N-30D 1 w01-0362.txt SCHNEIDER SEMI ANNUAL REPORT 2001 ================= THE SCHNEIDER SMALL CAP VALUE FUND ================= SEMI-ANNUAL REPORT FEBRUARY 28, 2001 (LOGO) [GRAPHIC OMITTED ----------------------------------- SCHNEIDER CAPITAL MANAGEMENT SCHNEIDER SMALL CAP VALUE FUND SEMI-ANNUAL INVESTMENT ADVISER'S REPORT FEBRUARY 28, 2001 Dear Fellow Shareholder: We are pleased to provide you with the semi-annual report for the Schneider Small Cap Value Fund for the six months ended February 28, 2001. STOCK MARKET OVERVIEW The U.S. stock market suffered a tumultuous decline during the six months ended February, with the Standard & Poor's 500 Index returning -18.30% for the period. The Russell 2000 Index of small cap stocks declined -11.15% and the technology-laden Nasdaq Composite plunged a painful -48.79%. The economy abruptly downshifted during the latter half of 2000 and continued to weaken in the first quarter of 2001. A succession of six Fed interest rate increases from July 1999 through May 2000, weak demand for manufactured goods, higher energy prices and a deflation of the technology bubble weighted heavily on the U.S. economy. In this environment, small cap value stocks were generally favored over other investment styles as investors appeared to judge growth stocks to be grossly overvalued in light of their deteriorating business fundamentals and lowered estimates for future earnings growth. INVESTMENT REVIEW The Fund performed slightly better than the benchmark Russell 2000 Value Index over the six-month period ended February 28, 2001, returning 11.46% versus 10.31% for its benchmark. Since inception on September 2, 1998, the Fund has performed extremely well in delivering a 39.92% annualized return versus 14.53% for the index. Most helpful to performance during the six-month period ended February 28, 2001, were the outstanding returns produced by the Fund's holdings in the health care sector. Investments in selected HMO's, hospital and related stocks were propelled by substantial improvement in their underlying profitability and earnings power. After years of relentless pressure on both costs and pricing, the industry finally experienced some relief that enabled well-managed firms to increase their margins and restore their profitability. Financial Services represented the largest sector weighting in the Fund, and a small number of holdings detracted from overall performance in the sector. Specifically, the Fund owned several insurance stocks that reported unanticipated earnings shortfalls due to unfavorable claims experience, additions to reserves or inadequate cost controls. SCHNEIDER SMALL CAP VALUE FUND SEMI-ANNUAL INVESTMENT ADVISER'S REPORT FEBRUARY 28, 2001 STRATEGY AND OUTLOOK The Fund continues to be invested primarily in companies that we believe are experiencing temporarily depressed profitability, with improvement expected in the medium-term through internally or externally-driven positive change. During the period a portion of our HMO and hospital stocks were sold to capture the substantial appreciation in those holdings, although selected names still offer value. The Fund continues to overweight the savings and loan industry. In our opinion, this group still sells at a discount to its underlying business value, and as the yield curve continues to migrate from an inverted to a more normal shape, we expect earnings and valuations to rebound strongly. We see opportunities beginning to appear in specific niches in cyclical industries that we believe are approaching trough earnings and valuations. Doubts are increasing that the U.S. can escape a fall into a prolonged and broad-based recession. We believe that serious structural imbalances in the economy, which include overcapacity in the manufacturing sector, the negative savings rate, a persistent trade deficit, high corporate and consumer debt levels, and the recent decline in consumer wealth, will need to be addressed before the outcome is clear. In the midst of this turbulent environment, we are taking particular care to avoid stocks that appear to be "cheap", but we believe are in reality no bargain due to the likelihood of future earnings erosion. We also continue to find an ample supply of attractive stocks that meet our stringent investment criteria. Thank you for the confidence you have shown in us by investing in the Schneider Small Cap Value Fund. /s/ ARNOLD C. SCHNEIDER III Arnold C. Schneider III, CFA Portfolio Manager Schneider Capital Management 2 SCHNEIDER SMALL CAP VALUE FUND SEMI-ANNUAL INVESTMENT ADVISER'S REPORT FEBRUARY 28, 2001 (UNAUDITED) Comparison of Change in Value of $10,000 Investment in Schneider Small Cap Value Fund (1)(2) vs. Russell 2000 Value Index [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC Schneider Small Cap Value Fund Russell 2000 Value Index 9/2/98 $10,000.00 $10,000.00 9/30/98 $10,000.00 $10,362.00 10/31/98 $11,930.00 $10,669.75 11/30/98 $12,410.00 $10,958.90 