BEA INTERNATIONAL EQUITY FUND
PORTFOLIO MANAGERS' LETTER
March 12, 1998
Dear Shareholders:
We are pleased to report on the results of the BEA International Equity Fund
(the "Fund") for the six months ended February 28, 1998 and discuss our
investment strategy.
PERFORMANCE
- -----------
At February 28, 1998, the net asset value (`NAV') of the Fund's Institutional
Class was $22.50, compared to an NAV of $22.22 on August 31, 1997. As a result,
the Institutional Class' total return (assuming reinvestment of dividends and
distributions) was up 15.8%. By comparison, the MSCI EAFE Index (the "Index")
was up 8.5% during the same period.
The NAV of the Fund's Advisor Class was $22.41 on February 28, 1998, compared to
an NAV of $22.17 on August 31, 1997. As a result, the Advisor Class' total
return (assuming reinvestment of dividends and distributions) was up 15.6%. By
comparison, the Index was up 8.5% during the same period.
PORTFOLIO REVIEW
- ----------------
The single most positive contributor to performance was our decision to
significantly underweight Japan relative to the EAFE benchmark. Our overweight
in European markets also worked quite well as did stock selection within the
region. An additional boost to performance was provided by our underweight and
subsequent absence from Asian markets, which experienced intense selling
throughout much of the second half of 1997.
EUROPE. In striking contrast to the Pacific region, Europe has been marked by
low interest rates, benign inflation, continued moderate economic growth, and
corporate restructurings, all of which have produced surging equity markets. As
the effective date of the single European currency approaches (January 1, 1999),
many corporations are preparing for the more unified market by consolidating
with what had been local competitors, based on the realization that
consolidation breeds the ability to compete successfully. This is particularly
true in the financial services industry, where there will no longer be a need
for multiple institutions. Rather, fewer and larger financial service companies
will be able to create business efficiencies and lower cost structures that will
pave the way to successful global competition. It is clear that business leaders
across Europe well know the need to foster this movement and we expect the brisk
pace of restructurings and consolidation activity to continue.
While stock markets in core Europe have performed well in the last six months
(France, Germany, the Netherlands, and the UK all rose approximately 20% in
local currency terms), those in the so-called "peripheral" countries have risen
sharply. Italy's market gained 37%, Spain was up 39%, and Portugal gained 46%.
This is largely due to the fact that interest rates in these countries have been
converging with those in the core countries as currency union approaches, which
has meant that rates have been falling.
We increased our weighting in Europe significantly over the last year and at
February 28th had 77% of the portfolio invested in this region. We continue to
like the outlook in Europe and are maintaining our overweight for the near
future.
JAPAN. Japan is suffering from a weak economy generally and an ailing financial
sector more specifically. It has certainly felt the economic shock waves from
emerging Asia, since Asia accounts for 45% of Japanese exports. Among Japan's
considerable domestic problems:
(BULLET) The impending approach of large-scale financial sector reforms (known
as "Big Bang") has led to a credit crunch. We prefer to see this as more of
a "credit rationalization," in which Japanese banks are actually compelled
to make loans based on creditworthiness.
(BULLET) Many Japanese companies that have limped along for years with very low
(or even negative) returns on capital have survived only because of the
banks' lax credit policies. Now, they are struggling just to stay alive.
(BULLET) The government's numerous efforts to stimulate the economy have been
misguided, focusing too much on public works spending and not enough on
supply side oriented tax reform and deregulation. So many such stimulation
packages have been proposed, in fact, that investors are suffering from
"package fatigue."
(BULLET) The government has also been paralyzed both by scandals at the Ministry
of Finance and the Bank of Japan and seemingly endless political infighting
within the ruling Liberal Democratic Party.
(BULLET) There has been an almost complete lack of corporate restructuring and
little commitment to the concept of shareholder value by corporate
managements.
1
<PAGE>
BEA INTERNATIONAL EQUITY FUND
PORTFOLIO MANAGERS' LETTER (CONTINUED)
We continue to underweight Japan relative to the EAFE benchmark. Our optimism
would increase if we saw any of the following: a serious effort by the
government to lower the top marginal tax rates; a genuine movement toward
corporate restructuring to create shareholder value; or the development of a
real market for corporate control (I.E., hostile takeovers or other kinds of
mergers and acquisitions).
EMERGING MARKETS
- ----------------
We were fortunate to have had a cautious view on Asia through most of 1997 and
positioned the Fund accordingly. Despite the sharp rallies in some of the Asian
currency and stock markets in the first few months of 1998, however, we remain
pessimistic. In our view, the rallies were mostly driven by over-enthusiasm and
technical factors. As we remain skeptical of the near-term economic prospects in
Asia and do not expect a full recovery for some time, we have not yet ventured
back into any Asian markets.
We also caution against being deceived by what we would call the "value
illusion," or the presence of seemingly low price/book value and price/earnings
ratios in some Asian markets. Many of these ratios look cheap because they are
based on past, rather than future, financial and operating performance. As such,
they take into account the fact that prices have fallen, but do not yet reflect
the deterioration of the underlying earnings and book value data.
Latin American fundamentals are a lot more attractive than those in Asia. Our
research indicates that the region offers the most attractive combination of
valuation, growth prospects and overall risk/reward profile among emerging
equity markets. While there is still some risk to Latin America from the
problems in Asia, financial and operating trends are much more positive as well.
As other developments occur in the international equity markets or at BEA, we
will be sure to keep you informed. Meanwhile, if you have questions, please feel
free to call upon us at any time.
Sincerely yours,
BEA International Equities Management Team
William P. Sterling, Executive Director
Richard Watt, Managing Director
Steven Bleiberg, Senior Vice President
Susan Boland, Senior Vice President
Emily Alejos, Vice President
Robert Hrabchak, Vice President
2
<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.
[GRAPH OMITTED]
PLOT POINTS FOLLOW:
BEA INTERNATIONAL
EQUITY INSTITUTIONAL MSCI
CLASS EAFE INDEX
10/01/1992 10,000 10,000
11/30/1992 9,685 9,571
02/28/1993 9,906 9,918
05/31/1993 11,218 12,062
08/31/1993 12,159 12,962
11/30/1993 12,120 11,928
02/28/1994 13,783 13,841
05/31/1994 12,999 13,735
08/31/1994 13,891 14,405
11/30/1994 13,080 13,732
02/28/1995 11,435 13,258
05/31/1995 12,500 14,451
08/31/1995 12,773 14,517
11/30/1995 12,387 14,815
02/29/1996 13,352 15,539
05/31/1996 13,901 16,041
08/31/1996 13,498 15,706
11/30/1996 14,166 16,606
02/28/1997 14,614 16,090
05/31/1997 15,361 17,303
08/31/1997 15,650 17,179
11/30/1997 16,087 16,588
02/28/1998 18,109 18,633
AVERAGE ANNUAL
TOTAL RETURN
One Year 23.90%
From Inception 12.35%
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.
[GRAPH OMITTED]
PLOT POINTS FOLLOW:
BEA INTERNATIONAL
EQUITY ADVISOR MSCI
CLASS EAFE INDEX
11/01/1996 10,000 10,000
02/28/1997 10,716 10,046
05/31/1997 11,254 10,803
08/31/1997 11,461 10,726
11/30/1997 11,776 10,357
02/28/1998 13,243 11,634
AVERAGE ANNUAL
TOTAL RETURN
One Year 23.58%
From Inception 23.16%
Note: Past performance is not predictive of future performance.
3
<PAGE>
BEA INTERNATIONAL EQUITY FUND
OF THE RBB FUND, INC.
STATEMENT OF NET ASSETS
FEBRUARY 28, 1998
(UNAUDITED)
NUMBER
OF SHARES VALUE
---------- ------------
COMMON STOCKS,
WARRANTS AND RIGHTS -- 95.4%
ARGENTINA -- 0.3%
Sodigas del Sur S.A.(DAGGER) ..... 403,923 $ 745,416
Sodigas Pampeana S.A.(DAGGER) .... 558,962 844,809
-----------
1,590,225
-----------
BRAZIL -- 0.5%
Centrais Eletricas Brasileiras
S.A. ADR ....................... 50,800 1,191,163
Companhia Paranaense de
Energia-Copel ..................4,091,000 51,228
Telecomunicacoes Brasileiras
S.A. ADR ....................... 15,000 1,836,562
-----------
3,078,953
-----------
CANADA -- 3.0%
BCE, Inc. ........................ 55,890 1,983,252
Canadian Imperial Bank of
Commerce ....................... 126,950 4,040,948
Northern Telecom Limited ......... 21,750 1,158,459
Petro-Canada ..................... 82,050 1,522,071
Royal Bank of Canada ............. 83,325 4,877,224
Suncor Energy Inc. ............... 76,100 2,793,980
Talisman Energy .................. 44,100 1,306,136
-----------
17,682,070
-----------
CHILE -- 0.8%
Chilectra S.A. ADR ............... 95,490 2,403,969
Compania de Telecomunicaciones
de Chile S.A. ADR .............. 88,650 2,426,794
-----------
4,830,763
-----------
DENMARK -- 1.1%
Den Danske Bank .................. 11,295 1,453,035
Tele Danmark A/S Cl. B ........... 71,060 4,601,540
-----------
6,054,575
-----------
FINLAND -- 0.9%
Pohjola Insurance Company
Ltd., Cl. B .................... 116,981 5,519,684
-----------
FRANCE -- 13.2%
Accor ............................ 20,161 4,655,136
Alcatel Alsthom S.A. ............. 66,428 8,639,934
AXA S.A. ......................... 74,081 7,165,660
Banque Nationale de Paris ........ 112,828 6,818,656
Bouygues ......................... 18,930 2,654,866
Cap Gemini S.A. .................. 63,217 7,267,181
Credit Commercial de France ...... 91,895 6,792,583
France Telecom S.A.** ............ 45,460 2,203,092
Groupe Danone .................... 25,980 5,247,812
LaGardere Groupe ................. 134,342 4,875,713
Renault S.A. ..................... 129,494 4,508,370
Rhone Poulenc Ltd., Cl. A ........ 149,104 6,870,859
NUMBER
OF SHARES VALUE
---------- ------------
FRANCE -- (CONTINUED)
Suez Lyonnaise des Eaux .......... 46,890 $ 6,183,435
Total S.A. Cl. B ................. 31,900 3,499,461
-----------
77,382,758
-----------
GERMANY -- 9.6%
Adidas-Salomon AG ................ 27,498 4,333,591
Allianz AG Holding
Registered Shares .............. 10,402 3,324,495
BMW .............................. 6,359 6,366,849
Bayerische Vereinsbank ........... 61,588 3,814,549
Dresdner Bank AG ................. 60,200 2,754,970
Henkel KGaA ...................... 109,753 7,118,257
Mannesmann AG .................... 13,030 7,883,654
RWE AG ........................... 102,740 5,678,339
Schering AG ...................... 55,117 6,189,714
Systeme, Anwendungen,
Produkte in der
Datenverarbeitung AG Pfd. ...... 20,666 8,532,827
-----------
55,997,245
-----------
IRELAND -- 3.3%
Allied Irish Banks plc ........... 452,000 5,834,669
Bank of Ireland .................. 419,344 8,036,849
CRH plc .......................... 438,650 5,499,836
-----------
19,371,354
-----------
ISRAEL -- 0.5%
ECI Telecommunications Ltd. ...... 37,845 1,099,870
Geotek Communications, Inc.
Series M Cumulative
Convertible Pfd.(DAGGER) ....... 600 1,198,737
Teva Pharmaceutical Industries
Ltd. ADR ....................... 11,754 493,668
-----------
2,792,275
-----------
ITALY -- 6.6%
Assicurazioni Generali ........... 263,119 7,513,694
Banca di Roma S.p.A. .............2,186,400 3,017,915
Credito Italiano .................1,716,258 6,589,003
Montedison S.p.A. ................6,187,079 6,386,059
Telecom Italia Mobile S.p.A. ..... 935,684 4,279,847
Telecom Italia Mobile S.p.A.
Non-Convertible Savings
Shares ......................... 571,192 1,675,798
Telecom Italia S.p.A. ............ 818,255 5,564,929
Telecom Italia Savings
Shares S.p.A. .................. 787,600 3,822,574
-----------
38,849,819
-----------
See Accompanying Notes to Financial Statements.
4
<PAGE>
BEA INTERNATIONAL EQUITY FUND (CONTINUED)
NUMBER
OF SHARES VALUE
---------- -----------
JAPAN -- 9.1%
Acom Company, Ltd. ................ 32,500 $ 1,816,274
Aoyama Trading Company ............ 32,900 713,575
Asahi Glass Company,
Limited ......................... 60,000 360,484
Bank of Tokyo -
Mitsubishi, Ltd. ................ 117,000 1,657,801
Bridgestone Corp. ................. 117,000 2,695,084
Canon, Inc. ....................... 93,000 2,127,523
Daiwa Bank, Ltd. .................. 290,800 828,687
Fuji Photo Film Company,
Ltd ............................. 68,000 2,664,450
Fujikura Ltd. ..................... 84,500 594,637
Fujitsu, Ltd. ..................... 216,000 2,427,926
Honda Motor Company, Ltd. ......... 96,000 3,320,826
Itochu Corp. ...................... 163,000 483,852
Minebea Company ................... 203,000 2,249,663
Mitsubishi Estate ................. 150,000 1,674,186
Mitsubishi Steel Manufacturing
Co., Ltd. ....................... 500 772
Mitsubishi Trust and Banking
Corp ............................ 165,000 1,946,093
Mitsui Chemicals Industries ....... 287,900 809,028
Nintendo Co., Ltd. ................ 17,900 1,643,631
Nippon Express Co., Ltd. .......... 60,000 374,733
Nippon Paper Industries
Company ......................... 54,000 274,851
Nippon Telegraph &
Telephone ....................... 304 2,791,419
Nippon Television Network
Corp ............................ 4,760 1,439,341
Nomura Securities Company,
Ltd ............................. 78,000 1,074,329
Promise Co., Ltd. ................. 28,400 1,587,144
Rohm Co., Ltd. .................... 13,000 1,286,313
The Sakura Bank, Limited .......... 143,000 597,673
Sankyo Co., Ltd. .................. 32,000 858,703
Sony Corp. ........................ 34,900 3,149,370
Sumitomo Metal Industries ......... 274,000 485,839
TDK Corp. ......................... 29,000 2,215,229
Terumo Corp. ...................... 112,000 1,578,089
Tokyo Electric Power .............. 102,200 1,925,401
Toyota Motor Corp. ................ 147,000 4,061,030
Yamanouchi Pharmaceutical
Co., Ltd. ....................... 64,000 1,555,291
-----------
53,269,247
-----------
MEXICO -- 2.2%
Cementos Mexicanos S.A.
de C.V. ......................... 656,874 2,605,909
Fomento Economico Mexicano
S.A. de C.V. Cl. B .............. 394,494 2,940,184
Kimberly Clark de Mexico S.A.
de C.V., Cl. A .................. 1,175,950 5,341,463
NUMBER
OF SHARES VALUE
--------- -----------
MEXICO -- (CONTINUED)
Telefonos de Mexico S.A.
ADR ..................................... 38,500 $ 1,951,469
Telefonos de Mexico S.A.
Unsponsored ADR ......................... 4,400 10,862
-----------
12,849,887
-----------
NETHERLANDS -- 4.6%
Internationale Nederlanden
Groep ................................... 120,295 6,364,753
Koninklijke KNP BT N.V. ................... 110,700 2,952,880
Philips Electronics N.V. .................. 51,450 3,996,575
Royal PTT Nederland N.V. .................. 148,412 7,468,128
VNU Verenigd Bezit ........................ 198,490 6,244,965
-----------
27,027,301
-----------
PORTUGAL -- 0.7% Portugal Telecom S.A.
Registered Shares ....................... 74,142 3,890,554
-----------
RUSSIA -- 1.0%
Lukoil Holding Pfd., ADR** ................ 79,650 1,820,409
Surgutneftegaz ADR ........................ 236,250 1,777,167
Tatneft ADR ............................... 19,661 2,259,417
-----------
5,856,993
-----------
SOUTH AFRICA -- 0.0%
South African Breweries
Limited ................................. 311 8,723
-----------
SPAIN -- 2.4%
Banco Central
Hispanoamericano S.A..................... 132,300 4,110,350
Banco Popular Espanol S.A.................. 41,244 3,655,362
Corporacion Bancaria de
Espana S.A............................... 48,600 3,616,245
Sol Melia S.A.............................. 52,773 2,501,334
-----------
13,883,291
-----------
SWEDEN -- 3.3%
AB Electrolux ............................. 29,054 2,213,586
Foreningsbanken AB ........................ 268,094 8,237,259
Nordbanken ................................ 939,873 5,928,176
Skandia Forsakrings AB .................... 53,226 3,004,850
-----------
19,383,871
-----------
SWITZERLAND -- 9.0%
Kuoni Reisen AG ........................... 1,466 5,983,470
Liechtenstein Global Trust AG ............. 3,040 2,620,332
Nestle S.A................................. 3,446 6,034,492
Novartis AG Registered Shares ............. 8,415 15,349,520
Roche Holding AG .......................... 511 5,981,862
Schweizerischer Bankverein ................ 15,558 5,205,082
See Accompanying Notes to Financial Statements.
5
<PAGE>
BEA INTERNATIONAL EQUITY FUND (CONCLUDED)
NUMBER
OF SHARES VALUE
--------- -----------
SWITZERLAND -- (CONTINUED)
Schweizerischer
Lebensversicherungs-und
Rentenanstalt ..................... 7,703 $ 6,728,840
Swiss Reinsurance Group
Registered Shares ................. 2,169 4,571,216
------------
52,474,814
------------
UNITED KINGDOM -- 22.9%
AMVESCAP plc ........................ 390,991 3,830,412
Avis Europe plc ..................... 1,687,530 5,793,210
BG plc .............................. 1,355,215 6,800,074
Boots Company plc ................... 540,604 8,122,203
British Aerospace plc ............... 265,490 8,340,427
British Petroleum plc ............... 294,717 4,066,408
Compass Group plc ................... 546,900 7,978,172
Glaxo Wellcome ...................... 106,249 2,973,963
Great Universal Stores plc .......... 492,003 6,278,143
HSBC Holdings plc ................... 77,400 2,378,014
JJB Sports plc ...................... 308,729 3,990,330
Lloyds TSB Holdings
Group plc ......................... 543,093 8,173,012
National Grid Group plc ............. 627,137 3,531,427
National Westminster Bank plc ....... 326,354 6,012,855
Next plc ............................ 540,222 7,369,305
Rentokil Initial plc ................ 642,415 3,170,565
Royal & Sun Alliance Group plc ...... 831,277 10,586,876
Shell Transport & Trading
Co. plc ........................... 688,190 4,923,340
Tesco plc ........................... 598,423 5,089,106
Unilever plc ........................ 757,932 6,863,643
Vodafone Group plc .................. 1,054,376 9,374,570
WPP Group plc ....................... 1,123,213 5,954,972
Zeneca Group plc .................... 59,100 2,568,935
------------
134,169,962
------------
VENEZUELA -- 0.4%
Compania Anonima National
Telefonos de Venezuela ADR ........ 64,350 2,280,403
------------
TOTAL COMMON STOCKS,
WARRANTS AND RIGHTS
(Cost $461,705,185) ............... 558,244,767
------------
PAR
(000)
----------
SHORT TERM INVESTMENTS -- 4.4%
BBH Grand Cayman U.S.
Dollar Time Deposit
5.125% 03/02/98 ..................... $25,478 25,478,000
------------
TOTAL SHORT TERM
INVESTMENTS
(Cost $25,478,000) .................. 25,478,000
------------
TOTAL INVESTMENTS -- 99.8%
(Cost $487,183,185) ................. 583,722,767
------------
VALUE
------------
OTHER ASSETS IN EXCESS
OF LIABILITIES -- 0.2% .............. $ 1,233,149
-------------
NET ASSETS (Applicable to
25,928,010 BEA Institutional
Shares and 65,257 BEA Advisor
Shares)-- 100.0% .................... 584,955,916
=============
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PRICE PER BEA
INSTITUTIONAL SHARE
($583,493,190 (DIVIDE) 25,928,010) .. $22.50
======
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PRICE PER BEA ADVISOR
SHARE ($1,462,726 (DIVIDE) 65,257) .. $22.41
======
* Cost for Federal income tax purposes at February 28, 1998 is $487,206,893.
The gross appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation .......................... $109,455,976
Gross Depreciation .......................... (12,940,102)
------------
Net Appreciation ............................ $ 96,515,874
============
** Non-income producing securities.
(DAGGER)Not readily marketable securities.
INVESTMENT ABBREVIATIONS
ADR ............................................... American Depository Receipts
AT FEBRUARY 28, 1998, NET ASSETS CONSISTED OF:
AMOUNT
------------
Capital Paid-In ................................... $460,484,689
Accumulated Net Investment Loss ................... (6,934,724)
Accumulated Net Realized Gain on
Security and Foreign Exchange Transactions ..... 34,912,465
Net Unrealized Appreciation on
Investments and Other .......................... 96,493,486
- -----------------------------------------------------------------
NET ASSETS ........................................ $584,955,916
- -----------------------------------------------------------------
See Accompanying Notes to Financial Statements.
6
<PAGE>
BEA EMERGING MARKETS EQUITY FUND
PORTFOLIO MANAGERS' LETTER
March 12, 1998
Dear Shareholders:
We are pleased to report on the results of the BEA Emerging Markets Equity Fund
(the "Fund") for the six months ended February 28, 1998 and discuss our
investment strategy.
PERFORMANCE
- -----------
At February 28, 1998, the net asset value ("NAV") of the Fund's Institutional
Class was $16.58, compared to an NAV of $19.64 on August 31, 1997. As a result,
the Institutional Class' total return (assuming reinvestment of dividends and
distributions) was down 9.4%. By comparison, the MSCI Emerging Markets Free
Index (the "Index") fell by 13.7% during the same period.
The NAV of the Fund's Advisor Class was $16.61 on February 28, 1998, compared to
an NAV of $19.60 on August 31, 1997. As a result, the Advisor Class' total
return (assuming reinvestment of dividends and distributions) was down 9.4%. By
comparison, the Index was down 13.7% during the same period.
Favorable regional and country selection were fundamentally responsible for the
Fund's outperformance of the Index benchmark. Two strategic moves were most
notable in this regard. First, we substantially underweighted Asia relative to
the Index. Our sense that conditions there were worsening proved accurate, as
evidenced by the region's severe outbreak of currency devaluation and weakening
stock prices. The Fund's holdings in the markets most affected (i.e., Thailand,
Malaysia, the Philippines, Indonesia and South Korea) have been at minimal
levels for several months now.
The other successful move was to raise allocations in selected European markets.
This was most effective in our overweighting of Turkey (which was the world's
top-performing equity market in 1997) and Portugal. In addition, stock selection
was especially strong in Israel and Poland.
MARKET COMMENTARY
- -----------------
Clearly, the most pressing issue of the day for emerging markets is the currency
turmoil in Southeast Asia and its investment implications. The turmoil was
touched off in late 1996 by massive selling of equities and the baht currency in
Thailand, as investors reacted to the nation's growing political instability and
financial-sector excesses. Fear of a regional domino effect led to a sharp
decline in currencies and stocks in the Philippines, Indonesia and Malaysia.
Following the Thai government's devaluation of the baht in July, similar
adjustments were made in the peso, rupiah and ringgit, respectively.
A spillover "contagion effect" from Southeast Asia was felt throughout the
emerging world's markets, spreading to other markets in the Pacific, Latin
America and Emerging Europe during the fourth quarter of 1997. Most prominent
among the major Latin markets in this regard was Brazil, whose equities
experienced heavy selling as a result of concerns that its real currency was
particularly vulnerable. By early November, pressure on the real forced the
government to announce an austerity program that included sharp cuts in fiscal
expenditures and a substantial increase in interest rates.
The crisis also affected Chile, normally considered a safe haven among Latin
markets. Investors feared a slump in consumption in Asia, to which approximately
one-third of total Chilean exports are directed. In addition, the price of
copper, a core component of Chilean exports, sharply declined. This combination
raised concerns over Chile's current account and outlook for the peso and
resulted in a sharp rise in interest rates which, in turn, prompted significant
selling in the equity market.
Elsewhere, Russia also proved vulnerable to the Asian contagion as equities
peaked in early October, just as the Hong Kong dollar began its sharp sell-off.
Given Russia's reliance on foreign capital flows, investor sentiment shifted
from buoyant optimism to vigilant caution amidst concerns both about the
nation's fiscal situation and the leadership of President Yeltsin.
In sum, few markets escaped the effect of the Asian crisis in 1997. Most
experienced selling pressures, especially those whose currencies were managed
and in which there was a heavy reliance on foreign funding of fiscal and current
account deficits.
7
<PAGE>
BEA EMERGING MARKETS EQUITY FUND
PORTFOLIO MANAGERS' LETTER (CONTINUED)
OUTLOOK
- -------
Since the start of 1998, we have seen strong rallies in Asian markets, mainly
led by the recovery in South Korea. The latter stemmed from investors' relief
that a solution would be found to the problematic rollover of some $25 billion
in short-term debt. This, in turn, led to a bottoming in the currency and an
inflow of speculative investments. It also sparked rallies elsewhere in the
region, based on the hope that the full effects of the crisis were over. The
illiquidity of these markets exacerbated the rallies' strength on the upside.
We think such rallies are unsustainable. The region's crisis has exposed deep
fundamental problems that include large current account deficits; overleveraged
banking and corporate sectors; and weak and corrupt political regimes. This will
likely require a long period of painful structural adjustment. Today's equity
valuations will have to fall further still before we can see genuine long-term
value available.
We see greater upside potential elsewhere, particularly in Latin America, yet
even here questions remain. In Brazil and Mexico (the Fund's two largest country
exposures), for example, our longer-term optimism is somewhat tempered by
substantive nearer-term concerns. Brazil has made dramatic progress in
addressing its fiscal issues, but there still is much more to be accomplished
(especially in the area of privatization) before we can invest there with
greater conviction. Mexican equity prices have been held down by a combination
of concerns over the strength of domestic demand and weakness in the price of
oil, which accounts for 40% of fiscal revenues. The recent fall in oil prices
has led to two major cuts in fiscal expenditures, which will likely have a
negative impact on the nation's economic growth prospects.
The latest agreement among Mexico, Saudi Arabia and Venezuela to shore up oil
prices by reducing production levels is very positive, however, and we believe
prices will firm at higher levels. This would considerably ease the pressure on
Mexico.
In addition, we note that interest rates are falling in a number of Asian
countries (notably Hong Kong and Singapore), where underlying fundamentals are
more positive. There also is renewed confidence with respect to China's monetary
policy, following statements from China's new Prime Minister, Zhu Rongji.
Nevertheless, on balance, our investment approach has become increasingly
defensive. We are maintaining our underweighting of Asia in favor of Latin
America and see selective opportunities elsewhere in markets such as Portugal,
Turkey and Egypt. In view of our expectation that investors will remain willing
to pay a premium for liquidity in such times of concern, we also continue to
refocus the Fund on the shares of relatively well-known, large-capitalization
companies with fundamentally sound businesses.
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, Senior Vice President
Susan Boland, Senior Vice President
Emily Alejos, Vice President
Robert Hrabchak, Vice President
8
<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.
BEA EMERGING MSCI EMERGING
MARKETS EQUITY MARKETS FREE
INSTITUTIONAL CLASS INDEX
02/01/1993 10,000 10,000
05/31/1993 10,815 10,923
08/31/1993 12,377 12,443
11/30/1993 14,653 14,648
02/28/1994 17,078 17,058
05/31/1994 14,839 15,724
08/31/1994 16,832 18,257
11/30/1994 15,879 17,189
02/28/1995 11,460 13,765
05/31/1995 12,677 15,243
08/31/1995 12,720 15,263
11/30/1995 11,835 14,349
02/29/1996 12,992 15,795
05/31/1996 13,881 16,481
08/31/1996 13,144 15,846
11/30/1996 13,295 15,817
02/28/1997 14,938 17,699
05/31/1997 14,605 17,759
08/31/1997 14,235 16,573
11/30/1997 12,683 13,717
02/28/1998 12,894 14,298
AVERAGE ANNUAL
TOTAL RETURN
One Year (13.68)%
From Inception 4.93%
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.
[GRAPH OMITTED]
PLOT POINTS FOLLOW:
BEA EMERGING MSCI EMERGING
MARKETS EQUITY MARKETS FREE
ADVISOR CLASS INDEX
11/30/1996 10,000 10,000
02/28/1997 11,451 11,309
05/31/1997 11,190 11,347
08/31/1997 10,896 10,589
11/30/1997 9,701 8,765
02/28/1998 9,869 9,135
AVERAGE ANNUAL
TOTAL RETURN
One Year (13.83)%
From Inception (1.13)%
Note: Past performance is not predictive of future performance.
9
<PAGE>
BEA EMERGING MARKETS EQUITY FUND
OF THE RBB FUND, INC.
STATEMENT OF NET ASSETS
FEBRUARY 28, 1998
(UNAUDITED)
NUMBER
OF SHARES VALUE
---------- -----------
COMMON STOCKS,
WARRANTS AND RIGHTS -- 94.5%
ARGENTINA -- 2.0%
Perez Companc S.A.......................... 99,400 $ 654,170
YPF S.A. ADR .............................. 19,942 630,666
-----------
1,284,836
-----------
BRAZIL -- 16.5%
Banco Itau S.A. PN ........................ 398,000 235,278
Centrais Eletricas Brasileiras
S.A. .................................... 28,120,000 1,264,156
Centrais Eletricas Brasileiras
S.A. ADR ................................ 10,000 234,481
Ceval Alimentos S.A. ...................... 78,505,688 277,896
Companhia Energetica de Minas
Gerais PN ............................... 6,869,125 294,825
Companhia Paranaense de
Energia ADR ............................. 29,400 374,850
Companhia Saneamento ...................... 5,565,000 1,154,861
Companhia Vale Rio Doce PN ................ 54,600 1,188,637
Encorpar PN ............................... 1,742,582 4,626
Petroleo Brasileiro S.A. PN ............... 4,480,100 1,014,961
Santista Alimentos S.A. ................... 223,907 245,703
Telecomunicacoes Brasileiras
S.A. .................................... 6,600,000 654,101
Telecomunicacoes Brasileiras
S.A. ADR ................................ 18,356 2,247,467
Telecomunicacoes de Sao Paulo
S.A. PN ................................. 3,356,417 929,698
Telecomunicacoes do Rio de
Janeiro S.A. PN ......................... 13,733 1,896
Uniao de Bancos Brasileriros
S.A. GDR ................................ 13,700 469,225
Usinas Siderurgica de Minas
Gerais S.A. PN .......................... 728 4,928
-----------
10,597,589
-----------
CHILE -- 2.6%
Chilectra S.A. ADR**** .................... 28,417 715,401
Distribucion Y Servicio
D & S S.A. ADR .......................... 17,700 269,925
Empresa Nacional de Electricidad
S.A. ADR ................................ 36,100 665,594
-----------
1,650,920
-----------
CHINA -- 1.2%
China Telecommunications
Ltd ..................................... 4,600 165,025
Huaneng Power International,
Inc. ADR** .............................. 23,800 586,075
-----------
751,100
-----------
COLOMBIA -- 0.0%
Cementos Paz del Rio 144A
ADR**** ................................. 218 2,807
-----------
NUMBER
OF SHARES VALUE
--------- ----------
CROATIA -- 0.6%
Pliva D.D. GDR 144A ....................... 19,600 $ 366,918
----------
CZECH REPUBLIC -- 1.4%
SPT Telecom A.S ........................... 7,776 919,707
----------
EGYPT -- 4.2%
Al-Ahram Beverages Co.,
S.A.E. 144A GDR ......................... 48,550 1,574,234
Commercial International Bank
GDR ..................................... 28,900 478,295
Suez Cement Company 144A
GDR ..................................... 33,500 661,625
----------
2,714,154
----------
HONG KONG -- 1.0%
Cosco Pacific Ltd. ........................ 176,000 164,805
Johnson Electric Holdings
Limited ................................. 43,500 154,505
Li & Fung Limited ......................... 102,000 154,137
Shanghai Industrial Holdings
Limited ................................. 42,200 183,135
----------
656,582
----------
HUNGARY -- 2.2%
Matav RT ADR .............................. 13,000 336,375
MOL Magyar Olaj - es
Gazipari GDR 144A ....................... 24,900 653,834
Richter ................................... 4,100 448,418
----------
1,438,627
----------
INDIA -- 6.6%
Hindustan Petroleum
Corporation Ltd. Participation
Notes ................................... 51,900 596,590
ITC Agro-Tech, Ltd. GDR** ................. 12,800 356,800
Larsen & Toubro Ltd.
