-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FELbYWRcIs0AYbVRhhX8oiNIXcVLzI0Ofutr0P+ubQQmBW4UNy6uSAyWcObFg0Ul bf4v2T9UukJV/YhX4xhtYw== 0000935069-98-000080.txt : 19980507 0000935069-98-000080.hdr.sgml : 19980507 ACCESSION NUMBER: 0000935069-98-000080 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980228 FILED AS OF DATE: 19980506 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: RBB FUND INC CENTRAL INDEX KEY: 0000831114 STANDARD INDUSTRIAL CLASSIFICATION: [] FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-05518 FILM NUMBER: 98611721 BUSINESS ADDRESS: STREET 1: 400 BELLEVUE PKWY STE 100 CITY: WILMINGTON STATE: DE ZIP: 19809 BUSINESS PHONE: 3027911791 MAIL ADDRESS: STREET 1: 103 BELLEVUE PKWY STREET 2: SUITE 152 CITY: WILMINGTON STATE: DE ZIP: 19809 FORMER COMPANY: FORMER CONFORMED NAME: FUND INC /DE/ DATE OF NAME CHANGE: 19600201 N-30D 1 BEA SEMI-ANNUAL REPORT 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 THE BEA FUNDS OF THE RBB FUND, INC. STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED FEBRUARY 28, 1998 (UNAUDITED)
BEA INTERNATIONAL BEA EMERGING BEA U.S. BEA GLOBAL EQUITY MARKETS EQUITY CORE EQUITY TELECOMMUNICATIONS FUND FUND FUND FUND ----------------- -------------- ----------- ------------------ 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 ============ ============ ============ ============
See Accompanying Notes to Financial Statements. 59 THE BEA FUNDS OF THE RBB FUND, INC. STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED FEBRUARY 28, 1998 (UNAUDITED)
BEA U.S. CORE BEA STRATEGIC FIXED INCOME GLOBAL FIXED BEA HIGH BEA MUNICIPAL FUND INCOME FUND YIELD FUND BOND FUND ------------- ------------- --------------- ------------- 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 =========== =========== =========== ===========
See Accompanying Notes to Financial Statements. 60 THE BEA FUNDS OF THE RBB FUND, INC. STATEMENTS OF CHANGES IN NET ASSETS
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 ----------------- --------------- ----------------- --------------- 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 ============= ============= ============= =============
See Accompanying Notes to Financial Statements. 61 THE BEA FUNDS OF THE RBB FUND, INC. STATEMENTS OF CHANGES IN NET ASSETS
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 ----------------- --------------- ----------------- ------------------ 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 ============ =========== ======== ======= (1) Commencement of Operations.
See Accompanying Notes to Financial Statements. 62 THE BEA FUNDS OF THE RBB FUND, INC. STATEMENTS OF CHANGES IN NET ASSETS
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 ----------------- --------------- ----------------- --------------- 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 ============ ============ =========== ===========
See Accompanying Notes to Financial Statements. 63 THE BEA FUNDS OF THE RBB FUND, INC. STATEMENTS OF CHANGES IN NET ASSETS
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 ----------------- --------------- ----------------- --------------- 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 ============ =========== =========== ===========
See Accompanying Notes to Financial Statements. 64 THE BEA FUNDS OF THE RBB FUND, INC. FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
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 ----------------- --------------- --------------- --------------- --------------- 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
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 ------------------- -------------------- -------------------- 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 (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.
See Accompanying Notes to Financial Statements. 65 THE BEA FUNDS OF THE RBB FUND, INC. FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
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 ----------------- --------------- --------------- --------------- --------------- 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
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 ---------------- -------------------- -------------------- 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 (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.
See Accompanying Notes to Financial Statements. 66 THE BEA FUNDS OF THE RBB FUND, INC. FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
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 ----------------- --------------- --------------- --------------------- 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
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 THE BEA FUNDS OF THE RBB FUND, INC. FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
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 ----------------- --------------- --------------- --------------- ----------------- 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) (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.
See Accompanying Notes to Financial Statements. 68 THE BEA FUNDS OF THE RBB FUND, INC. FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
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 ----------------- --------------- --------------- --------------- ----------------- 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) (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.
See Accompanying Notes to Financial Statements. 69 THE BEA FUNDS OF THE RBB FUND,INC. FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
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 ----------------- ---------------- ---------------- ---------------- --------------- 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%
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 ------------------ ----------------- -------------------- 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) (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.
See Accompanying Notes to Financial Statements. 70 THE BEA FUNDS OF THE RBB FUND, INC. FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
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 ----------------- --------------- --------------- --------------- ----------------- 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) (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.
See Accompanying Notes to Financial Statements. 71 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 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 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:
GROSS NET ADMINISTRATION FEE WAIVER ADMINISTRATION FEE ------------------ --------- ------------------ 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
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.
GROSS ADMINISTRATIVE NET ADMINISTRATIVE SERVICES FEE WAIVER SERVICES FEE -------------------- ---------- ------------------ 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
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:
INVESTMENT SECURITIES U.S.GOVERNMENT OBLIGATIONS ---------------------------- ---------------------------- PURCHASES SALES PURCHASES SALES ------------ ------------ ------------ ----------- 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
74 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:
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 ---------- ------------ ----------- ------------- ------------ ----------- ---------- --------- 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 =========== =========== =========== ===========
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 ---------- ------------ ----------- ------------- ------------ ----------- ---------- --------- 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 =========== =========== =========== ===========
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 ---------- ------------ ----------- ------------- ------------ ----------- ---------- --------- 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 =========== =========== =========== ===========
*Commencement of operations. 75 THE BEA FUNDS OF THE RBB FUND, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) NOTE 4. CAPITAL SHARES (CONTINUED)
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 ---------- ------------ ----------- ------------- ------------ ----------- ---------- --------- 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 =========== =========== =========== ===========
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 ---------- ------------ ----------- ------------- ------------ ----------- ---------- --------- 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 =========== =========== =========== ===========
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 ---------- --------- ---------- ----------- 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 ========== ========== * Commencement of operations.
76 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.
NUMBER OF ACQUISITION 02/28/98 PERCENTAGE OF SECURITY VALUE PER SHARES DATE FAIR VALUE NET ASSETS COST UNIT --------- ----------- ---------- ------------- ---------- --------- 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 ========== ==========
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 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:
FOREIGN UNREALIZED FORWARD CURRENCY EXPIRATION CURRENCY CONTRACT CONTRACT FOREIGN EXCHANGE CONTRACT DATE TO BE SOLD AMOUNT VALUE GAIN/(LOSS) --------------------- ---------- ------------ ---------- ---------- ---------------- 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) ========== ========== ========
FOREIGN UNREALIZED FORWARD CURRENCY EXPIRATION CURRENCY CONTRACT CONTRACT FOREIGN EXCHANGE CONTRACT DATE TO BE PURCHASED AMOUNT VALUE GAIN/(LOSS) --------------------- ---------- --------------- ----------- ----------- ---------------- 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) =========== =========== =========
The BEA U.S. Core Fixed Income Fund's open Forward Foreign Currency Contracts at February 28, 1998 were as follows:
FOREIGN UNREALIZED FORWARD CURRENCY EXPIRATION CURRENCY CONTRACT CONTRACT FOREIGN EXCHANGE CONTRACT DATE TO BE SOLD AMOUNT VALUE GAIN/(LOSS) --------------------- ---------- ------------ ---------- ---------- ---------------- 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 ========== ========== ========
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