12/31/98 $12,470.71 $11,303.01 1/31/99 $13,785.55 $11,046.43 2/28/99 $12,531.39 $10,291.96 3/31/99 $13,006.76 $10,207.57 4/30/99 $15,221.75 $11,139.52 5/31/99 $16,233.16 $11,481.50 6/30/99 $18,043.59 $11,897.13 7/31/99 $18,731.35 $11,615.17 8/31/99 $18,245.87 $11,191.22 9/30/99 $17,517.66 $10,967.39 10/31/99 $16,759.10 $10,748.04 11/30/99 $17,456.97 $10,803.93 12/31/99 $18,340.82 $11,135.61 1/31/00 $17,832.99 $10,843.86 2/29/00 $18,069.19 $11,506.42 3/31/00 $19,391.91 $11,560.50 4/30/00 $19,391.91 $11,628.71 5/31/00 $19,769.82 $11,450.79 6/30/00 $19,840.68 $11,785.15 7/31/00 $19,734.39 $12,177.60 8/31/00 $20,750.05 $12,721.94 9/30/00 $20,844.53 $12,649.42 10/31/00 $20,490.23 $12,603.88 11/30/00 $19,415.52 $12,346.76 12/31/00 $21,494.55 $13,672.81 1/31/01 $24,177.81 $14,050.18 2/28/01 $23,127.22 $14,030.51 -------------------------------------------------------------------------------- Total Returns VALUE ON SINCE FEBRUARY 28, 2001 INCEPTION(3) ----------------- ------------ Schneider Small Cap Value $23,127 39.92% Russell 2000 Value Index $14,031 14.53% -------------------------------------------------------------------------------- The Fund's total return is based on an increase in net asset value from $10.00 per share on September 2, 1998 to $16.29 per share on February 28, 2001, adjusted for dividends totaling $5.49 per share paid from net investment income and realized gains. ---------- (1) The chart assumes a hypothetical $10,000 initial investment in the Fund made on September 2, 1998 (inception) and reflects Fund expenses. Investors should note that the Fund is a professionally managed mutual fund while the indices are unmanaged, do not incur sales charges and/or expenses and are not available for investment. (2) Schneider Capital Management waived a portion of its advisory fee and agreed to reimburse a portion of the Fund's operating expenses, as necessary, to maintain the expense limitation, as set forth in the notes to the financial statements. Total returns shown include fee waivers and expense reimbursements, if any; total returns would have been lower had there been no assumption of fees and expenses in excess of expense limitations. Returns shown include the reinvestment of all dividends and other distributions. Past performance is not predictive of future performance. Investment return and principal value will fluctuate, so that your shares, when redeemed, may be worth more or less than their original cost. (3) Annualized return for the period September 2, 1998 (commencement of operations) through February 28, 2001. 3 SCHNEIDER SMALL CAP VALUE FUND PORTFOLIO OF INVESTMENTS FEBRUARY 28, 2001 (UNAUDITED) SHARES VALUE ------ ----------- DOMESTIC COMMON STOCKS -- 92.5% AEROSPACE/DEFENSE -- 1.2% Orbital Sciences Corp.* .............................. 38,000 $ 281,960 ----------- AGRICULTURE -- 2.6% Corn Products International, Inc. .................... 25,700 652,780 ----------- AUTOMOBILE PARTS & EQUIPMENT -- 0.8% Visteon Corp. ........................................ 12,900 185,760 ----------- AUTOMOBILE RENTALS -- 0.2% ANC Rental Corp.* .................................... 14,400 44,100 ----------- BANKS -- 1.3% Bancfirst Ohio Corp. ................................. 8,400 149,100 Pacific Century Financial Corp. ...................... 9,000 175,140 ----------- 324,240 ----------- CHEMICALS -- 3.3% Airgas, Inc.* ........................................ 20,300 164,633 Georgia Gulf Corp. ................................... 3,000 51,960 IMC Global, Inc. ..................................... 13,400 184,250 Millennium Chemicals, Inc. ........................... 5,000 89,500 Mississippi Chemical Corp. ........................... 8,700 38,715 Polyone Corp. ........................................ 34,200 294,120 ----------- 823,178 ----------- CHEMICALS & PLASTIC -- 1.5% Wellman, Inc. ........................................ 21,600 379,296 ----------- CHEMICALS - SPECIALTY -- 0.9% Lesco, Inc. .......................................... 8,600 119,325 Olin Corp. ........................................... 4,400 91,300 Terra Industries, Inc.* .............................. 3,900 13,416 ----------- 224,041 ----------- COMMUNICATION SERVICES -- 1.1% Metromedia International Group, Inc.* ................ 68,200 200,508 Via Net. Works Inc.* ................................. 13,800 79,350 ----------- 279,858 ----------- SHARES VALUE ------ ----------- COMPUTER SOFTWARE -- 1.9% Acclaim Entertainment, Inc.* ......................... 3,500 $ 4,484 3DO Co.* ............................................. 24,000 41,250 MSC Software Corp.* .................................. 39,800 378,100 Systems & Computer Technology Corp.* ................. 4,500 54,281 ----------- 478,115 ----------- CONSTRUCTION & BUILDING MATERIALS-- 1.0% USG Corp. ............................................ 13,400 255,136 ----------- ELECTRICAL EQUIPMENT -- 3.0% Electro Scientific Industries, Inc.* ................. 