Participation Notes ..................... 71,300 386,089
Mahanagra Telephone Nigam
Ltd. GDR 144A ........................... 2,600 44,525
Mahanagra Telephone Nigam
Ltd. Participation Notes ................ 59,000 384,090
Mahindra & Mahindra Ltd.
Participation Notes ..................... 7,750 48,050
Morgan Stanley India Investment
Fund, Inc. .............................. 144,556 1,165,483
Ranbaxy Laboratories Ltd. GDR ............. 12,800 336,000
Ranbaxy Laboratories Ltd. ................. 15,100 262,667
Reliance Industries Ltd.
Participation Notes ..................... 80,000 319,200
State Bank of India Ltd. GDR .............. 17,512 341,046
----------
4,240,540
----------
See Accompanying Notes to Financial Statements.
10
<PAGE>
BEA EMERGING MARKETS EQUITY FUND (CONTINUED)
NUMBER
OF SHARES VALUE
--------- ----------
ISRAEL -- 5.2%
Bank Leumi of Israel Ltd. ............... 191,130 $ 324,269
Blue Square Chain Stores
Properties & Investment
ADR ................................... 29,300 410,200
ECI Telecommunications Ltd. ............. 44,200 1,284,562
First International Bank of
Israel Ltd. ........................... 5,530 763,842
Israel Chemicals Ltd. ................... 427,500 548,741
-----------
3,331,614
-----------
LEBANON -- 0.6%
Solidere 144A GDR ....................... 31,320 392,283
-----------
MALAYSIA -- 1.0%
Berjaya Sports Toto Berhad .............. 55,100 154,429
Genting Berhad .......................... 41,600 138,100
Telekom Malaysia ........................ 97,900 332,992
-----------
625,521
-----------
MEXICO -- 15.9%
Cementos Mexicanos S.A. de
C.V. Cl. B ............................ 144,149 688,599
Cifra S.A. de CV Class V
ADR ................................... 53,089 1,027,710
Controladora Comercial
Mexicana S.A. de C.V. ................. 31,048 716,044
Corparacion GEO S.A. de
C.V. Cl. B** .......................... 54,202 306,954
Corporacion Industrial SanLuis
S.A. de C.V. CPO ...................... 112,974 635,147
Fomento Economico Mexicano
S.A. de C.V. Cl. B .................... 163,393 1,217,776
Grupo Carso S.A. de C.V.
Cl. A1 ................................ 106,000 646,948
Grupo Financiero Bancomer,
S.A. de C.V............................ 510,100 294,565
Grupo Modelo S.A. de C.V.
Cl. C ................................. 72,275 593,809
Grupo Televisa S.A. de C.V.
GDS ................................... 33,521 1,173,235
Kimberly-Clark de Mexico S.A.
de C.V. Cl. A ......................... 219,218 995,744
Sociedad de Fomento Industrial
ADR S.A. de C.V. ...................... 21,200 617,450
Telefonos de Mexico S.A.
ADR ................................... 24,700 1,251,981
-----------
10,165,962
-----------
PAKISTAN -- 0.9%
Hub Power Company Limited ............... 464,900 581,046
-----------
NUMBER
OF SHARES VALUE
--------- ----------
PERU -- 1.4%
Telefonica del Peru S.A. ADR .............. 46,912 $ 888,396
----------
PHILIPPINES -- 0.5%
Ayala Corporation ......................... 171,400 80,545
Philippine Long Distance
Telephone Company ADR ................... 5,900 155,612
San Miguel Corporation Cl. B .............. 47,000 77,744
----------
313,901
----------
POLAND -- 1.2%
Elektrim Spolka Akcyjna S.A. .............. 57,220 748,660
----------
PORTUGAL -- 3.9%
Banco Comercial Portugues
PFD Series A ............................ 9,000 990,000
Electricidade de Portugal S.A. ............ 53,920 1,143,375
Portugal Telecom S.A.
Registered .............................. 7,200 377,815
----------
2,511,190
----------
RUSSIA -- 3.5%
JSZ Kas Commerz Bank
144A ADS ................................ 7,800 167,700
Lukoil Holding ADR ........................ 8,800 637,402
Lukoil Holding ADR Pfd. ................... 6,700 153,129
Mosenergo ADR 144A ........................ 13,513 522,577
PLD Telekom, Inc. ......................... 45,500 273,000
Surgutneftegaz ADR ........................ 34,200 257,266
Unified Energy Systems .................... 9,400 258,406
----------
2,269,480
----------
SINGAPORE -- 0.8%
Natsteel Electronics Ltd.** ............... 97,000 174,731
Singapore Airlines *** .................... 20,700 153,238
Singapore Technologies
Shipbuilding & Engineering
Ltd.** .................................. 173,700 171,449
----------
499,418
----------
SOUTH AFRICA -- 6.6%
Amalgamated Banks of South
Africa Ltd. ............................. 126,634 973,810
Anglo American Corporation of
South Africa Ltd. ....................... 13,780 577,245
Barlow Ltd. ............................... 72,800 680,634
Sasol Ltd. ................................ 61,500 525,204
South African Breweries
Limited ................................. 53,272 1,494,179
----------
4,251,072
----------
See Accompanying Notes to Financial Statements.
11
<PAGE>
BEA EMERGING MARKETS EQUITY FUND (CONCLUDED)
NUMBER
OF SHARES VALUE
--------- ----------
SOUTH KOREA -- 1.0%
Dae Duck Electronics Co. ...................... 2,190 $ 173,001
Medison Co. Limited ........................... 1,950 126,577
Samsung Display Devices Co. ................... 3,180 184,997
Samsung Fire and Marine
Insurance ................................... 640 172,443
----------
657,018
----------
TAIWAN -- 4.9%
Morgan Stanley Taiwan Opals ................... 22,900 3,135,010
----------
THAILAND -- 0.8%
Advance Agro Public Co.,
Ltd.***/** .................................. 74,400 72,527
BEC World Public Co., Ltd. .................... 27,400 160,204
Bangkok Bank Commerce
Public Co., Ltd.*** ......................... 47,300 161,325
Siam City Cement Public Co.,
Ltd.*** ..................................... 30,500 88,457
----------
482,513
----------
TURKEY -- 5.1%
Akbank T.A.S. ................................. 9,427,463 745,213
Arcelik A.S. .................................. 4,758,850 371,020
Brisa Bridgestone Sabanci
Lastik San. Ve Tic A.S. ..................... 6,450,606 349,248
Eregli Demir Ve Celik
Fabrikalari T.A.S. .......................... 3,008,500 371,379
Haci Omer Sabanci
Holdings 144A ............................... 30,914 419,658
Turkiye Garanti Bankasi A.S. .................. 7,963,000 306,966
Yapi Ve Kredi Bankasi A.S. .................... 20,800,081 684,702
----------
3,248,186
----------
VENEZUELA -- 2.9%
Compania Anonima Nacional
Telefonos de Venezuela
ADR ......................................... 37,659 1,334,541
Electricad de Caracas ......................... 415,496 381,307
Siderurgica Venezolana
Sivensa S.A.C.A. ADR ........................ 54,700 147,646
----------
1,863,494
----------
TOTAL COMMON STOCKS,
WARRANTS AND RIGHTS
(Cost $60,291,873) .......................... 60,588,544
----------
PAR
(000) VALUE
------- ------------
SHORT TERM INVESTMENTS -- 1.9%
BBH Grand Cayman U.S. Dollar
Time Deposit
5.125% 03/02/98 ............................... $ 1,196 $ 1,196,000
------------
TOTAL SHORT TERM
INVESTMENTS
(Cost $1,196,000) ............................. 1,196,000
------------
TOTAL INVESTMENTS -- 96.4%
(Cost $61,487,873) ............................ 61,784,544
------------
OTHER ASSETS IN EXCESS
OF LIABILITIES -- 3.6% ........................ 2,279,505
------------
NET ASSETS (Applicable to
3,863,461 BEA Institutional
Shares and 715 BEA Advisor
Shares) -- 100.0% ............................. $ 64,064,049
============
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PRICE PER BEA
INSTITUTIONAL SHARE
($64,052,176 (DIVIDE) 3,863,461) .............. $16.58
======
NET ASSET VALUE,
OFFERING PRICE AND
REDEMPTION PRICE PER
BEA ADVISOR SHARE
(Cost $11,873 (DIVIDE) 715) ................... $16.61
======
* Cost for Federal income tax purposes at February 28, 1998 is $61,803,693.
The gross appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation ..................................... $ 5,134,073
Gross Depreciation ..................................... (5,153,222)
-----------
Net Appreciation ....................................... $ (19,149)
===========
** Non-income producing securities.
*** Denotes foreign shares.
**** Certain conditions for public sales may exist.
INVESTMENT ABBREVIATIONS
ADR .............................................. American Depository Receipts
ADS ................................................. American Depository Shares
GDR ................................................. Global Depository Receipts
AT FEBRUARY 28, 1998, NET ASSETS CONSISTED OF:
AMOUNT
----------
Capital Paid-In .............................................. $ 82,198,713
Accumulated Net Investment Loss .............................. (877,011)
Accumulated Net Realized Loss on
Security and Foreign Exchange Transactions ................ (17,553,702)
Net Unrealized Appreciation on
Investments and Other ..................................... 296,049
- --------------------------------------------------------------------------------
NET ASSETS ................................................... $64,064,049
- --------------------------------------------------------------------------------
See Accompanying Notes to Financial Statements.
12
<PAGE>
BEA U.S. CORE EQUITY FUND
PORTFOLIO MANAGERS' LETTER
March 12, 1998
Dear Shareholders:
We are pleased to report on the results of the BEA U.S. Core Equity Fund (the
"Fund") for the six months ended February 28, 1998 and discuss our investment
strategy.
PERFORMANCE REVIEW
- ------------------
At February 28, 1998, the net asset value ("NAV") of the Fund was $24.76,
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 17.6%. By
comparison, the Standard & Poor's 500 Index also gained 17.6% during the same
period.
The Fund's performance was powered by favorable selection both of industry
sectors and individual stocks. Among sectors, the top returns were generated in
the consumer group, technology/capital goods and financial services. The
best-performing stocks within these sectors included Omnicom Group, Inc. and
Home Depot, Inc.; Fluor Corp. and Lucent Technologies; and Charles Schwab
Corporation, respectively.
MARKET COMMENTARY
- -----------------
Our thoughts about U.S. equities these days bring to mind an old story. About an
hour into an airline flight from New York to Los Angeles, the pilot announces
that one of the plane's three engines had lost power, but there was enough power
in the two remaining engines to complete the flight, albeit somewhat late. Two
portfolio managers on the flight exchange frustrated glances and grumble that
they would be late for their meeting in L.A. After another hour or so, the pilot
announces that the second engine had lost power, but that the plane would reach
L.A. safely with a much longer delay. One of the managers leaps from his seat
and angrily exclaims, "My gosh, if we lose the third engine, we'll be up here
all day!"
As we have previously written, the U.S. stock market is like the plane in the
story. The market's three engines are earnings growth, price/earnings ratios and
dividend yields. Currently, standard valuation measures like the price/earnings
ratio are relatively high while dividend yields are near their all-time lows. In
other words, two of the main engines of equity returns are indicating that there
is little room to spare for further appreciation. The remaining engine, earnings
growth, is the only factor left to keep stock prices aloft.
Events in Asia over the last few months have prompted additional cause for
concern in the form of deflation. A moderate level of deflation should be
positive for equities in the long term, as it typically serves as a check on
rising interest rates and, hence, should have a favorable impact on
price/earnings ratios. The currency market's reflection of the severe structural
problems in the economies of South Korea, Indonesia and several other Asian
nations, however, suggests that near-term deflationary forces could be much
stronger. If so, earnings for multinational firms could face substantial
downward pressure.
As Asian exporters cut prices simply to move inventory and keep production lines
going, big U.S. multinationals lose the ability to raise prices (indeed, they
may have to cut them simply to remain competitive). In addition, depressed
conditions in Asian economies mean that domestic consumption of non-essential
(i.e., foreign) goods will likely decline. The bottom line is that the
multinationals' profit margins should be squeezed. While efforts to cut costs
and raise productivity are most helpful in this regard over the long haul, they
are much less so on a shorter-term basis.
It is useful in this context to cite another factor, one that we first discussed
in early 1997. This is the extraordinary gap in labor prices between the
developed and developing worlds. The 300 million or so people in
developed-nation workforces earn around $90 per day, vs. $3 per day for the 1.2
billion developing-world laborers.
This "labor arbitrage" should exert favorable deflationary force over the world
economy for many years to come. Nearer-term, though, it is most likely to
deprive the multinationals of pricing power and prevent much expansion in
profitability.
13
<PAGE>
BEA U.S. CORE EQUITY FUND
PORTFOLIO MANAGERS' LETTER (CONTINUED)
OUTLOOK
- -------
The U.S. equity market's performance in 1997 was not simply strong, it was
record-breaking: the first time in history that the market rose at least 20% for
three consecutive years. By itself, this should be enough to suggest that stock
prices are a bit frothy and ripe for some measure of correction. We see even
further reason for caution in the market's current dependence on earnings growth
to keep prices moving upward. Until earnings expectations become earnings
realities, then, we expect general market activity to remain fairly volatile.
It is the Fund's policy to remain nearly fully invested at all times in what we
regard as the best set of opportunities available to it. In view of the overall
environment for equities that we have described, we have concentrated the
portfolio in the shares of large entities whose revenues are mainly derived from
the domestic U.S. economy. As always, our individual stock selections are made
from among those companies that are generating notably positive returns on their
reinvested capital; successfully implementing various types of restructuring
measures; focusing on the enhancement of shareholder value; and led by
aggressive, top-quality management teams.
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
14
<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.
[GRAPH OMITTED]
PLOT POINTS FOLLOW:
BEA U.S. CORE S&P 500
EQUITY FUND INDEX
09/01/1994 10,000 10,000
11/30/1994 9,553 9,615
02/28/1995 10,251 10,398
05/31/1995 11,103 11,455
08/31/1995 11,975 12,149
11/30/1995 12,746 13,168
02/29/1996 13,940 14,007
05/31/1996 14,383 14,720
08/31/1996 14,080 14,421
11/30/1996 16,150 16,837
02/28/1997 16,786 17,672
05/31/1997 17,943 19,049
08/31/2997 19,475 20,275
11/30/2997 22,338 21,625
02/28/2998 24,994 23,838
AVERAGE ANNUAL
TOTAL RETURN
One Year 36.41%
From Inception 26.74%
Note: Past performance is not predictive of future performance.
15
<PAGE>
BEA U.S. CORE EQUITY FUND
OF THE RBB FUND, INC.
STATEMENT OF NET ASSETS
FEBRUARY 28, 1998
(UNAUDITED)
NUMBER
OF SHARES VALUE
--------- ----------
COMMON STOCK -- 99.2%
ADVERTISING -- 1.0%
Interpublic Group of Companies,
Inc. ...................................... 19,200 $ 1,046,400
-----------
AEROSPACE / DEFENSE -- 0.4%
Coltec Industries** ......................... 16,500 430,031
-----------
ALUMINUM -- 2.1%
Alumax, Inc. ................................ 10,500 389,156
Aluminum Company of
America ................................... 26,400 1,937,100
-----------
2,326,256
-----------
BUSINESS SERVICES -- 2.0%
Manpower, Inc. .............................. 52,700 2,223,281
-----------
CHEMICALS -- 1.5%
Dow Chemical ................................ 18,100 1,656,150
-----------
COMMERCIAL SERVICES -- 1.0%
Crescent Operating, Inc.** .................. 56,500 1,122,937
-----------
COMPUTERS, SOFTWARE AND SERVICING-- 19.2%
3Com Corp.** ................................ 59,700 2,134,275
Compaq Computer Corporation ................. 91,400 2,930,512
DST Systems** ............................... 40,000 2,115,000
Metacreations Corp.** ....................... 29,000 247,406
Microsoft Corporation** ..................... 51,200 4,339,200
National Semiconductor Corp.** .............. 67,700 1,616,338
Oracle Corp.** .............................. 46,400 1,142,600
Seagate Technology** ........................ 86,600 2,105,462
Sterling Commerce** ......................... 49,700 2,267,562
Synopsys, Inc.** ............................ 30,000 1,048,125
Xilinx, Inc.** .............................. 23,700 1,039,837
-----------
20,986,317
-----------
CONGLOMERATES -- 3.7%
General Electric Co. ........................ 26,200 2,037,050
Philip Morris Companies ..................... 45,000 1,954,687
-----------
3,991,737
-----------
CONSTRUCTION AND BUILDING MATERIALS -- 5.1%
Fluor Corp. ................................. 46,100 2,169,581
Sherwin Williams Co. ........................ 101,200 3,383,875
-----------
5,553,456
-----------
CONSUMER PRODUCTS & SERVICES -- 5.1%
Clorox Company .............................. 24,100 2,114,775
Newell Co. .................................. 74,100 3,399,337
-----------
5,514,112
-----------
ELECTRONICS -- 2.3%
Micron Technology ........................... 75,300 2,499,019
-----------
ENERGY -- 1.6%
Burlington Resources, Inc. .................. 8,800 393,800
CalEnergy Co.** ............................. 13,100 351,244
Schlumberger, Ltd. .......................... 12,500 942,187
-----------
1,687,231
-----------
NUMBER
OF SHARES VALUE
--------- -----------
ENTERTAINMENT -- 1.3%
Carmike Cinemas, Inc.,
Class A** ............................... 30,000 $ 916,875
GTECH Holdings Corporation** .............. 12,800 452,000
-----------
1,368,875
-----------
FINANCIAL SERVICES -- 9.7%
ACE Ltd. .................................. 10,000 988,750
Allstate Corporation ...................... 10,000 932,500
BankAmerica Corporation ................... 27,100 2,100,250
Beneficial Corporation .................... 10,000 1,180,000
CIT Group, Inc. ........................... 29,900 986,700
CNA Financial** ........................... 5,000 719,687
Charles Schwab Corporation ................ 45,000 1,698,750
Mutual Risk Management
Limited ................................. 30,000 960,000
Vesta Insurance Group, Inc. ............... 18,000 1,031,625
-----------
10,598,262
-----------
FOOD & BEVERAGE -- 3.4%
Hershey Foods ............................. 31,400 2,093,987
SYSCO Corporation ......................... 35,000 1,647,187
-----------
3,741,174
-----------
HEALTH CARE -- 2.1%
Biomet, Inc. .............................. 33,600 1,001,700
I-STAT Corporation** ...................... 14,800 238,650
Johnson & Johnson, Inc. ................... 13,600 1,026,800
-----------
2,267,150
-----------
INDUSTRIAL GOODS & MATERIALS -- 5.9%
Dover Corporation ......................... 89,600 3,460,800
Illinois Tool Works, Inc. ................. 49,300 2,954,919
-----------
6,415,719
-----------
METALS & MINING -- 2.3%
Amax Gold, Inc. ........................... 30,600 84,150
Barrick Gold .............................. 28,800 556,200
Battle Mountain Gold ...................... 31,600 189,600
Homestake Mining .......................... 18,800 188,000
Newmont Mining ............................ 40,400 1,169,075
Placer Dome, Inc. ......................... 26,900 346,337
-----------
2,533,362
-----------
OIL & GAS EXPLORATION -- 4.0%
Baker Hughes, Inc. ........................ 12,200 499,438
Enron Oil & Gas ........................... 49,500 1,058,063
Global Marine ............................. 41,600 964,600
Halliburton ............................... 10,300 478,950
Marine Drilling** ......................... 22,100 396,419
Unocal Corp. .............................. 25,400 957,263
-----------
4,354,733
-----------
PACKAGING -- 0.9%
Sealed Air Corporation** .................. 15,300 1,029,881
-----------
See Accompanying Notes to Financial Statements.
16
<PAGE>
BEA U.S. CORE EQUITY FUND (CONCLUDED)
NUMBER
OF SHARES VALUE
--------- -----------
PAPER & FOREST PRODUCTS -- 0.5%
Georgia Pacific Corporation ................. 9,400 $ 551,663
-----------
PHARMACEUTICALS -- 5.9%
Barr Laboratories, Inc.** ................... 40,000 1,360,000
Monsanto Company ............................ 20,000 1,017,500
Pharmacia & Upjohn .......................... 10,100 399,581
Smithkline Beecham p.l.c .................... 29,300 1,812,938
Warner Lambert Co. .......................... 12,900 1,886,625
-----------
6,476,644
-----------
PUBLISHING & INFORMATION SERVICES -- 4.7%
Gannett Company, Inc. ....................... 31,400 2,027,263
Omnicom Group, Inc. ......................... 43,800 2,003,850
Tribune Co. ................................. 17,000 1,097,563
-----------
5,128,676
-----------
RETAIL -- 4.6%
Home Depot, Inc. ............................ 20,000 1,276,250
Kmart Corporation ........................... 40,700 544,363
Sears & Roebuck ............................. 19,800 1,050,638
Wal-Mart Stores ............................. 45,100 2,088,694
-----------
4,959,945
-----------
STEEL -- 0.4%
Allegheny Teledyne .......................... 16,200 439,425
-----------
TELECOMMUNICATIONS -- 5.2%
Altera Corp.** .............................. 29,100 1,254,938
Lucent Technologies ......................... 34,200 3,706,470
WorldCom, Inc.** ............................ 20,000 763,750
-----------
5,725,158
-----------
TRANSPORTATION -- 3.3%
AMR Corporation ............................. 10,800 1,366,875
Canadian National Railway
Company ................................... 18,300 1,136,888
Canadian Pacific Ltd. ....................... 40,000 1,142,500
-----------
3,646,263
-----------
TOTAL COMMON STOCK
(Cost $87,860,380) ........................ 108,273,857
-----------
PREFERRED STOCK -- 0.4%
Microsoft Corporation ....................... 4,100 380,275
-----------
TOTAL PREFERRED STOCK
(Cost $362,325) ........................... 380,275
-----------
PAR
(000) VALUE
---------- -------------
SHORT TERM INVESTMENTS -- 0.5%
BBH Grand Cayman U.S. Dollar
Time Deposit
5.125% 03/02/98 ........................... $ 543 $ 543,000
------------
TOTAL SHORT TERM
INVESTMENTS
(Cost $543,000) ........................... 543,000
------------
TOTAL INVESTMENTS -- 100.1%
(Cost $88,765,705) ........................ 109,197,132
------------
LIABILITIES IN EXCESS
OF OTHER ASSETS -- (0.1%) ................. (54,720)
------------
NET ASSETS (Applicable to
4,407,919 BEA Institutional
Shares) -- 100.0% ......................... $109,142,412
============
NET ASSET VALUE,
OFFERING PRICE AND
REDEMPTION PRICE PER
BEA INSTITUTIONAL
SHARE
($109,142,412 (DIVIDE) 4,407,919) ......... $24.76
======
* Cost for Federal income tax purposes at February 28, 1998 is $88,757,982.
The gross appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation ....................................... $21,411,977
Gross Depreciation ....................................... (972,827)
------------
Net Appreciation ......................................... $20,439,150
===========
** Non-income producing securities.
AT FEBRUARY 28, 1998, NET ASSETS CONSISTED OF:
AMOUNT
-------------
Capital Paid-In ................................................. $ 79,725,198
Accumulated Net Investment Loss ................................. (16,087)
Accumulated Net Realized Gain on
Security and Foreign Exchange Transactions ................... 9,001,874
Net Unrealized Appreciation on
Investments and Other ........................................ 20,431,427
- --------------------------------------------------------------------------------
NET ASSETS ...................................................... $109,142,412
- --------------------------------------------------------------------------------
See Accompanying Notes to Financial Statements.
17
<PAGE>
BEA GLOBAL TELECOMMUNICATIONS FUND
PORTFOLIO MANAGERS' LETTER
March 12, 1998
Dear Shareholders:
We are pleased to report on the results of the BEA Global Telecommunications
Fund (the "Fund") and BEA's investment strategy for the six months ended
February 28, 1998.
PERFORMANCE REVIEW
- ------------------
At February 28, 1998, the net asset value ("NAV") of the Fund was $21.56,
compared to an NAV of $17.30 on August 31, 1997. As a result, the Fund's total
return (assuming reinvestment of dividends and distributions) was 31.6%. By
comparison, the MSCI Telecommunications Index (the "Index") returned 29.2%
during the same period.
We attribute the Fund's outperformance of the Index to two factors. First was
our exposure to Asia, which was significantly lower than that of the Index
throughout the period. As a result, the Fund was relatively unaffected by the
"Asian Flu" epidemic of currency devaluation and weakening stock prices. Second
was favorable stock selection. This was most notable in Europe, which was the
Fund's best-performing regional sector. Among the portfolio's highest-returning
stocks was United Kingdom's COLT Telecom, Group plc and Portugal's Portugal
Telecom S.A.
MARKET COMMENTARY
- -----------------
In the absence of major news in the telecom world at present, we believe it is
appropriate to reiterate our optimism regarding the prospects for global telecom
equities. Telecommunications is one of the world's most exciting businesses
today. This augurs quite well for investors, since the excitement is driven by
rapid and substantial change, which historically has proven to be a major
catalyst for great opportunities in the world of stocks.
Three themes support our bullish perspective. These include industry
consolidation; restructuring steps taken by individual companies; and growth.
The consolidation story is strongest in the U.S. and Europe, where established
and newer players alike often must seek out fresh combinations to stay
competitive. Restructuring is taking place worldwide in response to industry
deregulation. Growth manifests itself in the forms of globalization and the
convergence of information technology and communications (perhaps best
exemplified by the Internet). We see it occurring both in the developed nations
(where entrepreneurship and the drive for global expansion are most evident) as
well as in the emerging world (whose potential simply for market penetration is
huge).
OUTLOOK
- -------
We expect that performance of global telecommunications equities over the next
few months will be driven by our themes of consolidation and restructuring,
particularly in the major markets. Another important development to which we are
paying close attention is the upcoming privatization of Telecomunicacoes
Brasileiras S.A. ("Telebras"), the Brazilian national phone company. As
Telebras's various pieces are sold, their prices will undoubtedly prompt much
revaluation of telecom providers throughout the world. Once the privatization is
complete (i.e., in the July-September period), furthermore, there will be many
more vehicles for investor participation in the huge Brazilian telecom market.
In our last report, we expressed a preference in our stock selection for the
smaller "David" companies of the world that are competing with the established
industry "Goliaths". A prime example is Global TeleSystems Group, which
develops, owns and operates telcos in Europe and Asia. Its stock has more than
doubled since we bought it in its recent initial public offering. We will also
emphasize in the near term the shares of companies in developed-world nations
(especially in Europe) over those in the emerging markets. Within the latter, we
remain cautious on Asian companies and most favorably disposed toward those
based in Latin America and Eastern Europe.
Our investment approach remains built on the foundation of opportunism. In other
words, we are most concerned with identifying attractive stocks and less so with
structuring the portfolio on the basis of particular sector or geographical
allocations. This fundamental discipline continues to form the core of our
strategy.
18
<PAGE>
BEA GLOBAL TELECOMMUNICATIONS FUND
PORTFOLIO MANAGERS' LETTER (CONTINUED)
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
James Abate, Senior Vice President
Steven D. Bleiberg, Senior Vice President
Emily Alejos, Vice President
Robert Hrabchak, Vice President
19
<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.
[GRAPH OMITTED]
PLOT POINTS FOLLOW:
BEA GLOBAL MORGAN STANLEY
TELECOMMUNICATIONS COMPOSITE INDEX
FUND TELECOMMUNICATIONS
12/04/1996 10,000 10,000
02/28/1997 10,787 10,253
05/31/1997 11,460 10,727
08/31/1997 11,533 10,729
11/30/1997 12,859 12,107
02/28/1998 15,178 13,864
AVERAGE ANNUAL
TOTAL RETURN
One Year 40.72%
From Inception 40.07%
Note: Past performance is not predictive of future performance.
20
<PAGE>
BEA GLOBAL TELECOMMUNICATIONS FUND
OF THE RBB FUND, INC.
STATEMENT OF NET ASSETS
FEBRUARY 28, 1998
(UNAUDITED)
NUMBER
OF SHARES VALUE
--------- --------
COMMON STOCKS,
WARRANTS AND RIGHTS -- 97.1%
BRAZIL -- 10.3%
Companhia Riograndense
Telecom ..................................... 15,400 $15,604
Telecomunicacoes Brasileiras
S.A. PN ..................................... 30,500 8,529
Telecomunicacoes Brasileiras
S.A.......................................... 165,000 16,353
Telecomunicacoes Brasileiras
S.A. ADR .................................... 140 17,141
Telecomunicacoes de Minas
Gerais S.A. PN Cl. B ........................ 70,000 9,261
Telecomunicacoes de Sao Paulo
S.A. PN ..................................... 50,417 13,965
Telecomunicacoes do Rio de
Janeiro S.A. PN ............................. 67,000 9,250
-------
90,103
-------
CANADA -- 3.9%
BCE Mobile Communications,
Inc.** ...................................... 100 2,688
BCE, Inc. ..................................... 400 14,225
Teleglobe, Inc. ............................... 200 7,200
Telesystem International
Wireless Inc.** ............................. 500 9,662
-------
33,775
-------
CHINA -- 2.7%
China Telecommunications Ltd. ................. 670 24,036
-------
DENMARK -- 1.1%
Tele Danmark A/S Cl. B ........................ 150 9,713
-------
GERMANY -- 1.7%
Mannesmann AG ................................. 25 15,126
-------
INDIA -- 3.3%
Mahanagar Telephone Nigam
144A GDR** .................................. 1,000 17,125
Videsh Sanchar Nigam Ltd. ..................... 900 11,813
-------
28,938
-------
ISRAEL -- 3.5%
ECI Telecommunications Ltd. ................... 468 13,601
Gilat Satellite Networks Ltd. .................
ADR** ....................................... 500 16,875
-------
30,476
-------
ITALY -- 4.9%
Telecom Italia Mobile S.p.A. .................. 1,600 7,318
Telecom Italia Mobile S.p.A. ..................
Non-Convertible Savings
Shares ...................................... 4,700 13,789
Telecom Italia Savings Shares
S.p.A. ...................................... 4,400 21,355
-------
42,462
-------
NUMBER
OF SHARES VALUE
--------- --------
MEXICO -- 3.8%
Telefonos de Mexico S.A. ADR .................. 649 $ 32,896
--------
NETHERLANDS -- 1.1%
Royal PTT Nederland N.V. ...................... 200 10,064
--------
POLAND -- 2.8%
Elektrim Spolka Akcyjna S.A. .................. 1,900 24,859
--------
PORTUGAL -- 5.4%
Portugal Telecom S.A. ADR ..................... 600 31,575
Portugal Telecom S.A.
Registered .................................. 300 15,742
--------
47,317
--------
RUSSIA -- 4.6%
PLD Telekom, Inc.** ........................... 3,800 22,800
Vimpel Communications ADR** ................... 433 17,212
--------
40,012
--------
SPAIN -- 3.5%
Telefonica de Espana ADR ...................... 300 31,050
--------
TURKEY -- 2.5%
Northern Electric
Telekomunikasyon A.S. ....................... 56,500 21,536
--------
UNITED KINGDOM -- 8.6%
COLT Telecom Group plc ADR** .................. 900 75,600
--------
UNITED STATES -- 33.4%
360 Communications Company** .................. 700 18,550
Airtouch Communications, Inc.** ............... 400 17,975
Ameritech Corporation ......................... 400 16,675
Bell Atlantic Corporation ..................... 200 17,950
Cox Radio, Inc.** ............................. 200 8,600
Global Telesystems Group, Inc.** .............. 1,000 36,625
ICG Communications, Inc.** .................... 776 26,093
MCI Communications ............................ 200 9,563
Metricom, Inc.** .............................. 900 9,675
Metromedia International Group,
Inc. Convertible Pfd.** ..................... 200 10,300
NewsEdge Corp.** .............................. 650 7,231
PageMart Wireless, Inc.** ..................... 1,100 9,831
Paging Network, Inc.** ........................ 1,000 14,500
Sprint Corp. .................................. 200 13,200
Superior Telecom, Inc. ........................ 500 19,531
Teleport Communications, Inc.
Cl. A** ..................................... 100 5,463
U.S. West Communications
Group ....................................... 400 20,825
U.S. WEST Media Group** ....................... 500 16,094
WorldCom, Inc.** .............................. 362 13,824
--------
292,505
--------
TOTAL COMMON STOCKS,
WARRANTS AND RIGHTS
(Cost $607,720) ............................. 850,468
--------
See Accompanying Notes to Financial Statements.
