-----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, HXGF0lZd553eBDuD3/h6hPuU3OwAAAMAHdZEAHLAVszP/XmqEyCQi7ZI8byWPjXR csPPxNBqfMaievw2gdcQQw== 0000935069-96-000140.txt : 19961106 0000935069-96-000140.hdr.sgml : 19961106 ACCESSION NUMBER: 0000935069-96-000140 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960831 FILED AS OF DATE: 19961105 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: 1940 Act SEC FILE NUMBER: 811-05518 FILM NUMBER: 96654292 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 NUMERIC FUNDS ANNUAL REPORT N/I FAMILY OF MUTUAL FUNDS (Logo) [GRAPHIC OMITTED] N/I Micro Cap Fund N/I Growth Fund N/I Growth & Value Fund Annual Report August 31, 1996 N/I FAMILY OF MUTUAL FUNDS (Logo) [GRAPHIC OMITTED] MICRO CAP FUND GROWTH FUND GROWTH & VALUE FUND LETTER TO SHAREHOLDERS October 2, 1996 Fellow Shareholder: We are pleased to be sending you the first annual report of the N/I FAMILY OF MUTUAL FUNDS. Our objective for each annual report will be to discuss the performance of the markets and the economy, the relative performance of your portfolio, and some of the quantitative characteristics and insights of our research. Despite the short three month duration of our first fiscal year, we have some interesting things to tell you. Each of the funds started on June 3, at the beginning of one of the worst growth stock corrections of this decade. This turbulence, which lasted through July, was harmful to absolute returns as it is our policy to be always virtually fully invested. A steady influx of cash from new investors cushioned some of the pain, however, by allowing us to find stocks which were becoming increasingly attractive as the market fell. Buying into this weakness was productive as our relative performance was generally good over this period. MARKET AND ECONOMIC COMMENTARY This Summer's market correction deflated a "mini-bubble" which had taken many concept-driven stocks to stratospheric price/earnings multiples. Examples (none of which were held by our mutual funds) include Iomega, a disk drive manufacturer, Presstek, a developer of a new printing process, and Diana, a food distributor dabbling in telecommunications equipment. These stocks were bid up to prices of up to fifty times REVENUES, or more, on only modest improvement in their underlying earnings prospects or growth rates. The correction was precipitated by concerns about the sustainability of profit growth in the technology sector, and exaggerated by the extraordinary levels of over-valuation. Investors focused on the level of demand for personal computers and weak pricing due to capacity increases in the semiconductor industry. Also bothersome was how the Fed would decide between election year stimulus and growth-driven restraint. In our view, the bias is now toward restraint as earnings growth continues to be quite good with many more companies reporting earnings ahead of expectations. Other indicators of strength are high capacity utilization, indicating price pressure may not be far off, and the prospect of higher wage inflation, which has been remarkably low for many years, signaling the potential for cost-push price increases. The weak market also threw cold water on the sizzling hot initial public offering (IPO) market of the past eighteen months. Although the returns of our Growth and Micro Cap funds which qualify for these issues were helped, to a limited degree, by participation in small number of IPOs, we limited our investment in these issues to less than 1% of your portfolio value. The U.S. stock market has been remarkably tame over the past few years, so we were overdue for the reversion to more historically normal volatility. Please be prepared for more significant fluctuation in the value of your stock investments than you might have become accustomed to over the past few years. This nirvana of low inflation and high profit growth is unsustainable. The story for the rest of 1996 will be on what course the Fed decides and the outcome of the Congressional elections. QUANTITATIVE RESEARCH In general, our stock selection models performed well during this abbreviated three month period, particularly in the smaller capitalization area of the market. The market rewarded the fundamental improvement of many of the stocks our Estrend(TRADE MARK) model ranks most highly. Recall that this model evaluates the degree to which Wall Street security analysts are changing 1 their earnings forecasts for the stocks they follow. The market usually rewards such stocks if Fed policy is stable. When the Fed decides to change its position to become more restrictive or more accommodative, however, Estrend(TRADE MARK) often works less well as two things occur. First, the market pays less attention to recent analysts' earnings estimate revisions, believing that economic shifts render such changes less relevant. Second, the trends in revisions to these estimates are shorter-lived as the perception of a change in the economic landscape leads analysts to change the macroeconomic assumptions in their models. The change in the macro assumptions can frequently overwhelm the microeconomic changes which Estrend(TRADE MARK) is so good at forecasting. When Estrend(TRADE MARK) works poorly, however, more often than not, the Fair Value model, which measures the relative cheapness of a stock, is working quite well and it compensates for the underperformance of Estrend(TRADE MARK). It is this complementary pattern of returns between the Estrend(TRADE MARK) and Fair Value models which gives us the ability to earn good returns for your portfolio when one of the models is performing poorly. PORTFOLIO RETURNS The Growth Portfolio earned a return of -1.33% for the three month period ending August 31, 1996. Although the returns were negative, they were significantly better than the benchmark Russell 2500 Growth Index (an unmanaged index of smaller capitalization growth stocks) return of -8.56%. Good relative performance can be attributed to both of our stock selection models which were particularly effective in picking up bargains as the market fell in June and July. Successful investments were made in technology and consumer cyclical companies, with most of the relative emphasis of portfolio capital placed in these areas. The Growth & Value Portfolio returned -3.67% for the period ending August 31, 1996, compared with its benchmark, the Standard & Poor's MidCap 400 Index (an unmanaged index of middle capitalization stocks), which returned -2.87%. The shortfall relative to the index was caused by overweighted positions in oil refiners, personal computer manufacturers and commercial airlines. We stand by our focus on these industries as we believe the market has unfairly penalized these groups in the short term. The Micro Cap Portfolio earned a return of -2.75% over the period ending August 31, 1996. This return compares favorably with the -11.84% return of the Russell 2000 Growth Index, an unmanaged index of smaller capitalization growth stocks. This outperformance was earned due to good performance by our stock selection models, especially in the technology and consumer cyclical sectors, and the presence of good buying opportunities as the market moved down in June and July. We continue to hold modestly overweighted positions in technology (about 30% of capital), and consumer non-cyclical stocks (19% of capital). Thank you for your investment in our funds. We stand by our commitment to i) strictly limiting the size of our funds to optimize the returns we can deliver to you, ii) keeping our expenses significantly below the industry norm and not wasting your investment assets on sales and marketing fees and loads and iii) managing an investment program which is the product of leading edge research. Respectfully, /s/ JOHN C. BOGLE, JR. John C. Bogle, Jr. Director of Portfolio Management Numeric Investors L.P. 2 N/I FAMILY OF MUTUAL FUNDS (Logo) [GRAPHIC OMITTED] MICRO CAP FUND PORTFOLIO OF INVESTMENTS AUGUST 31, 1996 - -------------------------------------------------------------------------------- MARKET SHARES VALUE - -------------------------------------------------------------------------------- COMMON STOCKS--90.8% AEROSPACE--1.8% 7,600 BE Aerospace, Inc.