
---------
5,207,367
---------
Conglomerates -- 1.0%
General Electric Co. .......................... 7,600 608,000
---------
Construction & Building Materials -- 4.2%
Fluor Corp.# .................................. 29,160 1,153,642
Sherwin Williams Co. .......................... 63,905 1,525,732
---------
2,679,374
---------
Consumer Products & Services -- 4.6%
Clorox Company ................................ 10,290 992,342
Newell Co. .................................... 28,860 1,378,065
Procter & Gamble .............................. 7,600 581,400
---------
2,951,807
---------
Number
of Shares Value
--------- -----
Electronics -- 8.5%
Altera Corp. ................................ 21,125 $ 615,266
Intel Corp. ................................. 25,780 1,835,214
Micron Technology# .......................... 69,420 1,579,305
Motorola, Inc. .............................. 26,365 1,135,343
Texas Instruments ........................... 4,300 205,056
---------
5,370,184
---------
Energy & Oil Exploration -- 6.5%
Anadarko Petroleum .......................... 14,495 416,731
Burlington Resources, Inc. .................. 2,840 83,957
Chevron Corp. ............................... 6,200 459,187
Columbia Gas System ......................... 1,000 49,750
DTE Energy .................................. 3,200 134,800
Edison International ........................ 22,500 639,844
Enron Oil & Gas ............................. 31,285 406,705
ENSCO International ......................... 8,830 92,715
Exxon Corporation ........................... 14,100 922,669
Marine Drilling ............................. 12,480 112,320
ONEOK Inc. .................................. 1,500 45,094
Pogo Producing .............................. 8,830 105,408
Royal Dutch Petroleum ....................... 2,200 87,450
Talisman Energy ............................. 5,400 78,975
Unocal Corp. ................................ 16,075 503,348
---------
4,138,953
---------
Entertainment -- 0.9%
Carnival Corp. Class A ...................... 12,100 349,387
CBS Corp. ................................... 9,200 239,200
---------
588,587
---------
Financial Services -- 7.8%
Allstate Corporation ........................ 9,200 345,000
American Express Company .................... 5,000 390,000
American International Group, Inc. .......... 500 38,656
BankAmerica Corporation ..................... 15,600 999,375
CIT Group, Inc. ............................. 18,820 483,439
Golden West Financial ....................... 2,900 220,762
Merrill Lynch ............................... 1,500 99,000
Northern Trust .............................. 4,900 273,175
St. Paul Cos., Inc. ......................... 5,400 165,038
SunAmerica, Inc. ............................ 9,700 600,794
SunTrust Banks .............................. 8,500 476,000
Transamerica Corp. .......................... 6,400 656,400
Wachovia Corporation ........................ 3,200 234,600
---------
4,982,239
---------
Food & Beverage -- 1.8%
Coca - Cola Co. ............................. 11,100 722,887
Hershey Foods ............................... 5,635 394,450
---------
1,117,337
---------
Funeral Services -- 0.1%
Service Corp. International ................. 1,500 50,812
---------
See Accompanying Notes to Financial Statements.
14
<PAGE>
BEA U.S. Core Equity Fund (Concluded)
Number
of Shares Value
--------- -----
Health Care -- 4.0%
American Home Products ........................ 1,300 $ 65,163
Amgen, Inc. ................................... 700 42,613
Medtronic, Inc.# .............................. 40,735 2,092,761
United Healthcare ............................. 5,900 213,138
Wellpoint Health Networks ..................... 2,400 128,100
----------
2,541,775
----------
Industrial Goods & Materials -- 4.4%
Dover Corporation ............................. 45,285 1,234,016
Illinois Tool Works, Inc. ..................... 32,080 1,553,875
----------
2,787,891
----------
Metals & Mining -- 3.3%
Allegheny Teledyne ............................ 11,995 180,675
Aluminum Company of America# .................. 16,720 1,001,110
Bethlehem Steel ............................... 18,300 131,531
Inland Steel Industries ....................... 1,807 34,220
Newmont Mining ................................ 29,580 404,876
Phelps Dodge .................................. 2,965 132,684
USX-U.S. Steel Group .......................... 11,200 234,500
----------
2,119,596
----------
Paper & Forest Products -- 1.4%
Boise Cascade ................................. 2,920 71,358
Champion International ........................ 6,035 199,155
Georgia Pacific Corporation ................... 6,950 297,981
International Paper ........................... 4,280 158,360
Willamette Industries ......................... 5,715 140,732
----------
867,586
----------
Pharmaceuticals -- 6.2%
Bristol-Myers Squibb .......................... 11,890 1,163,734
Merck & Co. ................................... 5,700 660,844
Schering-Plough ............................... 14,735 1,267,210
Warner Lambert Co. ............................ 12,600 822,150
----------
3,913,938
----------
Publishing & Information Services -- 4.8%
Gannett Company, Inc. ......................... 38,660 2,280,940
Omnicom Group, Inc. ........................... 1,700 80,963
Tribune Co. ................................... 10,735 691,737
----------
3,053,640
----------
Restaurants -- 0.2%
Darden Restaurants ............................ 8,900 137,950
----------
Retail -- 8.1%
Dayton Hudson ................................. 11,200 403,200
Home Depot, Inc.# ............................. 45,060 1,734,810
Kroger Co. .................................... 13,700 616,500
Safeway, Inc. ................................. 1,400 55,125
TJX Companies, Inc. ........................... 17,700 394,931
Wal-Mart Stores# .............................. 32,645 1,917,894
----------
5,122,460
----------
Number
of Shares Value
--------- -----
Telecommunications -- 3.7%
Ameritech Corp. ............................. 11,400 $ 537,225
AT&T Corp. .................................. 15,800 791,975
BellSouth Corp. ............................. 6,200 425,088
General Instrument Corporation .............. 7,000 139,125
Lucent Technologies ......................... 2,400 170,100
Northern Telecom, Ltd. ...................... 3,800 181,450
WorldCom, Inc. .............................. 3,200 131,000
-----------
2,375,963
-----------
Transportation -- 0.1%
AMR Corporation ............................. 800 43,600
US Airways Group ............................ 700 40,775
-----------
84,375
-----------
Trucking & Freight -- 0.3%
NACCO Industries Cl. A ...................... 1,700 161,925
-----------
TOTAL COMMON STOCKS
(Cost $58,979,812) ........................ 53,233,664
-----------
Par
(000)
-----
SHORT TERM INVESTMENTS -- 9.9%
BBH Grand Cayman U.S. ...................
Dollar Time Deposit
4.938%? 09/01/98 ...................... $ 6,316 6,316,000
-----------
TOTAL SHORT TERM
INVESTMENTS
(Cost $6,316,000) ..................... 6,316,000
-----------
TOTAL INVESTMENTS -- 93.8%
(Cost $65,295,812) .................... 59,549,664
-----------
OTHER ASSETS IN EXCESS
OF LIABILITIES -- 6.2% ................ 3,964,301
-----------
TOTAL NET ASSETS -- 100% ................ $63,513,965
-----------
*Cost for Federal income tax purposes at August 31, 1998 is $65,347,764. The
gross appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation ......................... $2,323,433
Gross Depreciation ......................... (8,121,533)
-----------
Net Appreciation ........................... $(5,798,100)
===========
**Non-income producing securities.
#Security or a portion thereof is out on loan.
See Accompanying Notes to Financial Statements.
15
<PAGE>
BEA U.S. Core Equity Fund
of The RBB Fund, Inc.
Statement of Assets and Liabilities
August 31, 1998
ASSETS
Investments at value (Cost $65,295,812) ..................... $ 59,549,664
Collateral received for securities loaned ................... 9,567,600
Investments sold receivable ................................. 3,994,117
Dividend receivable ......................................... 89,031
Prepaid expenses ............................................ 5,200
Interest receivable ......................................... 1,300
Other assets ................................................ 730
------------
Total Assets .............................................. 73,207,642
LIABILITIES
Payable upon return of securities loaned .................... 9,567,600
Accrued expenses payable .................................... 126,077
------------
Total Liabilities ......................................... 9,693,677
NET ASSETS (Applicable to 2,923,534 BEA Institutional Shares) .. $ 63,513,965
============
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE
PER BEA INSTITUTIONAL SHARE ($63,513,965
divided by 2,923,534) .................................... $ 21.73
============
NET ASSETS CONSISTED OF:
Capital Stock (Par .001 per share) .......................... $ 2,924
Paid-In Capital ............................................. 42,420,318
Accumulated Net Investment Income ........................... 16,715
Accumulated Net Realized Gain on
Security and Foreign Exchange Transactions ................ 26,820,156
Net Unrealized Depreciation on
Investments and Other ..................................... (5,746,148)
------------
NET ASSETS ..................................................... $ 63,513,965
============
See Accompanying Notes to Financial Statements.
16
<PAGE>
BEA Global Telecommunications Fund
Portfolio Manager's Letter
September 24, 1998
Dear Shareholders:
We are pleased to report on the results of the BEA Global Telecommunications
Fund (the "Fund") for the fiscal year ended August 31, 1998.
At August 31, 1998, the net asset value (NAV) of the Fund was $20.54, compared
to an NAV of $17.30 on August 31, 1997. As a result, the Fund's total return was
25.38%. By comparison, the MSCI Telecommunications Index returned 40.56% during
the same period.
The Fund's performance was attributable to a combination of regional allocations
and stock selection. On a regional level, our most effective decisions were to
substantially underweight Asia and overweight Latin America. Because many Asian
telecom stocks often are among the most liquid stocks in their domestic markets,
they were hit especially hard by the "contagion" effect of currency devaluations
and weakening stock prices that roiled global equity markets beginning in
mid-1997. Our near-complete absence from a number of Asian markets during the
period, then, proved quite helpful to the Fund's return.
Stock selection was notably positive in emerging and developed Europe. In the
emerging portion, one stock generated extraordinary results. This was Global
TeleSystems Group, a young company that provides a broad range of
telecommunications services throughout Western and Central Europe and also does
business in the former Soviet Union. Among developed European markets, the
Fund's top performers were the U.K., Germany, Spain and Portugal.
Factors that adversely affected performance included our underweighting of the
U.S.; stock selection in Canada; and a mixture of overweighting and poor stock
selection in Israel.
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
Stephen D. Bleiberg, Managing Director
James A. Abate, Senior Vice President
Emily Alejos, Vice President
Robert B. Hrabchak, Vice President
Stephen R. Waite, Vice President
17
<PAGE>
BEA Global Telecommunications Fund
Portfolio Managers' 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. (Unaudited)
[GRAPHIC]
In the printed version of the document, a line graph appears which depicts the
following plot points:
BEA GLOBAL MORGAN STANLEY
TELECOMMUNICATIONS COMPOSITE INDEX
FUND TELECOMMUNICATIONS
------------------ ------------------
12/04/96 10,000 10,000
02/28/97 10,787 10,253
05/31/97 11,460 10,727
08/31/97 11,533 10,729
11/30/97 12,859 12,107
02/28/98 15,178 13,864
05/31/98 16,664 15,022
08/31/98 14,461 15,079
------------------------------
AVERAGE ANNUAL
TOTAL RETURN (UNAUDITED)
One Year 25.38%
From Inception 23.58%
------------------------------
Note: Past performance is not predictive of future performance.
18
<PAGE>
BEA Global Telecommunications Fund
of The RBB Fund, Inc.
Schedule of Investments
August 31, 1998
Number
of Shares Value
--------- -----
COMMON STOCKS -- 84.3%
Brazil -- 3.2%
Companhia Riograndense
Telecom ..................................... 11,300 $ 4,805
Telecomunicacoes Brasileiras
S.A ......................................... 120,500 6,047
Telecomunicacoes Brasileiras
S.A. PN ..................................... 30,500 3,320
Telecomunicacoes Brasileiras
Celular S.A. PN ............................. 30,500 1,167
Telecomunicacoes de Minas
Gerais S.A. PN Cl. B ........................ 70,000 2,800
Telecomunicacoes de Minas
Gerais Celular S.A. PN ...................... 70,000 1,727
Telecomunicacoes do Rio de
Janeiro S.A. PN ............................. 92,100 3,329
----------
23,195
----------
Canada -- 6.6%
BCE, Inc. ..................................... 292 9,399
Bell Canada International, Inc. ............... 730 8,304
Teleglobe, Inc. ............................... 300 7,350
Teleglobe, Inc. ............................... 730 17,781
Telesystem International
Wireless Inc. ............................... 365 4,900
----------
47,734
----------
China -- 2.2%
China Telecommunications Ltd. ................. 670 15,410
----------
Finland -- 2.0%
Nokia Corp. ADR ............................... 219 14,632
----------
Germany -- 2.4%
Mannesmann AG ................................. 182 16,874
----------
Greece -- 6.0%
STET Hellas Telecommunications
S.A. ADR .................................... 1,460 42,705
----------
Israel -- 1.3%
ECI Telecommunications Ltd. ................... 338 9,295
----------
Italy -- 4.7%
Olivetti S.p.A ................................ 8,030 17,969
Telecom Italia Savings Shares
S.p.A ....................................... 3,210 15,978
----------
33,947
----------
Mexico -- 1.7%
Telefonos de Mexico S.A ....................... 348 12,419
----------
Russia -- 1.3%
PLD Telekom, Inc. ............................. 3,800 9,025
----------
Sweden -- 1.7%
Telefonaktiebolaget L.M.
Ericsson ADR ................................ 584 12,520
----------
Number
of Shares Value
--------- -----
United Kingdom -- 9.7%
COLT Telecom Group plc ADR .................... 292 $ 42,048
Energis plc ................................... 1,071 14,840
Orange plc .................................... 1,095 13,018
----------
69,906
----------
United States -- 41.5%
Airtouch Communications, Inc. ................. 290 16,313
Amazon.com, Inc. .............................. 70 5,854
America Online ................................ 170 13,929
At Home Corp. Series A ........................ 690 19,665
AT&T Corp. .................................... 454 22,757
Broadcom Corp. Cl. A .......................... 395 20,145
Century Communications Corp.
Cl. A ....................................... 1,060 24,645
Cisco Systems ................................. 285 23,334
Global TeleSystems Group, Inc. ................ 1,160 37,120
Lucent Technologies ........................... 310 21,971
Lycos, Inc. ................................... 270 5,830
MCI Communications ............................ 150 7,500
MediaOne Group, Inc. .......................... 360 14,760
Sprint Corp. .................................. 150 10,059
Tele-Communications, Inc.
Cl. A ....................................... 230 7,590
Uniphase Corp. ................................ 340 13,611
WorldCom, Inc. ................................ 632 25,873
Yahoo, Inc. ................................... 99 6,726
----------
297,682
----------
TOTAL COMMON STOCKS
(Cost $620,629) ........................... 605,344
----------
TOTAL INVESTMENTS -- 84.3%
(Cost $620,629*) .......................... 605,344
----------
OTHER ASSETS IN EXCESS
OF LIABILITIES -- 15.7% ................... 112,749
----------
TOTAL NET ASSETS -- 100% .................... $718,093
==========
*Also cost for Federal income tax purposes at August 31, 1998. The gross
appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation .................... $ 98,231
Gross Depreciation .................... (113,516)
----------
Net Appreciation ...................... $ (15,285)
==========
INVESTMENT ABBREVIATIONS
ADR ........................................... American Depository Receipts
See Accompanying Notes to Financial Statements.
19
<PAGE>
BEA Global Telecommunications Fund
of The RBB Fund, Inc.
Statement of Assets and Liabilities
August 31, 1998
ASSETS
Investments at value (Cost $620,629) ........................ $ 605,344
Investments sold receivable ................................. 235,351
Due from advisor ............................................ 28,001
Dividend receivable ......................................... 199
Interest receivable ......................................... 119
Reclaim receivable .......................................... 60
---------
Total Assets .............................................. 869,074
LIABILITIES
Accrued expenses payable .................................... 23,161
Overdraft liability ......................................... 127,820
---------
Total Liabilities ......................................... 150,981
NET ASSETS (Applicable to 34,964 BEA Advisor Shares) ........... $ 718,093
=========
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE
PER BEA ADVISOR SHARE ($718,093 divided by 34,964) .......... $ 20.54
=========
NET ASSETS CONSISTED OF:
Capital Stock (Par .001 Per) ................................ $ 35
Paid-In Capital ............................................. 553,301
Accumulated Net Investment Loss ............................. (260)
Accumulated Net Realized Gain on
Security and Foreign Exchange Transactions ................ 179,704
Net Unrealized Depreciation on
Investments and Other ..................................... (14,687)
---------
NET ASSETS ..................................................... $ 718,093
=========
See Accompanying Notes to Financial Statements.
20
<PAGE>
BEA Select Economic Value Equity Fund
Portfolio Managers' Letter
September 24, 1998
Dear Shareholders:
We are writing to report on the results of the BEA Select Economic Value Equity
Fund (the "Fund") for the fiscal year ended August 31, 1998.
At August 31, 1998, the net asset value ("NAV") of the Fund was $13.17, compared
to an NAV of $15.00 on the Fund's inception on August 3, 1998. As a result, the
Fund's total return declined 12.20%. By comparison, the S&P 500 Index (the
"Index") fell 14.44% during the same period.
The Fund's outperformance of the Index was due to our adoption of a fairly
defensive investment posture. Specifically, we chose to emphasize stocks with
attractive dividend yields and relative price stability. We also focused on
historically defensive industry sectors such as telecommunications providers and
the major integrated oil companies. Top-performing telecom stocks during the
period included BellSouth Corp. and US West Communications Group, while Mobil
Corp. and Exxon Corporation were the most successful of our major holdings in
the energy and oil exploration.
Positions in two other sectors also benefited relative returns. These were
technology companies like Micron Technology; and consumer names like Hershey
Foods Corp. and Procter & Gamble.
As developments occur that we believe would be of interest to you, we will keep
you informed. Meanwhile, if you have any questions about your portfolio or the
capital markets generally, please feel free to call upon us at any time.
Sincerely yours,
BEA Select Economic Value Equities Management Team
William W. Priest, Jr., Chief Executive Officer & Executive Director
John B. Hurford, Executive Director
James A. Abate, Senior Vice President
Susan Everly, Vice President
James J. Mecca, Vice President
21
<PAGE>
BEA Select Economic Value Equity Fund
of The RBB Fund, Inc.
Statement of Net Assets
August 31, 1998
Number
of Shares Value
--------- -----
COMMON STOCKS -- 96.7%
Advertising -- 2.2%
Interpublic Group of
Companies ................................... 8,700 $ 495,900
----------
Agriculture -- 2.6%
Archer-Daniels-Midland ........................ 38,905 583,575
----------
Computers, Software & Servicing -- 7.8%
Applied Materials ............................. 4,400 108,075
Cisco Systems ................................. 2,900 237,437
I2 Technologies ............................... 19,400 274,025
Metacreations Corp. ........................... 6,900 21,994
Micron Technology# ............................ 20,100 457,275
Microsoft Corporation ......................... 7,000 671,563
----------
1,770,369
----------
Conglomerates -- 3.3%
General Electric Co. .......................... 9,300 744,000
----------
Construction & Building Materials -- 3.4%
Fluor Corp. ................................... 12,400 490,575
Sherwin Williams Co. .......................... 12,000 286,500
----------
777,075
----------
Consumer Products & Services -- 3.2%
Newell Co. .................................... 15,000 716,250
----------
Electronics -- 5.3%
Altera Corp. .................................. 3,500 101,938
Intel Corp. ................................... 6,500 462,719
KLA-Tencor Corp. .............................. 4,800 102,000
Motorola, Inc. ................................ 10,200 439,237
Teradyne, Inc. ................................ 5,100 88,612
----------
1,194,506
----------
Energy & Oil Exploration -- 12.1%
Anadarko Petroleum ............................ 3,700 106,375
Chevron Corp. ................................. 8,200 607,313
Exxon Corporation ............................. 9,300 608,569
Mobil Corp. ................................... 9,100 629,037
Talisman Energy ............................... 3,545 51,846
Texaco, Inc. .................................. 9,300 516,731
Unocal Corp. .................................. 7,100 222,319
----------
2,742,190
----------
Financial Services -- 8.6%
American Express Company ...................... 4,700 366,600
American International
Group, Inc. ................................. 2,800 216,475
BankAmerica Corporation ....................... 2,800 179,375
CIT Group, Inc. ............................... 7,900 202,931
First Union Corp. ............................. 8,300 402,550
NationsBank Corp. ............................. 3,100 176,700
State Street Corp. ............................ 7,700 400,881
----------
1,945,512
----------
Number
of Shares Value
--------- -----
Food & Beverage -- 2.6%
Hershey Foods Corp. ........................... 8,300 $ 581,000
----------
Health Care -- 3.5%
Centocor, Inc. ................................ 3,900 126,750
Medtronic, Inc. ............................... 13,100 673,012
----------
799,762
----------
Industrial Goods & Materials -- 3.3%
Dover Corporation ............................. 10,400 283,400
Illinois Tool Works, Inc. ..................... 9,700 469,844
----------
753,244
----------
Metals & Mining -- 7.3%
Allegheny Teledyne ............................ 7,700 115,981
Aluminum Company of
America ..................................... 8,300 496,962
Barrick Gold .................................. 25,200 327,600
Battle Mountain Gold .......................... 13,200 40,425
Cominco Ltd. .................................. 2,600 23,888
Homestake Mining .............................. 11,500 102,063
Inco, Ltd. .................................... 13,000 108,875
Newmont Mining ................................ 23,500 321,656
Phelps Dodge .................................. 1,300 58,175
Placer Dome, Inc. ............................. 7,300 58,856
----------
1,654,481
----------
Paper & Forest Products -- 2.0%
Champion International ........................ 2,800 92,400
Georgia Pacific Corporation ................... 3,300 141,488
International Paper ........................... 6,000 222,000
----------
455,888
----------
Pharmaceuticals -- 7.5%
Bristol-Meyers Squibb ......................... 6,600 645,975
Coulter Pharmaceutical, Inc. .................. 3,000 42,000
Procter & Gamble .............................. 7,600 581,400
Schering-Plough Corp. ?80660 .................. 5,000 430,000
----------
1,699,375
----------
Publishing & Information Services -- 5.1%
Gannett Company, Inc. ......................... 11,200 660,800
Tribune Co. ................................... 7,600 489,725
----------
1,150,525
----------
Retail -- 4.4%
Home Depot, Inc. .............................. 12,300 473,550
Wal-Mart Stores ? ............................. 9,100 534,625
----------
1,008,175
----------
See Accompanying Notes to Financial Statements.
22
<PAGE>
BEA Select Economic Value Equity Fund (Concluded)
Number
of Shares Value
--------- -----
Telecommunications -- 12.5%
Bell Atlantic Corp. ................... 15,100 $ 666,288
BellSouth Corp. ....................... 12,400 850,175
SBC Communications, Inc. .............. 16,700 634,600
U S West Communications
Group ............................... 13,100 681,200
------------
2,832,263
------------
TOTAL COMMON STOCKS
(Cost $25,038,832) .................. 21,904,090
------------
Par
(000)
-----
SHORT-TERM INVESTMENTS -- 1.1%
BBH Grand Cayman U.S.
Dollar Time Deposit
4.938% 09/01/98 ..................... $ 260 259,919
------------
TOTAL SHORT-TERM
INVESTMENTS
(Cost $259,919) ..................... 259,919
------------
TOTAL INVESTMENTS -- 97.8%
(Cost $25,298,751) .................. 22,164,009
------------
COLLATERAL RECEIVED FOR
SECURITIES LOANED ................... 475,000
------------
PAYABLE UPON RETURN OF
SECURITIES LOANED ................... (475,000)
------------
Value
-----
OTHER ASSETS IN EXCESS
OF LIABILITIES -- 2.2% .............. $ 495,431
------------
NET ASSETS (Applicable to
1,721,030 BEA Institutional
Shares) -- 100.0% ................... $22,659,440
------------
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PRICE PER BEA
INSTITUTIONAL SHARE
($22,659,440 divided by 1,721,030) $ 13.17
============
*Cost for Federal income tax purposes at August 31, 1998 is $25,312,798. The
gross appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation ............... $ 64,409
Gross Depreciation ............... (3,213,198)
Net Appreciation ................. $(3,148,789)
============
#Security or a portion thereof is out on loan.
At August 31, 1998, Net Assets Consisted Of:
Amount
------
Capital Paid-In ............................... $25,813,705
Accumulated Net Investment Income ............. 18,161
Accumulated Net Realized Loss on
Security and Foreign Exchange Transactions.. (37,684)
Net Unrealized Depreciation on
Investments and Other ...................... (3,134,742)
- - - - - --------------------------------------------------------------------------------
NET ASSETS .................................... $22,659,440
- - - - - --------------------------------------------------------------------------------
See Accompanying Notes to Financial Statements.
23
<PAGE>
BEA Long-Short Market Neutral Fund
Portfolio Managers' Letter
September 24, 1998
Dear Shareholders:
We are writing to report on the results of the BEA Long-Short Market Neutral
Fund (the "Fund") for the fiscal year ended August 31, 1998.
At August 31, 1998, the net asset value ("NAV") of the Fund was $15.27, compared
to an NAV of $15.00 on the Fund's inception on August 3, 1998. As a result, the
Fund's total return was 1.80%. By comparison, the Salomon Smith Barney U.S.
One-Month Treasury Bill Index (the "Index") gained 0.4% during the same period.
Essentially, the Fund outperformed its benchmark because our core stock
selection strategy worked well. We correctly emphasized two of the five
"drivers" that we believe contribute most to appreciation in stock prices. These
were earnings, in the form of improving earnings expectations, and stability.
Stocks that had been outperforming on a relative basis continued to do so, while
the valuation driver remained fairly unimportant. Our underestimation of the
strong performance potential of the financial strength driver modestly detracted
from the Fund's return.
We added value within each industry sector represented in the portfolio. This
was especially true in financial services, in which our short positions declined
significantly more than our long positions. Notable shorts included Lehman
Brothers; Morgan Stanley, Dean Witter; Peoples Bank Bridgeport; and Union
Planters Corp., all of which fell at least 25%. Some of the offsetting longs
were Jefferson-Pilot Corp.; Kimco Realty; Transamerica Corp.; and Amsouth
Bancorp, whose average decline was less than 15%.
As developments occur that we believe would be of interest to you, we will keep
you informed. Meanwhile, if you have any questions about your portfolio or the
capital markets generally, please feel free to call upon us at any time.
Sincerely yours,
BEA Structured Equities Management Team
William W. Priest, Jr., Chief Executive Officer & Executive Director
Eric N. Remole, Managing Director
Marc E. Bothwell, Vice President
Michael A. Welhoelter, Vice President
24
<PAGE>
BEA Long-Short Market Neutral Fund
of The RBB Fund, Inc.
Schedule of Investments
August 31, 1998
Number
of Shares Value
--------- ---------
INVESTMENTS IN SECURITIES -- 85.5%
COMMON STOCKS -- 76.0%
Advertising -- 2.4%
Omnicom Group ................................... 3,200 $152,400
--------
Air Transport -- 1.4%
Southwest Airlines .............................. 5,100 90,844
--------
Automotive -- 1.3%
Navistar International Corp. .................... 3,800 79,800
--------
Business Services -- 2.7%
Ceridian Corp. .................................. 2,900 140,650
Robert Half International, Inc. ................. 400 19,200
Storage Technology Corp. ........................ 600 13,050
--------
172,900
--------
Chemicals -- 3.8%
Air Products & Chemicals,
Inc. .......................................... 3,200 97,800
Lyondell Petrochemical Co. ...................... 6,600 142,313
--------
240,113
--------
Communications & Media -- 3.3%
A.H. Belo Corp. Cl. A ........................... 5,100 94,350
CBS Corp. ....................................... 700 18,200
Comsat Corp. .................................... 700 15,269
Knight-Ridder, Inc. ............................. 1,700 80,963
--------
208,782
--------
Computers, Software & Servicing -- 4.5%
Cadence Design Systems .......................... 1,200 25,350
GTECH Holdings .................................. 1,000 26,250
Ingram Micro, Inc., Cl. A ....................... 1,500 67,500
Microsoft Corp. ................................. 600 57,563
PeopleSoft, Inc. ................................ 300 8,438
Pixar, Inc. ..................................... 2,700 77,794
Transactions Systems Architects,
Inc. Cl. A .................................... 600 19,875
--------
282,770
--------
Construction & Building Materials -- 3.9%
Caterpillar, Inc. ............................... 500 21,094
Ingersoll Rand .................................. 2,200 87,450
Lafarge Corp. ................................... 2,300 65,694
Masco Corp. ..................................... 2,200 50,600
Vulcan Materials ................................ 200 22,300
--------
247,138
--------
Consumer Products -- 0.9%
Avon Products ................................... 900 56,588
--------
Electric Utilities -- 4.7%
Niagara Mohawk Power ............................ 5,300 82,150
Pinnacle West Capital ........................... 4,900 211,619
--------
293,769
--------
Number
of Shares Value
--------- ---------
Electronics -- 3.0%
Broadcom Corp. .................................. 700 $ 35,875
Kohls Corp. ..................................... 200 9,088
Linear Technology Corp. ......................... 3,000 141,000
--------
185,963
--------
Entertainment -- 1.2%
Clear Channel
Communications ................................ 1,500 67,500
--------
Financial Services-- 11.0%
AmSouth Bancorp ................................. 1,700 58,437
Equitable Companies ............................. 800 45,750
First Union Corp. ............................... 400 19,400
Franklin Resources .............................. 3,400 109,650
Hartford Financial Services,
Inc ........................................... 300 13,425
Jefferson-Pilot Corp. ........................... 1,600 90,800
Old Republic International ...................... 500 11,156
Regions Financial Corp. ......................... 1,830 63,364
SLM Holding ..................................... 2,200 78,925
T. Rowe Price Associates, Inc. .................. 1,300 39,569
Transamerica Corp. .............................. 500 51,281
20th Century Industries ......................... 1,500 37,125
UnionBanCal Corp. ............................... 1,000 74,875
--------
693,757
--------
Food & Beverage -- 3.9%
Coors, (Adolph) Cl. B ........................... 2,000 82,500
Fleming Cos. .................................... 12,600 150,413
Tootsie Roll Industries ......................... 400 13,500
--------
246,413
--------
Gas Utilities -- 0.3%
Peoples Energy .................................. 500 16,563
--------
Health Care -- 4.5%
Safeskin Corp. .................................. 300 10,125
Stryker Corp. ................................... 600 19,275
U.S. Surgical ................................... 1,100 43,931
Uniphase Corp. .................................. 500 19,969
Wellpoint Health Networks,
Inc. .......................................... 3,600 192,150
--------
285,450
--------
Lodging & Restaurants -- 0.3%
Host Marriott ................................... 1,300 18,200
--------
Metals & Mining -- 0.9%
Freeport-McMoran Copper &
Gold, Inc. Cl. B .............................. 4,700 54,638
--------
Oil & Gas Exploration -- 1.7%
ENSCO International ............................. 900 9,450
Helmerich & Payne ............................... 6,200 100,750
--------
110,200
--------
See Accompanying Notes to Financial Statements.