21
<PAGE>
BEA GLOBAL TELECOMMUNICATIONS FUND (CONCLUDED)
PAR
(000) VALUE
--------- --------
SHORT-TERM INVESTMENTS -- 3.4%
BBH Grand Cayman U.S. Dollar
Time Deposit
5.125% 03/02/98 ........................... $ 30 $ 30,000
--------
TOTAL SHORT-TERM
INVESTMENTS
(Cost $30,000) ............................ 30,000
--------
TOTAL INVESTMENTS -- 100.5%
(Cost $637,720) ........................... 880,468
--------
LIABILITIES IN EXCESS
OF OTHER ASSETS -- (0.5%) ................. (4,459)
--------
NET ASSETS (Applicable to
40,626 BEA Advisor
Shares)-- 100.0% .......................... $876,009
========
NET ASSET VALUE,
OFFERING PRICE AND
REDEMPTION PRICE PER
BEA ADVISOR SHARE
($876,009 (DIVIDE) 40,626) ................ $21.56
======
* Also cost for Federal income tax purposes at February 28, 1998. The gross
appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation .................................. $250,320
Gross Depreciation .................................. (7,572)
--------
Net Appreciation .................................... $242,748
========
** Non-income producing securities.
INVESTMENT ABBREVIATIONS
ADR ............................................... American Depository Receipts
AT FEBRUARY 28, 1998, NET ASSETS CONSISTED OF:
AMOUNT
--------
Capital Paid-In ................................................. $652,782
Accumulated Net Investment Loss ................................. (4,049)
Accumulated Net Realized Loss on
Security and Foreign Exchange Transactions ................... (15,472)
Net Unrealized Appreciation on
Investments and Other ........................................ 242,748
- --------------------------------------------------------------------------------
NET ASSETS ...................................................... $876,009
- --------------------------------------------------------------------------------
See Accompanying Notes to Financial Statements.
22
<PAGE>
BEA U.S. CORE FIXED INCOME FUND
PORTFOLIO MANAGERS' LETTER
March 12, 1998
Dear Shareholders:
We are pleased to report on the results of the BEA U.S. Core Fixed Income Fund
(the "Fund") for the six months ended February 28, 1998 and discuss our
investment strategy.
PERFORMANCE REVIEW
- ------------------
At February 28, 1998, the net asset value ("NAV") of the Fund was $15.70,
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) was 5.14%. By
comparison, the Lehman Brothers Aggregate Bond Index posted a return of 5.72%
during the same period.
The underperformance during the period is principally attributable to the Fund's
holdings in emerging market debt securities, which generated the period's lowest
returns among major fixed income sectors. To a lesser extent, performance also
was negatively affected by exposure to domestic high yield and security-specific
volatility within the Fund's allocation to investment-grade corporate bonds.
It is worth noting here that, even though the Portfolio was at the more
conservative end of our long-term range, the systemic shock of the problems in
Asia caused virtually all "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) to suffer during the period.
MARKET COMMENTARY
- -----------------
The key dynamic in the U.S. fixed income markets the past several months was the
effort by investors to grapple with the implications of the financial crisis
occurring in Asia. Assumptions concerning such vital factors as global
liquidity, sovereign risk and worldwide economic growth prospects were
reassessed in light of the crisis and, ultimately, reflected in the marketplace
via price adjustments. The presence of so much uncertainty resulted in a classic
"flight to quality" in which high-caliber instruments like United States
Treasury bonds fared best, while prices of securities most dependent on growth
prospects and liquidity conditions suffered the greatest declines.
The following are what we consider to be the most significant developments that
occurred during the period:
(BULLET) Flattening of the yield curve. The size of the differential between
yields on two-year and 30-year Treasury bonds narrowed to 28 basis points
from 63. For the year as a whole, this same yield spread shrank by over 70
basis points. In our opinion, such activity foreshadows slower economic
growth and lower liquidity.
(BULLET) Asian Flu epidemic. The "Asian Flu" of currency devaluation and
weakening debt prices continued to rage, as all of the region's currencies
(even the Japanese yen) declined versus the U.S. dollar. Standard and
Poor's downgraded Korea Development Bank (KDB) bonds, as well as all other
Korean corporate debt issues, to B+ from AA- in mid-December. Yield spreads
between KDB's and Treasuries widened to 700 basis points from 100 in the
third quarter. Overall, Asia is suffering one of the most drastic credit
tightenings in the post-WW II era. Our research suggests that this will
reduce U.S. economic growth in 1998 as much as 0.5%, to approximately 1.5%.
(BULLET) Surge in credit downgrades. Standard and Poor's downgraded 26 separate
Yankee bond issues (i.e., dollar-denominated bonds issued by non-U.S.
corporations) during the quarter. For the year, total downgrades outpaced
total upgrades by a ratio of 1.13 to 1.
(BULLET) Groundswell for new supply. The markets had difficulty absorbing 1997's
$150 billion worth of new corporate debt, though it was virtually the same
level of new supply issued in 1996. Nonetheless, the Asian crisis is
creating a great need for capital replenishment, which should generate a
substantial increase in the level of new supply. In addition, falling
long-term interest rates will persuade a greater number of issuers to come
to market. Analysts estimate that total issuance in 1998 will increase by
25%, to $188 billion.
OUTLOOK
- -------
We believe that U.S. financial markets are facing an extraordinary coincidence
of conflicting macroeconomic forces. These are the potential for inflation (in
the form of near-full employment and rising labor costs) and the simultaneous
deflationary wave coming from Asia's depressed economies. As a result, the
Federal Reserve and investors must choose
23
<PAGE>
BEA U.S. CORE FIXED INCOME FUND
PORTFOLIO MANAGERS' LETTER (CONTINUED)
their stance on interest rates and investment strategy, respectively, by
determining which of these cyclical forces will most impact the domestic
economy.
Since the fourth quarter of 1996, we have been especially concerned both about
the threat of excess production capacity in Asia and the over-leveraging of the
U.S. consumer. With Asian capacity having reached dangerously high levels, Asian
companies are relying on the American consumer (historically the "buyer of last
resort") to solve their capacity problems. We question whether the consumer
actually can do so. Consumer delinquencies already are very high (i.e., over
5%), while unemployment has hit a record low. Delinquency rates and individual
bankruptcies will continue to rise in 1998, thus reducing the probability of the
type of U.S. spending boom that Asia so desperately needs. Our conclusion, then,
is that there will be no quick fixes for Asia.
At present, we feel that the market's recent weakness has created good
fundamental value, but that technical factors will continue to dictate prices in
the near term. On this basis, we have identified certain sectors or individual
securities that we would like to purchase should technicals improve or prices
decline to a point at which valuations move from good to compelling. When these
latter conditions occur, we intend to reposition the portfolio so as to benefit
from the higher risk premium available.
Our strategies for the Fund's major asset sectors are as follows:
CORPORATE BONDS. The three primary drivers of spread contraction (i.e.,
liquidity, profits and ratings upgrades) are losing positive momentum enough for
us to believe that spreads of high-grade corporates relative to Treasuries will
widen another 10 basis points in 1998. As a result, we remain defensively
positioned. We expect values to become more compelling at some point during the
year and are poised to take advantage.
SECURITIZED DEBT. Having anticipated that investors would be slow to gauge the
extent to which falling interest rates would raise mortgage prepayment risk, we
reduced our position in mortgage-backed securities relative to the Lehman
benchmark to an underweight during the fourth quarter. We begin 1998 similarly
underweight and concentrated in low-coupon, call-protected instruments, and
expect an attractive buying opportunity to materialize as yield spreads widen.
We also are significantly overweight asset-backed securities, which we see as
having good scope for further gains.
BELOW INVESTMENT-GRADE. Despite the difficulties experienced during the fourth
quarter, emerging market debt was the top performer among major fixed income
sectors in 1997, while high yield fared best among domestic instruments. We
continue to believe that inclusion of both will enhance the Fund's performance
via the benefits of potential appreciation, higher-than-average yields and
risk-diversification. Although our current strategies for each are generally
defensive, we are vigilant for opportunistic purchases.
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
Robert W. Justich, Senior Vice President
Diane Damskey, Senior Vice President
Ira Edelblum, Senior Vice President
Jo Ann Corkran, Senior Vice President
24
<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.
[GRAPH OMITTED]
PLOT POINTS FOLLOW:
BEA U.S. LEHMAN BROTHERS
CORE FIXED AGGREGATE BOND
INCOME FUND INDEX
04/01/1994 10,000 10,000
05/31/1994 9,913 9,999
08/31/1994 10,017 10,188
11/30/1994 9,812 10,007
02/28/1995 10,204 10,520
05/31/1995 10,864 11,148
08/31/1995 11,078 11,342
11/30/1995 11,475 11,775
02/29/1996 11,590 11,809
05/31/1996 11,464 11,638
08/31/1996 11,658 11,806
11/30/1996 12,328 12,488
02/28/1997 12,420 12,442
05/31/1997 12,567 12,607
08/31/1997 13,001 12,991
11/30/1997 13,327 13,437
02/28/1998 13,670 13,735
AVERAGE ANNUAL
TOTAL RETURN
One Year 10.06%
From Inception 8.31%
Note: Past performance is not predictive of future performance.
25
<PAGE>
BEA U.S. CORE FIXED INCOME FUND
OF THE RBB FUND, INC.
STATEMENT OF NET ASSETS
FEBRUARY 28, 1998
(UNAUDITED)
PAR
(000) VALUE
-------- -----------
CORPORATE BONDS -- 33.4%
BANKING -- 5.1%
AO Sibneft
Sr. Loan Participation Notes
(NR, NR)
9.625% 08/15/00 .............................. $ 355 $ 340,800
Credit Lyonnais
Perpetual Sub. Variable Rate
Notes, Rule 144A
(Baa2, NR)(DAGGER)/
(DAGGER)(DAGGER)(DAGGER)/****
7.125% ....................................... 520 507,000
Export-Import Bank of Korea:
Yankee Notes (Ba1, B+)
6.500% 05/15/00 ............................ 210 197,138
144A Yankee Bonds
(Ba1, NR)
6.500% 10/06/99 ............................ 390 372,938
First Republic Bank
Sub. Notes (NR, BB+)
7.750% 09/15/12 .............................. 1,050 1,082,812
Fuji Finance (Cayman) Ltd.
Perpetual Gtd.
FRN (Baa3, NR)(DAGGER)/(DAGGER)
(DAGGER)(DAGGER)
7.300% ....................................... 870 791,700
National Australia Bank
Yankee Sub. Notes (A1, AA-)
6.600% 12/10/07 .............................. 380 381,835
National Westminster Bank
Perpetual Sub. FRN,
Series A (Aa3, A+)(DAGGER)/
(DAGGER)(DAGGER)(DAGGER)
5.813% ....................................... 610 534,329
Okobank Perpetual
Sub. FRN (A3, NR)(DAGGER)/
(DAGGER)(DAGGER)(DAGGER)
6.406% ....................................... 1,100 1,080,750
Santander Financial Issuances
Perpetual Sub. FRN
(A2, NR)(DAGGER)/(DAGGER)(DAGGER)(DAGGER)
6.963% ....................................... 500 482,500
Shinhan Bank
Sub. Notes (Ba1, B-)
7.250% 06/26/02 .............................. 350 298,375
Skandinaviska Enskilda
Banken AB:
Perpetual Sub. FRN
(Baa1, NR)(DAGGER)/(DAGGER)(DAGGER)(DAGGER)
6.625% ..................................... 1,470 1,478,585
Perpetual Sub. FRN
(NR, NR)(DAGGER)/(DAGGER)(DAGGER)(DAGGER)
7.500% ..................................... 910 938,902
Sovereign Bancorp
Sr. Notes (NR, BBB-)
6.750% 07/01/00 .............................. 110 110,000
SB Treasury Company L.L.C.
Noncumulative Preferred
Securities Series A
(A2, BB-)
9.400% 06/30/98 .............................. 1,035 1,071,225
PAR
(000) VALUE
-------- -----------
BANKING -- (CONTINUED)
Trans Financial Bank N.A.
Notes (Baa3, BBB-)
6.480% 10/23/98 ......................... $ 305 $ 305,701
----------
9,974,590
----------
BROADCASTING -- 0.8%
Fox/Liberty Network L.L.C.
144A Sr. Notes (B1, B)****
8.875% 08/15/07 ......................... 1,290 1,339,987
9.750% 08/15/07(DAGGER)(DAGGER) ......... 440 298,100
----------
1,638,087
----------
CABLE -- 0.5%
Cablevision Systems Corp.
Sr. Notes (Ba2, BB+)
7.875% 12/15/07 ......................... 750 773,437
Diamond Cable Communications
plc 144A Yankee Sr.
Discount Notes (Caa1, B-)
(DAGGER)(DAGGER)
10.750% 02/15/07 ........................ 405 270,337
----------
1,043,774
----------
CHEMICALS -- 0.1%
UCC Investors Holdings Inc.
Sub. Discount Notes (B3, B-)
(DAGGER)(DAGGER)
12.000% 05/01/05 ........................ 290 278,400
----------
ENERGY -- 0.6%
Cliffs Drilling Co., Gtd.
Sr. Notes, Series B (B1, B)
10.250% 05/15/03 ........................ 355 389,612
Valero Energy Corp.
144A Pass-Through Asset
Trusts (Baa3, BBB-)****
6.750% 12/15/02 ......................... 830 838,300
----------
1,227,912
----------
ENTERTAINMENT -- 2.4%
Time Warner, Inc.
Debentures (Ba1, BBB-)
7.570% 02/01/24 ......................... 940 998,750
6.850% 01/15/26 ......................... 3,545 3,686,800
----------
4,685,550
----------
FINANCIAL SERVICES -- 7.9%
American General Institutional
Capital Trust Co.
144A Gtd. Notes,
Series B (A2, A+)****
8.125% 03/15/46 ......................... 1,935 2,143,012
AT&T Capital Corp.
Medium-Term Notes
Series 4 (Baa3, BBB)
6.920% 04/29/99 ......................... 70 70,637
6.470% 12/03/99 ......................... 480 480,403
6.480% 12/03/99 ......................... 1,800 1,801,818
See Accompanying Notes to Financial Statements.
26
<PAGE>
BEA U.S. CORE FIXED INCOME FUND (CONTINUED)
PAR
(000) VALUE
-------- -----------
FINANCIAL SERVICES -- (CONTINUED)
Banque Nationale de Paris
144A Tier 1 Step-Up
Notes Series A (A2, A-)****/(DAGGER)
7.738% 06/05/98 ........................... $ 1,330 $ 1,356,068
BellSouth Capital Funding Corp.
Debentures (Aa1, AAA)
6.040% 11/15/26 ........................... 1,780 1,808,925
Fifth Mexican Acceptance Corp.
Rule 144A Notes Tranche A
(NR, NR)****/(DAGGER)(DAGGER)
(DAGGER)(DAGGER)/*****
8.000% 12/15/98 ........................... 2,510 624,362
Ford Holdings, Inc.
Gtd. Notes (A1, A+)
9.250% 03/01/00 ........................... 10 10,612
General Electric Capital Services
Gtd. Sub. Notes (Aaa, AAA)
7.500% 08/21/35 ........................... 165 185,212
General Motors Acceptance Corp.
Medium-Term Notes (A3, A)
5.800% 02/23/01 ......................... 1,440 1,438,618
6.800% 04/17/01 ......................... 625 637,500
7.250% 07/20/98 ......................... 125 125,669
6.625% 04/24/00 ......................... 1,290 1,306,125
Industrial Credit & Investment
Corp. of India
Medium Term Notes
(Baa3, BB+)
7.550% 08/15/07 ........................... 305 272,206
L'Auxiliare du Credit
Foncier de France:
Gtd. Notes (Ba1, NR)(DAGGER)/
(DAGGER)(DAGGER)(DAGGER)
5.688% 03/25/98 ......................... 740 709,290
Sr. Notes (Baa1, A)
8.000% 01/14/02 ......................... 830 874,612
Prudential Insurance Co. of
America
144A Capital Notes (A3, A)****
6.875% 04/15/03 ........................... 1,000 1,021,250
Trinity Re, Ltd.
Defeasance FRN Series 1998
Class A2 (NR, NR)
9.250% 03/03/98 ........................... 495 495,000
United Companies Financial Corp.
Sr. Notes (Ba1, BBB-)
7.000% 07/15/98 ........................... 270 268,312
-----------
15,629,631
-----------
FOOD & BEVERAGE -- 0.1%
Arisco Produtos Alimenticios
S.A. Medium Term Notes
(NR, NR)
10.750% 05/22/05 .......................... 160 149,600
-----------
PAR
(000) VALUE
-------- ---------
HEALTH CARE -- 2.3%
Columbia/HCA Healthcare Corp.
Debentures (Ba2, BBB)
8.360% 04/15/24 ............................. $ 360 $ 346,370
Merck & Co., Inc.
Medium Term Notes
Series B (NR, AAA)
5.760% 05/03/37 ............................. 2,840 2,900,350
Tenet Healthcare Corp.:
Sr. Notes (Ba1, BB)
7.875% 01/15/03 ............................. 410 424,350
8.625% 12/01/03 ............................. 850 896,750
----------
4,567,820
----------
INDUSTRIAL GOODS & MATERIALS -- 1.4%
Dresser Industries, Inc.
Debentures (Aa3, A)
7.600% 08/15/96 ............................. 1,095 1,238,719
Seagate Technology, Inc.
Sr. Debentures (Baa3, BBB)
7.450% 03/01/37 ............................. 1,500 1,483,125
----------
2,721,844
----------
PACKAGING/CONTAINERS -- 0.2%
Crown Packaging Enterprises Ltd.
Sr. Secured Discount
Notes (CA, NR)(DAGGER)(DAGGER)
14.000% 08/01/06 ............................ 550 13,750
Gaylord Container Corp.
Sr. Sub. Debentures (Caa, B-)
12.750% 05/15/05 ............................ 330 355,575
----------
369,325
----------
PAPER & FOREST PRODUCTS -- 0.5%
P. T. Indah Kiat Pulp &
Paper Corp.:
Gtd. Notes, Series B (Ba2, BB)
11.875% 06/15/02 .......................... 65 55,250
Sr. Secured Notes (Ba2, BB)
8.875% 11/01/00 ........................... 145 127,600
Repap New Brunswick Corp.
Sr. Secured Debentures
(Caa1, CC)
10.625% 04/15/05 ............................ 735 723,975
----------
906,825
----------
PUBLISHING & INFORMATION SERVICES -- 0.8%
Belo (A.H.) Corp.
Sr. Notes (Baa2, BBB-)
6.875% 06/15/02 ............................. 1,450 1,486,250
----------
REAL ESTATE -- 1.0%
Equity Office Properties Trust
144A Unsecured Special
Purpose Notes (Baa1, BBB)
6.500% 02/15/02 ............................. 2,050 2,050,000
----------
See Accompanying Notes to Financial Statements.
27
<PAGE>
BEA U.S. CORE FIXED INCOME FUND (CONTINUED)
PAR
(000) VALUE
-------- -----------
RESTAURANTS, HOTELS & CASINOS -- 0.6%
FelCor Suites
Limited Partnership,
Gtd. Sr. Notes (Ba1, BB+)
7.625% 10/01/07 ............................. $ 1,200 $1,222,500
----------
TELECOMMUNICATIONS -- 2.3%
BellSouth Telecommunications, Inc.
Debentures (Aaa, AAA)
5.850% 11/15/45 ............................. 1,150 1,157,187
7.000% 12/01/45 ........................... 125 130,312
Cencall Communications Corp.
Sr. Discount Notes
(B2, CCC+)(DAGGER)(DAGGER)
10.125% 01/15/04 ............................ 220 213,400
CS Wireless Systems, Inc.
Sr. Discount Notes
(Caa1, NR)(DAGGER)(DAGGER)
11.375% 03/01/06 ............................ 525 122,062
ICG Services Inc.
144A Sr. Discount Notes
(NR, NR)
10.000% 02/15/08 ............................ 300 178,500
Nextel Communications Inc.:
144A Sr. Discount Notes
(B2, CCC+)(DAGGER)(DAGGER)
9.950% 02/15/08 ........................... 600 366,000
144A Sr. Redeemable Discount
Notes (B2, CCC+)(DAGGER)(DAGGER)
10.650% 09/15/07 .......................... 950 615,125
Sr. Discount Notes
(B2, CCC+)
9.750% 10/31/07 ........................... 660 410,850
Rogers Cantel Inc.
Yankee Sr. Secured
Debentures (Ba3, BB+)
9.375% 06/01/08 ............................. 365 389,637
TCI Communications Inc.
Notes (Ba1, BBB-)
6.340% 02/01/02 ............................. 800 795,000
Wireless One, Inc.
Sr. Discount Notes (B3, B-)(DAGGER)(DAGGER)
13.500% 08/01/06 ............................ 320 53,600
----------
4,431,673
----------
TRANSPORTATION -- 3.4%
Continental Airlines, Inc.
Sr. Notes (Ba3, B)
9.500% 12/15/01 ............................. 665 714,875
Grupo Transportacion Ferroviaria
Mexicana, S.A. de C.V.
Gtd. Sr. Notes (B2, B+)****/(DAGGER)(DAGGER)
11.750% 06/15/07 ............................ 730 472,894
PAR
(000) VALUE
-------- -----------
TRANSPORTATION -- (CONTINUED)
Grupo Transportacion Ferroviaria
Mexicana, S.A. de C.V.
144A Gtd. Sr. Discount
Debentures
(B2, B+)(DAGGER)(DAGGER)
11.750% 06/15/09 ........................ $ 780 $ 514,800
Norfolk Southern Corp.:
Bonds (Baa1, BBB+)
7.900% 05/15/49 ....................... 255 290,700
Notes (Baa1, BBB+)
7.875% 02/15/04 ....................... 5 5,375
7.050% 05/01/04 ..................... 1,100 1,171,500
Northwest Airlines, Inc.
Gtd. Notes (Ba2, BB)
7.625% 03/15/05 ......................... 2,445 2,435,587
US Air, Inc.
Gtd. Sr. Notes (B3, CCC+)
10.000% 07/01/03 ........................ 1,025 1,085,219
-----------
6,690,950
-----------
UTILITIES -- 3.4%
Beaver Valley Funding Corp.
Secured Lease Obligation
Bonds (Ba3, BB-)
9.000% 06/01/17 ......................... 1,730 1,958,187
Connecticut Light and Power Co.:
First Mortgage Bonds,
Series D (Ba2, BB)
7.875% 10/01/24 ....................... 375 391,406
First and Ref. Mortgage Bonds,
1997 Series C
7.750% 06/01/02 ....................... 250 254,375
Long Island Lighting Co.
Debentures (Ba3, BB+)
9.000% 11/01/22 ......................... 1,150 1,302,375
Niagara Mohawk Power Corp.
First Mortgage Bonds
(Ba3, BB)
8.750% 04/01/22 ......................... 605 652,644
North Atlantic Energy Corp.
Secured First Mortgage Notes,
Series A (B1, B+)
9.050% 06/01/02 ......................... 875 885,938
TU Electric Capital Trust V,
Jr. Sub. Debentures
(Baa2, BBB)
8.175% 01/30/37 ......................... 1,130 1,190,738
-----------
6,635,663
-----------
TOTAL CORPORATE BONDS
(Cost $64,727,314) ...................... 65,710,394
-----------
See Accompanying Notes to Financial Statements.
28
<PAGE>
BEA U.S. CORE FIXED INCOME FUND (CONTINUED)
PAR
(000) VALUE
-------- -----------
MUNICIPAL BONDS -- 2.0%
Municipal Electric Authority
of Georgia Revenue Bond
Project One Sub-Series A
(Aaa, AAA)
5.000% 01/01/26 ............................. $ 1,900 $1,850,125
New Jersey Economic
Development Authority,
Pension Fund Revenue Bonds
Series A (Aaa, AAA)
7.425% 02/15/29 ........................... 1,545 1,707,750
Series B (Aaa, A1)
0.000% 02/15/08 ........................... 850 460,836
----------
TOTAL MUNICIPAL BONDS
(Cost $3,790,219) ........................... 4,018,711
----------
FOREIGN GOVERNMENT BONDS -- 10.3%
Federal Republic of Brazil
Capitalization Bonds Series L
(B1, BB-)
4.500% 04/15/98 ............................. 924 748,948
Federal Republic of Brazil
Interest Due Bonds (B1, NR)
6.813% 01/01/01 ............................. 875 846,563
Federal Republic of Brazil
MYDFA Trust Certificates
(NR, NR)
6.688% 09/15/07 ............................. 1,129 974,496
Federal Republic of Germany
Eurobonds (Aaa, NR)
6.000% 01/04/07 ............................. 6,650 3,950,952
International Bank for
Reconstruction & Development
U.S. Dollar Bonds (Aaa, AAA)
7.625% 01/19/23 ............................. 330 386,925
Republic of Argentina,
Par Bonds (Ba3, BB)
5.500% 05/31/98 ............................. 1,450 1,092,938
Republic of Argentina
Yankee Notes (Ba3, BB)
9.500% 05/31/98 ............................. 1,850 1,866,188
Republic of Poland
Past Due Interest Bonds
(Baa3, BBB-)
4.000% 10/27/14 ............................. 4,430 3,950,163
Republic of Venezuela
Global Bonds (Ba2, B+)
9.250% 09/15/27 ............................. 1,100 962,500
United Kingdom Treasury Gilt
Bonds (Aaa, NR)
8.500% 07/16/07 ............................. 2,050 3,923,815
PAR
(000) VALUE
-------- -----------
FOREIGN GOVERNMENT BONDS -- (CONTINUED)
United Mexican States Par Bonds,
Series A (Ba2, BB)
6.250% 12/31/19 ............................. $ 500 $ 422,188
Series B (Ba2, BB)
6.250% 12/31/19 ............................. 1,250 1,054,688
-----------
TOTAL FOREIGN
GOVERNMENT BONDS
(Cost $19,838,311) ............................ 20,180,364
-----------
AGENCY OBLIGATIONS -- 20.7%
FEDERAL HOME LOAN MORTGAGE CORPORATION -- 11.9%
Various Pools:
7.000% 12/01/09 .............................. 738 751,915
8.500% 09/01/20 .............................. 492 513,839
8.500% 07/01/21 .............................. 1,408 1,483,748
8.500% 09/01/27 .............................. 2,060 2,171,501
15-Year TBA's
6.500% 04/01/12 .............................. 8,500 8,579,688
6.000% 01/01/13 .............................. 6,500 6,408,594
REMIC-PAC, Series 1014 Class E
7.950% 02/15/20 .............................. 444 452,163
MACR, Series 1860
Principle Only
0.000% 02/15/24 .............................. 1,624 1,084,252
MACR, Series 1934, Class AB
6.000% 08/15/07 .............................. 1,950 1,947,530
-----------
TOTAL FEDERAL HOME
LOAN MORTGAGE
CORPORATION ................................... 23,393,230
-----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- 6.9%
Various Pools:
10.000% 02/01/05 ............................. 37 38,761
7.000% 12/01/09 ............................. 751 764,454
10.000% 01/01/10 ............................. 14 14,855
8.500% 11/01/17 ............................. 571 597,395
30-Year TBA
6.500% 09/01/27 .............................. 12,180 12,062,006
REMIC-PAC, 1991-165 Class M
8.250% 12/25/21 .............................. 13 13,466
MACR, Series 1996-5
Class PX Principle Only
0.000% 11/25/23 .............................. 160 105,800
-----------
TOTAL FEDERAL NATIONAL
MORTGAGE ASSOCIATION .......................... 13,596,737
-----------
See Accompanying Notes to Financial Statements.
29
<PAGE>
BEA U.S. CORE FIXED INCOME FUND (CONTINUED)
PAR
(000) VALUE
-------- -----------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -- 0.7%
Various Pools:
8.250% 08/15/04 ............................. $ 1 $ 749
9.000% 11/15/04 ............................. 1 1,215
9.000% 12/15/04 ............................. 1 975
8.250% 04/15/06 ............................. 2 1,576
13.500% 07/15/14 ............................. 1 928
9.000% 06/15/16 ............................. 83 88,762
8.000% 04/15/17 ............................. 151 156,402
9.000% 10/15/17 ............................. 385 413,371
9.000% 08/15/21 ............................. 602 645,866
9.000% 01/15/25 ............................. 115 123,803
-----------
TOTAL GOVERNMENT
NATIONAL MORTGAGE
ASSOCIATION ................................... 1,433,647
-----------
MISCELLANEOUS -- 1.2%
Government Trust Certificates
Collateral Trust Series 1C
(Aaa, AAA)
9.250% 11/15/01 ............................... 485 502,951
Tennessee Valley Authority
Debentures Series C
(NR, AAA)
5.880% 04/01/36 ............................... 1,735 1,780,544
-----------
2,283,495
-----------
TOTAL AGENCY OBLIGATIONS
(Cost $40,378,639) ............................ 40,707,109
-----------
ASSET BACKED SECURITIES -- 8.4%
Advanta Credit Card Master
Trust Visa/MasterCard Credit
Card Receivables,
Series 1995-F, Class A2
(Aaa, AAA)(DAGGER)
5.815% 08/01/03 ............................... 3,450 3,454,485
American Express Credit Account
Master Trust, Credit Card
Receivables, Series 1997-1,
Class A (Aaa, AAA)
6.400% 04/15/05 ............................... 750 763,282
California Infrastructure
San Diego Gas & Electric
Rate Reduction Certificates:
Series 1997-1 Class A6
(Aaa, AAA)
6.310% 09/25/08 ........................... 430 437,861
Class A7 (Aaa, AAA)
6.370% 12/25/09 ........................... 450 456,187
Citibank Credit Card Master
Trust I, Visa/MasterCard Credit
Card Receivables, Series 1997-2
Class A (Aaa, AAA)
6.550% 02/15/04 ............................... 650 661,957
PAR
(000) VALUE
-------- -----------
ASSET BACKED SECURITIES -- (CONTINUED)
Discover Card Master Trust I
Credit Card Receivables,
Series 1998-2 Class A
(Aaa, AAA)
5.800% 03/15/01 ........................... $ 750 $ 746,836
First USA Credit Card Master
Trust, Visa/MasterCard Credit
Card Receivables, Series 1997-6,
Class A (Aaa, AAA)
6.420% 03/17/05 ........................... 1,565 1,589,864
Fleetwood Credit Corporation
Grantor Trust, RV Retail
Installment Sale Contracts
Series 1993-B, Class A
(Aaa, AAA)
4.950% 08/15/08 ....................... 5 5,170
Series 1994-B, Class A
(Aaa, AAA)
6.750% 03/15/10 ....................... 255 257,160
Goldome Credit Corp.
Home Equity Trust
Series 1990-1, Class A
(Aa2, AA)
10.000% 07/15/05 .......................... 25 25,539
Green Tree Financial Corp.
Manufactured Housing Retail
Installment Sales Contracts,
Series 1993-4, Class A-2
(Aa2, NR)
5.850% 01/15/19 ....................... 40 40,472
Series 1995-5, Class A-3
(Aaa, AAA)
6.250% 09/15/26 ....................... 495 495,956
Series 1995-6, Class A-3
(Aaa, AAA)
6.650% 09/15/26 ....................... 130 131,379
Series 1995-7, Class A-2
(Aaa, AAA)
6.150% 11/15/26 ....................... 69 69,229
Series 1995-8, Class A-2
(Aaa, AAA)
6.150% 12/15/26 ....................... 63 62,683
Green Tree Securitized Net
Interest Margin Trust,
REMIC, Series 1994-A,
Class A (Baa3, NR)
6.900% 02/15/04 ........................... 102 100,967
Mellon Bank Credit Card Master
Trust, Visa/MasterCard Credit
Card Receivables, Series 1995-A,
Class A (Aaa, AAA)(DAGGER)
5.815% 04/15/03 ........................... 2,550 2,559,690
See Accompanying Notes to Financial Statements.
30
<PAGE>
BEA U.S. CORE FIXED INCOME FUND (CONTINUED)
PAR
(000) VALUE
-------- -----------
ASSET BACKED SECURITIES -- (CONTINUED)
Merrill Lynch Mortgage
Investors, Inc.,
Manufactured Housing Retail
Installment Sales Contracts
Series 1991-C, Class A
(Aaa, AAA)
9.000% 07/15/11 ........................... $ 77 $ 79,346
New York City Tax Lien
Collateralized Bonds,
Series 1996-1, Class C (NR, A)
7.110% 05/25/05 ........................... 314 318,171
Sears Credit Account Master Trust II
Credit Card Receivables,
Series 1997-1, Class A (Aaa, AAA)
6.200% 07/16/07 ........................... 1,500 1,518,227
Standard Credit Card Master Trust
Visa/MasterCard Credit Card
Receivables:
Series 1994-4,
Class A (Aaa, AAA)
8.250% 11/07/03 ....................... 1,190 1,275,002
Series 1993-2,
Class A (Aaa, AAA)
5.950% 09/07/03 ....................... 330 328,101
Toyota Auto Lease Trust,
Automobile Receivables,
Series 1997-A, Class A2
(Aaa, AAA)
6.350% 04/26/04 ........................... 840 844,794
Vanderbilt Mortgage Finance Corp.
