N-CSRS 1 g10185_rbbncsrs2004.txt RBB 2004 NCSRS UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-5518 -------- The RBB Fund, Inc. ---------------------------------------------------------- (Exact name of registrant as specified in charter) 300 East Lombard Street Baltimore, MD 21202 ---------------------------------------------------------- (Address of principal executive offices) (Zip code) The Corporation Trust Incorporated 300 East Lombard Street Baltimore, MD 21202 ---------------------------------------------------------- (Name and address of agent for service) Registrant's telephone number, including area code: 302-792-2555 ------------ Date of fiscal year end: August 31, 2004 --------------- Date of reporting period: February 29, 2004 ----------------- Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles. A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget ("OMB") control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. ss. 3507. ITEM 1. REPORTS TO STOCKHOLDERS. The Report to Shareholders is attached herewith. ================================== THE BEDFORD CLASS MONEY MARKET PORTFOLIO THE RBB FUND, INC. SEMI-ANNUAL REPORT FEBRUARY 29, 2004 ================================== THE BEDFORD CLASS THE RBB FUND, INC. MONEY MARKET PORTFOLIO STATEMENT OF NET ASSETS FEBRUARY 29, 2004 (UNAUDITED) PAR (000) VALUE ------- ------------- CERTIFICATES OF DEPOSIT--21.2% DOMESTIC CERTIFICATES OF DEPOSIT--8.0% J.P. Morgan Chase Bank 1.110%, 03/29/04 ................................ $12,000 $ 12,000,000 Washington Mutual Bank 1.070%, 05/12/04 ................................ 10,000 10,000,000 ------------- 22,000,000 ------------- YANKEE DOLLAR CERTIFICATES OF DEPOSIT--13.2% Banco Santander Puerto Rico 1.080%, 04/26/04 ................................ 1,000 1,000,000 1.070%, 05/20/04 ................................ 2,775 2,775,000 Foreningssparbanken AB (Swedbank) 1.440%, 03/01/05 ................................ 6,000 5,999,103 Landesbank Baden-Wurttemberg New York 1.040%, 03/17/04 ................................ 11,345 11,345,025 Toronto Dominion Bank 1.265%, 04/13/04 ................................ 5,000 4,999,971 Westdeutsche Landesbank 1.400%, 08/05/04 ................................ 10,000 10,000,000 ------------- 36,119,099 ------------- TOTAL CERTIFICATES OF DEPOSIT (Cost $58,119,099) .......................... 58,119,099 ------------- COMMERCIAL PAPER--24.0% BANKS--11.5% Bank of America Corp. 1.030%, 03/17/04 ................................ 12,725 12,719,175 Depfa Bank P.L.C. 1.125%, 03/05/04 ................................ 4,000 3,999,500 Nationwide Building Society 1.090%, 03/31/04 ................................ 15,000 14,986,375 ------------- 31,705,050 ------------- BROKER DEALER SECURITIES--9.9% Concord Minutemen Capital Co. LLC 1.060%, 04/08/04 ................................ 5,000 4,994,406 Lake Constance Funding LLC 1.040%, 03/17/04 ................................ 11,230 11,224,809 Tannehill Capital Co. LLC 1.040%, 03/22/04 ................................ 11,052 11,045,295 ------------- 27,264,510 ------------- PAR (000) VALUE ------- ------------- COMMERCIAL PAPER--(CONTINUED) CANNED, FROZEN, PRESERVED FRUIT--2.6% Sara Lee Corp. 1.060%, 03/22/04 ................................ $ 7,000 $ 6,995,671 ------------- TOTAL COMMERCIAL PAPER (Cost $65,965,231) .......................... 65,965,231 ------------- MUNICIPAL BONDS--0.1% MISSISSIPPI--0.1% Mississippi Business Finance Corp. IDR RB (Choctaw Foods, Inc.) Series 1995 (Rabobank)+ 1.130%, 03/07/04 ................................ 200 200,000 ------------- TOTAL MUNICIPAL BONDS (Cost $200,000) ............................. 200,000 ------------- VARIABLE RATE OBLIGATIONS--16.7% BANKS--8.0% Canadian Imperial Bank of New York++ 1.058%, 03/01/04 ................................ 10,000 9,999,982 HBOs Treasury Services P.L.C.++ 1.160%, 03/24/04 ................................ 10,000 10,000,000 Westpac Banking Corp.++ 1.100%, 03/11/04 ................................ 2,000 2,000,000 ------------- 21,999,982 ------------- ASSET BACKED SECURITIES--4.0% Merrill Lynch & Co., Inc.++ 1.102%, 04/05/04 ................................ 11,000 11,000,000 ------------- LIFE INSURANCE--4.7% John Hancock Global Funding++ 1.220%, 03/11/04 ................................ 8,000 8,003,416 Metlife Global Funding++ 1.100%, 03/01/04 ................................ 5,000 5,000,000 ------------- 13,003,416 ------------- TOTAL VARIABLE RATE OBLIGATIONS (Cost $46,003,398) .......................... 46,003,398 ------------- AGENCY OBLIGATIONS--12.8% Federal Home Loan Bank 4.875%, 04/16/04 ................................ 5,000 5,022,169 See Accompanying Notes to Financial Statements. 1 The BEDFORD CLASS THE RBB FUND, INC. MONEY MARKET PORTFOLIO STATEMENT OF NET ASSETS (CONCLUDED) FEBRUARY 29, 2004 (UNAUDITED) PAR (000) VALUE ------- ------------- AGENCY OBLIGATIONS--(CONTINUED) Federal Home Loan Mortgage Corp. 1.375%, 11/15/04 ................................ $ 5,000 $ 5,000,000 Federal National Mortgage Assn. 1.040%, 05/18/04 ................................ 10,000 9,997,604 3.000%, 06/15/04 ................................ 2,000 2,010,209 1.200%, 08/13/04 ................................ 10,000 10,000,000 1.500%, 12/03/04 ................................ 3,000 3,000,000 ------------- TOTAL AGENCY OBLIGATIONS (Cost $35,029,982) .......................... 35,029,982 ------------- MEDIUM TERM NOTES--4.5% Goldman Sachs Group, Inc. 1.230%, 05/18/04 ................................ 12,500 12,500,000 ------------- TOTAL MEDIUM TERM NOTES (Cost $12,500,000) .......................... 12,500,000 ------------- MASTER NOTES--2.9% SECURITY/BROKER/DEALER Morgan Stanley Mortgage Capital 1.233%, 02/26/05 ................................ 8,000 8,000,000 ------------- TOTAL MASTER NOTES (Cost $8,000,000) ........................... 8,000,000 ------------- REPURCHASE AGREEMENTS--17.6% Morgan Stanley & Co. (Tri-Party Agreement dated 02/27/04 to be repurchased at $45,003,938 collateralized by $7,368,891 Federal Mortgage Association Corporation bonds 4.50% due 02/15/33 and Federal National Mortgage Association Strips collateralized by $37,858,109 at a rate of 5.50% to 0.00% due 07/01/33 to 03/01/34. Market Value of collateral is $46,581,750.) 1.050%, 03/01/04 ................................ 45,000 45,000,000 PAR (000) VALUE ------- ------------- REPURCHASE AGREEMENTS--(CONTINUED) Morgan Stanley & Co. (Tri-Party Agreement dated 02/27/04 to be repurchased at $3,400,094 collateralized by $3,417,486 United States Treasury Notes 2.250% due 02/15/07. Market Value of collateral is $3,485,836.) 0.990%, 03/01/04 ............................... $ 3,400 $ 3,400,000 ------------- TOTAL REPURCHASE AGREEMENTS (Cost $48,400,000) ......................... 48,400,000 ------------- TOTAL INVESTMENTS AT VALUE--98.8% (Cost $274,217,710) ............................ 274,217,710 ------------- ASSETS IN EXCESS OF OTHER LIABILITIES--0.2% ........................ 520,242 ------------- NET ASSETS (Applicable to 85,081,614 Bedford Shares and 189,654,642 Sansom Street shares and 800 other shares)--100.0% ................................ $ 274,737,952 ============= NET ASSET VALUE, Offering and Redemption Price Per Share ($274,737,952 / 274,737,056) ................... $1.00 ===== + Variable Rate Demand Note -- The interest rate shown is the rate as of February 29, 2004 and the maturity date shown is the longer of the next interest rate readjustment date or the date the principal amount shown can be recovered through demand. ++ Variable Rate Obligations -- The interest rate shown is the rate as of February 29, 2004 and the maturity date shown is the next interest rate readjustment date or the maturity date. INVESTMENT ABBREVIATIONS IDR ..............................................Industrial Development Revenue LOC ............................................................Letter of Credit RAN ...................................................Revenue Anticipation Note RB .................................................................Revenue Bond VRDN ..................................................Variable Rate Demand Note See Accompanying Notes to Financial Statements. 2 THE BEDFORD CLASS THE RBB FUND, INC. MONEY MARKET PORTFOLIO STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED FEBRUARY 29, 2004 (UNAUDITED) Investment Income Interest .................................................. $1,504,730 ---------- Expenses Investment advisory and administration fees ............... 610,972 Distribution fees ......................................... 265,046 Transfer agent fees ....................................... 64,700 Printing fees ............................................. 48,001 Custodian fees ............................................ 32,745 Legal fees ................................................ 23,194 Directors' fees ........................................... 18,879 Audit fees ................................................ 16,353 Registration fees ......................................... 4,500 Insurance expense ......................................... 3,608 Service organization fees ................................. 3,342 Miscellaneous ............................................. 1,633 ---------- Total Expenses ....................................... 1,092,973 Less fees waived .......................................... (489,806) Less expense reimbursement by advisor ..................... (23,851) ---------- Net total expenses ................................... 579,316 ---------- Net investment income ........................................ 925,414 ---------- Realized gain on investments ................................. 896 ---------- Net increase in net assets resulting from operations ......... $ 926,310 ========== See Accompanying Notes to Financial Statements. 3 THE BEDFORD CLASS THE RBB FUND, INC. MONEY MARKET PORTFOLIO STATEMENT OF CHANGES IN NET ASSETS
FOR THE FOR THE SIX MONTHS ENDED YEAR ENDED FEBRUARY 29, 2004 AUGUST 31, 2003 ----------------- --------------- (UNAUDITED) Increase (decrease) in net assets: Operations: Net investment income .............................................. $ 925,414 $ 2,499,023 Net gain on investments ............................................ 896 3,622 ------------ ------------ Net increase in net assets resulting from operations ............... 926,310 2,502,645 ------------ ------------ Distributions to shareholders: Dividends to shareholders from Net Investment Income: Bedford shares ................................................... (83,300) (377,857) Sansom Street shares ............................................. (842,114) (2,121,166) Distributions to shareholders from Net realized short-term gains: Bedford shares ................................................... (1,077) (42,292) Sansom Street shares ............................................. (2,545) (96,036) ------------ ------------ Total distributions to shareholders ............................ (929,036) (2,637,351) ------------ ------------ Net capital share transactions (See Note 3) .......................... (4,038,046) (18,176,747) ------------ ------------ Total decrease in net assets ......................................... (4,040,772) (18,311,453) Net Assets: Beginning of period ................................................ 278,778,724 297,090,177 ------------ ------------ End of period ...................................................... $274,737,952 $278,778,724 ============ ============
See Accompanying Notes to Financial Statements. 4 THE BEDFORD CLASS THE RBB FUND, INC. FINANCIAL HIGHLIGHTS (a) (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
MONEY MARKET PORTFOLIO --------------------------------------------------------------------------------------- FOR THE FOR THE FOR THE FOR THE FOR THE SIX MONTHS YEAR YEAR YEAR YEAR ENDED ENDED ENDED ENDED ENDED FEBRUARY 29, 2004 AUGUST 31, 2003 AUGUST 31, 2002 AUGUST 31, 2001 AUGUST 31, 2000 ----------------- --------------- --------------- --------------- --------------- (UNAUDITED) Net asset value, beginning of year ..... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 -------- -------- -------- -------- -------- Income from investment operations: Net investment income ............... 0.0010 0.0046 0.0157 0.0460 0.0512 Net gains on securities ............. -- 0.0005 -- -- -- -------- -------- -------- -------- -------- Total from investment operations ...................... 0.0010 0.0051 0.0157 0.0460 0.0512 -------- -------- -------- -------- -------- Less distributions Dividends (from net investment income) ........................... (0.0010) (0.0046) (0.0157) (0.0460) (0.0512) Distributions (from capital gains) .. -- (0.0005) -- -- -- -------- -------- -------- -------- -------- Total distributions ............... (0.0010) (0.0051) (0.0157) (0.0460) (0.0512) -------- -------- -------- -------- -------- Net asset value, end of year ........... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ======== ======== ======== ======== ======== Total Return ........................... 0.20% 0.53% 1.59% 4.70% 5.24% Ratios /Supplemental Data Net assets, end of year (000) ....... $85,082 $80,406 $52,878 $676,964 $423,977 Ratios of expenses to average net assets(b) ..................... .95% .98% 1.00% 1.00% .97% Ratios of net investment income to average net assets ............. .20% .46% 1.75% 4.46% 5.15% (a) Financial Highlights relate solely to the Bedford Class of shares within this portfolio. (b) Without the waiver of advisory, administration and transfer agent fees and without the reimbursement of certain operating expenses, the ratios of expenses to average net assets for the Money Market Portfolio would have been 1.37% for the six months ended February 29, 2004 and 1.30%, 1.25%, 1.19% and 1.05% for the years ended August 31, 2003, 2002, 2001 and 2000, respectively.