* ......................... $ 125,400 6,400 Rohr, Inc.* ................................. 133,600 ----------- 259,000 ----------- AIR TRANSPORT--1.0% 10,000 Atlantic Coast Airlines, Inc.*/** ........... 145,000 ----------- AUTOMOBILE PARTS & EQUIPMENT--2.9% 13,900 Excel Industries Inc. ....................... 215,450 8,300 Standard Products Co. (The) ................. 190,900 ----------- 406,350 ----------- COMPUTER COMPONENTS--4.3% 11,500 Chips & Technologies, Inc. .................. 127,219 6,000 Documentum, Inc.** .......................... 151,500 10,800 Innovex, Inc. ............................... 179,550 3,800 Radisys Corp.** ............................. 141,075 ----------- 599,344 ----------- COMPUTERS--0.7% 7,400 Xircom, Inc.* ............................... 94,813 ----------- COMPUTERS & OFFICE EQUIPMENT--2.1% 8,400 Auspex Systems, Inc.* ....................... 132,300 5,600 ENCAD, Inc.* ................................ 162,400 ----------- 294,700 ----------- COMPUTERS, SOFTWARE & SERVICING--12.6% 8,600 AXENT Technologies, Inc.* ................... 146,200 8,500 CIBER, Inc.*/** ............................. 214,625 300 Citrix Systems, Inc.* ....................... 12,600 5,700 Computer Learning Centers, Inc.*/** ......... 165,300 8,100 Digital Link Corp.* ......................... 125,550 4,700 HMT Technology Corp.*/** .................... 84,600 3,800 Legato Systems, Inc.*/** .................... 150,100 5,600 Manugistics Group, Inc.* .................... 154,700 7,800 Scopus Technology, Inc.* .................... 142,350 5,800 SPSS Inc.* .................................. 138,475 600 Systemsoft Corp.* ........................... 19,500 3,500 Vantive Corp. (The)*/** ..................... 154,000 - -------------------------------------------------------------------------------- MARKET SHARES VALUE - ------------------------------------------------------------------------------ COMPUTERS, SOFTWARE & SERVICING--(CONTINUED) 2,700 Viasoft, Inc.* .............................. $ 160,650 2,900 Visio Corp.* ................................ 104,400 ----------- 1,773,050 ----------- COSMETICS--0.9% 9,300 Herbalife International, Inc. ............... 120,900 ----------- ELECTRICAL EQUIPMENT--4.9% 14,500 Columbus McKinnon Corp. ..................... 206,625 3,500 Fluke Corp. ................................. 125,125 5,100 Hughes Supply, Inc. ......................... 197,625 7,400 Robbins & Myers, Inc.** ..................... 162,800 ----------- 692,175 ----------- ELECTRONICS--5.4% 5,200 Digital Microwave Corp.* .................... 86,450 6,700 DII Group, Inc.*/** ......................... 195,975 3,500 ETEC Systems, Inc.* ......................... 106,750 7,500 General Scanning Inc.* ...................... 112,000 5,500 Interpoint Corp.* ........................... 61,875 3,500 Waters Corp.*/** ............................ 109,813 2,800 Wyle Electronics ............................ 90,300 ----------- 763,163 ----------- FINANCIAL SERVICES--0.8% 4,300 Cityscape Financial Corp.*/** ............... 118,250 ----------- FOOD & AGRICULTURE--2.1% 5,600 Interstate Bakeries Corp. ................... 169,400 4,600 Smithfield Foods, Inc.* ..................... 127,650 ----------- 297,050 ----------- HOSPITAL MANAGEMENT--1.3% 8,700 FPA Medical Management, Inc.*/** ............ 181,613 ----------- HOUSEHOLD PRODUCTS--2.3% 7,500 Central Garden & Pet Co.* ................... 184,688 5,200 Libbey Inc.** ............................... 145,600 ----------- 330,288 ----------- HOUSING--1.3% 9,800 Continental Homes Holding Corp.** ........... 188,650 ----------- The accompanying notes are an integral part of the financial statements. 3 N/I FAMILY OF MUTUAL FUNDS (Logo) [GRAPHIC OMITTED] MICRO CAP FUND PORTFOLIO OF INVESTMENTS (CONTINUED) AUGUST 31, 1996 - -------------------------------------------------------------------------------- MARKET SHARES VALUE - ------------------------------------------------------------------------------- INSURANCE - LIFE--1.4% 6,400 Security - Connecticut Corp. ................ $ 193,600 ----------- INSURANCE - PROPERTY & CASUALTY--1.5% 6,500 Selective Insurance Group, Inc. ............. 209,625 ----------- LEISURE & ENTERTAINMENT--2.2% 7,300 Coastcast Corp.** ........................... 159,687 3,400 GT Bicycles, Inc.* .......................... 38,675 6,700 Harveys Casino Resorts ...................... 115,575 ----------- 313,937 ----------- MACHINERY--0.8% 9,400 ADE Corp.* .................................. 105,750 ----------- MANUFACTURING INDUSTRIES--5.3% 6,300 Caraustar Industries, Inc. .................. 187,425 8,300 DT Industries, Inc. ......................... 217,875 5,900 Eltron International, Inc.* ................. 169,625 6,400 Ethan Allen Interiors, Inc. ................. 171,200 ----------- 746,125 ----------- MEDICAL & MEDICAL SERVICES--1.2% 4,700 Renal Care Group, Inc.* ..................... 172,725 ----------- MEDICAL INSTRUMENTS & SUPPLIES--5.0% 9,300 Chad Therapeutics, Inc.*/** ................. 162,750 4,200 Hologic, Inc.*/** ........................... 166,950 7,200 STERIS Corp.* ............................... 221,400 8,000 VISX, Inc.* ................................. 155,000 ----------- 706,100 ----------- METAL FABRICATING--0.9% 6,100 Varlen Corp.** .............................. 131,150 ----------- METAL MINING--2.8% 6,600 Olympic Steel, Inc.*/** ..................... 161,700 7,900 Oregon Metallurgical Corp.* ................. 235,025 ----------- 396,725 ----------- METALS--0.7% 2,800 Reliance Steel & Aluminum Co. ............... 93,800 ----------- OIL & GAS FIELD EXPLORATION--3.0% 8,100 Belden & Blake Corp.* ....................... 166,050 - -------------------------------------------------------------------------------- MARKET SHARES VALUE - -------------------------------------------------------------------------------- OIL & GAS FIELD EXPLORATION--(CONTINUED) 12,200 Comstock Resources, Inc.* ................... $ 128,100 3,800 Energy Ventures, Inc.* ...................... 124,925 ----------- 419,075 ----------- OIL, GAS FIELD SERVICES--0.8% 2,600 Seacor Holdings, Inc.*/** ................... 118,300 ----------- OPHTHALMIC GOODS--1.4% 5,500 Sola International Inc.* .................... 192,500 ----------- PHARMACEUTICALS--2.8% 8,400 Bindley Western Industries, Inc. ............ 149,100 10,100 Liposome Co., Inc. (The)*/** ................ 152,763 2,100 Medicis Pharmaceutical Corp.* ............... 85,870 ----------- 387,733 ----------- RESTAURANTS--0.8% 4,200 CKE Restaurants, Inc. ....................... 116,550 ----------- RETAIL - CATALOG & MAIL ORDER HOUSES--1.4% 13,600 Damark International, Inc. Class A* ......... 197,200 ----------- RETAIL - GROCERY STORES--0.9% 5,500 Riser Foods, Inc. Class A ................... 131,312 ----------- RETAIL - SPECIALTY--1.1% 5,900 Inacom Corp.*/** ............................ 159,300 ----------- RETAIL - SPECIALTY APPAREL--2.1% 6,600 American Eagle Outfitters, Inc.*/** ......... 135,300 21,100 Genesco, Inc.* .............................. 163,525 ----------- 298,825 ----------- SERVICES - BUSINESS SERVICES--1.1% 9,600 Employee Solutions, Inc.