Manufactured Housing Retail
Installment Sales Contracts,
Series 1995-B, Class A3
(Aaa, NR)
6.675% 05/07/06 ........................... 240 242,779
World Omni Automobile Lease
Securitization Trust,
Retail Closed-End Lease
Contracts Series 1995-A,
Class A (Aaa, AAA)
6.050% 11/25/01 ........................... 55 55,149
-----------
TOTAL ASSET BACKED
SECURITIES
(Cost $16,434,758) ........................ 16,520,286
-----------
COLLATERIZED MORTGAGED
BACKED SECURITIES -- 5.7%
Asset Securitization Corp.:
Series 1996-MD6, Class A1C
(Aaa, AAA)
7.040% 11/13/26 ......................... 1,440 1,521,230
Series 1996-MD6, Class A6
(BBB, BAA2)
7.108% 03/13/98 ......................... 650 681,792
PAR
(000) VALUE
-------- -----------
COLLATERIZED MORTGAGED
BACKED SECURITIES -- (CONTINUED)
Series 1997-D5 Class A1C
(Aaa, AAA)
6.750% 02/14/41 ....................... $ 700 $ 727,783
Series 1997-D5, Class A1D
(Aaa, AAA)
6.850% 02/14/41 ....................... 1,300 1,359,917
Carousel Center Finance Inc.
Series 1, Class C, Rule 144A
(NR, BBB+)
7.527% 11/15/07 ......................... 392 400,894
Collateralized Mortgage
Obligation Trust, REMIC
Series 54, Class C (Aaa, AAA)
9.250% 11/01/13 ......................... 2 1,797
DLJ Commercial Mortgage
Acceptance Corp.
Series 1998-CF1, Class A1B
(Aaa, AAA)
6.410% 02/15/08 ......................... 1,800 1,818,563
Kidder Peabody Acceptance Corp.:
Series 1994-C1, Class A
(NR, AAA)
6.650% 02/01/06 ....................... 170 173,139
Series 1994-C1, Class B
(NR, AA)
6.850% 02/01/06 ....................... 960 977,962
Morserv Inc.
REMIC, Series 1994-A,
Class 1A2 (Aaa, AAA)
7.000% 10/25/25 ......................... 48 48,382
PaineWebber Mortgage
Acceptance Corp. IV
Multifamily Mortgage
Pass-Throughs 144A
Series 1995-M1,
Class A (NR, NR)****
6.700% 01/15/07 ....................... 1,200 1,216,500
Series 1995-M1, Class D
(NR, NR)****
7.300% 01/15/07 ....................... 420 429,106
Salomon Brothers Mortgage
Securities VII, 144A Series
1997-TZH, Class A2 (NR,NR)
7.174% 03/25/22 ......................... 1,235 1,299,838
Structured Asset Securities Corp.
Series 1996-CFL, Class A1C
(NR, AAA)
5.944% 02/25/28 ......................... 644 641,686
-----------
TOTAL COLLATERIZED
MORTGAGED BACKED
SECURITIES
(Cost $11,088,034) ...................... 11,298,589
-----------
See Accompanying Notes to Financial Statements.
31
<PAGE>
BEA U.S. CORE FIXED INCOME FUND (CONTINUED)
NUMBER
OF SHARES VALUE
--------- -----------
COMMON STOCK -- 0.0%
PACKAGING/CONTAINERS -- 0.0%
Crown Packaging Enterprises,
Ltd. ............................................ 45,544 $ 455
-----------
TOTAL COMMON STOCK
($0.00) 455
-----------
PREFERRED STOCK -- 1.6%
BANKING -- 1.1%
California Federal Preferred
Capital Corp. 9.125%
Noncum. Exchangeable,
Series A ........................................ 75,400 2,078,213
-----------
REAL ESTATE -- 0.3%
American Real Estate Corp.
8.50% Cumulative, Series A ...................... 23,700 623,606
-----------
UTILITIES -- 0.2%
Long Island Lighting Co.
7.05% Cumulative,
Series QQ ....................................... 18,650 500,053
-----------
TOTAL PREFERRED STOCK
(Cost $3,000,305) ............................... 3,201,872
-----------
PAR
(000)
-----------
U.S. TREASURY OBLIGATIONS -- 13.1%
U.S. TREASURY BONDS -- 2.9%
8.875% 08/15/17 ....................... $ 1,250 1,660,975
6.875% 08/15/25 ....................... 3,675 4,105,011
-----------
5,765,986
-----------
U.S. TREASURY NOTES -- 10.2%
7.750% 11/30/99 ....................... 19,120 19,804,493
8.500% 02/15/00 ....................... 220 231,761
-----------
20,036,254
-----------
TOTAL U.S. TREASURY
OBLIGATIONS
(Cost $25,622,223) .................... 25,802,240
-----------
SHORT TERM INVESTMENTS -- 19.6%
BBH U.S. Dollar Grand Cayman
Time Deposit
5.125% 03/02/98 ....................... 38,470,000 38,470,000
-----------
TOTAL SHORT TERM
INVESTMENTS
(Cost $38,470,000) .................... 38,470,000
-----------
NUMBER
OF SHARES VALUE
--------- -----------
WARRANTS -- 0.0%
Capital Pacific Holdings
Group, Inc. ........................... 1,817 $ 1,363
Uniroyal Technology Corp. ............... 10,800 49,950
------------
TOTAL WARRANTS
(Cost $13,150) ........................ 51,313
------------
TOTAL INVESTMENTS -- 114.8%
(Cost $223,362,953) ................... 225,961,333
------------
LIABILITIES IN EXCESS
OF OTHER ASSETS -- (14.8%) ............ (29,166,503)
------------
NET ASSETS (Applicable to
12,531,301 BEA Institutional
Shares) -- 100.0% ..................... $196,794,830
------------
NET ASSET VALUE,
OFFERING PRICE AND
REDEMPTION PRICE PER
BEA INSTITUTIONAL SHARE
($196,794,830 (DIVIDE) 12,531,301) .... $15.70
======
* Cost for Federal income tax purposes at February 28, 1998 is $223,460,749.
The gross appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation .................................... $3,247,540
Gross Depreciation .................................... 746,956
----------
Net Appreciation ...................................... $2,500,584
==========
** Securities were acquired on a delayed delivery basis.
*** Non-income producing securities.
**** Certain conditions for public sales may exist.
***** Non-income producing securities which are in default.
(DAGGER)Variable rate obligations -- The interest shown is the rate as of
February 28, 1998.
(DAGGER)(DAGGER)Step Bond -- The interest rate as of February 28, 1998 is 0% and
will reset to interest shown at a future date.
(DAGGER)(DAGGER)(DAGGER)Securities have no stated maturity date.
(DAGGER)(DAGGER)(DAGGER)(DAGGER)Guaranteed by Grupo Sidek, S.A. de C.V. and
Grupo Situr S.A. de C.V.
The Moody's Investors Service, Inc. and Standard & Poor's Ratings Group ratings
indicated are the most recent rating available at February 28, 1998 and are
unaudited.
See Accompanying Notes to Financial Statements.
32
<PAGE>
BEA U.S. CORE FIXED INCOME FUND (CONCLUDED)
INVESTMENT ABBREVIATIONS
FRN ......................................................... Floating Rate Note
MACR ............................................ Modifiable and Combinable Real
Estate Investment Conduit
PAC ................................................. Planned Amortization Class
REMIC .................................. Real Estate Mortgage Investment Conduit
TBA ............................................................ To Be Announced
AT FEBRUARY 28, 1998, NET ASSETS CONSISTED OF:
AMOUNT
------------
Capital Paid-In .................................................. $190,114,525
Accumulated Net Investment Income ................................ 1,737,502
Accumulated Net Realized Gain on
Security and Foreign Exchange Transactions .................... 2,287,668
Net Unrealized Appreciation on
Investments and Other ......................................... 2,655,135
- --------------------------------------------------------------------------------
NET ASSETS ....................................................... $196,794,830
- --------------------------------------------------------------------------------
See Accompanying Notes to Financial Statements.
33
<PAGE>
BEA STRATEGIC GLOBAL FIXED INCOME FUND
PORTFOLIO MANAGERS' LETTER
March 12, 1998
Dear Shareholders:
We are pleased to report on the results of the BEA Strategic Global Fixed Income
Fund (the "Fund") for the six months ended February 28, 1998 and discuss our
investment strategy.
At February 28, 1998, the net asset value ("NAV") of the Fund was $15.05,
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) was 3.84%. By
comparison, the unhedged J.P. Morgan Global Government Bond Index (the "Index")
gained 4.83% during the same period.
PORTFOLIO REVIEW
- ----------------
We attribute the Fund's underperformance of the Index over the last six months
to several factors. Primary among these was our exposure to emerging market
debt. As noted in the next section, the emerging sector fared much worse during
the period than did the major sovereign debt markets. Whereas the Index contains
no emerging debt securities and, thus, is unaffected by activity in the sector,
about 8% of the Fund's total assets are invested in emerging instruments at
present. We would also like to note in this context that we were able to
profitably exploit short-term opportunities in the emerging sector following the
worst of the Asia-related sell-off a few months ago.
Other negative contributors to performance included our duration profile, which
was insufficiently long in a market that favored long duration; our
underweighting of Japan and simultaneous overweighting of the U.S. relative to
the Index; and our general exposure to corporate securities in a period in which
corporate yield spreads widened.
MARKET COMMENTARY
- -----------------
In the months since our last report, conditions in global government fixed
income markets have been volatile. Most were struck by the "Asian Flu" of
currency depreciation and falling securities prices at various points in the
third and fourth quarters of 1997. Fueled by mounting financial crises in
Indonesia and South Korea, the flu forced investors to reassess their
assumptions concerning such vital factors as global liquidity, sovereign risk
and worldwide economic growth prospects. The presence of so much uncertainty
resulted in a classic "flight to quality" in which the higher-caliber
instruments of nations perceived to be least risky (e.g., the U.S. and the U.K.)
fared best, while those of riskier developing nations suffered the greatest
declines.
Since the beginning of 1998, most major fixed income markets have fluctuated
within a modest trading range. This reflects several investor perceptions. The
latter include ongoing concern that U.S. interest rates may reverse course and
begin to trend upward; a growing consensus that the fixed income opportunities
created by the convergence of European interest rates required for monetary
union are no longer viable; and the boom in global equities, which attracts
greater inflows of investable funds as investors sense higher potential returns
than those in the debt markets.
As for the six-month period covered in this report, we note the striking
outperformance of emerging debt markets by those of the developed nations. Of
the 26 nations included in the Index and J.P. Morgan's Emerging Markets Bond
Index Plus, for example, all of the top 10 performers were developed, while
emerging nations accounted for eight of the 10 worst performers.
OUTLOOK
- -------
Given the current global macroeconomic environment, we continue to expect
positive returns from the world's major government bond markets through
year-end. The key to our thesis is the benign climate for interest rates and
inflation: monetary policy in the U.S. and Europe remains stable and
accomodative, while inflation is low in the U.S. and trending lower in Europe.
Growth in both regions is modest and sustainable, suggesting that a meaningful
outbreak of inflation in the foreseeable future appears highly improbable. Real
yields in several major markets thus remain relatively attractive.
The following is a summary of our current thoughts on the Fund's primary
geographical regions:
THE U.S. The U.S. economy and financial markets keep humming along. In spite of
cautious public remarks by Federal Reserve chairman Greenspan in recent weeks,
we continue to expect that the Fed will choose to leave interest rates
34
<PAGE>
BEA STRATEGIC GLOBAL FIXED INCOME FUND
PORTFOLIO MANAGERS' LETTER (CONTINUED)
unchanged for much, if not all, of 1998. We now see the possibility of a rate
hike later in the year, though, as a bit higher than previously. For now, we are
maintaining our overweighting of U.S. securities in the Portfolio vs. those of
Japan specifically and the Index generally.
EUROPE. Conditions in European debt markets are favorable and should remain so
at least into next year. The interest-rate convergence process mandated for
European Monetary Union that has powered performance for some time now, however,
is essentially complete. As a result, we are minimizing exposure to the
historically higher-yielding nations (e.g., Italy, Spain, Sweden) due to the
fact that their yield advantage relative to other European markets has
dissipated. We also see potential risks in the form of higher oil prices and the
possibility (admittedly slight, in our view) that U.S. money supply growth may
increase at an uncomfortably high rate. That said, we will maintain our European
allocation at neutral weight and will likely take a more defensive stance should
the trend in bond prices there stay strong.
JAPAN. It is difficult to construct an optimistic scenario for the Japanese
financial markets. The economy is in the doldrums and no viable catalyst for
growth appears on the horizon. The government's numerous efforts to construct
fiscal stimulation packages, moreover, are usually halfhearted and
ill-conceived. So many such packages have been proposed, in fact, that investors
are suffering from "package fatigue." Given that Japanese bond yields are so low
as to leave only minor downward potential and our belief that opportunities are
better and more plentiful elsewhere, we will retain our underweight position in
Japan.
EMERGING MARKETS. Looking ahead, we remain positive on the prospects for
emerging debt markets. We expect that volatility will persist and the heavy
new-issue calendar (which includes $3-5 billion by South Korea) will set the
tone for relative spreads in sovereign securities. While Asia continues to exert
a critical influence, the commitment to reforms exhibited by most Latin American
and Central European nations since the crisis period in late 1997 provides the
market with a strong base of support. Any stability in oil prices at current or
even higher levels should be favorable for the entire sector.
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
Robert W. Justich, Senior Vice President
Diane Damskey, Senior Vice President
Ira Edelblum, Senior Vice President
Jo Ann Corkran, Senior Vice President
35
<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.
[GRAPH OMITTED]
PLOT POINTS FOLLOW:
BEA STRATEGIC JP MORGAN GLOBAL
GLOBAL FIXED GOVT. BOND INDEX
INCOME FUND (UNHEDGED)
06/28/1994 10,000 10,000
07/31/1994 10,027 10,115
08/31/1994 10,001 10,089
11/30/1994 10,045 10,161
02/28/1995 10,274 10,659
05/31/1995 11,156 11,696
08/31/1995 11,072 11,496
11/30/1995 11,574 12,003
02/29/1996 11,668 11,957
05/31/1996 11,831 11,907
08/31/1996 12,140 12,283
11/30/1996 12,815 12,776
02/28/1997 12,531 12,284
05/31/1997 12,673 12,408
08/31/1997 12,684 12,487
11/30/1997 13,006 12,878
02/28/1998 13,170 13,089
AVERAGE ANNUAL
TOTAL RETURN
One Year 5.11%
From Inception 7.78%
Note: Past performance is not predictive of future performance.
36
<PAGE>
BEA STRATEGIC GLOBAL FIXED INCOME FUND
OF THE RBB FUND, INC.
STATEMENT OF NET ASSETS
FEBRUARY 28, 1998
(UNAUDITED)
PAR
(000) VALUE
-------- -----------
INTERNATIONAL BONDS -- 52.7%
ARGENTINA -- 1.4%
Republic of Argentina
Par Bonds
(Ba3, BB)
5.500% 03/31/23 ............................. $ 350 $ 266,219
Republic of Argentina
Yankee Notes (Ba3, BB)
9.500% 11/30/02 ............................. 140 141,225
----------
407,444
----------
AUSTRALIA -- 1.5%
Queensland Treasury Corp.
Global Bonds (Aaa, NR)
8.000% 07/14/99 ............................. AUD 630 445,819
----------
BRAZIL -- 1.4%
Arisco Produtos Alimenticios S. A.
Gtd. Notes (NR, NR)
10.750% 05/22/05 ............................ $ 50 46,750
Federal Republic of Brazil
Capitalization Bonds (B1, BB-)
8.000% 04/15/14 ............................. 35 28,077
Federal Republic of Brazil
Capitalization Bonds
Series L (B1, BB-)
8.000% 04/15/14 ............................. 69 56,171
Federal Republic of Brazil
MYDFA Trust Certificates
(NR, NR)(DAGGER)
6.688% 03/16/98 ............................. 226 194,899
Cia. Petroleo Ipiranga S.A.
Sr. Unsub.Notes
(NR, NR)
10.625% 02/25/02 ............................ 95 95,475
----------
421,372
----------
FINLAND -- 0.5%
Okobank
Perpetual Sub. FRN
(A3, NA)(DAGGER)/(DAGGER)(DAGGER)(DAGGER)
6.406% ...................................... $ 160 157,200
----------
FRANCE -- 2.3%
Republic of France
Treasury Bonds (NR, NR)
7.500% 04/25/05 ............................. FF 3,600 687,273
----------
GERMANY -- 15.4%
Federal Republic of Germany
Bonds (Aaa, NR)
6.000% 07/04/07 ............................. DEM 5,000 2,974,222
Federal Republic of Germany
Eurobonds (Aaa, NR)
6.000% 02/16/06 ............................. 2,630 1,559,948
----------
4,534,170
----------
PAR
(000) VALUE
-------- -----------
INDIA -- 0.1%
Industrial Credit & Investment
Corp. of India
Medium Term Notes
(Baa3, BB+)
7.550% 08/15/07 ............................. $ 30 $ 26,774
----------
JAPAN -- 0.3%
Fuji Finance (Cayman)Ltd.
Perpetual Sub. FRN
(Baa1, NR)(DAGGER)/(DAGGER)(DAGGER)(DAGGER)
6.425% ...................................... 100 91,000
----------
MEXICO -- 2.8%
Fifth Mexican Acceptance Corp.
Rule 144A Notes Tranche A
(NR, NR)**/(DAGGER)(DAGGER)(DAGGER)(DAGGER)/***
8.000% 12/15/98 ............................. 500 124,375
Grupo Transportacion Ferroviaria
Mexicana, S.A. de C.V.
Gtd. Sr. Notes (B2, B+)(DAGGER)(DAGGER)
11.75% 06/15/07 ............................. 30 19,434
United Mexican States
Certificado de Tesoreria
(NR, NR)
0.000% 12/17/98 ............................. 392 39,524
United Mexican States
Par Bonds Series W-A
(Ba2, BB)
6.250% 12/31/19 ............................. 750 633,281
----------
816,614
----------
NETHERLANDS -- 4.0%
Kingdom of Netherlands
Government Bonds
(NR, NR)
5.750% 01/15/04 ............................. NLG 2,250 1,161,335
----------
NEW ZEALAND -- 3.1%
Government of New Zealand
Bonds (Aaa, AAA)
8.000% 02/15/01 ............................. NZD 1,000 595,808
8.000% 04/15/04 ............................. 500 306,132
----------
901,940
----------
POLAND -- 1.3%
Republic of Poland
Past Due Interest Bonds
(Baa3, BBB-)
4.000% 10/27/14 ............................. $ 425 378,972
----------
RUSSIA -- 0.7%
AO Sibneft
Loan Participation Notes
(NR, NR)(DAGGER)
9.625% 05/15/98 ............................. 100 96,250
9.875% 08/15/00 ............................. 100 96,000
----------
192,250
----------
See Accompanying Notes to Financial Statements.
37
<PAGE>
BEA STRATEGIC GLOBAL FIXED INCOME FUND (CONTINUED)
PAR
(000) VALUE
-------- -----------
INTERNATIONAL BONDS (CONTINUED)
SOUTH KOREA -- 0.1%
Shinhan Bank
Sub. Notes (Ba1, BB-)
7.250% 06/26/02 ............................. $ 25 $ 21,313
-----------
SUPRANATIONAL -- 5.3%
International Bank for Reconstruction
& Development
Japanese Yen Global Bonds
(Aaa, AAA)
5.250% 03/20/02 ............................. JPY 170,000 1,566,878
-----------
SWEDEN -- 3.2%
Nordic Investment Bank
Swedish Kronor Notes
(Aa1, NR)
6.250% 02/08/99 ............................. SEK 4,500 568,371
Skandinaviska Enskilda
Banken AB
Perpetual Sub. FRN (NR, NR)
7.500% ...................................... $ 350 361,116
-----------
929,487
-----------
UNITED KINGDOM -- 9.1%
U.K. Treasury Gilt Bonds (Aaa, NR)
7.500% 12/07/06 ............................. GBP 1,500 2,688,940
-----------
VENEZUELA -- 0.2%
Republic of Venezuela
Global Bonds (Ba2, B)
9.250% 09/15/27 ............................. $ 80 70,000
-----------
TOTAL INTERNATIONAL
BONDS
(Cost $16,073,096) .......................... 15,498,781
-----------
DOMESTIC BONDS -- 46.1%
CORPORATE BONDS -- 19.0%
BANKING -- 1.0%
Export-Import Bank of Korea
Yankee Bonds (Ba1, NR)
6.500% 10/06/99 ............................. $ 30 28,728
First Republic Bank
Sub. Notes (NR, BB+)
7.750% 09/15/12 ............................. 200 206,250
National Australia Bank
Yankee Sub. Notes (A1, AA-)
6.600% 12/10/07 ............................. 45 45,217
-----------
280,195
-----------
CABLE -- 0.4%
Cablevision Systems Corp.
Sr. Notes (Ba2, BB+)
7.875% 12/15/07 ............................. 100 103,125
PAR
(000) VALUE
------- -----------
CABLE (CONTINUED)
Diamond Cable Communications
plc 144A Yankee
Sr. Discount Notes (Caa1, B-)(DAGGER)(DAGGER)
10.750% 02/15/07 ............................ $ 40 $ 26,700
-----------
129,825
-----------
ELECTRONICS -- 1.5%
Seagate Technology, Inc.
Sr. Debentures (Baa3, BBB)
7.450% 03/01/37 ............................. 440 435,050
-----------
ENERGY -- 0.1%
Cliffs Drilling Co.
Gtd. Sr. Notes, Series B (B1, B)
10.250% 05/15/03 ............................ 40 43,900
-----------
ENTERTAINMENT -- 1.8%
Time Warner, Inc.
Debentures (Ba1, BBB-)
7.570% 02/01/24 ............................. 120 127,500
6.850% 01/15/26 ............................. 400 416,000
-----------
543,500
-----------
FINANCIAL SERVICES -- 4.1%
AT&T Capital Corp.
Medium Term Notes Series 4
(Baa3, BBB)
6.920% 04/29/99 ............................. 320 322,912
BellSouth Capital Funding Corp.
Debentures (Aa1, AAA)
6.040% 11/15/26 ............................. 340 345,525
First Nationwide (Parent)
Holdings, Inc.
144A Sr. Notes (B3, B)
12.500% 04/15/03 ............................ 170 195,287
General Motors Acceptance Corp.
Medium Term Notes (A3, A)
6.210% 09/19/00 ............................. 240 240,900
Sovereign Bancorp
Sr. Notes (B1, BBB-)
6.750% 07/01/00 ............................. 115 115,000
-----------
1,219,624
-----------
HEALTH CARE -- 1.9%
Columbia/HCA Healthcare
Debentures (Ba2, BBB)
8.360% 04/15/24 ............................. 25 24,054
Merck & Co., Inc.
Medium Term Notes, Series B
(Aaa, AAA)
5.760% 05/03/37 ............................. 370 377,862
Tenet Healthcare Corp.
Sr. Notes (Ba1, BB)
9.625% 09/01/02 ............................. 155 170,113
-----------
572,029
-----------
See Accompanying Notes to Financial Statements.
38
<PAGE>
BEA STRATEGIC GLOBAL FIXED INCOME FUND (CONTINUED)
PAR
(000) VALUE
-------- -----------
INDUSTRIAL GOODS & MATERIALS -- 0.3%
Dresser Industries, Inc.
Debentures (A1, A)
7.600% 08/15/96 ............................. $ 75 $ 84,844
-----------
PAPER & FOREST PRODUCTS -- 0.2%
P. T. Indah Kiat Pulp & Paper Corp.
Gtd. Notes, Series B (Ba2, BB)
11.875% 06/15/02 ............................ 5 4,250
Repap New Brunswick Corp.
Yankee Sr. Secured Debentures
(Caa1, CC)
10.625% 04/15/05 ............................ 50 49,250
-----------
53,500
-----------
REAL ESTATE -- 1.1%
Health and Retirement Property
Trust
Remarketed Reset FRN
(Baa2, BBB)
6.141% 04/09/98 ............................. 310 308,837
-----------
TELECOMMUNICATIONS -- 0.6%
Cencall Communications Corp.
Sr. Discount Notes (B2, CCC-)(DAGGER)(DAGGER)
10.125% 01/15/04 ............................ 15 14,550
CS Wireless Systems, Inc.
144A Sr. Discount Notes
(Caa1, NR)(DAGGER)(DAGGER)
11.375% 03/01/06 ............................ 70 16,275
Nextel Communications Inc.
Sr. Discount Notes (B2, CCC+)(DAGGER)(DAGGER)
9.75% 10/31/07 .............................. 45 28,013
Rogers Cantel Inc.
Yankee Sr. Secured
Debentures (Ba3, BB+)
9.375% 06/01/08 ............................. 50 53,375
TCI Communications Inc.
Notes (Ba1, BBB-)
6.340% 02/01/02 ............................. 55 54,656
Wireless One, Inc.
Sr. Discount Notes (B3, B-)(DAGGER)(DAGGER)
13.50% 08/01/06 ............................. 45 7,538
-----------
174,407
-----------
TRANSPORTATION -- 2.2%
Norfolk Southern Corp.
Bonds (Baa1, BBB+)
7.900% 05/15/49 ........................... 20 22,800
Notes (Baa1, BBB+)
7.050% 05/01/37 ........................... 75 79,875
PAR
(000) VALUE
-------- -----------
TRANSPORTATION (CONTINUED)
Northwest Airlines,Inc.
Gtd. Notes (Ba2, BB)
7.625% 03/15/05 ............................. $ 350 $ 348,653
US Air, Inc. Gtd.
Sr. Notes (B3, CCC+)
10.000% 07/01/03 ............................ 175 185,281
-----------
636,609
-----------
UTILITIES -- 3.8%
Beaver Valley Funding Corp.
Secured Lease Obligation Bonds
(Ba3, BB-)
9.000% 06/01/17 ............................. 250 282,797
Connecticut Light and Power Co.:
First Mortgage Bonds, Series D
(Ba2, BB)
7.875% 10/01/24 ........................... 40 41,750
First and Ref. Mortgage Bonds,
1997 Series C (Ba2, BB)
7.750% 06/01/02 ........................... 35 35,613
Long Island Lighting Co.:
Debentures (Ba3, BB+)
9.000% 11/01/22 ............................. 290 328,425
8.900% 07/15/19 ............................. 70 74,462
Niagara Mohawk Power Corp.
First Mortgage Bonds
(Ba3, BB)
8.750% 04/01/22 ............................. 185 199,569
North Atlantic Energy Corp.
Secured First Mortgage Notes,
Series A (B1, B+)
9.050% 06/01/02 ............................. 140 141,750
-----------
1,104,366
-----------
TOTAL CORPORATE BONDS
(Cost $5,564,336) ........................... 5,586,686
-----------
MUNICIPAL BONDS -- 1.3%
Municipal Electric Authority of
Georgia Revenue Bonds
Project One Sub-Series A
(Aaa, AAA)
5.000% 01/01/26 ............................. 260 253,175
New Jersey Economic
Development Authority,
Pension Fund Revenue Bonds,
Series A (Aaa, AAA)
7.425% 02/15/29 ............................. 105 116,061
-----------
TOTAL MUNICIPAL BONDS
(Cost $361,919) 369,236
-----------
See Accompanying Notes to Financial Statements.
39
<PAGE>
BEA STRATEGIC GLOBAL FIXED INCOME FUND (CONTINUED)
PAR
(000) VALUE
-------- -----------
ASSET BACKED SECURITIES -- 8.9%
Advanta Credit Card Master Trust,
Visa/MasterCard Credit Card
Receivables, Series 1995-F,
Class A2 (Aaa, AAA)(DAGGER)
5.815% 08/01/03 ............................. $ 490 $ 490,637
American Express Credit Account
Master Trust,
Credit Card Receivables,
Series 1997-1, Class A
(Aaa, AAA)
6.400% 04/15/05 ............................. 105 106,859
California Infrastructure San Diego
Gas & Electric Rate Reduction
Series 1997-1 Class A7
(Aaa, AAA)
6.370% 12/25/09 ............................. 50 50,687
California Infrastructure San Diego
Gas & Electric Rate Reduction
Series 1997-3 Class A6
(Aaa, AAA)
6.310% 09/25/08 ............................. 50 50,914
Citibank Credit Card Master Trust I,
Visa/MasterCard Credit Card
Receivables, Series 1997-2
Class A (Aaa, AAA)
6.550% 02/15/02 ............................. 45 45,828
Discover Card Master Trust I,
Credit Card Receivables
Series 1998-2, Class A
(Aaa, AAA)
5.800% 03/15/01 ............................. 55 54,768
First USA Credit Card Master Trust,
Visa/MasterCard Credit Card
Receivables, Series 1997-6,
Class A (Aaa, AAA)
6.420% 03/17/05 ............................. 115 116,827
Fleetwood Credit Corp. Grantor
Trust, RV Retail Installment Sale
Contracts, Series 1997-B,
Class A (Aaa, AAA)
6.400% 09/15/13 ............................. 246 248,168
Green Tree Financial Corp.
Manufactured Housing Retail
Installment Sales Contracts,
Series 1997-6, Class A3
(Aaa, NR)
6.320% 01/15/29 ............................. 500 502,735
Green Tree Recreational,
Equipment and Consumer
Trust Series 1997-C, Class A1
(NR, NR)
6.490% 05/15/13 ............................. 247 251,052
Mellon Bank Credit Card Master
Trust Visa/MasterCard Credit
Card Receivables Series 1995-A,
Class A (Aaa, AAA)(DAGGER)
5.815% 04/15/03 ............................. 390 391,482
PAR
(000) VALUE
-------- -----------
ASSET BACKED SECURITIES (CONTINUED)
Sears Credit Account Master
Trust II, Credit Card
Receivables, Series 1997-1,
Class A (Aaa, AAA)
6.200% 07/16/07 ............................. $ 105 $ 106,276
Standard Credit Card Master
Trust, Visa/MasterCard Credit
Card Receivables, Series 1994-4,
Class A (Aaa, AAA)
8.250% 11/07/03 ............................. 85 91,072
Toyota Auto Lease Trust,
Automobile Receivables,
Series 1997-A, Class A2
(Aaa, AAA)
6.350% 04/26/04 ............................. 120 120,685
-----------
TOTAL ASSET BACKED
SECURITIES
(Cost $2,613,394) ........................... 2,627,990
-----------
COLLATERIZED MORTGAGED
BACKED SECURITIES -- 1.3%
Asset Securitization Corp.:
Series 1997-D5, Class A1C
(Aaa, AAA)
6.750% 02/14/41 ........................... 50 51,984
Series 1997-D5, Class A1D
(Aaa, AAA)
6.850% 02/14/41 ........................... 180 188,296
DLJ Commercial Mortgage
Acceptance Corp.
Series 1998-CF1, Class A1B
(Aaa, AAA)
6.410% 02/15/08 ............................. 130 131,341
-----------
TOTAL COLLATERIZED
MORTGAGED BACKED
SECURITIES
(Cost $364,815) ............................. 371,621
-----------
AGENCY OBLIGATIONS -- 10.2%
FEDERAL HOME LOAN MORTGAGE CORPORATION -- 7.0%
Various Pools:
7.000% 12/01/09 .............................. 438 446,450
6.500% 08/01/12 .............................. 605 610,672
6.000% 01/01/13 .............................. 450 443,672
8.500% 09/01/20 .............................. 71 73,864
8.500% 07/01/21 .............................. 192 202,658
8.500% 09/01/27 .............................. 277 292,130
-----------
2,069,446
-----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- 3.2%
Various Pools:
8.500% 11/01/17 ............................ 48 49,783
6.500% 09/01/27 .............................. 890 881,378
-----------
931,161
-----------
TOTAL AGENCY
OBLIGATIONS
(Cost $3,000,243) ........................... 3,000,607
-----------
See Accompanying Notes to Financial Statements.
40
<PAGE>
BEA STRATEGIC GLOBAL FIXED INCOME FUND (CONCLUDED)
PAR
(000) VALUE
-------- -----------
U.S. TREASURY OBLIGATIONS -- 5.4%
U.S. TREASURY NOTES -- 3.2%
7.750% 11/30/99 ............................ $ 915 $ 947,756
-----------
U.S. TREASURY BONDS -- 2.2%
6.875% 08/15/25 ............................ 570 636,696
-----------
TOTAL U.S. TREASURY
OBLIGATIONS
(Cost $1,588,575) ........................... 1,584,452
-----------
TOTAL DOMESTIC BONDS
(Cost $13,493,282) .......................... 13,540,592
-----------
SHORT TERM INVESTMENTS -- 10.6%
BBH Grand Cayman
U.S. Dollar Time Deposit
5.125% 03/02/98 ............................. 3,111 3,111,000
-----------
TOTAL SHORT TERM
INVESTMENTS
(Cost $3,111,000) ........................... 3,111,000
-----------
TOTAL INVESTMENTS -- 109.4%
(Cost $32,677,378) .......................... 32,150,373
-----------
LIABILITIES IN EXCESS
OF OTHER ASSETS -- (9.4%) ................... (2,750,871)
-----------
NET ASSETS (Applicable to
1,953,447 BEA Institutional
Shares) -- 100.0% ........................... $29,399,502
-----------
NET ASSET VALUE,
OFFERING PRICE AND
REDEMPTION PRICE PER
BEA INSTITUTIONAL SHARE
($29,399,502 (DIVIDE) 1,953,447) ............ $15.05
======
VALUE
---------
* Cost for Federal income tax purposes at February 28, 1998 is $32,684,079.