6,100 171,181 Exide Corp. .......................................... 23,900 218,446 Sensormatic Electronics Corp.* ....................... 16,000 350,400 ----------- 740,027 ----------- ELECTRONIC COMPONENTS & ACCESSORIES-- 0.1% Nam Tai Electronics, Inc. ............................ 800 14,200 ----------- ENGINEERING & CONSTRUCTION -- 1.2% Willbros Group, Inc.* ................................ 31,900 293,161 ----------- ENTERTAINMENT -- 0.1% AMC Entertainment, Inc.* ............................. 4,200 25,200 ----------- FARM MACHINERY & EQUIPMENT -- 1.0% CNH Global N.V. ...................................... 30,400 249,280 ----------- FINANCE -- 1.0% AmeriCredit Corp.* ................................... 6,300 215,334 Union Acceptance Corp.* .............................. 6,300 31,106 ----------- 246,440 ----------- FOOD -- 3.8% Dean Foods Co. ....................................... 1,900 62,624 International Multifoods Corp. ....................... 20,400 383,316 Suiza Foods Corp.* ................................... 3,500 171,395 Tate & Lyle PLC - ADR ................................ 22,200 321,150 ----------- 938,485 ----------- FOOD - MEAT PROCESSING -- 1.3% Pilgrim's Pride Corp., Class A ....................... 44,400 315,240 ----------- FOOTWEAR -- 1.3% Barry (R.G.) Corp.* .................................. 43,600 119,900 Finish Line, Inc., (The) Class A*..................... 28,000 194,250 ----------- 314,150 ----------- The accompanying notes are an integral part of the financial statements. 4 SCHNEIDER SMALL CAP VALUE FUND PORTFOLIO OF INVESTMENTS (CONTINUED) FEBRUARY 28, 2001 (UNAUDITED) SHARES VALUE ------ ----------- HEALTHCARE -- 2.9% Humana, Inc.* ........................................ 13,700 $ 184,950 PacifiCare Health Systems, Inc.* ..................... 4,400 172,150 Sierra Health Services, Inc.* ........................ 41,900 219,975 United Wisconsin Services, Inc. ...................... 22,900 144,270 ----------- 721,345 ----------- HEALTHCARE FACILITIES -- 3.5% American Retirement Corp.* ........................... 42,700 181,475 Sunrise Assisted Living, Inc.* ....................... 29,000 688,750 ----------- 870,225 ----------- HEALTHCARE - MISCELLANEOUS -- 0.6% Angelica Corp. ....................................... 16,200 149,688 ----------- HOMEBUILDING -- 5.1% American Real Estate Partners, L.P.* ................. 17,500 172,375 Champion Enterprises, Inc.* .......................... 82,100 451,550 Clayton Homes, Inc. .................................. 30,000 382,500 Newhall Land & Farming Co. ........................... 9,600 254,400 ----------- 1,260,825 ----------- INSURANCE -- 1.7% E. W. Blanch Holdings, Inc. .......................... 21,784 181,243 Mutual Risk Management Ltd. .......................... 8,300 94,205 Scottish Annuity & Life Holdings ..................... 9,100 147,875 ----------- 423,323 ----------- INSURANCE - PROPERTY & CASUALTY-- 13.6% American Financial Group, Inc. ....................... 33,000 792,000 Danielson Holding Corp.* ............................. 55,300 235,025 GAINSCO, Inc. ........................................ 20,000 39,400 HCC Insurance Holdings, Inc. ......................... 30,400 715,008 Meadowbrook Insurance Group, Inc. .................... 5,700 25,650 Navigators Group, Inc.* .............................. 4,600 63,825 Professionals Group, Inc.* ........................... 7,550 181,672 PXRE Group Ltd. ...................................... 34,300 587,559 RenaissanceRe Holdings Ltd. .......................... 6,500 483,275 Zenith National Insurance Corp. ...................... 8,400 229,320 ----------- 3,352,734 ----------- SHARES VALUE ------ ----------- INSURANCE - SPECIALTY -- 3.3% FPIC Insurance Group, Inc.* .......................... 43,900 $ 422,537 LandAmerica Financial Group, Inc. .................... 4,500 161,550 LTC Properties, Inc. ................................. 6,000 24,120 MIIX Group, Inc. (The) ............................... 26,300 195,935 ----------- 804,142 ----------- MACHINERY - SPECIALIZED -- 1.4% Stewart & Stevenson Services, Inc. ................... 13,600 350,200 ----------- MANUFACTURING - SPECIALTY -- 0.9% York International Corp. ............................. 7,200 230,400 ----------- MANUFACTURING INDUSTRIES -- 0.6% ABC-Naco, Inc.* ...................................... 24,400 134,200 Park Ohio Holdings Corp.* ............................ 2,400 13,200 ----------- 147,400 ----------- METAL FABRICATORS -- 0.2% Hardinge, Inc. ....................................... 2,000 25,750 Metals USA, Inc. ..................................... 10,900 33,790 ----------- 59,540 ----------- METALS -- 1.0% Brush Engineered Materials, Inc. ..................... 9,000 189,450 Century Aluminum Co. ................................. 4,100 56,119 ----------- 245,569 ----------- OFFICE PRODUCTS -- 1.0% Interface, Inc. ...................................... 22,600 144,075 Moore Corp. Ltd. ..................................... 