25
<PAGE>
BEA Long-Short Market Neutral Fund (Continued)
Number
of Shares Value
--------- ---------
Pharmaceuticals -- 1.6%
ALZA Corp. .................................. 2,300 $ 82,800
Schering-Plough ............................. 200 17,200
---------
100,000
---------
Real Estate -- 4.3%
Kimco Realty ................................ 6,400 227,200
Simon Debartolo Group ....................... 1,600 46,500
---------
273,700
---------
Retail -- 4.8%
Dollar Tree Stores .......................... 500 14,500
Federated Department Stores,
Inc. ...................................... 600 26,138
Office Depot ................................ 4,100 104,550
TJX Companies ............................... 7,100 158,419
---------
303,607
---------
Metals & Mining -- 1.8%
Bethlehem Steel ............................. 2,900 20,844
Inland Steel Industries ..................... 2,279 43,159
USX-U.S. Steel Group ........................ 2,500 52,344
---------
116,347
---------
Telecommunications -- 4.5%
AirTouch Communications ..................... 800 45,000
AT&T Corp. .................................. 2,500 125,313
Lucent Technologies ......................... 100 7,088
Tele-Communications
International ............................. 1,000 20,750
Tellabs, Inc. ............................... 1,800 76,050
WorldCom, Inc. .............................. 200 8,188
---------
282,389
---------
Telecommunications & Equipment -- 2.4%
General Instrument Corp. .................... 4,800 95,400
Northern Telecom, Ltd. ...................... 660 31,515
Vitesse Semiconductor Corp. ................. 900 24,413
---------
151,328
---------
Waste Management -- 0.9%
Browning-Ferris Industries .................. 1,800 58,500
---------
TOTAL COMMON STOCKS
(Cost $5,690,115) ......................... 4,789,659
---------
Par
(000) Value
---------- ---------
REPURCHASE AGREEMENT -- 9.5%
Bear Stearns (Agreement dated
8/31/98, to be repurchased at
$600,597) 5.81%, 09/01/98 ................ $ 600 $ 600,500
----------
INVESTMENTS IN SECURITIES
(Cost $6,290,615*) ....................... 5,390,159
----------
Number
of Shares
-----------
SECURITIES SOLD SHORT -- (75.9%)
Aerospace & Defense -- (1.1%)
B.F. Goodrich Co. .......................... (2,200) (59,538)
Northrop Grumman ........................... (200) (12,675)
--------
(72,213)
--------
Agriculture -- (2.1%)
IMC Global, Inc. ........................... (2,700) (49,613)
Pioneer Hi-Bred International .............. (2,400) (81,000)
--------
(130,613)
--------
Air Transport -- (2.0%)
UAL Corp. .................................. (2,100) (126,656)
--------
Apparel -- (0.7%)
Fruit of the Loom, Inc., Cl. A ............. (2,100) (47,119)
--------
Automotive -- (0.4%)
Genuine Parts Co. .......................... (900) (28,181)
--------
Broadcasting -- (0.8%)
Univision Communications,
Inc. - Cl. A ............................. (600) (15,975)
USA Networks, Inc. ......................... (1,600) (31,400)
--------
(47,375)
--------
Building & Building Materials -- (3.2%)
Armstrong World Industries ................. (3,000) (144,000)
Johns Manville Corp. ....................... (2,600) (35,588)
Lennar Corp. ............................... (1,100) (19,938)
--------
(199,526)
--------
Business Services -- (2.8%)
ACNielsen Corp. ............................ (1,300) (26,081)
Electronic Data Systems .................... (4,400) (147,400)
--------
(173,481)
--------
Chemicals -- (1.3%)
Cabot Corp. ................................ (500) (10,875)
Hercules, Inc. ............................. (2,800) (71,575)
--------
(82,450)
--------
See Accompanying Notes to Financial Statements.
26
<PAGE>
BEA Long-Short Market Neutral Fund (Continued)
Number
of Shares Value
--------- ---------
Computers, Software & Servicing -- (2.0%)
Advanced Micro Devices ................... (4,300) $ (56,706)
Cabletron Systems ........................ (4,300) (30,100)
Hewlett-Packard Co. ...................... (400) (19,425)
Netscape Communications
Corp. .................................. (1,200) (21,675)
---------
(127,906)
---------
Containers -- (0.8%)
Crown Cork & Seal Co., Inc. .............. (1,500) (49,125)
---------
Consumer Products -- (3.9%)
American Standard
Companies .............................. (400) (15,650)
Gillette Co. ............................. (3,300) (135,713)
Kimberly-Clark ........................... (600) (22,875)
Whitman Corporation ...................... (4,600) (71,300)
---------
(245,538)
---------
Electric Utilities -- (3.4%)
Unicom Corp. ............................. (2,300) (81,938)
Wisconsin Energy Corp. ................... (4,600) (133,688)
---------
(215,626)
---------
Electronics -- (2.1%)
Atmel Corp. .............................. (11,600) (69,963)
Avnet, Inc. .............................. (900) (42,525)
Vishay Intertechnology ................... (1,800) (18,900)
---------
(131,388)
---------
Financial Services -- (9.2%)
Aetna, Inc. .............................. (900) (54,169)
American Financial Group ................. (3,700) (123,025)
First Tennessee National Corp. ........... (400) (9,525)
Firstar Corp. ............................ (1,100) (42,625)
Lehman Brothers Holdings,
Inc. ................................... (1,000) (39,375)
Morgan Stanley Dean Witter
Discover & Co. ......................... (3,200) (185,800)
People's Bank/Connecticut ................ (2,000) (42,000)
Union Planters Corporation ............... (2,100) (84,525)
---------
(581,044)
---------
Food & Beverage -- (1.1%)
Anheuser-Busch Cos. ...................... (900) (41,513)
IBP, Inc. ................................ (1,600) (26,500)
---------
(68,013)
---------
Health Care -- (1.8%)
Foundation Health Systems,
Inc. ................................... (1,200) (13,425)
Humana, Inc. ............................. (1,100) (14,300)
United Healthcare ........................ (2,300) (83,088)
---------
(110,813)
---------
Number
of Shares Value
--------- ---------
Industrial Goods & Materials -- (0.7%)
Owens-Illinois, Inc. ..................... (500) $ (15,594)
UNIFI, Inc. .............................. (1,200) (26,700)
---------
(42,294)
---------
Machinery -- (1.6%)
Briggs & Stratton Corp. .................. (2,800) (103,075)
---------
Medical Equipment -- (8.9%)
Beckman Coulter, Inc. .................... (3,500) (193,813)
E.G. & G., Inc. .......................... (500) (11,719)
KLA-Tencor Corp. ......................... (500) (10,625)
Perkin Elmer ............................. (4,300) (248,863)
Raychem Corp. ............................ (3,200) (92,800)
---------
(557,820)
---------
Metals & Mining -- (0.7%)
Battle Mountain Gold ..................... (14,200) (43,488)
---------
Office Equipment & Supplies -- (2.0%)
Harland ( John H. ) Co. .................. (9,800) (128,013)
---------
Oil & Gas Exploration -- (2.4%)
Baker Hughes, Inc. ....................... (3,600) (65,700)
Transocean Offshore ...................... (1,300) (31,931)
USX - Marathon Group ..................... (2,100) (54,600)
---------
(152,231)
---------
Oil Services -- (2.4%)
Dynegy Inc. .............................. (1,000) (9,563)
Kerr-McGee Corp. ......................... (3,700) (142,913)
---------
(152,476)
---------
Paper & Forest Products -- (2.6%)
Georgia Pacific .......................... (3,800) (162,925)
---------
Pharmaceuticals -- (1.5%)
Dura Pharmaceuticals ..................... (1,800) (29,700)
Forest Laboratories, Inc. ................ (1,200) (39,300)
Monsanto Co. ............................. (500) (27,344)
---------
(96,344)
---------
Railroads -- (0.5%)
Wisconsin Central
Transportation Corp. ................... (2,300) (28,894)
---------
Real Estate -- (0.4%)
Archstone Communities Trust .............. (1,400) (27,125)
---------
Recreation -- (2.3%)
Brunswick Corp. .......................... (9,500) (141,906)
---------
See Accompanying Notes to Financial Statements.
27
<PAGE>
BEA Long-Short Market Neutral Fund (Continued)
<TABLE>
<CAPTION>
Number
of Shares Value
--------- ------------
<S> <C> <C>
Retail Trade -- (4.7%)
Bausch & Lomb, Inc. ................................ (700) $ (29,619)
Circuit City Stores ................................ (2,300) (71,013)
Gap, Inc. .......................................... (700) (35,744)
General Nutrition .................................. (5,200) (69,225)
Ikon Office Solutions .............................. (6,700) (37,269)
Pep Boys-Manny, Moe & Jack ......................... (3,800) (55,813)
-----------
(298,683)
-----------
Telecommunications -- (2.6%)
Andrew Corp. ....................................... (900) (13,331)
Citizens Utilities Co. Cl. B ....................... (2,317) (16,653)
Frontier Corp. ..................................... (3,400) (103,275)
Southern New England
Telecommunications ............................... (500) (32,406)
-----------
(165,665)
-----------
Tobacco -- (0.4%)
UST, Inc. .......................................... (900) (23,513)
-----------
Transportation -- (0.3%)
Ryder System ....................................... (800) (18,850)
-----------
Waste Management -- (3.2%)
Republic Industries, Inc. .......................... (11,500) (203,406)
-----------
TOTAL SECURITIES SOLD SHORT
(Proceeds $5,892,364) ............................ (4,783,775)
-----------
OTHER ASSETS IN EXCESS
OF LIABILITIES -- 90.4% .......................... 5,695,898
-----------
NET ASSETS (Applicable to
412,744 BEA Institutional
Shares) -- 100.0% ................................ $ 6,302,282
===========
*Cost for Federal income tax purposes at August 31, 1998
is $6,302,528. The gross appreciation
(depreciation) on a tax basis is as follows:
Gross Appreciation - Investments ................... $ 9,716
Gross Depreciation - Investments ................... (922,085)
Gross Appreciation - Short Sales ................... 1,122,686
Gross Depreciation - Short Sales ................... (14,094)
-----------
Net Appreciation ................................. $ 196,223
===========
**Non-income producing securities
</TABLE>
See Accompanying Notes to Financial Statements.
28
<PAGE>
BEA Long-Short Market Neutral Fund
of The RBB Fund, Inc.
Statement of Assets and Liabilities
August 31, 1998
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Investments at value (Cost $6,290,615) ................................................................ $ 5,390,159
Deposits with brokers and custodian bank for securities sold short .................................... 5,430,217
Interest receivable ................................................................................... 25,436
Dividends receivable .................................................................................. 5,656
Other assets .......................................................................................... 250,245
------------
Total Assets ........................................................................................ 11,101,713
LIABILITIES
Securities sold short (proceeds $5,892,364) ........................................................... 4,783,775
Payable for dividends on securities sold short ........................................................ 11,484
Accrued expenses payable .............................................................................. 4,172
------------
Total Liabilities ................................................................................... 4,799,431
NET ASSETS (Applicable to 412,744 BEA Institutional Shares) .............................................. $ 6,302,282
============
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE
PER BEA INSTITUTIONAL SHARE ($6,302,282 divided by 412,744) ........................................... $ 15.27
At August 31, 1998, Net Assets Consisted Of:
Amount
-----------
Capital Stock ........................................................................................... $ 413
Paid-In Capital ......................................................................................... 6,191,010
Accumulated Net Investment Income ....................................................................... 9,716
Accumulated Net Realized Loss on
Security and Foreign Exchange Transactions ........................................................... (106,990)
Net Unrealized Appreciation on
Investments and Other ................................................................................ 208,133
-----------
NET ASSETS .............................................................................................. $ 6,302,282
-----------
</TABLE>
See Accompanying Notes to Financial Statements.
29
<PAGE>
BEA U.S. Core Fixed Income Fund
Portfolio Managers' Letter
September 24, 1998
Dear Shareholders:
We are pleased to report on the results of the BEA U.S. Core Fixed Income Fund
(the "Fund") for the fiscal year ended August 31, 1998.
At August 31, 1998, the net asset value ("NAV") of the Fund was $15.72, compared
to an NAV of $15.65 on August 31, 1997. As a result, the Fund's total return
(assuming reinvestment of dividends and distributions of $1.1034 per share) was
7.77%. By comparison, the Lehman Brothers Aggregate Bond Index (the "Index")
posted a return of 10.56% during the same period.
Underperformance, relative to the Index, during the period was principally
attributable to the Fund's holdings in "spread product" (i.e., debt securities
whose market valuation is greatly driven by the spreads between their yields and
those of U.S. Treasury debt). Much of the underperformance occurred in the month
of August alone. Market volatility in August was such that many spread product
sectors generated their worst-ever, relative returns for a single month.
Returns among the various spread product sectors have been negative over the
last year as well, as a classic "flight to quality" reaction caused Treasuries
to become the favored asset among fixed income investors. Factors driving the
flight to quality include the financial crisis in Emerging Asia, problematic
economic and political conditions in Japan, deterioration in the Russian economy
and a generalized concern about possible currency devaluations.
While Treasuries gained from the flight to quality, spread product fell. Indeed,
yield spreads began to grow to their historically widest levels in September
1997, when the Fund's fiscal year started. This was particularly true of
emerging market debt securities. Although the Fund's exposure to the emerging
sector was modest throughout the period, the sector's weakness was sufficient to
account for much of the Fund's underperformance. Returns were also adversely
affected by the Fund's overweighting of corporate bonds and its underweighting
of Treasuries relative to the Index.
Looking ahead, we believe that the confluence of big-picture events that is
driving the decline in global credit quality and liquidity will continue to
dictate the direction of spread product prices for at least the balance of 1998.
We are hopeful that global financial markets will stabilize enough for
investors' key investment consideration to change from "Will it be lower
tomorrow?" to "Is the asset fundamentally cheap?" Should this occur, the
compelling relative value of the spread product currently held in the Fund
suggests that performance will meaningfully improve.
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
William P. Sterling, Executive Director
Gregg M. Diliberto, Managing Director
Mark K. Silverstein, Managing Director
Jo Ann Corkran, Senior Vice President
Diane C. Damskey, Senior Vice President
Ira Edelblum, Senior Vice President
Robert W. Justich, Senior Vice President
30
<PAGE>
BEA U.S. Core Fixed Income Fund
Portfolio Managers' 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. (Unaudited)
[GRAPHIC]
In the printed version of the document, a line graph appears which depicits
the following plot points:
BEA U.S. CORE LEHMAN BROTHERS
FIXED INCOME AGGREGATE BOND
FUND INDEX
------------- --------------
04/1/94 10,000 10,000
05/31/94 9,913 9,999
08/31/94 10,017 10,188
11/30/94 9,812 10,007
02/28/95 10,204 10,520
05/31/95 10,864 11,148
08/31/95 11,078 11,342
11/30/95 11,475 11,775
02/29/96 11,590 11,809
05/31/96 11,464 11,638
08/31/96 11,658 11,806
11/30/96 12,328 12,488
02/28/97 12,420 12,442
05/31/97 12,567 12,607
08/31/97 13,001 12,991
11/30/97 13,327 13,437
02/28/98 13,670 13,735
05/31/98 13,898 13,985
08/31/98 14,011 14,364
------------------------------
AVERAGE ANNUAL
TOTAL RETURN (UNAUDITED)
One Year 7.77%
Three Years 8.14%
From Inception 7.93%
------------------------------
Note: Past performance is not predictive of future performance.
31
<PAGE>
BEA U.S. Core Fixed Income Fund
of The RBB Fund, Inc.
Statement of Net Assets
August 31, 1998
Par
(000) Value
---------- -----------
CORPORATE BONDS -- 36.2%
Aerospace/Defense -- 0.0%
Boeing Co. ................................
Debentures (Aa3, AA)
7.500% 08/15/42 ......................... $ 150 $ 171,000
----------
Banking -- 6.7%
Chase Manhattan Corp.
Sub. Notes (A1, A)
6.375% 04/01/08 ......................... 2,960 2,989,600
Cie. Financiere de Paribas
Sub. Notes (A3, A-)
6.950% 07/22/13 ......................... 2,625 2,657,812
Credit Lyonnais
Perpetual Sub. Variable Rate
Notes, Rule 144A (Baa2, NR)
6.750%+++ ............................... 2,780 2,654,900
First Republic Bank
Sub. Notes (NR, BB+)
7.750% 09/15/12 ......................... 2,070 2,189,025
ForeningsSparbanken AB
Perpetual Sr. Sub. FRN (A3, NR)
6.438%+++ ............................. 980 980,098
Perpetual Sub. FRN (A3, NR)
7.500%+++ ............................. 1,340 1,412,896
Fuji Finance (Cayman) Ltd.
Medium Term Notes (A3, NR)
7.300% 09/11/98 ....................... 730 525,600
Perpetual Sub. Notes
(Ba1, NR)
6.550%+++ ............................. 820 590,400
Fuji JGB Investment LLC
144A Noncum. Preferred
Securities Series A (Ba1, NR)
9.870% 12/30/98 ......................... 2,150 1,724,923
Long Island Savings Bank, Inc.
Sr. Bank Notes (Baa3, BBB)
7.000% 06/13/02 ......................... 250 259,687
National Westminster Bank
Gtd Capital
Notes (Aa3, AA-)
9.375% 11/15/03 ......................... 550 631,213
Okobank Perpetual Medium Term
FRN (A3, NR)
6.188%+++ ............................... 1,970 1,930,600
Santander Financial Issuances
Perpetual Sub. FRN (A2, NR)
6.588% .................................. 750 727,500
Skandinaviska Enskilda
Banken AB
Perpetual Sub. FRN (NR, NR)
7.500%+++ ............................. 1,905 1,948,015
(Baa1, NR)
6.625%+++ ............................. 2,280 2,296,393
144A (Baa1, BBB+)
6.500%+++ ............................. 2,200 2,183,808
Par
(000) Value
---------- -----------
Banking -- (continued)
Sovereign Bancorp
Sr. Notes (NR, BBB-)
6.750% 07/01/00 ......................... $ 185 $ 186,619
Trans Financial Bank N.A
Notes (A1, A)
6.480% 10/23/98 ......................... 645 645,411
-----------
26,534,500
-----------
Broadcasting -- 1.1%
Fox/Liberty Network LLC
Sr. Discount Notes (B1, B)
9.75% 08/15/07 .......................... 665 405,650
8.875% 08/15/07 ......................... 1,705 1,606,962
Turner Broadcasting System Inc.
Sr. Notes (Baa3, BBB-)
7.400% 02/01/04 ......................... 2,120 2,210,100
-----------
4,222,712
-----------
Cable -- 0.5%
CSC Holdings Inc. .........................
Sr. Notes (Ba2, BB+)
7.875% 12/15/07 ......................... 1,305 1,313,156
Diamond Cable Communications
PLC Yankee Sr. Discount
Notes (Caa1, B-)
10.75% 02/15/07++ ....................... 675 505,406
Videotron Holdings Plc
Yankee Sr. Discount Notes
(NR, BBB+)
11.00% 08/15/05++ ....................... 95 85,262
-----------
1,903,824
-----------
Conglomerates -- 0.0%
General Electric Capital Corp.
Remarketed Reset Notes
(Aaa, AAA)
6.290% 12/15/07 ......................... 160 163,203
-----------
Energy -- 1.4%
AO Sibneft
Loan Participation Notes
(NR, NR)
9.688% 08/15/00 ......................... 455 146,156
KN Energy, Inc.
Reset Put Notes (Baa2, BBB-)
6.300% 03/01/01 ......................... 1,965 1,989,562
LASMO (USA) Inc.
Gtd. Debentures (Baa2, BBB)
7.300% 11/15/27 25 25,937
Petroleum Geo-Services ASA
Yankee Sr. Notes (Baa3, BBB)
7.125% 03/30/28 ......................... 2,115 2,125,575
Valero Energy Corp.
144A Putable Asset Trusts
(Baa3, BBB-)
6.750% 12/15/02 ......................... 1,220 1,253,550
-----------
5,540,780
-----------
See Accompanying Notes to Financial Statements.
32
<PAGE>
BEA U.S. Core Fixed Income Fund (Continued)
Par
(000) Value
---------- -----------
Entertainment -- 2.3%
Time Warner, Inc.
Debentures (Baa3, BBB-)
8.050% 01/15/16 ....................... $ 1,875 $2,069,531
7.480% 01/15/08 ....................... 170 181,262
(Ba1, BBB-)
6.850% 01/15/26 ....................... 6,375 6,622,031
----------
8,872,824
----------
Financial Services -- 7.4%
American General Institutional
Capital Trust Co. 144A Gtd
Notes, Series B (A2, A+)
8.125% 03/15/46 ......................... 2,160 2,513,700
Associates Corp. of North America
Sr. Debentures (Aa3, AA-)
5.960% 05/15/37 ......................... 195 199,875
AT&T Capital Corp.
Medium Term Notes Series 4
(Baa3, BBB)
6.260% 02/18/99 ....................... 345 345,794
6.410% 08/13/99 ....................... 155 155,695
6.920% 04/29/99 ....................... 815 820,494
6.470% 12/03/99 ....................... 950 955,528
6.480% 12/03/99 ....................... 2,730 2,746,209
BellSouth Capital Funding Corp.
Debentures (Aa1, AAA)
6.040% 11/15/26 ......................... 2,975 3,064,250
Fifth Mexican Acceptance Corp.
Gtd. Notes (NR, NR)****
8.000% 12/15/98 ......................... 3,060 866,592
First Nationwide (Parent)
Holdings, Inc.
Sr. Notes (Ba3, B)
12.500% 04/15/03 ........................ 1,770 1,986,825
Ford Holdings, Inc.
Gtd. Notes (A1, A)
9.250% 03/01/00 ......................... 115 121,181
General Motors Acceptance Corp.
Notes (A2, A)
7.750% 01/15/99 ....................... 200 201,598
6.375% 12/01/01 ....................... 295 302,375
6.625% 04/24/00 ....................... 1,325 1,348,187
6.900% 06/06/00 ....................... 2,320 2,372,293
6.210% 09/19/00 ....................... 550 556,875
5.800% 02/23/01 ....................... 2,165 2,181,237
6.800% 04/17/01 ....................... 625 645,312
Industrial Credit & Investment
Corp. 144A Yankee
Medium Term Notes (Baa2, BB+)
7.550% 08/15/07 ......................... 40 34,850
John Hancock Mutual Life
Insurance Co. ...........................
144A Surplus Notes (A1, AA-)
7.375% 02/15/24 ......................... 370 407,000
Par
(000) Value
---------- -----------
Financial Services -- (continued)
L'Auxiliare du Credit Foncier
de France
Gtd. Notes (Baa3, NR)
5.582% 09/25/98 .................... $ 2,200 $ 2,125,860
5.598% 10/20/98 .................... 155 149,776
(A3, A)
8.000% 01/14/02 .................... 1,660 1,764,796
Prudential Insurance Co. of
America
144A Capital Notes (A3, A)
6.875% 04/15/03 ...................... 1,600 1,656,000
Residential Reinsurance Ltd.
Notes, Series 1998-A2 (NR, NR)
9.330% 10/01/98 ...................... 600 600,000
Travelers Group Inc.
Debentures (Aa2, AA-)
6.875% 02/15/49 ...................... 40 41,750
Trinity Re, Ltd.
144A FRN, Series 1998,
Class A2 (Ba3, NR)
9.250% 12/31/98 .................... 495 485,100
Defeasance FRN, Series 1998,
Class A1 (Aaa, NR)
7.490% 12/31/98 .................... 325 321,750
-----------
28,970,902
-----------
Food & Beverage -- 0.1%
Arisco Produtos Alimenticios
S.A. Gtd. Notes
(NR, NR)
10.750%? 05/22/05 ....................... 340 289,000
-----------
Health Care -- 2.2%
Columbia/HCA Healthcare Corp.
Debentures (Ba2, BBB)
8.360% 04/15/24 ......................... 1,485 1,377,724
Merck & Co., Inc.
Medium Term Notes Series B
(Aaa, AAA)
5.760% 05/03/37 ......................... 7,130 7,326,075
-----------
8,703,799
-----------
Industrial Goods & Materials -- 1.3%
Dresser Industries, Inc.
Debentures (Aa3, A)
7.600% 08/15/49 ......................... 1,785 2,099,606
Seagate Technology, Inc.
Sr. Debentures (Baa3, BBB)
7.450% 03/01/37 ......................... 2,615 2,644,419
-----------
4,744,025
-----------
Packaging/Containers -- 0.0%
Crown Packaging
Enterprises Ltd.
Yankee Sr. Secured Discount
Notes (Ca, NR)
14.00% 08/01/06++ ....................... 550 6,187
-----------
See Accompanying Notes to Financial Statements.
33
<PAGE>
BEA U.S. Core Fixed Income Fund (Continued)
Par
(000) Value
---------- -----------
Paper & Forest Products -- 0.1%
Fort James Corp.
Notes (Baa3, BBB-)
6.234% 03/15/01 ......................... $ 330 $ 333,712
P. T. Indah Kiat Pulp & Paper Corp.
Sr. Secured Notes (Caa1, CCC+)
8.875% 11/01/00 ......................... 280 159,600
Repap New Brunswick Inc.
Sr. Secured Debentures
(Caa1, CC)
10.625% 04/15/05 ........................ 35 30,362
----------
523,674
----------
Publishing & Information Services -- 0.8%
Belo (A.H.) Corp.
Sr. Debentures (Baa2, BBB-)
7.250% 09/15/27 ....................... 540 567,675
Sr. Notes (Baa2, BBB-)
6.875% 06/15/02 ....................... 2,635 2,723,931
----------
3,291,606
----------
Real Estate -- 0.9%
EOP Operating LP
Mandatory Par Put Remarketed
Securities (Baa1, BBB)
6.376% 02/15/02 ......................... 3,505 3,531,287
Health and Retirement Properties
Trust (Baa2, BBB)
6.114% 10/09/98 ......................... 100 99,625
----------
3,630,912
----------
Restaurants, Hotels & Casinos -- 0.3%
FelCor Suites
Limited Partnership
Gtd. Sr. Notes (Ba1, BB+)
7.700% 10/01/07 ......................... 1,065 1,072,987
Hyatt Equities Llc
144A Medium Term Notes
(A3, BBB+)
6.800%? 05/15/00 ........................ 230 234,600
----------
1,307,587
----------
Retail -- 0.4%
K Mart Corp.
Notes (Ba2, BB)
7.950% 02/01/23 ....................... 420 406,875
Pass Through Certificates,
Series 1995-K3 (Ba2, BB)
8.540% 01/02/15 ....................... 1,072 1,142,201
----------
1,549,076
----------
Telecommunications -- 5.3%
BellSouth
Telecommunications, Inc.
Debentures (Aaa, AAA)
5.850% 11/15/45 ......................... 3,705 3,737,419
7.000% 12/01/45 ......................... 255 271,256
Par
(000) Value
---------- -----------
Telecommunications -- (continued)
CenCall Communications Corp.
Sr. Discount Notes (B2, CCC-)
10.125% 01/15/04++ ...................... $ 425 $ 429,250
CS Wireless Systems, Inc.
Sr. Discount Notes Series B
(Ca, C)
11.375% 03/01/06++ ...................... 1,040 249,600
Globo Comunicacoes e
Participacoes S.A
144A Sr. Notes (B1, BB-)
10.625% 12/05/08 ........................ 670 453,925
GTE Corp.
Debentures (Baa1, A)
6.360% 04/15/06 ......................... 1,480 1,500,350
6.840% 04/15/18 ......................... 1,215 1,242,337
6.940% 04/15/28 ......................... 2,560 2,624,000
MCI Communications Corp.
Sr. Notes (Baa2, BBB+)
6.125% 04/15/10 ....................... 1,510 1,515,662
6.500% 04/15/10 ....................... 635 632,619
Nextel Communications, Inc.:
Sr. Serial Red. Discount Notes
(B2, CCC+)++
9.950% 02/15/08 ....................... 410 233,188
9.750% 10/31/07 ....................... 225 131,063
Sr. Redeemable Discount
Notes (B2, CCC)++
10.650% 09/15/07 ...................... 2,975 1,811,031
Tele-Communications, Inc.
Medium Term Notes (Ba2, BB+)
6.340% 02/01/02 ......................... 1,585 1,608,775
Telefonica de Argentina
144A Medium Term Notes
(Ba3, BBB-)
9.125% 05/07/08 ......................... 640 519,200
Teleport Communications
Group, Inc.
Sr. Discount Notes
(Ba3, BB+)
9.650% 03/31/27 ......................... 695 796,644
Wireless One, Inc.
Sr. Discount Notes (Ca, CCC+)
13.500% 08/01/06++ ...................... 635 63,500
Worldcom, Inc.
Notes (Baa2, BBB+)
6.950% 08/15/28 ......................... 3,030 2,969,400
----------
20,789,219
----------
Transportation -- 2.6%
Continental Airlines, Inc.
Sr. Notes (Ba2, B+)
9.500% 12/15/01 ......................... 1,755 1,816,425
See Accompanying Notes to Financial Statements.
34
<PAGE>
BEA U.S. Core Fixed Income Fund (Continued)
Par
(000) Value
---------- -----------
Transportation -- (continued)
Grupo Transportacion Ferroviaria
Mexicana, S.A. de C.V ...................
Gtd. Sr. Notes (B2, B+)
11.75% 06/15/07++ ..................... $ 810 $ 433,350
Yankee Gtd. Sr. Discount
Debentures (B2, B+)
11.75% 06/15/09++ ..................... 1,655 856,463
Norfolk Southern Corp.
Notes (Baa1, BBB+)
7.875% 02/15/04 ......................... 5 5,469
7.050% 05/01/04 ......................... 2,650 2,875,250
Northwest Airlines, Inc.
Gtd. Notes (Ba2, BB)
7.875% 03/15/08 ....................... 290 297,613
7.625% 03/15/05 ....................... 3,065 3,130,131
US Air, Inc.
Gtd. Sr. Notes (B1, B)
9.625% 02/01/01 ....................... 760 788,500
------------
10,203,201
------------
Utilities -- 2.7%
Beaver Valley Funding Corp. ...............
Secured Lease Obligation
Bonds (Ba3, BB-)
9.000% 06/01/17 ......................... 2,370 2,704,763
Connecticut Light and Power Co.
First and Refunding Mortgage
Bonds, Series 97C (Ba2, BB)
7.750% 06/01/02 ....................... 1,060 1,103,725
Series D
7.875% 10/01/24 ....................... 720 757,800
Long Island Lighting Co.
Debentures (Baa3, A-)
9.000% 11/01/22 ......................... 1,615 1,857,250
Niagara Mohawk Power Corp.
First Mortgage Bonds (Ba1, BBB-)
8.750% 04/01/22 ......................... 1,110 1,200,188
North Atlantic Energy Corp.
Secured First Mortgage Notes,
Series A (B1, B+)
9.050% 06/01/02 ......................... 1,567 1,590,505
TU Electric Capital V,
Capital Securities (Baa2, BBB)
8.175% 01/30/37 ......................... 1,410 1,441,725
------------
10,655,956
------------
Waste Management -- 0.1%
USA Waste Services, Inc. ..................