See Accompanying Notes to Financial Statements. 5 THE BEDFORD CLASS THE RBB FUND, INC. NOTES TO FINANCIAL STATEMENTS FEBRUARY 29, 2004 (UNAUDITED) NOTE 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES The RBB Fund, Inc. ("RBB" or the "Fund") 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 "1940 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 1940 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 active investment portfolios, including the Money Market Portfolio ("Portfolio"), which comprises the RBB family of funds. RBB has authorized capital of thirty billion shares of common stock of which 26.073 billion shares are currently classified into ninety-seven classes of Common Stock. Each class represents an interest in an active or inactive RBB investment portfolio. The active classes have been grouped into eight separate "families," seven of which have begun investment operations. A) SECURITY VALUATION -- Portfolio securities are valued under the amortized cost method, which approximates current market value. Under this method, securities are valued at cost when purchased and thereafter a constant proportionate amortization of any discount or premium is recorded until maturity of the security. Regular review and monitoring of the valuation is performed to ensure that cost continues to approximate market value and to avoid dilution or other unfair results to shareholders. The Portfolio seeks to maintain net asset value per share at $1.00. B) SECURITY TRANSACTIONS, INVESTMENT INCOME, AND EXPENSES -- Security transactions are accounted for on the trade date. The cost of investments sold is determined by use of the specific identification method for both financial reporting and income tax purposes. Interest income is accrued when earned. Certain expenses, such as distribution, transfer agency and printing, are class specific expenses and vary by class. Expenses not directly attributable to a specific portfolio or class are allocated based on relative net assets of each portfolio and class, respectively. Expenses incurred on behalf of a specific class, fund or fund family are charged directly to the class, fund or fund family (in proportion to net assets). Expenses incurred for all portfolios within the RBB family of funds (such as director or professional fees) are charged to all portfolios in proportion to their average net assets. C) DISTRIBUTIONS TO SHAREHOLDERS -- Dividends from net investment income are declared daily, recorded on the ex-date and paid monthly. All distributions from net investment income are taxed as ordinary income. Any net realized capital gains are distributed at least annually. Income distributions and capital gain distributions are determined in accordance with income tax regulations, which may differ from accounting principles generally accepted in the United States of America. D) FEDERAL INCOME TAXES -- No provision is made for federal income taxes. It is the Fund's intention to have each portfolio continue to qualify for and elect the tax treatment applicable to regulated investment companies under the Internal Revenue Code and make the requisite distributions to its shareholders which will be sufficient to relieve it from Federal income and excise taxes. 6 THE BEDFORD CLASS THE RBB FUND, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) FEBRUARY 29, 2004 (UNAUDITED) NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) E) REPURCHASE AGREEMENTS -- Money market instruments may be purchased subject to the seller's agreement to repurchase them at an agreed upon date and price. The seller will be required on a daily basis to maintain the value of the securities subject to the agreement at not less than the repurchase price plus accrued interest. If the value of the underlying securities falls below 102% of the value of the repurchase price plus accrued interest, the Portfolio will require the seller to deposit additional collateral by the next Portfolio business day. In the event that the seller under the agreement defaults on its repurchase obligation or fails to deposit sufficient collateral, the Portfolio has the contractual right, subject to the requirements of applicable bankruptcy and insolvency laws, to sell the underlying securities and may claim any resulting loss from the seller. The agreements are conditioned upon the collateral being deposited under the Federal Reserve Book Entry System or with the Portfolio's custodian or a third party sub-custodian. F) 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. These estimates and assumptions 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 reporting period. Actual results could differ from those estimates. NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES Pursuant to Investment Advisory Agreements, BlackRock Institutional Management Corp. ("BIMC"), an indirect majority-owned subsidiary of The PNC Financial Services Group, Inc., serves as investment adviser and as administrator for the Money Market Portfolio. For the Money Market Portfolio, BIMC and PFPC Inc. ("PFPC") have entered into a delegation agreement, wherein PFPC has agreed to perform Administration and Accounting services for an annual fee of .10% of the average net assets of the Portfolio, paid out of the fee paid to BIMC. For its advisory services, BIMC is entitled to receive the following fees, computed daily and payable monthly, and based on the Portfolio's average daily net assets: PORTFOLIO ANNUAL RATE ------------------------ ---------------------------------------------- Money Market Portfolio .45% of first $250 million of net assets; .40% of next $250 million of net assets; .35% of net assets in excess of $500 million. BIMC may, at its discretion, voluntarily waive all or any portion of its advisory fee for this Portfolio. For each class of shares within the Portfolio, the net advisory fee charged to each class is the same on a relative basis. For the six months ended February 29, 2004, advisory fees and waivers for the investment portfolio were as follows: GROSS NET ADVISORY ADVISORY FEE WAIVER FEE ----------- ----------- -------------- Money Market Portfolio $587,778 $(489,806) $97,972 As of February 29, 2004, the Money Market Portfolio owed BIMC $6,632 in advisory fees. 7 THE BEDFORD CLASS THE RBB FUND, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) FEBRUARY 29, 2004 (UNAUDITED) NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (CONTINUED) For providing regulatory administrative services to RBB, PFPC is entitled to receive compensation as agreed to by the Fund and PFPC. This agreement commenced on June 1, 2003. This fee is allocated to each portfolio of RBB based on the Portfolio's average net assets as a percentage of the total RBB net assets. The Portfolio portion of this fee for the period September 1, 2003 to February 29, 2004 was $23,194. The investment advisor/administrator may voluntarily waive and/or reimburse the Portfolio for the amount, if any, by which the total operating and management expenses exceed the expense cap. For the six months ended February 29, 2004, the expense caps were as follows: PORTFOLIO CLASS OF SHARES EXPENSE CAP ---------- ----------------- ------------- Money Market Portfolio Bedford .97% Sansom Street .20% Effective January 7, 2003, the Money Market Portfolio expense caps for the Bedford Class and Sansom Street Class changed from 1.00% to .97% and .49% to .20%, respectively. Reimbursed expenses for the six months ended February 29, 2004 were $23,851 for the Money Market Portfolio. The Fund, on behalf of each class of shares within the investment portfolio, has adopted Distribution Plans pursuant to Rule 12b-1 under the 1940 Act. The Fund has entered into a Distribution Contract with PFPC Distributors, Inc. ("PFPC Distributors"). PFPC Distributors is a wholly-owned subsidiary of PFPC Worldwide Inc. and an indirect wholly-owned subsidiary of The PNC Financial Services Group, Inc. The plans provide for each class to make monthly payments, based on average net assets, to PFPC Distributors of up to .65% on an annualized basis for the Bedford Class and up to .20% on an annualized basis for the Sansom Street Class. For the six months ended February 29, 2004, distribution fees paid to PFPC Distributors for each class were as follows: DISTRIBUTION FEE ------------ Money Market Portfolio Bedford Class $265,046 Sansom Street Class -- -------- Total Money Market Portfolio $265,046 ======== PFPC serves as each class's transfer and dividend disbursing agent. Both PFPC Trust Co. and PFPC are wholly-owned subsidiaries of PFPC Worldwide Inc., an indirect wholly-owned subsidiary of The PNC Financial Services Group, Inc. 8 THE BEDFORD CLASS THE RBB FUND, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) FEBRUARY 29, 2004 (UNAUDITED) NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (CONTINUED) PFPC may, at its discretion, voluntarily waive all or any portion of its transfer agency fee for any class of shares. For the six months ended February 29, 2004, transfer agency fees and waivers for each class of shares within the investment portfolio were as follows: TRANSFER AGENCY FEE --------------- Money Market Portfolio Bedford Class $51,500 Sansom Street Class 13,200 ------- Total Money Market Portfolio $64,700 ======= PFPC Trust Co. serves as custodian for the Fund's Portfolio. As compensation for such custodial services, PFPC Trust Co. is entitled to receive the following fees, computed daily and payable monthly, and based on the Portfolio's average gross assets: PORTFOLIO ANNUAL RATE ------------------------ -------------------------------------------------- Money Market Portfolio .025% of first $50 million of gross assets; .020% of next $50 million of gross assets; .015% of gross assets in excess of $100 million. The Fund has entered into service agreements with banks affiliated with PNC who render support services to customers who are the beneficial owners of the Sansom Street Class in consideration of the payment of .10% of the daily net asset value of such shares. For the six months ended February 29, 2004, service organization fees were $3,342 for the Money Market Portfolio. As of February 29, 2004, the Money Market Portfolio owed PFPC and its affiliates $60,107 for their services. 9 THE BEDFORD CLASS THE RBB FUND, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) FEBRUARY 29, 2004 (UNAUDITED) NOTE 3. CAPITAL SHARES Transactions in capital shares (at $1 per capital share) for each year were as follows:
MONEY MARKET PORTFOLIO ------------------------------------ FOR THE FOR THE SIX MONTHS ENDED YEAR ENDED FEBRUARY 29, 2004 AUGUST 31, 2003 ----------------- --------------- (UNAUDITED) VALUE VALUE ----------------- --------------- Shares sold: Bedford Class $ 187,153,525 $ 312,708,677 Sansom Street Class 1,007,523,224 1,864,927,379 --------------- --------------- Total Shares Sold 1,194,676,749 2,177,636,056 Shares issued on reinvestment of dividends: Bedford Class 85,919 430,446 Sansom Street Class 41,616 172,379 --------------- --------------- Total Shares Reinvested 127,535 602,825 Shares repurchased: Bedford Class (182,566,088) (285,586,385) Sansom Street Class (1,016,276,242) (1,910,829,243) --------------- --------------- Total Shares Repurchased (1,198,842,330) (2,196,415,628) --------------- --------------- Net decrease $ (4,038,046) $ (18,176,747) =============== =============== Bedford Shares authorized 1,500,000,000 1,500,000,000 =============== ===============
NOTE 4. PROXY VOTING Policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, by calling (800) 533-7719 and on the Securities and Exchange Commission's website at http://www.sec.gov. NOTE 5. NET ASSETS At February 29, 2004, net assets consisted of the following: MONEY MARKET PORTFOLIO ------------ Paid-in capital $274,737,056 Accumulated net realized gain/(loss) on investments 896 ------------ Total net assets $274,737,952 ============ 10 THE BEDFORD CLASS THE RBB FUND, INC. NOTES TO FINANCIAL STATEMENTS (CONCLUDED) FEBRUARY 29, 2004 (UNAUDITED) NOTE 6. OTHER FINANCIAL HIGHLIGHTS The Portfolio currently offers one other class of shares representing interest in the Money Market Portfolio: Sansom Street. The Sansom Street Class is marketed to different types of investors. Additional information regarding the Sansom Street shares is available in its annual report. The financial highlights of the Sansom Street Class are as follows:
THE SANSOM STREET FAMILY (a) MONEY MARKET PORTFOLIO ----------------------------------------------------------------------------------------- FOR THE FOR THE FOR THE FOR THE FOR THE SIX MONTHS YEAR YEAR YEAR YEAR ENDED ENDED ENDED ENDED ENDED FEBRUARY 29, 2004 AUGUST 31, 2003 AUGUST 31, 2002 AUGUST 31, 2001 AUGUST 31, 2000 ----------------- --------------- --------------- --------------- --------------- (UNAUDITED) Net asset value, beginning of year ..... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 -------- -------- -------- -------- -------- Income from investment operations: Net investment income ............... 0.0047 0.0114 0.0209 0.0511 0.0560 Net gains on securities ............. -- 0.0005 -- -- -- -------- -------- -------- -------- -------- Total net income from investment operations ...................... 0.0047 0.0119 0.0209 0.0511 0.0560 -------- -------- -------- -------- -------- Less distributions Dividends (from net investment income) ........................... (0.0047) (0.0114) (0.0209) (0.0511) (0.0560) Distributions (from capital gains) .. -- (0.0005) -- -- -- -------- -------- -------- -------- -------- Total distributions ............... (0.0047) (0.0119) (0.0209) (0.0511) (0.0560) -------- -------- -------- -------- -------- Net asset value, end of year ........... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ======== ======== ======== ======== ======== Total Return ...................... 0.94% 1.21% 2.11% 5.23% 5.75% Ratios/Supplemental Data Net assets, end of year (000) ....... $189,656 $198,373 $244,212 $201,632 $326,745 Ratios of expenses to average net assets(b) ..................... .20% .30% .49% .49% .49% Ratios of net investment income to average net assets ................ .94% 1.14% 2.10% 5.23% 5.42% (a) Financial highlights relate solely to the Sansom Street Class of shares within this portfolio. (b) Without the waiver of advisory fees and reimbursement of certain operating expenses, the ratios of expenses to average net assets for the Money Market Portfolio would have been .57% for the six months ended February 29, 2004 and .57%, .64%, .61% and .61% for the years ended August 31, 2003, 2002, 2001 and 2000, respectively.
11 ADDITIONAL INFORMATION PricewaterhouseCoopers LLP ("PwC") resigned as the auditor of the Money Market Portfolio of RBB on December 11, 2003 due to PwC's business relationship with certain affiliates of BIMC. As a result of PwC's engagement to provide certain contemplated services to BIMC affiliates in the future, PwC will no longer be independent with respect to the Money Market Portfolio of RBB. On December 11, 2003, RBB by action of the Board of Directors and upon the recommendation of its Audit Committee engaged Deloitte & Touche LLP to serve as the independent auditors to audit RBB's financial statements with respect to the Money Market Portfolio for the fiscal year ending August 31, 2004. PwC's reports on RBB's financial statements for the fiscal year ended August 31, 2003 contained no adverse opinion or disclaimer of opinion nor were they qualified or modified as to uncertainty, audit scope or accounting principles. During RBB's fiscal year ended August 31, 2003, (i) there were no disagreements with PwC on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of PwC, would have caused it to make reference to the subject matter of the disagreements in connection with its reports on the Registrant's financial statements for such years, and (ii) there were no "reportable events" of the kind described in Item 304(a)(1)(v) of Regulation S-K under the Securities Exchange Act of 1934, as amended. During RBB's fiscal year ended August 31, 2003, neither RBB, its portfolios nor anyone on their behalf has consulted Deloitte & Touche LLP on items which (i) concerned the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on RBB's financial statements or (ii) concerned the subject of a disagreement (as defined in paragraph (a)(1)(iv) of Item 304 of Regulation S-K) or reportable events (as described in paragraph (a)(1)(v) of said Item 304). The above information is required to be included in our shareholder reports for two years following a change of independent auditors. 12 THE BEDFORD CLASS THE RBB FUND, INC. FUND MANAGEMENT (UNAUDITED) Information pertaining to the Directors and Officers of the Fund is set forth below. The statement of additional information (SAI) includes additional information about the Directors and is available without charge, upon request, by calling (800) 533-7719.