26,300 106,515 ----------- 250,590 ----------- OIL & GAS - REFINING -- 0.3% Tesoro Petroleum Corp.* .............................. 6,300 79,632 ----------- OIL & GAS FIELD SERVICES -- 1.9% Atwood Oceanics, Inc.* ............................... 1,500 65,355 Friede Goldman Halter, Inc.* ......................... 51,100 138,481 Smedvig ASA - ADR, Class B ........................... 26,800 269,340 ----------- 473,176 ----------- PACKAGING/CONTAINERS -- 0.2% Gaylord Containers Corp., Class A*.................... 45,900 53,244 ----------- The accompanying notes are an integral part of the financial statements. 5 SCHNEIDER SMALL CAP VALUE FUND PORTFOLIO OF INVESTMENTS (CONTINUED) FEBRUARY 28, 2001 (UNAUDITED) SHARES VALUE ------ ----------- PAPER -- 1.7% Glatfelter P.H. Co. .................................. 26,200 $ 314,138 Mercer International, Inc.* .......................... 15,000 109,219 ----------- 423,357 ----------- PLASTIC PRODUCTS -- 2.1% Tupperware Corp. ..................................... 22,200 523,920 ----------- RETAIL - EATING & DRINKING PLACES -- 0.2% CKE Restaurants, Inc.* ............................... 12,100 44,770 ----------- RETAIL - GROCERY STORES -- 0.3% The Great Atlantic & Pacific Tea Co., Inc. .............................................. 7,000 66,850 ----------- RETAIL - SPECIALTY -- 1.6% Casual Male Corp. .................................... 41,100 303,112 Intertan, Inc.* ...................................... 6,450 80,625 ----------- 383,737 ----------- SAVINGS & LOAN ASSOCIATIONS -- 10.0% BankUnited Financial Corp., Class A* ................. 16,400 161,950 Bank Plus Corp.* ..................................... 56,600 261,775 Bay View Capital Corp.* .............................. 34,600 217,980 FirstFed Financial Corp.* ............................ 5,300 155,290 First Niagara Financial Group ........................ 3,200 36,600 Flushing Financial Corp. ............................. 12,400 221,650 Pennfed Financial Services ........................... 4,600 88,550 Staten Island Bancorp, Inc. .......................... 3,100 77,035 Thistle Group Holdings Co. ........................... 12,300 111,469 Washington Federal, Inc. ............................. 25,250 656,500 Westcorp, Inc. ....................................... 27,600 468,924 ----------- 2,457,723 ----------- SEMI-CONDUCTORS & RELATED -- 0.4% Chippac, Inc.* ....................................... 2,900 11,600 MEMC Electronic Materials, Inc.* ..................... 10,600 86,920 ----------- 98,520 ----------- SHIPPING -- 1.8% Alexander & Baldwin, Inc. ............................ 3,500 90,344 Kirby Corp.* ......................................... 7,300 147,095 Sea Containers, Ltd., Class A ........................ 10,300 213,210 ----------- 450,649 ----------- SHARES VALUE ------ ----------- STEEL -- 2.2% Birmingham Steel Corp.* .............................. 50,300 $ 72,935 Cleveland Cliffs, Inc. ............................... 9,400 168,730 Commercial Metals Co. ................................ 3,400 86,938 USX-U.S. Steel Group ................................. 13,800 210,312 ----------- 538,915 ----------- TELECOMMUNICATIONS EQUIPMENT -- 0.3% Primus Telecommunications Group, Inc.* ............... 25,200 74,812 ----------- TIRES & INNER TUBES -- 2.3% Titan International, Inc. ............................ 26,600 134,596 Wabash National Corp. ................................ 39,900 430,920 ----------- 565,516 ----------- TRANSPORTATION -- 1.3% Covenant Transportation, Inc., Class A* .............. 15,400 195,388 Heartland Express, Inc.* ............................. 3,900 97,500 U.S. Xpress Enterprises, Inc.* ....................... 2,700 18,731 ----------- 311,619 ----------- UTILITIES -- 1.5% Avista Corp. ......................................... 7,900 124,425 Sierra Pacific Resources ............................. 17,300 239,778 ----------- 364,203 ----------- TOTAL DOMESTIC COMMON STOCKS (Cost $20,884,029) .............................. 22,841,271 ----------- CANADIAN COMMON STOCK -- 2.7% Boardwalk Equities, Inc.* ............................ 29,000 197,029 Canadian Hotel Income Properties, REIT .............................................. 47,461 280,895 Fairfax Financial Holdings Ltd.* ..................... 1,300 186,838 ----------- TOTAL CANADIAN COMMON STOCK (Cost $712,557) ................................. 664,762 ----------- FRENCH COMMON STOCK -- 1.4% Compagnie Francaise d'Etudes de Construction Technip .............................. 2,500 355,149 ----------- TOTAL FRENCH COMMON STOCK (Cost $264,612) ................................. 355,149 ----------- The accompanying notes are an integral part of the financial statements. 6 SCHNEIDER SMALL CAP VALUE FUND PORTFOLIO OF INVESTMENTS (CONCLUDED) FEBRUARY 28, 2001 (UNAUDITED) PAR (000) VALUE ------ ----------- CONVERTIBLE BONDS -- 0.7% Asia Pulp & Paper Global Finance (Caa3, CCC-) 23.65%,** 11/18/12 ................................ $3,080 $ 161,700 ----------- TOTAL CONVERTIBLE BONDS (Cost $255,608) ................................. 161,700 ----------- SHORT TERM INVESTMENTS -- 3.2% Wilmington Fund Cash Sweep 5.26%, 03/01/01 ................................... 784 783,997 ----------- TOTAL SHORT TERM INVESTMENTS (Cost $783,997) ................................. 783,997 ----------- TOTAL INVESTMENTS -- 100.5% (Cost $22,900,803) ................................ 24,806,879 ----------- LIABILITIES IN EXCESS OF OTHER ASSETS -- (0.5%) .......................... (120,174) ----------- NET ASSETS -- 100.0% ................................. $24,686,705 =========== ---------- * Non-income producing. ** The rate shown represents yield to maturity on zero coupon bonds. ADR - American Depository Receipt REIT - Real Estate Investment Trust The Moody's Investor Service, Inc. and Standard and Poor's Ratings Group's ratings indicated are the most recent ratings available at February 28, 2001. The accompanying notes are an integral part of the financial statements. 7 SCHNEIDER SMALL CAP VALUE FUND STATEMENT OF ASSETS AND LIABILITIES FEBRUARY 28, 2001 (UNAUDITED) ASSETS Investments, at value (cost-- $22,900,803) .......... $24,806,879 Receivable for investments sold ..................... 202,220 Dividends and interest receivable ................... 34,469 Receivable from advisor ............................. 5,032 Other assets ........................................ 887 ----------- Total Assets ...................................... 25,049,487 ----------- LIABILITIES Payable for investments purchased ................... 320,859 Accrued expenses payable and other liabilities ...... 41,923 ----------- Total Liabilities ................................. 362,782 ----------- NET ASSETS Capital stock, $0.001 par value ..................... 1,516 Additional paid-in capital .......................... 21,332,734 Undistributed net investment income ................. 35,696 Accumulated net realized gain from investments and foreign exchange transactions, if any ......... 1,410,683 Net unrealized appreciation on investments and foreign exchange transactions, if any ............. 1,906,076 ----------- Net assets applicable to shares outstanding ......... $24,686,705 =========== Shares outstanding ..................................... 1,515,527 =========== Net asset value, offering and redemption price per share $16.29 =========== The accompanying notes are an integral part of the financial statements. 8 SCHNEIDER SMALL CAP VALUE FUND STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED FEBRUARY 28, 2001 ----------------- Investment Income Dividends ................................................................... $ 162,378* Interest .................................................................... 24,411 ---------- 186,789 ---------- Expenses Advisory fees ............................................................... 103,871 Administration fees ......................................................... 52,565 Custodian fees and expenses ................................................. 26,405 Administrative service fees ................................................. 15,581 Transfer agent fees and expenses ............................................ 13,041 Printing .................................................................... 11,901 Federal and state registration fees ......................................... 5,951 Audit and legal fees ........................................................ 2,558 Directors fees .............................................................. 863 Insurance ................................................................... 233 Other ....................................................................... 1,113 ---------- Total expenses before waivers ............................................. 234,082 Less: waivers ............................................................... (119,697) ---------- Total expenses after waivers .............................................. 114,385 ---------- Net investment income .......................................................... 72,404 ---------- Netrealized and unrealized gain/(loss) on investment and foreign exchange transactions: Net realized gain/(loss) from: Investments ............................................................... 2,055,014 Foreign currency transactions ............................................. (183) Net change in unrealized appreciation/(depreciation) on: Investments ............................................................... 286,055 Foreign currency transactions ............................................. (530) ---------- Net realized and unrealized gain on investments and foreign currency ........ 2,340,356 ----------- Net increase in net assets resulting from operations ........................... $2,412,760 ========== ---------- *Net of foreign withholding taxes of $5,406.