Sr. Notes (Baa3, BBB+)
7.125% 10/01/07 ......................... 415 440,938
------------
TOTAL CORPORATE BONDS
(Cost $141,554,434) ..................... 142,514,925
------------
Par
(000) Value
---------- -----------
MUNICIPAL BONDS -- 3.9%
California State G.O
(FGIC Insured) (Aaa, AAA)
5.000% 02/01/23 ......................... $ 500 $ 495,000
Illinois State G.O. .......................
(MBIA Insured) (Aaa, AAA)
4.750% 06/01/23 ......................... 850 814,938
Jacksonville, Florida Electric
Authority, Electric System Revenue
Bonds Series 3-A (Aa2, AA)
5.000% 10/01/23 .......................... 675 669,938
Massachusetts Bay Transportation
Authority, General Transportation
Systems Revenue Bonds
Series A (MBIA Insured)
(Aaa, AAA)
4.750% 03/01/21 ....................... 765 732,488
Series D (Aa3, AA-)
5.000% 03/01/27 ....................... 130 129,188
Massachusetts State Turnpike
Authority, Metropolitan Highway
Systems Revenue Bonds, Series A
(MBIA Insured) (Aaa, AAA)
5.000% 01/01/27 ......................... 100 99,000
Massachusetts State Water
Resources Authority, General
Revenue Bonds, Series A
(FSA Insured) (Aaa, AAA)
4.750% 08/01/27 ......................... 960 914,400
Municipal Electric Authority of
Georgia, Project One Sub Lien
Revenue Bonds, Series A
(Aaa, AAA)
5.000% 01/01/26 ......................... 2,725 2,704,563
Nevada State G.O.
(Municipal Bond Bank Project
Numbers 65 & R-6)
(MBIA Insured) (Aaa, AAA)
4.750% 05/15/26 ......................... 1,000 957,500
New Jersey Economic
Development Authority, State
Pension Funding Revenue Bonds,
(FSA Insured) Series B (Aaa, AAA)
0.000% 02/15/20 ....................... 155 43,341
Series B (AMBAC Insured)
(Aaa, AAA)
0.000% 02/15/09 ....................... 155 85,541
0.000% 02/15/02 ....................... 165 137,016
0.000% 02/15/07 ....................... 1,410 879,093
0.000% 02/15/08 ....................... 1,285 756,210
0.000% 02/15/03 ....................... 1,085 855,588
0.000% 02/15/01 ....................... 320 282,182
Series A (MBIA Insured)
(Aaa, AAA)
7.425% 02/15/29 ....................... 2,420 2,864,990
See Accompanying Notes to Financial Statements.
35
<PAGE>
BEA U.S. Core Fixed Income Fund (Continued)
Par
(000) Value
---------- -----------
MUNICIPAL BONDS -- (continued)
New York City Municipal Water
Finance Authority, Water and
Sewer Systems Revenue Bond
Series D (FGIC-TCRS Insured)
(Aaa, AAA)
4.750% 06/15/25 ....................... $ 395 $ 380,681
Series D (MBIA IBC Insured)
(Aaa, AAA)
4.750% 06/15/25 ....................... 735 707,438
New York Metropolitan Transit
Authority Dedicated Tax
Fund Revenue Bonds, Series A
(FGIC Insured) (Aaa, AAA)
4.750% 04/01/28 ......................... 260 249,275
South Carolina State Public
Service Authority, Revenue
Bonds Series A (MBIA Insured)
(Aaa, AAA)
5.000% 01/01/29 ......................... 530 527,350
Tampa, Florida Health Systems
Revenue Bonds (Aaa, AAA)
4.750% 11/15/28 ......................... 45 42,750
-----------
TOTAL MUNICIPAL BONDS
(Cost $14,633,997) ...................... 15,328,470
-----------
FOREIGN GOVERNMENT BONDS -- 6.5%
Federal Republic of Brazil
MYDFA Trust Certificates
(NR, NR)
6.563% 09/15/07 ......................... 1,707 917,567
International Bank for
Reconstruction & Development
U.S. Dollar Bonds (Aaa, AAA)
7.625% 01/19/23 ......................... 550 691,625
Republic of Argentina
Secured Par Bonds Series L-GP
(Ba3, BB)
5.750% 11/30/98 ....................... 445 275,066
Structured Notes (Ba3, BB)
8.726% 04/10/05 ....................... 1,150 977,500
Yankee Spread Adjusted Notes
(Ba3, BB)
9.150% 11/30/98 ....................... 2,750 2,213,750
Republic of Bulgaria
Discount Bonds, Series A
(B2, NR)
6.688% 01/28/99 ......................... 2,305 1,279,275
Republic of Colombia
Notes (Baa3, BBB-)
8.625% 04/01/08 ......................... 2,985 2,328,300
Republic of Poland
Past Due Interest Bonds
(Baa3, BBB-)
4.000% 10/27/14 ....................... 1,050 870,188
4.000% 10/27/14 ....................... 8,420 6,525,500
Par
(000) Value
---------- -----------
FOREIGN GOVERNMENT BONDS -- (continued)
United Kingdom
Treasury Bonds (AAA, NR)
7.250% 12/07/07 GBP ..................... 3,350 $ 6,400,213
United Mexican States
Par Bonds, Series W-B (Ba2, BB)
6.250% 12/31/19 ......................... $ 4,150 3,034,688
-----------
TOTAL FOREIGN
GOVERNMENT BONDS
(Cost $28,983,582) ...................... 25,513,672
-----------
AGENCY OBLIGATIONS -- 31.3%
Federal Home Loan Mortgage Corporation -- 6.6%
Various Pools:
6.500% 07/01/99 ......................... 81 81,597
7.000% 12/01/09 ..................... ... 777 794,928
15-Year Gold TBA
0.000% 04/01/12 ......................... 17,425 17,719,047
REMIC-PAC Series 1014 Class E
7.950% 02/15/20.......................... 1,467 1,488,180
REMIC-PAC Series 1660 Class E
6.000% 01/15/07 ......................... 2,135 2,142,224
MACR Series 1860 Principal Only
0.000% 02/15/24 ......................... 1,689 1,397,447
MACR Series 1934, Class AB
6.000% 08/15/07 ......................... 2,495 2,506,653
-----------
TOTAL FEDERAL HOME
LOAN MORTGAGE
CORPORATION ............................. 26,130,076
-----------
Federal National Mortgage Association -- 23.7%
Various Pools:
10.000% 02/01/05 ......................... 224 237,400
10.000% 01/01/10 ......................... 979 1,061,255
6.000% 04/01/28 ......................... 139 136,488
6.000% 11/01/12 ......................... 492 490,916
6.000% 04/01/28 ......................... 149 146,588
6.000% 06/01/28 ......................... 137 135,204
6.000% 08/01/28 ......................... 714 703,458
6.000% 08/01/28 ......................... 149 146,273
6.000% 07/01/13 ......................... 957 955,398
6.000% 03/01/13 ......................... 531 530,362
6.000% 03/01/28 ......................... 238 234,036
6.000% 07/01/13 ......................... 498 497,229
6.000% 04/01/28 ......................... 84 82,888
6.000% 05/01/28 ......................... 1,980 1,950,301
6.000% 06/01/13 ......................... 335 334,265
6.000% 04/01/13 ......................... 2,715 2,709,909
6.000% 07/01/13 ......................... 516 515,472
6.000% 08/21/28 ......................... 693 682,605
6.000% 08/01/28 ......................... 99 97,515
6.000% 08/01/28 ......................... 693 682,388
6.000% 08/01/28 ......................... 525 516,830
See Accompanying Notes to Financial Statements.
36
<PAGE>
BEA U.S. Core Fixed Income Fund (Continued)
Par
(000) Value
---------- -----------
Federal National Mortgage Association -- (continued)
6.000% 08/01/13 ........................... $ 2,742 $ 2,737,158
6.000% 07/01/13 ........................... 990 988,144
6.000% 08/01/13 ........................... 506 505,417
(TBA)
6.000% 08/01/13 ........................... 173 172,926
6.000% 08/01/13 ........................... 970 968,381
15-Year TBA's
7.000% 01/01/11 ........................... 1,450 1,479,906
6.000% 01/15/11 ........................... 3,850 3,836,766
6.500% 05/01/13 ........................... 15,520 15,723,700
30-Year TBA's
6.000% 10/15/17 ........................... 1,950 1,917,703
8.000% 03/15/25 ........................... 13,890 14,376,150
6.500% 09/01/27 ........................... 29,290 29,427,297
7.000% 07/01/28 ........................... 7,695 7,827,258
REMIC-PAC 1991-165 Class M
8.250% 12/25/21 ........................... 13 13,626
REMIC-PAC Series 1993-235
Class G PO
0.000% 09/25/23 ........................... 90 57,290
MACR Series 1996-5 Class
PX PO
0.000% 11/25/23 ........................... 235 170,375
REMIC Series 1997-16 Class
M PO (Aaa, AAA)
0.000% 02/25/23 ........................... 170 124,180
-----------
TOTAL FEDERAL NATIONAL
MORTGAGE ASSOCIATION ....................... 93,173,057
-----------
Government National Mortgage Association -- 0.2%
Various Pools:
6.500% 09/15/03 .......................... 8 8,345
8.250% 08/15/04 .......................... 1 583
9.000% 11/15/04 .......................... 1 1,092
9.000% 12/15/04 .......................... 1 887
8.250% 04/15/06 .......................... 1 1,413
13.500% 07/15/14 .......................... 1 922
9.000% 12/15/16 .......................... 34 36,219
8.000% 04/15/17 .......................... 123 128,029
9.000% 08/15/21 .......................... 489 523,029
-----------
TOTAL GOVERNMENT
NATIONAL MORTGAGE
ASSOCIATION ............................. 700,519
-----------
Miscellaneous -- 0.9%
Government Trust Certificates
Collateral Trust Notes Series 1C
(Aaa, AAA)
9.250% 11/15/01 ......................... 425 441,952
National Archives Facility Trust
COP (Aaa, AAA)
8.500% 09/01/19 ......................... 682 850,269
Par
(000) Value
---------- -----------
Miscellaneous -- (continued)
Tennessee Valley Authority
Debentures, Series B (Aaa, NR)
6.235% 07/15/45 ....................... $ 60 $ 62,775
Power Bonds Series A (Aaa, AAA)
5.880% 04/01/36 ....................... 1,980 2,029,500
------------
3,384,496
------------
TOTAL AGENCY OBLIGATIONS
(Cost $215,203,961) ..................... 123,388,148
------------
ASSET BACKED SECURITIES -- 6.8%
AESOP Funding II LLC,
Automobile Lease Contracts,
Series 1997-1, Class A1
(Aaa, AAA)
6.220% 10/20/01 ......................... 720 727,200
Capita Equipment Receivables
Trust Series 1996-1, Class A3
(Aaa, AAA)
6.110% 07/15/99 ......................... 1,131 1,133,080
Cityscape Home Equity Loan Trust,
Home Equity Loan Certificates
Series 1996-2, Class A2
(Aaa, AAA)
7.200% 11/15/06 ......................... 500 507,136
ContiMortgage Home Equity
Loan Trust Series 1996-4,
Class A8 (Aaa, AAA)
7.220% 01/15/28 ....................... 820 880,393
Series 1998-1, Class A5 (Aaa, AAA)
6.430% 04/15/16 ....................... 1,980 2,048,293
Fleetwood Credit Corp. Grantor
Trust, RV Retail Installment
Sale Contracts Series 1997-B,
Class A (Aaa, AAA)
6.400% 05/15/13 ....................... 761 770,739
Series 1993-B, Class A
(Aaa, AAA)
4.950% 08/15/08 ....................... 361 358,080
Series 1994-B, Class A
(Aaa, AAA)
6.750% 03/15/10 ....................... 1,228 1,250,610
Goldome Credit Corp. Home Equity
Trust Series 1990-1, Class A
(Aa2, AA)
10.000% 07/15/05 ........................ 45 45,338
See Accompanying Notes to Financial Statements.
37
<PAGE>
BEA U.S. Core Fixed Income Fund (Continued)
Par
(000) Value
---------- ----------
ASSET BACKED SECURITIES -- (continued)
Green Tree Financial Corp.
Manufactured Housing Retail
Installment Sales Contracts,
Series 1995-6, Class A3
(Aaa, AAA)
6.650% 09/15/26 .......................... $ 2,721 $2,758,521
Series 1995-8, Class A2
(Aaa, AAA)
6.150% 12/15/26 .......................... 6 6,142
Series 1997-3, Class A3
(Aaa, NR)
6.730% 07/15/28 .......................... 700 723,770
Series 1997-6 Class A3
(NR, AAA)
6.320% 01/15/29 .......................... 640 648,000
Series 1998-4 Class A3
(Aaa, NR)
5.980% 08/01/08 .......................... 3,180 3,189,938
Series 1995-5, Class A3
(Aaa, AAA)
6.250% 09/15/26 .......................... 302 304,088
Green Tree Home Equity Loan
Trust Home Equity Loan
Certificate Series 1998-C,
Class A2 (NR, AAA)
6.030% 07/15/29 ............................ 2,945 2,950,062
Green Tree Recreational,
Equipment & Consumer Trust,
Consumer Products & Equipment
Retail Installments Sales Contracts
Series 1997-C, Class A1
(NR, AAA)
6.490% 02/15/18 .......................... 690 709,936
Series 1998-B, Class A3
(NR, AAA)
6.050% 10/15/10 .......................... 1,065 1,077,481
Green Tree Securitized Net
Interest Margin Trust, REMIC,
Series 1994-A, Class A (Baa3, NR)
6.900% 02/15/04 ............................ 857 858,853
IMC Home Equity Loan Trust,
Home Equity Loan Certificates
Series 1998-3, Class A3
(Aaa, AAA)
6.160% 05/20/14 ............................ 1,055 1,055,824
Merrill Lynch Mortgage Investors,
Inc., Manufactured Housing
Retail Installment Sales Contracts
Series 1991-C, Class A
(Aaa, AAA)
9.000% 07/15/11 ............................ 57 57,928
Par
(000) Value
---------- -----------
ASSET BACKED SECURITIES -- (continued)
New Century Home Equity Loan
Trust Mortgage Loan Certificates
Series 1997-NC6, Class A4
(Aaa, AAA)
6.730% 07/25/22 ......................... $ 675 $ 695,812
New York City Tax Lien
144A Collateralized Bonds,
Series 1996-1, Class C (NR, A)
7.110% 05/25/05 ....................... 171 172,110
Series 1997-1 Class A
(Aaa, AAA)
6.460% 05/25/05 ....................... 94 95,056
Oakwood Mortgage Investors Inc.
Manufactured Housing Retail
Installment Sales Contracts
Series 1996-A Class A3
(NR, AAA)
6.600% 05/15/21 ......................... 105 107,792
Southern Pacific Secured Assets
Corp. Mortgage Loan
Certificates Series 1998-1,
Class A2 (Aaa, AAA)
6.270% 03/25/28 ......................... 2,455 2,467,275
UCFC Acceptance Corp. Home
Equity Loan Certificates
Series 1996-B1, Class A7
(Aaa, AAA)
8.200% 09/15/27 ......................... 745 802,104
Vanderbilt Mortgage Finance,
Manufactured Housing Retail
Installment Sales Contracts,
Series 1995-B, Class A3 (NR)
6.675% 05/07/06 ......................... 325 330,070
World Omni Automobile Lease
Securitization Trust, Retail
Closed-End Lease Contracts
Series 1995-A, Class A
(Aaa, AAA)
6.050% 11/25/01 ......................... 48 47,880
-----------
TOTAL ASSET BACKED
SECURITIES
(Cost $18,247,418) ...................... 26,779,511
-----------
COLLATERALIZED MORTGAGED
BACKED SECURITIES -- 3.9%
Asset Securitization Corp. ..................
Series 1996-MD6, Class A6
(Baa2, BBB)
7.106% 09/13/98 ....................... 760 790,519
Series 1997-D5, Class A1D
(Aaa, AAA)
6.850% 02/14/41 ....................... 1,845 1,932,638
See Accompanying Notes to Financial Statements.
38
<PAGE>
BEA U.S. Core Fixed Income Fund (Continued)
Par
(000) Value
---------- -----------
COLLATERALIZED MORTGAGED
BACKED SECURITIES -- (continued)
Carousel Center Finance Inc.
144A Series 1, Class C,
(NR, BBB+)
7.527% 11/15/07 ............................ $ 367 $ 373,771
Collateralized Mortgage Obligation
Trust, REMIC, Series 54, Class C
(Aaa, AAA)
9.250% 11/01/13 ............................ 1 1,419
G3 Mortgage Reinsurance Ltd.
Mortgage Default Recourse Notes,
Series 1, Class A (Baa2, BBB)
6.648% 09/25/98 ............................ 950 950,296
General Motors Acceptance Corp.
Commercial Mortgage
Securities, Inc. Series 1997-C1,
Class A2 (Aaa, AAA)
6.853% 09/15/06 ............................ 530 550,703
Kidder Peabody Acceptance Corp.
Series 1993-M1, Class A1
(NR, AA2)
7.150% 04/25/25 .......................... 331 330,950
Series 1994-C1, Class A
(NR, AAA)
6.650% 02/01/06 .......................... 390 404,638
Series 1994-C1, Class B
(NR, AA)
6.850% 02/01/06 .......................... 1,305 1,326,206
PaineWebber Mortgage Acceptance
Corp. IV Multifamily Mortgage
Pass-Throughs Series 1995-M1,
Class A 144A (NR, NR)
6.700% 01/15/07 .......................... 1,430 1,463,683
Class D 144A (NR, NR)
7.300% 01/15/07 .......................... 420 426,021
Salomon Brothers Mortgage
Securities VII, 144A Series
1997-TZH, Class A2 (Aa2, NR)
7.174% 03/25/22 .......................... 1,925 2,023,055
REMIC Series 1997-NC4,
Class A (NR, AAA)
5.948% 09/25/98 .......................... 67 67,197
Structured Asset Securitization Corp.
Series 1996-CFL,
Class A1C (NR, AAA)
5.944% 02/25/28 .......................... 883 883,390
Series 1998-C2, Class A
(Aaa, NR)
5.826% 09/25/98 .......................... 3,859 3,847,296
-----------
TOTAL COLLATERALIZED
MORTGAGED BACKED
SECURITIES
(Cost $24,591,319) ......................... 15,371,782
-----------
Par
(000) Value
---------- -----------
COMMON STOCK -- 0.0%
Packaging/Containers -- 0.0%
Crown Packaging Enterprises,
Ltd ..................................... $ 45,544 $ 455
------------
TOTAL COMMON STOCK
(Cost $0) ............................... 455
------------
PREFERRED STOCKS -- 1.5%
Financial Services -- 0.4%
Lehman Brothers Holdings Inc.
5.67% Cumulative, Series ................ 10,800 526,500
Travelers Group Inc.
6.213% Cumulative Series ................ 16,800 919,800
------------
1,446,300
------------
Real Estate -- 1.1%
American RE Capital Corp.
8.50% Cumulative, Series A .............. 29,600 778,850
California Federal Preferred
Capital Corp.
9.125% Noncum.
Exchangeable Series A ................... 86,350 2,280,180
NB Capital Corp.
8.35% Noncum. Exchangeable .............. 46,600 1,252,375
------------
4,311,405
------------
TOTAL PREFERRED STOCKS
(Cost $5,634,342) ....................... 5,757,705
------------
Par
(000)
------------
U.S. TREASURY OBLIGATIONS -- 9.0%
U.S. Treasury Bills -- 0.1%
4.860% 09/24/98 ......................... 75 74,698
4.870% 09/24/98 ......................... 200 199,286
4.990% 09/24/98 ......................... 55 54,718
------------
328,702
------------
U.S. Treasury Bonds -- 0.4%
8.875% 08/15/17 ......................... 1,250 1,751,984
------------
U.S. Treasury Notes -- 8.2%
8.500% 02/15/00 ......................... 220 230,439
5.375% 02/15/01 ......................... 13,420 13,540,659
6.625% 06/30/01 ......................... 185 192,674
6.250% 06/30/02 ......................... 8,600 8,957,513
7.500% 02/15/05 ......................... 5 5,656
6.250% 02/15/07 ......................... 8,450 9,086,328
------------
32,013,269
------------
U.S. Treasury Strip Bonds -- 0.3%
0.000% 11/15/16 ......................... 3,430 1,266,191
------------
TOTAL U.S. TREASURY
OBLIGATIONS
(Cost $34,588,525) ...................... 35,360,146
------------
See Accompanying Notes to Financial Statements.
39
<PAGE>
BEA U.S. Core Fixed Income Fund (Continued)
Par
(000) Value
---------- -----------
WARRANTS -- 0.0%
Capital Pacific Holdings Group,
Inc ..................................... 2,528 $ 1,896
Checkers Drive-In Restaurants ............. 2,642 495
Uniroyal Technology Corp. ................. 10,800 74,250
-------------
TOTAL WARRANTS
(Cost $14,178) .......................... 76,641
-------------
SHORT TERM INVESTMENTS -- 23.6%
Discount Notes
5.440% 09/11/98 ......................... 93,000 92,859,467
-------------
TOTAL INVESTMENTS -- 122.7%
(Cost $483,451,756) ..................... 482,950,922
-------------
LIABILITIES IN EXCESS OF
OTHER ASSETS-- 22.7% .................... (89,417,810)
-------------
NET ASSETS (Applicable to
25,039,577 BEA Institutional
Shares) -- 100.0% ....................... $ 393,533,112
=============
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PRICE PER BEA
INSTITUTIONAL SHARE
($393,533,112 divided by 25,039,577) .... $ 15.72
=============
*Also cost for Federal income tax purposes at August 31, 1998 is $483,461,036.
The gross appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation ........................ $ 5,798,874
Gross Depreciation ........................ (6,308,988)
-------------
Net Appreciation .......................... $ (510,114)
=============
+ Variable rate obligations -- The interest shown is the rate as of August
31, 1998.
++ Step Bond -- The interest rate as of August 31, 1998 is 0% and will reset
to interest rate shown at a future date.
+++ Securities have no stated maturity date.
The Moody's Investors Service, Inc. and Standard & Poor's Ratings Group ratings
indicated are the most recent rating available at August 31, 1998 and are
unaudited.
CURRENCY ABBREVIATIONS
GBP ...................................................... United Kingdom Pounds
INVESTMENT ABBREVIATIONS
FRN ......................................................... Floating Rate Note
MACR .............................................. Modified and Combinable Real
Estate Investment Conduit
PAC ................................................. Planned Amortization Class
REMIC .................................. Real Estate Mortgage Investment Conduit
TBA ............................................................ To Be Announced
At August 31, 1998, Net Assets Consisted Of:
Amount
------------
Capital Paid-In ............................................... $386,873,312
Accumulated Net Investment Income ............................. 4,330,226
Accumulated Net Realized Gain on
Security and Foreign Exchange Transactions ................. 3,255,148
Net Unrealized Depreciation on
Investments and Other ...................................... (925,574)
- - - - - --------------------------------------------------------------------------------
NET ASSETS .................................................... $393,533,112
- - - - - --------------------------------------------------------------------------------
See Accompanying Notes to Financial Statements.
40
<PAGE>
BEA Strategic Global Fixed Income Fund
Portfolio Managers' Letter
September 24, 1998
Dear Shareholders:
We are pleased to report on the results of the BEA Strategic Global Fixed Income
Fund (the "Fund") for the fiscal year ended August 31, 1998.
At August 31, 1998, the net asset value ("NAV") of the Fund was $15.10, compared
to an NAV of $15.41 on August 31, 1997. As a result, the Fund's total return
(assuming reinvestment of dividends and distributions of $.9387 per share) was
4.19%. By comparison, the unhedged J.P. Morgan Global Government Bond Index (the
"Index") gained 9.63% during the same period.
Two factors were most responsible for the Fund's underperformance (compared to
the Index) during the period. These were its meaningful exposure to "spread
product"--debt securities whose market valuation is greatly driven by the
differences, known as "spreads," between their yields and those of U.S. Treasury
debt--and holdings in emerging market debt instruments.
We also note that much of the underperformance occurred in the month of August
alone. Market volatility in August was so high, in fact, that many spread
product sectors generated their worst-ever, relative returns for a single month.
Returns among the various spread product sectors have been negative over the
last year, as several classic "flight to quality" reactions caused Treasuries to
become the favored asset among fixed income investors. Factors driving the
flight to quality included the financial crisis in Emerging Asia, problematic
economic and political conditions in Japan, deterioration in the Russian economy
and a generalized concern about possible currency devaluations.
While Treasuries gained from the flight to quality, spread product fell. Indeed,
yield spreads began to grow to their historically widest levels in September
1997, when the Fund's fiscal year started. This was particularly true of
emerging debt markets, which, as measured by J.P. Morgan's EMBI+ index, lost
29.9% of their value during the fiscal year. Although the Fund's exposure to the
emerging sector was modest throughout the year, the sector's weakness was
sufficient to account for much of the Fund's underperformance.
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
William P. Sterling, Executive Director
Gregg M. Diliberto, Managing Director
Mark K. Silverstein, Managing Director
Jo Ann Corkran, Senior Vice President
Diane C. Damskey, Senior Vice President
Ira Edelblum, Senior Vice President
Robert W. Justich, Senior Vice President
41
<PAGE>
BEA Strategic Global Fixed Income Fund
Portfolio Managers' 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. (Unaudited)
[GRAPHIC]
In the printed version of the document, a line graph appears which depicts the
following plot points:
BEA STRATEGIC JP MORGAN
GOVT. BOND INDEX GLOBAL FIXED
(UNHEDGED) INCOME FUND
---------------- ------------
06/28/94 10,000 10,000
07/31/94 10,027 10,115
08/31/94 10,001 10,089
11/30/94 10,045 10,161
02/28/95 10,274 10,659
05/31/95 11,156 11,696
08/31/95 11,072 11,496
11/30/95 11,574 12,003
02/29/96 11,668 11,957
05/31/96 11,831 11,907
08/31/96 12,140 12,283
11/30/96 12,815 12,776
02/28/97 12,531 12,284
05/31/97 12,673 12,408
08/31/97 12,684 12,487
11/30/97 13,006 12,878
02/28/98 13,170 13,089
05/31/98 13,232 13,247
08/31/98 13,215 13,689
------------------------
AVERAGE ANNUAL
TOTAL RETURN (UNAUDITED)
------------------------
One Year 4.19%
Three Years 6.07%
From Inception 6.89%
------------------------
Note: Past performance is not predictive of future performance.
42
<PAGE>
BEA Strategic Global Fixed Income Fund
of The RBB Fund, Inc.
Schedule of Investments
August 31, 1998
Par
(000) Value
--------- --------
INTERNATIONAL BONDS -- 54.2%
Argentina -- 1.2%
Disco S.A.
144A Notes (Ba3, BB)
9.875% 05/15/08 ................................ $ 15 $ 10,913
Republic of Argentina
FRB (Ba3, BB)
6.625% 03/31/05 .............................. 124 80,275
Secured Par Bonds, Series L-GP
(Ba3, BB)
5.750% 11/30/98 .............................. 255 157,144
Yankee Spread Adjusted
Notes (Ba3, BB)
9.150% 11/30/02 .............................. 80 64,400
Structured Notes (Ba3, BB)
8.940% 04/10/05 .............................. 35 29,750
---------
342,482
---------
Brazil -- 1.0%
Banco Nacional de Desenvolvimento
Economico e Social
144A Structured Notes (B1, BB-)
10.800% 06/16/08 ............................... 45 43,987
Cia. Petroleo Ipiranga S.A.
Sr. Notes (NR, NR)
10.625% 02/25/02 ............................... 65 52,000
Federal Republic of Brazil
Global Bonds (B2, BB-)
9.375% 04/07/08 ................................ 65 39,081
MYDFA Trust Certificates
(NR, NR)
6.563% 09/15/07 ................................ 235 126,226
Globo Comunicacoes e Participacoes S.A.
144A Sr. Notes (B2, BB-)
10.625% 12/05/08 ................................ 45 30,488
---------
291,782
---------
Bulgaria -- 0.4%
Republic of Bulgaria
Discount FRN, Series A (B2, NR)
6.688% 07/28/24 ................................. 205 113,775
---------
Canada -- 1.2%
Government of Canada
Debentures (Aa1, AAA)
5.500% 02/01/00 ................................. CND 250 159,174
7.000% 12/01/06 ................................. 250 173,395
---------
332,569
---------
Colombia -- 0.7%
Republic of Colombia
Global Bonds (Baa3, BBB-)
8.625% 04/01/08 $ 210 163,800
Yankee Notes (Baa3, BBB-)
8.820% 08/13/05 .............................. 40 34,990
---------
198,790
---------
Finland -- 0.2%
Okobank Perpetual Medium Term
FRN (A3, NR)
6.188%+++ ....................................... 60 58,800
---------
France -- 3.6%
Cie. Financiere de Paribas
Sub. Notes (A3, A-)
6.950% 07/22/13 ................................. 100 101,500
Credit Lyonnais
Perpetual Sub. VRN,
Rule 144A (Baa2, NR)
6.750%+++ ....................................... 90 85,950
L'Auxiliare du Credit Foncier de
France Gtd. Notes (Baa3, NR)
5.582% 09/25/02 ................................. 125 120,787
Republic of France
Treasury Bonds (Aaa, NR)
7.500% 04/25/05 ................................. FRF 3,600 728,832
----------
1,037,069
----------
Germany -- 17.2%
Federal Republic of Germany
Eurobonds (Aaa, NR)
6.000% 02/16/06 ................................. DEM 2,630 1,664,489
6.000% 07/04/07 ................................. 5,000 3,221,133
----------
4,885,622
----------
Japan -- 0.3%
Fuji Finance (Cayman) Ltd.
Perpetual Sub. FRN (Ba1, NR)
6.550% $ 70 50,400
Perpetual Gtd. Medium Term
Notes (A3, NR)
7.300%......................................... 50 36,000
----------
86,400
----------
Kazakhstan -- 0.0%
Kazkommerts International BV
144A Gtd. Notes (B2, B+)
11.250% 05/08/01 ................................ 10 5,000
----------
Mexico -- 0.8%
Fifth Mexican Acceptance Corp.
Rule 144A Gtd. Notes (NR, NR)
8.000% 12/15/98 ................................. 500 141,600
Grupo Transportacion Ferroviaria
Mexicana S.A. de C.V. Yankee
Gtd. Sr. Discount Notes
(B2, B+)
0.000% 06/15/07 ................................. 30 16,050
United Mexican States
Sr. Notes
(Ba2, BB)
8.625% 03/12/08 ................................. 83 64,792
----------
222,442
----------
See Accompanying Notes to Financial Statements.