------------------------------------------------------------------------------------------------------------------------------------ NUMBER OF TERM OF OFFICE PORTFOLIOS IN OTHER NAME, ADDRESS, POSITION(S) HELD AND LENGTH OF PRINCIPAL OCCUPATION(S) FUND COMPLEX DIRECTORSHIPS AND DATE OF BIRTH WITH FUND TIME SERVED 1 DURING PAST 5 YEARS OVERSEEN BY HELD BY DIRECTOR DIRECTOR ------------------------------------------------------------------------------------------------------------------------------------ DISINTERESTED DIRECTORS ------------------------------------------------------------------------------------------------------------------------------------ Julian A. Brodsky Director - 1988 to present Since 1969, Director and Vice 16 Director, Comcast Comcast Corporation Chairman, Comcast Corporation Corporation. 1500 Market Street, (cable television and 35th Fl. communications); Director, NDS Philadelphia, PA 19102 Group PLC (provider of systems DOB: 7/16/33 and applications for digital pay TV). ------------------------------------------------------------------------------------------------------------------------------------ Francis J. McKay Director - 1988 to present Since 2000, Vice President, Fox 16 None Fox Chase Cancer Center Chase Cancer Center(biomedical 333 Cottman Avenue research and medical care); prior Philadelphia, PA 19111 to 2000, Executive Vice President, DOB: 12/06/35 Fox Chase Cancer Center. ------------------------------------------------------------------------------------------------------------------------------------ Arnold M. Reichman Director - 1991 to present Since December 2000, Director, 16 None 106 Pierrepont Street Gabelli Partners, L.P. (an Brooklyn, NY 11201 investment partnership); Chief DOB: 5/21/48 Operating Officer and member of the Board of Directors of Outercurve Technologies (wireless enabling services) until April 2001; Chief Operating Officer and member of the Executive Operating Committee of Warburg Pincus Asset Management, Inc.; Executive Officer and Director of Credit Suisse Asset Management Securities, Inc. (formerly Counsellors Securities, Inc.) and Director/Trustee of various investment companies advised by Warburg Pincus Asset Management, Inc. until September 15, 1999; Prior to 1997, Managing Director of Warburg Pincus Asset Management, Inc. ------------------------------------------------------------------------------------------------------------------------------------ Marvin E. Sternberg Director - 1991 to present Since 1974, Chairman, Director and 16 Director, Moyco Moyco Technologies, Inc. President, Moyco Technologies, Inc. Technologies, 200 Commerce Drive (manufacturer of precision coated and Inc. Montgomeryville, PA 18936 industrial abrasives); Since 1999, DOB: 3/24/34 Director, Pennsylvania Business Bank. ------------------------------------------------------------------------------------------------------------------------------------
13 THE BEDFORD CLASS THE RBB FUND, INC. FUND MANAGEMENT (CONTINUED) (UNAUDITED)
------------------------------------------------------------------------------------------------------------------------------------ NUMBER OF TERM OF OFFICE PORTFOLIOS IN OTHER NAME, ADDRESS, POSITION(S) HELD AND LENGTH OF PRINCIPAL OCCUPATION(S) FUND COMPLEX DIRECTORSHIPS AND DATE OF BIRTH WITH FUND TIME SERVED DURING PAST 5 YEARS OVERSEEN BY HELD BY DIRECTOR DIRECTOR ------------------------------------------------------------------------------------------------------------------------------------ INTERESTED DIRECTORS 2 ------------------------------------------------------------------------------------------------------------------------------------ Robert Sablowsky Director - 1991 to present Since July 2002, Senior Vice 16 None Oppenheimer & Company, Inc. President and prior thereto, 200 Park Avenue Executive Vice President of New York, NY 10166 Oppenheimer & Company, Inc. DOB:4/16/38 (formerly Fahnestock & Co., Inc., a registered broker-dealer). ------------------------------------------------------------------------------------------------------------------------------------ J. Richard Carnall Director - 2002 to present Director of PFPC Inc. from January 16 None 400 Bellevue Parkway 1987 to April 2002; Chairman and Wilmington, DE 19809 Chief Executive Officer of PFPC Inc. DOB: 9/25/38 until April 2002; Executive Vice President of PNC Bank, National Association from October 1981 to April 2002; Director of PFPC International Ltd. (financial services) from August 1993 to April 2002; Director of PFPC International (Cayman) Ltd. (financial services) from September 1996 to April 2002, and Director of International Dollar Reserve Fund, Ltd. (Cayman mutual fund Company) from September 1993 to present; Governor of the Investment Company Institute (investment company industry trade organization) from July 1996 to January 2002; Director of PNC Asset Management, Inc. (investment advisory) from September 1994 to March 1998; Director of PNC National Bank from October 1995 to November 1997; Director of Haydon Bolts, Inc. (bolt manufacturer) and Parkway Real Estate Company (subsidiary of Haydon Bolts, Inc.) since 1984. Mr. Carnall provides consulting services from time to time to PFPC Inc. ------------------------------------------------------------------------------------------------------------------------------------
THE BEDFORD CLASS THE RBB FUND, INC. FUND MANAGEMENT (CONCLUDED) (UNAUDITED)
------------------------------------------------------------------------------------------------------------------------------------ NUMBER OF TERM OF OFFICE PORTFOLIOS IN OTHER NAME, ADDRESS, POSITION(S) HELD AND LENGTH OF PRINCIPAL OCCUPATION(S) FUND COMPLEX DIRECTORSHIPS AND DATE OF BIRTH WITH FUND TIME SERVED DURING PAST 5 YEARS OVERSEEN BY HELD BY DIRECTOR DIRECTOR ------------------------------------------------------------------------------------------------------------------------------------ OFFICER(S) WHO ARE NOT DIRECTORS ------------------------------------------------------------------------------------------------------------------------------------ Edward J. Roach President and - 1991 to present Certified Public Accountant; Vice N/A N/A 400 Bellevue Parkway Treasurer and Chairman of the Board, Fox Chase 4th Floor - 1988 to present Cancer Center; Trustee Emeritus, Wilmington, DE 19809 Pennsylvania School for the Deaf; DOB: 6/29/24 Trustee Emeritus, Immaculata University; President or Vice President and Treasurer of various investment companies advised by subsidiaries of PNC Bank Corp. from 1981 to 1997; Managing General Partner, President and Treasurer of Chestnut Street Exchange Fund; Director of the Bradford Funds, Inc. from 1996 to 2000. ------------------------------------------------------------------------------------------------------------------------------------ Lisa M. King Secretary - Since 2003 Since 2000, Vice President and Counsel, N/A N/A 301 Bellevue Parkway PFPC Inc. (financial services company); 2nd Floor Associate, Stradley, Ronon, Stevens & Wilmington, DE 19809 Young, LLC (law firm) from 1996-2000. DOB: 1/27/68 ------------------------------------------------------------------------------------------------------------------------------------ 1 Each Director serves for an indefinite period of time until his successor is elected and qualified or until his death, resignation or removal. Each officer holds office at the pleasure of the Board of Directors until the next annual meeting of the Company or until his or her successor is duly elected and qualified, or until he or she dies, resigns, is removed or becomes disqualified. 2 Messrs. Carnall and Sablowsky are considered "interested persons" of the Company as that term is defined in the 1940 Act. Mr. Carnall is an "interested Director" of the Company because he owns shares of The PNC Financial Services Group, Inc. The investment adviser to the Company's Money Market Portfolio, BlackRock Institutional Management Corporation, and the Company's principal underwriter, PFPC Distributors, Inc., are indirect subsidiaries of the PNC Financial Services Group, Inc. Mr. Sablowsky is considered an "interested Director" of the Company by virtue of his position as an officer of a registered broker-dealer.
15 INVESTMENT ADVISER BlackRock Institutional Management Corporation 100 Bellevue Parkway Wilmington, DE 19809 TRANSFER AGENT PFPC Inc. 301 Bellevue Parkway Wilmington, DE 19809 DISTRIBUTOR PFPC Distributors, Inc. 760 Moore Road King of Prussia, PA 19406 CUSTODIAN PFPC Trust Company 8800 Tinicum Blvd. Suite 200 Philadelphia, PA 19153 INDEPENDENT AUDITORS Deloitte & Touche LLP 1700 Market Street Philadelphia, PA 19103-3984 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 Portfolio. It is not authorized for the distribution to prospective investors in the Portfolio unless it is preceded or accompanied by a current prospectus which includes details regarding the Portfolio's objectives, policies and other information. Total investment return is based on historical results and is not intended to indicate future performance. Current performance may be lower or higher than the performance data provided in the report. -------------------------------------------------------------------------------- [GRAPHIC OMITTED] BEAR STEARNS -------------------------------------------------------------------------------- ------------------------------------- MONEY MARKET PORTFOLIO Semi-Annual Report February 29, 2004 THE BEDFORD CLASS THE RBB FUND, INC. MONEY MARKET PORTFOLIO STATEMENT OF NET ASSETS FEBRUARY 29, 2004 (UNAUDITED) PAR (000) VALUE ------- ------------ CERTIFICATES OF DEPOSIT--21.2% DOMESTIC CERTIFICATES OF DEPOSIT--8.0% J.P. Morgan Chase Bank 1.110%, 03/29/04 ................................ $12,000 $ 12,000,000 Washington Mutual Bank 1.070%, 05/12/04 ................................ 10,000 10,000,000 ------------ 22,000,000 ------------ YANKEE DOLLAR CERTIFICATES OF DEPOSIT--13.2% Banco Santander Puerto Rico 1.080%, 04/26/04 ................................ 1,000 1,000,000 1.070%, 05/20/04 ................................ 2,775 2,775,000 Foreningssparbanken AB (Swedbank) 1.440%, 03/01/05 ................................ 6,000 5,999,103 Landesbank Baden-Wurttemberg New York 1.040%, 03/17/04 ................................ 11,345 11,345,025 Toronto Dominion Bank 1.265%, 04/13/04 ................................ 5,000 4,999,971 Westdeutsche Landesbank 1.400%, 08/05/04 ................................ 10,000 10,000,000 ------------ 36,119,099 ------------ TOTAL CERTIFICATES OF DEPOSIT (Cost $58,119,099) .......................... 58,119,099 ------------ COMMERCIAL PAPER--24.0% BANKS--11.5% Bank of America Corp. 1.030%, 03/17/04 ................................ 12,725 12,719,175 Depfa Bank P.L.C. 1.125%, 03/05/04 ................................ 4,000 3,999,500 Nationwide Building Society 1.090%, 03/31/04 ................................ 15,000 14,986,375 ------------ 31,705,050 ------------ BROKER DEALER SECURITIES--9.9% Concord Minutemen Capital Co. LLC. 1.060%, 04/08/04 ................................ 5,000 4,994,406 Lake Constance Funding LLC. 1.040%, 03/17/04 ................................ 11,230 11,224,809 Tannehill Capital Co. LLC. 1.040%, 03/22/04 ................................ 11,052 11,045,295 ------------ 27,264,510 ------------ CANNED, FROZEN, PRESERVED FRUIT--2.6% Sara Lee Corp. 1.060%, 03/22/04 ................................ 7,000 6,995,671 ------------ TOTAL COMMERCIAL PAPER (Cost $65,965,231) .......................... 65,965,231 ------------ PAR (000) VALUE ------- ------------ MUNICIPAL BONDS--0.1% MISSISSIPPI--0.1% Mississippi Business Finance Corp. IDR RB (Choctaw Foods, Inc.) Series 1995 (Rabobank)+ 1.130%, 03/07/04 ................................ $ 200 $ 200,000 ------------ TOTAL MUNICIPAL BONDS (Cost $200,000) ............................. 200,000 ------------ VARIABLE RATE OBLIGATIONS--16.7% BANKS--8.0% Canadian Imperial Bank of New York++ 1.058%, 03/01/04 ................................ 10,000 9,999,982 HBOs Treasury Services P.L.C.++ 1.160%, 03/24/04 ................................ 10,000 10,000,000 Westpac Banking Corp.++ 1.100%, 03/11/04 ................................ 2,000 2,000,000 ------------ 21,999,982 ------------ ASSET BACKED SECURITIES--4.0% Merrill Lynch & Co., Inc.++ 1.102%, 04/05/04 ................................ 11,000 11,000,000 ------------ LIFE INSURANCE--4.7% John Hancock Global Funding++ 1.220%, 03/11/04 ................................ 8,000 8,003,416 Metlife Global Funding++ 1.100%, 03/01/04 ................................ 5,000 5,000,000 ------------ 13,003,416 ------------ TOTAL VARIABLE RATE OBLIGATIONS (Cost $46,003,398) .......................... 46,003,398 ------------ AGENCY OBLIGATIONS--12.8% Federal Home Loan Bank 4.875%, 04/16/04 ................................ 5,000 5,022,169 Federal Home Loan Mortgage Corp. 1.375%, 11/15/04 ................................ 5,000 5,000,000 Federal National Mortgage Assn. 1.040%, 05/18/04 ................................ 10,000 9,997,604 3.000%, 06/15/04 ................................ 2,000 2,010,209 1.200%, 08/13/04 ................................ 10,000 10,000,000 1.500%, 12/03/04 ................................ 3,000 3,000,000 ------------ TOTAL AGENCY OBLIGATIONS (Cost $35,029,982) .......................... 35,029,982 ------------ MEDIUM TERM NOTES--4.5% Goldman Sachs Group, Inc. 1.230%, 05/18/04 ................................ 12,500 12,500,000 ------------ TOTAL MEDIUM TERM NOTES (Cost $12,500,000) .......................... 12,500,000 ------------ See Accompanying Notes to Financial Statements. 1 THE BEDFORD CLASS THE RBB FUND, INC. MONEY MARKET PORTFOLIO STATEMENT OF NET ASSETS (CONCLUDED) FEBRUARY 29, 2004 (UNAUDITED) PAR (000) VALUE ------- ------------ MASTER NOTES--2.9% SECURITY/BROKER/DEALER Morgan Stanley Mortgage Capital 1.233%, 02/26/05 ................................ $ 8,000 $ 8,000,000 ------------ TOTAL MASTER NOTES (Cost $8,000,000) ........................... 8,000,000 ------------ REPURCHASE AGREEMENTS--17.6% Morgan Stanley & Co. (Tri-Party Agreement dated 02/27/04 to be repurchased at $45,003,938 collateralized by $7,368,891 Federal Mortgage Association Corporation bonds 4.50% due 02/15/33 and Federal National Mortgage Association Strips collateralized by $37,858,109 at a rate of 5.50% to 0.00% due 07/01/33 to 03/01/34. Market Value of collateral is $46,581,750.) 1.050%, 03/01/04 ................................ 45,000 45,000,000 Morgan Stanley & Co. (Tri-Party Agreement dated 02/27/04 to be repurchased at $3,400,094 collateralized by $3,417,486 United States Treasury Notes 2.250% due 02/15/07. Market Value of collateral is $3,485,836.) 0.990%, 03/01/04 ................................ 3,400 3,400,000 ------------ TOTAL REPURCHASE AGREEMENTS (Cost $48,400,000) .......................... 48,400,000 ------------ TOTAL INVESTMENTS AT VALUE--98.8% (Cost $274,217,710) ............................. 274,217,710 ------------ ASSETS IN EXCESS OF OTHER LIABILITIES--0.2% ......................... 