The gross appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation ............................. $ --
Gross Depreciation ............................. (533,706)
---------
Net Depreciation ............................... $(533,706)
=========
** Certain conditions for public sale may exist.
*** Non-income producing securities which are in default.
(DAGGER)Variable rate obligations -- The interest shown is the rate as of
February 28, 1998.
(DAGGER)(DAGGER)Step Bond -- The interest rate as of February 28, 1998 is 0% and
will reset to interest rate shown at a future date.
(DAGGER)(DAGGER)(DAGGER)Securities have no stated maturity date.
(DAGGER)(DAGGER)(DAGGER)(DAGGER)Guaranteed by Grupo Sidek, S.A. de C.V.and Grupo
Situr S.A. de C.V.
(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 February 28, 1998 and are
unaudited.
CURRENCY ABBREVIATIONS
AUD ......................................................... Australian Dollars
DEM ....................................................... German Deutschemarks
FF ............................................................... French Francs
GBP ...................................................... United Kingdom Pounds
JPY ............................................................... Japanese Yen
NLG ........................................................ Netherland Guilder
SEK .............................................................. Swedish Krona
INVESTMENT ABBREVIATIONS
FRB ......................................................... Floating Rate Bond
FRN ......................................................... Floating Rate Note
AT FEBRUARY 28, 1998, NET ASSETS CONSISTED OF:
AMOUNT
-----------
Capital Paid-In ............................................... $30,146,467
Accumulated Net Investment Loss ............................... (774,735)
Accumulated Net Realized Gain on
Security and Foreign Exchange Transactions ................. 733,950
Net Unrealized Depreciation on
Investments and Other ...................................... (706,180)
- --------------------------------------------------------------------------------
NET ASSETS .................................................... $29,399,502
- --------------------------------------------------------------------------------
See Accompanying Notes to Financial Statements.
41
<PAGE>
BEA HIGH YIELD FUND
PORTFOLIO MANAGERS' LETTER
March 12, 1998
Dear Shareholders:
We are pleased to report on the results of the BEA High Yield Fund (the "Fund")
for the six months ended February 28, 1998 and discuss our investment strategy.
At February 28, 1998, the net asset value ("NAV") of the Fund's Institutional
Class was $17.74, compared to an NAV of $17.08 on August 31, 1997. As a result,
the Institutional Class' total return (assuming reinvestment of dividends) was
8.75%. By comparison, the Credit Suisse First Boston High Yield Index (the
"Index") gained 6.21% during the same period.
The NAV of the Fund's Advisor Class was $17.74 on February 28, 1998, compared to
an NAV of $17.08 on August 31, 1997. As a result, the Advisor Class' total
return (assuming reinvestment of dividends) was 8.51%. By comparison, the Index
gained 6.21% during the same period.
MARKET COMMENTARY
- -----------------
The key dynamic in the U.S. fixed income markets in recent months was the effort
by investors to grapple with the implications of the financial crisis occurring
in Asia. Assumptions concerning such vital factors as global liquidity,
sovereign risk and worldwide economic growth prospects were reassessed in light
of the crisis and, ultimately, reflected in the marketplace via price
adjustments. The presence of so much uncertainty resulted in a classic "flight
to quality" in which high-caliber instruments like United States Treasury bonds
and investment-grade corporate debt fared best, while prices of securities most
dependent on growth prospects and liquidity conditions suffered the greatest
declines.
One could reasonably expect that high yield debt would sell off in this type of
environment. Such was not the case, however, as the sector actually benefited.
Not only did high yield generate positive returns, but it also attracted
substantial cash inflows from investors exiting the relatively riskier emerging
debt markets.
The flight to quality additionally favored high yield by pushing down interest
rates. The yield on the bellwether 30-year Treasury bond, for example, fell to
5.92% at February 28th from 6.60% at the end of 1996. With rates declining on
one hand and higher-yielding emerging market debt selling off on the other,
yield-hungry investors had few other places to go.
Overall, 1997 was a banner year for the high yield market. The Credit Suisse
First Boston index's 12.6% return handily exceeded the 9.65% gained by the
Lehman Brothers Aggregate Bond Index, a standard benchmark for the
investment-grade sector. According to Chase Securities, new records were set in
mutual fund inflows ($21.5 billion, up 35.2% from 1996), new issue volume
($125.5 billion, up 70.5%) and total market size ($452.3 billion, up 28.2%). The
average yield for the overall high yield market fell to 9.31% from 9.47% on
January 1, 1997.
PORTFOLIO REVIEW
- ----------------
The Fund's outperformance of the Index over the last six months was primarily
attributable to our emphasis on individual security selection and sector
weightings. Both of these fundamental elements of our strategy remain
essentially unchanged.
The most prominent contributor to outperformance was telecommunications, which
continues both as the Portfolio's most heavily weighted sector and its most
heavily overweighted sector relative to the Index. Our near-doubling of the
benchmark's telecom weighting enhanced performance by magnifying the beneficial
impact of our telecom holdings' substantially higher returns. Other positive
factors included our underweighting in energy, which sold off as oil prices
declined; and our avoidance of certain poorly performing companies in the
automobile sector.
We also note that events in Asia had little effect on the Fund. This was mainly
because our three largest sector weightings (i.e., telecom, cable and media,
gaming), which account for almost half of total assets, are almost exclusively
focused on the domestic U.S. market. In addition, the Portfolio contains
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.
42
<PAGE>
BEA HIGH YIELD FUND
PORTFOLIO MANAGERS' LETTER (CONTINUED)
OUTLOOK
- -------
In our view, the two drivers of a positive 1998 outlook for the high yield
market remain intact. These are the ongoing macroeconomic backdrop of moderate
growth and stable-to-declining interest rates, as well as the vibrance of
corporate merger and acquisitions activity.
We believe that a somewhat cautious investment stance in the near term is most
appropriate, however, as we expect to see a higher level of volatility in the
market over the coming months. In particular, we see the current decoupling of
the stock and bond markets as a mixed blessing for high yield. Stock prices are
currently surging to new highs, while bonds are treading water in response to
fluctuating investor perceptions regarding the direction of interest rates. The
relevance of trends in both markets for high yield suggests that achieving
above-market returns should be more difficult than in 1997.
Our strategy will continue to include a preference for issues at the higher end
of the high yield credit spectrum (i.e., single-B) and the retention of our
largest sector allocations in telecommunications, cable and media, and gaming.
Late in 1997, in fact, we raised exposure to these sectors even further because
of their brighter prospects relative to those of cyclicals.
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 M. Rossi, CFA, Senior Vice President
Mary Ann Thomas, Senior Vice President
John M. Tobin, CFA, Senior Vice President
43
<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.
[GRAPH OMITTED]
PLOT POINTS FOLLOW:
BEA HIGH CS FIRST BOSTON
YIELD FUND HIGH YIELD
INSTITUTIONAL CLASS INDEX
03/01/1993 10,000 10,000
05/31/1993 10,607 10,419
08/31/1993 11,294 10,809
11/30/1993 11,872 11,209
02/28/1994 12,128 11,570
05/31/1994 11,484 11,143
08/31/1994 11,539 11,201
11/30/1994 11,449 11,123
02/28/1995 10,961 11,638
05/31/1995 12,010 12,370
08/31/1995 12,439 12,680
11/30/1995 12,784 13,029
02/29/1996 13,665 13,516
05/31/1996 13,990 13,662
08/31/1996 13,984 13,965
11/30/1996 14,571 14,547
02/28/1997 15,190 15,219
05/31/1997 15,350 15,488
08/31/1997 16,105 16,119
11/30/1997 16,653 16,553
02/28/1998 17,514 17,120
AVERAGE ANNUAL
TOTAL RETURN
One Year 15.30%
From Inception 11.87%
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.
[GRAPH OMITTED]
PLOT POINTS FOLLOW:
BEA HIGH CS FIRST BOSTON
YIELD FUND HIGH YIELD
ADVISOR CLASS INDEX
11/30/1996 10,000 10,000
02/28/1997 10,541 10,625
05/31/1997 10,646 10,813
08/31/1997 11,164 11,253
11/30/1997 11,523 11,556
02/28/1998 12,114 11,952
AVERAGE ANNUAL
TOTAL RETURN
One Year 14.92%
From Inception 15.41%
Note: Past performance is not predictive of future performance.
44
<PAGE>
BEA HIGH YIELD FUND
OF THE RBB FUND, INC.
STATEMENT OF NET ASSETS
FEBRUARY 28, 1998
(UNAUDITED)
PAR
(000) VALUE
--------- -----------
CORPORATE BONDS -- 92.1%
AEROSPACE & DEFENSE -- 0.5%
K&F Industries
144A Sr. Sub. Notes (B3, B-)
9.250% 10/15/07 ............................. $ 500 $ 530,000
----------
AUTOMOTIVE -- 3.6%
Cambridge Industries, Inc.
144A Gtd. Sr. Sub. Notes (B3, B-)
10.250% 07/15/07 ............................ 400 421,000
Collins & Aikman Products Corp.
Gtd. Sr. Sub. Notes (B3, B)
11.500% 04/15/06 ............................ 450 507,375
Consorcio G Grupo Dina S.A./
MCII Holdings (U.S.A.), Inc.
144A Sr. Secured Notes
(NR, NR)
9.875% 11/15/02 ............................. 500 450,625
Delco Remy International, Inc.
144A Gtd. Sr. Sub. Notes
(B2, B-)
10.625% 08/01/06 ............................ 500 551,250
Hayes Wheels International Inc.
Sr. Sub. Notes, Series B
(NR, NR)
9.125% 07/15/07 ............................. 350 371,875
LDM Technologies, Inc.
144A Sr. Sub. Notes (B3, B-)
10.750% 01/05/07 ............................ 400 444,000
Oxford Automotive, Inc.
144A Gtd. Sr. Sub. Notes
(NR, B-)
10.125% 06/15/07 ............................ 300 321,000
Safelite Glass Corp.
144A Sr. Sub. Notes (B3, B)
9.875% 12/15/06 ............................. 350 372,750
Titan Wheel International, Inc.
Sr. Sub. Notes (B1, BB-)
8.750% 04/01/07 ............................. 250 262,812
----------
3,702,687
----------
BROADCASTING -- 4.6%
Allbritton Communications
Company
Sr. Sub. Notes (NR, NR)
8.875% 02/01/08 ......................... 250 252,500
Sr. Sub. Notes Series B
(B3, B-)****
9.750% 11/30/07 ......................... 250 264,375
American Radio Systems Corp.
Gtd. Sr. Sub. Notes (B2, B-)
9.000% 02/01/06 ............................. 250 267,500
Australis Holdings PTY Ltd.
144A Yankee Sr. Secured
Discount Notes (B2, NR)(DAGGER)
15.000% 11/01/02 ............................ 294 147,000
Australis Media Ltd.
Yankee Gtd. Sr. Sub.
Discount Notes (NR, NR)(DAGGER)
15.75% 05/15/03 ........................... 908 272,371
PAR
(000) VALUE
-------- -----------
BROADCASTING -- (CONTINUED)
Capstar Broadcasting Partners, Inc.
144A Sr. Discount Notes
(NR, NR)(DAGGER)
12.750% 02/01/09 ............................ $ 500 $ 371,250
Chancellor Radio Broadcasting Co.
Sr. Sub. Notes (B2, B-)
9.375% 10/01/04 ............................. 250 260,937
EchoStar Communications Corp.
Gtd. Sr. Discount Notes (B2, B)(DAGGER)
12.875% 06/01/04 ............................ 350 330,750
Granite Broadcasting Corp.
Sr. Sub. Notes (B3, B-)
9.375% 12/01/05 ............................. 450 465,750
Jacor Communications Co.
Sr. Sub. Notes (B2, B)
9.750% 12/15/06 ............................. 250 275,000
Pegasus Communications Corp.
Sr. Notes, Series B (B3, B-)
9.625% 10/15/05 ............................. 500 522,500
Sinclair Broadcast Group
Sr. Sub. Notes (B2, B)
10.000% 09/30/05 ............................ 250 264,375
Spanish Broadcasting System, Inc.
144A Sr. Notes (NR, NR)
11.000% 03/15/04 ............................ 300 331,500
United International Holdings, Inc.
144A Sr. Secured Discount
Notes (B3, B)(DAGGER)
10.750% 02/15/08 ............................ 600 364,500
Young Broadcasting, Inc.
Gtd. Sr. Sub. Notes,
Series B (B2, B)
9.000% 01/15/06 ............................. 250 260,625
----------
4,650,933
----------
BUSINESS SERVICES -- 1.0%
Employee Solutions, Inc.
144A Gtd. Sr. Notes (B1, B+)
10.000% 10/15/04 ............................ 500 485,625
Iron Mountain, Inc.
144A Sr. Notes (B3, B-)
8.750% 09/30/09 ............................. 500 521,250
----------
1,006,875
----------
CABLE -- 10.9%
Adelphia Communications Corp.
Sr. Notes, Series B (NR, NR)
10.500% 07/15/04 ............................ 400 442,000
Cablevision Systems Corp.
Sr. Sub. Debentures (B2, B)
9.875% 02/15/13 ............................. 500 555,000
Century Communications Corp.
Sr. Discount Notes (Ba3, BB-)
0.000% 01/15/08 ............................. 1,000 435,000
Charter Communications
Southeast, L.P.
Sr. Notes Series B (B3, B)
11.250% 03/15/06 ............................ 900 1,003,500
See Accompanying Notes to Financial Statements.
45
<PAGE>
BEA HIGH YIELD FUND (CONTINUED)
PAR
(000) VALUE
--------- -----------
CABLE -- (CONTINUED)
Comcast U.K. Cable Partners Ltd.,
Yankee Sr. Debentures (B2, B)(DAGGER)
11.200% 11/15/07 .......................... $ 750 $ 616,875
Diamond Cable Communications
PLC Sr. Discount Notes (B3, B-)
11.750% 12/15/05 .......................... 1,000 767,500
DIVA Systems Corp.
Units (NR, NR)
13.000% 05/15/06 .......................... 2,250 2,435,625
Falcon Holding Group L.P.
Sr. Sub. PIK Notes (NR, NR)
11.000% 09/15/03 ........................ 508 566,855
Helicon Group L.P.
Sr. Secured Notes,
Series B (B1, B)
11.000% 11/01/03 .......................... 500 538,750
International CableTel, Inc.
Sr. Deferred Coupon Notes,
Series A (B3, B)(DAGGER)
11.000% 04/15/05 .......................... 750 645,000
James Cable Partners, L.P./
James Cable Finance Corp.
144A Sr. Notes (NR, NR)
10.750% 08/15/04 ...................... 250 268,750
Sr. Notes Series B (NR, B+)
10.750% 08/15/04 ...................... 200 215,000
Lenfest Communications, Inc.
Sr. Notes (Ba3, BB+)
8.375% 11/01/05 ........................... 300 312,000
Marcus Cable L.P.
Sr. Discount Notes (B3, B)(DAGGER)
14.250% 12/15/05 .......................... 650 580,937
Northland Cable Television Inc.
144A Gtd. Sr. Sub. Notes (B3, B-)
10.250% 11/15/07 .......................... 600 643,500
Rifkin Acquisition Partners L.P.
Sr. Sub. Notes (B3, NR)
11.125% 01/15/06 .......................... 500 555,000
Rogers Communications, Inc.
Yankee Sr. Notes (B2, BB-)
9.125% 01/15/06 ........................... 550 559,625
-----------
11,140,917
-----------
CHEMICALS -- 2.7%
Climachem Inc.
144A Gtd. Sr. Notes (B3, B)
10.750% 12/01/07 .......................... 500 526,250
Freedom Chemical Company
Sr. Sub. Notes (B3, B-)
10.625% 10/15/06 .......................... 500 587,500
Harris Chemical North America
Sr. Secured Debentures (B2, B+)
10.250% 07/15/01 .......................... 400 421,500
PAR
(000) VALUE
--------- -----------
CHEMICALS -- (CONTINUED)
PCI Chemicals Canada Inc.
144A Gtd. Sr. Secured Notes,
Series B (B2, B+)
9.250% 10/15/07 ............................. $ 250 $ 252,500
Radnor Holdings, Inc.
Sr. Notes, Series B (B2, BB-)
10.000% 12/01/03 ............................ 500 527,500
Sterling Chemical Holdings, Inc.
Sr. Discount Notes (Caa, B+)(DAGGER)
13.500% 08/15/08 ............................ 700 442,750
----------
2,758,000
----------
COMPUTERS, SOFTWARE & SERVICES -- 0.7%
Advanced Micro Devices, Inc.
Sr. Secured Notes (Ba1, BB-)
11.000% 08/01/03 ............................ 250 270,625
Verio, Inc. 144A Units (NR, NR)
13.500% 06/15/04 ............................ 350 456,750
----------
727,375
----------
CONSTRUCTION & BUILDING MATERIALS -- 2.8%
Collins & Aikman Floorcoverings, Inc.
Sr. Sub. Notes, Series B (B3, B-)
10.000% 01/15/07 ............................ 250 265,000
Koppers Industries, Inc.
144A Sr. Notes (B2, B-)
9.875% 12/01/07 ............................. 500 527,500
Omega Cabinets, Ltd.
144A Gtd. Sr. Sub. Notes
(NR, NR)
10.500% 06/15/07 .......................... 300 318,000
Sr. Sub. Notes (NR, NR)
10.500% 06/15/07 .......................... 100 106,000
Southdown, Inc.
144A Sr. Sub. Notes (B1, B+)
10.000% 03/01/06 ............................ 500 553,750
Uniforet, Inc.
Yankee Gtd. Sr. Notes (B2, B+)
11.125% 10/15/06 ............................ 500 490,000
Waxman Industries, Inc.
Sr. Notes, Series B
(Caa1, CCC+)(DAGGER)
12.750% 06/01/04 ............................ 600 549,000
----------
2,809,250
----------
CONSUMER PRODUCTS & SERVICE -- 2.0%
Coinstar, Inc.
Sr. Discount Notes (NR, NR)(DAGGER)
13.000% 10/01/06 ............................ 525 409,500
Holmes Products Corp.
144A Gtd. Sr. Sub. Notes (B3, B-)
9.875% 11/15/07 ............................. 500 521,250
Hosiery Corp. of America, Inc.
Sr. Sub. Notes (B3, B-)
13.750% 08/01/02 ............................ 400 441,000
Renaissance Cosmetics, Inc.
Sr. Notes (B3, B-)
11.750% 02/15/04 ............................ 250 137,500
See Accompanying Notes to Financial Statements.
46
<PAGE>
BEA HIGH YIELD FUND (CONTINUED)
PAR
(000) VALUE
--------- -----------
CONSUMER PRODUCTS & SERVICE -- (CONTINUED)
Signature Brands USA, Inc.
Sr. Sub. Notes (B3, B-)
13.000% 08/15/02 ............................ $ 250 $ 268,750
Werner Holdings Co. Inc.
144A Sr. Sub. Notes (B2, B-)
10.000% 11/15/07 ............................ 250 265,000
----------
2,043,000
----------
ELECTRONICS -- 1.7%
Ampex Corp.
144A Sr. Notes (NR, NR)
12.000% 03/15/03 ............................ 500 500,000
Elgar Holdings, Inc.
144A Gtd. Sr. Notes (NR, NR)
9.875% 02/01/08 ............................. 500 507,500
Unisys Corporation
Sr. Notes, Series B (B1, B+)
12.000% 04/15/03 ............................ 400 458,000
Zilog, Inc.
144A Gtd. Sr. Secured Notes
(B2, B)
9.500% 03/01/05 ............................. 300 300,750
----------
1,766,250
----------
ENERGY -- 3.7%
Bellwether Exploration Company
Gtd. Sr. Sub. Notes (B3, B-)
10.875% 04/01/07 ............................ 250 270,000
Cliffs Drilling Company
Gtd. Sr. Notes, Series B (B1, B)
10.250% 05/15/03 ............................ 350 384,125
Dailey International Inc.
144A Gtd. Sr. Notes (B2, B)
9.500% 02/15/08 ............................. 400 406,000
Forcenergy, Inc.
Sr. Sub. Notes (B2, B)
9.500% 11/01/06 ............................. 250 265,625
HS Resources Inc.
144A Sr. Sub. Notes (B2, B)
9.250% 11/15/06 ............................. 400 409,500
KCS Energy Inc.
Gtd. Sr. Sub. Notes (B3, B-)
8.875% 01/15/08 ............................. 250 248,750
Kelley Oil & Gas Corp.
144A Sr. Sub. Notes (B3, B-)
10.375% 10/15/06 ............................ 400 421,000
Nuevo Energy Company
Sr. Sub. Notes (B1, B+)
9.500% 04/15/06 ............................. 250 270,000
Plains Resources, Inc.
Sr. Sub. Notes, Series B
(B2, B-)****
10.250% 03/15/06 ............................ 250 270,625
PAR
(000) VALUE
--------- -----------
ENERGY -- (CONTINUED)
Pride Petroleum Services, Inc.
Sr. Notes (Ba3, BB-)
9.375% 05/01/07 ......................... $ 300 $ 324,000
Southwest Royalties, Inc.
144A Gtd. Sr. Notes (B3, B)
10.500% 10/15/04 ........................ 300 276,750
Wiser Oil Co.
Gtd. Sr. Sub. Notes (B2, B-)
9.500% 05/15/07 ......................... 250 243,125
----------
3,789,500
----------
ENTERTAINMENT -- 3.1%
American Skiing Co.
Sr. Sub. Notes, Series B
(B3, CCC+)
12.000% 07/15/06 ........................ 400 449,000
AMF Group, Inc.
Gtd. Sr. Discount Notes,
Series B (B2, B-)(DAGGER)
12.250% 03/15/06 ...................... 459 368,347
Gtd. Sr. Discount Notes,
10.875% 03/15/06 ...................... 350 387,625
Booth Creek Ski Holdings, Inc.
Sr. Notes, Series B (Caa1, B-)
12.500% 03/15/07 ........................ 400 409,000
Cobblestone Holdings, Inc.
Sr. Notes, Series B (Caa1, B-)
0.000% 06/01/04 ......................... 750 381,562
Hollywood Theaters, Inc.
144A Gtd. Sr. Sub. Notes
(B3, B-)
10.625% 08/01/07 ........................ 500 545,000
KSL Recreation Group, Inc.
144A Sr. Sub. Notes (B3, B-)
10.250% 05/01/07 ........................ 350 385,000
Premier Parks, Inc.
Gtd. Sr. Notes (B2, B+)
9.750% 01/15/07 ......................... 250 270,625
----------
3,196,159
----------
FINANCIAL SERVICES -- 0.3%
Fifth Mexican Acceptance Corp.
144A Notes (NR, NR)**/****
8.000% 12/15/98 ......................... 1,040 258,700
----------
FOOD & BEVERAGE -- 2.5%
AmeriServ Food Distribution, Inc.
Gtd. Sr. Notes (B1, B+)
8.875% 10/15/06 ......................... 500 517,500
Archibald Candy Corp.
144A Gtd. Sr. Secured Notes
(B2, NR)
10.250% 07/01/04 ........................ 300 315,000
Delta Beverage Group, Inc.
Sr. Notes (B2, B+)
9.750% 12/15/03 ......................... 250 262,500
See Accompanying Notes to Financial Statements.
47
<PAGE>
BEA HIGH YIELD FUND (CONTINUED)
PAR
(000) VALUE
--------- ----------
FOOD & BEVERAGE -- (CONTINUED)
Eagle Family Foods, Inc.
144A Gtd. Sr. Sub. Notes
(B3, B-)
8.750% 01/15/08 ............................. $ 250 $ 249,375
Fleming Companies Inc.
144A Gtd. Sr. Sub. Notes
(B3, B+)
10.500% 12/01/04 ............................ 150 160,125
Fresh Del Monte Produce N.V.
Yankee Sr. Notes, Series B
(Ba3, BB-)
10.000% 05/01/03 ............................ 284 299,620
International Home Foods, Inc.
Gtd. Sr. Sub. Notes (B2, B-)
10.375% 11/01/06 ............................ 250 279,375
Premium Standard Farm Inc.
Sr. Secured Notes (NR, NR)
11.000% 09/17/03 ............................ 450 490,500
----------
2,573,995
----------
HEALTH CARE -- 1.9%
Beverly Enterprises, Inc.
Gtd. Sr. Notes (B1, B+)
9.000% 02/15/06 ............................. 300 316,500
Integrated Health Services, Inc.
144A Sr. Sub. Notes (B1, B)
9.500% 09/15/07 ............................. 250 264,375
Mariner Health Group, Inc.
Sr. Sub. Notes (B2, B)
9.500% 04/01/06 ............................. 250 264,375
Paracelsus Healthcare Corp.
Sr. Sub. Notes (B1, B)
10.000% 08/15/06 ............................ 250 261,875
Quest Diagnostic, Inc.
Sr. Sub. Notes (B2, B+)
10.750% 12/15/06 ............................ 500 556,875
Tenet Healthcare Corp.
Sr. Sub. Notes (Ba3, B+)
8.625% 01/15/07 ............................. 250 260,937
----------
1,924,937
----------
INDUSTRIAL GOODS & MATERIALS -- 2.3%
Derlan Manufacturing, Inc.
Yankee Sr. Notes (B3, B+)
10.000% 01/15/07 ............................ 250 263,750
Golden Ocean Group Ltd.
Units (NR, NR)
10.000% 08/31/01 ............................ 438 348,210
Haynes International, Inc.
Sr. Notes (B3, B-)
11.625% 09/01/04 ............................ 500 571,250
International Utility Structures Inc.
144A Sr. Sub. Notes (NR, NR)
13.000% 02/01/08 ............................ 350 362,250
PAR
(000) VALUE
--------- ----------
INDUSTRIAL GOODS & MATERIALS -- (CONTINUED)
Jordan Industries Inc.
144A Sr. Notes (B3, NR)
10.375% 08/01/07 ............................ $ 500 $ 518,750
Motors and Gears, Inc.
Sr. Notes, Series D (B3, B)
10.750% 11/15/06 ............................ 250 273,125
----------
2,337,335
----------
METALS & MINING -- 2.8%
Anchor Lamina Inc./ Anchor
Lamina America, Inc.
144A Sr. Sub. Notes (B3, B-)
9.875% 02/01/08 ............................. 500 507,500
Gulf States Steel, Inc.
First Mortgage Notes (B1, B)
13.500% 04/15/03 ............................ 400 397,000
Ivaco, Inc.
Yankee Sr. Notes (B1, B+)
11.500% 09/15/05 ............................ 250 274,375
Metallurg Inc.
144A Gtd. Sr. Notes (B3, B-)
11.000% 12/01/07 ............................ 500 523,750
NS Group, Inc.
Sr. Secured Notes (B3, B-)
13.500% 07/15/03 ............................ 240 280,200
Renco Steel Holdings, Inc.
144A Sr. Secured Notes
(NR, NR)
10.875% 02/01/05 ............................ 500 510,000
Weirton Steel Corporation
Sr. Notes (B2, B)
11.375% 07/01/04 ............................ 350 378,875
----------
2,871,700
----------
OFFICE EQUIPMENT & SUPPLIES -- 0.4%
Knoll, Inc. Sr. Sub. Notes
(B3, B+)****
10.875% 03/15/06 ............................ 325 370,500
----------
PACKAGING & CONTAINERS -- 1.6%
BPC Holding Corporation
Sr. Secured Notes, Series B
(Caa3, NR)****
12.500% 06/15/06 ............................ 500 550,000
Crown Packaging Enterprises Ltd.
Sr. Secured Discount Notes
(Ca, NR)****/(DAGGER)
14.000% 08/01/06 ............................ 775 19,375
Four M Corp.
Sr. Secured Notes
Series B (B2, B)
12.000% 06/01/06 ............................ 250 265,625
Plastic Containers, Inc.
144A Sr. Secured Notes
(B1, B+)
10.000% 12/15/06 ............................ 500 558,750
See Accompanying Notes to Financial Statements.
48
<PAGE>
BEA HIGH YIELD FUND (CONTINUED)
PAR
(000) VALUE
--------- ----------
PACKAGING & CONTAINERS -- (CONTINUED)
Stone Container Finance Co.
Gtd. Sr. Notes (B1, B+)
11.500% 08/15/06 ............................ $ 250 $ 263,437
----------
1,657,187
----------
PAPER & FOREST PRODUCTS -- 2.2%
Ainsworth Lumber Co. Ltd.
144A Yankee Sr. Secured
PIK Notes (B3, B)
12.500% 07/15/07 ............................ 300 303,375
Bear Island Paper Company L.L.C./
Bear Island Finance Company II
144A Sr. Secured Notes (B2, B)
10.000% 12/01/07 ............................ 400 409,000
Crown Paper Co. Sr. Sub. Notes
(B3, B)
11.000% 09/01/05 ............................ 400 422,000
MAXXAM Group Holdings, Inc.
144A Sr. Secured Notes,
Series B (NR, NR)
12.000% 08/01/03 ............................ 400 442,000
Printpack, Inc.
144A Sr. Sub. Notes (B3, B+)
10.625% 08/15/06 ............................ 350 379,750
Specialty Paperboard, Inc.
144A Sr. Notes (B1, BB-)
9.375% 10/15/06 ............................. 250 260,938
----------
2,217,063
----------
PUBLISHING & INFORMATION SERVICES -- 2.4%
Gray Communications Systems
Gtd. Sr. Sub. Notes (B3, B-)
10.625% 10/01/06 ............................ 200 219,000
Hollinger International
Publishing Inc.
Sr. Sub. Notes (B1, BB-)
9.250% 03/15/07 ............................. 250 269,375
InterAct Systems Inc.
144A Sr. Discount Notes
(NR, NR)(DAGGER)
14.000% 08/01/03 ............................ 700 278,250
Liberty Group Publishing, Inc.
144A Sr. Discount Debentures
(Caa1, CCC+)
11.625% 02/01/09 ............................ 300 183,750
Mentus Media Corp.
144A Units (NR, NR)
12.125% 02/01/03 ............................ 500 501,250
Nebraska Book Company, Inc.
144A Sr. Sub. Notes (B3, B-)
8.750% 02/15/08 ............................. 250 251,250
PAR
(000) VALUE
--------- -----------
PUBLISHING & INFORMATION SERVICES -- (CONTINUED)
Sun Media Corp.
144A Yankee Sr. Sub.
Notes (B3, B-)
9.500% 02/15/07 ............................. $ 300 $ 327,000
Yankee Sr. Sub. Notes (B3, B-)
9.500% 05/15/07 ............................. 100 109,000
Universal Outdoor, Inc.
Sr. Sub. Notes, Series B (B1, B)
9.750% 10/15/06 ............................... 250 281,875
----------
2,420,750
----------
REAL ESTATE -- 0.3%
HMH Properties, Inc.
Series B (NR, NR)
8.875% 07/15/07 ............................... 250 265,938
----------
RESTAURANTS, HOTELS & GAMING -- 8.3%
American Restaurant Group Inc.,
144A Sr. Notes (B3, B)
11.500% 02/15/03 .............................. 500 505,000
AmeriKing, Inc.
Gtd. Sr. Notes (B3, B-)
10.750% 12/01/06 .............................. 400 426,000
Ameristar Casinos, Inc.
144A Gtd. Sr. Sub. Notes
(NR, NR)
10.500% 08/01/04 .............................. 500 526,250
CapStar Hotel Company
144A Sr. Sub. Notes (B1, B)
8.750% 08/15/07 ............................... 250 260,625
Casino America, Inc.
Gtd. Sr. Notes (B1, B)
12.500% 08/01/03 .............................. 500 555,000
Casino Magic of Louisiana Corp.
First Mortgage Notes (B3, B-)
13.000% 08/15/03 .............................. 600 693,000
Coast Hotels and Casinos, Inc.
Gtd. First Mortgage Notes,
Series B (B3, B)****
13.000% 12/15/02 .............................. 350 403,375
Friendly Ice Cream Corp.
Gtd. Sr. Notes (B1, B)
10.500% 12/01/07 .............................. 250 263,750
Grand Casinos, Inc.
Sr. Notes, Series B (B2, B+)
9.000% 10/15/04 ............................... 250 261,875
Horseshoe Gaming L.L.C.