*/** ................ 160,800 ----------- TELECOMMUNICATIONS--2.5% 10,900 AML Communications, Inc.* ................... 167,587 7,200 Brooktrout Technology, Inc.* ................ 180,000 ----------- 347,587 ----------- TELECOMMUNICATIONS EQUIPMENT--0.8% 3,200 Davox Corp.* ................................ 108,800 ----------- TEXTILES--0.9% 7,700 Kellwood Co. ................................ 124,162 ----------- The accompanying notes are an integral part of the financial statements. 4 N/I FAMILY OF MUTUAL FUNDS (Logo) [GRAPHIC OMITTED] MICRO CAP FUND PORTFOLIO OF INVESTMENTS (CONCLUDED) AUGUST 31, 1996 - -------------------------------------------------------------------------------- MARKET SHARES VALUE - ------------------------------------------------------------------------------- TOYS--0.7% 7,300 Equity Marketing, Inc.* ..................... $ 97,637 ----------- TRANSPORTATION--1.2% 7,800 USFreightways Corp. ......................... 161,850 ----------- WHOLESALE - FARM PRODUCTS--1.1% 4,400 Northland Cranberries, Inc. Class A ......... 158,400 ----------- WHOLESALE - SPECIALTY EQUIPMENT--2.0% 5,500 Tech Data Corp.* ............................ 145,750 5,100 U.S. Office Products Co.* ................... 135,150 ----------- 280,900 ----------- Total Common Stocks (Cost $12,171,239) ........................ 12,794,814 ----------- PRINCIPAL AMOUNT - --------- SHORT-TERM INVESTMENTS--15.6% U.S. TREASURY OBLIGATIONS--4.4% U.S. Treasury Bills 130,000 5.155%(DAGGER), 10/17/96 .................. 129,197 500,000 5.180%(DAGGER), 10/17/96 .................. 496,913 ----------- Total U.S. Treasury Obligations (Cost $625,859) ........................... 626,110 ----------- SHARES ------ MONEY MARKET FUNDS--7.2% 641,205 Federated Short-Term U.S. Government Trust .......................... 641,205 366,797 The Treasurers Fund Inc. U.S. Treasury Money Market Portfolio ................................. 366,797 ----------- Total Money Market Funds (Cost $1,008,002) ......................... 1,008,002 ----------- - -------------------------------------------------------------------------------- MARKET SHARES VALUE - -------------------------------------------------------------------------------- REPURCHASE AGREEMENT--4.0% 570,838 Bear, Stearns Securities Corp. (Agreement dated 08/30/96 to be repurchased at $571,165, collateralized by $1,730,000 Resolution Trust Corp. Bonds 6.993% due 04/26/21. Market value of collateral is $585,214) 5.150%, 09/03/96 (Cost $570,838) .......... $ 570,838 ----------- Total Short-Term Investments (Cost $2,204,699) ......................... 2,204,950 ----------- Total Investments -- 106.4% (Cost $14,375,938) ........................ 14,999,764 Liabilities in Excess of Other Assets -- (6.4%) .................... (899,664) ----------- Net Assets -- 100.0% ........................ $14,100,100 =========== - ----------- * Non-income producing. ** Security or a portion thereof is out on loan. (DAGGER) Effective yield on the date of purchase. The accompanying notes are an integral part of the financial statements. 5 N/I FAMILY OF MUTUAL FUNDS (Logo) [GRAPHIC OMITTED] GROWTH FUND PORTFOLIO OF INVESTMENTS AUGUST 31, 1996 - -------------------------------------------------------------------------------- MARKET SHARES VALUE - ------------------------------------------------------------------------------- COMMON STOCKS--89.3% AEROSPACE--0.7% 9,000 Rohr, Inc.* ................................. $ 187,875 ----------- AIR TRANSPORT--0.7% 7,800 Continental Airlines, Inc. Class B*/** ...... 176,475 ----------- AUTOMOBILE PARTS & EQUIPMENT--1.6% 27,400 Excel Industries Inc. ....................... 424,700 ----------- BROKERAGE--1.0% 12,200 Lehman Brothers Holdings Inc. ............... 257,725 ----------- CHEMICALS--1.5% 8,100 Arcadian Corp. .............................. 178,200 6,600 Cytec Industries, Inc.*/** .................. 229,350 ----------- 407,550 ----------- COMMERCIAL SERVICES--1.9% 1,300 APAC Teleservices, Inc.*/** ................. 57,525 5,200 Quintiles Transnational Corp.* .............. 393,250 1,500 Romac International, Inc.* .................. 46,500 ----------- 497,275 ----------- COMPUTER & OFFICE EQUIPMENT--2.1% 12,600 Auspex Systems, Inc.* ....................... 198,450 12,300 ENCAD, Inc.* ................................ 356,700 ----------- 555,150 ----------- COMPUTER COMPONENTS--0.4% 4,600 Komag, Inc.* ................................ 97,750 ----------- COMPUTERS--2.8% 3,900 Dell Computer Corp.* ........................ 261,788 4,400 Storage Technology Corp.*/** ................ 166,650 25,800 Xircom, Inc.* ............................... 330,563 ----------- 759,001 ----------- COMPUTERS, SOFTWARE & SERVICING--13.6% 11,800 CFI Proservices, Inc.*/** ................... 215,350 16,100 CIBER, Inc.*/** ............................. 406,525 7,800 Computer Associates International, Inc. ....................... 409,500 - -------------------------------------------------------------------------------- MARKET SHARES VALUE - -------------------------------------------------------------------------------- COMPUTERS, SOFTWARE & SERVICING--(CONTINUED) 6,900 Compuware Corp.* ............................ $ 296,700 6,000 Gartner Group, Inc., Class A* ............... 187,500 16,300 GT Interactive Software Corp.*/** ........... 277,100 4,700 HMT Technology Corp.* ....................... 84,600 7,400 Legato Systems, Inc.*/** .................... 292,300 3,500 McAfee Associates, Inc.*/** ................. 208,688 1,600 Remedy Corp.* ............................... 72,800 11,600 Scopus Technology, Inc.* .................... 211,700 8,300 Vantive Corp. (The)* ........................ 365,200 5,800 Viasoft, Inc.* .............................. 345,100 7,600 Visio Corp.* ................................ 273,600 ----------- 3,646,663 ----------- ELECTRICAL EQUIPMENT--4.2% 2,200 Belden, Inc. ................................ 59,675 10,700 Hughes Supply, Inc. ......................... 414,625 2,000 Kuhlman Corp. ............................... 33,000 10,800 Robbins & Myers, Inc.** ..................... 237,600 10,000 UCAR International Inc.* .................... 390,000 ----------- 1,134,900 ----------- ELECTRONICS--5.8% 2,800 Atmel Corp.* ................................ 72,450 7,000 Eltron International, Inc.* ................. 201,250 5,600 ETEC Systems, Inc.* ......................... 170,800 11,500 MEMC Electronic Materials, Inc.* ............ 405,375 7,200 SCI Systems, Inc.*/** ....................... 321,300 7,700 Waters Corp.* ............................... 241,588 4,500 Wyle Electronics ............................ 145,125 ----------- 1,557,888 ----------- ENTERTAINMENT--0.4% 2,900 MGM Grand, Inc.* ............................ 109,475 ----------- FINANCIAL SERVICES--1.2% 11,300 Cityscape Financial Corp.*/** ............... 310,750 ----------- GAS TRANSPORTATION & DISTRIBUTION--0.8% 6,000 Eastern Enterprises** ....................... 219,750 ----------- The accompanying notes are an integral part of the financial statements. 6 N/I FAMILY OF MUTUAL FUNDS (Logo) [GRAPHIC OMITTED] GROWTH FUND PORTFOLIO OF INVESTMENTS (CONTINUED) AUGUST 31, 1996 - -------------------------------------------------------------------------------- MARKET SHARES VALUE - -------------------------------------------------------------------------------- HOSPITAL MANAGEMENT--1.6% 10,200 FPA Medical Management, Inc.*/** ............ $ 212,925 5,700 Lincare Holdings, Inc.* ..................... 212,681 ----------- 425,606 ----------- HOTELS--0.4% 3,800 Promus Hotel Corp.* ......................... 114,475 ----------- HOUSEHOLD PRODUCTS--0.4% 5,300 Eagle Hardware & Garden, Inc.*/** ........... 