520,242 ------------ NET ASSETS (Applicable to 85,081,614 Bedford Shares and 189,654,642 Sansom Street shares and 800 other shares)--100.0% ................................. $274,737,952 ============ NET ASSET VALUE, Offering and Redemption Price Per Share ($274,737,952 / 274,737,056) .................... $1.00 ===== + Variable Rate Demand Note -- The interest rate shown is the rate as of February 29, 2004 and the maturity date shown is the longer of the next interest rate readjustment date or the date the principal amount shown can be recovered through demand. ++ Variable Rate Obligations -- The interest rate shown is the rate as of February 29, 2004 and the maturity date shown is the next interest rate readjustment date or the maturity date. INVESTMENT ABBREVIATIONS IDR ..............................................Industrial Development Revenue LOC ............................................................Letter of Credit RAN ...................................................Revenue Anticipation Note RB .................................................................Revenue Bond VRDN ..................................................Variable Rate Demand Note See Accompanying Notes to Financial Statements. 2 THE BEDFORD CLASS THE RBB FUND, INC. MONEY MARKET PORTFOLIO STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED FEBRUARY 29, 2004 (UNAUDITED) Investment Income Interest .................................................... $1,504,730 ---------- Expenses Investment advisory and administration fees ................. 610,972 Distribution fees ........................................... 265,046 Transfer agent fees ......................................... 64,700 Printing fees ............................................... 48,001 Custodian fees .............................................. 32,745 Legal fees .................................................. 23,194 Directors' fees ............................................. 18,879 Audit fees .................................................. 16,353 Registration fees ........................................... 4,500 Insurance expense ........................................... 3,608 Service organization fees ................................... 3,342 Miscellaneous ............................................... 1,633 ---------- Total Expenses ......................................... 1,092,973 Less fees waived ............................................ (489,806) Less expense reimbursement by advisor ....................... (23,851) ---------- Net total expenses ..................................... 579,316 ---------- Net investment income .......................................... 925,414 ---------- Realized gain on investments ................................... 896 ---------- Net increase in net assets resulting from operations ........... $ 926,310 ========== See Accompanying Notes to Financial Statements. 3 THE BEDFORD CLASS THE RBB FUND, INC. MONEY MARKET PORTFOLIO STATEMENT OF CHANGES IN NET ASSETS
FOR THE FOR THE SIX MONTHS ENDED YEAR ENDED FEBRUARY 29, 2004 AUGUST 31, 2003 ----------------- --------------- (UNAUDITED) Increase (decrease) in net assets: Operations: Net investment income .............................................. $ 925,414 $ 2,499,023 Net gain on investments ............................................ 896 3,622 ------------- ------------- Net increase in net assets resulting from operations ............... 926,310 2,502,645 ------------- ------------- Distributions to shareholders: Dividends to shareholders from Net Investment Income: Bedford shares ................................................... (83,300) (377,857) Sansom Street shares ............................................. (842,114) (2,121,166) Distributions to shareholders from Net realized short-term gains: Bedford shares ................................................... (1,077) (42,292) Sansom Street shares ............................................. (2,545) (96,036) ------------- ------------- Total distributions to shareholders ............................ (929,036) (2,637,351) ------------- ------------- Net capital share transactions (See Note 3) .......................... (4,038,046) (18,176,747) ------------- ------------- Total decrease in net assets ......................................... (4,040,772) (18,311,453) Net Assets: Beginning of period ................................................ 278,778,724 297,090,177 ------------- ------------- End of period ...................................................... $ 274,737,952 $ 278,778,724 ============= =============
See Accompanying Notes to Financial Statements. 4 THE BEDFORD CLASS THE RBB FUND, INC. FINANCIAL HIGHLIGHTS (a) (FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR)
MONEY MARKET PORTFOLIO ----------------------------------------------------------------------------------------- FOR THE FOR THE FOR THE FOR THE FOR THE SIX MONTHS YEAR YEAR YEAR YEAR ENDED ENDED ENDED ENDED ENDED FEBRUARY 29, 2004 AUGUST 31, 2003 AUGUST 31, 2002 AUGUST 31, 2001 AUGUST 31, 2000 ----------------- --------------- --------------- --------------- --------------- (UNAUDITED) Net asset value, beginning of year ... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ------- ------- ------- -------- -------- Income from investment operations: Net investment income .............. 0.0010 0.0046 0.0157 0.0460 0.0512 Net gains on securities ............ -- 0.0005 -- -- -- ------- ------- ------- -------- -------- Total from investment operations ...................... 0.0010 0.0051 0.0157 0.0460 0.0512 ------- ------- ------- -------- -------- Less distributions Dividends (from net investment income) ........................... (0.0010) (0.0046) (0.0157) (0.0460) (0.0512) Distributions (from capital gains).. -- (0.0005) -- -- -- ------- ------- ------- -------- -------- Total distributions ............... (0.0010) (0.0051) (0.0157) (0.0460) (0.0512) ------- ------- ------- -------- -------- Net asset value, end of year ......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ======= ======= ======= ======== ======== Total Return ......................... 0.20% 0.53% 1.59% 4.70% 5.24% Ratios /Supplemental Data Net assets, end of year (000) ...... $85,082 $80,406 $52,878 $676,964 $423,977 Ratios of expenses to average net assets(b) ..................... .95% .98% 1.00% 1.00% .97% Ratios of net investment income to average net assets ............. .20% .46% 1.75% 4.46% 5.15% (a) Financial Highlights relate solely to the Bedford Class of shares within this portfolio. (b) Without the waiver of advisory, administration and transfer agent fees and without the reimbursement of certain operating expenses, the ratios of expenses to average net assets for the Money Market Portfolio would have been 1.37% for the six months ended February 29, 2004 and 1.30%, 1.25%, 1.19% and 1.05% for the years ended August 31, 2003, 2002, 2001 and 2000, respectively.
See Accompanying Notes to Financial Statements. 5 THE BEDFORD CLASS THE RBB FUND, INC. NOTES TO FINANCIAL STATEMENTS FEBRUARY 29, 2004 (UNAUDITED) NOTE 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES The RBB Fund, Inc. ("RBB" or the "Fund") 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 "1940 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 1940 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 active investment portfolios, including the Money Market Portfolio ("Portfolio"), which comprises the RBB family of funds. RBB has authorized capital of thirty billion shares of common stock of which 26.073 billion shares are currently classified into ninety-seven classes of Common Stock. Each class represents an interest in an active or inactive RBB investment portfolio. The active classes have been grouped into eight separate "families," seven of which have begun investment operations. A) SECURITY VALUATION -- Portfolio securities are valued under the amortized cost method, which approximates current market value. Under this method, securities are valued at cost when purchased and thereafter a constant proportionate amortization of any discount or premium is recorded until maturity of the security. Regular review and monitoring of the valuation is performed to ensure that cost continues to approximate market value and to avoid dilution or other unfair results to shareholders. The Portfolio seeks to maintain net asset value per share at $1.00. B) SECURITY TRANSACTIONS, INVESTMENT INCOME, AND EXPENSES -- Security transactions are accounted for on the trade date. The cost of investments sold is determined by use of the specific identification method for both financial reporting and income tax purposes. Interest income is accrued when earned. Certain expenses, such as distribution, transfer agency and printing, are class specific expenses and vary by class. Expenses not directly attributable to a specific portfolio or class are allocated based on relative net assets of each portfolio and class, respectively. Expenses incurred on behalf of a specific class, fund or fund family are charged directly to the class, fund or fund family (in proportion to net assets). Expenses incurred for all portfolios within the RBB family of funds (such as director or professional fees) are charged to all portfolios in proportion to their average net assets. C) DISTRIBUTIONS TO SHAREHOLDERS -- Dividends from net investment income are declared daily, recorded on the ex-date and paid monthly. All distributions from net investment income are taxed as ordinary income. Any net realized capital gains are distributed at least annually. Income distributions and capital gain distributions are determined in accordance with income tax regulations, which may differ from accounting principles generally accepted in the United States of America. D) FEDERAL INCOME TAXES -- No provision is made for federal income taxes. It is the Fund's intention to have each portfolio continue to qualify for and elect the tax treatment applicable to regulated investment companies under the Internal Revenue Code and make the requisite distributions to its shareholders which will be sufficient to relieve it from Federal income and excise taxes. E) REPURCHASE AGREEMENTS -- Money market instruments may be purchased subject to the seller's agreement to repurchase them at an agreed upon date and price. The seller will be required on a daily basis to maintain the value of the securities subject to the agreement at not less than the repurchase price plus accrued interest. If the value of the underlying securities falls below 102% of the value of the repurchase price plus accrued interest, the Portfolio will require the seller to deposit additional collateral by the next Portfolio business day. In the event that the seller under the agreement defaults on its repurchase obligation or fails to deposit sufficient collateral, the Portfolio has the contractual right, subject to the requirements of applicable bankruptcy and insolvency laws, to sell the underlying securities and may claim any resulting loss from the seller. The agreements are conditioned upon the collateral being deposited under the Federal Reserve Book Entry System or with the Portfolio's custodian or a third party sub-custodian. 6 THE BEDFORD CLASS THE RBB FUND, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) FEBRUARY 29, 2004 (UNAUDITED) NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) F) 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. These estimates and assumptions 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 reporting period. Actual results could differ from those estimates. NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES Pursuant to Investment Advisory Agreements, BlackRock Institutional Management Corp. ("BIMC"), an indirect majority-owned subsidiary of The PNC Financial Services Group, Inc., serves as investment adviser and as administrator for the Money Market Portfolio. For the Money Market Portfolio, BIMC and PFPC Inc. ("PFPC") have entered into a delegation agreement, wherein PFPC has agreed to perform Administration and Accounting services for an annual fee of .10% of the average net assets of the Portfolio, paid out of the fee paid to BIMC. For its advisory services, BIMC is entitled to receive the following fees, computed daily and payable monthly, and based on the Portfolio's average daily net assets: PORTFOLIO ANNUAL RATE ------------------------- ---------------------------------------------- Money Market Portfolio .45% of first $250 million of net assets; .40% of next $250 million of net assets; .35% of net assets in excess of $500 million. BIMC may, at its discretion, voluntarily waive all or any portion of its advisory fee for this Portfolio. For each class of shares within the Portfolio, the net advisory fee charged to each class is the same on a relative basis. For the six months ended February 29, 2004, advisory fees and waivers for the investment portfolio were as follows: GROSS NET ADVISORY ADVISORY FEE WAIVER FEE ----------- ------------ ----------- Money Market Portfolio $587,778 $(489,806) $97,972 As of February 29, 2004, the Money Market Portfolio owed BIMC $6,632 in advisory fees. For providing regulatory administrative services to RBB, PFPC is entitled to receive compensation as agreed to by the Fund and PFPC. This agreement commenced on June 1, 2003. This fee is allocated to each portfolio of RBB based on the Portfolio's average net assets as a percentage of the total RBB net assets. The Portfolio portion of this fee for the period September 1, 2003 to February 29, 2004 was $23,194. The investment advisor/administrator may voluntarily waive and/or reimburse the Portfolio for the amount, if any, by which the total operating and management expenses exceed the expense cap. For the six months ended February 29, 2004, the expense caps were as follows: PORTFOLIO CLASS OF SHARES EXPENSE CAP ---------- ----------------- --------------- Money Market Portfolio Bedford .97% Sansom Street .20% Effective January 7, 2003, the Money Market Portfolio expense caps for the Bedford Class and Sansom Street Class changed from 1.00% to .97% and .49% to .20%, respectively. Reimbursed expenses for the six months ended February 29, 2004 were $23,851 for the Money Market Portfolio. 7 THE BEDFORD CLASS THE RBB FUND, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) FEBRUARY 29, 2004 (UNAUDITED) NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (CONTINUED) The Fund, on behalf of each class of shares within the investment portfolio, has adopted Distribution Plans pursuant to Rule 12b-1 under the 1940 Act. The Fund has entered into a Distribution Contract with PFPC Distributors, Inc. ("PFPC Distributors"). PFPC Distributors is a wholly-owned subsidiary of PFPC Worldwide Inc. and an indirect wholly-owned subsidiary of The PNC Financial Services Group, Inc. The plans provide for each class to make monthly payments, based on average net assets, to PFPC Distributors of up to .65% on an annualized basis for the Bedford Class and up to .20% on an annualized basis for the Sansom Street Class. For the six months ended February 29, 2004, distribution fees paid to PFPC Distributors for each class were as follows: DISTRIBUTION FEE ------------ Money Market Portfolio Bedford Class $265,046 Sansom Street Class -- -------- Total Money Market Portfolio $265,046 ======== PFPC serves as each class's transfer and dividend disbursing agent. Both PFPC Trust Co. and PFPC are wholly-owned subsidiaries of PFPC Worldwide Inc., an indirect wholly-owned subsidiary of The PNC Financial Services Group, Inc. PFPC may, at its discretion, voluntarily waive all or any portion of its transfer agency fee for any class of shares. For the six months ended February 29, 2004, transfer agency fees and waivers for each class of shares within the investment portfolio were as follows: TRANSFER AGENCY FEE --------------- Money Market Portfolio Bedford Class $51,500 Sansom Street Class 13,200 ------- Total Money Market Portfolio $64,700 ======= PFPC Trust Co. serves as custodian for the Fund's Portfolio. As compensation for such custodial services, PFPC Trust Co. is entitled to receive the following fees, computed daily and payable monthly, and based on the Portfolio's average gross assets: PORTFOLIO ANNUAL RATE ------------------------ ------------------------------------------------ Money Market Portfolio .025% of first $50 million of gross assets; .020% of next $50 million of gross assets; .015% of gross assets in excess of $100 million. The Fund has entered into service agreements with banks affiliated with PNC who render support services to customers who are the beneficial owners of the Sansom Street Class in consideration of the payment of .10% of the daily net asset value of such shares. For the six months ended February 29, 2004, service organization fees were $3,342 for the Money Market Portfolio. As of February 29, 2004, the Money Market Portfolio owed PFPC and its affiliates $60,107 for their services. 8 THE BEDFORD CLASS THE RBB FUND, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) FEBRUARY 29, 2004 (UNAUDITED) NOTE 3. CAPITAL SHARES Transactions in capital shares (at $1 per capital share) for each year were as follows:
MONEY MARKET PORTFOLIO ------------------------------------- FOR THE SIX FOR THE MONTHS ENDED YEAR ENDED FEBRUARY 29, 2004 AUGUST 31, 2003 ----------------- --------------- (UNAUDITED) VALUE VALUE --------------- --------------- Shares sold: Bedford Class $ 187,153,525 $ 312,708,677 Sansom Street Class 1,007,523,224 1,864,927,379 --------------- --------------- Total Shares Sold 1,194,676,749 2,177,636,056 Shares issued on reinvestment of dividends: Bedford Class 85,919 430,446 Sansom Street Class 41,616 172,379 --------------- --------------- Total Shares Reinvested 127,535 602,825 Shares repurchased: Bedford Class (182,566,088) (285,586,385) Sansom Street Class (1,016,276,242) (1,910,829,243) --------------- --------------- Total Shares Repurchased (1,198,842,330) (2,196,415,628) --------------- --------------- Net decrease $ (4,038,046) $ (18,176,747) =============== =============== Bedford Shares authorized 1,500,000,000 1,500,000,000 =============== ===============
NOTE 4. PROXY VOTING Policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, by calling (800) 447-1139 and on the Securities and Exchange Commission's website at http://www.sec.gov. NOTE 5. NET ASSETS At February 29, 2004, net assets consisted of the following: MONEY MARKET PORTFOLIO ------------ Paid-in capital $274,737,056 Accumulated net realized gain/(loss) on investments 896 ------------ Total net assets $274,737,952 ============ 9 THE BEDFORD CLASS THE RBB FUND, INC. NOTES TO FINANCIAL STATEMENTS (CONCLUDED) FEBRUARY 29, 2004 (UNAUDITED) NOTE 6. OTHER FINANCIAL HIGHLIGHTS The Portfolio currently offers one other class of shares representing interest in the Money Market Portfolio: Sansom Street. The Sansom Street Class is marketed to different types of investors. Additional information regarding the Sansom Street shares is available in its annual report. The financial highlights of the Sansom Street Class are as follows:
THE SANSOM STREET FAMILY (a) MONEY MARKET PORTFOLIO ----------------------------------------------------------------------------------------- FOR THE FOR THE FOR THE FOR THE FOR THE SIX MONTHS YEAR YEAR YEAR YEAR ENDED ENDED ENDED ENDED ENDED FEBRUARY 29, 2004 AUGUST 31, 2003 AUGUST 31, 2002 AUGUST 31, 2001 AUGUST 31, 2000 ----------------- --------------- --------------- --------------- --------------- (UNAUDITED) Net asset value, beginning of year ....... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 -------- -------- -------- -------- -------- Income from investment operations: Net investment income ................. 0.0047 0.0114 0.0209 0.0511 0.0560 Net gains on securities ............... -- 0.0005 -- -- -- -------- -------- -------- -------- -------- Total net income from investment operations ........................ 0.0047 0.0119 0.0209 0.0511 0.0560 -------- -------- -------- -------- -------- Less distributions Dividends (from net investment income) ............................. (0.0047) (0.0114) (0.0209) (0.0511) (0.0560) Distributions (from capital gains) .... -- (0.0005) -- -- -- -------- -------- -------- -------- -------- Total distributions ................. (0.0047) (0.0119) (0.0209) (0.0511) (0.0560) -------- -------- -------- -------- -------- Net asset value, end of year ............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ======== ======== ======== ======== ======== Total Return ........................ 0.94% 1.21% 2.11% 5.23% 5.75% Ratios/Supplemental Data Net assets, end of year (000) ......... $189,656 $198,373 $244,212 $201,632 $326,745 Ratios of expenses to average net assets(b) ....................... .20% .30% .49% .49% .49% Ratios of net investment income to average net assets .................. .94% 1.14% 2.10% 5.23% 5.42% (a) Financial highlights relate solely to the Sansom Street Class of shares within this portfolio. (b) Without the waiver of advisory fees and reimbursement of certain operating expenses, the ratios of expenses to average net assets for the Money Market Portfolio would have been .57% for the six months ended February 29, 2004 and .57%, .64%, .61% and .61% for the years ended August 31, 2003, 2002, 2001 and 2000, respectively.
10 ADDITIONAL INFORMATION PricewaterhouseCoopers LLP ("PwC") resigned as the auditor of the Money Market Portfolio of RBB on December 11, 2003 due to PwC's business relationship with certain affiliates of BIMC. As a result of PwC's engagement to provide certain contemplated services to BIMC affiliates in the future, PwC will no longer be independent with respect to the Money Market Portfolio of RBB. On December 11, 2003, RBB by action of the Board of Directors and upon the recommendation of its Audit Committee engaged Deloitte & Touche LLP to serve as the independent auditors to audit RBB's financial statements with respect to the Money Market Portfolio for the fiscal year ending August 31, 2004. PwC's reports on RBB's financial statements for the fiscal year ended August 31, 2003 contained no adverse opinion or disclaimer of opinion nor were they qualified or modified as to uncertainty, audit scope or accounting principles. During RBB's fiscal year ended August 31, 2003, (i) there were no disagreements with PwC on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of PwC, would have caused it to make reference to the subject matter of the disagreements in connection with its reports on the Registrant's financial statements for such years, and (ii) there were no "reportable events" of the kind described in Item 304(a)(1)(v) of Regulation S-K under the Securities Exchange Act of 1934, as amended. During RBB's fiscal year ended August 31, 2003, neither RBB, its portfolios nor anyone on their behalf has consulted Deloitte & Touche LLP on items which (i) concerned the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on RBB's financial statements or (ii) concerned the subject of a disagreement (as defined in paragraph (a)(1)(iv) of Item 304 of Regulation S-K) or reportable events (as described in paragraph (a)(1)(v) of said Item 304). The above information is required to be included in our shareholder reports for two years following a change of independent auditors. 11 THE BEDFORD CLASS THE RBB FUND, INC. FUND MANAGEMENT (UNAUDITED) Information pertaining to the Directors and Officers of the Fund is set forth below. The statement of additional information (SAI) includes additional information about the Directors and is available without charge, upon request, by calling (800) 447-1139.
------------------------------------------------------------------------------------------------------------------------------------ NUMBER OF TERM OF OFFICE PORTFOLIOS IN OTHER NAME, ADDRESS, POSITION(S) HELD AND LENGTH OF PRINCIPAL OCCUPATION(S) DURING PAST FUND COMPLEX DIRECTORSHIPS AND DATE OF BIRTH WITH FUND TIME SERVED 5 YEARS OVERSEEN BY HELD BY DIRECTOR DIRECTOR ------------------------------------------------------------------------------------------------------------------------------------ DISINTERESTED DIRECTORS ------------------------------------------------------------------------------------------------------------------------------------ Julian A. Brodsky Director - 1988 to present Since 1969, Director and Vice Chairman, 16 Director, Comcast Corporation Comcast Corporation (cable television Comcast 1500 Market Street, 35th Fl. and communications); Director, NDS Corporation. Philadelphia, PA 19102 Group PLC (provider of systems and DOB: 7/16/33 applications for digital pay TV). ------------------------------------------------------------------------------------------------------------------------------------ Francis J. McKay Director - 1988 to present Since 2000, Vice President, Fox 16 None Fox Chase Cancer Center Chase Cancer Center (biomedical 333 Cottman Avenue research and medical care); prior Philadelphia, PA 19111 to 2000, Executive Vice President, DOB: 12/06/35 Fox Chase Cancer Center. ------------------------------------------------------------------------------------------------------------------------------------ Arnold M. Reichman Director - 1991 to present Since December 2000, Director, 16 None 106 Pierrepont Street Gabelli Partners, L.P. (an investment Brooklyn, NY 11201 partnership); Chief Operating Officer DOB: 5/21/48 and member of the Board of Directors of Outercurve Technologies (wireless enabling services) until April 2001; Chief Operating Officer and member of the Executive Operating Committee of Warburg Pincus Asset Management, Inc.; Executive Officer and Director of Credit Suisse Asset Management Securities, Inc. (formerly Counsellors Securities, Inc.) and Director/Trustee of various investment companies advised by Warburg Pincus Asset Management, Inc. until September 15, 1999; Prior to 1997, Managing Director of Warburg Pincus Asset Management, Inc. ------------------------------------------------------------------------------------------------------------------------------------ Marvin E. Sternberg Director - 1991 to present Since 1974, Chairman, Director and 16 Director, Moyco Technologies, Inc. President, Moyco Technologies, Inc. Moyco 200 Commerce Drive (manufacturer of precision coated and Technologies, Montgomeryville, PA 18936 industrial abrasives); Since 1999, Inc. DOB: 3/24/34 Director, Pennsylvania Business Bank. ------------------------------------------------------------------------------------------------------------------------------------
12 THE BEDFORD CLASS THE RBB FUND, INC. FUND MANAGEMENT (CONTINUED) (UNAUDITED)
------------------------------------------------------------------------------------------------------------------------------------ NUMBER OF TERM OF OFFICE PORTFOLIOS IN OTHER NAME, ADDRESS, POSITION(S) HELD AND LENGTH OF PRINCIPAL OCCUPATION(S) DURING PAST FUND COMPLEX DIRECTORSHIPS AND DATE OF BIRTH WITH FUND TIME SERVED 5 YEARS OVERSEEN BY HELD BY DIRECTOR DIRECTOR ------------------------------------------------------------------------------------------------------------------------------------ INTERESTED DIRECTORS 2 ------------------------------------------------------------------------------------------------------------------------------------ Robert Sablowsky Director - 1991 to present Since July 2002, Senior Vice President 16 None Oppenheimer & Company, Inc. and prior thereto, Executive Vice 200 Park Avenue President of Oppenheimer & Company, New York, NY 10166 Inc. (formerly Fahnestock & Co., Inc., DOB:4/16/38 a registered broker-dealer). ------------------------------------------------------------------------------------------------------------------------------------ J. Richard Carnall Director - 2002 to present Director of PFPC Inc. from January 1987 16 None 400 Bellevue Parkway to April 2002; Chairman and Chief Wilmington, DE 19809 Executive Officer of PFPC Inc. until DOB: 9/25/38 April 2002; Executive Vice President of PNC Bank, National Association from October 1981 to April 2002; Director of PFPC International Ltd. (financial services) from August 1993 to April 2002; Director of PFPC International (Cayman) Ltd. (financial services) from September 1996 to April 2002, and Director of International Dollar Reserve Fund, Ltd. (Cayman mutual fund Company) from September 1993 to present; Governor of the Investment Company Institute (investment company industry trade organization) from July 1996 to January 2002; Director of PNC Asset Management, Inc. (investment advisory) from September 1994 to March 1998; Director of PNC National Bank from October 1995 to November 1997; Director of Haydon Bolts, Inc. (bolt manufacturer) and Parkway Real Estate Company (subsidiary of Haydon Bolts, Inc.) since 1984. Mr. Carnall provides consulting services from time to time to PFPC Inc. ------------------------------------------------------------------------------------------------------------------------------------
13 THE BEDFORD CLASS THE RBB FUND, INC. FUND MANAGEMENT (CONCLUDED) (UNAUDITED)
------------------------------------------------------------------------------------------------------------------------------------ NUMBER OF TERM OF OFFICE PORTFOLIOS IN OTHER NAME, ADDRESS, POSITION(S) HELD AND LENGTH OF PRINCIPAL OCCUPATION(S) DURING PAST FUND COMPLEX DIRECTORSHIPS AND DATE OF BIRTH WITH FUND TIME SERVED 5 YEARS OVERSEEN BY HELD BY DIRECTOR DIRECTOR ------------------------------------------------------------------------------------------------------------------------------------ OFFICER(S) WHO ARE NOT DIRECTORS ------------------------------------------------------------------------------------------------------------------------------------ Edward J. Roach President and - 1991 to present Certified Public Accountant; Vice Chairman N/A N/A 400 Bellevue Parkway Treasurer of the Board, Fox Chase Cancer Center; 4th Floor and Trustee Emeritus, Pennsylvania School for Wilmington, DE 19809 the Deaf; Trustee Emeritus, Immaculata DOB: 6/29/24 - 1988 to present University; President or Vice President and Treasurer of various investment companies advised by subsidiaries of PNC Bank Corp. from 1981 to 1997; Managing General Partner, President and Treasurer of Chestnut Street Exchange Fund; Director of the Bradford Funds, Inc. from 1996 to 2000. ------------------------------------------------------------------------------------------------------------------------------------ Lisa M. King Secretary - Since 2003 Since 2000, Vice President and Counsel, N/A N/A 301 Bellevue Parkway PFPC Inc. (financial services company); 2nd Floor Associate, Stradley, Ronon, Stevens & Wilmington, DE 19809 Young, LLC (law firm) from 1996-2000. DOB: 1/27/68 ------------------------------------------------------------------------------------------------------------------------------------ 1 Each Director serves for an indefinite period of time until his successor is elected and qualified or until his death, resignation or removal. Each officer holds office at the pleasure of the Board of Directors until the next annual meeting of the Company or until his or her successor is duly elected and qualified, or until he or she dies, resigns, is removed or becomes disqualified. 2 Messrs. Carnall and Sablowsky are considered "interested persons" of the Company as that term is defined in the 1940 Act. Mr. Carnall is an "interested Director" of the Company because he owns shares of The PNC Financial Services Group, Inc. The investment adviser to the Company's Money Market Portfolio, BlackRock Institutional Management Corporation, and the Company's principal underwriter, PFPC Distributors, Inc., are indirect subsidiaries of the PNC Financial Services Group, Inc. Mr. Sablowsky is considered an "interested Director" of the Company by virtue of his position as an officer of a registered broker-dealer.