The accompanying notes are an integral part of the financial statements. 9 SCHNEIDER SMALL CAP VALUE FUND STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS FOR THE ENDED FEBRUARY 28, 2001 YEAR ENDED (UNAUDITED) AUGUST 31, 2000 ----------------------- --------------- INCREASE IN NET ASSETS RESULTING FROM OPERATIONS Net investment income .................................... $ 72,404 $ 68,943 Net realized gain from investments and foreign currency transactions, if any .................. 2,054,831 2,907,567 Net change in unrealized appreciation/(depreciation) on investments and foreign currency transactions, if any 285,525 (658,920) ----------- ----------- Net increase in net assets resulting from operations ..... 2,412,760 2,317,590 ----------- ----------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income .................................... (93,529) -- Net realized capital gains ............................... (3,249,041) (2,065,468) ----------- ----------- Total dividends and distributions to shareholders ...... (3,342,570) (2,065,468) ----------- ----------- INCREASE IN NET ASSETS DERIVED FROM CAPITAL SHARE TRANSACTIONS (SEE NOTE 4) ................................. 6,222,822 6,217,845 ----------- ----------- Total increase in net assets ........................... 5,293,012 6,469,967 NET ASSETS Beginning of period ...................................... 19,393,693 12,923,726 ----------- ----------- End of period ............................................ $24,686,705 $19,393,693 =========== ===========
The accompanying notes are an integral part of the financial statements. 10 SCHNEIDER SMALL CAP VALUE FUND FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- 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. --------------------------------------------------------------------------------
FOR THE SIX MONTHS FOR THE FOR THE PERIOD ENDED FEBRUARY 28, 2001 YEAR ENDED SEPTEMBER 2, 1998* (UNAUDITED) AUGUST 31, 2000 THROUGH AUGUST 31, 1999 ----------------------- --------------- ----------------------- PER SHARE OPERATING PERFORMANCE** Net asset value, beginning of period ......................... $ 17.57 $ 18.04 $ 10.00 Net investment income/(loss)(1) .............................. 0.05 0.07 (0.02) Net realized and unrealized gain on investments and foreign exchange transactions, if any(2) .................. 1.55 1.94 8.19 ------- ------- ------- Net increase in net assets resulting from operations ......... 1.60 2.01 8.17 ------- ------- ------- Dividends and distributions to shareholders from: Net investment income ........................................ (0.08) -- -- Net realized capital gains ................................... (2.80) (2.48) (0.13) ------- ------- ------- Total dividends and distributions to shareholders ............ (2.88) (2.48) (0.13) ------- ------- ------- Net asset value, end of period ............................... $ 16.29 $17.57 $18.04 ======= ======= ======= Total investment return(3) ................................... 11.46% 13.72% 82.46% ======= ======= ======= RATIO/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) .................... $24,687 $19,394 $12,924 Ratio of expenses to average net assets(1) ................... 1.10%(4) 1.10% 1.10%(4) Ratio of expense to average net assets without waivers and expense reimbursements .................................... 2.25%(4) 2.37% 3.90%(4) Ratio of net investment income/(loss) to average net assets(1) 0.70%(4) 0.44% (0.17)%(4) Portfolio turnover rate ...................................... 51.37% 84.93% 145.99% ---------- * Commencement of operations. ** Calculated based on shares outstanding on the first and last day of the respective period, except for dividends and distributions, if any, which are based on actual shares outstanding on the dates of distributions. (1) Reflects waivers and reimbursements. (2) The amounts shown for each share outstanding throughout the respective period are not in accord with the changes in the aggregate gains and losses on investments during the respective period because of the timing of sales and repurchases of Fund shares in relation to fluctuating net asset value during the respective period. (3) Total investment 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 investment returns are not annualized. (4) Annualized The accompanying notes are an integral part of the financial statements.