117,925 ----------- HOUSING--1.0% 13,700 Continental Homes Holding Corp.** ........... 263,725 ----------- INSURANCE--2.8% 6,500 American Bankers Insurance Group, Inc. ............................... 308,750 16,400 Fremont General Corp.** ..................... 444,850 ----------- 753,600 ----------- INSURANCE - PROPERTY & CASUALTY--1.0% 4,200 CMAC Investment Corp. ....................... 262,500 ----------- LEISURE & ENTERTAINMENT--1.0% 11,600 Coastcast Corp.*/** ......................... 253,750 ----------- MACHINERY--0.8% 5,800 Harnischfeger Industries, Inc.** ............ 218,950 ----------- MANUFACTURED HOUSING--1.1% 13,000 Redman Industries, Inc.* .................... 292,500 ----------- MANUFACTURING INDUSTRIES--1.0% 8,700 Foamex International, Inc.*/** .............. 135,394 3,300 Oakley, Inc.*/** ............................ 135,300 ----------- 270,694 ----------- MEDICAL & MEDICAL SERVICES--1.4% 8,200 Oxford Health Plans, Inc.*/** ............... 375,150 ----------- - -------------------------------------------------------------------------------- MARKET SHARES VALUE - -------------------------------------------------------------------------------- MEDICAL INSTRUMENTS & SUPPLIES--6.8% 2,700 Coherent, Inc.* ............................. $ 105,975 8,900 Guidant Corp. ............................... 451,675 5,700 Hologic, Inc.* .............................. 226,575 6,600 Invacare Corp.* ............................. 199,650 5,500 Safeskin Corp.* ............................. 178,750 14,200 STERIS Corp.* ............................... 436,650 11,400 VISX, Inc.* ................................. 220,875 ----------- 1,820,150 ----------- METAL MINING--2.3% 2,000 AK Steel Holding Corp.** .................... 74,500 10,800 Olympic Steel, Inc.*/** ..................... 264,600 9,200 Oregon Metallurgical Corp.* ................. 273,700 ----------- 612,800 ----------- OFFICE FURNITURE--0.8% 5,700 Herman Miller, Inc. ......................... 213,839 ----------- OIL & GAS FIELD EXPLORATION--1.3% 34,300 Comstock Resources, Inc.* ................... 360,150 ----------- OIL EQUIPMENT & SERVICES--3.9% 6,700 Camco International, Inc. ................... 226,962 8,600 Cooper Cameron Corp.* ....................... 453,650 10,800 Energy Ventures, Inc.* ...................... 355,050 ----------- 1,035,662 ----------- OIL INTERNATIONAL--1.2% 8,300 Helmerich & Payne, Inc.** ................... 327,850 ----------- OIL, GAS FIELD SERVICES--0.9% 5,100 Seacor Holdings, Inc.* ...................... 232,050 ----------- OPHTHALMIC GOODS--1.7% 12,700 Sola International, Inc.* ................... 444,500 ----------- PHARMACEUTICALS--0.7% 4,700 Medicis Pharmaceutical Corp.* ............... 192,186 ----------- The accompanying notes are an integral part of the financial statements. 7 N/I FAMILY OF MUTUAL FUNDS (Logo) [GRAPHIC OMITTED] GROWTH FUND PORTFOLIO OF INVESTMENTS (CONCLUDED) AUGUST 31, 1996 - -------------------------------------------------------------------------------- MARKET SHARES VALUE - -------------------------------------------------------------------------------- RETAIL - CATALOG & MAIL ORDER HOUSES--0.9% 16,600 Damark International, Inc. Class A* ......... $ 240,700 ----------- RETAIL - GENERAL MERCHANDISE--1.0% 12,700 Stein Mart, Inc.* ........................... 265,112 ----------- RETAIL - GROCERY STORES--1.2% 7,100 Vons Cos., Inc. (The)* ...................... 314,175 ----------- RETAIL - SPECIALTY--4.1% 3,550 CDW Computer Centers, Inc.*/** .............. 230,750 5,800 CompUSA Inc.*/** ............................ 232,725 14,700 Inacom Corp.*/** ............................ 396,900 7,200 Rexall Sundown, Inc.*/** .................... 249,300 ----------- 1,109,675 ----------- RETAIL - SPECIALTY APPAREL--2.4% 1,600 Claire's Stores, Inc. ....................... 52,800 7,100 Ross Stores, Inc. ........................... 273,350 6,100 TJX Cos., Inc. .............................. 195,200 3,400 Wet Seal, Inc. (The)* ....................... 124,100 ----------- 645,450 ----------- SERVICES - BUSINESS SERVICES--0.6% 9,900 Employee Solutions, Inc.*/** ................ 165,825 ----------- TELECOMMUNICATIONS--1.1% 12,200 Brooktrout Technology, Inc.* ................ 305,000 ----------- TELECOMMUNICATIONS EQUIPMENT--4.0% 5,700 Ascend Communications, Inc.* ................ 298,537 6,600 Aspect Telecommunications Corp.*/** ......... 343,200 9,800 Digital Microwave Corp.* .................... 162,925 5,400 DSP Communications, Inc.* ................... 274,725 ----------- 1,079,387 ----------- TEXTILES--0.5% 8,300 Kellwood Co. ................................ 133,837 ----------- TOYS--0.3% 2,800 Lewis Galoob Toys, Inc.* .................... 73,500 ----------- - -------------------------------------------------------------------------------- MARKET SHARES VALUE - -------------------------------------------------------------------------------- WHOLESALE - SPECIALTY EQUIPMENT--2.4% 12,000 Tech Data Corp.* ............................ $ 318,000 12,200 U.S. Office Products Co.* ................... 323,300 ----------- 641,300 ----------- Total Common Stocks (Cost $22,848,283) ........................ 23,904,950 ----------- PRINCIPAL AMOUNT - --------- SHORT-TERM INVESTMENTS--12.7% U.S. TREASURY OBLIGATIONS --5.8% 1,550,000 U.S. Treasury Bills 5.105%(DAGGER), 10/17/96 (Cost $1,539,899) ......................... 1,540,430 ----------- SHARES ------ MONEY MARKET FUNDS--6.9% 880,314 Federated Short-Term U.S. Government Trust ..................................... 880,314 978,189 The Treasurers Fund Inc. U.S. Treasury Money Market Portfolio ................................. 978,189 ----------- Total Money Market Funds (Cost $1,858,503) ......................... 1,858,503 ----------- Total Short-Term Investments (Cost $3,398,402) ......................... 3,398,933 ----------- Total Investments -- 102.0% (Cost $26,246,685) ........................ 27,303,883 Liabilities in Excess of Other Assets -- (2.0%) .................... (548,151) ----------- Net Assets -- 100.0% $26,755,732 =========== - -------------------------------------------------------------------------------- * Non-income producing. ** Security or a portion thereof is out on loan. (DAGGER) Effective yield on the date of purchase. The accompanying notes are an integral part of the financial statements. 8 N/I FAMILY OF MUTUAL FUNDS (Logo) [GRAPHIC OMITTED] GROWTH & VALUE FUND PORTFOLIO OF INVESTMENTS AUGUST 31, 1996 - -------------------------------------------------------------------------------- MARKET SHARES VALUE - -------------------------------------------------------------------------------- COMMON STOCKS--91.5% AEROSPACE--0.8% 600 McDonnell Douglas Corp. ..................... $ 30,075 ----------- AIR TRANSPORT--3.1% 2,000 Continental Airlines, Inc. Class B*/** ...... 45,250 500 Delta Air Lines, Inc. ....................... 35,438 1,000 Northwest Airlines Corp.*/** ................ 37,750 ----------- 118,438 ----------- AUTOMOBILE PARTS & EQUIPMENT--0.9% 900 Borg-Warner Automotive, Inc. ................ 33,750 ----------- AUTOMOBILES & TRUCKS--2.0% 2,600 Chrysler Corp. .............................. 75,725 ----------- BROKERAGE--2.9% 1,200 Bear Stearns Companies Inc. (The) ........... 28,050 1,100 Donaldson, Lufkin & Jenrette, Inc. .......... 34,788 2,200 Lehman Brothers Holdings Inc. ............... 46,475 ----------- 109,313 ----------- CHEMICALS--2.5% 600 Cabot Corp. ................................. 16,500 400 Dow Chemical Co. ............................ 31,900 900 Engelhard Corp. ............................. 18,338 2,200 Terra Industries Inc. ....................... 