14 [THIS PAGE INTENTIONALLY LEFT BLANK.] [THIS PAGE INTENTIONALLY LEFT BLANK.] The Bear Stearns Funds 383 MADISON AVENUE NEW YORK, NY 10179 1.800.766.4111 MONEY MARKET PORTFOLIO INVESTMENT ADVISER BlackRock Institutional Management Corporation 100 Bellevue Parkway Wilmington, DE 19809 TRANSFER AGENT PFPC Inc. 760 Moore Road King of Prussia, PA 19406 DISTRIBUTOR PFPC Distributors, Inc. 760 Moore Road King of Prussia, PA 19406 CUSTODIAN PFPC Trust Company 8800 Tinicum Blvd. Suite 200 Philadelphia, PA 19153 INDEPENDENT AUDITORS Deloitte & Touche LLP 1700 Market Street Philadelphia, PA 19103-3984 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 Portfolio. It is not authorized for the distribution to prospective investors in the Portfolio unless it is preceded or accompanied by a current prospectus which includes details regarding the Portfolio's objectives, policies and other information. Total investment return is based on historical results and is not intended to indicate future performance. Current performance may be lower or higher than the performance data provided in the report. BSF-R-023-04 SHAREBUILDER BEDFORD SHARES OF THE RBB MONEY MARKET PORTFOLIO -------------------------------------------------------------------------------- Managed by BlackRock Institutional Management Corporation [GRAPHIC OMITTED] SHAREBUILDER(R) SEMI-ANNUAL REPORT February 29, 2004 www.sharebuilder.com THE BEDFORD CLASS THE RBB FUND, INC. MONEY MARKET PORTFOLIO STATEMENT OF NET ASSETS FEBRUARY 29, 2004 (UNAUDITED) PAR (000) VALUE ------- ------------ CERTIFICATES OF DEPOSIT--21.2% DOMESTIC CERTIFICATES OF DEPOSIT--8.0% J.P. Morgan Chase Bank 1.110%, 03/29/04 .................................. $12,000 $ 12,000,000 Washington Mutual Bank 1.070%, 05/12/04 .................................. 10,000 10,000,000 ------------ 22,000,000 ------------ YANKEE DOLLAR CERTIFICATES OF DEPOSIT--13.2% Banco Santander Puerto Rico 1.080%, 04/26/04 .................................. 1,000 1,000,000 1.070%, 05/20/04 .................................. 2,775 2,775,000 Foreningssparbanken AB (Swedbank) 1.440%, 03/01/05 .................................. 6,000 5,999,103 Landesbank Baden-Wurttemberg New York 1.040%, 03/17/04 .................................. 11,345 11,345,025 Toronto Dominion Bank 1.265%, 04/13/04 .................................. 5,000 4,999,971 Westdeutsche Landesbank 1.400%, 08/05/04 .................................. 10,000 10,000,000 ------------ 36,119,099 ------------ TOTAL CERTIFICATES OF DEPOSIT (Cost $58,119,099) ............................ 58,119,099 ------------ COMMERCIAL PAPER--24.0% BANKS--11.5% Bank of America Corp. 1.030%, 03/17/04 .................................. 12,725 12,719,175 Depfa Bank P.L.C. 1.125%, 03/05/04 .................................. 4,000 3,999,500 Nationwide Building Society 1.090%, 03/31/04 .................................. 15,000 14,986,375 ------------ 31,705,050 ------------ BROKER DEALER SECURITIES--9.9% Concord Minutemen Capital Co. LLC. 1.060%, 04/08/04 .................................. 5,000 4,994,406 Lake Constance Funding LLC. 1.040%, 03/17/04 .................................. 11,230 11,224,809 Tannehill Capital Co. LLC. 1.040%, 03/22/04 .................................. 11,052 11,045,295 ------------ 27,264,510 ------------ CANNED, FROZEN, PRESERVED FRUIT--2.6% Sara Lee Corp. 1.060%, 03/22/04 .................................. 7,000 6,995,671 ------------ TOTAL COMMERCIAL PAPER (Cost $65,965,231) ............................ 65,965,231 ------------ PAR (000) VALUE ------- ------------ MUNICIPAL BONDS--0.1% MISSISSIPPI--0.1% Mississippi Business Finance Corp. IDR RB (Choctaw Foods, Inc.) Series 1995 (Rabobank)+ 1.130%, 03/07/04 .................................. $ 200 $ 200,000 ------------ TOTAL MUNICIPAL BONDS (Cost $200,000) ............................... 200,000 ------------ VARIABLE RATE OBLIGATIONS--16.7% BANKS--8.0% Canadian Imperial Bank of New York++ 1.058%, 03/01/04 .................................. 10,000 9,999,982 HBOs Treasury Services P.L.C.++ 1.160%, 03/24/04 .................................. 10,000 10,000,000 Westpac Banking Corp.++ 1.100%, 03/11/04 .................................. 2,000 2,000,000 ------------ 21,999,982 ------------ ASSET BACKED SECURITIES--4.0% Merrill Lynch & Co., Inc.++ 1.102%, 04/05/04 .................................. 11,000 11,000,000 ------------ LIFE INSURANCE--4.7% John Hancock Global Funding++ 1.220%, 03/11/04 .................................. 8,000 8,003,416 Metlife Global Funding++ 1.100%, 03/01/04 .................................. 5,000 5,000,000 ------------ 13,003,416 ------------ TOTAL VARIABLE RATE OBLIGATIONS (Cost $46,003,398) ............................ 46,003,398 ------------ AGENCY OBLIGATIONS--12.8% Federal Home Loan Bank 4.875%, 04/16/04 .................................. 5,000 5,022,169 Federal Home Loan Mortgage Corp. 1.375%, 11/15/04 .................................. 5,000 5,000,000 Federal National Mortgage Assn. 1.040%, 05/18/04 .................................. 10,000 9,997,604 3.000%, 06/15/04 .................................. 2,000 2,010,209 1.200%, 08/13/04 .................................. 10,000 10,000,000 1.500%, 12/03/04 .................................. 3,000 3,000,000 ------------ TOTAL AGENCY OBLIGATIONS (Cost $35,029,982) ............................ 35,029,982 ------------ MEDIUM TERM NOTES--4.5% Goldman Sachs Group, Inc. 1.230%, 05/18/04 .................................. 12,500 12,500,000 ------------ TOTAL MEDIUM TERM NOTES (Cost $12,500,000) ............................ 12,500,000 ------------ See Accompanying Notes to Financial Statements. 1 THE BEDFORD CLASS THE RBB FUND, INC. MONEY MARKET PORTFOLIO STATEMENT OF NET ASSETS (CONCLUDED) FEBRUARY 29, 2004 (UNAUDITED) PAR (000) VALUE ------- ------------ MASTER NOTES--2.9% SECURITY/BROKER/DEALER Morgan Stanley Mortgage Capital 1.233%, 02/26/05 .................................. $ 8,000 $ 8,000,000 ------------ TOTAL MASTER NOTES (Cost $8,000,000) ............................. 8,000,000 ------------ REPURCHASE AGREEMENTS--17.6% Morgan Stanley & Co. (Tri-Party Agreement dated 02/27/04 to be repurchased at $45,003,938 collateralized by $7,368,891 Federal Mortgage Association Corporation bonds 4.50% due 02/15/33 and Federal National Mortgage Association Strips collateralized by $37,858,109 at a rate of 5.50% to 0.00% due 07/01/33 to 03/01/34. Market Value of collateral is $46,581,750.) 1.050%, 03/01/04 .................................. 45,000 45,000,000 Morgan Stanley & Co. (Tri-Party Agreement dated 02/27/04 to be repurchased at $3,400,094 collateralized by $3,417,486 United States Treasury Notes 2.250% due 02/15/07. Market Value of collateral is $3,485,836.) 0.990%, 03/01/04 .................................. 3,400 3,400,000 ------------ TOTAL REPURCHASE AGREEMENTS (Cost $48,400,000) ............................ 48,400,000 ------------ TOTAL INVESTMENTS AT VALUE--98.8% (Cost $274,217,710) ............................... 274,217,710 ------------ ASSETS IN EXCESS OF OTHER LIABILITIES--0.2% ........................... 520,242 ------------ NET ASSETS (Applicable to 85,081,614 Bedford Shares and 189,654,642 Sansom Street shares and 800 other shares)--100.0% ................................... $274,737,952 ============ NET ASSET VALUE, Offering and Redemption Price Per Share ($274,737,952 / 274,737,056)....................... $1.00 ===== + Variable Rate Demand Note -- The interest rate shown is the rate as of February 29, 2004 and the maturity date shown is the longer of the next interest rate readjustment date or the date the principal amount shown can be recovered through demand. ++ Variable Rate Obligations -- The interest rate shown is the rate as of February 29, 2004 and the maturity date shown is the next interest rate readjustment date or the maturity date. INVESTMENT ABBREVIATIONS IDR .............................................Industrial Development Revenue LOC ...........................................................Letter of Credit RAN ..................................................Revenue Anticipation Note RB ................................................................Revenue Bond VRDN .................................................Variable Rate Demand Note See Accompanying Notes to Financial Statements. 2 THE BEDFORD CLASS THE RBB FUND, INC. MONEY MARKET PORTFOLIO STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED FEBRUARY 29, 2004 (UNAUDITED) Investment Income Interest .................................................... $1,504,730 ---------- Expenses Investment advisory and administration fees ................. 610,972 Distribution fees ........................................... 265,046 Transfer agent fees ......................................... 64,700 Printing fees ............................................... 48,001 Custodian fees .............................................. 32,745 Legal fees .................................................. 23,194 Directors' fees ............................................. 18,879 Audit fees .................................................. 16,353 Registration fees ........................................... 4,500 Insurance expense ........................................... 3,608 Service organization fees ................................... 3,342 Miscellaneous ............................................... 1,633 ---------- Total Expenses ......................................... 1,092,973 Less fees waived ............................................. (489,806) Less expense reimbursement by advisor ....................... (23,851) ---------- Net total expenses ..................................... 579,316 ---------- Net investment income .......................................... 925,414 ---------- Realized gain on investments ................................... 896 ---------- Net increase in net assets resulting from operations ........... $ 926,310 ========== See Accompanying Notes to Financial Statements. 3 THE BEDFORD CLASS THE RBB FUND, INC. MONEY MARKET PORTFOLIO STATEMENT OF CHANGES IN NET ASSETS
FOR THE FOR THE SIX MONTHS ENDED YEAR ENDED FEBRUARY 29, 2004 AUGUST 31, 2003 ----------------- --------------- (UNAUDITED) Increase (decrease) in net assets: Operations: Net investment income ................................................... $ 925,414 $ 2,499,023 Net gain on investments ................................................. 896 3,622 ------------ ------------ Net increase in net assets resulting from operations .................... 926,310 2,502,645 ------------ ------------ Distributions to shareholders: Dividends to shareholders from Net Investment Income: Bedford shares ........................................................ (83,300) (377,857) Sansom Street shares .................................................. (842,114) (2,121,166) Distributions to shareholders from Net realized short-term gains: Bedford shares ........................................................ (1,077) (42,292) Sansom Street shares .................................................. (2,545) (96,036) ------------ ------------ Total distributions to shareholders ................................. (929,036) (2,637,351) ------------ ------------ Net capital share transactions (See Note 3) ............................... (4,038,046) (18,176,747) ------------ ------------ Total decrease in net assets .............................................. (4,040,772) (18,311,453) Net Assets: Beginning of period ..................................................... 278,778,724 297,090,177 ------------ ------------ End of period ........................................................... $274,737,952 $278,778,724 ============ ============
See Accompanying Notes to Financial Statements. 4 THE BEDFORD CLASS THE RBB FUND, INC. FINANCIAL HIGHLIGHTS (a) (FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR)
MONEY MARKET PORTFOLIO ----------------------------------------------------------------------------------------- FOR THE FOR THE FOR THE FOR THE FOR THE SIX MONTHS YEAR YEAR YEAR YEAR ENDED ENDED ENDED ENDED ENDED FEBRUARY 29, 2004 AUGUST 31, 2003 AUGUST 31, 2002 AUGUST 31, 2001 AUGUST 31, 2000 ----------------- --------------- --------------- --------------- --------------- (UNAUDITED) Net asset value, beginning of year ..... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 -------- -------- -------- -------- -------- Income from investment operations: Net investment income ................ 0.0010 0.0046 0.0157 0.0460 0.0512 Net gains on securities .............. -- 0.0005 -- -- -- -------- -------- -------- -------- -------- Total from investment operations ........................ 0.0010 0.0051 0.0157 0.0460 0.0512 -------- -------- -------- -------- -------- Less distributions Dividends (from net investment income) ............................. (0.0010) (0.0046) (0.0157) (0.0460) (0.0512) Distributions (from capital gains) ... -- (0.0005) -- -- -- -------- -------- -------- -------- -------- Total distributions ................. (0.0010) (0.0051) (0.0157) (0.0460) (0.0512) -------- -------- -------- -------- -------- Net asset value, end of year ........... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ======== ======== ======== ======== ======== Total Return ........................... 0.20% 0.53% 1.59% 4.70% 5.24% Ratios /Supplemental Data Net assets, end of year (000) ........ $ 85,082 $ 80,406 $ 52,878 $676,964 $423,977 Ratios of expenses to average net assets(b) ....................... .95% .98% 1.00% 1.00% .97% Ratios of net investment income to average net assets ............... .20% .46% 1.75% 4.46% 5.15% (a) Financial Highlights relate solely to the Bedford Class of shares within this portfolio. (b) Without the waiver of advisory, administration and transfer agent fees and without the reimbursement of certain operating expenses, the ratios of expenses to average net assets for the Money Market Portfolio would have been 1.37% for the six months ended February 29, 2004 and 1.30%, 1.25%, 1.19% and 1.05% for the years ended August 31, 2003, 2002, 2001 and 2000, respectively.