43
<PAGE>
BEA Strategic Global Fixed Income Fund (Continued)
<TABLE>
<CAPTION>
Par
(000) Value
------ ----------
<S> <C> <C> <C>
Netherlands -- 4.3%
Kingdom of the Netherlands
Government Bonds (Aaa, NR)
5.750% 01/15/04 .................................. NLG 2,250 $ 1,223,311
-----------
New Zealand -- 2.7%
Government of New Zealand
Bonds (Aaa, AAA)
8.000% 02/15/01 .................................. NZD 1,000 511,149
8.000% 04/15/04 .................................. 500 264,640
-----------
775,789
-----------
Norway -- 0.2%
Petroleum Geo-Services ASA
Yankee Senior Notes
(Baa3, BBB)
7.125% 03/30/28 .................................. $ 60 60,300
-----------
Poland -- 1.5%
Republic of Poland
Past Due Interest Bonds
(Baa3, BBB-)
4.000% 10/27/14 ................................ 445 346,487
RSTA Bonds
(Baa3, BBB-)
3.750% 10/27/98 ................................ 45 31,725
Par Bonds (Baa3, BBB-)
3.000% 10/27/24 ................................ 95 58,425
-----------
436,637
-----------
Russia -- 0.5%
AO Sibneft
144A Loan Participation
Notes (NR, NR)
9.688% 08/15/00 .................................. 250 94,080
Russian Federation, Ministry of
Finance 144A Bonds (B3, CCC-)
12.750% 06/24/28 ................................. 20 5,000
Bank of Foreign Economic Affairs
of the USSR (Vneshekonombank)
Debentures Series 19 Year FRB
(Ca, NR)
6.625% 12/15/15 .................................. 205 33,515
-----------
132,595
-----------
Supranational -- 7.0%
European Investment Bank
Eurobonds (Aaa, AAA)
5.000% 04/15/08 .................................. ITL 1,000,000 589,552
International Bank for
Reconstruction & Development
Japanese Yen Global Bonds
(Aaa, AAA)
5.250% 03/20/02 .................................. JPY 170,000 1,392,937
-----------
1,982,489
-----------
Sweden -- 1.4%
ForeningsSparbanken AB
Perpetual Sub. FRN (A3, NR)
7.500%+++......................................... $ 40 $ 42,176
Skandinaviska Enskilda Banken AB
Perpetual Sub. FRN
(NR, NR)
7.500%+++......................................... 350 357,903
-----------
400,079
-----------
United Kingdom -- 10.0%
U.K. Treasury
Gilt Bonds (Aaa, NR)
7.500% 12/07/06 .................................. GBP 1,500 2,853,208
-----------
TOTAL INTERNATIONAL BONDS
(Cost $15,896,418) ............................... 15,439,139
-----------
DOMESTIC BONDS -- 50.5%
CORPORATE BONDS -- 19.2%
Banking -- 1.5%
Chase Manhattan Corp.
Sub. Notes (A1, A)
6.375% 04/01/08 .................................. $ 85 85,850
First Republic Bank
Sub. Notes (NR, BB+)
7.750% 09/15/12 .................................. 200 211,500
National Westminster Bank
Gtd. Capital Notes (Aa3, AA-)
9.375% 11/15/03 .................................. 15 17,363
Sovereign Bancorp
Sr. Notes (NR, BBB-)
6.750% 07/01/00 .................................. 115 116,006
-----------
430,719
-----------
Broadcasting -- 0.2%
Fox/Liberty Networks L.L.C.,
Sr. Discount Notes (B1, B)
9.750% 08/15/07 ................................ 15 9,150
Sr. Notes (B1, B)
8.875% 08/15/07 ................................ 45 42,413
-----------
51,563
-----------
Cable -- 0.2%
CSC Holdings, Inc.
Sr. Notes (Ba2, BB+)
7.875% 12/15/07 .................................. 40 40,250
Diamond Cable Communications plc
144A Yankee Sr. Discount
Notes (Caa1, B-)
10.750% 02/15/07 ................................. 25 18,719
-----------
58,969
-----------
Electronics -- 0.3%
Seagate Technology, Inc.
Sr. Debentures (Baa3, BBB)
7.450% 03/01/37 .................................. 90 91,013
-----------
</TABLE>
See Accompanying Notes to Financial Statements.
44
<PAGE>
BEA Strategic Global Fixed Income Fund (Continued)
Par
(000) Value
---------- ----------
Entertainment -- 2.0%
Time Warner, Inc.
Debentures (Baa3, BBB-)
8.050% 01/15/16 ....................... $ 140 $ 154,525
Debentures (Ba1, BBB-)
6.850% 01/15/26 ....................... 400 415,500
----------
570,025
----------
Financial Services -- 3.9%
AT&T Capital Corp. Medium
Term Notes Series 4
(Baa3, BBB)
6.920% 04/29/99 ......................... 320 322,157
BellSouth Capital Funding Corp.
Debentures (Aa1, AAA)
6.040% 11/15/26 ......................... 340 350,200
First Nationwide (Parent)
Holdings, Inc.
Sr. Notes (Ba3, B)
12.500% 04/15/03 ........................ 170 190,825
General Motors Acceptance Corp.
Medium Term Notes (A2, A)
6.210% 09/19/00 ......................... 240 243,000
----------
1,106,182
----------
Health Care -- 1.5%
Columbia/HCA Healthcare Corp.
Debentures (Ba2, BBB)
8.360% 04/15/24 ......................... 55 54,685
Merck & Co., Inc. Medium
Term Notes, Series B
(Aaa, AAA)
5.760% 05/03/37 ......................... 370 380,175
----------
434,860
----------
Industrial Goods & Materials -- 0.3%
Dresser Industries, Inc.
Debentures (Aa3, A)
7.600% 08/15/45 ......................... 70 82,338
----------
Real Estate -- 1.4%
EOP Operating L.P.
Notes (Baa1, BBB)
6.375% 02/15/03 ......................... 100 101,000
Health and Retirement Properties
Trust Remarketed Reset Notes
(Baa2, BBB)
6.288% 07/09/07 ......................... 310 308,838
----------
409,838
----------
Retail -- 1.0%
KMart Corp.
Medium Term Notes, Series C
(Ba2, BB)
7.820% 01/02/02 ....................... $ 100 $ 99,250
7.840% 01/02/02 ....................... 100 99,375
Series D (Ba2, BB)
7.770% 07/02/02 ....................... 100 99,125
----------
297,750
----------
Telecommunications -- 2.2%
CenCall Communications Corp.
Sr. Discount Notes (B2, CCC+)
10.125% 01/15/04 ........................ 15 15,150
CS Wireless Systems, Inc.
Sr. Discount Notes Series B
(Ca, C)
11.375% 03/01/06 ........................ 70 16,800
GTE Corp.
Debentures (Baa1, A)
6.840% 04/15/18 ......................... 225 230,063
MCI Communications Corp.
Sr. Notes (Baa2, BBB+)
6.125% 04/15/12 ......................... 45 45,169
Nextel Communications Inc.
Sr. Serial Redeemable Discount
Notes (B2, CCC+)
10.650% 09/15/07 ........................ 210 127,838
Tele-Communications Inc.
Medium Term Notes
(Ba2, BB+)
6.340% 02/01/02 ......................... 55 55,825
Wireless One, Inc.
Sr. Discount Notes (Ca, CCC+)
13.500% 08/01/06 ........................ 45 4,500
Worldcom Inc.,
Notes (Baa2, BBB+)
6.950% 08/15/28 ......................... 85 83,300
----------
578,645
----------
Transportation -- 1.7%
Continental Airlines, Inc.
Sr. Notes (Ba2, B+)
9.500% 12/15/01 ......................... 120 124,200
Norfolk Southern Corp.
Notes (Baa1, BBB+)
7.050% 05/01/37 ......................... 75 81,375
Northwest Airlines, Inc.
Gtd. Notes (Ba2, BB)
7.625% 03/15/05 ......................... 230 234,888
US Air, Inc.
Gtd. Sr. Notes (B1, B)
9.625% 02/01/01 ......................... 50 51,875
--------
492,338
--------
See Accompanying Notes to Financial Statements.
45
<PAGE>
BEA Strategic Global Fixed Income Fund (Continued)
Par
(000) Value
---------- ----------
Utilities -- 3.0%
Beaver Valley Funding Corp.
Secured Lease Obligation
Bonds (Ba3, BB-)
9.000% 06/01/17 ............................... $ 150 $ 171,188
Connecticut Light and Power Co.
First and Ref. Mortgage Bonds,
Series 97C (Ba2, BB)
7.750% 06/01/02 ............................. 75 78,094
First and Ref. Mortgage Bonds,
Series D (Ba2, BB)
7.875% 10/01/24 ............................. 40 42,100
Long Island Lighting Co.
Debentures (Baa3, A-)
8.900% 07/15/19 ............................... 70 74,288
9.000% 11/01/22 ............................... 145 166,750
Niagara Mohawk Power Corp.
First Mortgage Bonds
(Ba1, BBB-)
8.750% 04/01/22 ............................... 185 200,031
North Atlantic Energy Corp.
Secured First Mortgage Notes,
Series A (B1, B+)
9.050% 06/01/02 ............................... 130 131,950
----------
864,401
----------
TOTAL CORPORATE BONDS
(Cost $5,888,197) ............................. 5,468,641
----------
MUNICIPAL BONDS -- 1.7%
Illinois State G.O.
(MBIA Insured) (Aaa, AAA)
4.750% 06/01/23 ............................... 15 14,381
Jacksonville, Florida Electric
Authority Electric Revenue
Bond Series 3-A (Aa2, AA)
5.000% 10/01/23 ............................... 20 19,850
Massachusetts State Water
Resources Authority, General
Revenue Bonds Series A
(FSA Insured) (Aaa, AAA)
4.750% 08/01/27 ............................... 25 23,844
Massachussetts Bay Transportation
Authority General Transportation
Systems Revenue Bonds Series A
(MBIA Insured) (Aaa, AAA)
4.750% 03/01/21 ............................... 35 33,556
Municipal Electric Authority of
Georgia Project One Sub. Lien
Revenue Bonds, Series A
(Aaa, AAA)
5.000% 01/01/26 ............................... 260 258,375
New Jersey Economic
Development Authority, Pension
Funding Revenue Bonds, Series A
(MBIA Insured) (Aaa, AAA)
7.425% 02/15/29 ............................... $ 105 $ 124,307
New York City Municipal Water
Finance Authority, Water and
Sewer Systems Revenue Bonds
Series D (FGIC TCRS Insured)
(Aaa, AAA)
4.750% 06/15/25 ............................... 10 9,638
----------
TOTAL MUNICIPAL BONDS
(Cost $460,940) ............................... 483,951
----------
ASSET BACKED SECURITIES -- 3.8%
ContiMortgage Home Equity
Loan Trust Home Equity Loan
Certificates Series
1996-4, Class A8 (Aaa, AAA)
7.220% 01/15/28 ............................. 10 10,736
Series 1998-1,
Class A5 (Aaa, AAA)
6.430% 04/15/16 ............................. 70 72,414
Fleetwood Credit Corp. Grantor
Trust, RV Retail Installment Sales
Contracts, Series 1997-B,
Class A (Aaa, AAA)
6.400% 05/15/13 ............................... 207 209,145
Green Tree Financial Corp.
Manufactured Housing Retail
Installment Sales Contracts,
Series 1997-6 Class A3
(NR, AAA)
6.320% 01/15/29 ............................... 190 192,375
Series 1998-4 Class A3
(Aaa, NR)
5.980% 08/01/08 ............................... 120 120,375
Green Tree Home Equity Loan
Trust, Home Equity Loan
Certificates Series 1998-C,
Class A2 (NR, AAA)
6.030% 07/15/29 ............................... 100 100,172
Green Tree Recreational,
Equipment & Consumer Trust,
Consumer Products & Equipment
Retail Installment Sales Contracts
Series 1998-B, Class A-3
(NR, AAA)
6.050% 10/15/10 ............................... 15 15,176
See Accompanying Notes to Financial Statements.
46
<PAGE>
BEA Strategic Global Fixed Income Fund (Continued)
Par
(000) Value
---------- -----------
ASSET BACKED SECURITIES -- (continued)
Green Tree Recreational,
Equipment and Consumer Trust,
Consumer Products & Equipment
Retail Installment Sales Contracts
Series 1997-C Class A1 (NR, AAA)
6.490% 02/15/18 ............................... $ 204 $ 210,354
IMC Home Equity Loan Trust,
Home Equity Loan Certificates
Series 1998-3, Class A3
(Aaa, AAA)
6.160% 05/20/14 ............................... 35 35,027
New Century Home Equity Loan
Trust Mortgage Loan Certificates
Series 1997-NC6, Class A4
(Aaa, AAA)
6.730% 07/25/22 ............................... 20 20,617
Southern Pacific Secured Assets
Corp. Mortgage Loan Certificates
Series 1998-1, Class A2
(Aaa, AAA)
6.270% 02/15/18 ............................... 80 80,400
UCFC Acceptance Corp. Home
Equity Loan Certificates,
Series 1996-B1, Class A7
(Aaa, AAA)
8.200% 09/15/27 ............................... 25 26,916
-----------
TOTAL ASSET BACKED
SECURITIES
(Cost $950,870) ............................... 1,093,707
-----------
COLLATERALIZED MORTGAGE
BACKED SECURITIES -- 0.6%
Asset Securitization Corp.
Series 1997-D5, Class A1D
(Aaa, AAA)
6.850% 02/14/41 ............................... 130 136,175
General Motors Acceptance Corp.
Commercial Mortgage
Securities, Inc. Series 1997-C1
Class A2 (Aaa, AAA)
6.853% 09/15/06 ............................... 20 20,781
-----------
TOTAL COLLATERALIZED
MORTGAGE BACKED
SECURITIES
(Cost $279,161) ............................... 156,956
-----------
AGENCY OBLIGATIONS -- 14.6%
Federal Home Loan Mortgage Corporation -- 5.4%
Various Pools:
7.000% 12/01/09 ................................ 389 397,464
15-Year Gtd. TBA 08/01/12 ....................... 605 615,209
6.500% 01/01/13 ................................ 500 506,562
-----------
1,519,235
-----------
Federal National Mortgage Association -- 9.2%
Various Pools:
15-Year TBA
7.000% 06/01/13 ................................ $ 50 $ 51,031
6.000% 08/01/13 ................................ 40 39,925
6.000% 08/01/13 ................................ 208 207,510
30-Year TBA
7.000% 12/31/25 ................................ 235 239,039
6.500% 09/01/27 ................................ 940 944,406
8.000% 06/01/28 ................................ 525 543,375
6.000% 04/01/28 ................................ 114 112,143
6.000% 03/01/28 ................................ 260 261,219
6.000% 08/01/28 ................................ 134 131,645
6.000% 08/01/28 ................................ 30 29,255
REMIC Series 1997-16 Class M
Principle Only (Aaa, AAA)
0.000% 02/25/23 ............................... 80 58,438
-----------
2,617,986
-----------
TOTAL AGENCY OBLIGATIONS
(Cost $4,096,519) ............................. 4,137,221
-----------
U.S. TREASURY OBLIGATIONS -- 10.6%
U.S. Treasury Bills -- 0.1%
4.990% 09/24/98 ................................ 30 29,904
------------
U.S. Treasury Bonds --6.2%
6.875% 08/15/25 ................................ 1,485 1,779,693
-----------
U.S. Treasury Notes -- 4.3%
5.375% 02/15/01 ................................ 435 438,911
6.250% 06/30/02 ................................ 195 203,106
6.250% 02/15/07 ................................ 540 580,665
-----------
1,222,682
-----------
TOTAL U.S. TREASURY
OBLIGATIONS
(Cost $2,893,330) ............................. 3,032,279
-----------
TOTAL DOMESTIC BONDS
(Cost $14,569,017) ............................ 14,372,755
-----------
SHORT-TERM INVESTMENTS -- 0.3%
BBH Grand Cayman U.S.
Dollar Time Deposit
4.938% 09/01/98 ........................,...... 106 106,000
-----------
TOTAL SHORT-TERM
INVESTMENTS
(Cost $106,000) ............................... 106,000
-----------
See Accompanying Notes to Financial Statements.
47
<PAGE>
BEA Strategic Global Fixed Income Fund (Concluded)
Par
(000) Value
---------- ----------
TOTAL INVESTMENTS -- 105.0%
(Cost $30,571,435) ................................. 29,917,894
------------
OTHER LIABILITIES IN EXCESS
OF ASSETS -- (5.0%) ........................... (1,434,510)
------------
TOTAL NET ASSETS -- 100.0% ...................... $ 28,483,384
============
* Also cost for Federal income tax purposes at August 31, 1998 is
$30,580,634. The gross appreciation (depreciation) on a tax basis is
as follows:
Gross Appreciation ................................ $113,330
Gross Depreciation ................................ (776,070)
---------
Net Appreciation.................................... $(662,740)
=========
*** Non-income producing securities which are in default.
+ Variable rate obligations -- The interest shown is the rate as of
August 31, 1998.
++ Step Bond -- The interest rate as of August 31, 1998 is 0% and will reset
to interest rate shown at a future date.
+++ Securities have no stated maturity date.
++++ Guaranteed by Grupo Sidek, S.A. de C.V. and Grupo Situr S.A. de C.V.
(a) With additional 750,000 rights attached, expiring 06/03/2006, with no
market value.
The Moody's Investors Service, Inc. and Standard & Poor's Ratings Group ratings
indicated are the most recent rating available at August 31, 1998 and are
unaudited.
CURRENCY ABBREVIATIONS
CND .......................................................Canadian Dollars
DEM .......................................................German Deutschmarks
FRF .......................................................French Francs
GBP .......................................................United Kingdom Pounds
ITL .......................................................Italian Lira
JPY .......................................................Japanese Yen
NLG .......................................................Netherland Guilder
NZD .......................................................New Zealand Dollar
INVESTMENT ABBREVIATIONS
FRB .......................................................Floating Rate Bond
FRN .......................................................Floating Rate Note
See Accompanying Notes to Financial Statements.
48
<PAGE>
BEA Strategic Global Fixed Income Fund
of The RBB Fund, Inc.
Statement of Assets and Liabilities
August 31, 1998
ASSETS
Investments at value (Cost $30,571,435) ..................... $ 29,917,894
Interest receivable ......................................... 773,839
Investments sold receivable ................................. 702,435
Prepaid expenses ............................................ 33,801
Other assets ................................................ 942,409
------------
Total Assets .............................................. 32,370,378
LIABILITIES
Investments purchased payable ............................... 3,655,374
Forward currency contracts payable .......................... 205,094
Accrued expenses payable .................................... 17,901
Futures margin payable ...................................... 8,625
------------
Total Liabilities ......................................... 3,886,994
NET ASSETS (Applicable to 1,886,423 BEA Institutional Shares) .. $ 28,483,384
============
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE
PER BEA INSTITUTIONAL SHARE ($28,483,384
divided by 1,886,423) ....................................... $ 15.10
============
NET ASSETS CONSISTED OF:
Capital Paid-In ............................................. $ 29,133,251
Accumulated Net Investment Loss ............................. (525,810)
Accumulated Net Realized Gain on
Security and Foreign Exchange Transactions ................ 754,133
Net Unrealized Depreciation on
Investments and Other ..................................... (878,190)
------------
NET ASSETS ..................................................... $ 28,483,384
============
See Accompanying Notes to Financial Statements.
49
<PAGE>
BEA High Yield Fund
Portfolio Managers' Letter
September 24, 1998
Dear Shareholders:
We are pleased to report on the results of the BEA High Yield Fund (the "Fund")
for the fiscal year ended August 31, 1998.
At August 31, 1998, the net asset value ("NAV") of the Fund's Institutional
Class was $16.60, compared to an NAV of $17.08 on August 31, 1997. As a result,
the Institutional Class's total return (assuming reinvestment of dividends of
$1.4246 per share) was 5.48%. By comparison, the Credit Suisse First Boston High
Yield Index (the "Index") gained 1.46% during the same period.
The NAV of the Fund's Advisor Class was $16.62 on August 31, 1998, compared to
an NAV of $17.08 on August 31, 1997. As a result, the Advisor Class's total
return (assuming reinvestment of dividends of $1.3694 per share) was 5.27%
versus 1.46% for the Index.
The Fund outperformed the Credit Suisse First Boston benchmark over the 12-month
period due to the same factors that drove outperformance in the fiscal year's
first half:
o Overweight in telecommunications. We continue to like telecom because of
its potential consolidation opportunities and attractive growth prospects.
As has been the case for some time now, it is the portfolio's most heavily
weighted sector and one of its most heavily overweighted sectors relative
to the benchmark. The Fund thus benefited disproportionately from the
announced mergers of WorldCom with MCI and AT&T with Tele-Communications.
o Overweight in gaming. Consolidation activity remains the prime attraction
for investors in gaming. Our overweight left the Fund well positioned when
several deals were announced, such as Hilton's acquisition of Grand
Casinos.
o Underweight in energy. Prices for the world's major commodities,
including oil and gas, have been battered as a result of the severe
economic crisis in Asia. We avoided much of the decline in energy-related
securities by keeping a low presence in the sector and concentrating on
energy service companies.
o Domestic focus. Events in Asia had little impact on the Fund, as our
largest sector weightings--which account for about half of total
assets--were almost exclusively focused on the domestic U.S. market. The
portfolio also had relatively low exposure to steel, paper and chemicals,
which are the high yield market's cyclical industry groups most negatively
affected by the Asian turmoil.
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 K. Dudley, Senior Vice President
Marianne Rossi, CFA, Senior Vice President
Mary Ann Thomas, CFA, Senior Vice President
John M. Tobin, CFA, Senior Vice President
50
<PAGE>
BEA High Yield Fund
Portfolio Managers' 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. (Unaudited)
[GRAPHIC]
In the printed version of the document, a line graph appears which depicts the
following plot points:
BEA HIGH CS FIRST
YIELD FUND BOSTON HIGH
INSTITUTIONAL YIELD
CLASS INDEX
------------- -----------
3/1/93 10,000 10,000
5/31/93 10,607 10,419
8/31/93 11,294 10,809
11/30/93 11,872 11,209
2/28/94 12,128 11,570
5/31/94 11,484 11,143
8/31/94 11,539 11,201
11/30/94 11,449 11,123
2/28/95 10,961 11,638
5/31/95 12,010 12,370
8/31/95 12,439 12,680
11/30/95 12,784 13,029
2/29/96 13,665 13,516
5/31/96 13,990 13,662
8/31/96 13,984 13,965
11/30/96 14,571 14,547
2/28/97 15,190 15,219
5/31/97 15,350 15,488
8/31/97 16,105 16,119
11/30/97 16,653 16,553
2/28/98 17,514 17,120
5/31/98 17,845 17,387
8/31/98 16,988 16,354
------------------------------
AVERAGE ANNUAL
TOTAL RETURN (UNAUDITED)
One Year 5.48%
Three Years 10.95%
Five Years 8.52%
From Inception 10.11%
------------------------------
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. (Unaudited)
[GRAPHIC]
In the printed version of the document, a line graph appears which depicts the
following plot points:
BEA HIGH CS FIRST
YIELD FUND BOSTON HIGH
ADVISOR YIELD
CLASS INDEX
---------- -----------
11/1/96 10,000 10,000
11/30/96 10,110 10,156
2/28/97 10,541 10,625
5/31/97 10,646 10,813
8/31/97 11,164 11,253
11/30/97 11,523 11,556
2/28/98 12,114 11,952
5/31/98 12,333 12,138
8/31/98 11,752 11,417
------------------------------
AVERAGE ANNUAL
TOTAL RETURN (UNAUDITED)
One Year 5.27%
From Inception 9.13%
------------------------------
Note: Past performance is not predictive of future performance.
51
<PAGE>
BEA High Yield Fund
of The RBB Fund, Inc.
Statement of Net Assets
August 31, 1998
Par
(000) Value
----------- ----------
CORPORATE BONDS -- 91.6%
Aerospace/Defense -- 0.5%
K&F Industries, Inc. Sr. Sub.
Notes, Series B (B3, B-)
9.250% 10/15/07 ......................... $ 500 $ 495,000
----------
Automotive -- 4.5%
Aetna Industries, Inc.
Sr. Notes (B3, B-)
11.875% 10/01/06 ........................ 500 528,125
Cambridge Industries, Inc.
Gtd. Sr. Sub. Notes, Series B
(B3, B-)
10.250% 07/15/07 ........................ 400 404,000
Collins & Aikman Products Co.
Gtd. Sr. Sub. Notes (B2, B)
11.500% 04/15/06 ........................ 450 488,812
Consorcio G Grupo Dina S.A.
de C.V./MCII Holdings
(U.S.A.), Inc. Sr. Secured
Discount Exchange Notes
(NR, NR)
9.875% 11/15/02 ......................... 500 476,875
Delco Remy International, Inc.
Gtd. Sr. Sub. Notes (B2, B)
10.625% 08/01/06 ........................ 500 530,000
Hayes Wheels International, Inc.
Gtd. Sr. Sub. Notes, Series B
(B2, B)
9.125% 07/15/07 ......................... 350 336,875
LDM Technologies, Inc.
Gtd. Sr. Sub. Notes, Series B
(B3, B-)
10.750% 01/05/07 ........................ 400 406,500
Oxford Automotive, Inc.
Gtd. Sr. Sub. Notes, Series B
(Caa1, B-)
10.125% 06/15/07 ........................ 300 302,250
Oxford Automotive, Inc.
144A Gtd. Sr. Sub. Notes
(Caa1, B-)
10.125% 06/15/07 ........................ 200 201,500
Safelite Glass Corp.
144A Sr. Sub. Notes (B3, B)
9.875% 12/15/06 ......................... 350 357,875
Titan Wheel International, Inc.
Sr. Sub. Notes (B1, BB-)
8.750% 04/01/07 ......................... 250 246,562
----------
4,279,374
----------
Broadcasting -- 5.1%
Allbritton Communications
Company
Sr. Sub. Notes,
Series B (B3, B-)
8.875% 02/01/08 ..................... 250 256,250
Sr. Sub. Debentures,
Series B (B3, B-)
9.750% 11/30/07 ..................... 250 263,750
Par
(000) Value
----------- ----------
Broadcasting -- (continued)
American Radio Systems Corp.
Gtd. Sr. Sub. Notes (B2, BB-)
9.000% 02/01/06 ......................... $ 250 $ 262,812
Australis Holdings Pty. Ltd.
Yankee Sr. Secured
Discount Notes (NR, D)
15.000% 11/01/02+ ....................... 294 14,700
Australis Media Ltd.
Yankee Units (C, D)
15.750% 05/15/03+ ....................... 8 120
15.750% 05/15/03+ ....................... 900 13,500
Capstar Broadcasting Partners, Inc.
Sr. Discount Notes (NR, B-)
12.750% 02/01/09+ ....................... 500 376,875
Chancellor Media Corp.
Gtd. Sr. Sub. Notes (B2, B)
9.375% 10/01/04 ......................... 250 253,750
EchoStar Communications Corp.
Gtd. Sr. Discount Notes (B2, B-)
12.875% 06/01/04+ ....................... 350 335,125
Granite Broadcasting Corp.
Sr. Sub. Notes (B3, B-)
9.375% 12/01/05 ....................... 450 456,187
144A Sr. Sub. Notes, Series A
(B3, B-)
8.875% 05/15/08 ....................... 250 237,500
Jacor Communications Co.
Gtd. Sr. Sub. Notes (B2, B)
9.750% 12/15/06 ......................... 250 271,875
Pegasus Communications Corp.
Sr. Notes, Series B (B3, B-)
9.625% 10/15/05 ......................... 250 248,125
Sinclair Broadcast Group
Sr. Sub. Notes (B2, B)
10.000% 09/30/05 ........................ 400 420,500
Spanish Broadcasting System, Inc.
Gtd. Sr. Notes Series B (B2, B)
11.000% 03/15/04 ........................ 300 315,750
TCI Satellite Entertainment, Inc.
144A Sr. Sub. Discount Notes
(Caa1, B)
12.250% 02/15/07+ ..................... 200 126,000
144A Sr. Sub. Notes (Caa1, B)
10.875% 02/15/07 ...................... 450 418,500
United International Holdings Inc.
Sr. Secured Discount Notes,
Series B (B3, B)
10.750% 02/15/08+ ....................... 600 282,000
Young Broadcasting, Inc.
Gtd. Sr. Sub. Notes, Series B
(B2, B)
9.000% 01/15/06 ......................... 250 259,375
----------
4,812,694
----------
See Accompanying Notes to Financial Statements.
52
<PAGE>
BEA High Yield Fund (Continued)
Par
(000) Value
-------- -----------
Business Services -- 0.9%
Iron Mountain, Inc.
144A Sr. Sub. Notes (B3, B-)
8.750% 09/30/09 ......................... $ 500 $ 483,750
U.S. Office Products Company
144A Gtd. Sr. Sub. Notes
(B3, B-)
9.750% 06/15/08 ......................... 400 339,000
-----------
822,750
-----------
Cable -- 11.0%
Adelphia Communications Corp.
Sr. Notes, Series B (B2, NR)
10.500% 07/15/04 ........................ 400 431,000
Century Communications Corp.
Sr. Discount Notes, Series B
(Ba3, BB-)
0.000% 01/15/08 ......................... 800 363,000
Charter Communications
Southeast, L.P.
Sr. Notes, Series B (B3, B)
11.250% 03/15/06 ........................ 900 996,750
Comcast U.K. Cable Partners Ltd.
Yankee Sr. Debentures (B2, B-)
11.200% 11/15/07 ........................ 750 622,500
CSC Holdings, Inc.
Sr. Debentures (B1, BB-)
9.875% 02/15/13 ......................... 500 545,000
Diamond Cable
Communications Plc, Yankee Sr
Discount Notes (Caa1, B-)
11.750% 12/15/05+ ....................... 500 410,000
DIVA Systems Corp.
Units (NR, NR)
13.000% 03/01/08+ ....................... 2,527 909,720
Falcon Holding Group L.P./
Falcon Funding Corp.
144A Sr. Debentures (B2, B)
9.285% 04/15/10 ..................... 500 317,500
144A Sr. Discount Debentures
(B2, B)
8.375% 04/15/10 ..................... 250 243,750
Helicon Group L.P.
Sr. Secured Notes, Series B
(B1, B)
11.000% 11/01/03 ........................ 500 529,375
James Cable Partners L.P./
James Cable Finance Corp.
Gtd. Sr. Notes, Series B (B2, B+)
10.750% 08/15/04 ........................ 500 510,000
Jones Intercable, Inc.
Notes (Ba2, BB+)
7.625% 04/15/08 ......................... 500 500,625
Lenfest Communications, Inc.
Sr. Notes (Ba3, BB+)
8.375% 11/01/05 ......................... 300 313,875
Par
(000) Value
-------- --------
Cable -- (continued)
Marcus Cable L.P.
Sr. Discount Notes (B3, B)
14.250% 12/15/05+ ....................... $ 650 $ 610,187
Northland Cable Television, Inc.
Gtd. Sr. Sub. Notes (B3, B-)
10.250% 11/15/07 ........................ 600 633,750
NTL, Inc.