29,150 ----------- 95,888 ----------- COMMERCIAL SERVICES--2.0% 1,400 Measurex Corp. .............................. 38,500 1,000 Ogden Corp. ................................. 19,625 600 PHH Corp. ................................... 17,325 ----------- 75,450 ----------- COMPUTER & OFFICE EQUIPMENT--1.0% 600 Harris Corp.** .............................. 36,900 ----------- COMPUTER COMPONENTS--1.9% 1,600 Komag, Inc.* ................................ 34,000 1,100 Western Digital Corp. ....................... 38,638 ----------- 72,638 ----------- - -------------------------------------------------------------------------------- MARKET SHARES VALUE - -------------------------------------------------------------------------------- COMPUTERS--4.4% 1,300 Compaq Computer Corp.* ...................... $ 73,613 800 Dell Computer Corp.* ........................ 53,700 900 Gateway 2000, Inc.* ......................... 40,106 ----------- 167,419 ----------- COMPUTERS, SOFTWARE & SERVICING--4.1% 400 Cisco Systems, Inc.* ........................ 21,100 1,400 Computer Associates International, Inc. ....................... 73,500 600 Compuware Corp.* ............................ 25,800 2,000 GT Interactive Software Corp.** ............. 34,000 ----------- 154,400 ----------- ELECTRICAL EQUIPMENT--2.0% 1,500 Tektronix, Inc. ............................. 58,125 500 UCAR International Inc.* .................... 19,500 ----------- 77,625 ----------- ELECTRICAL MACHINERY, EQUIPMENT & SUPPLIES--0.6% 400 Tecumseh Products Co. Class A ............... 21,000 ----------- ELECTRONICS--3.0% 700 Johnson Controls, Inc. ...................... 49,350 1,000 MEMC Electronic Materials, Inc. ............. 35,250 700 SCI Systems, Inc.*/** ....................... 31,238 ----------- 115,838 ----------- ENTERTAINMENT--0.8% 900 King World Productions, Inc.* ............... 31,725 ----------- FINANCIAL SERVICES--4.7% 1,200 Countrywide Credit Industries, Inc. ......... 28,950 1,200 First USA, Inc. ............................. 63,600 1,700 Greenpoint Financial Corp. .................. 60,563 300 Textron Inc. ................................ 25,612 ----------- 178,725 ----------- FOOD & AGRICULTURE--1.8% 1,300 ConAgra, Inc. ............................... 54,762 500 Interstate Bakeries Corp. ................... 15,125 ----------- 69,887 ----------- The accompanying notes are an integral part of the financial statements. 9 N/I FAMILY OF MUTUAL FUNDS (Logo) [GRAPHIC OMITTED] GROWTH & VALUE FUND PORTFOLIO OF INVESTMENTS (CONTINUED) AUGUST 31, 1996 - -------------------------------------------------------------------------------- MARKET SHARES VALUE - -------------------------------------------------------------------------------- GRAIN MILLS PRODUCTS--2.2% 1,995 Archer-Daniels-Midland Co. .................. $ 35,411 2,000 IBP, Inc. ................................... 46,750 ----------- 82,161 ----------- GREETING CARDS--1.4% 2,100 American Greetings Corp. .................... 54,075 ----------- HOSPITAL MANAGEMENT--1.0% 800 Oxford Health Plans, Inc.*/** ............... 36,600 ----------- HOUSEHOLD FURNITURE--1.0% 1,100 Lancaster Colony Corp. ...................... 40,012 ----------- HOUSEHOLD PRODUCTS--0.7% 1,100 First Brands Corp. .......................... 25,025 ----------- INSURANCE--1.8% 500 Aetna Inc. .................................. 33,062 1,200 US LIFE Corp. ............................... 35,100 ----------- 68,162 ----------- INSURANCE - PROPERTY & CASUALTY--1.1% 1,300 American Financial Group, Inc. .............. 40,462 ----------- MACHINERY--0.8% 800 Harnischfeger Industries, Inc.* ............. 30,200 ----------- MANUFACTURING INDUSTRIES--1.3% 1,300 Parker-Hannifin Corp. ....................... 50,700 ----------- MEDICAL INSTRUMENTS & SUPPLIES--2.4% 800 Beckman Instruments,Inc. .................... 29,500 600 Guidant Corp. ............................... 30,450 800 Mallinckrodt Group Inc. ..................... 32,400 ----------- 92,350 ----------- METAL MINING--1.7% 1,700 AK Steel Holding Corp.*/** .................. 63,325 ----------- METALS - DIVERSIFIED--0.8% 500 Phelps Dodge Corp. .......................... 30,250 ----------- - -------------------------------------------------------------------------------- MARKET SHARES VALUE - -------------------------------------------------------------------------------- NATIONAL COMMERCIAL BANKS--2.7% 1,000 First Union Corp. ........................... $ 63,875 1,200 Union Planters Corp. ........................ 39,450 ----------- 103,325 ----------- NATURAL GAS--0.4% 300 Columbia Gas System, Inc. (The) ............. 16,875 ----------- OIL & GAS FIELD EXPLORATION--0.6% 1,000 Parker & Parsley Petroleum Co. .............. 24,750 ----------- OIL DOMESTIC--2.2% 1,200 National Fuel Gas Co. ....................... 44,400 1,800 Valero Energy Corp. ......................... 38,025 ----------- 82,425 ----------- OIL EQUIPMENT & SERVICES--1.2% 900 Cooper Cameron Corp. ........................ 47,475 ----------- OIL INTERNATIONAL--3.1% 900 Helmerich & Payne, Inc. ..................... 35,550 1,600 Occidental Petroleum Corp. .................. 37,200 2,200 USX-Marathon Group .......................... 45,925 ----------- 118,675 ----------- PAPER & FOREST PRODUCTS--1.7% 500 Consolidated Papers, Inc. ................... 25,750 1,600 Fort Howard Corp.* .......................... 37,800 ----------- 63,550 ----------- PHARMACEUTICALS--1.7% 500 Bristol-Myers Squibb Co. .................... 43,875 400 Schering-Plough Corp. ....................... 22,350 ----------- 66,225 ----------- PRIMARY METAL PRODUCTS--1.3% 1,500 Trinity Industries, Inc. .................... 48,562 ----------- RETAIL - COMPUTER & COMPUTER SOFTWARE STORES--0.8% 800 CompUSA Inc.*/** ............................ 32,100 ----------- RETAIL - SPECIALTY APPAREL--1.2% 1,200 Ross Stores, Inc. ........................... 46,200 ----------- The accompanying notes are an integral part of the financial statements. 10 N/I FAMILY OF MUTUAL FUNDS (Logo) [GRAPHIC OMITTED] GROWTH & VALUE FUND PORTFOLIO OF INVESTMENTS (CONCLUDED) AUGUST 31, 1996 - -------------------------------------------------------------------------------- MARKET SHARES VALUE - -------------------------------------------------------------------------------- SAVINGS & LOAN ASSOCIATION--1.0% 1,100 Washington Mutual, Inc. ..................... $ 39,875 ----------- TELECOMMUNICATIONS--2.7% 800 SBC Communications Inc. ..................... 37,300 1,600 Sprint Corp. ................................ 65,000 ----------- 102,300 ----------- TELECOMMUNICATIONS EQUIPMENT--0.6% 400 U.S. Robotics Corp.* ........................ 21,000 ----------- TEXTILES--1.3% 1,100 Springs Industries, Inc. Class A ............ 49,638 ----------- TOBACCO--1.1% 1,600 RJR Nabisco Holdings Corp. .................. 42,200 ----------- TRANSPORTATION EQUIPMENT--2.3% 700 CSX Corp. ................................... 35,437 500 GATX Corp. .................................. 23,125 1,000 Illinois Central Corp. ...................... 30,250 ----------- 88,812 ----------- UTILITIES--9.4% 1,300 Ameritech Corp. ............................. 67,112 2,200 Entergy Corp. ............................... 55,825 3,200 Montana Power Co.** ......................... 69,200 2,600 New York State Electric & Gas Corp.** ....... 55,900 2,200 Unicom Corp. ................................ 50,600 1,900 Washington Water Power Co. .................. 35,150 900 Western Resources, Inc. ..................... 26,437 ----------- 360,224 ----------- WHOLESALE - GROCERIES & GENERAL LINE--1.5% 2,000 Supervalu, Inc. ............................. 56,250 ----------- Total Common Stocks (Cost $3,479,554) ......................... 