See Accompanying Notes to Financial Statements. 5 THE BEDFORD CLASS THE RBB FUND, INC. NOTES TO FINANCIAL STATEMENTS FEBRUARY 29, 2004 (UNAUDITED) NOTE 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES The RBB Fund, Inc. ("RBB" or the "Fund") 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 "1940 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 1940 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 active investment portfolios, including the Money Market Portfolio ("Portfolio"), which comprises the RBB family of funds. RBB has authorized capital of thirty billion shares of common stock of which 26.073 billion shares are currently classified into ninety-seven classes of Common Stock. Each class represents an interest in an active or inactive RBB investment portfolio. The active classes have been grouped into eight separate "families," seven of which have begun investment operations. A) SECURITY VALUATION -- Portfolio securities are valued under the amortized cost method, which approximates current market value. Under this method, securities are valued at cost when purchased and thereafter a constant proportionate amortization of any discount or premium is recorded until maturity of the security. Regular review and monitoring of the valuation is performed to ensure that cost continues to approximate market value and to avoid dilution or other unfair results to shareholders. The Portfolio seeks to maintain net asset value per share at $1.00. B) SECURITY TRANSACTIONS, INVESTMENT INCOME, AND EXPENSES -- Security transactions are accounted for on the trade date. The cost of investments sold is determined by use of the specific identification method for both financial reporting and income tax purposes. Interest income is accrued when earned. Certain expenses, such as distribution, transfer agency and printing, are class specific expenses and vary by class. Expenses not directly attributable to a specific portfolio or class are allocated based on relative net assets of each portfolio and class, respectively. Expenses incurred on behalf of a specific class, fund or fund family are charged directly to the class, fund or fund family (in proportion to net assets). Expenses incurred for all portfolios within the RBB family of funds (such as director or professional fees) are charged to all portfolios in proportion to their average net assets. C) DISTRIBUTIONS TO SHAREHOLDERS -- Dividends from net investment income are declared daily, recorded on the ex-date and paid monthly. All distributions from net investment income are taxed as ordinary income. Any net realized capital gains are distributed at least annually. Income distributions and capital gain distributions are determined in accordance with income tax regulations, which may differ from accounting principles generally accepted in the United States of America. D) FEDERAL INCOME TAXES -- No provision is made for federal income taxes. It is the Fund's intention to have each portfolio continue to qualify for and elect the tax treatment applicable to regulated investment companies under the Internal Revenue Code and make the requisite distributions to its shareholders which will be sufficient to relieve it from Federal income and excise taxes. E) REPURCHASE AGREEMENTS -- Money market instruments may be purchased subject to the seller's agreement to repurchase them at an agreed upon date and price. The seller will be required on a daily basis to maintain the value of the securities subject to the agreement at not less than the repurchase price plus accrued interest. If the value of the underlying securities falls below 102% of the value of the repurchase price plus accrued interest, the Portfolio will require the seller to deposit additional collateral by the next Portfolio business day. In the event that the seller under the agreement defaults on its repurchase obligation or fails to deposit sufficient collateral, the Portfolio has the contractual right, subject to the requirements of applicable bankruptcy and insolvency laws, to sell the underlying securities and may claim any resulting loss from the seller. The agreements are conditioned upon the collateral being deposited under the Federal Reserve Book Entry System or with the Portfolio's custodian or a third party sub-custodian. 6 THE BEDFORD CLASS THE RBB FUND, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) FEBRUARY 29, 2004 (UNAUDITED) NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) F) 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. These estimates and assumptions 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 reporting period. Actual results could differ from those estimates. NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES Pursuant to Investment Advisory Agreements, BlackRock Institutional Management Corp. ("BIMC"), an indirect majority-owned subsidiary of The PNC Financial Services Group, Inc., serves as investment adviser and as administrator for the Money Market Portfolio. For the Money Market Portfolio, BIMC and PFPC Inc. ("PFPC") have entered into a delegation agreement, wherein PFPC has agreed to perform Administration and Accounting services for an annual fee of .10% of the average net assets of the Portfolio, paid out of the fee paid to BIMC. For its advisory services, BIMC is entitled to receive the following fees, computed daily and payable monthly, and based on the Portfolio's average daily net assets: PORTFOLIO ANNUAL RATE ------------------------ --------------------------------------------- Money Market Portfolio .45% of first $250 million of net assets; .40% of next $250 million of net assets; .35% of net assets in excess of $500 million. BIMC may, at its discretion, voluntarily waive all or any portion of its advisory fee for this Portfolio. For each class of shares within the Portfolio, the net advisory fee charged to each class is the same on a relative basis. For the six months ended February 29, 2004, advisory fees and waivers for the investment portfolio were as follows: GROSS NET ADVISORY ADVISORY FEE WAIVER FEE ------------ ----------- ------------ Money Market Portfolio $587,778 $(489,806) $97,972 As of February 29, 2004, the Money Market Portfolio owed BIMC $6,632 in advisory fees. For providing regulatory administrative services to RBB, PFPC is entitled to receive compensation as agreed to by the Fund and PFPC. This agreement commenced on June 1, 2003. This fee is allocated to each portfolio of RBB based on the Portfolio's average net assets as a percentage of the total RBB net assets. The Portfolio portion of this fee for the period September 1, 2003 to February 29, 2004 was $23,194. The investment advisor/administrator may voluntarily waive and/or reimburse the Portfolio for the amount, if any, by which the total operating and management expenses exceed the expense cap. For the six months ended February 29, 2004, the expense caps were as follows: PORTFOLIO CLASS OF SHARES EXPENSE CAP ---------- ---------------------- ------------- Money Market Portfolio Bedford .97% Sansom Street .20% Effective January 7, 2003, the Money Market Portfolio expense caps for the Bedford Class and Sansom Street Class changed from 1.00% to .97% and .49% to .20%, respectively. Reimbursed expenses for the six months ended February 29, 2004 were $23,851 for the Money Market Portfolio. 7 THE BEDFORD CLASS THE RBB FUND, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) FEBRUARY 29, 2004 (UNAUDITED) NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (CONTINUED) The Fund, on behalf of each class of shares within the investment portfolio, has adopted Distribution Plans pursuant to Rule 12b-1 under the 1940 Act. The Fund has entered into a Distribution Contract with PFPC Distributors, Inc. ("PFPC Distributors"). PFPC Distributors is a wholly-owned subsidiary of PFPC Worldwide Inc. and an indirect wholly-owned subsidiary of The PNC Financial Services Group, Inc. The plans provide for each class to make monthly payments, based on average net assets, to PFPC Distributors of up to .65% on an annualized basis for the Bedford Class and up to .20% on an annualized basis for the Sansom Street Class. For the six months ended February 29, 2004, distribution fees paid to PFPC Distributors for each class were as follows: DISTRIBUTION FEE ------------ Money Market Portfolio Bedford Class $265,046 Sansom Street Class -- -------- Total Money Market Portfolio $265,046 ======== PFPC serves as each class's transfer and dividend disbursing agent. Both PFPC Trust Co. and PFPC are wholly-owned subsidiaries of PFPC Worldwide Inc., an indirect wholly-owned subsidiary of The PNC Financial Services Group, Inc. PFPC may, at its discretion, voluntarily waive all or any portion of its transfer agency fee for any class of shares. For the six months ended February 29, 2004, transfer agency fees and waivers for each class of shares within the investment portfolio were as follows: TRANSFER AGENCY FEE --------------- Money Market Portfolio Bedford Class $51,500 Sansom Street Class 13,200 ------- Total Money Market Portfolio $64,700 ======= PFPC Trust Co. serves as custodian for the Fund's Portfolio. As compensation for such custodial services, PFPC Trust Co. is entitled to receive the following fees, computed daily and payable monthly, and based on the Portfolio's average gross assets: PORTFOLIO ANNUAL RATE ----------------------- -------------------------------------------------- Money Market Portfolio .025% of first $50 million of gross assets; .020% of next $50 million of gross assets; .015% of gross assets in excess of $100 million. The Fund has entered into service agreements with banks affiliated with PNC who render support services to customers who are the beneficial owners of the Sansom Street Class in consideration of the payment of .10% of the daily net asset value of such shares. For the six months ended February 29, 2004, service organization fees were $3,342 for the Money Market Portfolio. As of February 29, 2004, the Money Market Portfolio owed PFPC and its affiliates $60,107 for their services. 8 THE BEDFORD CLASS THE RBB FUND, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) FEBRUARY 29, 2004 (UNAUDITED) NOTE 3. CAPITAL SHARES Transactions in capital shares (at $1 per capital share) for each year were as follows:
MONEY MARKET PORTFOLIO ------------------------------------- FOR THE SIX FOR THE MONTHS ENDED YEAR ENDED FEBRUARY 29, 2004 AUGUST 31, 2003 ----------------- --------------- (UNAUDITED) VALUE VALUE ----------------- --------------- Shares sold: Bedford Class $ 187,153,525 $ 312,708,677 Sansom Street Class 1,007,523,224 1,864,927,379 --------------- --------------- Total Shares Sold 1,194,676,749 2,177,636,056 Shares issued on reinvestment of dividends: Bedford Class 85,919 430,446 Sansom Street Class 41,616 172,379 --------------- --------------- Total Shares Reinvested 127,535 602,825 Shares repurchased: Bedford Class (182,566,088) (285,586,385) Sansom Street Class (1,016,276,242) (1,910,829,243) --------------- --------------- Total Shares Repurchased (1,198,842,330) (2,196,415,628) --------------- --------------- Net decrease $ (4,038,046) $ (18,176,747) =============== =============== Bedford Shares authorized 1,500,000,000 1,500,000,000 =============== ===============
NOTE 4. PROXY VOTING Policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, by calling (800) 533-7719 and on the Securities and Exchange Commission's website at http://www.sec.gov. Note 5. Net Assets At February 29, 2004, net assets consisted of the following: MONEY MARKET PORTFOLIO ------------ Paid-in capital $274,737,056 Accumulated net realized gain/(loss) on investments 896 ------------ Total net assets $274,737,952 ============ 9 THE BEDFORD CLASS THE RBB FUND, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) FEBRUARY 29, 2004 (UNAUDITED) NOTE 6. OTHER FINANCIAL HIGHLIGHTS The Portfolio currently offers one other class of shares representing interest in the Money Market Portfolio: Sansom Street. The Sansom Street Class is marketed to different types of investors. Additional information regarding the Sansom Street shares is available in its annual report. The financial highlights of the Sansom Street Class are as follows:
THE SANSOM STREET FAMILY (a) MONEY MARKET PORTFOLIO -------------------------------------------------------------------------------------------- FOR THE FOR THE FOR THE FOR THE FOR THE SIX MONTHS YEAR YEAR YEAR YEAR ENDED ENDED ENDED ENDED ENDED FEBRUARY 29, 2004 AUGUST 31, 2003 AUGUST 31, 2002 AUGUST 31, 2001 AUGUST 31, 2000 ----------------- --------------- --------------- --------------- --------------- (UNAUDITED) Net asset value, beginning of year .... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 -------- -------- -------- -------- -------- Income from investment operations: Net investment income .............. 0.0047 0.0114 0.0209 0.0511 0.0560 Net gains on securities ............ -- 0.0005 -- -- -- -------- -------- -------- -------- -------- Total net income from investment operations ..................... 0.0047 0.0119 0.0209 0.0511 0.0560 -------- -------- -------- -------- -------- Less distributions Dividends (from net investment income) .......................... (0.0047) (0.0114) (0.0209) (0.0511) (0.0560) Distributions (from capital gains).. -- (0.0005) -- -- -- -------- -------- -------- -------- -------- Total distributions .............. (0.0047) (0.0119) (0.0209) (0.0511) (0.0560) -------- -------- -------- -------- -------- Net asset value, end of year .......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ======== ======== ======== ======== ======== Total Return ..................... 0.94% 1.21% 2.11% 5.23% 5.75% Ratios/Supplemental Data Net assets, end of year (000) ...... $189,656 $198,373 $244,212 $201,632 $326,745 Ratios of expenses to average net assets(b) .................... .20% .30% .49% .49% .49% Ratios of net investment income to average net assets ............... .94% 1.14% 2.10% 5.23% 5.42% (a) Financial highlights relate solely to the Sansom Street Class of shares within this portfolio. (b) Without the waiver of advisory fees and reimbursement of certain operating expenses, the ratios of expenses to average net assets for the Money Market Portfolio would have been .57% for the six months ended February 29, 2004 and .57%, .64%, .61% and .61% for the years ended August 31, 2003, 2002, 2001 and 2000, respectively.
10 ADDITIONAL INFORMATION PricewaterhouseCoopers LLP ("PwC") resigned as the auditor of the Money Market Portfolio of RBB on December 11, 2003 due to PwC's business relationship with certain affiliates of BIMC. As a result of PwC's engagement to provide certain contemplated services to BIMC affiliates in the future, PwC will no longer be independent with respect to the Money Market Portfolio of RBB. On December 11, 2003, RBB by action of the Board of Directors and upon the recommendation of its Audit Committee engaged Deloitte & Touche LLP to serve as the independent auditors to audit RBB's financial statements with respect to the Money Market Portfolio for the fiscal year ending August 31, 2004. PwC's reports on RBB's financial statements for the fiscal year ended August 31, 2003 contained no adverse opinion or disclaimer of opinion nor were they qualified or modified as to uncertainty, audit scope or accounting principles. During RBB's fiscal year ended August 31, 2003, (i) there were no disagreements with PwC on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of PwC, would have caused it to make reference to the subject matter of the disagreements in connection with its reports on the Registrant's financial statements for such years, and (ii) there were no "reportable events" of the kind described in Item 304(a)(1)(v) of Regulation S-K under the Securities Exchange Act of 1934, as amended. During RBB's fiscal year ended August 31, 2003, neither RBB, its portfolios nor anyone on their behalf has consulted Deloitte & Touche LLP on items which (i) concerned the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on RBB's financial statements or (ii) concerned the subject of a disagreement (as defined in paragraph (a)(1)(iv) of Item 304 of Regulation S-K) or reportable events (as described in paragraph (a)(1)(v) of said Item 304). The above information is required to be included in our shareholder reports for two years following a change of independent auditors. 11 THE BEDFORD CLASS THE RBB FUND, INC. FUND MANAGEMENT (UNAUDITED) Information pertaining to the Directors and Officers of the Fund is set forth below. The statement of additional information (SAI) includes additional information about the Directors and is available without charge, upon request, by calling (800) 533-7719 .