144A Sr. Sub. Notes, Series B
(B3, B)
9.375% 06/15/07 ............................... 500 539,375
Mohegan Tribal Gaming Authority
Sr. Secured Notes, Series B
(Ba1, BB+)****
13.500% 11/15/02 .............................. 400 517,000
See Accompanying Notes to Financial Statements.
49
<PAGE>
BEA HIGH YIELD FUND (CONTINUED)
PAR
(000) VALUE
--------- -----------
RESTAURANTS, HOTELS & GAMING -- (CONTINUED)
Mrs. Fields Original Cookies Co.
144A Gtd. Sr. Notes (B2, B+)
10.125% 12/01/04 ............................ $ 350 $ 353,500
Players International, Inc.
Gtd. Sr. Notes (Ba3, BB)
10.875% 04/15/05 ............................ 250 273,125
Prime Hospitality Corp.
Secured First Mortgage Notes
(Ba3, BB)
9.250% 01/15/06 ............................. 250 266,250
Red Roof Inns, Inc.
Sr. Exchange Notes (B2, B)
9.625% 12/15/03 ............................. 250 257,500
Showboat Inc.
First Mortgage Bonds (Ba3, BB-)
9.250% 05/01/08 ............................. 250 270,625
Showboat Marina Casino Partnership
First Mortgage Notes,
Series B (B2, B)
13.500% 03/15/03 ............................ 450 536,625
Sun International Hotels
Gtd. Sr. Sub. Notes (Ba3, B+)
9.000% 03/15/07 ............................. 400 424,000
The Majestic Star Casino L.L.C.
Sr. Secured Notes (B2, B)****
12.750% 05/15/03 ............................ 500 540,000
Waterford Gaming L.L.C./
Waterford Gaming Finance Corp.
144A Sr. Notes (NR, NR)
12.750% 11/15/03 ............................ 473 522,074
----------
8,394,949
----------
RETAIL TRADE -- 1.5%
County Seat Stores, Inc.
144A Units (NR, NR)
12.750% 11/01/04 ............................ 500 507,500
Jitney-Jungle Stores of America, Inc.
Gtd. Sr. Notes (B2, B)
12.000% 03/01/06 ............................ 250 283,750
K Mart Corp. Debentures
(Ba3, B+)
7.750% 10/01/12 ............................. 500 496,250
Pantry, Inc.
Sr. Sub. Notes (B3, B-)
10.250% 10/15/07 ............................ 250 261,250
----------
1,548,750
----------
TELECOMMUNICATIONS -- 24.2%
Advanced Radio
Telecommunications Corp.
Sr. Notes (Caa2, CCC+)
14.000% 02/15/07 ............................ 500 523,750
American Communication
Services, Inc.
Sr. Discount Notes
(NR, NR)****/(DAGGER)
13.000% 11/01/05 ............................ 1,100 943,250
PAR
(000) VALUE
--------- ----------
TELECOMMUNICATIONS -- (CONTINUED)
Brooks Fiber Properties, Inc.
Sr. Notes (NR, NR)
10.000% 06/01/07 ............................ $ 250 $ 289,375
Sr. Discount Notes
(NR, NR)****/(DAGGER)
11.875% 03/01/06 ............................ 500 426,250
Clearnet Communications, Inc.
Sr. Discount Notes (B3, NR)(DAGGER)
14.750% 12/15/05 ............................ 500 403,750
Comcast Cellular Corp.
144A Sr. Notes (Ba3, BB+)
9.500% 05/01/07 ............................. 400 422,000
DTI Holdings, Inc.
144A Units (NR, NR)(DAGGER)
12.500% 03/01/08 ............................ 600 327,000
Dobson Communications Corp.
Sr. Notes (NR, NR)
11.750% 04/15/07 ............................ 200 218,500
Focal Communications Corp.,
144A Sr. Discount Notes
(NR, NR)
12.125% 02/15/08 ............................ 750 409,688
GST Equipment Funding
144A Sr. Notes (NR, NR)
13.250% 05/01/07 ............................ 250 296,250
GST USA, Inc.
Gtd. Sr. Discount Notes
(NR, NR)(DAGGER)
13.875% 12/15/05 ............................ 500 404,375
Geotek Communications, Inc.
Conv. Sr. Sub. Notes
(Caa2, NR)****
12.000% 02/15/01 ............................ 1,000 750,000
Globalstar, L.P./ Globalstar
Capital Corp.
Sr. Notes (B3, B)
10.750% 11/01/04 .......................... 100 100,500
144A Units (B3, B)
11.375% 02/15/04 .......................... 200 207,000
Hermes Europe Railtel B.V.
144A Sr. Notes (NR, B)
11.500% 08/15/07 ............................ 250 280,625
Hyperion Telecommunications, Inc.
Sr. Discount Notes, Series B
(NR, NR)(DAGGER)
13.000% 04/15/03 .......................... 500 374,375
Sr.Notes Series B (B3, B)
12.250% 09/01/04 .......................... 250 284,375
ICG Services Inc.
144A Sr. Discount Notes
(NR, NR)(DAGGER)
10.000% 02/15/08 ............................ 800 476,000
Intelcom Group (U.S.A.), Inc.
Gtd. Sr. Exchangeable
Discount Notes (NR, NR)(DAGGER)
12.500% 05/01/06 ............................ 1,000 781,250
See Accompanying Notes to Financial Statements.
50
<PAGE>
BEA HIGH YIELD FUND (CONTINUED)
PAR
(000) VALUE
--------- ----------
TELECOMMUNICATIONS -- (CONTINUED)
Intermedia Communications, Inc.
144A Sr. Discount Notes
(B2, NR)(DAGGER)
11.250% 07/15/07 .............................. $ 500 $368,750
Iridium L.L.C./Iridium Capital Corp.
144A Sr. Notes (B3, B-)
11.250% 07/15/05 .............................. 600 615,000
ITC DeltaCom Inc.
144A Sr. Notes (B3, B)
11.000% 06/01/07 .............................. 250 282,500
IXC Communications Inc.
Sr. Secured Notes, Series B
(B3, B)
12.500% 10/01/05 .............................. 500 580,000
Jordan Telecommunication
Products, Inc.
144A Sr. Discount Notes
(NR, NR)
11.750% 08/01/07 .............................. 400 339,000
KMC Telecom Holdings Inc.
144A Units (NR, NR)
12.500% 02/15/08 .............................. 500 285,000
McCaw International Ltd.
144A Units (NR, NR)(DAGGER)
13.000% 04/15/07 .............................. 500 330,000
McleodUSA, Inc.
144A Sr. Notes (B2, B+)
9.250% 07/15/07 ............................. 300 324,750
Sr. Discount Notes (B2, B+)(DAGGER)
10.500% 03/01/07 ............................ 500 377,500
MetroNet Communications Corp.
144A Yankee Sr. Discount
Notes (NR, NR)
10.750% 11/01/07 ............................ 400 263,500
Yankee Units (NR, NR)
12.000% 08/15/07 ............................ 400 464,000
Microcell Telecommunications, Inc.
Yankee Sr. Discount Notes,
Series B (NR, NR)
14.000% 06/01/06 .............................. 500 351,875
NEXTLINK Communications, Inc.
Sr. Notes (NR, NR)
12.500% 04/15/06 .............................. 250 288,125
Nextel Communications, Inc.
Sr. Discount Notes (B3, CCC-)(DAGGER)
9.750% 08/15/04 ............................... 900 861,750
Orbital Imaging Corp.,
144A Units (NR, NR)
11.625% 03/01/05 .............................. 500 512,500
Orion Network Systems, Inc.
Units (B2, B)
11.250% 01/15/07 .............................. 300 351,000
Pagemart Nationwide, Inc.
Sr. Discount Notes (NR, NR)(DAGGER)
15.000% 02/01/05 .............................. 750 660,000
PAR
(000) VALUE
--------- -----------
TELECOMMUNICATIONS -- (CONTINUED)
People's Telephone Co., Inc.
Sr. Notes (B2, B-)
12.250% 07/15/02 ............................ $ 450 $ 479,250
Petersburg Long Distance, Inc.
144A Units (NR, NR)****/(DAGGER)
14.000% 06/01/04 .......................... 1,010 1,010,000
144A Conv. Sub. Notes
(NR, NR)****
9.000% 06/01/06 ........................... 230 230,000
Price Communications Corp./
Price Communications Cellular
Holdings, Inc.
Units (NR, NR)(DAGGER)
13.500% 08/01/07 ............................ 800 532,000
Price Communications Wireless, Inc.
144A Sr. Sub. Notes (B3, NR)
11.750% 07/15/07 ............................ 250 275,625
PriCellular Wireless Corp.
Sr. Sub. Discount Notes
(B3, CCC+)(DAGGER)
12.250% 10/01/03 ............................ 250 257,500
Qwest Communications
International, Inc.
Sr. Notes, Series B (B2, B+)
10.875% 04/01/07 .......................... 350 403,375
Sr. Discount Notes (B2, B+)
9.470% 10/15/07 ........................... 750 525,000
RCN Corp.
144A Sr. Notes (B3, NR)
10.000% 10/15/07 .......................... 400 424,000
144A Sr. Discount Notes
(B3, NR)(DAGGER)
9.800% 02/15/08 ........................... 400 245,500
Sprint Spectrum L.P./Sprint
Spectrum Finance Corp.
Sr. Notes (B2, B+)
11.000% 08/15/06 ............................ 500 576,250
TCI Satellite Entertainment, Inc.
144A Sr. Sub. Notes (B3, B-)
10.875% 02/15/07 .......................... 450 481,500
144A Sr. Sub. Discount Notes
(B3, B-)(DAGGER)
12.250% 02/15/07 .......................... 300 210,000
Teleport Communications
Group, Inc.
Sr. Discount Notes (B1, B)(DAGGER)
11.125% 07/01/07 .......................... 500 431,875
Sr. Notes (B1, B)
9.875% 07/01/06 ........................... 300 347,250
Telesystem International
Wireless Inc.
Sr. Discount Notes (NR, NR)
10.500% 06/30/07 ............................ 500 340,000
Telewest Communications
Group Plc Yankee
Sr. Discount Debentures (B1, BB)(DAGGER)
11.000% 10/01/07 ............................ 800 646,000
See Accompanying Notes to Financial Statements.
51
<PAGE>
BEA HIGH YIELD FUND (CONTINUED)
PAR
(000) VALUE
--------- ---------
TELECOMMUNICATIONS -- (CONTINUED)
Teligent Inc.
Sr. Notes (Caa1, CCC)
11.500% 12/01/07 .............................. $ 500 $ 517,500
UNIFI Communications, Inc.
144A Units (NR, NR)
14.000% 03/01/04 .............................. 500 390,000
Vanguard Cellular Systems, Inc.
Sr. Debentures (B1, B+)
9.375% 04/15/06 ............................... 250 261,875
WinStar Communications, Inc.
Sr. Discount Notes
(Caa1, CCC+)(DAGGER)
14.000% 10/15/05 .............................. 1,000 821,250
-----------
24,579,313
-----------
TEXTILES & APPAREL -- 1.5%
Maxim Group, Inc.
Gtd. Sr. Sub. Notes,
Series B (B2, B)
9.250% 10/15/07 ............................... 500 506,250
William Carter Company
Sr. Sub. Notes, Series A
(B3, B-)
10.375% 12/01/06 450 482,063
Worldtex Inc.
144A Sr. Notes (B1, B+)
9.625% 12/15/07 ............................... 500 521,250
-----------
1,509,563
-----------
TRANSPORTATION -- 2.1%
AirTran Airlines, Inc.
Secured Notes (NR, NR)
10.500% 04/15/01 .............................. 250 241,250
Atlantic Express Transportation
Corp.
144A Gtd. Sr. Secured Notes
(B2, B)
10.750% 02/01/04 .............................. 250 269,375
Kitty Hawk, Inc.
144A Sr. Notes (B1, B+)
9.950% 11/15/04 ............................... 250 262,500
Pegasus Shipping Hellas Co.
144A Gtd. Sr. Mortgage Notes
(Caa1, B)
11.875% 11/15/04 .............................. 500 505,000
Trans World Airlines, Inc.
144A Sr. Notes (NR, NR)
11.375% 03/01/06 .............................. 500 504,375
US Air, Inc.
Sr. Notes (B3, CCC+)
10.000% 07/01/03 .............................. 350 370,563
-----------
2,153,063
-----------
PAR
(000) VALUE
--------- ---------
WASTE MANAGEMENT -- 0.5%
Allied Waste North America
Gtd. Sr. Sub. Notes (B3, B+)
10.250% 12/01/06 .............................. $ 450 $ 502,875
-----------
TOTAL CORPORATE BONDS
(Cost $87,775,291) ............................ 93,707,564
-----------
ASSET BACKED SECURITIES -- 0.7%
Airplanes Pass Through Trust
Series 1, Class D (Ba2, BB)
10.875% 03/15/19 .............................. 600 676,639
-----------
TOTAL ASSET BACKED
SECURITIES
(Cost $600,000) ............................... 676,639
-----------
SHARES
---------
RIGHTS / WARRANTS*** -- 0.8%
CHEMICALS -- 0.2%
Uniroyal Technology Corp. ....................... 43,500 201,191
----------
CONSTRUCTION & BUILDING MATERIALS -- 0.0%
Capital Pacific Holdings
Group, Inc. ................................... 12,640 9,480
----------
CONSUMER PRODUCTS & SERVICES -- 0.3%
Coinstar, Inc. .................................. 3,671 286,338
Renaissance Cosmetics, Inc. ..................... 500 5
----------
286,343
----------
TELECOMMUNICATIONS -- 0.3%
Advanced Radio
Telecommunications Corp. ...................... 7,500 115,050
American Communication
Services, Inc. ................................ 1,500 154,500
Ampex Corp. 144A ................................ 17,000 21,250
Globalstar, L.P. ................................ 200 25,000
Mccaw International Ltd. ........................ 500 2,000
MetroNet Communications Corp. ................... 400 800
Microcell Telecommunications, Inc. .............. 1,600 16
Microcell Telecommunications, Inc. .............. 1,600 19,744
Orion Network Systems, Inc. ..................... 300 3,600
Price Communications Corp. ...................... 2,752 24,768
UNIFI Communications, Inc. ...................... 500 5
----------
366,733
----------
TOTAL RIGHTS / WARRANTS
(Cost $234,080) ............................... 863,747
----------
See Accompanying Notes to Financial Statements.
52
<PAGE>
BEA HIGH YIELD FUND (CONCLUDED)
SHARES VALUE
---------- ---------
COMMON STOCKS -- 0.0%
PACKAGING/CONTAINERS -- 0.0%
Crown Packaging Enterprises,
Ltd ........................................... 100,847 $ 1,008
----------
TELECOMMUNICATIONS -- 0.0%
Intermedia Communications, Inc. ................. 141 10,769
----------
TOTAL COMMON STOCKS
(Cost $8,566) ................................. 11,777
----------
PREFERRED STOCKS -- 4.5%
AEROSPACE/DEFENSE -- 0.9%
GPA Group plc
7% Cum. Conv. Second
Preference .................................... 1,750,000 962,500
----------
BROADCASTING -- 0.2%
Source Media Inc.
144A 13.50% Units ............................. 10,000 247,500
----------
CABLE -- 0.1%
DIVA Systems Corporation
Series C ...................................... 5,945 69,854
----------
CONSUMER PRODUCTS & SERVICES -- 0.1%
Renaissance Cosmetics, Inc.
14% Cumulative ................................ 614 61,426
----------
PUBLISHING & INFORMATION SERVICES -- 0.2%
Liberty Group Publishing, Inc.
144A 14.75% Cum
Exchangeable .................................. 10,000 252,500
----------
RESTAURANTS, HOTELS, AND GAMING -- 0.1%
AmeriKing, Inc. 13.00% Cum
Exchangeable .................................. 5,502 148,554
----------
RETAIL TRADE -- 0.3%
Jitney-Jungle Stores of
America, Inc.
144A 15.00% Class A ........................... 1,750 273,000
----------
TELECOMMUNICATIONS -- 2.6%
American Communication
Services, Inc.
12.75% Jr. Redeemable PIK ..................... 825 974,085
Hyperion Telecommunications, Inc.
12.875% Sr. Exch.
Redeemable, Series B .......................... 206 235,820
Intermedia Communications Inc.
144A 7.00% Jr. Convertible,
Series E ...................................... 20,000 652,400
NEXTLINK Communications, Inc.
144A 14% Cum
Exchangeable PIK .............................. 6,886 428,709
Nextel Communications, Inc.
13.00% Exchangeable,
Series D PIK .................................. 265 307,402
----------
2,598,416
----------
VALUE
----------
TOTAL PREFERRED STOCKS
(Cost $4,094,361) ............................. $ 4,613,750
------------
TOTAL INVESTMENTS -- 98.1%
(Cost $92,712,298) ............................ 99,873,477
------------
OTHER ASSETS IN EXCESS
OF LIABILITIES -- 1.9% ........................ 1,891,557
------------
NET ASSETS (Applicable to
5,665,832 BEA Institutional
Shares and 71,438 BEA
Advisor Shares) -- 100.0% ..................... $101,765,034
------------
NET ASSET VALUE,
OFFERING PRICE AND
REDEMPTION PRICE PER
BEA INSTITUTIONAL SHARE
($100,497,948 (DIVIDE) 5,665,832) ............. $17.74
======
NET ASSET VALUE,
OFFERING PRICE AND
REDEMPTION PRICE PER
BEA ADVISOR SHARE
($1,267,086 (DIVIDE) 71,438) .................. $17.74
======
* Also cost for Federal income tax purposes at February 28, 1998. The gross
appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation ................................... $10,049,400
Gross Depreciation ................................... (2,888,221)
-----------
Net Appreciation ..................................... $ 7,161,179
===========
** Guaranteed by Grupo Sidek, S.A. de C.V. and Grupo Situr, S.A. de C.V.
*** Non-income producing securities.
**** Certain conditions for public sales may exist.
(DAGGER)Step Bond -- The interest rate as of February 28, 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 February 28, 1998 and are
unaudited.
INVESTMENT ABBREVIATIONS
PIK ............................................................... Pay In Kind
AT FEBRUARY 28, 1998, NET ASSETS CONSISTED OF:
AMOUNT
-------------
Capital Paid-In ................................................. $108,280,361
Accumulated Net Investment Income ............................... 1,293,131
Accumulated Net Realized Loss on
Security and Foreign Exchange
Transactions ................................................. (14,969,637)
Net Unrealized Appreciation on
Investments and Other ........................................ 7,161,179
- --------------------------------------------------------------------------------
NET ASSETS ...................................................... $101,765,034
- --------------------------------------------------------------------------------
See Accompanying Notes to Financial Statements.
53
<PAGE>
BEA MUNICIPAL BOND FUND
PORTFOLIO MANAGERS' LETTER
March 12, 1998
Dear Shareholders:
We are pleased to report on the results of the BEA Municipal Bond Fund (the
"Fund") for the six months ended February 28, 1998 and discuss our investment
strategy.
PERFORMANCE REVIEW
- ------------------
At February 28, 1998, the net asset value ("NAV") of the Fund was $15.08,
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) was 4.86%. By
comparison, the Lehman Brothers Municipal Bond Index gained 5.04% during the
same period.
PORTFOLIO REVIEW
- ----------------
Most sectors of the U.S. fixed income market performed fairly well in 1997, as
interest rates fell sharply. The yield on the bellwether 30-year U.S. Treasury
bond, for example, declined to 5.92% at December 31 from 6.64% a year earlier.
Despite their participation in the rally, however, municipal securities still
underperformed the taxable sector. Taxables' return of 9.65% (as measured by the
Lehman Brothers Aggregate Bond Index) was 46 basis points more than the 9.19%
generated by Lehman's municipal index.
Falling rates actually hurt the muni market in several important ways. First,
they prompted a large increase in new issues and advanced refundings, as issuers
sought to reduce their debt-servicing costs. The resulting glut of new paper
helped to raise the market's gross supply level to a four-year high of $214
billion. Next, they drove yields on certain credits and maturities below the
psychologically meaningful floor level of 5.00%. This caused many retail
investors, who are the single largest source of demand for municipals, to balk
at making new purchases. Finally, falling rates compelled many investors to put
their cash into other asset classes such as equities and taxables, whose
potential returns are more attractive. Periodic rumblings of support for cuts in
tax rates also helped to dampen munis' performance.
The Fund's performance over the last six months was primarily attributable to
our substantial holdings of noncallable and discounted securities. Because both
of these subsectors have higher ratings and coupon yields relative to callables,
their presence in a portfolio tends to enhance performance both in up and down
markets. A total of about 33% of the Fund's total assets was call-protected at
February 28, versus only 9% of the Lehman benchmark. As a result, the Fund was
able to capture more of the market's upside and absorb less downside.
OUTLOOK
- -------
Our positive near-term outlook for the municipal market remains intact. We
expect that the macroeconomic conditions that have proven so favorable for the
financial markets more broadly will continue to apply. In particular, we believe
that the Federal Reserve will maintain its neutral position on interest rates at
least over the next few months. Unlike the many observers who consider a hike in
rates most probable, we feel that the Fed will take a more accommodative stance
due to the combination of low domestic inflation and deflationary winds blowing
in from Asia.
We note several other factors that augur well for munis' performance. A mammoth
$6.7 billion new issue by the Long Island Power Authority, to be sold in two
separate transactions during 1998, is expected to generate high investor
interest and raise the visibility of the overall muni market among the general
public. The yield on long-term AAA-rated munis is about 87% of that of Treasury
bonds, indicating a meaningful relative undervaluation. Munis, in addition, have
historically fared quite well in the first calendar quarter.
Our investment strategy will continue to consist of maintaining a high level of
noncallable instruments in the Portfolio; acting opportunistically to buy
taxables when we sense that they offer compelling value; aggressively
underweighting insured bonds, which carry an uncomfortably high diversification
risk; and overweighting revenue issues, whose risk/reward profile we consider
more desirable than more highly rated general obligation bonds.
54
<PAGE>
BEA MUNICIPAL BOND FUND
PORTFOLIO MANAGERS' LETTER (CONCLUDED)
As developments occur in the fixed income markets or at BEA that we believe
would be of interest to you, we will be sure to keep you informed. Meanwhile, if
you have questions, please feel free to call upon us at any time.
Sincerely yours,
BEA Fixed Income Management Team
Robert J. Moore, Executive Director
William P. Sterling, Executive Director
Gregg M. Diliberto, Managing Director
Mark K. Silverstein, Managing Director
Robert W. Justich, Senior Vice President
Diane Damskey, Senior Vice President
Ira Edelblum, Senior Vice President
Jo Ann Corkran, Senior Vice President
---------------------------
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN THE BEA MUNICIPAL BOND
FUND AND THE LEHMAN BROTHERS MUNICIPAL BOND INDEX FROM INCEPTION 6/20/94, PERIOD
ENDED 7/31/94 AND AT EACH QUARTER END.
[GRAPH OMITTED]
PLOT POINTS FOLLOW:
BEA LEHMAN BROTHERS
MUNICIPAL MUNICIPAL BOND
BOND FUND INDEX
06/20/1994 10,000 10,000
07/31/1994 10,040 10,038
08/31/1994 10,040 10,073
11/30/1994 9,647 9,571
02/28/1995 10,350 10,354
05/31/1995 10,846 10,820
08/31/1995 10,886 10,965
11/30/1995 11,193 11,079
02/29/1996 11,216 11,498
05/31/1996 10,937 11,314
08/31/1996 11,134 11,539
11/30/1996 11,643 12,049
02/28/1997 11,731 12,132
05/31/1997 11,835 12,252
08/31/1997 12,218 12,606
11/30/1997 12,508 12,914
02/28/1998 12,812 13,242
AVERAGE ANNUAL
TOTAL RETURN
One Year 9.21%
From Inception 6.92%
Note: Past performance is not predictive of future performance.
55
<PAGE>
BEA MUNICIPAL BOND FUND
OF THE RBB FUND, INC.
STATEMENT OF NET ASSETS
FEBRUARY 28, 1998
(UNAUDITED)
PAR
(000) VALUE
------- -----------
MUNICIPAL BONDS -- 77.3%
CALIFORNIA -- 7.1%
California State GO (Aaa, AAA)
5.125% 10/01/17 ............................... $ 825 $ 825,000
Los Angeles CA, Department of
Water & Power,
Water RB (Aa, AA)
4.500% 05/15/23 ............................... 705 628,331
----------
1,453,331
----------
COLORADO -- 3.1%
Colorado Springs CO,
Utility RB (Aaa, AAA)
5.875% 11/15/17 ............................... 595 646,319
----------
FLORIDA -- 7.3%
Florida State Board of Education
GO (Aa2, AA+)
5.125% 06/01/22 ............................... 30 29,812
Jacksonville FL, Electric Authority
RB, 2nd Installment (Aaa, AAA)
6.000% 07/01/12 ............................... 610 673,287
Tallahassee FL, Electric RB,
First Lien (Aaa, AAA)
6.100% 10/01/06 ............................... 730 792,050
----------
1,495,149
----------
ILLINOIS -- 6.7%
Chicago Illinois GO, Series 1993
(FGIC Insured) (Aaa, AAA)
5.250% 01/01/18 ............................... 705 707,644
Illinois State Sales Tax RB,
Series Q (Aa3, AAA)
5.750% 06/15/14 ............................... 650 676,812
----------
1,384,456
----------
INDIANA -- 0.1%
Indianapolis IN, Public
Improvement Board RB
(Aaa, AA+)
6.000% 01/10/18 ............................... 25 26,875
----------
LOUISIANA -- 3.5%
New Orleans LA, Home Mortgage
Authority SOB (Aaa, AAA)
6.250% 01/15/11 ............................... 635 716,756
----------
MARYLAND -- 4.9%
Maryland State Transportation
Authority Project RB
(Aaa, AAA)
6.800% 07/01/16 ............................... 850 1,009,375
----------
MASSACHUSETTS -- 3.2%
Massachusetts State Water
Resources Authority, General
RB, Series 92A (Aaa, AAA)
6.500% 07/15/19 ............................... 20 24,375
Massachusetts State Water
Resources RB (Aaa, AAA)
5.000% 12/01/25 ............................... 660 636,075
----------
660,450
----------
PAR
(000) VALUE
------- -----------
NEW YORK -- 25.6%
New York State Dormitory
Authority RB (Elizabeth
Church Manor Nursing Home)
(N/R, AA)
5.400% 08/01/23 ............................... $ 60 $ 61,125
New York State Dormitory
Authority RB (Episcopal Health
Services) (GNMA Coll.)
(NR, AAA)
7.550% 08/01/29 ............................... 435 467,081
New York State Dormitory
Authority RB (Judicial Facilities
Lease) (MBIA Insured)
(Aaa, AAA)
7.375% 07/01/16 ............................... 630 780,412
New York State Dormitory
Authority RB (Judicial
Facilities Lease) (Aaa, AAA)
7.375% 07/01/16 ............................... 40 49,950
New York State Dormitory
Authority RB (Park Ridge
Housing Inc. Project)
(GNMAColl.) (NR, AAA)
7.850% 02/01/29 ............................... 530 555,922
New York State Medical Care
Facility Finance Agency,
Hospital & Nursing Home
Insured Mortgage RB
(NR, AAA)
5.500% 02/15/22 ............................... 750 772,500
New York State Power Authority
General Purpose Electric RB,
Series R (Aaa, AAA)
7.000% 01/01/10 ............................... 360 436,050
New York State Throughway
Authority, General RB, Series B
(MBIA Insured) (Aaa, AAA)
5.000% 01/01/20 ............................... 30 29,325
New York NY, Transitional
Finance Authority RB, Secured
Future Tax Series B (Aa3, AA)
4.750% 11/15/14 ............................... 35 33,950
New York, NY GO, Series D
(Baa1, BBB+)
8.000% 08/01/03 ............................... 650 730,437
6.000% 02/15/25 ............................... 15 15,769
New York, NY GO, Series H
(NR, BBB+)
7.200% 02/01/02 ............................... 530 595,587
New York, NY GO, Series H
(Baa1, BBB+)
7.200% 02/01/13 ............................... 70 77,350
Suffolk County, NY Water
Authority, Waterworks RB,
Series V (NR, AAA)
6.750% 06/01/12 ............................... 580 674,250
----------
5,279,708
----------
See Accompanying Notes to Financial Statements.
56
<PAGE>
BEA MUNICIPAL BOND FUND (CONTINUED)
PAR
(000) VALUE
------- -----------
PUERTO RICO -- 4.5%
Commonwealth of Puerto Rico
GO (Baa1, A)
5.400% 07/01/07 ............................... $ 730 $ 778,362
Puerto Rico Electric Power
Authority, RB Series N
(Baa1, BBB+)
7.125% 07/01/14 ............................... 135 142,256
-----------
920,618
-----------
SOUTH DAKOTA -- 0.1%
Heartland Consumers Power
District SD Electric RB
(Aaa, AAA)
6.375% 01/01/16 ............................... 25 28,500
-----------
VIRGIN ISLANDS -- 3.6%
Virgin Islands Public Finance
Authority RB (NR, BBB)
7.700% 10/01/04 ............................... 690 735,712
-----------
VIRGINIA -- 3.8%
Fairfax County VA
Redevelopment & Housing
Authority, Mortgage RB
(FHA Insured) (NR, AAA)
7.100% 04/01/19 ............................... 630 791,438
-----------
WASHINGTON -- 3.8%
King County WA GO, Series A
(Aa1, AA+)
6.200% 01/01/24 ............................... 40 43,200
Seattle WA Water System RB
(Aa2, AA)
5.250% 12/01/23 ............................... 735 741,431
-----------
784,631
-----------
TOTAL MUNICIPAL BONDS
(Cost $14,565,457) 15,933,318
-----------
CORPORATE BONDS -- 9.0%
BANKING -- 1.0%
Export-Import Bank of Korea:
Yankee Bonds (Ba1, B)
6.500% 02/10/02 ............................. 25 22,344
Yankee Notes (Ba1, B+)
6.500% 05/15/00 ............................. 50 46,938
Fuji Finance (Cayman) Ltd.
Perpetual Sub. Notes(DAGGER)/
(DAGGER)(DAGGER)(DAGGER)
(A3, NR)
6.425% ........................................ 150 136,500
-----------
205,782
-----------
CABLE -- 0.5%
Cablevision Systems Corp.
Sr. Notes (Ba2, BB+)
7.875% 12/15/07 ............................... 80 82,500
Diamond Cable Communications
plc 144A Yankee Sr. Discount
Notes (Caa1, B-)(DAGGER)(DAGGER)/**
10.75% 02/15/07 ............................... 45 30,038
-----------
112,538
-----------
PAR
(000) VALUE
------- -----------
ENERGY -- 0.2%
Cliffs Drilling Co.,
Gtd. Sr. Notes, Series B
(B1, B)
10.250% 05/15/03 .............................. $ 35 $ 38,413
--------
FOOD AND BEVERAGE -- 0.1%
Arisco Productos Alimenticios S.A.
Medium Term Notes (NR, NR)
10.750% 05/22/05 .............................. 20 18,700
--------
FINANCIAL SERVICES -- 1.6%
First Nationwide (Parent)
Holdings, Inc.
144A Sr. Notes (B3, B)**
12.500% 04/15/03 .............................. 260 298,675
Industrial Credit & Investment
Corp. of India
Medium Term Notes
(Baa3, BB+)
7.550% 08/15/07 ............................... 35 31,237
--------
329,912
--------
PAPER & FOREST PRODUCTS -- 0.4%
P. T. Indah Kiat Pulp & Paper Corp.
Sr. Secured Notes (Ba2, BB)
8.875% 11/01/00 ............................... 15 13,200
Repap New Brunswick Corp.
Yankee Sr. Secured Debentures
(Caa1, CC)
10.625% 04/15/05 .............................. 75 73,875
--------
87,075
--------
TELECOMMUNICATIONS -- 1.0%
Cencall Communications Corp.
Sr. Discount Notes
(B2, CCC+)(DAGGER)(DAGGER)
10.125% 01/15/04 .............................. 25 24,250
CS Wireless Systems, Inc.
Sr. Discount Notes (Caa1, NR)(DAGGER)(DAGGER)
11.375% 03/01/06 .............................. 30 6,975
Intelcom Group (U.S.A.), Inc.
Gtd. Sr. Exchangeable Discount
Notes (NR, NR)(DAGGER)(DAGGER)
12.50% 05/01/06 ............................... 60 46,875
Nextel Communications, Inc.
Sr. Discount Notes (B2, CCC+)(DAGGER)(DAGGER)
9.75% 10/31/07 ................................ 70 43,575
Rogers Cantel Inc.
Yankee Sr. Secured Debentures
(Ba3, BB+)(DAGGER)(DAGGER)
9.375% 06/01/08 ............................... 65 69,388
Wireless One, Inc.