Sr. Deferred Coupon Notes,
Series A (B3, B-)
11.000% 04/15/05+ ....................... 750 645,000
Rifkin Acquisition Partners L.P.
Sr. Sub. Notes (B3, B-)
11.125% 01/15/06 ........................ 500 547,500
Rogers Communications, Inc.
Yankee Sr. Notes (B2, BB-)
9.125% 01/15/06 ......................... 550 544,500
Telewest Communications plc
Yankee Sub. Debentures
(B1, B+)
9.625% 10/01/06 ....................... 250 246,250
Yankee Sr. Discount
Debentures (B1, B+)
11.000% 10/01/07+ ..................... 600 474,000
-----------
10,394,282
-----------
Cellular/Wireless Communications -- 4.4%
Advanced Radio
Telecommunications Corp.
Sr. Notes (Caa2, CCC)
14.000% 02/15/07 ........................ 500 402,500
Clearnet Communications, Inc.
Yankee Sr. Discount Notes
(B3, NR)
14.750% 12/15/05+ ....................... 500 400,000
Comcast Cellular Holdings, Inc.
Sr. Notes, Series B (Ba3, BB+)
9.500% 05/01/07+ ........................ 400 388,500
Dobson Communications Corp.
144A Sr. Notes (NR, NR)
11.750% 04/15/07 ........................ 250 264,062
Iridium Operating L.L.C./Iridium
Capital Corp.
Gtd. Sr. Notes, Series C/EN
(B3, B-)
11.250% 07/15/05 ........................ 350 287,000
McCaw International, Ltd.
Sr. Discount Notes (Caa1, CCC+)
13.000% 04/15/07 ........................ 500 295,625
Microcell Telecommunications Inc.
Yankee Sr. Discount Notes,
Series B (B3, NR)
14.000% 06/01/06 ........................ 500 335,625
Nextel Communications, Inc.
Sr. Discount Notes (B2, CCC+)
9.750% 08/15/04+ ........................ 500 485,625
See Accompanying Notes to Financial Statements.
53
<PAGE>
BEA High Yield Fund (Continued)
Par
(000) Value
---------- ----------
Cellular/Wireless Communications -- (continued)
Price Communications Wireless, Inc.
Sr. Sub. Notes, Series B (B3, CCC)
11.750% 07/15/07 ........................ $ 250 $ 267,813
Price Communications Cellular
Holdings, Inc.
Sr. Exchangeable PIK Notes
(Caa1, NR)
11.250% 08/15/08 ........................ 250 252,500
Sprint Spectrum L.P./
Sprint Spectrum Finance Corp.
Sr. Notes (Ba2, B+)
11.000% 08/15/06 ........................ 500 563,125
Vanguard Cellular Systems, Inc.
Sr. Debentures (B1, B+)
9.375% 04/15/06 ......................... 250 261,250
----------
4,203,625
----------
Chemicals -- 1.7%
ClimaChem, Inc.
Gtd. Sr. Notes, Series B (B3, B)
10.750% 12/01/07 ........................ 500 511,250
Pioneer Americas Acquisition Corp.
Gtd. Sr. Secured Notes Series B
(NR, B+)
9.250% 06/15/07 ......................... 250 219,375
Radnor Holdings Corp.
Gtd. Sr. Notes, Series B (B2, BB-)
10.000% 12/01/03 ........................ 500 506,875
Sterling Chemical Holdings, Inc.
Sr. Secured Discount Notes
(Caa1, B+)
13.500% 08/15/08+ ....................... 700 350,000
----------
1,587,500
----------
Computers, Software & Services -- 0.6%
Verio, Inc.
144A Units (B3, NR)
13.500% 06/15/04 ...................... 350 388,500
144A Sr. Notes (B3, B-)
10.375% 04/01/05 ...................... 200 205,000
----------
593,500
----------
Construction & Building Materials -- 2.1%
Koppers Industries, Inc.
Sr. Sub. Notes (B2, B-)
9.875% 12/01/07 ......................... 500 504,375
Omega Cabinets, Ltd.
Sr. Sub. Notes (B3, NR)
10.500% 06/15/07 ........................ 400 398,500
Southdown, Inc.
Sr. Sub. Notes, Series B
(Baa3, BBB-)
10.000% 03/01/06 ........................ 500 543,125
Par
(000) Value
---------- ----------
Construction & Building Materials -- (continued)
Waxman Industries, Inc. ...................
Sr. Notes, Series B (Caa1, CCC+)
12.750% 06/01/04+ ....................... $ 600 $ 564,000
----------
2,010,000
----------
Consumer Products & Services -- 1.5%
Coinstar, Inc.
Sr. Discount Notes (NR, NR)
13.000% 10/01/06+ ....................... 525 428,531
Holmes Products Corp.
Gtd. Sr. Sub. Notes, Series B
(B3, B-)
9.875% 11/15/07 ......................... 250 252,500
Packaged Ice Inc.
144a Gtd. Sr. Notes (B3, B)
9.750% 02/01/05 ......................... 250 247,500
Signature Brands USA, Inc.
Sr. Sub. Notes (B3, B-)
13.000% 08/15/02 ........................ 250 279,687
Werner Holding Co., Inc.
Gtd. Sr. Sub. Notes,
Series A (B2, B-)
10.000% 11/15/07 ........................ 250 255,312
----------
1,463,530
----------
Electronics -- 0.9%
Elgar Holdings, Inc.
144A Gtd. Sr. Notes (B2, NR)
9.875% 02/01/08 ......................... 500 425,000
Unisys Corporation
Sr. Notes, Series B (Ba3, BB-)
12.000% 04/15/03 ........................ 400 447,500
----------
872,500
----------
Energy -- 3.6%
Bellwether Exploration Company
Gtd. Sr. Sub. Notes (B3, B-)
10.875% 04/01/07 ........................ 250 248,437
Cliffs Drilling Company
Gtd. Sr. Notes, Series D (B1, B+)
10.250% 05/15/03 ........................ 350 372,750
Dailey International Inc.
Gtd. Sr. Notes, Series B (B2, B-)
9.500% 02/15/08 ......................... 400 351,500
Forcenergy, Inc.
Sr. Sub. Notes (B2, B-)
9.500% 11/01/06 ......................... 250 234,687
HS Resources Inc.
Gtd. Sr. Sub. Notes (B2, B)
9.250% 11/15/06 ......................... 400 390,500
KCS Energy Inc.
Gtd. Sr. Sub. Notes (B3, B-)
8.875% 01/15/08 ......................... 250 200,000
Kelley Oil & Gas Corp.
Gtd. Sr. Sub. Notes, Series B
(B3, B-)
10.375% 10/15/06 ........................ 400 380,000
See Accompanying Notes to Financial Statements.
54
<PAGE>
BEA High Yield Fund (Continued)
Par
(000) Value
---------- ----------
Energy -- (continued)
Nuevo Energy Company
Gtd. Sr. Sub. Notes (B1, B+)
9.500% 04/15/06 ......................... $ 250 $ 242,500
Plains Resources, Inc.
Gtd. Sr. Sub. Notes,
Series B (B2, B-)
10.250% 03/15/06 ........................ 250 249,375
Pride Petroleum Services, Inc.
Sr. Notes (Ba3, BB)
9.375% 05/01/07 ......................... 300 298,875
Southwest Royalties, Inc.
Gtd. Sr. Notes, Series B (Caa2, B-)
10.500% 10/15/04 ........................ 300 225,000
Wiser Oil Co.
Gtd. Sr. Sub. Notes (B2, B-)
9.500% 05/15/07 ......................... 250 209,375
----------
3,402,999
----------
Entertainment -- 3.1%
American Skiing Co.
Sr. Sub. Notes, Series B
(B3, CCC+)
12.000% 07/15/06 ........................ 400 427,000
AMF Bowling Worldwide, Inc.
Gtd. Sr. Sub. Notes, Series B
(B2, B)
10.875% 03/15/06 ...................... 350 332,500
Gtd. Sr. Sub. Discount Notes,
Series B (B2, B)
12.250% 03/15/06 ...................... 459 312,120
Booth Creek Ski Holdings, Inc.
Gtd. Sr. Sub. Notes, Series B
(Caa1, B-)
12.500% 03/15/07 ........................ 400 401,000
Hollywood Theaters, Inc.
Gtd. Sr. Sub. Notes (B3, B-)
10.625% 08/01/07 ........................ 500 509,375
KSL Recreation Group, Inc.
Sr. Sub. Notes, Series B (B3, B-)
10.250% 05/01/07 ........................ 350 372,312
Premier Parks, Inc.
Sr. Notes (B3, B-)
9.250% 04/01/06 ....................... 250 235,000
Gtd. Sr. Notes (B1, B)
9.750% 01/15/07 ....................... 250 258,125
----------
2,847,432
----------
Financial Services -- 0.3%
Fifth Mexican Acceptance Corp.
144A Gtd. Notes (NR, NR)
8.000% 12/15/98 ......................... 1,040 294,528
----------
Food & Beverage -- 2.4%
AmeriServ Food Distribution, Inc.
Gtd. Sr. Notes (B1, B+)
8.875% 10/15/06 ......................... 500 466,875
Par
(000) Value
---------- ----------
Food & Beverage -- (continued)
Archibald Candy Corp.
Gtd. Sr. Secured Notes (B2, B)
10.250% 07/01/04 ........................ $ 300 $ 312,000
Delta Beverage Group, Inc.
Sr. Notes (B2, B+)
9.750% 12/15/03 ......................... 250 257,812
Eagle Family Foods, Inc.
Gtd. Sr. Sub. Notes, Series B
(B3, B-)
8.750% 01/15/08 ......................... 350 330,750
Fleming Companies, Inc.
Gtd. Sr. Sub. Notes, Series B
(B3, B+)
10.500% 12/01/04 ........................ 150 151,125
International Home Foods, Inc.
Gtd. Sr. Sub. Notes (B2, B-)
10.375% 11/01/06 ........................ 250 270,625
Premium Standard Farm Inc.
Sr. Secured Notes (NR, NR)
11.000% 09/17/03 ........................ 450 472,500
----------
2,261,687
----------
Health Care -- 2.8%
Beverly Enterprises, Inc.
Gtd. Sr. Notes (Ba3, B+)
9.000% 02/15/06 ......................... 400 395,500
InSight Health Services Corp.
144A Gtd. Sr. Sub. Notes (B3, B-)
9.625% 06/15/08 ......................... 400 387,000
Integrated Health Services, Inc.
Sr. Sub. Notes, Series A (B2, B-)
9.500% 09/15/07 ......................... 250 230,625
Mariner Health Group, Inc.
Sr. Sub. Notes, Series B (B2, B-)
9.500% 04/01/06 ......................... 250 258,750
Oxford Health Plans, Inc.
144A Sr. Notes (Caa1, B-)
11.000% 05/15/05 ........................ 400 328,000
Paracelsus Healthcare Corp.
Sr. Sub. Notes (B3, B-)
10.000% 08/15/06 ........................ 250 240,000
Quest Diagnostics, Inc.
Gtd. Sr. Sub. Notes (B2, B+)
10.750% 12/15/06 ........................ 500 548,125
Tenet Healthcare Corp.
Sr. Sub. Notes (Ba3, BB-)
8.625% 01/15/07 ......................... 250 258,125
----------
2,646,125
----------
Industrial Goods & Materials -- 2.4%
Anchor Lamina Inc./Anchor
Lamina America, Inc.
144A Sr. Sub. Notes (B3, B-)
9.875% 02/01/08 ......................... 500 477,500
See Accompanying Notes to Financial Statements.
55
<PAGE>
BEA High Yield Fund (Continued)
Par
(000) Value
---------- ----------
Industrial Goods & Materials -- (continued)
Derlan Manufacturing, Inc.
Yankee Sr. Notes (B3, B+)
10.000% 01/15/07 ........................ $ 250 $ 255,312
International Utility Structures Inc.
144A Sr. Sub. Notes (NR, NR)
13.000% 02/01/08 ........................ 350 360,500
Jordan Industries Inc.
Sr. Notes, Series B (B3, B+)
10.375% 08/01/07 ........................ 500 488,750
Morris Material Handling, Inc.
144A Gtd. Sr. Notes (B2, B)
9.500% 04/01/08 ......................... 400 339,000
Motors and Gears, Inc.
Sr. Notes, Series D (B3, B)
10.750% 11/15/06 ........................ 250 247,812
Thermadyne Holdings Corp.
144A Sr. Discount Debentures
(Caa1, CCC+)
12.500% 06/01/08+ ....................... 250 125,000
----------
2,293,874
----------
Metals & Mining -- 2.9%
Gulf States Steel, Inc.
First Mortgage Notes (B1, B-)
13.500% 04/15/03 ........................ 400 351,500
Haynes International, Inc.
Sr. Notes (B3, B-)
11.625% 09/01/04 ........................ 500 550,625
Ivaco, Inc.
Yankee Sr. Notes (B1, B+)
11.500% 09/15/05 ........................ 250 269,375
Metallurg, Inc.
Sr. Notes, Series B (B3, B-)
11.000% 12/01/07 ........................ 500 515,625
NS Group, Inc.
Gtd. Sr. Secured Notes (Ba2, B+)
13.500% 07/15/03 ........................ 240 261,300
Weirton Steel Corporation
Sr. Notes (B2, B)
11.375% 07/01/04 ........................ 350 357,000
WHX Corporation
Sr. Exchange Notes (B3, B)
10.500% 04/15/05 ........................ 500 446,250
----------
2,751,675
----------
Office Equipment & Supplies -- 0.4%
Knoll, Inc.
Sr. Sub. Notes (B1, B+)
10.875% 03/15/06 ........................ 325 362,375
----------
Packaging/Containers -- 1.7%
BPC Holding Corporation
Sr. Secured Notes, Series B
(Caa3, NR)
12.500% 06/15/06 ........................ 500 539,375
Par
(000) Value
---------- ----------
Packaging & Containers -- (continued)
Crown Packaging Enterprises Ltd.
Yankee Sr. Secured Discount
Notes (Ca, NR)
14.000% 08/01/06+ ....................... $ 775 $ 8,719
Four M Corp.
Gtd. Sr. Secured Notes,
Series B (B3, B)
12.000% 06/01/06 ........................ 250 245,625
Plastic Containers, Inc.
Sr. Secured Notes, Series B
(B1, B+)
10.000% 12/15/06 ........................ 500 521,250
Stone Container Finance Co.
Yankee Gtd. Sr. Notes (B2, B)
11.500% 08/15/06 ........................ 250 264,063
----------
1,579,032
----------
Paper & Forest Products -- 2.8%
Ainsworth Lumber Co. Ltd.
Yankee Sr. Secured PIK Notes
(B3, B)
12.500% 07/15/07 ........................ 400 423,000
Bear Island Paper Company, L.L.C./
Bear Island Finance Company II
Sr. Secured Notes, Series B (B2, B)
10.000% 12/01/07 ........................ 400 400,000
Crown Paper Co.
Sr. Sub. Notes (B3, B)
11.000% 09/01/05 ........................ 400 352,000
FiberMark, Inc.
Sr. Notes (B1, BB-)
9.375% 10/15/06 ......................... 250 256,563
MAXXAM Group Holdings Inc.
144A Sr. Secured Notes,
Series B (B3, CCC+)
12.000% 08/01/03 ........................ 400 438,500
Printpack Inc.
Sr. Sub. Notes, Series B (B3, B+)
10.625% 08/15/06 ........................ 350 369,250
Uniforet, Inc.
Yankee Gtd. Sr. Secured Notes
(B2, B)
11.125% 10/15/06 ........................ 500 401,250
----------
2,640,563
----------
Pharmaceuticals -- 0.4%
ICN Pharmaceutical Inc.
144A Sr. Notes (Ba3, BB)
8.750% 11/15/08 ......................... 400 384,000
----------
Publishing & Information Services -- 3.9%
Ampex Corp.
Sr. Notes, Series B (NR, B+)
12.000% 03/15/03 ........................ 500 507,500
Gray Communications Systems, Inc.
Gtd. Sr. Sub. Notes (B3, B-)
10.625% 10/01/06 ........................ 200 213,500
See Accompanying Notes to Financial Statements.
56
<PAGE>
BEA High Yield Fund (Continued)
Par
(000) Value
---------- ----------
Publishing & Information Services -- (continued)
Hollinger International
Publishing Inc.
Gtd. Sr. Sub. Notes (B1, BB-)
9.250% 03/15/07 ......................... $ 250 $ 253,125
InterAct Systems Inc.
144A Sr. Discount Notes
(NR, NR)
14.000% 08/01/03+ ....................... 700 273,000
Level 3 Communications, Inc.
144A Sr. Notes (B3, B)
9.125% 05/01/08 ......................... 400 358,000
Liberty Group Publishing, Inc.
Sr. Discount Debentures
(Caa1, CCC+)
11.625% 02/01/09+ ....................... 300 172,125
Mentus Media Corp.
144A Sr. Secured Notes (NR, NR)
12.000% 02/01/03 ........................ 527 527,000
Nebraska Book Co.,
144A Sr. Sub. Notes (B3, B-)
8.750% 02/15/08 ......................... 250 235,313
Orbital Imaging Corp.
144A Units (NR, NR)
11.625% 03/01/05 ........................ 500 501,250
Sun Media Corp.
Yankee Sr. Sub. Notes (B3, B-)
9.500% 02/15/07 ......................... 194 193,758
9.500% 05/15/07 ......................... 65 64,919
Tri-State Outdoor Media Group, Inc.
144A Sr. Notes (NR, NR)
11.000% 05/15/08 ........................ 400 400,000
----------
3,699,490
----------
Real Estate -- 0.3%
HMH Properties, Inc.
Gtd. Sr. Notes, Series A (Ba2, BB)
7.875% 08/01/05 ......................... 250 238,750
----------
Restaurants, Hotels & Gaming -- 8.4%
American Restaurant Group Inc.
144A Sr. Secured Notes,
Series A (B3, B)
11.500% 02/15/03 ........................ 500 475,000
AmeriKing, Inc.
Gtd. Sr. Notes (B3, B-)
10.750% 12/01/06 ........................ 400 416,500
Ameristar Casinos, Inc.
Gtd. Sr. Sub. Notes,
Series B (B3, B-)
10.500% 08/01/04 ........................ 500 515,625
CapStar Hotel Co.
Sr. Sub. Notes (Ba3, B)
8.750% 08/15/07 ......................... 250 240,000
Casino America, Inc.
Gtd. Sr. Notes (B1, B+)
12.500% 08/01/03 ........................ 500 552,500
Par
(000) Value
---------- ----------
Restaurants, Hotels & Gaming -- (continued)
Casino Magic of Louisiana Corp.
Gtd. First Mortgage Notes,
Series B (B3, B-)
13.000% 08/15/03 ........................... $ 600 $ 688,500
Coast Hotels and Casinos, Inc.
Gtd. First Mortgage Notes,
Series B (B2, B+)
13.000% 12/15/02 ........................... 350 394,188
Friendly Ice Cream Corp.
Gtd Sr. Notes (B1, B)
10.500% 12/01/07 ........................... 250 223,125
Grand Casinos, Inc.
Gtd. Sr. Notes, Series B (B2, B+)
9.000% 10/15/04 ............................ 250 265,938
Hard Rock Hotel, Inc.
144A Sr. Sub. Notes (B3, B-)
9.250% 04/01/05 ............................ 400 407,000
Horseshoe Gaming L.L.C
Gtd. Sr. Sub. Notes,
Series B (B3, B+)
9.375% 06/15/07 ............................ 500 501,250
Mohegan Tribal Gaming Authority
Sr. Secured Notes, Series B
(Ba1, BB+)
13.500% 11/15/02 ........................... 400 516,500
Players International, Inc.
Sr. Notes (Ba3, BB-)
10.875% 04/15/05 ........................... 250 265,938
Prime Hospitality Corp.
Secured First Mortgage Notes
(Ba2, BB)
9.250% 01/15/06 ............................ 250 257,500
Red Roof Inns, Inc.
Sr. Exchange Notes (B2, B)
9.625% 12/15/03 ............................ 250 252,813
Showboat Marina Casino
Partnership/Showboat Marine
Finance Corp. First Mortgage
Notes, Series B (B2, BB-)
13.500% 03/15/03 ........................... 450 527,625
Sun International Hotels Ltd.
Yankee Gtd. Sr. Sub. Notes
(Ba3, B+)
9.000% 03/15/07 ............................ 400 404,000
The Majestic Star Casino L.L.C.
Sr. Exchange Secured Notes
(B2, B)
12.750% 05/15/03 ........................... 500 533,750
Waterford Gaming L.L.C./
Waterford Gaming Finance Corp.
Sr. Notes (NR, NR)
12.750% 11/15/03 ........................... 473 514,979
----------
7,952,731
----------
See Accompanying Notes to Financial Statements.
57
<PAGE>
BEA High Yield Fund (Continued)
Par
(000) Value
---------- ----------
Retail Trade -- 3.2%
County Seat Stores, Inc.
144A Units (NR, NR)
12.750% 11/01/04 ........................ $ 500 $ 522,500
Finlay Enterprises, Inc.
Sr. Secured Debentures (B2, B)
9.000% 05/01/08 ......................... 500 428,750
Jitney-Jungle Stores of America, Inc.
Gtd. Sr. Notes (B2, B+)
12.000% 03/01/06 ........................ 250 272,500
K Mart Corp.
Debentures (Ba2, BB)
7.750% 10/01/12 ......................... 500 488,125
Mrs. Fields' Original Cookies Inc.
Gtd. Sr. Notes, Series B (B2, NR)
10.125% 12/01/04 ...................... 350 336,875
144A Gtd. Sr. Notes, Series A
(B2, B+)
10.125% 12/01/04 ...................... 150 144,375
Mrs. Fields' Holding Co., Inc.
144A Units (Caa2, B-)
14.000% 12/01/05+ ....................... 200 111,500
Pantry, Inc.
Gtd. Sr. Sub. Notes (B3, B-)
10.250% 10/15/07 ........................ 250 244,688
Pathmark Stores,
Sr. Sub Notes (Caa1, CCC+)
9.625% 05/01/03 ......................... 500 481,250
----------
3,030,563
----------
Telecommunications -- 14.4%
Bell Technology Group Ltd.
144A Units (NR, NR)
13.000% 05/01/05 ........................ 300 286,500
Dobson Wireline Company
144A Sr. Notes (NR, NR)
12.250% 06/15/08 ........................ 400 368,000
DTI Holdings, Inc.
144A Sr. Discount Notes
(NR, NR)
12.500% 03/01/08+ ....................... 600 244,500
E. Spire Communications, Inc.
Sr. Discount Notes (NR, NR)
13.000% 11/01/05+ ....................... 700 525,875
Focal Communications Corp.
144A Sr. Discount Notes
(NR, NR)
12.125% 02/15/08 ........................ 550 297,000
Global Crossing Holdings Ltd.
144A Sr. Notes (NR, NR)
9.625% 05/15/08 ......................... 150 143,250
Globalstar, L.P./Globalstar
Capital Corp.
Sr. Notes (B3, B)
10.750% 11/01/04 ........................ 100 80,000
Par
(000) Value
---------- ----------
Telecommunications -- (continued)
GST Equipment Funding, Inc.
Sr. Secured Exchange Notes
(NR, NR)
13.250% 05/01/07 ........................... $ 250 $ 282,500
GST USA, Inc.
Gtd. Sr. Discount Exchange
Notes (NR, NR)
13.875% 12/15/05+ .......................... 500 383,125
Hermes Europe Railtel BV
Yankee Sr. Notes (B3, B)
11.500% 08/15/07 ........................... 250 259,688
Hyperion Telecommunications, Inc.
Sr. Discount Notes, Series B
(B3, B+)
13.000% 04/15/03+ ........................ 500 345,000
Sr. Secured Notes, Series B
(B3, B+)
12.250% 09/01/04 ......................... 250 245,000
ICG Services, Inc.
144A Sr. Discount Notes (NR, NR)
10.000% 02/15/08+ .......................... 500 283,125
ICG Holdings, Inc.
Gtd. Sr. Exchangeable Discount
Notes (NR, NR)
12.500% 05/01/06+ .......................... 800 624,000
Intermedia Communications Inc.
Sr. Discount Notes, Series B
(B2, B)
11.250% 07/15/07+ .......................... 500 345,000
ITC DeltaCom, Inc.
Sr. Notes (B2, B)
11.000% 06/01/07 ........................... 163 182,560
Jordan Telecommunication
Products, Inc.
Sr. Discount Notes, Series B
(NR, B+)
11.750% 08/01/07+ .......................... 400 316,500
KMC Telecom Holdings, Inc.
Sr. Discount Notes (NR, NR)
12.500% 02/15/08+ .......................... 500 286,250
L-3 Communications Corp.
Gtd. Sr. Sub. Notes (B2, B)
8.500% 05/15/08 ............................ 250 245,000
McLeodUSA, Inc.
Sr. Notes (B2, B+)
9.250% 07/15/07 .......................... 300 291,750
Sr. Discount Notes (B2, B+)
10.500% 03/01/07+ ........................ 500 348,125
MetroNet Communications Corp.
Sr. Discount Notes (B3, B)
9.250% 11/01/07 .......................... 400 268,500
Sr. Notes (B3, B)
12.000% 08/15/07 ......................... 400 453,000
See Accompanying Notes to Financial Statements.
58
<PAGE>
BEA High Yield Fund (Continued)
Par
(000) Value
---------- ----------
Telecommunications -- (continued)
MJD Communications Inc.
144A Sr. Sub. Notes (B3, B-)
9.500% 05/01/08 .......................... $ 400 $ 405,000
NEXTLINK Communications, Inc.
Sr. Discount Notes (B3, NR)
9.450% 04/15/08+ ....................... 500 270,625
NEXTLINK Communications
LLC/NEXTLINK Capital Inc.
Sr. Notes (B3, B)
12.500% 04/15/06 ....................... 250 278,125
Orion Network Systems, Inc.
Gtd. Sr. Notes (B2, B+)
11.250% 01/15/07 ......................... 300 330,375
Pagemart Nationwide, Inc.
Sr. Discount Notes (B3, NR)
15.000% 02/01/05+ ........................ 750 660,000
People's Telephone Co., Inc.
Sr. Notes, Series B (B2, B-)
12.250% 07/15/02 ......................... 250 281,875
PLD Telekom, Inc.
144A Units (NR, NR)
14.000% 06/01/04 ....................... 1,010 959,500
144A, Conv. Sub. Notes
(NR, NR)
9.000% 06/01/06 ........................ 230 289,800
Qwest Communications
International, Inc.
Sr. Discount Notes (Ba1, BB+)
9.470% 10/15/07+ ....................... 750 547,500
Sr. Notes, Series B (Ba1, BB+)
10.875% 04/01/07 ....................... 200 225,000
RCN Corp.
Sr. Notes, Series B (B3, NR)
10.000% 10/15/07 ....................... 400 368,500
Sr. Discount Notes, Series B
(B3, NR)
9.800% 02/15/08+ ....................... 300 171,750
Rhythms Netconnections
144A Units (NR, NR)
13.500% 05/15/08 ......................... 750 307,500
Startec Global
Communications Corp.
144A Units (NR, NR)
12.000% 05/15/08 ......................... 400 384,000
Teligent Inc.
Sr. Notes (Caa1, CCC)
11.500% 12/01/07 ......................... 500 460,000
WinStar Communications, Inc.
Sr. Discount Notes
(Caa, CCC+)
14.000% 10/15/05+ ........................ 1,000 677,500
-----------
13,721,298
-----------
Par
(000) Value
---------- ----------
Textiles & Apparel --
1.8% Collins &
Aikman Floorcoverings, Inc.
Sr. Sub. Notes, Series B (B3, B-)
10.000% 01/15/07 ........................ $ 250 $ 257,812
Hosiery Corp. of America, Inc.
Sr. Sub. Notes (B3, B-)
13.750% 08/01/02 ........................ 400 434,000
Maxim Group, Inc.
Gtd. Sr. Sub. Notes,
Series B (B2, B)
9.250% 10/15/07 ......................... 500 506,875
William Carter Company
Sr. Sub. Notes, Series A (B3, B-)
10.375% 12/01/06 ........................ 450 468,563
-----------
1,667,250
-----------
Transportation -- 2.5%
AirTran Airlines, Inc.
Sr. Secured Notes (B2, B-)
10.500% 04/15/01 ........................ 250 249,375
Atlantic Express Transportation Corp.
Gtd. Sr. Secured Notes (B2, B)
10.750% 02/01/04 ........................ 250 261,250
Canadian Airlines Corp. Yankee
Sr. Notes (Caa2, CCC-)
12.250% 08/01/06 ........................ 250 242,500
Golden Ocean Group Ltd.
Gtd. Sr. Notes (B3, CCC+)
10.000% 08/31/01 ........................ 657 395,842
Kitty Hawk, Inc.
Sr. Secured Notes (B1, B+)
9.950% 11/15/04 ......................... 250 254,375
Pegasus Shipping (Hellas) Ltd.
144A Gtd. First Preferred Ship
Mortgage Notes, Series A
(Caa1, B)
11.875% 11/15/04 ........................ 500 490,000
Trans World Airlines, Inc.
Sr. Notes (Caa1, CC)
11.375% 03/01/06 ........................ 500 487,500
-----------
2,380,842
-----------
Waste Management -- 1.1%
Allied Waste North America, Inc.
Gtd. Sr. Sub. Notes (B2, B+)
10.250% 12/01/06 ........................ 450 484,875
Waste Systems International, Inc.
144a Conv. Sub. Notes
(NR, CCC+)
7.000% 05/13/05 ......................... 500 517,500
-----------
1,002,375
-----------
TOTAL CORPORATE BONDS
(Cost $87,969,696) ...................... 86,692,344
-----------
See Accompanying Notes to Financial Statements.