11 SCHNEIDER SMALL CAP VALUE FUND NOTES TO FINANCIAL STATEMENTS FEBRUARY 28, 2001 (UNAUDITED) 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 fourteen investment portfolios, including the Schneider Small Cap Value Fund (the "Fund") which commenced investment operations on September 2, 1998. As of the date hereof, the Fund offers the Institutional Class. RBB has authorized capital of thirty billion shares of common stock of which 15.98 billion are currently classified into ninety-four classes. Each class represents an interest in one of fourteen investment portfolios of RBB. The classes have been grouped into thirteen separate "families", eight of which have begun investment operations, including the Schneider Small Cap Value Fund. PORTFOLIO VALUATION -- The net asset value of the Fund is determined as of 4:00 p.m. Eastern Standard Time on each business day. The 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 the RBB's Board of Directors, the Fund may use a pricing service, bank or broker-dealer experienced in such matters to value its securities. 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 the Fund. USE OF ESTIMATES -- The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates. REPURCHASE AGREEMENTS -- The 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 the Fund enters into repurchase agreements are banks and broker/dealers which Schneider Capital Management, LP (the Fund's investment adviser or "SCM") considers creditworthy. 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. SCM 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 the Fund to possible loss because of adverse market action or delays in connection with the disposition of the underlying securities. 12 SCHNEIDER SMALL CAP VALUE FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) FEBRUARY 28, 2001 (UNAUDITED) 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 the accrual basis. Dividend income is recorded on the ex-dividend date. FOREIGN CURRENCY TRANSLATION -- Foreign securities, other assets and liabilities are valued using the foreign currency exchange rate effective at the end of the reporting period. Cost of investments is translated at the currency exchange rate effective at the trade date. The gain or loss resulting from a change in currency exchange rates between the trade and settlement dates of a portfolio transaction is treated as a gain or loss on foreign currency. Likewise, the gain or loss resulting from a change in currency exchange rates, between the date income is accrued and paid, is treated as a gain or loss on foreign currency. The Fund does not separate that portion of the results of operations arising from changes in exchange rates and that portion arising from changes in the market prices of securities. DIVIDENDS AND DISTRIBUTIONS -- Dividends from net investment income, if any, are declared and paid at least annually to shareholders. Distributions from net realized capital gains, if any, are 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. These differences include the treatment of non-taxable dividends, expiring capital loss carryforwards, foreign currency gain/loss, partnerships, and losses deferred due to wash sales and excise tax regulations. Permanent book and tax basis differences relating to shareholder distributions will result in reclassifications to paid in capital. U.S. FEDERAL TAX STATUS -- No provision is made for U.S. federal income taxes as it is the Fund's intention to continue 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. 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES SCM serves as the Fund's investment adviser. For its advisory services, SCM is entitled to receive 1.00% of the Fund's average daily net assets, computed daily and payable monthly. The adviser has agreed to limit the Fund's total operating expenses for the current fiscal year to the extent that such expenses exceeded 1.10% of the Fund's average daily net assets. As necessary, this limitation is effected in waivers of advisory fees and reimbursements of other fund expenses. For the six months ended February 28, 2001, investment advisory fees and waivers of expenses were as follows:
GROSS ADVISORY WAIVERS NET ADVISORY -------------- ---------- ------------ Schneider Small Cap Value Fund $103,871 $(102,134) $1,737
The Fund will not pay SCM at a later time for any amounts it may waive or any amounts that SCM has assumed. 13 SCHNEIDER SMALL CAP VALUE FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) FEBRUARY 28, 2001 (UNAUDITED) PFPC Trust Co. serves as custodian of the Fund. PFPC Inc. ("PFPC"), serves as administrator for the Fund. Both PFPC Trust Co. and PFPC are wholly-owned subsidiaries of PFPC Worldwide, Inc., an indirect majority-owned subsidiary of the PNC Financial Services Group, Inc. For providing administrative services PFPC is entitled to receive a monthly fee equal to an annual rate of 0.125% of the Fund's average daily net assets, subject to a minimum monthly fee of $8,333 per Fund plus out of pocket expenses. For the six months ended February 28, 2001, PFPC, at its discretion, voluntarily agreed to waive a portion of its administration fees for the Fund. During this period, PFPC's administration fees and related waivers were as follows:
GROSS NET ADMINISTRATION FEES WAIVERS ADMINISTRATION FEES ------------------- -------- ------------------- Schneider Small Cap Value Fund $52,565 $(4,098) $48,467
In addition, PFPC serves as the Fund's transfer and disbursing agent. PFPC, at its discretion, voluntarily agreed to waive a portion of its transfer agency fees for the Fund. During the six months ended February 28, 2001, transfer agency fees and waivers were as follows:
GROSS TRANSFER NET TRANSFER AGENCY FEES WAIVERS AGENCY FEES -------------- -------- ------------ Schneider Small Cap Value Fund $13,041 $(1,000) $12,041
From September 1, 2000 through January 1, 2001, Provident Distributors, Inc. (PDI) provided certain administrative services to the Fund. As compensation for such administrative services, PDI received a monthly fee equal to an annual rate of 0.15% of the Fund's average daily net assets. For the period ended January 1, 2001, PDI, at its discretion, voluntarily agreed to waive a portion of its administrative services fees for the Fund. During this period, administrative services fees were as follows:
GROSS ADMINISTRATIVE NET ADMINISTRATIVE SERVICES FEES WAIVERS SERVICES FEES -------------- -------- ------------------ Schneider Small Cap Value Fund $9,741 $(7,793) $1,948
Since January 2, 2001, PFPC Distributors, Inc., a wholly-owned subsidiary of PFPC Worldwide, Inc. and an indirect majority-owned subsidiary of the PNC Financial Services Group, Inc., provides certain administrative services to the Fund. As compensation for such administrative services, PFPC Distributors receives a monthly fee equal to an annual rate of 0.15% of the Fund's average daily net assets. For the period ended February 28, 2001, PFPC Distributors, at its discretion, voluntarily agreed to waive a portion of its administrative services fees for the Fund. During this period, administrative services fees were as follows:
GROSS ADMINISTRATIVE NET ADMINISTRATIVE SERVICES FEES WAIVERS SERVICES FEES -------------- -------- ------------------ Schneider Small Cap Value Fund $5,840 $(4,672) $1,168
These fees are accrued daily and paid monthly. 14 SCHNEIDER SMALL CAP VALUE FUND NOTES TO FINANCIAL STATEMENTS (CONCLUDED) FEBRUARY 28, 2001 (UNAUDITED) 3. INVESTMENT IN SECURITIES For U.S. federal income tax purposes, the cost of securities owned at February 28, 2001 was $22,948,475. Accordingly, the net unrealized appreciation/(depreciation) of investments was as follows:
NET APPRECIATION/ APPRECIATION DEPRECIATION (DEPRECIATION) ------------ ------------ ----------------- Schneider Small Cap Value Fund $4,188,165 $(2,329,761) $1,858,404
For the six months ended February 28, 2001, aggregate purchases and sales of investment securities (excluding short-term investments) were as follows: PURCHASES SALES ----------- ----------- Schneider Small Cap Value Fund $13,111,299 $10,770,060 4. CAPITAL SHARE TRANSACTIONS As of February 28, 2001 the Fund has 100,000,000 shares of $0.001 par value common stock authorized. Transactions in capital shares for the six months ended February 28, 2001 were as follows: SCHNEIDER SMALL CAP VALUE FUND ---------------------- SHARES AMOUNT -------- ----------- Sales ......................... 259,722 $ 4,224,998 Reinvest ...................... 230,776 3,288,554 Repurchases ................... (78,893) (1,290,730) -------- ----------- Net increase .................. 411,605 $ 6,222,822 ======= =========== On February 28, 2001, two shareholders held approximately 20% of the outstanding shares of the Schneider Small Cap Value Fund. One of the shareholders, an officer of the advisor, owns approximately 9% of the outstanding shares. 15 INVESTMENT ADVISER Schneider Capital Management 460 E. Swedesford Road Wayne, PA 19087 ADMINISTRATOR/TRANSFER AGENT PFPC Inc. 400 Bellevue Parkway Wilmington, DE 19809 DISTRIBUTOR PFPC Distributors, Inc. 3200 Horizon Dr. King of Prussia, PA 19046 CUSTODIAN PFPC Trust Company 8800 Tinicum Blvd. Suite 200 Philadelphia, PA 19153 INDEPENDENT ACCOUNTANTS PricewaterhouseCoopers LLP Two Commerce Square, Suite 1700 2001 Market Street Philadelphia, PA 19103-7042 COUNSEL Drinker Biddle & Reath LLP One Logan Square 18th and Cherry Streets Philadelphia, PA 19103-6996 This report is submitted for the general information of the shareholders of the Fund. It is not authorized for the distribution to prospective investors in the Fund unless it is preceded or accompanied by a current prospectus which includes details regarding the Fund's objectives, policies and other information. Total investment return is based on historical results and is not intended to indicate future performance. The investment return and principal value of an investment in the Fund will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than original cost.