3,488,579 ----------- - -------------------------------------------------------------------------------- PRINCIPAL MARKET AMOUNT VALUE - -------------------------------------------------------------------------------- SHORT-TERM INVESTMENT--11.4% U.S. TREASURY OBLIGATIONS--5.2% U.S. Treasury Bills 100,000 5.015%(DAGGER), 10/17/96 .................. $ 99,383 100,000 5.155%(DAGGER), 10/17/96 .................. 99,383 ----------- Total U.S. Treasury Obligations (Cost $198,690) ........................... 198,766 ----------- SHARES - ---------- MONEY MARKET FUND--3.2% 123,110 The Treasurers Fund Inc. U.S. Treasury Money Market Portfolio (Cost $123,110) ................. 123,110 ----------- PRINCIPAL AMOUNT - ----------- REPURCHASE AGREEMENT--3.0% 114,146 Bear, Stearns Securities Corp. (Agreement dated 08/30/96 to be repurchased at $114,211, collateralized by $350,000 Resolution Trust Corp. Bonds 6.993% due 04/26/21. Market value of collateral is $118,396) 5.150%, 09/03/96 (Cost $114,146) ........... 114,146 ----------- Total Short-Term Investments (Cost $435,946) ........................... 436,022 ----------- Total Investments -- 102.9% (Cost $3,915,500) ......................... 3,924,601 Liabilities in Excess of Other Assets -- (2.9%) .................... (111,451) ----------- Net Assets -- 100.0% ........................ $ 3,813,150 =========== - -------------------------------------------------------------------------------- * Non-income producing. ** Security or a portion thereof is out on loan. (DAGGER) Effective yield on the date of purchase. The accompanying notes are an integral part of the financial statements. 11 N/I FAMILY OF MUTUAL FUNDS (Logo) [GRAPHIC OMITTED] STATEMENT OF ASSETS AND LIABILITIES AUGUST 31, 1996
MICRO CAP GROWTH GROWTH & VALUE FUND FUND FUND ------------ ------------- -------------- ASSETS Investments, at value (cost -- $14,375,938, $26,246,685, $3,915,500, respectively) ..................................... $14,999,764 $27,303,883 $3,924,601 Receivable for Fund shares sold .................................. 112,089 571,079 50,343 Receivable for investments sold .................................. 5,460 55,440 11,304 Receivable from investment adviser ............................... 1,697 -- 5,796 Dividends and interest receivable ................................ 8,120 14,847 5,892 Prepaid expenses and other assets ................................ 11,565 11,616 11,314 ----------- ----------- ---------- Total assets .................................................. 15,138,695 27,956,865 4,009,250 ----------- ----------- ---------- LIABILITIES Payable for investments purchased ................................ 1,011,851 1,143,778 176,538 Payable for Fund shares repurchased .............................. -- 19,751 -- Accrued expenses and other liabilities ........................... 26,744 37,604 19,562 ----------- ----------- ---------- Total liabilities ............................................. 1,038,595 1,201,133 196,100 ----------- ----------- ---------- NET ASSETS Capital stock, $0.001 par value .................................. 1,208 2,259 330 Paid-in capital .................................................. 14,112,914 26,228,556 3,809,457 Undistributed net investment income .............................. 13,553 22,490 9,319 Accumulated net realized loss from investments ................... (651,401) (554,771) (15,057) Net unrealized appreciation on investments ....................... 623,826 1,057,198 9,101 ----------- ----------- ---------- Net assets applicable to shares outstanding ................... $14,100,100 $26,755,732 $3,813,150 =========== =========== ========== Net assets ....................................................... $14,100,100 $26,755,732 $3,813,150 ----------- ----------- ---------- Shares outstanding ............................................... 1,208,365 2,259,414 329,787 ----------- ----------- ---------- Net asset value, offering and redemption price per share ......... $11.67 $11.84 $11.56 =========== =========== ==========
The accompanying notes are an integral part of the financial statements. 12 N/I FAMILY OF MUTUAL FUNDS (Logo) [GRAPHIC OMITTED] STATEMENT OF OPERATIONS FOR THE PERIOD JUNE 3, 1996* THROUGH AUGUST 31, 1996
MICRO CAP GROWTH GROWTH & VALUE FUND FUND FUND ------------ ------------- -------------- INVESTMENT INCOME Dividends ...................................................... $ 10,604 $ 10,225 $ 9,682 Interest ....................................................... 21,562 43,733 4,561 --------- ---------- --------- 32,166 53,958 14,243 --------- ---------- --------- EXPENSES Advisory fees .................................................. 13,959 23,596 3,693 Co-Administration fees ......................................... 19,055 19,698 18,162 Administrative services fees ................................... 2,789 4,719 738 Federal and state registration fees ............................ 10,367 15,834 5,682 Transfer agent fees and expenses ............................... 8,700 8,700 8,600 Custodian fees and expenses .................................... 5,567 6,065 3,786 Printing ....................................................... 2,439 2,439 2,411 Audit and legal fees ........................................... 777 869 674 Other .......................................................... 715 769 533 --------- ---------- --------- Total expenses before waivers and reimbursements ............ 64,368 82,689 44,279 Less: waivers and reimbursements ............................ (45,755) (51,221) (39,355) --------- ---------- --------- Total expenses after waivers and reimbursements ............. 18,613 31,468 4,924 --------- ---------- --------- Net investment income .......................................... 13,553 22,490 9,319 --------- ---------- --------- NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS Net realized loss from investments ............................. (651,401) (554,771) (15,057) Net change in unrealized appreciation on investments ........... 623,826 1,057,198 9,101 --------- ---------- --------- Net realized and unrealized gain/(loss) on investments ......... (27,575) 502,427 (5,956) --------- ---------- --------- NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS ... $ (14,022) $ 524,917 $ 3,363 ========= ========== ========= - ---------- *Commencement of operations.
The accompanying notes are an integral part of the financial statements. 13 N/I FAMILY OF MUTUAL FUNDS (Logo) [GRAPHIC OMITTED] STATEMENT OF CHANGES IN NET ASSETS FOR THE PERIOD JUNE 3, 1996* THROUGH AUGUST 31, 1996
MICRO CAP GROWTH GROWTH & VALUE FUND FUND FUND ------------ ------------- -------------- INCREASE/(DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income .......................................... $ 13,553 $ 22,490 $ 9,319 Net realized loss from investments ............................. (651,401) (554,771) (15,057) Net change in unrealized appreciation on investments ........... 623,826 1,057,198 9,101 ----------- ----------- ---------- Net increase/(decrease) in net assets resulting from operations ............................................ (14,022) 524,917 3,363 ----------- ----------- ---------- Increase in net assets derived from capital share transactions .... 14,114,122 26,230,815 3,809,787 ----------- ----------- ---------- Total increase in net assets ................................... 14,100,100 26,755,732 3,813,150 NET ASSETS Beginning of period ............................................ -- -- -- ----------- ----------- ---------- End of period .................................................. $14,100,100 $26,755,732 $3,813,150 =========== =========== ========== - ---------- *Commencement of operations.