59
<PAGE>
BEA High Yield Fund (Continued)
Par
(000) Value
---------- ----------
ASSET BACKED SECURITIES -- 0.7%
Airplanes Pass Through Trust
Series 1, Class D (Ba2, BB)
10.875% 03/15/19 ........................ $ 600 $662,459
--------
TOTAL ASSET BACKED
SECURITIES
(Cost $600,000) ......................... 662,459
--------
Shares
--------
RIGHTS/WARRANTS -- 1.4%
Broadcasting -- 0.0%
Australis Holdings Pty. Ltd. .............. 294 3
--------
Cable -- 0.6%
DIVA Systems Corp. ........................ 2,250 517,500
--------
Cellular Wireless Communications -- 0.0%
Microcell Telecommunications, Inc. ........ 1,600 40,800
Microcell Telecommunications, Inc. ........ 1,600 216
--------
41,016
--------
Chemicals -- 0.3%
Uniroyal Technology Corp. ................. 43,500 299,063
--------
Computers, Software & Services -- 0.1%
Verio, Inc. ............................... 2,800 89,600
--------
Construction & Building Materials -- 0.0%
Capital Pacific Holdings
Group, Inc. ............................. 12,640 9,480
--------
Consumer Products & Services -- 0.0%
Coinstar, Inc. ............................ 3,671 26,844
Signature Brands USA, Inc. ................ 250 --
--------
26,844
--------
Publishing & Information Services -- 0.0%
InterAct Systems, Inc. .................... 700 --
Mentus Media Corp. 144A ................... 1,391 14
Source Media Inc. ......................... 5,587 37,716
--------
37,730
--------
Telecommunications -- 0.4%
Advanced Radio
Telecommunications Corp. ................ 7,500 44,100
Ampex Corp. 144A .......................... 17,000 19,125
DTI Holdings, Inc. 144A ................... 3,000 3,000
E. Spire Communications, Inc.
144A .................................... 1,500 165,000
Globalstar, L.P. .......................... 200 8,000
KMC Telecom Holdings, Inc. ................ 500 3,625
McCaw International, Ltd. ................. 500 2,500
MetroNet Communications Corp. ............. 400 1,600
Orbital Imaging Corp. ..................... 500 20,000
Orion Network Systems, Inc. ............... 300 4,800
Price Communications Corp. ................ 2,752 50,224
--------
321,974
--------
Shares Value
---------- ----------
RIGHTS/WARRANTS (Continued)
Transportation -- 0.0%
Golden Ocean Group, Ltd. .................. 438 $ 4,161
----------
TOTAL RIGHTS/WARRANTS
(Cost $543,433) ......................... 1,347,371
----------
COMMON STOCKS -- 0.0%
Packaging/Containers -- 0.0%
Crown Packaging Enterprises,
Ltd. .................................... 100,847 1,008
----------
Telecommunications -- 0.0%
Intermedia Communications,
Inc. .................................... 731 18,184
----------
TOTAL COMMON STOCKS
(Cost $16,345) .......................... 19,192
----------
PREFERRED STOCKS -- 4.5%
Aerospace/Defense -- 1.1%
GPA Group plc
Conv. Cum. Second
Preference Shares ....................... 1,750,000 980,000
----------
Cable -- 0.1%
DIVA Systems Corp.
Series C ................................ 5,945 67,773
----------
Cellular/Wireless Communications -- 0.3%
Rural Cellular Corp.
144A 11.375% Sr. Exchangeable
PIK, Series B ........................... 2,570 251,860
----------
Publishing & Information Services -- 0.3%
Source Media, Inc.
13.50% Sr. PIK .......................... 10,687 267,175
----------
Restaurants, Hotels & Gaming -- 0.2%
AmeriKing, Inc.
13.00% Cum. Exchangeable ................ 5,864 134,872
----------
Telecommunications -- 2.5%
E. Spire Communications, Inc.
12.75% Jr. Redeemable PIK ............... 878 965,813
Hyperion Telecommunications, Inc.
12.875% Sr. Exch. Redeemable,
Series B ................................ 218 253,832
Intermedia Communications Inc.
144A 7.00% Jr. Convertible,
Series E ................................ 20,000 517,400
Nextel Communications, Inc.
13.00% Exchangeable,
Series D PIK ............................ 281 309,359
NEXTLINK Communications, Inc.
144A 14% Sr. Exchangeable
Redeemable PIK .......................... 7,376 407,524
----------
2,453,928
----------
TOTAL PREFERRED STOCKS
(Cost $3,357,210) ....................... 4,155,608
----------
See Accompanying Notes to Financial Statements.
60
<PAGE>
BEA High Yield Fund (Concluded)
Value
------------
TOTAL INVESTMENTS -- 98.2%
(Cost $92,486,684*) ........................ $92, 876,974
------------
OTHER ASSETS IN EXCESS
OF LIABILITIES -- 1.8% ..................... 1,736,738
------------
NET ASSETS (Applicable to
5,665,050 BEA Institutional
Shares and 34,272 BEA
Advisor Shares)-- 100.0% ................... $94,613,712
===========
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PRICE PER BEA
INSTITUTIONAL SHARE
($94,044,132 divided by 5,665,050) ......... $ 16.60
===========
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PRICE PER BEA
ADVISOR SHARE
($569,580 divided by 34,272) ............... $ 16.62
===========
* Also cost for Federal income tax purposes at August 31, 1998. The gross
appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation ................ $ 5,462,212
Gross Depreciation ................ (5,071,922)
-----------
Net Appreciation .................. $ 390,290
===========
+ Step Bond -- The interest rate as of August 31, 1998 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, 1998
and are unaudited.
INVESTMENT ABBREVIATIONS
PIK ............................... Pay In Kind
At August 31, 1998, Net Assets Consisted Of:
Amount
-------------
Capital Paid-In ........................................... $ 107,704,405
Accumulated Net Investment Income ......................... 1,895,526
Accumulated Net Realized Loss on
Security and Foreign Exchange Transactions ............. (15,376,509)
Net Unrealized Appreciation on
Investments and Other .................................. 390,290
- - - - - -------------------------------------------------------------------------------
NET ASSETS ................................................ $ 94,613,712
- - - - - -------------------------------------------------------------------------------
See Accompanying Notes to Financial Statements.
61
<PAGE>
BEA Municipal Bond Fund
Portfolio Managers' Letter
September 24, 1998
Dear Shareholders:
We are pleased to report on the results of the BEA Municipal Bond Fund (the
"Fund") for the fiscal year ended August 31, 1998.
At August 31, 1998, the net asset value ("NAV") of the Fund was $15.12, compared
to an NAV of $14.84 on August 31, 1997. As a result, the Fund's total return
(assuming reinvestment of dividends and distributions of $.8233 per share) was
7.62%. By comparison, the Lehman Brothers Municipal Bond Index gained 8.65%
during the same period.
The Fund's performance lagged that of the Lehman benchmark due to its exposure
to taxable corporate bonds. Most "spread product" (i.e., debt securities whose
market valuation is greatly driven by the spreads between their yields and those
of U.S. Treasury debt), which includes corporates, underperformed over the last
year as a combination of global factors triggered several classic "flight to
quality" rallies. Market volatility in the month of August, in fact, was such
that many spread product sectors generated their worst-ever, relative returns
for a single month. Looking ahead, our outlook for corporates remains favorable,
however, as their fundamental valuations are compellingly low.
Within the Fund's core municipal holdings, returns continue to be supported by
our substantial positions in non-callable securities. As we have mentioned in
previous reports, the presence of non-callables in a portfolio tends to enhance
performance both in up and down markets, because their credit ratings and coupon
yields typically are higher than those of callables. About 28% of the Fund's
assets were invested in non-callables at August 31st, compared to 12% of the
Lehman benchmark.
We remain positive on the muni market's prospects over the next few months. The
key ingredient in our view is valuation, as the yield on long-term AAA-rated
munis currently is about 97% of the yield on comparable Treasury bonds, an
all-time high. What this means is that investors can get nearly the same yield
tax-free that they can get on a taxable basis; in other words, munis are
extraordinarily cheap relative to taxables.
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
William P. Sterling, Executive Director
Gregg M. Diliberto, Managing Director
Mark K. Silverstein, Managing Director
Jo Ann Corkran, Senior Vice President
Diane C. Damskey, Senior Vice President
Ira Edelblum, Senior Vice President
Robert W. Justich, Senior Vice President
62
<PAGE>
BEA Municipal Bond Fund
Portfolio Managers' 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. (Unaudited)
[GRAPHIC]
In the printed version of the document, a line graph appears which depicts the
following plot points.
BEA LEHMAN BROTHERS
MUNICIPAL BOND MUNICIPAL BOND
FUND INDEX
-------------- ---------------
6/20/94 10,000 10,000
7/31/94 10,040 10,038
8/31/94 10,040 10,073
11/30/94 9,647 9,571
2/28/95 10,350 10,354
5/31/95 10,846 10,820
8/31/95 10,886 10,965
11/30/95 11,193 11,079
02/29/96 11,216 11,498
05/31/96 10,937 11,314
8/31/96 11,134 11,539
11/30/96 11,643 12,049
2/28/97 11,731 12,132
5/31/97 11,835 12,252
8/31/97 12,218 12,606
11/30/97 12,508 12,914
2/28/98 12,812 13,242
5/31/98 12,971 13,402
8/31/98 13,149 13,697
------------------------
AVERAGE ANNUAL
TOTAL RETURN (UNAUDITED)
One Year 7.62%
Three Years 6.50%
From Inception 6.72%
------------------------
Note: Past performance is not predictive of future performance.
63
<PAGE>
BEA Municipal Bond Fund
of The RBB Fund, Inc.
Statement of Net Assets
August 31, 1998
Par
(000) Value
---------- ----------
MUNICIPAL BONDS -- 80.9%
California -- 10.2%
California State GO (A1, A+)
6.300% 09/11/11 ........................... $ 670 $ 790,600
California State GO (Aaa, AAA)
5.125% 10/01/17 ........................... 825 832,219
Los Angeles CA, Department of
Water & Power
Water RB (Aa, AA)
4.500%? 05/15/23 .......................... 705 643,312
----------
2,266,131
----------
Colorado -- 3.0%
Colorado Springs CO,
Utility RB (Aaa, AAA)
5.875% 11/15/17 ........................... 595 669,375
----------
Florida -- 6.6%
Jacksonville FL, Electric Authority
RB, 2nd Installment (Aaa, AAA)
6.000% 07/01/12 ........................... 610 677,100
Tallahassee FL, Electric RB,
First Lien (Aaa, AAA)
6.100% 10/01/06 ........................... 730 793,875
----------
1,470,975
----------
Illinois -- 6.3%
Chicago Illinois GO, Series 1993
(FGIC Insured) (Aaa, AAA)
5.250% 01/01/18 ........................... 705 709,406
Illinois State Sales Tax RB,
Series Q (Aa2, AAA)
5.750% 06/15/14 ........................... 650 681,687
----------
1,391,093
----------
Indiana -- 0.1%
Indianapolis IN, Public
Improvement Board RB,
Series A (Aaa, AAA)
6.000% 01/10/18 ........................... 25 26,875
----------
Louisiana -- 3.2%
New Orleans LA, Home Mortgage
Authority SOB (Aaa, AAA)
6.250% 01/15/11 ........................... 635 719,931
----------
Maryland -- 4.6%
Maryland State Transportation
Authority Project RB
(Aaa, AAA)
6.800% 07/01/16 ........................... 850 1,018,937
----------
Massachusetts -- 3.1%
Massachusetts State Water
Resources Authority, General
RB, Series 92A (A1, A)
6.500% 07/15/19 ........................... 20 24,025
Par
(000) Value
---------- ----------
Massachusetts -- (continued)
Massachusetts State Water
Resources Authority RB Series B
(MBIA Insured) (Aaa, AAA)
5.000% 12/01/25 ........................... $ 660 $655,050
--------
679,075
--------
New York -- 28.5%
Metropolitan Transit Authority
Commuter Facilities RB,
Series A (Aaa, AAA)
5.000% 07/01/23 ........................... 600 599,250
New York, N.Y. Municipal Water
Finance Authority, Water &
Sewer System RB, Series D
(MBIA Insured) (Aaa, AAA)
4.875% 06/15/21 ........................... 400 395,000
New York State Dormitory
Authority RB (Elizabeth Church
Manor Nursing Home) (NR, AA)
5.400% 08/01/23 ........................... 60 61,650
New York State Dormitory
Authority RB (Episcopal Health
Services) (GNMA Coll.)
(NR, AAA)
7.550% 08/01/29 ........................... 435 462,187
New York State Dormitory
Authority RB (Judicial Facilities
Lease) (Aaa, AAA)
7.375% 07/01/16 ........................... 40 50,250
New York State Dormitory
Authority RB (Park Ridge
Housing Inc. Project)
(FHA Insured) (GNMA Coll.)
(NR, AAA)
7.850% 02/01/29 ........................... 530 547,776
New York State Local Government
Assistance Corp. RB Series B
(MBIA Insured) (Aaa, AAA)
4.875% 04/01/20 ........................... 580 568,400
New York State Medical Care
Facility Finance Agency,
Hospital & Nursing Home RB
(FHA Insured) RB (NR, AAA)
5.500% 02/15/22 ........................... 730 758,287
New York State Power Authority
General Purpose RB
(Aaa, AAA)
7.000% 01/01/10 ........................... 360 439,200
New York State Throughway
Authority, General RB Series B
(MBIA Insured) (Aaa, AAA)
5.000% 01/01/20 ........................... 30 29,962
New York, NY Prefunded GO,
Series D (Aaa, A-)
8.000% 08/01/01 ........................... 540 609,525
See Accompanying Notes to Financial Statements.
64
<PAGE>
BEA Municipal Bond Fund (Continued)
Par
(000) Value
---------- ----------
New York -- (continued)
New York, NY Prefunded GO,
Series D (A3, A-)
6.000% 02/15/05 ........................... $ 10 $ 11,112
New York, NY Unrefunded Balance
GO, Series D (A3, A-)
8.000% 08/01/03 ........................... 110 123,062
6.000% 02/15/25 ........................... 5 5,344
New York, NY Prerefunded GO,
Series H (NR, A-)
7.200% 02/01/13 ........................... 530 592,937
New York, NY Unrefunded
Balance GO, Series H
(A3, A-)
7.200% 02/01/13 ........................... 70 77,087
New York, NY Municipal Water
Finance Authority, Water & Sewer
System RB Series B
(FGIC Insured) (Aaa, AAA)
5.125% 06/15/30 ........................... 295 295,737
New York, NY Transitional Finance
Authority RB (Future Tax
Secured) Series B (Aa3, AA)
4.750% 11/15/14 ........................... 35 34,694
Suffolk County NY Water
Authority, Waterworks RB,
Series V (NR, AAA)
6.750% 06/01/12 ........................... 580 677,150
----------
6,338,610
----------
Puerto Rico -- 4.2%
Commonwealth of Puerto Rico
GO (Baa1, A)
5.400% 07/01/07 ........................... 730 781,100
Puerto Rico Electric Power
Authority, Unrefunded Balance
RB Series N (Baa1, BBB+)
7.125% 07/01/14 ........................... 135 141,066
----------
922,166
----------
South Dakota -- 0.1%
Heartland Consumers Power
District SD Electric RB
(Aaa, AAA)
6.375% 01/01/16 ........................... 25 28,406
----------
Tennessee -- 0.1%
Metropolitan Government of
Nashville and Davidson County
TN Water and Sewer RB
(FGIC Insured) Series A
(Aaa, AAA)
4.750% 01/01/22 ........................... 30 29,025
----------
Virgin Islands -- 3.3%
Virgin Islands Public Finance
Authority RB (NR, AAA)
7.700% 10/01/04 ........................... 690 734,650
----------
Par
(000) Value
---------- ----------
Virginia -- 3.6%
Fairfax County VA Redevelopment
& Housing Authority, Mortgage
RB (Island Walk Proj.)
(FHA Insured) (NR, AAA)
7.100% 04/01/19 ........................... $ 630 $ 804,038
-----------
Washington -- 4.0%
King County WA GO, Series A
(Aa1, AA+)
6.200% 01/01/24 ........................... 40 43,550
Seattle WA Municipal Light &
Power RB (Aa2, AA)
5.125% 07/01/22 ........................... 100 100,875
Seattle WA Water System
RB (Aa2, AA)
5.250% 12/01/23 ........................... 735 747,863
-----------
892,288
-----------
TOTAL MUNICIPAL BONDS
(Cost $16,497,737) ........................ 17,991,575
-----------
CORPORATE BONDS -- 9.7%
Banking -- 2.3%
Cie. Financiere de Paribas
Sub. Notes (A3, A-)
6.950% 07/22/13 ........................... 145 146,813
Chase Manhattan Corp.
Sub. Notes (A1, A)
6.375% 04/01/08 ........................... 165 166,650
Export-Import Bank of Korea,
Global Bonds (Ba2, BB+)
6.500% 02/10/02 ........................... 25 19,344
Export-Import Bank of Korea,
Yankee Notes (Ba2, BB+)
6.500% 05/15/00 ........................... 50 43,563
First Republic Bank Corp.
Sub. Notes (NR, BB+)
7.750% 09/15/12 ........................... 25 26,438
Fuji Finance (Cayman) Ltd.
Perpetual Sub. Notes
(Ba1, NR)
6.550%++................................... 100 72,000
National Westminster Bank
Gtd. Capital Notes (Aa3, AA-)
9.375% 11/15/03 ........................... 30 34,725
-----------
509,533
-----------
Broadcasting -- 0.4%
Fox/Liberty Networks L.L.C.,
Sr. Notes (B1, B)
8.875% 08/15/07 ......................... 85 80,113
Sr. Discount Notes (B1, B)
9.750% 08/15/07 ......................... 30 18,300
-----------
98,413
-----------
See Accompanying Notes to Financial Statements.
65
<PAGE>
BEA Municipal Bond Fund (Continued)
Par
(000) Value
-------- ----------
Cable -- 0.4%
CSC Holdings, Inc.
Sr. Notes (Ba2, BB+)
7.875% 12/15/07 ............................. $ 70 $ 70,438
Diamond Cable Communications
plc Yankee Sr. Discount
Notes (Caa1, B-)
10.750% 02/15/07 ............................ 40 29,950
----------
100,388
----------
Financial Services -- 1.3%
First Nationwide (Parent)
Holdings, Inc.
Sr. Notes (Ba3, B)
12.500% 04/15/03 ............................ 260 291,850
----------
Food & Beverage -- 0.1%
Arisco Produtos Alimenticios S.A.
Gtd. Notes (NR, NR)
10.750% 05/22/05 ............................ 20 17,000
----------
Health Care -- 0.4%
Columbia/HCA Healthcare Corp.
Debentures (Ba2, BBB)
8.360% 04/15/24 ............................. 85 78,860
----------
Paper and Forest Products -- 0.0%
P.T. Indah Kiat Pulp & Paper Corp.
Sr. Secured Notes (Caa, CCC+)
8.875% 11/01/00 ............................. 15 8,550
----------
Retail -- 0.4%
K Mart Corp.
Notes (Ba2, BB)
7.950% 02/01/23 ............................. 25 24,219
K Mart Corp. Pass-Through
Certificates Series 1995
Class K3 (Ba2, BB)
8.540% 01/02/15 ............................. 59 62,873
----------
87,092
----------
Telecommunications -- 0.7%
CenCall Communications Corp.
Sr. Discount Notes (B2, CCC+)
10.125% 01/15/04 ............................ 25 25,250
CS Wireless Systems, Inc.
Sr. Discount Notes Series B
(Ca, C)
11.375% 03/01/06 ............................ 30 7,200
Nextel Communications Inc.
Sr. Serial Redeemable Discount
Notes (B2, CCC+)
10.650% 09/15/07 ............................ 190 115,663
Wireless One, Inc.
Sr. Discount Notes (Ca, CCC+)
13.500% 08/01/06 ............................ 35 3,500
----------
151,613
----------
Par
(000) Value
-------- ----------
Transportation -- 1.7%
Continental Airlines, Inc.
Sr. Notes (Ba2, B+)
9.500% 12/15/01 ............................. $ 90 $ 93,150
Grupo Transportacion Ferroviaria
Mexicana, S.A. de C.V.
Gtd. Sr. Discount Notes (B2, B+)
11.750% 06/15/09 ............................ 50 26,750
Northwest Airlines,Inc.
Gtd. Notes (Ba2, BB)
7.625% 03/15/05 ............................. 200 204,250
US Air, Inc.
Gtd. Sr. Notes (B1, B)
9.625% 02/01/01 ............................. 45 46,688
----------
370,838
----------
Utilities -- 2.0%
Beaver Valley Funding Corp.
Secured Lease Obligation
Bonds (Ba3, BB-)
9.000% 06/01/17 ............................. 140 159,775
Connecticut Light and Power Co.
First and Ref. Mortgage Bonds,
Series 97C (Ba2, BB)
7.750% 06/01/02 ........................... 85 88,506
Series D (Ba2, BB)
7.875% 10/01/24 ........................... 10 10,525
Long Island Lighting Co.
Debentures (Baa3, A-)
9.000% 11/01/22 ............................. 80 92,000
North Atlantic Energy Corp.
Secured First Mortgage Notes,
Series A (B1, B+)
9.050% 06/01/02 ............................. 93 94,395
----------
445,201
----------
TOTAL CORPORATE BONDS
(Cost $2,198,408) ........................... 2,159,338
----------
FOREIGN GOVERNMENT BONDS -- 2.8%
Republic of Argentina
Structured Notes (Ba3, BB)
8.940% 04/10/05 ............................. 65 55,250
Republic of Poland
Past Due Interest Bonds
(Baa3, BBB-)
4.000% 10/27/14 ............................. 435 337,125
United Mexican States
Par Bonds, Series W-A (Ba2, BB)
6.250% 12/31/19 ............................. 300 219,188
----------
TOTAL FOREIGN BONDS
(Cost $677,894) ............................. 611,563
----------
See Accompanying Notes to Financial Statements.
66
<PAGE>
BEA Municipal Bond Fund (Concluded)
Par
(000) Value
----------- -----------
SHORT TERM INVESTMENTS -- 5.3%
BBH U.S. Dollar Grand Cayman
Time Deposit
4.938% 09/01/98 ....................... $ 1,168 $ 1,168,000
-----------
TOTAL SHORT TERM
INVESTMENTS
(Cost $1,168,000) ..................... 1,168,000
-----------
TOTAL INVESTMENTS -- 98.7%
(Cost $20,542,039*) ................... 21,930,476
-----------
OTHER ASSETS IN EXCESS
OF LIABILITIES -- 1.3% ................ 298,156
-----------
NET ASSETS (Applicable to
1,470,225 BEA Institutional
Shares) -- 100.0% ..................... $22,228,632
===========
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PRICE PER BEA
INSTITUTIONAL SHARE
($22,228,632 divided by 1,470,225) .... $ 15.12
===========
* Cost for Federal income tax purposes at August 31, 1998 is $20,555,741.
The gross appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation .................................. $ 1,581,909
Gross Depreciation .................................. (207,174)
-----------
Net Appreciation .................................... $ 1,374,735
===========
+++ Securities have no stated maturity date.
The Moody's Investors Service, Inc. and Standard & Poor's Ratings Group ratings
indicated are the most recent rating available at August 31, 1998 and are
unaudited.
INVESTMENT ABBREVIATIONS
GO .....................................................General Obligations
RB .....................................................Revenue Bond
SOB ....................................................Special Obligations Bond
At August 31, 1998, Net Assets Consisted Of:
Amount
-----------
Capital Paid-In ............................................. $20,509,825
Accumulated Net Investment Gain ............................. 47,844
Accumulated Net Realized Gain on
Security and Foreign Exchange Transactions ............... 217,004
Net Unrealized Appreciation on
Investments and Other .................................... 1,453,959
-----------
NET ASSETS .................................................. $22,228,632
-----------
See Accompanying Notes to Financial Statements.
67
<PAGE>
The BEA Funds
of The RBB Fund, Inc.
Statements of Operations
For the Year Ended August 31, 1998
<TABLE>
<CAPTION>
BEA International BEA Emerging BEA U.S. BEA Global BEA Select
Equity Markets Equity Core Equity Telecommunications Economic Value
Fund Fund Fund Fund Equity Fund
----------------- -------------- ------------ ------------------ --------------
Investment Income
<S> <C> <C> <C> <C> <C>
Dividends ................................. $ 10,658,537 $ 1,074,296 $ 997,966 $ 10,295 $ 37,148
Interest .................................. 1,316,620 276,422 211,625 4,568 837
Securities lending ........................ 283,497 32,536 8,244 807 --
Foreign taxes withheld .................... (699,553) (95,309) -- (831) --
------------ ------------ ------------ ------------ ------------
Total Investment Income ................. 11,559,101 1,287,945 1,217,835 14,839 37,985
------------ ------------ ------------ ------------ ------------
Expenses
Investment advisory fees .................. 4,971,749 609,034 739,710 9,174 14,867
Administration service fees ............... 932,203 91,355 147,942 459 2,974
Administration fees ....................... 776,835 76,129 123,285 1,147 2,478
Custodian fees ............................ 570,852 327,094 54,324 24,211 1,169
Audit fees ................................ 57,088 8,484 12,281 40 244
Miscellaneous fees ........................ 21,075 15,033 2,740 3,573 421
Printing fees ............................. 105,290 35,117 23,966 4,614 187
Registration fees ......................... (26,563) 24,948 15,974 15,210 2,339
Legal fees ................................ 62,809 5,682 9,137 50 187
Transfer agent fees ....................... 132,437 19,703 22,099 1,745 479
Insurance expense ......................... 11,883 2,693 2,075 366 188
Directors fees ............................ 11,703 2,097 2,068 102 187
Organization expense ...................... 849 3,841 5,194 -- --
Distribution fees ......................... 3,606 352 -- 2,293 --
------------ ------------ ------------ ------------ ------------
7,631,816 1,221,562 1,160,795 62,984 25,720
Less fees waived and reimbursed ........... (532,364) (307,718) (174,516) (47,847) (5,896)
------------ ------------ ------------ ------------ ------------
Total Expenses .......................... 7,099,452 913,844 986,279 15,137 19,824
------------ ------------ ------------ ------------ ------------
Net Investment Income (Loss) ................. 4,459,649 374,101 231,556 (298) 18,161
------------ ------------ ------------ ------------ ------------
Realized and Unrealized Gain (Loss) on
Investments and Foreign Currency
Transactions:
Net realized gain (loss) from:
Security transactions ................... 63,909,753 (11,385,395) 31,964,087 187,100 (37,684)
Foreign exchange transactions ........... (3,492,286) (111,014) -- 343 --
------------ ------------ ------------ ------------ ------------
60,417,467 (11,496,409) 31,964,087 187,443 (37,684)
------------ ------------ ------------ ------------ ------------
Net unrealized appreciation (depreciation):
Investments ............................. 17,461,521 (13,521,918) (24,866,062) (45,995) (3,134,742)
Translation of assets and
liabilities in foreign currencies .... 255,847 10,880 -- 598 --
------------ ------------ ------------ ------------ ------------
17,717,368 (13,511,038) (24,866,062) (45,397) (3,134,742)
------------ ------------ ------------ ------------ ------------
Net Gain (Loss) On Investments And
Foreign Currency Transactions ........... 78,134,835 (25,007,447) 7,098,025 142,046 (3,172,426)
------------ ------------ ------------ ------------ ------------
Net Increase (Decrease) In Net Assets
Resulting From Operations ............... $ 82,594,484 $(24,633,346) $ 7,329,581 $ 141,748 $ (3,154,265)
============ ============ ============ ============ ============
</TABLE>
See Accompanying Notes to Financial Statements.
68
<PAGE>
The BEA Funds
of The RBB Fund, Inc.
Statements of Operations
For the Year Ended August 31, 1998
<TABLE>
<CAPTION>
BEA Long-Short BEA U.S. Core BEA Strategic
Market Neutral Fixed Income Global Fixed BEA High BEA Municipal
Fund Fund Income Fund Yield Fund Bond Fund
-------------- ------------ ------------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Investment Income
Dividends ................................. $ 5,656 $ 306,190 $ -- $ 40,434 $ --
Interest .................................. 25,436 14,371,573 2,065,179 8,700,613 1,186,877
Securities lending ........................ -- -- -- -- --
Foreign taxes withheld .................... -- -- -- -- --
------------ ------------ ------------ ------------ ------------
Total Investment Income ................. 31,092 14,677,763 2,065,179 8,741,047 1,186,877
------------ ------------ ------------ ------------ ------------
Expenses
Investment advisory fees .................. 7,419 867,842 170,631 693,346 145,287
Administration service fees ............... 742 347,137 51,189 148,574 31,133
Administration fees ....................... 618 235,924 48,431 123,812 30,402
Custodian fees ............................ 1,099 83,810 65,445 44,332 27,195
Audit fees ................................ 16 21,826 4,946 12,606 1,456
Miscellaneous fees ........................ 312 14,516 5,304 22,608 5,922
Printing fees ............................. 19 35,909 22,312 32,235 17,648
Registration fees ......................... 2,339 25,970 8,693 7,522 14,161
Legal fees ................................ 1,169 17,968 2,525 6,000 385
Transfer agent fees ....................... 115 44,259 12,023 29,092 6,888
Insurance expense ......................... 10 4,002 743 990 193
Directors fees ............................ 4 5,701 891 1,663 195
Organization expense ...................... -- 4,125 5,395 5,274 7,413
Distribution fees ......................... -- -- -- 5,317 --
Dividend expense .......................... 11,484 -- -- -- --
------------ ------------ ------------ ------------ ------------
25,346 1,708,989 398,528 1,133,371 288,278
Less fees waived .......................... (3,970) (612,693) (142,581) (434,709) (80,726)
------------ ------------ ------------ ------------ ------------
Total Expenses .......................... 21,376 1,096,296 255,947 698,662 207,552
------------ ------------ ------------ ------------ ------------
Net Investment Income ........................ 9,716 13,581,467 1,809,232 8,042,385 979,325
------------ ------------ ------------ ------------ ------------
Realized and Unrealized Gain (Loss) on
Investments and Foreign Currency
Transactions:
Net realized gain (loss) from:
Security transactions ................... (106,990) 3,839,460 931,576 1,492,405 235,346
Foreign exchange transactions ........... -- (59,994) (2,077,002) -- --
Futures Transactions .................... -- (73,209) (39,137) -- --
------------ ------------ ------------ ------------ ------------
(106,990) 3,706,257 (1,184,563) 1,492,405 235,346
------------ ------------ ------------ ------------ ------------
Net unrealized appreciation (depreciation):
Investments ............................. 208,133 (2,001,588) 489,984 (4,546,923) 305,974
Translation of assets and
liabilities in foreign currencies .... -- (437,541) 446,728 -- --
------------ ------------ ------------ ------------ ------------
208,133 (2,439,129) 936,712 (4,546,923) 305,974
------------ ------------ ------------ ------------ ------------
Net Gain (Loss) On Investments And
Foreign Currency Transactions ........... 101,143 1,267,128 (247,851) (3,054,518) 541,320
------------ ------------ ------------ ------------ ------------
Net Increase (Decrease) In Net Assets
Resulting From Operations ............... $ 110,859 $ 14,848,595 $ 1,561,381 $ 4,987,867 $ 1,520,645
============ ============ ============ ============ ============
</TABLE>
See Accompanying Notes to Financial Statements.
69
<PAGE>
The BEA Funds
of The RBB Fund, Inc.