Sr. Discount Notes (B3, B-)
(DAGGER)(DAGGER)
13.50% 08/01/06 ............................... 35 5,863
--------
196,926
--------
See Accompanying Notes to Financial Statements.
57
<PAGE>
BEA MUNICIPAL BOND FUND (CONCLUDED)
PAR
(000) VALUE
------- -----------
TRANSPORTATION -- 1.8%
Grupo Transportacion Ferroviaria
Mexicana, S.A. de C.V. 144A
Gtd. Sr. Discount Debentures
(B2, B+)(DAGGER)(DAGGER)
11.75% 06/15/09 ............................... $ 50 $ 32,390
Northwest Airlines, Inc.
Gtd. Notes (Ba2, BB)
7.625% 03/15/05 ............................... 250 249,038
US Air, Inc.
Gtd. Sr. Notes (B3, CCC+)
10.000% 07/01/03 .............................. 85 89,994
----------
371,422
----------
UTILITIES -- 2.4%
Beaver Valley Funding Corp.
Secured Lease Obligation
Bonds (Ba3, BB-)
9.000% 06/01/17 ............................... 180 203,614
Connecticut Light and Power Co.:
First Mortgage Bonds, Series D
(Ba2, BB)
7.875% 10/01/24 ............................. 10 10,438
First and Ref. Mortgage Bonds,
1997 Series C (Ba2, BB)
7.750% 06/01/02 ............................. 30 30,525
Long Island Lighting Co.
Debentures (Ba3, BB+)
9.000% 11/01/22 ............................... 135 152,888
North Atlantic Energy Corp.
Secured First Mortgage Notes,
Series A (B1, B+)
9.050% 06/01/02 ............................... 100 101,250
----------
498,715
----------
TOTAL CORPORATE BONDS
(Cost $1,815,530) ............................. 1,859,483
----------
FOREIGN BONDS -- 0.9%
Republic of Poland Past
Due Interest Bonds
(Baa3, BBB-)
4.000% 10/27/14 ............................... 160 142,600
Republic of Venezuela Global
Bonds (Ba2, B+)
9.250% 09/15/27 ............................... 55 48,125
----------
TOTAL FOREIGN BONDS
(Cost $185,259) ............................... 190,725
----------
U.S. TREASURY OBLIGATIONS -- 4.6%
U.S. TREASURY BONDS -- 4.1%
6.875% 08/15/25 ............................. 750 837,757
----------
U.S. TREASURY NOTES -- 0.5%
7.750% 11/30/99 ............................ 105 108,759
----------
TOTAL U.S. TREASURY
OBLIGATIONS
(Cost $954,993) ............................... 946,516
----------
PAR
(000) VALUE
------- -----------
SHORT TERM INVESTMENTS -- 7.4%
BBH Grand Cayman U. S. Dollar
Time Deposit
5.125% 03/02/98 ............................... $ 1,533 $ 1,533,000
-----------
TOTAL SHORT TERM
INVESTMENTS
(Cost $1,533,000) ............................. 1,533,000
-----------
TOTAL INVESTMENTS -- 99.2%
(Cost $19,054,239) ............................ 20,463,042
-----------
OTHER ASSETS IN EXCESS
OF LIABILITIES -- 0.8% ........................ 156,717
-----------
NET ASSETS (Applicable to
1,367,328 BEA Institutional
Shares) -- 100.0% ............................. $20,619,759
-----------
NET ASSET VALUE,
OFFERING PRICE AND
REDEMPTION PRICE PER
BEA INSTITUTIONAL SHARE
($20,619,759 (DIVIDE) 1,367,328) .............. $15.08
======
* Cost for Federal income tax purposes at February 28, 1998 is $19,056,364.
The gross appreciation (depreciation) on a tax basis is as follows:
Gross Appreciation ..................................... $1,469,496
Gross Depreciation ..................................... (62,818)
----------
Net Appreciation ....................................... $1,406,678
==========
** Certain conditions for public sale may exist.
(DAGGER)Variable rate obligations.
(DAGGER)(DAGGER)Step Bond -- The interest rate as of February 28, 1998 is 0% and
will reset to interest rate shown at a future date.
(DAGGER)(DAGGER)(DAGGER)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 February 28, 1998 and are
unaudited.
INVESTMENT ABBREVIATIONS
GO ......................................................... General Obligations
RB ............................................................... Revenue Bond
SOB ................................................... Special Obligations Bond
AT FEBRUARY 28, 1998, NET ASSETS CONSISTED OF:
AMOUNT
-----------
Capital Paid-In ................................................... $18,977,789
Accumulated Net Investment Income ................................. 42,080
Accumulated Net Realized Gain on
Security and Foreign Exchange Transactions ..................... 134,619
Net Unrealized Appreciation on
Investments and Other .......................................... 1,465,271
- --------------------------------------------------------------------------------
NET ASSETS ........................................................ $20,619,759
- --------------------------------------------------------------------------------
See Accompanying Notes to Financial Statements.
58
<PAGE>
THE BEA FUNDS
OF THE RBB FUND, INC.
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED FEBRUARY 28, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
BEA INTERNATIONAL BEA EMERGING BEA U.S. BEA GLOBAL
EQUITY MARKETS EQUITY CORE EQUITY TELECOMMUNICATIONS
FUND FUND FUND FUND
----------------- -------------- ----------- ------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends ........................................ $ 2,558,274 $ 219,373 $ 513,564 $ 2,633
Interest ......................................... 715,557 121,234 154,029 1,573
Foreign taxes withheld ........................... (321,835) (29,773) -- (134)
------------ ------------ ------------ ------------
Total Investment Income ........................ 2,951,996 310,834 667,593 4,072
------------ ------------ ------------ ------------
EXPENSES
Investment advisory fees ......................... 2,298,953 347,438 351,629 3,480
Administration service fees ...................... 431,054 52,116 70,326 174
Administration fees .............................. 359,211 43,430 58,605 435
Custodian fees ................................... 328,982 206,345 20,063 4,223
Audit fees ....................................... 28,665 4,278 6,141 51
Miscellaneous fees ............................... 10,888 8,288 2,044 1,459
Printing fees .................................... 53,023 7,466 6,715 --
Registration fees ................................ (39,235) 10,050 8,717 7,542
Legal fees ....................................... 7,024 1,142 981 51
Transfer agent fees .............................. 72,302 10,797 10,527 516
Insurance expense ................................ 5,095 1,357 789 51
Directors fees ................................... 5,346 1,057 817 51
Organization expense ............................. 849 3,841 2,576 --
Distribution fees ................................ 1,401 52 -- 870
------------ ------------ ------------ ------------
3,563,558 697,657 539,930 18,903
Less fees waived ................................. (239,975) (176,448) (71,091) (13,160)
------------ ------------ ------------ ------------
Total Expenses ................................. 3,323,583 521,209 468,839 5,743
------------ ------------ ------------ ------------
Net Investment Income (Loss) ........................ (371,587) (210,375) 198,754 (1,671)
------------ ------------ ------------ ------------
Realized and Unrealized Gain (Loss) on
Investments and Foreign Currency
Transactions:
Net realized gain(loss) from:
Security transactions .......................... 41,658,437 (3,479,505) 14,144,702 (8,076)
Foreign exchange transactions .................. (2,382,628) (121,901) -- (2,073)
------------ ------------ ------------ ------------
39,275,809 (3,601,406) 14,144,702 (10,149)
------------ ------------ ------------ ------------
Net unrealized appreciation(depreciation):
Investments .................................... 42,929,810 (2,467,435) 1,311,513 212,038
Translation of assets and
liabilities in foreign currencies ........... 75,684 12,844 -- --
------------ ------------ ------------ ------------
43,005,494 (2,454,591) 1,311,513 212,038
------------ ------------ ------------ ------------
Net Gain (Loss) On Investments And Foreign
Currency Transactions .......................... 82,281,303 (6,055,997) 15,456,215 201,889
------------ ------------ ------------ ------------
Net Increase (Decrease) In Net Assets
Resulting From Operations ...................... $ 81,909,716 $ (6,266,372) $ 15,654,969 $ 200,218
============ ============ ============ ============
</TABLE>
See Accompanying Notes to Financial Statements.
59
<PAGE>
THE BEA FUNDS
OF THE RBB FUND, INC.
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED FEBRUARY 28, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
BEA U.S. CORE BEA STRATEGIC
FIXED INCOME GLOBAL FIXED BEA HIGH BEA MUNICIPAL
FUND INCOME FUND YIELD FUND BOND FUND
------------- ------------- --------------- -------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends ........................................... $ 126,593 $ -- $ 8,566 $ --
Interest ............................................ 5,807,120 1,165,267 4,059,774 579,191
Foreign taxes withheld .............................. -- -- -- --
----------- ----------- ----------- -----------
Total Investment Income ........................... 5,933,713 1,165,267 4,068,340 579,191
----------- ----------- ----------- -----------
EXPENSES
Investment advisory fees ............................ 348,394 97,437 329,528 70,370
Administration service fees ......................... 139,358 29,231 70,613 15,079
Administration fees ................................. 116,131 24,359 58,844 12,566
Custodian fees ...................................... 27,817 23,895 23,622 11,337
Audit fees .......................................... 10,945 2,474 6,679 611
Miscellaneous fees .................................. 8,580 2,336 10,736 3,714
Printing fees ....................................... 7,688 9,440 9,903 3,390
Registration fees ................................... 13,265 3,503 1,432 8,179
Legal fees .......................................... 3,084 643 -- --
Transfer agent fees ................................. 19,576 6,087 13,072 3,626
Insurance expense ................................... 1,671 371 495 20
Directors fees ...................................... 1,592 446 832 97
Organization expense ................................ 2,045 2,675 5,274 3,676
Distribution fees ................................... -- -- 868 --
----------- ----------- ----------- -----------
700,146 202,897 531,898 132,665
Less fees waived .................................... (235,621) (56,741) (201,502) (32,138)
----------- ----------- ----------- -----------
Total Expenses .................................... 464,525 146,156 330,396 100,527
----------- ----------- ----------- -----------
Net Investment Income .................................. 5,469,188 1,019,111 3,737,944 478,664
----------- ----------- ----------- -----------
Realized and Unrealized Gain on Investments
and Foreign Currency Transactions:
Net realized gain(loss) from:
Security transactions ............................. 2,857,866 911,409 1,899,277 163,855
Foreign exchange transactions ..................... (132,221) (1,574,959) -- --
----------- ----------- ----------- -----------
2,725,645 (663,550) 1,899,277 163,855
----------- ----------- ----------- -----------
Net unrealized appreciation:
Investments ....................................... 1,094,602 615,829 2,223,966 317,286
Translation of assets and liabilities
in foreign currencies .......................... 46,978 492,893 -- --
----------- ----------- ----------- -----------
1,141,580 1,108,722 2,223,966 317,286
----------- ----------- ----------- -----------
Net Gain On Investments And Foreign
Currency Transactions ............................... 3,867,225 445,172 4,123,243 481,141
----------- ----------- ----------- -----------
Net Increase In Net Assets Resulting
From Operations ..................................... $ 9,336,413 $ 1,464,283 $ 7,861,187 $ 959,805
=========== =========== =========== ===========
</TABLE>
See Accompanying Notes to Financial Statements.
60
<PAGE>
THE BEA FUNDS
OF THE RBB FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
BEA INTERNATIONAL BEA EMERGING MARKETS
EQUITY FUND EQUITY FUND
--------------------------------- ----------------------------------
FOR THE FOR THE
SIX MONTHS SIX MONTHS
ENDED FOR THE YEAR ENDED FOR THE YEAR
FEBRUARY 28, 1998 ENDED FEBRUARY 28, 1998 ENDED
(UNAUDITED) AUGUST 31, 1997 (UNAUDITED) AUGUST 31, 1997
----------------- --------------- ----------------- ---------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income (loss) .............................. $ (371,587) $ 4,728,247 $ (210,375) $ 994,882
Net gain (loss) on investments and foreign
currency transactions ................................... 82,281,303 93,551,154 (6,055,997) 7,065,927
------------- ------------- ------------- -------------
Net increase (decrease) in net assets
resulting from operations ............................... 81,909,716 98,279,401 (6,266,372) 8,060,809
------------- ------------- ------------- -------------
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) -- (3,905,669) --
BEA Advisor shares ...................................... (167,102) -- (695) --
------------- ------------- ------------- -------------
Total distributions to shareholders .......................... (73,591,727) (8,629,611) (4,639,183) (348,772)
------------- ------------- ------------- -------------
Net capital share transactions ............................... 7,980,153 (203,262,817) (8,046,368) (39,387,274)
------------- ------------- ------------- -------------
Total increase (decrease) in net assets ...................... 16,298,142 (113,613,027) (18,951,923) (31,675,237)
Net Assets:
Beginning of period ....................................... 568,657,774 682,270,801 83,015,972 114,691,209
------------- ------------- ------------- -------------
End of period ............................................. $ 584,955,916 $ 568,657,774 $ 64,064,049 $ 83,015,972
============= ============= ============= =============
</TABLE>
See Accompanying Notes to Financial Statements.
61
<PAGE>
THE BEA FUNDS
OF THE RBB FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
BEA U.S.CORE BEA GLOBAL
EQUITY FUND TELECOMMUNICATIONS FUND
---------------------------------- -------------------------------------
FOR THE FOR THE
SIX MONTHS SIX MONTHS FOR THE
ENDED FOR THE YEAR ENDED PERIOD
FEBRUARY 28, 1998 ENDED FEBRUARY 28, 1998 DECEMBER 4, 1997(1)
(UNAUDITED) AUGUST 31, 1997 (UNAUDITED) TO AUGUST 31, 1997
----------------- --------------- ----------------- ------------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income (loss) ......................... $ 198,754 $ 505,555 $ (1,671) $ 618
Net gain on investments and foreign
currency transactions .............................. 15,456,215 23,232,367 201,889 60,316
------------ ----------- -------- -------
Net increase in net assets
resulting from operations .......................... 15,654,969 23,737,922 200,218 60,934
------------ ----------- -------- -------
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 .......................... 20,458,084 8,716,601 144,244 508,538
------------ ----------- -------- -------
Total increase in net assets ............................ 22,960,671 27,166,307 306,537 569,472
Net Assets:
Beginning of period .................................. 86,181,741 59,015,434 569,472 --
------------ ----------- -------- -------
End of period ........................................ $109,142,412 $86,181,741 $876,009 $69,472
============ =========== ======== =======
<FN>
(1) Commencement of Operations.
</FN>
</TABLE>
See Accompanying Notes to Financial Statements.
62
<PAGE>
THE BEA FUNDS
OF THE RBB FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
BEA U.S. CORE FIXED BEA STRATEGIC GLOBAL
INCOME FUND FIXED INCOME FUND
--------------------------------- ----------------------------------
FOR THE FOR THE
SIX MONTHS SIX MONTHS
ENDED FOR THE YEAR ENDED FOR THE YEAR
FEBRUARY 28, 1998 ENDED FEBRUARY 28, 1998 ENDED
(UNAUDITED) AUGUST 31, 1997 (UNAUDITED) AUGUST 31, 1997
----------------- --------------- ----------------- ---------------
<S> <C> <C> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income ............................... $ 5,469,188 $ 9,002,632 $ 1,019,111 $ 2,209,653
Net gain (loss) on investments and foreign
currency transactions ............................. 3,867,225 6,297,781 445,172 (456,286)
------------ ------------- ----------- -----------
Net increase in net assets
resulting from operations ......................... 9,336,413 15,300,413 1,464,283 1,753,367
------------ ------------- ----------- -----------
Distributions to shareholders:
Dividends to shareholders from net investment
income:
BEA Institutional shares .......................... (5,921,795) (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 .................... (8,704,072) (9,710,784) (2,295,953) (2,573,324)
------------ ------------- ----------- -----------
Net capital share transactions ......................... 18,943,907 53,032,678 (14,054,229) 6,757,858
------------ ------------- ----------- -----------
Total increase (decrease) in net assets ................ 19,576,248 58,622,307 (14,885,899) 5,937,901
Net Assets:
Beginning of period ................................. 177,218,582 118,596,275 44,285,401 38,347,500
------------ ------------- ----------- -----------
End of period ....................................... $196,794,830 $177,218,582 $29,399,502 $44,285,401
============ ============ =========== ===========
</TABLE>
See Accompanying Notes to Financial Statements.
63
<PAGE>
THE BEA FUNDS
OF THE RBB FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
BEA HIGH BEA MUNICIPAL
YIELD FUND BOND FUND
--------------------------------- ----------------------------------
FOR THE FOR THE
SIX MONTHS SIX MONTHS
ENDED FOR THE YEAR ENDED FOR THE YEAR
FEBRUARY 28, 1998 ENDED FEBRUARY 28, 1998 ENDED
(UNAUDITED) AUGUST 31, 1997 (UNAUDITED) AUGUST 31, 1997
----------------- --------------- ----------------- ---------------
<S> <C> <C> <C> <C>
Increase in net assets:
Operations:
Net investment income ............................... $3,737,944 $7,559,270 $478,664 $946,746
Net gain on investments and foreign
currency transactions ............................. 4,123,243 5,031,026 481,141 867,592
------------ ----------- ----------- -----------
Net increase in net assets
resulting from operations ......................... 7,861,187 12,590,296 959,805 1,814,338
------------ ----------- ----------- -----------
Distributions to shareholders:
Dividends to shareholders from net investment
income:
BEA Institutional shares .......................... (4,175,371) (7,131,514) (480,873) (944,821)
BEA Advisor shares ................................ (25,139) (4,682) -- --
Distributions to shareholders from net realized
capital gains:
BEA Institutional shares .......................... -- -- (154,615) (594,155)
BEA Advisor shares ................................ -- -- -- --
Total distributions to shareholders .................... (4,200,510) (7,136,196) (635,488) (1,538,976)
------------ ----------- ----------- -----------
Net capital share transactions ......................... 5,387,545 11,414,154 485,324 (46,498)
------------ ----------- ----------- -----------
Total increase in net assets ........................... 9,048,222 16,868,254 809,641 228,864
Net Assets:
Beginning of period ................................. 92,716,812 75,848,558 19,810,118 19,581,254
------------ ----------- ----------- -----------
End of period ....................................... $101,765,034 $92,716,812 $20,619,759 $19,810,118
============ =========== =========== ===========
</TABLE>
See Accompanying Notes to Financial Statements.
64
<PAGE>
THE BEA FUNDS
OF THE RBB FUND, INC.
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
BEA INTERNATIONAL EQUITY FUND
----------------------------------------------------------------------------------------
FOR THE SIX
MONTHS ENDED FOR THE FOR THE FOR THE FOR THE
FEBRUARY 28, 1998 YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
(UNAUDITED) 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 (loss) .......... (0.02) 0.18 0.19 0.06 0.05
Net gain (loss) on
securities
(realized and
unrealized) ............ 3.23 2.89 1.05 (1.75) 2.60
-------- -------- -------- -------- --------
Total from investment
operations ............. 3.21 3.07 1.24 (1.69) 2.65
-------- -------- -------- -------- --------
Less Dividends and
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 .............. $ 22.50 $ 22.22 $ 19.41 $ 18.24 $ 20.73
======== ======== ======== ======== ========
Total return ................ 15.71%(c) 15.93% 6.81%(d) (8.06)%(d) 14.23%(d)
Ratio/Supplemental Data
Net assets,
end of period (000's) .... $583,493 $568,510 $682,271 $773,255 $767,190
Ratio of expenses to
average net assets ....... 1.16%(a)(b) 1.16%(a) 1.19%(a) 1.25%(a) 1.25%(a)
Ratio of net investment
income (loss)
to average net assets .... (0.13)%(b) 0.71% 0.84% 0.35% 0.33%
Fund turnover rate 64%(c) 126% 86% 78% 104%
Average commission rate(e) . $0.0187 $0.0039 $0.0007 N/A N/A
</TABLE>
<TABLE>
<CAPTION>
BEA INTERNATIONAL EQUITY FUND
------------------------------------------------------------------
FOR THE SIX
FOR THE PERIOD MONTHS ENDED FOR THE PERIOD
OCTOBER 1, 1992* TO FEBRUARY 28, 1998 NOVEMBER 1, 1996* TO
AUGUST 31, 1993 (UNAUDITED) AUGUST 31, 1997
------------------- -------------------- --------------------
INSTITUTIONAL ADVISOR ADVISOR
------------------- -------------------- --------------------
<S> <C> <C> <C>
Net asset value,
beginning of period ....... $ 15.00 $ 22.17 $ 19.67
-------- -------- --------
Income from investment
operations
Net investment
income (loss) ......... 0.04 (0.12) 0.36
Net gain (loss) on
securities
(realized and
unrealized) ........... 3.69 3.29 2.40
-------- -------- --------
Total from investment
operations ............ 3.73 3.17 2.76
-------- -------- --------
Less Dividends and
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 ............. $ 18.73 $22.41 $ 22.17
======== ====== ========
Total return ............... 24.87%(c)(d) 15.55%(c) 14.14%(c)
Ratio/Supplemental Data
Net assets,
end of period (000's) ... $268,404 $1,463 $ 147
Ratio of expenses to
average net assets ...... 1.25%(a)(b) 1.42%(a)(b) 1.43%(a)(b)
Ratio of net investment
income (loss)
to average net assets ... 0.41%(b) (0.41)%(b) 1.15%(b)
Fund turnover rate 106%(c) 64%(c) 126%(c)
Average commission rate(e). N/A $0.0187 $0.0039
<FN>
(a) Without the voluntary waiver of advisory fees and administration fees, the
ratios of expenses to average net assets for the BEA International
Institutional Class would have been 1.24% annualized for the six months
ended February 28, 1998 and 1.25%, 1.22%, 1.26% and 1.30% for the years
ended August 31, 1997, 1996, 1995 and 1994, respectively, and 1.46%
annualized for the period ended August 31, 1993. Without the volunary
waiver of advisory fees and administration fees, the ratios of expenses to
average net assets for the BEA International Advisor Class would have been
1.51% annualized for the six months ended February 28, 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.
(e) Computed by dividing the total amount of brokerage commissions paid by the
total shares of investment securities purchased and sold during the period
for which commissions were charged, as required by the SEC for fiscal years
beginning after September 1, 1995.
* Commencement of operations.
</FN>
</TABLE>
See Accompanying Notes to Financial Statements.
65
<PAGE>
THE BEA FUNDS
OF THE RBB FUND, INC.
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
BEA EMERGING MARKETS EQUITY FUND
-----------------------------------------------------------------------------------------
FOR THE SIX
MONTHS ENDED FOR THE FOR THE FOR THE FOR THE
FEBRUARY 28, 1998 YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
(UNAUDITED) 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) ......... (0.04) 0.21 0.10 0.02 (0.03)
Net gain (loss) on
securities
(realized and
unrealized) ........... (1.78) 1.30 0.48 (5.94) 6.64
------- ------- -------- -------- --------
Total from investment
operations ............ (1.82) 1.51 0.58 (5.92) 6.61
------- ------- -------- -------- --------
Less Dividends and
Distributions
Dividends from net
investment income ..... (0.20) (0.07) (0.05) (0.07) (0.09)
Distributions from
capital gains ......... (1.04) -- -- (0.92) (0.32)
------- ------- -------- -------- --------
Total distributions ..... (1.24) (0.07) (0.05) (0.99) (0.41)
------- ------- -------- -------- --------
Net asset value,
end of period ............. $ 16.58 $ 19.64 $ 18.20 $ 17.67 $ 24.58
======= ======= ======== ======== ========
Total return ................ (9.42)%(c) 8.31% 3.33%(d) (24.42)%(d) 35.99%(d)
Ratio/Supplemental Data
Net assets,
end of period (000's) ... $64,052 $83,012 $114,691 $128,323 $140,675
------- ------- -------- -------- --------
Ratio of expenses to
average net assets ...... 1.50%(a)(b) 1.49%(a) 1.49%(a) 1.50%(a) 1.50%(a)
Ratio of net investment
income (loss)
to average net assets ... (0.61)%(b) 0.99% 0.63% 0.02% (0.02)%
Fund turnover rate 87%(c) 147% 79% 79% 54%
Average commission rate(e). $0.0013 $0.0004 $ 0.0005 N/A N/A
</TABLE>
<TABLE>
<CAPTION>
BEA EMERGING MARKETS EQUITY FUND
-----------------------------------------------------------------
FOR THE SIX
FOR THE PERIOD MONTHS ENDED FOR THE PERIOD
FEBRUARY 1, 1993* TO FEBRUARY 28, 1998 NOVEMBER 1, 1996* TO
AUGUST 31, 1993 (UNAUDITED) AUGUST 31, 1997
---------------- -------------------- --------------------
INSTITUTIONAL ADVISOR ADVISOR
---------------- -------------------- --------------------
<S> <C> <C> <C>
Net asset value,
beginning of period ....... $ 15.00 $ 19.60 $ 18.08
------- ------- -------
Income from investment
operations
Net investment
income (loss) ......... 0.02 (0.06) 0.18
Net gain (loss) on
securities
(realized and
unrealized) ........... 3.36 (1.77) 1.40
------- ------- -------
Total from investment
operations ............ 3.38 (1.83) 1.58
------- ------- -------
Less Dividends and
Distributions
Dividends from net
investment income ..... -- (0.12) (0.06)
Distributions from
capital gains ......... -- (1.04) --
------- ------- -------
Total distributions ..... -- (1.16) (0.06)
------- ------- -------
Net asset value,
end of period ............. $ 18.38 $ 16.61 $ 19.60
======= ======= =======
Total return ................ 22.53%(c)(d) (9.43)%(c) 8.76%(c)
Ratio/Supplemental Data
Net assets,
end of period (000's) ... $21,988 $ 12 $ 4
------- ------- -------
Ratio of expenses to
average net assets ...... 1.50%(a)(b) 1.84%(a)(b) 1.75%(a)(b)
Ratio of net investment
income (loss)
to average net assets ... 0.28%(b) 0.21%(b) 0.88%(b)
Fund turnover rate 38%(c) 87%(c) 147%
Average commission rate(e). N/A $0.0013 $0.0004
<FN>
(a) Without the voluntary waiver of advisory fees and administration fees and
without the reimbursement of operating expenses, the ratios of expenses to
average net assets for the BEA Emerging Markets Institutional Class would
have been 2.01% annualized for the six months ended February 28, 1998 and
1.63%, 1.62%, 1.61% and 2.01% for the years ended August 31, 1997, 1996,
1995 and 1994, respectively, and 3.23% annualized for the period ended
August 31, 1993. Without the voluntary waiver of advisory fees and
administration fees, the ratios of expenses to average net assets for the
BEA Emerging Markets Advisor Class would have been 2.35% annualized for the
six months ended February 28, 1998 and 1.92% annualized for the period
ended August 31, 1997.
(b) Annualized
(c) Not Annualized
(d) Redemption fees not reflected in total return
(e) Computed by dividing the total amount of brokerage commissions paid by the
total shares of investment securities purchased and sold during the period
for which commissions were charged, as required by the SEC for fiscal years
beginning after September 1, 1995.
* Commencement of operations.
</FN>
</TABLE>
See Accompanying Notes to Financial Statements.
66
<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 SIX
MONTHS ENDED FOR THE FOR THE FOR THE PERIOD
FEBRUARY 28, 1998 YEAR ENDED YEAR ENDED SEPTEMBER 1, 1994* TO
(UNAUDITED) 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) ................. 0.06 0.14 0.20 0.22
Net gain on securities
(realized and
unrealized) ............ 3.86 6.82 2.81 2.72
-------- ------- ------- -------
Total from investment
operations ............. 3.92 6.96 3.01 2.94
-------- ------- ------- -------
Less Dividends and
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 .............. $ 24.76 $ 24.40 $ 19.05 $ 17.86
======== ======= ======= =======
Total return .................. 17.57%(c) 38.32% 17.59% 19.75%
Ratio/Supplemental Data
Net assets,
end of period (000's) .. $109,142 $86,182 $59,015 $31,644
Ratio of expenses to
average net assets ..... 1.00%(a)(b) 1.00%(a) 1.00%(a) 1.00%(a)
Ratio of net investment
income (loss) to average
net assets ............. 0.42%(b) 0.67% 1.25% 1.59%
Fund turnover rate ....... 78%(c) 93% 127% 123%
Average commission rate(d) $0.0568 $0.0592 $0.0614 N/A
</TABLE>
BEA GLOBAL
TELECOMMUNICATIONS FUND
------------------------------------------
FOR THE SIX
MONTHS ENDED FOR THE PERIOD
FEBRUARY 28, 1998 DECEMBER 4, 1996* TO
(UNAUDITED) AUGUST 31, 1997
----------------- --------------------
ADVISOR ADVISOR
----------------- --------------------
Net asset value,
beginning of period ........ $ 17.30 $ 15.00
-------- --------
Income from investment
operations
Net investment income
(loss) ................. (0.05) 0.02
Net gain on securities
(realized and
unrealized) ............ 5.35 2.28
-------- --------
Total from investment
operations ............. 5.30 2.30
-------- --------
Less Dividends and
Distributions
Dividends from net
investment income ...... -- --
Distributions from
capital gains .......... (1.04) --
-------- --------
Total distributions ...... (1.04) --
-------- --------
Net asset value,
end of period .............. $ 21.56 $ 17.30
======== ========
Total return .................. 31.61%(c) 15.33%(c)
Ratio/Supplemental Data
Net assets,
end of period (000's) .. $ 876 $ 569
Ratio of expenses to
average net assets ..... 1.65%(a)(b) 1.65%(a)(b)
Ratio of net investment
income (loss) to average
net assets ............. (0.48)%(b) 0.16%(b)
Fund turnover rate ....... 38%(c) 43%(c)
Average commission rate(d) $0.0017 $0.0035
(a) Without the voluntary waiver of advisory fees and administration fees, the
ratios of expenses to average net assets for the BEA U.S. Core Equity Fund
Institutional Class would have been 1.15% annualized for the six months
ended February 28, 1998 and 1.18%, 1.34% and 1.51% for the years ended
August 31, 1997, 1996 and 1995, respectively. Without the waiver of
advisory fees and administration fees and without the reimbursement of
operating expenses, the ratios of expenses to average net assets for the
BEA Global Telecommunications Fund Advisor Class would have been 5.43%
annualized for the six months ended February 28, 1998 and 8.38% annualized
for the period ended August 31, 1997.
(b) Annualized.
(c) Not annualized.
(d) Computed by dividing the total amount of brokerage commissions paid by the
total shares of investment securities purchased and sold during the period
for which commissions were charged, as required by the SEC for fiscal years
beginning after September 1, 1995.
* Commencement of operations.
See Accompanying Notes to Financial Statements.
67
<PAGE>
THE BEA FUNDS
OF THE RBB FUND, INC.
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
BEA U.S. CORE FIXED INCOME FUND
-------------------------------------------------------------------------------------
FOR THE SIX
MONTHS ENDED FOR THE FOR THE FOR THE FOR THE PERIOD
FEBRUARY 28, 1998 YEAR ENDED YEAR ENDED YEAR ENDED APRIL 1, 1994* TO
(UNAUDITED) 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 ............. $ 15.65 $ 15.06 $ 15.42 $ 14.77 $ 15.00
-------- -------- -------- ------- -------
Income from investment
operations
Net investment income ......... 0.45 0.92 0.95 0.88 0.42
Net gain (loss) on securities
(realized and unrealized) ... 0.33 0.76 (0.16) 0.61 (0.40)
-------- -------- -------- ------- -------
Total from investment
operations .................. 0.78 1.68 0.79 1.49 0.02
-------- -------- -------- ------- -------
Less Dividends and
Distributions
Dividends from net
investment income ........... (0.50) (0.97) (0.93) (0.84) (0.25)
Distributions from
capital gains ............... (0.23) (0.12) (0.22) -- --
-------- -------- -------- ------- -------
Total distributions ........... (0.73) (1.09) (1.15) (0.84) (0.25)
-------- -------- -------- ------- -------
Net asset value,
end of period ................... $ 15.70 $ 15.65 $ 15.06 $ 15.42 $ 14.77
======== ======== ======== ======= =======
Total return .................. 5.14%(c) 11.53% 5.23% 10.60% 0.17%(c)
Ratio/Supplemental Data
Net assets,
end of period (000's) ....... $196,795 $177,219 $118,596 $99,250 $30,016
Ratio of expenses to
average net assets .......... 0.50%(a)(b) 0.50%(a) 0.50%(a)(b) 0.50%(a) 0.50%(a)(b)
Ratio of net investment
income to average
net assets .................. 5.89%(b) 6.31% 6.43%(b) 6.47% 6.04%(b)
Fund turnover rate ............ 217%(c) 372% 201% 304% 186%(c)
<FN>
(a) Without the voluntary waiver of advisory fees and administration fees, the
ratios of expenses to average net assets for the BEA U.S. Core Fixed Income
Fund Institutional Class would have been .76% annualized for the six months
ended February 28, 1998 and .78%, .78% and .84% for the years ended August
31, 1997, 1996 and 1995 respectively, and .99% annualized for the period
ended August 31, 1994.