The accompanying notes are an integral part of the financial statements. 14 N/I FAMILY OF MUTUAL FUNDS (Logo) [GRAPHIC OMITTED] FINANCIAL HIGHLIGHTS FOR THE PERIOD JUNE 3, 1996* THROUGH AUGUST 31, 1996 - -------------------------------------------------------------------------------- Contained below is per share operating performance data for each share outstanding, total investment return, ratios to average net assets and other supplemental data for the period. This information has been derived from information provided in the financial statements. - --------------------------------------------------------------------------------
MICRO CAP GROWTH GROWTH & VALUE FUND FUND FUND ------------ ------------- -------------- PER SHARE OPERATING PERFORMANCE** Net asset value, beginning of period .............................. $ 12.00 $ 12.00 $ 12.00 -------- -------- ------- Net investment income(1) .......................................... 0.01 0.01 0.03 Net realized and unrealized loss on investments(2) ................ (0.34) (0.17) (0.47) -------- -------- ------- Net decrease in net assets resulting from operations .............. (0.33) (0.16) (0.44) -------- -------- ------- Net asset value, end of period .................................... $ 11.67 $ 11.84 $ 11.56 ======== ======== ======= Total investment return(3) ........................................ (2.75)% (1.33)% (3.67)% ======== ======== ======= RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) ......................... $ 14,100 $ 26,756 $ 3,813 Ratio of expenses to average net assets***(1)(4) .................. 1.00% 1.00% 1.00% Ratio of net investment income to average net assets***(1)......... 0.73% 0.71% 1.89% Portfolio turnover rate**** ....................................... 42.92% 19.21% 5.25% Average commission rate per share(5) .............................. $ 0.0339 $ 0.0365 $0.0363 - ---------- * Commencement of operations. ** Calculated based on shares outstanding on the first and last day of the period, except for dividends and distributions, if any, which are based on actual shares outstanding on the dates of distributions. *** Annualized. **** Not annualized. (1) Reflects waivers and reimbursements. (2) The amount shown for a share outstanding throughout the period is not in accord with the change in the aggregate gains and losses in investments during the period because of the timing of sales and repurchases of Fund shares in relation to fluctuating net asset value during the period. (3) Total return is calculated assuming a purchase of shares on the first day and a sale of shares on the last day of each period reported and includes reinvestments of dividends and distributions, if any. Total return is not annualized. (4) Without the waiver of advisory, administration and transfer agent fees and without the reimbursement of certain operating expenses, the ratio of expenses to average net assets annualized for the period ended August 31, 1996 would have been 3.45%, 2.62% and 8.98% for n/i Micro Cap Fund, n/i Growth Fund, and n/i Growth & Value Fund, respectively. (5) Computed by dividing the total amount of commissions paid by the total number of shares purchased and sold during the period subject to such commissions.
The accompanying notes are an integral part of the financial statements. 15 N/I FAMILY OF MUTUAL FUNDS (Logo) [GRAPHIC OMITTED] MICRO CAP FUND GROWTH FUND GROWTH & VALUE FUND NOTES TO FINANCIAL STATEMENTS 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES The RBB Fund, Inc. ("RBB") was incorporated under the laws of the State of Maryland on February 29, 1988 and is registered under the Investment Company Act of 1940, as amended, (the "Investment Company Act") as an open-end management investment company. RBB is a "series fund", which is a mutual fund divided into separate portfolios. Each portfolio is treated as a separate entity for certain matters under the Investment Company Act, and for other purposes, and a shareholder of one portfolio is not deemed to be a shareholder of any other portfolio. Currently RBB has seventeen investment portfolios, including the n/i FAMILY OF MUTUAL FUNDS ("n/i Family") which consists of three diversified portfolios: n/i Micro Cap Fund, n/i Growth Fund and n/i Growth & Value Fund (each a "Fund", collectively the "Funds"). RBB has authorized capital of thirty billion shares of common stock of which 12.35 billion are currently classified into sixty-six classes. Each class represents an interest in one of seventeen investment portfolios of RBB. The classes have been grouped into fifteen separate "families", eight of which have begun investment operations, including the n/i Family, which commenced operations on June 3, 1996. PORTFOLIO VALUATION -- The net asset value of each Fund is determined as of 4:00 p.m. eastern time on each business day. Each Fund's securities are valued at the last reported sales price on the national securities exchange or national securities market on which such shares are primarily traded. If no sales are reported, as in the case of some securities traded over-the-counter, portfolio securities are valued at the mean between the last reported bid and asked prices. Securities for which market quotations are not readily available are valued at fair market value as determined in good faith by or under the direction of RBB's Board of Directors. With the approval of RBB's Board of Directors, each Fund may use a pricing service, bank or broker/dealer experienced in such matters to value its securities. The preparation of financial statements requires the use of estimates by management. Short-term obligations with maturities of 60 days or less are valued at amortized cost which approximates market value. Expenses and fees, including investment advisory and administration fees are accrued daily and taken into account for the purpose of determining the net asset value of each Fund. REPURCHASE AGREEMENTS -- Each Fund has agreed to purchase securities from financial institutions subject to the seller's agreement to repurchase them at an agreed-upon time and price ("repurchase agreements"). The financial institutions with whom each Fund enters into repurchase agreements are banks and broker/dealers which Numeric Investors L.P. (the Funds' investment adviser or "Numeric") considers creditworthy pursuant to criteria approved by RBB's Board of Directors. The seller under a repurchase agreement will be required to maintain the value of the securities as collateral, subject to the agreement at not less than the repurchase price plus accrued interest. Numeric marks to market daily the value of the collateral, and, if necessary, requires the seller to maintain additional securities, to ensure that the value is not less than the repurchase price. Default by or bankruptcy of the seller would, however, expose each Fund to possible loss because of adverse market action or delays in connection with the disposition of the underlying securities. INVESTMENT TRANSACTIONS AND INVESTMENT INCOME -- 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 in determining realized gains and losses on investments. Interest income is recorded on an accrual basis. Dividend income is recorded on the ex-dividend date. Expenses not directly attributable to a specific Fund are allocated based on relative net assets of each Fund. 16 N/I FAMILY OF MUTUAL FUNDS (Logo) [GRAPHIC OMITTED] MICRO CAP FUND GROWTH FUND GROWTH & VALUE FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) DIVIDENDS AND DISTRIBUTIONS -- Dividends from net investment income, if any, will be declared and paid at least annually to shareholders. Distributions from net realized capital gains, if any, will be distributed at least annually. Income and capital gain distributions are determined in accordance with U.S. federal income tax regulations which may differ from generally accepted accounting principles. U.S. FEDERAL TAX STATUS -- No provision is made for U.S. federal income taxes as it is each Fund's intention to qualify for and elect the tax treatment applicable to regulated investment companies under Subchapter M of the Internal Revenue Code of 1986, as amended, and make the requisite distributions to its shareholders which will be sufficient to relieve it from U.S. federal income and excise taxes. For U.S. Federal income tax purposes, realized capital losses incurred after October 31, but within the fiscal year are deemed to arise on the first day of the following fiscal year. For the period ended August 31, 1996, the n/i Micro Cap Fund, n/i Growth Fund and n/i Growth & Value Fund incurred and elected to defer such losses of $634,355, $527,801 and $15,057, respectively. 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES Numeric Investors L.P. serves as each Fund's investment adviser. For its advisory services, Numeric is entitled to receive 0.75% of each Fund's average daily net assets, computed daily and payable monthly. The adviser has voluntarily agreed to limit each Fund's total operating expenses for the current and the following fiscal year to the extent that such expenses exceeded 1.00% of each Fund's average daily net assets. As necessary, this limitation is effected in waivers of advisory fees and reimbursements of expenses exceeding the advisory fee. For the period ended August 31, 1996, investment advisory fees, waivers and reimbursements of expenses were as follows: GROSS NET EXPENSE FUND ADVISORY FEES WAIVER ADVISORY FEES REIMBURSEMENT - ---- ------------- --------- ------------- -------------- n/i Micro Cap Fund ...... $13,959 $(13,959) -- $(16,152) n/i Growth Fund ......... 