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
BEA International BEA Emerging Markets
Equity Fund Equity Fund
-------------------------------- --------------------------------
For the Year For the Year For the Year For the Year
Ended Ended Ended Ended
August 31, 1998 August 31, 1997 August 31, 1998 August 31, 1997
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income ..................................... $ 4,459,649 $ 4,728,247 $ 374,101 $ 994,882
Net gain (loss) on investments and foreign
currency transactions ................................... 78,134,835 93,551,154 (25,007,447) 7,065,927
------------- ------------- ------------- -------------
Net increase (decrease) in net assets
resulting from operations ............................... 82,594,484 98,279,401 (24,633,346) 8,060,809
------------- ------------- ------------- -------------
Dividends and Distributions to shareholders:
Dividends to shareholders from net investment
income:
BEA Institutional shares ................................ -- (8,629,576) (732,736) (348,763)
BEA Advisor shares ...................................... -- (35) (83) (9)
Distributions to shareholders from net realized capital gains:
BEA Institutional shares ................................ (73,424,625) -- (649,941) --
BEA Advisor shares ...................................... (167,102) -- (115) --
Distributions to shareholders from capital:
BEA Institutional shares ................................ -- -- (3,255,728) --
BEA Advisor shares ...................................... -- -- (580) --
------------- ------------- ------------- -------------
Total distributions to shareholders .......................... (73,591,727) (8,629,611) (4,639,183) (348,772)
------------- ------------- ------------- -------------
Net capital share transactions ............................... 47,441,934 (203,262,817) (28,889,378) (39,387,274)
------------- ------------- ------------- -------------
Total increase (decrease) in net assets ...................... 56,444,691 (113,613,027) (58,161,907) (31,675,237)
Net Assets:
Beginning of period ....................................... 568,657,774 682,270,801 83,015,972 114,691,209
------------- ------------- ------------- -------------
End of period ............................................. $ 625,102,465 $ 568,657,774 $ 24,854,065 $ 83,015,972
============= ============= ============= =============
</TABLE>
See Accompanying Notes to Financial Statements.
70
<PAGE>
The BEA Funds
of The RBB Fund, Inc.
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
BEA U.S. Core BEA Global BEA Select Economic
Equity Fund Telecommunications Fund Value Equity Fund
-------------------------------- ----------------------------------- -------------------
For the Year For the Year For the Year For the Period For the Period
Ended Ended Ended December 4, 1997* August 3, 1998*
August 31, 1998 August 31, 1997 August 31, 1998 to August 31, 1997 to August 31, 1998
--------------- --------------- --------------- ------------------ ------------------
<S> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income (loss) ......... $ 231,556 $ 505,555 $ (298) $ 618 $ 18,161
Net gain (loss) on investments and
foreign currency transactions ...... 7,098,025 23,232,367 142,046 60,316 (3,172,426)
------------ ------------ ------------ ------------ -----------
Net increase (decrease) in net assets
resulting from operations .......... 7,329,581 23,737,922 141,748 60,934 (3,154,265)
------------ ------------ ------------ ------------ -----------
Dividends and Distributions to
shareholders:
Dividends to shareholders from net
investment income:
BEA Institutional shares ........... (472,680) (657,991) -- -- --
BEA Advisor shares ................. -- -- (138) -- --
Distributions to shareholders from net
realized capital gains:
BEA Institutional shares ........... (12,679,702) (4,630,225) -- -- --
BEA Advisor shares ................. -- -- (37,787) -- --
------------ ------------ ------------ ------------ -----------
Total distributions to shareholders ..... (13,152,382) (5,288,216) (37,925) -- --
------------ ------------ ------------ ------------ -----------
Net capital share transactions .......... (16,844,975) 8,716,601 44,798 508,538 25,813,705
------------ ------------ ------------ ------------ -----------
Total increase (decrease) in
net assets ........................... (22,667,776) 27,166,307 148,621 569,472 22,659,440
Net Assets:
Beginning of period .................. 86,181,741 59,015,434 569,472 -- --
------------ ------------ ------------ ------------ -----------
End of period ........................ $ 63,513,965 $ 86,181,741 $ 718,093 $ 569,472 $22,659,440
============ ============ ============ ============ ===========
</TABLE>
* Commencement of Operations.
See Accompanying Notes to Financial Statements.
71
<PAGE>
The BEA Funds
of The RBB Fund, Inc.
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
BEA Long-Short Market BEA U.S. Core Fixed BEA Strategic Global
Neutral Fund Income Fund Fixed Income Fund
-------------------- ---------------------------------- ----------------------------------
For the Period For the Year For the Year For the Year For the Year
August 3, 1998* Ended Ended Ended Ended
to August 31, 1998 August 31, 1998 August 31, 1997 August 31, 1998 August 31, 1997
------------------ --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income ............... $ 21,200 $ 13,581,467 $ 9,002,632 $ 1,809,232 $ 2,209,653
Net gain (loss) on investments and
foreign currency transactions ..... 89,659 1,267,128 6,297,781 (247,851) (456,286)
------------- ------------- ------------- ------------- -------------
Net increase (decrease) in net assets
resulting from operations ......... 110,859 14,848,595 15,300,413 1,561,381 1,753,367
------------- ------------- ------------- ------------- -------------
Dividends and Distributions to
shareholders:
Dividends to shareholders from
net investment income:
BEA Institutional shares .......... -- (11,454,482) (8,690,856) (1,133,693) (1,800,833)
BEA Advisor shares ................ -- -- -- -- --
Distributions to shareholders from
net realized capital gains:
BEA Institutional shares .......... -- (2,782,277) (1,019,928) (1,162,260) (772,491)
BEA Advisor shares ................ -- -- -- -- --
------------- ------------- ------------- ------------- -------------
Total distributions to shareholders .... -- (14,236,759) (9,710,784) (2,295,953) (2,573,324)
------------- ------------- ------------- ------------- -------------
Net capital share transactions ......... 6,191,423 215,702,694 53,032,678 (15,067,445) 6,757,858
------------- ------------- ------------- ------------- -------------
Total increase (decrease) in
net assets .......................... 6,302,282 216,314,530 58,622,307 (15,802,017) 5,937,901
Net Assets:
Beginning of period ................. -- 177,218,582 118,596,275 44,285,401 38,347,500
------------- ------------- ------------- ------------- -------------
End of period ....................... $ 6,302,282 $ 393,533,112 $ 177,218,582 $ 28,483,384 $ 44,285,401
============= ============= ============= ============= =============
</TABLE>
* Commencement of Operations ...........
See Accompanying Notes to Financial Statements.
72
<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 Year For the Year For the Year For the Year
Ended Ended Ended Ended
August 31, 1998 August 31, 1997 August 31, 1998 August 31, 1997
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income ..................................... $ 8,042,385 $ 7,559,270 $ 979,325 $ 946,746
Net gain (loss) on investments and foreign
currency transactions ................................... (3,054,518) 5,031,026 541,320 867,592
------------ ------------ ------------ ------------
Net increase (decrease) in net assets
resulting from operations ............................... 4,987,867 12,590,296 1,520,645 1,814,338
------------ ------------ ------------ ------------
Dividends and Distributions to shareholders:
Dividends to shareholders from net investment
income:
BEA Institutional shares ................................ (7,732,581) (7,131,514) (976,336) (944,821)
BEA Advisor shares ...................................... (169,975) (4,682) -- --
Distributions to shareholders from net realized capital gains:
BEA Institutional shares ................................ -- -- (154,615) (594,155)
BEA Advisor shares ...................................... -- -- -- --
------------ ------------ ------------ ------------
Total distributions to shareholders .......................... (7,902,556) (7,136,196) (1,130,951) (1,538,976)
------------ ------------ ------------ ------------
Net capital share transactions ............................... 4,811,589 11,414,154 2,028,820 (46,498)
------------ ------------ ------------ ------------
Total increase (decrease) in net assets ...................... 1,896,900 16,868,254 2,418,514 228,864
Net Assets:
Beginning of period ....................................... 92,716,812 75,848,558 19,810,118 19,581,254
------------ ------------ ------------ ------------
End of period ............................................. $ 94,613,712 $ 92,716,812 $ 22,228,632 $ 19,810,118
============ ============ ============ ============
</TABLE>
See Accompanying Notes to Financial Statements.
73
<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
Year Ended Year Ended Year Ended Year Ended Year Ended
August 31, 1998 August 31, 1997 August 31, 1996 August 31, 1995 August 31, 1994
--------------- --------------- --------------- --------------- ----------------
Institutional Institutional Institutional Institutional Institutional
--------------- --------------- --------------- --------------- ----------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period .......... $ 22.22 $ 19.41 $ 18.24 $ 20.73 $ 18.73
-------- -------- -------- -------- --------
Income from investment
operations
Net investment
income ................... 0.15 0.18 0.19 0.06 0.05
Net gain (loss) on
investments and
foreign currency
transactions (realized
and unrealized)........... 3.26 2.89 1.05 (1.75) 2.60
-------- -------- -------- -------- --------
Total from investment
operations................ 3.41 3.07 1.24 (1.69) 2.65
-------- -------- -------- -------- --------
Less Distributions
Dividends from net
investment income ........ -- (0.26) (0.07) -- (0.05)
Distributions from
capital gains............. (2.93) -- -- (0.80) (0.60)
-------- -------- -------- -------- --------
Total distributions ........ (2.93) (0.26) (0.07) (0.80) (0.65)
-------- -------- -------- -------- --------
Net asset value,
end of period................. $ 22.70 $ 22.22 $ 19.41 $ 18.24 $ 20.73
======== ======== ======== ======== ========
Total return................... 16.74% 15.93% 6.81%(d) (8.06)%(d) 14.23%(d)
Ratio/Supplemental Data
Net assets,
end of period (000's)....... $623,482 $568,510 $682,271 $773,255 $767,190
Ratio of expenses to
average net assets.......... 1.14%(a) 1.16%(a) 1.19%(a) 1.25%(a) 1.25%(a)
Ratio of net investment
income (loss)
to average net assets....... 0.72% 0.71% 0.84% 0.35% 0.33%
Fund turnover rate............ 141% 126% 86% 78% 104%
</TABLE>
<TABLE>
<CAPTION>
----------------------------------------
For the For the Period
Year Ended November 1, 1996* to
August 31, 1998 August 31, 1997
--------------- -------------------
Advisor Advisor
--------------- -------------------
<S> <C> <C>
Net asset value,
beginning of period .......... $ 22.17 $ 19.67
------- -------
Income from investment
operations
Net investment
income ................... 0.03 0.36
Net gain (loss) on
investments and
foreign currency
transactions (realized
and unrealized)........... 3.29 2.40
------- -------
Total from investment
operations................ 3.32 2.76
------- -------
Less Distributions
Dividends from net
investment income ........ -- (0.26)
Distributions from
capital gains............. (2.93) --
------- -------
Total distributions ........ (2.93) (0.26)
------- -------
Net asset value,
end of period................. $ 22.56 $ 22.17
======= =======
Total return................... 16.33% 14.14%(c)
Ratio/Supplemental Data
Net assets,
end of period (000's)....... $ 1,620 $ 147
Ratio of expenses to
average net assets.......... 1.40%(a) 1.43%(a)(b)
Ratio of net investment
income (loss)
to average net assets....... 0.58% 1.15%(b)
Fund turnover rate............ 141% 126%(c)
</TABLE>
(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 1.23%, 1.25%, 1.22%, 1.26% and 1.30%
for the years ended August 31, 1998, 1997, 1996, 1995 and 1994,
respectively. 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 1.48 % for the year ended
August 31, 1998 and 1.53% annualized for the period ended August 31, 1997.
(b) Annualized.
(c) Not Annualized.
(d) Redemption fees not reflected in
total return.
* Commencement of operations.
See Accompanying Notes to Financial Statements.
74
<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 For the For the For the
Year Ended Year Ended Year Ended Year Ended Year Ended
August 31, 1998 August 31, 1997 August 31, 1996 August 31, 1995 August 31, 1994
--------------- --------------- --------------- --------------- ----------------
Institutional Institutional Institutional Institutional Institutional
--------------- --------------- --------------- --------------- ----------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period .......... $ 19.64 $ 18.20 $ 17.67 $ 24.58 $ 18.38
------- -------- -------- -------- --------
Income from investment
operations
Net investment
income (loss) ............ 0.12 0.21 0.10 0.02 (0.03)
Net gain (loss) on
investments and
foreign currency
transactions (realized
and unrealized)........... (8.08) 1.30 0.48 (5.94) 6.64
------- ------- -------- -------- --------
Total from investment
operations ............... (7.96) 1.51 0.58 (5.92) 6.61
------- ------- -------- -------- --------
Less Distributions
Dividends from net
investment income ........ (0.20) (0.07) (0.05) (0.07) (0.09)
Distributions from
capital gains ............ (0.17) -- -- (0.92) (0.32)
Return of capital .......... (0.87) -- -- -- --
------- ------- -------- -------- --------
Total distributions ........ (1.24) (0.07) (0.05) (0.99) (0.41)
------- ------- -------- -------- --------
Net asset value,
end of period ................ $ 10.44 $ 19.64 $ 18.20 17.67 $ 24.58
======= ======= ======== ======== ========
Total return ................... (42.96)% 8.31% 3.33%(d) (24.42)%(d) 35.99%(d)
Ratio/Supplemental Data
Net assets,
end of period (000's) ...... $24,217 $83,012 $114,691 $128,323 $140,675
Ratio of expenses to
average net assets ......... 1.50%(a) 1.49%(a) 1.49%(a) 1.50%(a) 1.50%(a)
Ratio of net investment
income (loss)
to average net assets ...... 0.61% 0.99% 0.63% 0.02% (0.02)%
Fund turnover rate ........... 179% 147% 79% 79% 54%
</TABLE>
<TABLE>
<CAPTION>
----------------------------------------
For the For the Period
Year Ended November 1, 1996* to
August 31, 1998 August 31, 1997
--------------- -------------------
Advisor Advisor
--------------- -------------------
<S> <C> <C>
Net asset value,
beginning of period .......... $ 19.60 $18.08
------- ------
Income from investment
operations
Net investment
income (loss) ............ 0.03 0.18
Net gain (loss) on ------- ------
investments and
foreign currency
transactions (realized
and unrealized)........... (7.99) 1.40
------- ------
Total from investment
operations ............... (7.96) 1.58
------- ------
Less Distributions
Dividends from net
investment income ........ (0.12) (0.06)
Distributions from
capital gains ............ (0.17) --
Return of capital .......... (0.87) --
------- ------
Total distributions ........ (1.16) (0.06)
------- ------
Net asset value,
end of period ................ $ 10.48 $19.60
======= ======
Total return ................... (42.86)% 8.76%(c)
Ratio/Supplemental Data
Net assets,
end of period (000's) ...... $ 636 $ 4
Ratio of expenses to
average net assets ......... 1.75%(a) 1.75%(a)(b)
Ratio of net investment
income (loss)
to average net assets ...... 1.08% 0.88%(b)
Fund turnover rate ........... 179% 147%
</TABLE>
(a) Without the voluntary waiver of advisory fees and administration fees and
without the reimbursement of operating expenses, the ratios of expenses to
average net assets for the BEA Emerging Markets Institutional Class would
have been 2.01%, 1.63%, 1.62%, 1.61% and 2.01% for the years ended August
31, 1998, 1997, 1996, 1995 and 1994, respectively. 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 2.33% for the year ended August 31, 1998 and 1.88% for the period
ended August 31, 1997.
(b) Annualized
(c) Not Annualized
(d) Redemption fees not reflected in total return
* Commencement of operations.
See Accompanying Notes to Financial Statements.
75
<PAGE>
The BEA Funds
of The RBB Fund, Inc.
Financial Highlights
(For a Share Outstanding Throughout each Period)
<TABLE>
<CAPTION>
BEA U.S. Core Equity Fund
-------------------------------------------------------------------------------------
For the For the For the For the Period
Year Ended Year Ended Year Ended September 1, 1994* to
August 31, 1998 August 31, 1997 August 31, 1996 August 31, 1995
--------------- --------------- --------------- ---------------------
Institutional Institutional Institutional Institutional
--------------- --------------- --------------- ---------------------
<S> <C> <C> <C> <C>
Net asset value,
beginning of period....... $ 24.40 $ 19.05 $ 17.86 $ 15.00
------- ------- ------- -------
Income from investment
operations
Net investment
income (loss)......... 0.01 0.14 0.20 0.22
Net gain (loss) on
investments and
foreign currency
transactions
(realized
and unrealized)....... 0.88 6.82 2.81 2.72
------- ------- ------- -------
Total from investment
operations............ 0.89 6.96 3.01 2.94
-------- ------- ------- -------
Less Distributions
Dividends from net
investment income..... (0.13) (0.20) (0.21) (0.08)
Distributions from
capital gains......... (3.43) (1.41) (1.61) --
-------- ------- ------- -------
Total distributions..... (3.56) (1.61) (1.82) (0.08)
-------- ------- ------- -------
Net asset value,
end of period............. $ 21.73 $ 24.40 $ 19.05 $ 17.86
======== ======= ======= =======
Total return................. 3.18% 38.32% 17.59% 19.75%
Ratio/Supplemental Data
Net assets,
end of period
(000's)............... $63,514 $86,182 $59,015 $31,644
Ratio of expenses to
average net assets.... 1.00%(a) 1.00%(a) 1.00%(a) 1.00%(a)
Ratio of net investment
income (loss) to
average net assets.... 0.23% 0.67% 1.25% 1.59%
Fund turnover rate...... 164% 93% 127% 123%
</TABLE>
<TABLE>
<CAPTION>
BEA Global
Telecommunications Fund
--------------------------------------------
For the For the Period
Year Ended December 4, 1996* to
August 31, 1998 August 31, 1997
--------------- --------------------
Advisor Advisor
--------------- --------------------
<S> <C> <C>
Net asset value,
beginning of period....... $17.30 $15.00
------ ------
Income from investment
operations
Net investment income (0.01) 0.02
Net gain (loss) on
investments and
foreign currency
transactions
(realized
and unrealized)....... 4.29 2.28
------ ------
Total from investment
operations............ 4.28 2.30
------ ------
Less Distributions
Dividends from net
investment income..... -- --
Distributions from
capital gains......... (1.04) --
------ ------
Total distributions..... (1.04) --
------ ------
Net asset value,
end of period............. $20.54 $17.30
====== ======
Total return................. 25.38% 15.33%(c)
Ratio/Supplemental Data
Net assets,
end of period
(000's)............... $ 718 $ 569
Ratio of expenses to
average net assets.... 1.65%(a) 1.65%(a)(b)
Ratio of net investment
income (loss) to
average net assets.... (0.03)% 0.16%(b)
Fund turnover rate...... 169% 43%(c)
</TABLE>
(a) Without the voluntary waiver of advisory fees and administration fees, the
ratios of expenses to average net assets for the BEA U.S. Core Equity Fund
would have been 1.18%, 1.18%, 1.34% for the years ended August 31, 1998,
1997 and 1996, respectively, and 1.51% annualized for the period ended
August 31, 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 6.86% for the year
ended August 31, 1998 and 8.38% annualized for the period ended August 31,
1997.
(b) Annualized.
(c) Not annualized.
* Commencement of operations.
See Accompanying Notes to Financial Statements.
76
<PAGE>
The BEA Funds
of The RBB Fund, Inc.
Financial Highlights
(For a Share Outstanding Throughout each Period)
<TABLE>
<CAPTION>
BEA Select BEA
Economic Long-Short
Value Market
Equity Fund Neutral Fund BEA U.S. Core Fixed Income Fund
----------------- ------------------- -----------------------------------------
For the Period For the Period For the For the
August 3, 1998* to August 3, 1998* to Year Ended Year Ended
August 31, 1998 August 31, 1998 August 31, 1998 August 31, 1997
------------------ ------------------- --------------- ---------------
Institutional Institutional Institutional Institutional
------------------ ------------------- --------------- ---------------
<S> <C> <C> <C> <C>
Net asset value,
beginning of period ................ $ 15.00 $15.00 $ 15.65 $ 15.06
------- ------ -------- --------
Income from investment
operations
Net investment income ............ 0.01 0.05 0.84 0.92
Net gain (loss) on investments and
foreign currency transactions
(realized and unrealized) ...... (1.84) 0.22 0.33 0.76
------- ------ -------- --------
Total from investment
operations ..................... (1.83) 0.27 1.17 1.68
------- ------ -------- --------
Less Dividends and
Distributions
Dividends from net
investment income .............. -- -- (0.87) (0.97)
Distributions from
capital gains .................. -- -- (0.23) (0.12)
------- ------ -------- --------
Total distributions .............. -- -- (1.10) (1.09)
------- ------ -------- --------
Net asset value,
end of period ...................... $ 13.17 $15.27 $ 15.72 $ 15.65
======= ====== ======== ========
Total return ..................... (12.20)%(a)(c) 1.80%(a)(c) 7.77% 11.53%
Ratio/Supplemental Data
Net assets,
end of period (000's) .......... $22,659 $6,302 $393,533 $177,219
Ratio of expenses to average net
assets (including dividend
expense) ....................... -- 4.32% -- --
Ratio of expenses to
average net assets (excluding
dividend expense) .............. 1.00%(a)(b) 2.00%(a)(b) 0.47%(a) 0.50%(a)
Ratio of net investment
income (loss) to average
net assets ..................... 0.92% 1.96% 5.87% 6.31%
Fund turnover rate ............... 52%(c) 130% 372% 372%
</TABLE>
<TABLE>
<CAPTION>
BEA U.S. Core Fixed Income Fund
-------------------------------------------------------
For the For the For the Period
Year Ended Year Ended April 1, 1994* to
August 31, 1996 August 31, 1995 August 31, 1994
--------------- --------------- ------------------
Institutional Institutional Institutional
--------------- --------------- ------------------
<S> <C> <C> <C>
Net asset value,
beginning of period ................ $ 15.42 $ 14.77 $ 15.00
-------- ------- -------
Income from investment
operations
Net investment income ............ 0.95 0.88 0.42
Net gain (loss) on investments and
foreign currency transactions
(realized and unrealized) ...... (0.16) 0.61 (0.40)
-------- ------- -------
Total from investment
operations ..................... 0.79 1.49 0.02
-------- ------- -------
Less Dividends and
Distributions
Dividends from net
investment income .............. (0.93) (0.84) (0.25)
Distributions from
capital gains .................. (0.22) -- --
-------- ------- -------
Total distributions .............. (1.15) (0.84) (0.25)
-------- ------- -------
Net asset value,
end of period ...................... $ 15.06 $ 15.42 $ 14.77
======== ======= =======
Total return ..................... 5.23% 10.60% 0.17%(c)
Ratio/Supplemental Data
Net assets,
end of period (000's) .......... $118,596 $99,250 $30,016
Ratio of expenses to average net
assets (including dividend
expense) ....................... -- -- --
Ratio of expenses to
average net assets (excluding
dividend expense) .............. 0.50%(a) 0.50%(a) 0.50(a)(b)
Ratio of net investment
income (loss) to average
net assets ..................... 6.43% 6.47% 6.04%(b)
Fund turnover rate ............... 201% 304% 186%(c)
</TABLE>
(a) Without the voluntary waiver of advisory fees and administration fees, the
ratios of expenses to average net assets for the Select Economic Value Fund
Institutional Class would have been 1.30% annualized for the period ended
August 31, 1998. Without the voluntary waiver of advisory fees and
administration fees, the ratios of expenses to average net assets for the
Long-Short Market Neutral Fund Institutional Class would have been 5.12%
(excluding dividend expense) and 7.44% (including dividend expense)
annualized for the period ended August 31, 1998. 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 .74%, .78%, .78% and .84% for the years ended August
31, 1998, 1997, 1996 and 1995, respectively, and .99% annualized for the
period ended August 31, 1994.
(b) Annualized.
(c) Not annualized.
* Commencement of operations.
See Accompanying Notes to Financial Statements.
77
<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 For the Period
Year Ended Year Ended Year Ended Year Ended June 28, 1994* to
August 31, 1998 August 31, 1997 August 31, 1996 August 31, 1995 August 31, 1994
---------------- --------------- --------------- --------------- --------------------
Institutional Institutional Institutional Institutional Institutional
---------------- --------------- --------------- --------------- --------------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period ............... $ 15.41 $ 15.75 $ 15.67 $ 15.00 $15.00
------- ------- ------- ------- ------
Income from investment
operations
Net investment income ........... 0.87 0.85 0.87 1.06 0.15
Net gain (loss) on investments
and foreign currency
transactions (realized and
unrealized) ................... (0.25) (0.16) 0.58 0.49 (0.15)
------- ------- ------- ------- ------
Total from investment
operations .................... 0.62 0.69 1.45 1.55 --
------- ------- ------- ------- ------
Less Distributions
Dividends from net
investment income ............. (0.45) (0.71) (1.22) (0.88) --
Distributions from
capital gains ................. (0.48) (0.32) (0.15) -- --
------- ------- ------- ------- ------
Total distributions ............. (0.93) (1.03) (1.37) (0.88) --
------- ------- ------- ------- ------
Net asset value,
end of period ..................... $ 15.10 $ 15.41 $ 15.75 $ 15.67 $15.00
======= ======= ======= ======= ======
Total return ......................... 4.19% 4.48% 9.65% 10.72% 0.00%(c)
Ratio/Supplemental Data
Net assets,
end of period (000's) ......... $28,483 $44,285 $38,348 $19,565 $6,300
Ratio of expenses to
average net assets ............ 0.75%(a) 0.75%(a) 0.75%(a) 0.75%(a) 0.75%(a)(b)
Ratio of net investment
income (loss)
to average net assets ......... 5.30% 5.31% 7.37% 7.26% 5.64%(b)
Fund turnover rate .............. 283% 98% 87% 91% 0%(c)
</TABLE>
(a) Without the voluntary waiver of advisory fees and administration fees and
without the reimbursement of operating expenses, the ratios of expenses to
average net assets for the BEA Strategic Global Fixed Income Fund
Institutional Class would have been 1.17%, 0.98%, 1.07% and 1.29% for the
years ended August 31, 1998, 1997, 1996, and 1995, respectively and 1.92%
annualized for the period ended August 31, 1994.
(b) Annualized.
(c) Not annualized.
* Commencement of operations.
See Accompanying Notes to Financial Statements.
78
<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
Year Ended Year Ended Year Ended Year Ended Year Ended
August 31, 1998 August 31, 1997 August 31, 1996 August 31, 1995 August 31, 1994
--------------- --------------- --------------- --------------- ----------------
Institutional Institutional Institutional Institutional Institutional
--------------- --------------- --------------- --------------- ----------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period ........ $ 17.08 $ 16.09 $ 15.72 $ 15.94 $ 16.94
------- ------- ------- -------- --------
Income from investment
operations
Net investment income .... 1.43 1.37 1.47 1.42 1.20
Net gain (loss) on
investments and
foreign currency
transactions (realized
and unrealized) ........ (0.49) 0.96 0.40 (0.30) (0.77)
------- ------- ------- -------- --------
Total from investment
operations ............. 0.94 2.33 1.87 1.12 0.43
------- ------- ------- -------- --------
Less Distributions
Dividends from net
investment income ...... (1.42) (1.34) (1.50) (1.34) (1.43)
Distributions from
capital gains .......... -- -- -- -- --
------- ------- ------- -------- --------
Total distributions ...... (1.42) (1.34) (1.50) (1.34) (1.43)
------- ------- ------- -------- --------
Net asset value, end of
period ................... $ 16.60 $ 17.08 $ 16.09 $ 15.72 $ 15.94
======= ======= ======= ======== ========
Total return ................. 5.48% 15.17% 12.42% 7.79%(d) 2.24%(d)
Ratio/Supplemental Data
Net assets,
end of period (000's)... $94,044 $92,630 $75,849 $153,621 $143,517
Ratio of expenses to
average net assets ..... 0.70%(a) 0.70%(a) 0.88%(a) 1.00%(a) 1.00%(a)
Ratio of net investment
income (loss)
to average net assets .. 8.12% 8.44% 8.92% 9.37% 7.73%
Fund turnover rate ....... 60% 84% 143% 70% 121%
</TABLE>
<TABLE>
<CAPTION>
----------------------------------------
For the For the Period
Year Ended November 1, 1996* to
August 31, 1998 August 31, 1997
--------------- -------------------
Advisor Advisor
--------------- -------------------
<S> <C> <C>
Net asset value,
beginning of period ........ $17.08 $16.21
Income from investment
operations
Net investment income .... 1.36 0.93
Net gains (losses) on
investments and
foreign currency
transactions (realized
and unrealized) ........ (0.45) 0.87
------ ------
Total from investment
operations ............. 0.91 1.80
------ ------
Less Distributions
Dividends from net
investment income ...... (1.37) (0.93)
Distributions from
capital gains .......... -- --
------ ------
Total distributions ...... (1.37) (0.93)
------ ------
Net asset value, end of
period ................... $16.62 $17.08
====== ======
Total return ................. 5.27% 11.49%(c)
Ratio/Supplemental Data
Net assets,
end of period (000's)... $ 570 $ 86
Ratio of expenses to
average net assets ..... 0.95%(a) 0.96%(a)(b)
Ratio of net investment
income (loss)
to average net assets .. 7.96% 8.13%(b)
Fund turnover rate ....... 60% 84%(c)
</TABLE>
(a) Without the voluntary waiver of advisory fees and administration fees, the
ratios of expenses to average net assets for the BEA High Yield Fund
Institutional Class would have been 1.14%, 1.13%, 1.11% , 1.08%, 1.13% for
the years ended August 31, 1998, 1997, 1996, 1995, 1994, respectively.
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 1.39% for the year ended August 31,1998 and
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.
See Accompanying Notes to Financial Statements.
79
<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 For the Period
Year Ended Year Ended Year Ended Year Ended June 20, 1994* to
August 31, 1998 August 31, 1997 August 31, 1996 August 31, 1995 August 31, 1994
--------------- --------------- --------------- --------------- ---------------
Institutional Institutional Institutional Institutional Institutional
--------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of period .................. $ 14.84 $ 14.65 $ 15.46 $ 15.06 $ 15.00
------- ------- ------- ------- -------
Income from investment
operations
Net investment income .............. 0.70 0.72 0.73 0.71 0.09
Net gain (loss) on investments
and foreign currency
transactions (realized and
unrealized) ...................... 0.40 0.65 (0.37) 0.50 (0.03)
------- ------- ------- ------- -------
Total from investment
operations ....................... 1.10 1.37 0.36 1.21 0.06
------- ------- ------- ------- -------
Less Distributions
Dividends from net
investment income ................ (0.71) (0.72) (0.74) (0.76) --
Distributions from
capital gains .................... (0.11) (0.46) (0.43) (0.05) --
------- ------- ------- ------- -------
Total distributions ................ (0.82) (1.18) (1.17) (0.81) --
------- ------- ------- ------- -------
Net asset value, end of period .......... $ 15.12 $ 14.84 $ 14.65 $ 15.46 $ 15.06
======= ======= ======= ======= =======
Total return ............................ 7.62% 9.74% 2.27% 8.42% 0.40%(c)
Ratio/Supplemental Data
Net assets,
end of period (000's) ............ $22,229 $19,810 $19,581 $48,978 $42,310
Ratio of expenses to
average net assets ............... 1.00%(a) 1.00%(a) 1.00%(a) 1.00%(a) 1.00%(a)(b)
Ratio of net investment
income (loss) to average
net assets ....................... 4.72% 4.88% 4.62% 4.76% 3.27%(b)
Fund turnover rate ................. 57% 43% 34% 25% 9%(c)
</TABLE>
(a) Without the voluntary waiver of advisory fees and administration fees, the
ratios of expenses to average net assets for the Municipal Bond Fund
Institutional Class would have been 1.39%, 1.37%, 1.42% and 1.19% for the
years ended August 31, 1998, 1997, 1996 and 1995, respectively, and 1.34%
annualized for the period ended August 31, 1994.