(b) Annualized.
(c) Not annualized.
* Commencement of operations.
</FN>
</TABLE>
See Accompanying Notes to Financial Statements.
68
<PAGE>
THE BEA FUNDS
OF THE RBB FUND, INC.
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
BEA STRATEGIC GLOBAL FIXEDINCOME FUND
-------------------------------------------------------------------------------------
FOR THE SIX
MONTHS ENDED FOR THE FOR THE FOR THE FOR THE PERIOD
FEBRUARY 28, 1998 YEAR ENDED YEAR ENDED YEAR ENDED JUNE 28, 1994* TO
(UNAUDITED) 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 ....... 0.45 0.85 0.87 1.06 0.15
Net gains (losses) on
securities (realized
and unrealized) ........... 0.12 (0.16) 0.58 0.49 (0.15)
------- ------- ------- ------- ------
Total from investment
operations ................ 0.57 0.69 1.45 1.55 --
------- ------- ------- ------- ------
Less Dividends and
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 ................. $ 15.05 $ 15.41 $ 15.75 $ 15.67 $15.00
======= ======= ======= ======= ======
Total return ..................... 3.84%(c) 4.48% 9.65% 10.72% 0.00%(c)
Ratio/Supplemental Data
Net assets,
end of period (000's) ..... $29,400 $44,285 $38,348 $19,565 $6,300
Ratio of expenses to
average net assets ........ 0.75%(a)(b) 0.75%(a) 0.75%(a) 0.75%(a) 0.75%(a)(b)
Ratio of net investment
income (loss)
to average net assets ..... 5.23%(b) 5.31% 7.37% 7.26% 5.64%(b)
Fund turnover rate .......... 172% 98% 87% 91% 0%(c)
<FN>
(a) Without the voluntary waiver of advisory fees and administration fees and
without the reimbursement of operating expenses, the ratios of expenses to
average net assets for the BEA Strategic Global Fixed Income Fund
Institutional Class would have been 1.04% annualized for the six months
ended February 28, 1998 and 0.98%, 1.07% and 1.29% for the years ended
August 31, 1997, 1996 and 1995, respectively and 1.92% annualized for the
period ended August 31, 1994.
(b) Annualized.
(c) Not annualized.
* Commencement of operations.
</FN>
</TABLE>
See Accompanying Notes to Financial Statements.
69
<PAGE>
THE BEA FUNDS
OF THE RBB FUND,INC.
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
BEA HIGH YIELD FUND
----------------------------------------------------------------------------------------------
FOR THE SIX
MONTHS ENDED FOR THE FOR THE FOR THE FOR THE
FEBRUARY 28, 1998 YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
(UNAUDITED) 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 ... 0.69 1.37 1.47 1.42 1.20
Net gains (losses) on
securities (realized
and unrealized) ....... 0.76 0.96 0.40 (0.30) (0.77)
-------- ------- ------- -------- --------
Total from investment ... 1.45 2.33 1.87 1.12 0.43
-------- ------- ------- -------- --------
Less Dividends and
Distributions
Dividends from net
investment income ..... (0.79) (1.34) (1.50) (1.34) (1.43)
Distributions from
capital gains ......... -- -- -- -- --
-------- ------- ------- -------- --------
Total distributions ..... (0.79) (1.34) (1.50) (1.34) (1.43)
-------- ------- ------- -------- --------
Net asset value,
end of period ............. $ 17.74 $ 17.08 $ 16.09 $ 15.72 $ 15.94
======== ======= ======= ======== ========
Total return ................ 8.75%(c) 15.17% 12.42% 7.79%(d) 2.24%(d)
Ratio/Supplemental Data
Net assets,
end of period (000's) . $100,498 $92,630 $75,849 $153,621 $143,517
Ratio of expenses to
average net assets .... 0.70%(a)(b) 0.70%(a) 0.88%(a) 1.00%(a) 1.00%(a)
Ratio of net investment
income (loss)
to average net assets . 7.94%(b) 8.44% 8.92% 9.37% 7.73%
Fund turnover rate ...... 47%(c) 84% 143% 70% 121%
</TABLE>
<TABLE>
<CAPTION>
BEA HIGH YIELD FUND
------------------------------------------------------------
FOR THE SIX
FOR THE PERIOD MONTHS ENDED FOR THE PERIOD
MARCH 31, 1993* TO FEBRUARY 28, 1998 NOVEMBER 1, 1996* TO
AUGUST 31, 1993 (UNAUDITED) AUGUST 31, 1997
------------------ ----------------- --------------------
INSTITUTIONAL ADVISOR ADVISOR
------------------ ----------------- --------------------
<S> <C> <C> <C>
Net asset value,
beginning of period ....... $ 15.00 $17.08 $ 16.21
------- ------ -------
Income from investment
operations
Net investment income ... 0.52 0.79 0.93
Net gains (losses) on
securities (realized
and unrealized) ....... 1.42 0.62 0.87
------- ------ ------
Total from investment ... 1.94 1.41 1.80
------- ------ ------
Less Dividends and
Distributions
Dividends from net
investment income ..... -- (0.75) (0.93)
Distributions from
capital gains ......... -- -- --
------- ------ -------
Total distributions ..... -- (0.75) (0.93)
------- ------ -------
Net asset value,
end of period ............. $ 16.94 $17.74 $ 17.08
======= ====== =======
Total return ................ 12.93%(c)(d) 8.51%(c) 11.49%(c)
Ratio/Supplemental Data
Net assets,
end of period (000's) . $98,357 $1,267 $ 86
Ratio of expenses to
average net assets .... 1.00%(a)(b) 0.96%(a)(b) 0.96%(a)(b)
Ratio of net investment
income (loss)
to average net assets . 7.56%(b) 7.86%(b) 8.13%(b)
Fund turnover rate ...... 72%(c) 47%(c) 84%(c)
<FN>
(a) Without the voluntary waiver of advisory fees and administration fees, the
ratios of expenses to average net assets for the BEA High Yield Fund
Institutional Class would have been 1.13% annualized for the six months
ended February 28, 1998 and 1.13%, 1.11%, 1.08% and 1.13% for the years
ended August 31, 1997, 1996, 1995 and 1994, respectively and 1.17%
annualized for the period ended August 31, 1993. Without the voluntary
waiver of advisory fees and administration fees, the ratios of expenses to
average net assets for the BEA High Yield Fund Advisor Class would have
been 1.39% annualized for the six months ended February 28, 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.
</FN>
</TABLE>
See Accompanying Notes to Financial Statements.
70
<PAGE>
THE BEA FUNDS
OF THE RBB FUND, INC.
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
BEA MUNICIPAL BOND FUND
-------------------------------------------------------------------------------------
FOR THE SIX
MONTHS ENDED FOR THE FOR THE FOR THE FOR THE PERIOD
FEBRUARY 28, 1998 YEAR ENDED YEAR ENDED YEAR ENDED JUNE 20, 1994* TO
(UNAUDITED) 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 .......... 0.35 0.72 0.73 0.71 0.09
Net gains (losses) on
securities (realized
and unrealized) .............. 0.36 0.65 (0.37) 0.50 (0.03)
------- ------- ------- ------- -------
Total from investment
operations ................... 0.71 1.37 0.36 1.21 0.06
------- ------- ------- ------- -------
Less Dividends and
Distributions
Dividends from net
investment income ............ (0.36) (0.72) (0.74) (0.76) --
Distributions from
capital gains ................ (0.11) (0.46) (0.43) (0.05) --
------- ------- ------- ------- -------
Total distributions ............ (0.47) (1.18) (1.17) (0.81) --
------- ------- ------- ------- -------
Net asset value,
end of period .................... $ 15.08 $ 14.84 $ 14.65 $ 15.46 $ 15.06
======= ======= ======= ======= =======
Total return ........................ 4.86%(c) 9.74% 2.27% 8.42% 0.40%(c)
Ratio/Supplemental Data
Net assets,
end of period (000's) ........ $20,620 $19,810 $19,581 $48,978 $42,310
Ratio of expenses to
average net assets ........... 1.00%(a)(b) 1.00%(a) 1.00%(a) 1.00%(a) 1.00%(a)(b)
Ratio of net investment
income (loss) to average
net assets ................... 4.76%(b) 4.88% 4.62% 4.76% 3.27%(b)
Fund turnover rate ............. 25%(c) 43% 34% 25% 9%(c)
<FN>
(a) Without the voluntary waiver of advisory fees and administration fees, the
ratios of expenses to average net assets for the Municipal Bond Fund
Institutional Class would have been 1.32% annualized for the six months
ended February 28, 1998 and 1.37%, 1.42% and 1.19% for the years ended
August 31, 1997, 1996 and 1995 respectively, and 1.34% annualized for the
period ended August 31, 1994.
(b) Annualized.
(c) Not annualized.
* Commencement of operations.
</FN>
</TABLE>
See Accompanying Notes to Financial Statements.
71
<PAGE>
THE BEA FUNDS
OF THE RBB FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
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-three investment Portfolios, eight of which are included in these
financial statements.
The Fund has authorized capital of thirty billion shares of common stock of
which 14.03 billion are currently classified into eighty-three classes. Each
class represents an interest in one of twenty-three investment portfolios of
RBB. The classes have been grouped into fifteen separate "families", eight of
which have begun investment operations. The BEA Family represents interests in
eight Funds which are covered by this report.
A) SECURITY VALUATION -- Fund securities for which market
quotations are readily available are valued at market value, which is
currently determined using the last reported sales price. If no sales are
reported, as in the case of some securities traded over-the-counter, Fund
securities are valued at the mean between the last reported bid and asked
prices. All other securities and assets are valued as determined in good
faith by the Board of Directors. Short-term obligations with maturities of
60 days or less are valued at amortized cost which approximates market
value.
B) FOREIGN CURRENCY TRANSACTIONS -- Transactions denominated in
foreign currencies are recorded in the Fund's records at the current
prevailing exchange rates. Asset and liability accounts that are
denominated in a foreign currency are adjusted daily to reflect current
exchange rates. Transaction gains or losses resulting from changes in
exchange rates during the reporting period or upon settlement of the
foreign currency transaction are reported in operations for the current
period. It is not practical to isolate that portion of both realized and
unrealized gains and losses on investments in the statement of operations
that result from fluctuations in foreign currency exchange rates. The Fund
reports certain foreign currency related transactions as components of
realized gains for financial reporting purposes, whereas such components
are treated as ordinary income (loss) for Federal income tax purposes.
C) SECURITY TRANSACTIONS AND INVESTMENT INCOME -- Security
transactions are accounted for on the trade date. The cost of investments
sold is determined by use of the specific identification method for both
financial reporting and income tax purposes. Interest income is recorded on
the accrual basis. Dividends are recorded on the ex-dividend date. Certain
expenses, principally transfer agent and printing, are class specific
expenses and vary by class. Expenses not directly attributable to a
specific Fund or class are allocated based on relative net assets of each
Fund and class, respectively.
D) DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- Dividends from
net investment income and net realized capital gains will be declared and
paid at least annually. The character of distributions made during the year
for net investment income or net realized gains may differ from their
ultimate characterization for federal income tax purposes due to GAAP/tax
differences in the character of income and expense recognition. These
differences are primarily due to differing treatments for net operating
losses, mortgage-backed securities, passive foreign investment companies,
and forward foreign currency contracts.
E) FEDERAL INCOME TAXES -- No provision is made for Federal taxes
as it is the Fund's intention to have each Fund qualify for and elect the
tax treatment applicable to regulated investment companies under the
Internal Revenue Code and make the requisite distributions to its
shareholders which will be sufficient to relieve it from Federal income and
excise taxes.
F) USE OF ESTIMATES -- The preparation of financial statements in
conformity with generally accepted accounting principals requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
G) OTHER -- Securities denominated in currencies other than U.S.
dollars are subject to changes in value due to fluctuations in exchange
rates.
72
<PAGE>
THE BEA FUNDS
OF THE RBB FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Some countries in which the Funds invest require governmental approval for
the repatriation of investment income, capital or the proceeds of sales of
securities by foreign investors. In addition, if there is a deterioration in a
country's balance of payments or for other reasons, a country may impose
temporary restrictions on foreign capital remittances abroad.
The securities exchanges of certain foreign markets are substantially
smaller, less liquid and more volatile than the major securities markets in the
United States. Consequently, acquisition and disposition of securities by the
Funds may be inhibited. In addition, a significant proportion of the aggregate
market value of equity securities listed on the major securities exchanges in
emerging markets are held by a smaller number of investors. This may limit the
number of shares available for acquisition or disposition by the Fund.
Lower-rated debt securities (commonly known as "junk bonds") possess
speculative characteristics and are subject to greater market fluctuations and
risk of lost income and principal than higher-rated debt securities for a
variety of reasons. Also, during an economic downturn or substantial period of
rising interest rates, highly leveraged issuers may experience financial stress
which would adversely affect their ability to service their principal and
interest payment obligations, to meet projected business goals and to obtain
additional financing.
In addition, periods of economic uncertainty and changes can be expected to
result in increased volatility of market prices of lower-rated debt securities
and a Fund's net asset value.
NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
Pursuant to Investment Advisory Agreements, BEA Associates ("BEA"), an
indirect, wholly-owned subsidiary of Credit Suisse Group, serves as investment
advisor for each of the eight Funds described herein.
For its advisory services, BEA is entitled to receive the following fees,
computed daily and payable quarterly on a Fund's average daily net assets:
FUND ANNUAL RATE
-------------------------------------- ---------------------------------
BEA International Equity Fund 0.80% of average daily net assets
BEA Emerging Markets Equity Fund 1.00% of average daily net assets
BEA U.S. Core Equity Fund 0.75% of average daily net assets
BEA Global Telecommunications Fund 1.00% of average daily net assets
BEA U.S. Core Fixed Income Fund 0.375% of average daily net assets
BEA Strategic Global Fixed Income Fund 0.50% of average daily net assets
BEA High Yield Fund 0.70% of average daily net assets
BEA Municipal Bond Fund 0.70% of average daily net assets
BEA may, at its discretion, voluntarily waive all or any portion of its
advisory fee for any of the Funds. For the six months ended February 28, 1998,
advisory fees and waivers for each of the eight investment Funds were as
follows:
GROSS NET
ADVISORY FEE WAIVER ADVISORY FEE
------------ --------- ------------
BEA International Equity Fund $ 2,298,953 $ (2,866) $ 2,296,087
BEA Emerging Markets Equity Fund 347,438 (134,755) 212,683
BEA U.S. Core Equity Fund 351,629 (5,454) 346,175
BEA Global Telecommunications Fund 3,480 (3,480) --
BEA U.S. Core Fixed Income Fund 348,394 (105,554) 242,840
BEA Strategic Global Fixed Income Fund 97,437 (24,587) 72,850
BEA High Yield Fund 329,528 (123,829) 205,699
BEA Municipal Bond Fund Fund 70,370 (18,064) 52,306
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.
73
<PAGE>
THE BEA FUNDS
OF THE RBB FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (CONTINUED)
PFPC Inc. ("PFPC"), an indirect, wholly-owned subsidiary of PNC Bank Corp.,
serves as administrator for each of the eight Funds. PFPC's administration fee
is computed daily and payable quarterly at an annual rate of .125% of each
Fund's average daily net assets. PFPC may, at its discretion, voluntarily waive
all or any portion of its administration fee for any of the Funds. For the six
months ended February 28, 1998, administration fees for each of the eight
investment Funds were as follows:
<TABLE>
<CAPTION>
GROSS NET
ADMINISTRATION FEE WAIVER ADMINISTRATION FEE
------------------ --------- ------------------
<S> <C> <C> <C>
BEA International Equity Fund $359,211 $ (7,213) $351,998
BEA Emerging Markets Equity Fund 43,430 -- 43,430
BEA U.S. Core Equity Fund 58,605 -- 58,605
BEA Global Telecommunications Fund 435 (435) --
BEA U.S. Core Fixed Income Fund 116,131 -- 116,131
BEA Strategic Global Fixed Income Fund 24,359 (4,872) 19,487
BEA High Yield Fund 58,844 (11,769) 47,075
BEA Municipal Bond Fund 12,566 -- 12,566
</TABLE>
Counsellors Funds Service, Inc. ("Counsellors Service"), a wholly-owned
subsidiary of Counsellors Securities Inc., serves as administrative services
agent. An administrative service fee is computed daily and payable quarterly at
an annual rate of .15% of each Fund's average daily net assets.
<TABLE>
<CAPTION>
GROSS ADMINISTRATIVE NET ADMINISTRATIVE
SERVICES FEE WAIVER SERVICES FEE
-------------------- ---------- ------------------
<S> <C> <C> <C>
BEA International Equity Fund $431,054 $(229,896) $201,158
BEA Emerging Markets Equity Fund 52,116 (41,693) 10,423
BEA U.S. Core Equity Fund 70,326 (65,637) 4,689
BEA Global Telecommunications Fund 174 (174) --
BEA U.S. Core Fixed Income Fund 139,358 (130,067) 9,291
BEA Strategic Global Fixed Income Fund 29,231 (27,282) 1,949
BEA High Yield Fund 70,613 (65,904) 4,709
BEA Municipal Bond Fund 15,079 (14,074) 1,005
</TABLE>
The BEA International Equity Fund, BEA Emerging Markets Fund, BEA Global
Telecommunications Fund, and the BEA High Yield Fund have each entered into
Distribution Agreements with Counsellors Securities pursuant to their
Distribution Plans under Rule 12b-1 of the 1940 Act. In consideration of
services, the Distribution agreement provides that the Funds will each pay
Counsellors Securities 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.
NOTE 3. PURCHASES AND SALES OF SECURITIES
For the six months ended February 28, 1998, purchases and sales of
investment securities (other than short-term investments) were as follows:
<TABLE>
<CAPTION>
INVESTMENT SECURITIES U.S.GOVERNMENT OBLIGATIONS
---------------------------- ----------------------------
PURCHASES SALES PURCHASES SALES
------------ ------------ ------------ -----------
<S> <C> <C> <C> <C>
BEA International Equity Fund $352,237,219 $408,835,059 $ -- $ --
BEA Emerging Markets Equity Fund 57,215,994 66,537,299 -- --
BEA U.S. Core Equity Fund 79,664,948 69,197,756 -- --
BEA Global Telecommunications Fund 352,587 249,574 -- --
BEA U.S. Core Fixed Income Fund 95,597,566 63,706,805 327,061,940 327,411,351
BEA Strategic Global Fixed Income Fund 30,273,871 26,863,515 37,448,374 51,219,977
BEA High Yield Fund 47,730,556 43,740,725 -- --
BEA Municipal Bond Fund Fund 4,900,976 5,239,620 1,965,670 2,070,638
</TABLE>
74
<PAGE>
THE BEA FUNDS
OF THE RBB FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 4. CAPITAL SHARES
Transactions in capital shares for each period were as follows:
<TABLE>
<CAPTION>
BEA INTERNATIONAL EQUITY FUND
-----------------------------------------------------------------------------------------------------------
FOR THE FOR THE
SIX MONTHS ENDED SIX MONTHS ENDED FOR THE PERIOD
FEBRUARY 28, 1998 FOR THE YEAR ENDED FEBRUARY 28, 1998 NOVEMBER 1, 1996*
(UNAUDITED) AUGUST 31, 1997 (UNAUDITED) THROUGH AUGUST 31, 1997
------------------------ --------------------------- ------------------------- -----------------------
INSTITUTIONAL INSTITUTIONAL ADVISOR ADVISOR
------------------------ --------------------------- ------------------------- -----------------------
SHARES VALUE SHARES VALUE SHARES VALUE SHARES VALUE
---------- ------------ ----------- ------------- ------------ ----------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold 1,251,812 $ 28,225,465 2,106,657 $ 43,959,322 166,533 $ 3,877,330 7,020 $142,126
Shares issued in
reinvestment of
dividends 3,354,933 68,910,317 407,411 8,213,395 8,163 167,087 2 33
Shares repurchased, net
of redemption fees (4,265,194) (90,520,903) (12,069,824) (255,570,149) (116,086) (2,679,143) (375) (7,544
---------- ------------ ----------- ------------- ---------- ----------- ----------- --------
Net increase (decrease) 341,551 $ 6,614,879 (9,555,756) $(203,397,432) 58,610 $ 1,365,274 6,647 $134,615
========== ============ =========== ============= =========== =========== =========== ========
BEA Shares Authorized 500,000,000 500,000,000 100,000,000 100,000,000
=========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
BEA EMERGING MARKETS EQUITY FUND
-----------------------------------------------------------------------------------------------------------
FOR THE FOR THE
SIX MONTHS ENDED SIX MONTHS ENDED FOR THE PERIOD
FEBRUARY 28, 1998 FOR THE YEAR ENDED FEBRUARY 28, 1998 NOVEMBER 1, 1996*
(UNAUDITED) AUGUST 31, 1997 (UNAUDITED) THROUGH AUGUST 31, 1997
------------------------ --------------------------- ------------------------- -----------------------
INSTITUTIONAL INSTITUTIONAL ADVISOR ADVISOR
------------------------ --------------------------- ------------------------- -----------------------
SHARES VALUE SHARES VALUE SHARES VALUE SHARES VALUE
---------- ------------ ----------- ------------- ------------ ----------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold 94,831 $ 1,648,055 300,734 $ 6,118,794 27,237 $ 475,567 580 $ 6,252
Shares issued in
reinvestment of
dividends 245,801 4,154,033 11,536 216,755 46 775 -- 9
Shares repurchased, net
of redemption fees (704,407) (13,843,816) (2,385,604) (45,726,259) (26,751) (480,982) (397) (2,825)
---------- ------------ ----------- ------------- ----------- ----------- ----------- -------
Net increase (decrease) (363,775) $ (8,041,728) (2,073,334) $ (39,390,710) 532 $ (4,640) 183 $ 3,436
========== ============ =========== ============= =========== =========== =========== =======
BEA Shares Authorized 500,000,000 500,000,000 100,000,000 100,000,000
=========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
BEA U.S. CORE EQUITY FUND BEA GLOBAL TELECOMMUNICATIONS FUND
----------------------------------------------------- ---------------------------------------------------
FOR THE FOR THE
SIX MONTHS ENDED SIX MONTHS ENDED FOR THE PERIOD
FEBRUARY 28, 1998 FOR THE YEAR ENDED FEBRUARY 28, 1998 DECEMBER 4, 1996*
(UNAUDITED) AUGUST 31, 1997 (UNAUDITED) THROUGH AUGUST 31, 1997
------------------------ --------------------------- ------------------------- -----------------------
INSTITUTIONAL INSTITUTIONAL ADVISOR ADVISOR
------------------------ --------------------------- ------------------------- -----------------------
SHARES VALUE SHARES VALUE SHARES VALUE SHARES VALUE
---------- ------------ ----------- ------------- ------------ ----------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold 508,449 $12,495,791 629,948 $ 13,787,909 5,697 $106,975 35,439 $550,787
Shares issued in
reinvestment of
dividends 568,713 12,778,985 247,726 4,994,154 2,037 37,921 -- --
Shares repurchased, net
of redemption fees (201,257) (4,816,692) (443,835) (10,065,462) (34) (652) (2,513) (42,249)
---------- ------------ ----------- ------------- ----------- -------- ----------- --------
Net increase 875,905 $ 20,458,084 433,839 $ 8,716,601 7,700 $144,244 32,926 $508,538
========== ============ =========== ============= =========== ======== =========== ========
BEA Shares Authorized 50,000,000 50,000,000 100,000,000 100,000,000
=========== =========== =========== ===========
</TABLE>
*Commencement of operations.
75
<PAGE>
THE BEA FUNDS
OF THE RBB FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 4. CAPITAL SHARES (CONTINUED)
<TABLE>
<CAPTION>
BEA U.S. CORE FIXED INCOME FUND BEA STRATEGIC GLOBAL FIXED INCOME FUND
----------------------------------------------------- ---------------------------------------------------
FOR THE FOR THE
SIX MONTHS ENDED SIX MONTHS ENDED
FEBRUARY 28, 1998 FOR THE YEAR ENDED FEBRUARY 28, 1998 FOR THE YEAR ENDED
(UNAUDITED) AUGUST 31, 1997 (UNAUDITED) AUGUST 31, 1997
------------------------ --------------------------- ------------------------- -----------------------
INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL
------------------------ --------------------------- ------------------------- -----------------------
SHARES VALUE SHARES VALUE SHARES VALUE SHARES VALUE
---------- ------------ ----------- ------------- ------------ ----------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold 1,493,111 $ 23,500,949 3,766,133 $ 57,992,720 170,786 $ 2,655,510 583,542 $ 9,015,150
Shares issued in
reinvestment of
dividends 557,633 8,608,997 635,274 9,648,554 147,509 2,200,318 155,630 2,420,275
Shares repurchased, net
of redemption fees (840,842) (13,166,039) (953,578) (14,608,596) (1,238,439) (18,910,057) (300,343) (4,677,567)
---------- ------------ ----------- ------------- ---------- ------------ ----------- -----------
Net increase (decrease) 1,209,902 $ 18,943,907 3,447,829 $ 53,032,678 (920,144) $(14,054,229) 438,829 $ 6,757,858
========== ============ =========== ============= =========== ============ =========== ===========
BEA Shares Authorized 50,000,000 50,000,000 50,000,000 50,000,000
=========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
BEA HIGH YIELD FUND
-----------------------------------------------------------------------------------------------------------
FOR THE FOR THE
SIX MONTHS ENDED SIX MONTHS ENDED FOR THE PERIOD
FEBRUARY 28, 1998 FOR THE YEAR ENDED FEBRUARY 28, 1998 NOVEMBER 1, 1996*
(UNAUDITED) AUGUST 31, 1997 (UNAUDITED) THROUGH AUGUST 31, 1997
------------------------ --------------------------- ------------------------- -----------------------
INSTITUTIONAL INSTITUTIONAL ADVISOR ADVISOR
------------------------ --------------------------- ------------------------- -----------------------
SHARES VALUE SHARES VALUE SHARES VALUE SHARES VALUE
---------- ------------ ----------- ------------- ------------ ----------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold 1,640,247 $ 28,232,602 1,921,993 $ 31,537,039 66,825 $1,157,674 5,206 $85,650
Shares issued in
reinvestment of
dividends 238,728 4,058,869 425,311 6,905,890 1,256 21,472 9 148
Shares repurchased, net
of redemption fees (1,636,106) (28,053,452) (1,638,080) (27,112,004) (1,700) (29,620) (158) (2,569)
---------- ------------ ----------- ------------- ---------- ---------- ----------- -------
Net increase (decrease) 242,869 $ 4,238,019 709,224 $ 11,330,925 66,381 $1,149,526 5,057 $83,229
========== ============ =========== ============= =========== ========== =========== =======
BEA Shares Authorized 500,000,000 500,000,000 100,000,000 100,000,000
=========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
BEA MUNICIPAL BOND FUND
--------------------------------------------------------
FOR THE SIX MONTHS ENDED
FEBRUARY 28, 1998 FOR THE YEAR ENDED
(UNAUDITED) AUGUST 31, 1997
------------------------- ---------------------------
INSTITUTIONAL INSTITUTIONAL
------------------------- ---------------------------
SHARES VALUE SHARES VALUE
---------- --------- ---------- -----------
<S> <C> <C> <C> <C>
Shares sold 130 $ 1,962 7,719 $ 111,603
Shares issued in
reinvestment of
dividends 40,117 601,355 101,853 1,488,998
Shares repurchased, net
of redemption fees (7,858) (117,993) (111,453) (1,647,099)
---------- --------- ---------- -----------
Net increase (decrease) 32,389 $ 485,324 (1,881) $ (46,498)
========== ========= ========== ===========
BEA Shares Authorized 50,000,000 50,000,000
========== ==========
<FN>
* Commencement of operations.
</FN>
</TABLE>
76
<PAGE>
THE BEA FUNDS
OF THE RBB FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 4. CAPITAL SHARES (CONTINUED)
On February 28,1998, four shareholders held approximately 24% of the
outstanding shares of the BEA International Equity Institutional Class, three
shareholders held approximately 86% of the outstanding shares of the BEA
Emerging Markets Institutional Class, five shareholders held approximately 78%
of the outstanding shares of the BEA U.S. Core Equity Institutional Class, three
shareholders held approximately 74% of the outstanding shares of the BEA Global
Telecommunications Advisor Class, six shareholders held approximately 59% of the
outstanding shares of the BEA U.S. Core Fixed Income Institutional Class, two
shareholders held approximately 87% of the outstanding shares of the BEA
Strategic Global Fixed Income Institutional Class, five shareholders held
approximately 55% of the outstanding shares of the BEA High Yield Institutional
Class, and four shareholders held approximately 64% of the outstanding shares of
the BEA Municipal Bond Institutional Class.
NOTE 5. RESTRICTED SECURITIES
Certain of the BEA International Equity Fund's investments are restricted
as to resale and are valued at the direction of the Fund's Board of Directors in
good faith, at fair value, after taking into consideration appropriate
indications of value available. The table below shows the number of shares held,
the acquisition date, value as of February 28, 1998, percentage of net assets
which the securities comprise, aggregate cost and unit value of the securities.
<TABLE>
<CAPTION>
NUMBER OF ACQUISITION 02/28/98 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 1,198,737 0.2% 6,000,000 1.998
---------- ----------
$2,788,962 $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 six months ended February 28, 1998, the
BEA Strategic Global Fixed Income Fund and the BEA U.S. Core Fixed Income Fund
entered into forward foreign currency contracts.
77
<PAGE>
THE BEA FUNDS
OF THE RBB FUND, INC.
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
(UNAUDITED)
The BEA Strategic Global Fixed Income Fund's open Forward Foreign Currency
Contracts at February 28, 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>
Australian Dollars 03/12/98 600,000 $ 395,040 $ 408,438 $(13,398)
Canadian Dollars 03/12/98 2,500,000 1,742,768 1,757,000 (14,232)
German Deutschemarks 03/12/98 508,837 280,505 280,589 (84)
German Deutschemarks 03/12/98 1,000,000 548,700 551,432 (2,732)
German Deutschemarks 03/12/98 914,910 500,000 504,511 (4,511)
Italian Lira 03/12/98 988,535,890 569,595 552,458 17,137
Japanese Yen 03/12/98 196,110,000 1,500,000 1,557,062 (57,062)
Spanish Pesetas 03/12/98 308,580,000 2,000,000 2,005,459 (5,459)
Swedish Krona 03/12/98 1,866,173 241,420 233,236 8,184
---------- ---------- --------
$7,778,028 $7,850,185 $(72,157)
========== ========== ========
</TABLE>
<TABLE>
<CAPTION>
FOREIGN UNREALIZED
FORWARD CURRENCY EXPIRATION CURRENCY CONTRACT CONTRACT FOREIGN EXCHANGE
CONTRACT DATE TO BE PURCHASED AMOUNT VALUE GAIN/(LOSS)
--------------------- ---------- --------------- ----------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
Canadian Dollars 03/12/98 2,591,082 $ 1,829,861 $ 1,821,012 $ (8,849)
German Deutschemarks 03/12/98 1,363,425 750,000 751,836 1,836
German Deutschemarks 03/12/98 1,982,798 1,125,950 1,093,378 (32,572)
German Deutschemarks 03/12/98 2,240,625 1,250,000 1,235,552 (14,448)
Italian Lira 03/12/98 1,075,020,000 600,001 600,791 790
Japanese Yen 03/12/98 68,780,000 548,700 546,095 (2,605)
Japanese Yen 03/12/98 92,077,500 750,000 731,071 (18,929)
Japanese Yen 03/12/98 99,259,846 777,289 788,097 10,808
Japanese Yen 03/12/98 125,275,000 1,000,000 994,651 (5,349)
Japanese Yen 03/12/98 154,191,041 1,187,912 1,224,236 36,324
Netherlands Guilder 03/12/98 802,365 395,040 392,391 (2,649)
Spanish Peseta 03/12/98 337,760,000 2,262,291 2,195,101 (67,190)
Swedish Krona 03/12/98 3,203,400 400,000 400,363 363
Swiss Francs 03/12/98 728,150 500,000 497,384 (2,616)
----------- ----------- ---------
$13,377,044 $13,271,958 $(105,086)
=========== =========== =========
</TABLE>
The BEA U.S. Core Fixed Income Fund's open Forward Foreign Currency
Contracts at February 28, 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 03/12/98 7,113,525 $3,991,754 $3,905,505 $ 86,249
Great Britain Pounds 03/12/98 2,396,723 3,904,262 3,943,568 (39,306)
---------- ---------- --------
$7,896,016 $7,849,073 $ 46,943
========== ========== ========
</TABLE>
78
<PAGE>
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79
<PAGE>
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80