23,596 (20,371) $3,225 (13,652) n/i Growth & Value Fund . 3,693 (3,693) -- (21,812) The Funds will not pay Numeric at a later time for any amounts it may waive or any amounts which Numeric has assumed. PFPC Inc. ("PFPC"), an indirect wholly-owned subsidiary of PNC Bank, National Association, and Bear Stearns Funds Management Inc. ("BSFM"), a wholly-owned subsidiary of The Bear Stearns Companies Inc., serve as co-administrators for each of the Funds. For providing administrative services PFPC is entitled to receive a monthly fee equal to an annual rate of 0.125% of each Fund's average daily net assets, subject to a minimum monthly fee of $6,250 per Fund. BSFM is entitled to receive a monthly fee equal to an annual rate of 0.05% of each Fund's average daily net assets. 17 N/I FAMILY OF MUTUAL FUNDS (Logo) [GRAPHIC OMITTED] MICRO CAP FUND GROWTH FUND GROWTH & VALUE FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) For the period ended August 31, 1996, PFPC, at their discretion, voluntarily agreed to waive a portion of their co-administration fees for each of the Funds. For the period ended August 31, 1996, PFPC's co-administration fees and related waivers were as follows: GROSS PFPC NET PFFC CO-ADMINISTRATION CO-ADMINISTRATION FUND FEES WAIVERS FEES - ---- ----------------- -------- ----------------- n/i Micro Cap Fund ............ $18,125 $(9,063) $9,062 n/i Growth Fund ............... 18,125 (9,063) 9,062 n/i Growth & Value Fund ....... 17,917 (8,959) 8,958 In addition, PFPC serves as each Fund's transfer and disbursing agent. PFPC, at their discretion, voluntarily agreed to waive a portion of their transfer agency fees for each of the Funds. For the period ended August 31, 1996, transfer agency fees and waivers were as follows: GROSS NET TRANSFER AGENCY TRANSFER AGENCY FUND FEES WAIVERS FEES - ---- --------------- -------- --------------- n/i Micro Cap Fund ............ $8,700 $(4,350) $4,350 n/i Growth Fund ............... 8,700 (4,350) 4,350 n/i Growth & Value Fund ....... 8,600 (4,300) 4,300 Counsellors Funds Services, Inc. ("Counsellors"), a wholly-owned subsidiary of Warburg, Pincus Counsellors, Inc., provides certain administrative services to each of the Funds. As compensation for such administrative services, Counsellors is entitled to receive a monthly fee equal to an annual rate of 0.15% of each Funds average daily net assets. For the period ended August 31, 1996 Counsellors has, at its discretion, voluntarily agreed to waive a portion of its administrative services fees for each of the Funds. For the period ended August 31, 1996, administrative services fees and waivers were as follows: GROSS ADMINISTRATIVE NET ADMINISTRATIVE FUND SERVICES FEES WAIVERS SERVICES FEES - ---- --------------- -------- ------------------ n/i Micro Cap Fund ............ $2,789 $(2,231) $558 n/i Growth Fund ............... 4,719 (3,785) 934 n/i Growth & Value Fund ....... 738 (591) 147 These fees are computed daily and paid monthly, and are subject to reduction in any year to the extent that any Funds expenses exceed the most stringent limits prescribed by the laws or regulations of any state in which the Funds' shares are offered for sale. 18 N/I FAMILY OF MUTUAL FUNDS (Logo) [GRAPHIC OMITTED] MICRO CAP FUND GROWTH FUND GROWTH & VALUE FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) 3. INVESTMENT IN SECURITIES For U.S. federal income tax purposes, the cost of securities owned at August 31, 1996 were $14,392,984, $26,273,655 and $3,915,500 for n/i Micro Cap Fund, n/i Growth Fund, and n/i Growth & Value Fund, respectively. Accordingly, the net unrealized appreciation/(depreciation) of investments are as follows: FUND APPRECIATION DEPRECIATION NET APPRECIATION - ---- ------------ ------------ ---------------- n/i Micro Cap Fund ........ $ 865,465 $(258,685) $ 606,780 n/i Growth Fund ........... 1,601,062 (570,834) 1,030,228 n/i Growth & Value Fund ... 129,809 (120,708) 9,101 For the period ended August 31, 1996, aggregate purchases and sales of investment securities (excluding short-term investments) were as follows: FUND PURCHASES SALES - ---- ----------- ---------- n/i Micro Cap Fund ......................... $16,206,833 $3,384,161 n/i Growth Fund ............................ 26,198,179 2,795,290 n/i Growth & Value Fund .................... 3,622,731 128,146 4. CAPITAL SHARE TRANSACTIONS As of August 31, 1996 each Fund has 50,000,000 shares of $0.001 par value common stock authorized. Transactions in capital shares for the period June 3, 1996 (commencement of operations) through August 31, 1996 were as follows: SALES REPURCHASES ----------------------- --------------------- SHARES AMOUNT SHARES AMOUNT --------- ----------- ------- ---------- n/i Micro Cap Fund .......... 1,217,175 $14,212,327 8,810 $ 98,205 n/i Growth Fund ............. 2,384,034 27,674,950 124,620 1,444,135 n/i Growth & Value Fund ..... 336,865 3,890,583 7,078 80,796 19 N/I FAMILY OF MUTUAL FUNDS (Logo) [GRAPHIC OMITTED] MICRO CAP FUND GROWTH FUND GROWTH & VALUE FUND NOTES TO FINANCIAL STATEMENTS (CONCLUDED) 5. SECURITIES LENDING Loans of securities are required at all times to be secured by collateral at least equal to 102% of the market value of the securities on loan. However, in the event of default or bankruptcy by the other party to the agreement, realization and/or retention of the collateral may be subject to legal proceedings. In the event that the borrower fails to return securities, and cash collateral being maintained by the borrower is insufficient to cover the value of loaned securities and provided such collateral insufficiency is not the result of investment losses, the lending agent has agreed to pay the amount of the shortfall to the Funds. The market value of securities on loan to brokers and the related collateral cash and indemnification received at August 31, 1996, was as follows: VALUE OF SECURITIES VALUE OF COLLATERAL FUND ON LOAN AND INDEMNIFICATION - ---- ------------------- ------------------- N/i Micro Cap Fund .............. $2,740,526 $2,839,810 n/i Growth Fund ................. 6,567,566 6,887,259 n/i Growth & Value Fund ......... 411,577 431,299 The cash collateral was reinvested into repurchase agreements which was in turn collateralized by Resolution Trust Corp. Mortgage Backed Obligations. 20 REPORT OF INDEPENDENT ACCOUNTANTS TO THE SHAREHOLDERS AND BOARD OF DIRECTORS OF THE RBB FUND,INC: We have audited the accompanying statements of assets and liabilities, including the portfolio of investments, of the n/i Micro Cap Fund, n/i Growth Fund and n/i Growth & Value Fund of The RBB Fund, Inc., as of August 31, 1996 and the related statements of operations, the statements of changes in net assets and the financial highlights for the period June 3, 1996 (commencement of operations) through August 31, 1996. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of investments held by the custodian and brokers as of August 31, 1996. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of the n/i Micro Cap Fund, n/i Growth Fund and n/i Growth & Value Fund of The RBB Fund, Inc., as of August 31, 1996 and the results of their operations, the changes in their net assets and their financial highlights for the period June 3, 1996 (commencement of operations) through August 31, 1996, in conformity with generally accepted accounting principles. COOPERS & LYBRAND L.L.P. 2400 Eleven Penn Center Philadelphia, Pennsylvania October 15, 1996 21 [THIS PAGE INTENTIONALLY LEFT BLANK] N/I FAMILY OF MUTUAL FUNDS (Logo) [GRAPHIC OMITTED] One Memorial Drive Cambridge, MA 02142 1-800-numeric [686-3742] http://www.numeric.com INVESTMENT ADVISER Numeric Investors L.P. One Memorial Drive Cambridge, MA 02142 CO-ADMINISTRATORS Bear Stearns Funds Management Inc. 245 Park Avenue, 15th floor New York, NY 10167 PFPC Inc. Bellevue Corporate Center 400 Bellevue Parkway Wilmington, DE 19809 DISTRIBUTOR Counsellors Funds Services, Inc. 466 Lexington Avenue New York, NY 10017 CUSTODIAN Custodial Trust Company 101 Carnegie Center Princeton, NJ 05840 TRANSFER AGENT PFPC Inc. Bellevue Corporate Center 400 Bellevue Parkway Wilmington, DE 19809 INDEPENDENT ACCOUNTANTS Coopers & Lybrand, L.L.P. 2400 Eleven Penn Center Philadelphia, PA 19103 COUNSEL Ballard Spahr Andrews & Ingersoll 1735 Market Street Philadelphia, PA 19103 This report is submitted for the general information of the shareholders of each Fund.It is not authorized for the distribution to prospective investors in each Fund unless it is preceded or accompanied by a current prospectus which includes details regarding each Fund's objectives, policies and other information. Total return is based on historical results and is not intended to indicate future performance. The investment return and principal value of an investment in each Fund will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than original cost. -----END PRIVACY-ENHANCED MESSAGE-----