(b) Annualized.
(c) Not annualized.
* Commencement of operations.
80
See Accompanying Notes to Financial Statements.
<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 twenty-six
investment Portfolios, ten of which are included in these financial statements.
The Fund has authorized capital of thirty billion shares of common stock of
which 16.27 billion are currently classified into ninety-seven classes. Each
class represents an interest in one of twenty-six investment portfolios of RBB.
The classes have been grouped into fifteen separate "families", nine of which
have begun investment operations. The BEA Family represents interests in ten
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 are class specific 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 generally
accepted accounting principles (GAAP) and 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 GAAP 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) REPURCHASE AGREEMENTS -- Money market instruments may be
purchased from banks and non-bank dealers subject to the seller's agreement
to repurchase them at an agreed upon date and price. Collateral for
repurchase agreements may have longer maturities than the maximum
permissible remaining maturity of portfolio
81
<PAGE>
The BEA Funds
of The RBB Fund, Inc.
Notes to Financial Statements (Continued)
Note 1. Summary of Significant Accounting Policies (Continued)
investments. The seller will be required on a daily basis to maintain the
value of the securities subject to the agreement to equal at least 102% of
the repurchase price including accrued interest. The agreements are
conditional upon the collateral being deposited under the Federal Reserve
book-entry system or held in a separate account by the Fund's custodian or
an authorized securities depository.
Listed below is the collateral associated with the repurchase agreement
with Bear Stearns outstanding at August 31, 1998 for the BEA Long-Short
Market Neutral Fund:
<TABLE>
<CAPTION>
Market Accrued Total
Security Maturity Par Value Interest Value
-------- -------- -------- ------- -------- -------
<S> <C> <C> <C> <C> <C>
Federal National Mortgage Association Strip PO 07/01/26 965,000 612,407 1,717 614,124
</TABLE>
H) FINANCIAL FUTURES TRANSACTIONS -- The Fund invests in
financial futures contracts solely for the purpose of hedging its existing
portfolio securities, or securities that the Fund intends to purchase,
against fluctuations in fair value caused by changes in prevailing market
interest rates. Certain portfolios of the Fund may enter into futures
contracts subject to certain limitations. Upon entering into a futures
contract, the Fund is required to deposit cash or pledge U.S. Government
securities of an initial margin. Subsequent payments, which are dependent
on the daily fluctuations in the value of the underlying security or
securities, are made or received by the Fund each day (daily variations
margin) and are recorded as unrealized gains or losses until the contracts
are closed. When the contracts are closed, the Fund records a realized gain
or loss equal to the difference between the proceeds from (or cost of) the
closing transaction and the Fund's basis in the contracts. Risks of
entering into futures contracts include the possibility that there will be
an imperfect price correlation between the futures contracts and the
underlying securities. Second, it is possible that a lack of liquidity for
futures contracts could exist in the secondary market, resulting in an
inability to close a futures position prior to its maturity date. Third,
the purchase of a futures contract involves the risk that a Fund could lose
more than the original margin deposit required to initiate a futures
transaction.
As of August 31, 1998, U.S. Core Fixed Income Fund held the following
futures contracts:
<TABLE>
<CAPTION>
Futures Expiration Contract Contract Unrealized
Contracts Date Amount Value Gain/Loss
--------- ---------- -------------- -------------- -----------
<S> <C> <C> <C> <C>
5-Year Treasury Notes Future 12/21/98 $ 16,239,313 $ 16,365,688 $ 126,375
U.S. Treasury Notes Future 12/21/98 $ (36,334,016) $ (36,787,063) $ (453,047)
Treasury Bond Future 12/21/98 $ 22,679,780 $ 22,981,344 $ 301,564
Japan 10-Year BondFuture 09/09/98 $ (12,160,000) $ (12,403,175) $ (243,175)
</TABLE>
As of August 31, 1998, Strategic Global Fixed Income Fund held the
following futures contracts:
<TABLE>
<CAPTION>
Futures Expiration Contract Contract Unrealized
Contracts Date Amount Value Gain/Loss
--------- ---------- -------------- -------------- -----------
<S> <C> <C> <C> <C>
U.S. Treasury Notes Future 12/21/98 $(3,239,906) $(3,280,375) $(40.469)
U.S. Treasury Notes Future 12/21/98 $ 375,914 $ 380,906 $ 4,992
</TABLE>
I) TBA PURCHASE COMMITMENTS -- The Funds may enter into "TBA" (to
be announced) purchases commitments to purchase securities for a fixed
price at a future date, typically not exceeding 45 days. TBA purchase
commitments are considered securities and involve a risk of loss if the
value of the security to be purchased declines prior to settlement date,
which risk is in addition to the risk of decline in the Fund's other
assets. Unsettled TBA purchase commitments are valued at the current market
value of the underlying securities, according to the procedures described
under "Security Valuation" above.
82
<PAGE>
The BEA Funds
of The RBB Fund, Inc.
Notes to Financial Statements (Continued)
Note 1. Summary of Significant Accounting Policies (Continued)
J) SECURITIES LENDING -- Loans of the securities are required at
all times to be secured by collateral at least equal to 102% of the market
value of domestic securities on loan including any accrued interest thereon
and 105% of the market value of foreign securities on loan including any
accrued interest thereon. However, in the event of default or bankruptcy by
the other party to the agreement, realization and/or retention of the
collateral may be subject to legal proceedings. The market value of
securities on loan to brokers and the value of collateral held by the Fund
with respect to such loans (including right to draw on letter of credit) at
August 31, 1998, is as follows
<TABLE>
<CAPTION>
Markets Value of Value of
Fund Securities Loaned Collateral Recorded
------------------------------------------ ----------------- --------------------
<S> <C> <C>
BEA International Equity Fund $84,245,397 $88,971,334
BEA Emerging Markets Equity Fund 3,141,896 3,331,400
BEA U.S. Core Equity Fund 9,319,263 9,567,600
BEA Select Economic Equity Fund Value 463,125 475,000
</TABLE>
K) SHORT SALES -- When the Adviser anticipates that a security is
overvalued, it may sell the security short by borrowing the same security
from a broker or other institution and selling the security. A Fund will
incur a loss as a result of a short sale if the price of the borrowed
security increases between the date of the short sale and the date on which
the Fund replaces such security. A Fund will realize a gain if there is a
decline in price of the security between those dates, which decline exceeds
the costs of the borrowing the security and other transaction costs. There
can be no assurance that a Fund will be able to close out a short position
at any particular time or at an acceptable price. Although a Fund's gain is
limited to the amount at which it sold a security short, its potential loss
is limited only by the maximum attainable price of the security less the
price at which the security was sold. Until a Fund replaces a borrowed
security, it will maintain at all times cash, U.S. Government securities,
or other liquid securities in an amount which, when added to any amount
deposited with a broker as collateral will at least equal the current
market value of the security sold short. Depending on arrangements made
with brokers, a Fund may not receive any payments (including interest) on
collateral deposited with them. The Funds will not make a short sale if,
after giving effect to such sale, the market value of all securities sold
short exceeds 100% of the value of a Fund's net assets.
L) OTHER -- Securities denominated in currencies other than U.S.
dollars are subject to changes in value due to fluctuations in exchange
rates.
Some countries in which the Funds invest require governmental approval for
the repatriation of investment income, capital or the proceeds of sales of
securities by foreign investors. In addition, if there is a deterioration in a
country's balance of payments or for other reasons, a country may impose
temporary restrictions on foreign capital remittances abroad.
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.
83
<PAGE>
The BEA Funds
of The RBB Fund, Inc.
Notes to Financial Statements (Continued)
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 ten Funds described herein.
For its advisory services, BEA is entitled to receive the following fees,
computed daily and payable quarterly on a Fund's average daily net assets:
<TABLE>
<CAPTION>
Fund Annual Rate
---------------------------------------- ---------------------------------
<S> <C>
BEA International Equity Fund 0.80% of average daily net assets
BEA Emerging Markets Equity Fund 1.00% of average daily net assets
BEA U.S. Core Equity Fund 0.75% of average daily net assets
BEA Global Telecommunications Fund 1.00% of average daily net assets
BEA Select Economic Value Equity Fund 0.75% of average daily net assets
BEA Long-Short Market Neutral Fund 1.50% 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
</TABLE>
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, 1998, advisory
fees and waivers for each of the ten investment Funds were as follows:
<TABLE>
<CAPTION>
Gross Net
Advisory Fee Waiver Advisory Fee
------------ --------- ------------
<S> <C> <C> <C>
BEA International Equity Fund $4,971,749 $ (27,976) $4,943,773
BEA Emerging Markets Equity Fund 609,034 (234,633) 374,401
BEA U.S. Core Equity Fund 739,710 (36,437) 703,273
BEA Global Telecommunications Fund 9,174 (9,174) --
BEA Select Economic Value Equity Fund 14,867 (643) 14,224
BEA Long-Short Market Neutral Fund 7,419 (2,758) 4,661
BEA U.S. Core Fixed Income Fund 867,842 (288,699) 579,143
BEA Strategic Global Fixed Income Fund 170,631 (89,310) 81,321
BEA High Yield Fund 693,346 (271,277) 422,069
BEA Municipal Bond Fund 145,287 (51,669) 93,618
</TABLE>
BEA reimbursed the BEA Global Telecommunications Fund $37,067 for the year
ended August 31, 1998.
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.
84
<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 ten 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, 1998, administration fees for each of the ten investment Funds were
as follows:
<TABLE>
<CAPTION>
Gross Net
Administration Fee Waiver Administration Fee
------------------ --------- ------------------
<S> <C> <C> <C>
BEA International Equity Fund $776,835 $ (7,213) $769,622
BEA Emerging Markets Equity Fund 76,129 -- 76,129
BEA U.S. Core Equity Fund 123,285 -- 123,285
BEA Global Telecommunications Fund 1,147 (1,147) --
BEA Select Economic Value Equity Fund 2,478 (2,478) --
BEA Long-Short Market Neutral Fund 618 (618) --
BEA U.S. Core Fixed Income Fund 235,924 -- 235,924
BEA Strategic Global Fixed Income Fund 48,431 (5,494) 42,937
BEA High Yield Fund 123,812 (24,762) 99,050
BEA Municipal Bond Fund 30,402 -- 30,402
</TABLE>
Provident Distributors, Inc. ("PDI") 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 administrative agent may at its discretion, voluntarily waive all or
any portion of its administrative service fee for any of the Funds. For the year
ended August 31, 1998, administrative service fees for each of the ten
investment funds were as follows:
<TABLE>
<CAPTION>
Gross Administrative Net Administrative
Service Fee Waiver Service Fee
-------------------- ---------- ------------------
<S> <C> <C> <C>
BEA International Equity Fund $932,203 $(497,175) $435,028
BEA Emerging Markets Equity Fund 91,355 (73,084) 18,271
BEA U.S. Core Equity Fund 147,942 (138,079) 9,863
BEA Global Telecommunications Fund 459 (459) --
BEA Select Economic Value Equity Fund 2,973 (2,775) 198
BEA Long-Short Market Neutral Fund 742 (594) 148
BEA U.S. Core Fixed Income Fund 347,137 (323,994) 23,143
BEA Strategic Global Fixed Income Fund 51,189 (47,777) 3,412
BEA High Yield Fund 148,574 (138,669) 9,905
BEA Municipal Bond Fund 31,133 (29,057) 2,076
</TABLE>
The BEA International Equity Fund, BEA Emerging Markets Equity Fund, BEA
Global Telecommunications Fund, and the BEA High Yield Fund had each entered
into Distribution Agreements with Counsellors Securities, Inc. ("Counsellors
Securities") pursuant to their Distribution Plans under Rule 12b-1 of the 1940
Act. In consideration of services, the Distribution agreement provides that the
Funds will each pay the distributor a fee calculated to an annual rate of 0.25%
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.
85
<PAGE>
The BEA Funds
of The RBB Fund, Inc.
Notes to Financial Statements (Continued)
Note 3. Purchases and Sales of Securities
For the year ended August 31, 1998, purchases and sales of investment
securities (other than short-term investments) were as follows:
<TABLE>
<CAPTION>
Investment Securities U.S. Government Obligations Short Securities
----------------------------- ----------------------------- ----------------
Purchases Sales Purchases Sales Sales
------------ ------------ ------------- ------------ ----------------
<S> <C> <C> <C> <C> <C>
BEA International Equity Fund $832,050,010 $872,931,809 $ -- $ -- $ --
BEA Emerging Markets Equity Fund 99,922,836 129,951,583 -- -- --
BEA U.S. Core Equity Fund 151,566,833 188,161,919 -- -- --
BEA Global Telecommunications Fund 1,339,708 1,418,962 -- -- --
BEA Select Economic Equity Fund 36,493,041 11,416,525 -- -- --
BEA Long-Short Market Neutral Fund 6,985,683 734,861 -- -- 6,360,722
BEA U.S. Core Fixed Income Fund 241,703,217 160,761,216 1,179,740,152 910,268,176 --
BEA Strategic Global Fixed Income Fund 38,651,846 36,581,131 68,102,884 79,533,855 --
BEA High Yield Fund 71,838,211 68,120,582 -- -- --
BEA Municipal Bond Fund 6,969,526 6,453,747 4,499,548 5,116,564 --
</TABLE>
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 Year Ended
August 31, 1998 August 31, 1997 August 31, 1998
----------------------------- ------------------------------ -------------------------------
Institutional Institutional Advisor
----------------------------- ------------------------------ -------------------------------
Shares Value Shares Value Shares Value
------------ ------------- ------------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 4,245,007 $ 102,490,297 2,106,657 $ 43,959,322 211,487 $ 4,990,229
Shares issued in
reinvestment of
dividends 3,354,933 68,910,317 407,411 8,213,395 8,163 167,087
Shares repurchased (5,715,329) (125,473,547) (12,069,824) (255,570,149) (154,474) (3,642,448)
------------ ------------- ------------- ------------- ------------- -------------
Net increase (decrease) 1,884,611 $ 45,927,067 (9,555,756) $(203,397,432) 65,176 $ 1,514,868
============ ============= ============= ============= ============= =============
BEA Shares Authorized 500,000,000 500,000,000 100,000,000
============ ============= =============
<CAPTION>
---------------------------------
For the Period November 1, 1996*
Through August 31, 1997
--------------------------------
Advisor
------------------------------
Shares Value
------------- -------------
<S> <C> <C>
Shares sold 7,020 $ 142,126
Shares issued in
reinvestment of
dividends 2 33
Shares repurchased (375) (7,544)
------------- -------------
Net increase (decrease) 6,647 $ 134,615
============= =============
BEA Shares Authorized 100,000,000
=============
</TABLE>
<TABLE>
<CAPTION>
BEA Emerging Markets Equity Fund
--------------------------------------------------------------------------------------------------
For the Year Ended For the Year Ended For the Year Ended
August 31, 1998 August 31, 1997 August 31, 1998
----------------------------- ------------------------------ -------------------------------
Institutional Institutional Advisor
----------------------------- ------------------------------ -------------------------------
Shares Value Shares Value Shares Value
------------ ------------- ------------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 102,528 $ 1,830,455 300,734 $ 6,118,794 93,287 $ 1,457,394
Shares issued in
reinvestment of
dividends 245,801 4,154,034 11,536 216,755 46 775
Shares repurchased (2,256,500) (35,760,759) (2,385,604) (45,726,259) (32,820) (571,277)
------------- ------------- ------------- ------------- ------------- -------------
Net increase (decrease) (1,908,171) $ (29,776,270) (2,073,334) $ (39,370,710) 60,513 $ 886,892
============= ============= ============= ============= ============= =============
BEA Shares Authorized 500,000,000 500,000,000 100,000,000
============= ============= =============
<CAPTION>
---------------------------------
For the Period November 1, 1996*
Through August 31, 1997
--------------------------------
Advisor
------------------------------
Shares Value
------------- -------------
<S> <C> <C>
Shares sold 580 $ 6,252
Shares issued in
reinvestment of
dividends -- 9
Shares repurchased (397) (2,825)
------------- -------------
Net increase (decrease) 183 $ 3,436
============= =============
BEA Shares Authorized 100,000,000
=============
</TABLE>
*Commencement of operations.
86
<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 Equity Fund BEA Global
--------------------------------------------------------------- -------------------------------
For the Year Ended For the Year Ended For the Year Ended
August 31, 1998 August 31, 1997 August 31, 1998
----------------------------- ------------------------------ -------------------------------
Institutional Institutional Advisor
----------------------------- ------------------------------ -------------------------------
Shares Value Shares Value Shares Value
------------ ------------- ------------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 682,212 $ 16,949,211 629,948 $ 13,787,908 18,229 $ 414,135
Shares issued in
reinvestment of
dividends 568,713 12,778,985 247,726 4,994,154 2,037 37,921
Shares repurchased (1,859,405) (46,573,171) (443,835) (10,065,462) (18,228) (407,258)
------------- ------------- ------------- ------------- ------------- -------------
Net increase
(decrease) (608,480) $ (16,844,975) 433,839 $ 8,716,600 2,038 $ 44,798
============= ============= ============= ============= ============= =============
BEA Shares Authorized 50,000,000 50,000,000 100,000,000
============= ============= =============
<CAPTION>
Telecommunications Fund
---------------------------------
For the Period December 4, 1996*
Through August 31, 1997
--------------------------------
Advisor
------------------------------
Shares Value
------------- -------------
<S> <C> <C>
Shares sold 35,439 $ 550,788
Shares issued in
reinvestment of
dividends -- --
Shares repurchased (2,513) (42,249)
------------- -------------
Net increase (decrease) 32,926 $ 508,539
============= =============
BEA Shares Authorized 100,000,000
=============
</TABLE>
<TABLE>
<CAPTION>
BEA Select Economic
Value Equity Fund BEA Long-Short Market Neutral Fund
-----------------------------------------------------------------------
For the Period August 3, 1998* For the Period August 3, 1998*
Through August 31, 1998 Through August 31, 1998
------------------------------- -------------------------------
Institutional Institutional
------------------------------- -------------------------------
Shares Value Shares Value
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Shares sold 1,721,030 $25,813,705 412,744 $ 6,191,423
Shares issued in
reinvestment of
dividends -- -- -- --
Shares repurchased -- -- -- --
----------- ----------- ----------- -----------
Net increase (decrease) 1,721,030 $25,813,705 412,744 $ 6,191,423
=========== =========== =========== ===========
BEA Shares Authorized 50,000,000 50,000,000
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
BEA U.S. Core Fixed Income Fund BEA Strategic Global
---------------------------------------------------------------- -------------------------------
For the Year Ended For the Year Ended For the Year Ended
August 31, 1998 August 31, 1997 August 31, 1998
------------------------------ ------------------------------ -------------------------------
Institutional Institutional Advisor
------------------------------ ------------------------------ -------------------------------
Shares Value Shares Value Shares Value
------------- ------------- ------------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 15,080,236 $ 237,240,219 3,766,118 $ 57,492,720 227,215 $ 3,505,185
Shares issued in
reinvestment of
dividends 906,263 14,074,352 635,289 9,648,554 147,509 2,200,318
Shares repurchased (2,268,321) (35,611,876) (953,578) (14,608,596) (1,361,892) (20,772,949)
------------- ------------- ------------- ------------- ------------- -------------
Net increase (decrease) 13,718,178 $ 215,702,695 3,447,829 $ 53,032,678 (987,168) $ (15,067,446)
============= ============= ============= ============= ============= =============
BEA Shares Authorized 50,000,000 50,000,000 50,000,000
============= ============= =============
<CAPTION>
Fixed Income Fund
------------------------------
For the Year Ended
August 31, 1997
------------------------------
Institutional
------------------------------
Shares Value
------------- -------------
<S> <C> <C>
Shares sold 583,542 $ 9,015,150
Shares issued in
reinvestment of
dividends 155,630 2,420,275
Shares repurchased (300,343) (4,677,567)
------------- -------------
Net increase (decrease) 438,829 $ 6,757,858
============= =============
BEA Shares Authorized 50,000,000
=============
</TABLE>
*Commencement of operations.
87
<PAGE>
The BEA Funds
of The RBB Fund, Inc.
Notes to Financial Statements (Continued)
Note 4. Capital Shares (Continued)
<TABLE>
<CAPTION>
BEA High Yield Fund
---------------------------------------------------------------------------------------------------
For the Year Ended For the Year Ended For the Year Ended
August 31, 1998 August 31, 1997 August 31, 1998
------------------------------ ------------------------------ -------------------------------
Institutional Institutional Advisor
------------------------------ ------------------------------ -------------------------------
Shares Value Shares Value Shares Value
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 2,248,712 $ 38,970,312 1,921,993 $ 31,537,039 266,018 $ 4,697,209
Shares issued in
reinvestment of
dividends 416,842 7,175,130 425,311 6,905,890 9,315 162,504
Shares repurchased (2,423,467) (41,922,050) (1,638,080) (27,112,004) (246,118) (4,271,516)
------------- ------------- ------------- ------------- ------------- -------------
Net increase (decrease) 242,087 $ 4,223,392 709,224 $ 11,330,925 29,215 $ 588,197
============= ============= ============= ============= ============= =============
BEA Shares Authorized 500,000,000 500,000,000 100,000,000
============= ============= =============
<CAPTION>
--------------------------------
For the Period November 1, 1996*
Through August 31, 1997
--------------------------------
Advisor
--------------------------------
Shares Value
------------- -------------
<S> <C> <C>
Shares sold 5,206 $ 85,650
Shares issued in
reinvestment of
dividends 9 148
Shares repurchased (158) (2,569)
------------- -------------
Net increase (decrease) 5,057 $ 83,229
============= =============
BEA Shares Authorized 100,000,000
=============
</TABLE>
<TABLE>
<CAPTION>
BEA Municipal Bond Fund
------------------------------------------------------------------
For the Year Ended For the Year Ended
August 31, 1998 August 31, 1997
------------------------------ ------------------------------
Institutional Institutional
------------------------------ ------------------------------
Shares Value Shares Value
------------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
Shares sold 217,663 $ 3,269,230 7,719 $ 111,603
Shares issued in
reinvestment of
dividends 70,888 1,064,203 101,853 1,488,998
Shares repurchased (153,265) (2,304,613) (111,453) (1,647,099)
------------ ------------ ------------ ------------
Net increase (decrease) 135,286 $ 2,028,820 (1,881) $ (46,498)
============ ============ ============ ============
BEA Shares Authorized 50,000,000 50,000,000
============ ============
</TABLE>
*Commencement of operations.
On August 31, 1998, two shareholders held approximately 12% of the
outstanding shares of the BEA International Equity Institutional Class, three
shareholders held approximately 94% of the BEA International Advisor Class, four
shareholders held approximately 90% of the outstanding shares of the BEA
Emerging Markets Equity Institutional Class, seven shareholders held
approximately 84% of the outstanding shares of the BEA U.S. Core Equity
Institutional Class, one shareholder held approximately 98% of the BEA Emerging
Markets Advisor Class, two shareholders held approximately 98% of the
outstanding shares of the BEA Select Economic Value Equity Fund, one shareholder
held approximately 96% of the outstanding shares of the BEA Long-Short Market
Neutral Fund, four shareholders held approximately 64% of the outstanding shares
of the BEA Global Telecommunications Advisor Class, four shareholders held
approximately 76% of the outstanding shares of the BEA U.S. Core Fixed Income
Institutional Class, three shareholders held approximately 96% of the
outstanding shares of the BEA Strategic Global Fixed Income Institutional Class,
five shareholders held approximately 56% of the outstanding shares of the BEA
High Yield Institutional Class, two shareholders held approximately 98% of the
BEA High Yield Advisor Class and four shareholders held approximately 63% of the
outstanding shares of the BEA Municipal Bond Institutional Class.
88
<PAGE>
The BEA Funds
of The RBB Fund, Inc.
Notes to Financial Statements (Continued)
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, 1998, percentage of net assets
which the securities comprise, aggregate cost and unit value of the securities.
<TABLE>
<CAPTION>
Number of Acquisition 08/31/98 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 -- 0.0% 6,000,000 0.000
---------- ----------
$1,590,225 $6,950,076
========== ==========
</TABLE>
Note 6. Forward Foreign Currency Contracts
The Funds will generally enter into forward foreign currency exchange
contracts as a way of managing foreign exchange rate risk. A Fund may enter into
these contracts to fix the U.S. dollar value of a security that it has agreed to
buy or sell for the period between the date the trade was entered into and the
date the security is delivered and paid for. A Fund may also use these contracts
to hedge the U.S. dollar value of securities it already owns denominated in
foreign currencies. 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.
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 result 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, 1998, the BEA
Strategic Global Fixed Income Fund and the BEA U.S. Core 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, 1998 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>
German Deutschemarks 09/11/98 895,990 $ 500,000 $ 509,056 $ (9,056)
Great Britain Pounds 09/11/98 306,410 500,000 513,087 (13,087)
Italian Lira 09/11/98 1,002,974,222 566,331 576,225 (9,894)
Japanese Yen 09/11/98 275,580,000 1,961,423 1,956,598 4,825
----------- ----------- -----------
$ 3,527,754 $3,554,966 $ (27,212)
=========== =========== ===========
89
</TABLE>
<PAGE>
The BEA Funds
of The RBB Fund, Inc.
Notes to Financial Statements (Concluded)
Note 6. Forward Foreign Currency Contracts (Continued)
<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 09/11/98 844,380 $ 500,000 $ 483,188 $ (16,812)
Australian Dollars 09/11/98 490,396 300,000 280,624 (19,376)
Canadian Dollars 09/11/98 1,061,764 728,723 677,279 (51,444)
German Deutschemarks 09/11/98 443,888 250,000 252,195 2,195
German Deutschemarks 09/11/98 447,712 249,958 254,367 4,409
German Deutschemarks 09/11/98 4,070,413 2,370,900 2,369,418 (1,482)
German Deutschemarks 09/11/98 888,000 500,000 504,517 4,517
German Deutschemarks 09/11/98 1,781,740 1,000,000 1,012,295 12,295
Japanese Yen 09/11/98 108,800,000 800,000 772,472 (27,528)
Japanese Yen 09/11/98 68,480,000 500,000 486,203 (13,797)
Japanese Yen 09/11/98 281,367,137 2,046,604 1,997,686 (48,918)
Swedish Krona 09/11/98 4,939,860 623,012 611,755 (11,257)
---------- ---------- ---------
$9,869,197 $9,701,999 $(167,198)
========== ========== =========
</TABLE>
The BEA U.S. Core Fixed Income Fund's open Forward Foreign Currency
Contracts at August 31, 1998 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>
Great British Pounds 09/17/98 3,708,378 $6,037,240 $6,209,716 $(172,476)
</TABLE>
Note 7. Capital Loss Carryover
At August 31, 1998, Capital loss carryovers were available to offset future
realized gains as follows: $9,398,340 in the Emerging Markets Equity Fund which
expires in 2004, $23,637 in the Select Economic Value Equity Fund which expires
in 2006, $95,077 in Long-Short Market Neutral Fund which expires in 2006 and
$15,376,507 in the BEA High Yield Fund of which $7,035,737 expires in 2000,
$4,986,021 expires in 2003, and $3,354,749 expires in 2005.
Note 8. Reorganization
On July 29,1998, the Board of Directors of the RBB Fund, Inc., on behalf 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 High Yield Fund, BEA Municipal Bond Fund, BEA Global
Telecommunications Fund, BEA Long-Short Market Neutral Fund, BEA Long-Short
Equity Fund, and BEA Select Economic Value Equity Fund (each, an "Existing
Fund") approved proposed reorganizations (each, a "Reorganization") pursuant to
which the assets of each Existing Fund would be acquired by a new fund (each, a
"New Fund") organized to accomplish the applicable Reorganization.
Upon completion of each Reorganization, each shareholder of an Existing
Fund would become a shareholder of the corresponding New Fund and receive shares
of the same class of the New Fund with a value equal to the value of the
shareholder's investment in the Existing Fund. Each proposed Reorganization is
subject to the fulfillment of certain conditions, including the approval of
shareholders of such Existing Fund. Proxy materials describing the proposed
reorganizations were mailed to shareholders of each Existing Fund in
anticipation of a special meeting of shareholders which is scheduled for October
16, 1998. If approved by shareholders, each Reorganization will occur as soon
thereafter as practicable. Completion of the Reorganizations is expected to
occur on or about October 23, 1998.
90
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors of The RBB Fund,Inc.:
In our opinion, the accompanying statements of assets and liabilities,
including the schedule of investments, of the BEA International Equity Fund, BEA
Emerging Markets Equity Fund, BEA U.S.Core Equity Fund, BEA Strategic Global
Fixed Income Fund, BEA Global Telecommunications Fund, and BEA Long-Short Market
Neutral Fund of The RBB Fund,Inc.(the "Fund") and the accompanying statements of
net assets of the BEA High Yield Fund, BEA Select Economic Value Equity Fund,
BEA U.S. Core Fixed Income Fund and BEA Municipal Bond Fund of The RBB
Fund,Inc., and the related statements of operations and changes in net assets,
and the financial highlights 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 Strategic Global Fixed Income Fund,
BEA Global Telecommunications Fund, BEA High Yield Fund, BEA Select Economic
Value Equity Fund, BEA Long-Short Market Neutral Fund, BEA U.S. Core Fixed
Income Fund and BEA Municipal Bond Fund of The RBB Fund,Inc. at August 31, 1998,
the results of their operations for the year (or period) then ended, changes in
their net assets for each of the two years (or periods) in the period then
ended, and the financial highlights for each of the periods presented, in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities owned at August 31, 1998 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
PricewaterhouseCoopers LLP
2400 ElevenPennCenter
Philadelphia, Pennsylvania
October 22, 1998
91
<PAGE>
Tax Information Letters
Important Tax Information for Shareholders of BEA Emerging Markets Equity Fund
(Unaudited)
During the fiscal year ended August 31, 1998, the Emerging Markets Equity
Fund - Institutional Class distributed $800,456 of foreign source income on
which the Fund paid foreign taxes of $152,238. 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, 1998, the Emerging Markets Equity
Fund - Advisor Class distributed $93 of foreign source on which the Fund paid
foreign taxes of $27. 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, 1998, 23.7% 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, 1998 (the end of the fiscal year),
79% of the dividends paid by the Fund were exempt-interest dividends for the
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 1999, 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 1998. 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, 1998, the BEA Funds declared the following
dividends from realized capital gains:
<TABLE>
<CAPTION>
Short-term Mid-term Long-term
capital gain capital gain capital gain
per share per share per share
------------ ------------ ------------
<S> <C> <C> <C>
BEA International Equity Fund -- $2.29 $0.64
BEA Emerging Markets Equity Fund -- -- 1.04
BEA U.S. Core Equity Fund $1.01 1.27 1.15
BEA Global Telecommunications Fund 1.04 -- --
BEA U.S. Core Fixed Income Fund 0.17 0.04 0.02
BEA Strategic Global Fixed Income Fund 0.28 0.14 0.07
BEA Municipal Bond Fund 0.09 0.01 0.01
</TABLE>
92