------------------------------------------------------------------------------------------------------------------------------------ NUMBER OF TERM OF OFFICE PORTFOLIOS IN OTHER NAME, ADDRESS, POSITION(S) HELD AND LENGTH OF PRINCIPAL OCCUPATION(S) FUND COMPLEX DIRECTORSHIPS AND DATE OF BIRTH WITH FUND TIME SERVED 1 DURING PAST 5 YEARS OVERSEEN BY HELD BY DIRECTOR DIRECTOR ------------------------------------------------------------------------------------------------------------------------------------ DISINTERESTED DIRECTORS ------------------------------------------------------------------------------------------------------------------------------------ Julian A. Brodsky Director - 1988 to present Since 1969, Director and Vice 16 Director, Comcast Corporation Chairman, Comcast Corporation Comcast 1500 Market Street, 35th Fl. (cable television and Corporation. Philadelphia, PA 19102 communications); Director, NDS DOB: 7/16/33 Group PLC (provider of systems and applications for digital pay TV). ------------------------------------------------------------------------------------------------------------------------------------ Francis J. McKay Director - 1988 to present Since 2000, Vice President, Fox 16 None Fox Chase Cancer Center Chase Cancer Center (biomedical 333 Cottman Avenue research and medical care); prior Philadelphia, PA 19111 to 2000, Executive Vice President, DOB: 12/06/35 Fox Chase Cancer Center. ------------------------------------------------------------------------------------------------------------------------------------ Arnold M. Reichman Director - 1991 to present Since December 2000, Director, 16 None 106 Pierrepont Street Gabelli Partners, L.P. (an Brooklyn, NY 11201 investment partnership); Chief DOB: 5/21/48 Operating Officer and member of the Board of Directors of Outercurve Technologies (wireless enabling services) until April 2001; Chief Operating Officer and member of the Executive Operating Committee of Warburg Pincus Asset Management, Inc.; Executive Officer and Director of Credit Suisse Asset Management Securities, Inc. (formerly Counsellors Securities, Inc.) and Director/Trustee of various investment companies advised by Warburg Pincus Asset Management, Inc. until September 15, 1999; Prior to 1997, Managing Director of Warburg Pincus Asset Management, Inc. ------------------------------------------------------------------------------------------------------------------------------------ Marvin E. Sternberg Director - 1991 to present Since 1974, Chairman, Director and 16 Director, Moyco Technologies, Inc. President, Moyco Technologies, Inc. Moyco 200 Commerce Drive (manufacturer of precision coated Technologies, Montgomeryville, PA 18936 and industrial abrasives); Since 1999, Inc. DOB: 3/24/34 Director, Pennsylvania Business Bank. ------------------------------------------------------------------------------------------------------------------------------------
12 THE BEDFORD CLASS THE RBB FUND, INC. FUND MANAGEMENT (CONTINUED) (UNAUDITED)
------------------------------------------------------------------------------------------------------------------------------------ NUMBER OF TERM OF OFFICE PORTFOLIOS IN OTHER NAME, ADDRESS, POSITION(S) HELD AND LENGTH OF PRINCIPAL OCCUPATION(S) FUND COMPLEX DIRECTORSHIPS AND DATE OF BIRTH WITH FUND TIME SERVED DURING PAST 5 YEARS OVERSEEN BY HELD BY DIRECTOR DIRECTOR ------------------------------------------------------------------------------------------------------------------------------------ INTERESTED DIRECTORS 2 ------------------------------------------------------------------------------------------------------------------------------------ Robert Sablowsky Director - 1991 to present Since July 2002, Senior Vice 16 None Oppenheimer & Company, Inc. President and prior thereto, 200 Park Avenue Executive Vice President of New York, NY 10166 Oppenheimer & Company, Inc. DOB:4/16/38 (formerly Fahnestock & Co., Inc., a registered broker-dealer). ------------------------------------------------------------------------------------------------------------------------------------ J. Richard Carnall Director - 2002 to present Director of PFPC Inc. from 16 None 400 Bellevue Parkway January 1987 to April 2002; Wilmington, DE 19809 Chairman and Chief Executive DOB: 9/25/38 Officer of PFPC Inc. until April 2002; Executive Vice President of PNC Bank, National Association from October 1981 to April 2002; Director of PFPC International Ltd. (financial services) from August 1993 to April 2002; Director of PFPC International (Cayman) Ltd. (financial services) from September 1996 to April 2002, and Director of International Dollar Reserve Fund, Ltd. (Cayman mutual fund Company) from September 1993 to present; Governor of the Investment Company Institute (investment company industry trade organization) from July 1996 to January 2002; Director of PNC Asset Management, Inc. (investment advisory) from September 1994 to March 1998; Director of PNC National Bank from October 1995 to November 1997; Director of Haydon Bolts, Inc. (bolt manufacturer) and Parkway Real Estate Company (subsidiary of Haydon Bolts, Inc.) since 1984. Mr. Carnall provides consulting services from time to time to PFPC Inc. ------------------------------------------------------------------------------------------------------------------------------------
13 THE BEDFORD CLASS THE RBB FUND, INC. FUND MANAGEMENT (CONCLUDED) (UNAUDITED)
------------------------------------------------------------------------------------------------------------------------------------ NUMBER OF TERM OF OFFICE PORTFOLIOS IN OTHER NAME, ADDRESS, POSITION(S) HELD AND LENGTH OF PRINCIPAL OCCUPATION(S) FUND COMPLEX DIRECTORSHIPS AND DATE OF BIRTH WITH FUND TIME SERVED DURING PAST 5 YEARS OVERSEEN BY HELD BY DIRECTOR DIRECTOR ------------------------------------------------------------------------------------------------------------------------------------ OFFICER(S) WHO ARE NOT DIRECTORS ------------------------------------------------------------------------------------------------------------------------------------ Edward J. Roach President and - 1991 to present Certified Public Accountant; Vice N/A N/A 400 Bellevue Parkway Treasurer Chairman of the Board, Fox Chase 4th Floor and Cancer Center; Trustee Emeritus, Wilmington, DE 19809 Pennsylvania School for the Deaf; DOB: 6/29/24 - 1988 to present Trustee Emeritus, Immaculata University; President or Vice President and Treasurer of various investment companies advised by subsidiaries of PNC Bank Corp. from 1981 to 1997; Managing General Partner, President and Treasurer of Chestnut Street Exchange Fund; Director of the Bradford Funds, Inc. from 1996 to 2000. ------------------------------------------------------------------------------------------------------------------------------------ Lisa M. King Secretary - Since 2003 Since 2000, Vice President and N/A N/A 301 Bellevue Parkway Counsel, PFPC Inc. (financial 2nd Floor services company); Associate, Wilmington, DE 19809 Stradley, Ronon, Stevens & Young, DOB: 1/27/68 LLC (law firm) from 1996-2000. ------------------------------------------------------------------------------------------------------------------------------------ 1 Each Director serves for an indefinite period of time until his successor is elected and qualified or until his death, resignation or removal. Each officer holds office at the pleasure of the Board of Directors until the next annual meeting of the Company or until his or her successor is duly elected and qualified, or until he or she dies, resigns, is removed or becomes disqualified. 2 Messrs. Carnall and Sablowsky are considered "interested persons" of the Company as that term is defined in the 1940 Act. Mr. Carnall is an "interested Director" of the Company because he owns shares of The PNC Financial Services Group, Inc. The investment adviser to the Company's Money Market Portfolio, BlackRock Institutional Management Corporation, and the Company's principal underwriter, PFPC Distributors, Inc., are indirect subsidiaries of the PNC Financial Services Group, Inc. Mr. Sablowsky is considered an "interested Director" of the Company by virtue of his position as an officer of a registered broker-dealer.
14 [THIS PAGE INTENTIONALLY LEFT BLANK.] [THIS PAGE INTENTIONALLY LEFT BLANK.] CUSTOMER CARE For questions regarding your ShareBuilder account please call 1-866-SHRBLDR (1-866-747-2537) or visit ShareBuilder online at ShareBuilder.com. Please be aware that ShareBuilder Customer Care Agents are NOT able to place a trade for you over the phone, open your account over the phone, or provide any type of financial advice or recommendations. WRITTEN CORRESPONDENCE Post Office Address: ShareBuilder -- Bedford Shares of The RBB Money Market Portfolio c/o ShareBuilder Securities Corporation PO Box 1728 Bellevue, WA 98009 Street Address: ShareBuilder -- Bedford Shares of the RBB Money Market c/o ShareBuilder Securities Corporation 1445 -- 120th Avenue Northeast Bellevue, WA 98005 -------------------------------------------------------------------------------- INVESTMENT COMPANY ACT FILE NO. 811-05518 ================================================================================ THE SANSOM STREET CLASS MONEY MARKET PORTFOLIO THE RBB FUND, INC. Semi-Annual Report February 29, 2004 ================================================================================ THE SANSOM STREET CLASS THE RBB FUND, INC. MONEY MARKET PORTFOLIO STATEMENT OF NET ASSETS FEBRUARY 29, 2004 (UNAUDITED) PAR (000) VALUE ------- ------------ CERTIFICATES OF DEPOSIT--21.2% DOMESTIC CERTIFICATES OF DEPOSIT--8.0% J.P. Morgan Chase Bank 1.110%, 03/29/04 ............................... $12,000 $ 12,000,000 Washington Mutual Bank 1.070%, 05/12/04 ............................... 10,000 10,000,000 ------------ 22,000,000 ------------ YANKEE DOLLAR CERTIFICATES OF DEPOSIT--13.2% Banco Santander Puerto Rico 1.080%, 04/26/04 ............................... 1,000 1,000,000 1.070%, 05/20/04 ............................... 2,775 2,775,000 Foreningssparbanken AB (Swedbank) 1.440%, 03/01/05 ............................... 6,000 5,999,103 Landesbank Baden-Wurttemberg New York 1.040%, 03/17/04 ............................... 11,345 11,345,025 Toronto Dominion Bank 1.265%, 04/13/04 ............................... 5,000 4,999,971 Westdeutsche Landesbank 1.400%, 08/05/04 ............................... 10,000 10,000,000 ------------ 36,119,099 ------------ TOTAL CERTIFICATES OF DEPOSIT (Cost $58,119,099) ......................... 58,119,099 ------------ COMMERCIAL PAPER--24.0% BANKS--11.5% Bank of America Corp. 1.030%, 03/17/04 ............................... 12,725 12,719,175 Depfa Bank P.L.C. 1.125%, 03/05/04 ............................... 4,000 3,999,500 Nationwide Building Society 1.090%, 03/31/04 ............................... 15,000 14,986,375 ------------ 31,705,050 ------------ BROKER DEALER SECURITIES--9.9% Concord Minutemen Capital Co. LLC. 1.060%, 04/08/04 ............................... 5,000 4,994,406 Lake Constance Funding LLC. 1.040%, 03/17/04 ............................... 11,230 11,224,809 Tannehill Capital Co. LLC. 1.040%, 03/22/04 ............................... 11,052 11,045,295 ------------ 27,264,510 ------------ PAR (000) VALUE ------- ------------ COMMERCIAL PAPER--(CONTINUED) CANNED, FROZEN, PRESERVED FRUIT--2.6% Sara Lee Corp. 1.060%, 03/22/04 ............................... $ 7,000 $ 6,995,671 ------------ TOTAL COMMERCIAL PAPER (Cost $65,965,231) ......................... 65,965,231 ------------ MUNICIPAL BONDS--0.1% MISSISSIPPI--0.1% Mississippi Business Finance Corp. IDR RB (Choctaw Foods, Inc.) Series 1995 (Rabobank)+ 1.130%, 03/07/04 ............................... 200 200,000 ------------ TOTAL MUNICIPAL BONDS (Cost $200,000) ............................ 200,000 ------------ VARIABLE RATE OBLIGATIONS--16.7% BANKS--8.0% Canadian Imperial Bank of New York++ 1.058%, 03/01/04 ............................... 10,000 9,999,982 HBOs Treasury Services P.L.C.++ 1.160%, 03/24/04 ............................... 10,000 10,000,000 Westpac Banking Corp.++ 1.100%, 03/11/04 ............................... 2,000 2,000,000 ------------ 21,999,982 ------------ ASSET BACKED SECURITIES--4.0% Merrill Lynch & Co., Inc.++ 1.102%, 04/05/04 ............................... 11,000 11,000,000 ------------ LIFE INSURANCE--4.7% John Hancock Global Funding++ 1.220%, 03/11/04 ............................... 8,000 8,003,416 Metlife Global Funding++ 1.100%, 03/01/04 ............................... 5,000 5,000,000 ------------ 13,003,416 ------------ TOTAL VARIABLE RATE OBLIGATIONS (Cost $46,003,398) ......................... 46,003,398 ----------- AGENCY OBLIGATIONS--12.8% Federal Home Loan Bank 4.875%, 04/16/04 ............................... 5,000 5,022,169 See Accompanying Notes to Financial Statements. 1 THE SANSOM STREET CLASS THE RBB FUND, INC. MONEY MARKET PORTFOLIO STATEMENT OF NET ASSETS (CONCLUDED) FEBRUARY 29, 2004 (UNAUDITED) PAR (000) VALUE ------- ------------ AGENCY OBLIGATIONS--(CONTINUED) Federal Home Loan Mortgage Corp. 1.375%, 11/15/04 ............................... $ 5,000 $ 5,000,000 Federal National Mortgage Assn. 1.040%, 05/18/04 ............................... 10,000 9,997,604 3.000%, 06/15/04 ............................... 2,000 2,010,209 1.200%, 08/13/04 ............................... 10,000 10,000,000 1.500%, 12/03/04 ............................... 3,000 3,000,000 ------------ TOTAL AGENCY OBLIGATIONS (Cost $35,029,982) ......................... 35,029,982 ------------ MEDIUM TERM NOTES--4.5% Goldman Sachs Group, Inc. 1.230%, 05/18/04 ............................... 12,500 12,500,000 ------------ TOTAL MEDIUM TERM NOTES (Cost $12,500,000) ......................... 12,500,000 ------------ MASTER NOTES--2.9% SECURITY/BROKER/DEALER Morgan Stanley Mortgage Capital 1.233%, 02/26/05 ............................... 8,000 8,000,000 ------------ TOTAL MASTER NOTES (Cost $8,000,000) .......................... 8,000,000 ------------ REPURCHASE AGREEMENTS--17.6% Morgan Stanley & Co. (Tri-Party Agreement dated 02/27/04 to be repurchased at $45,003,938 collateralized by $7,368,891 Federal Mortgage Association Corporation bonds 4.50% due 02/15/33 and Federal National Mortgage Association Strips collateralized by $37,858,109 at a rate of 5.50% to 0.00% due 07/01/33 to 03/01/34. Market Value of collateral is $46,581,750.) 1.050%, 03/01/04 ............................... 45,000 45,000,000 PAR (000) VALUE ------- ------------ REPURCHASE AGREEMENTS--(CONTINUED) Morgan Stanley & Co. (Tri-Party Agreement dated 02/27/04 to be repurchased at $3,400,094 collateralized by $3,417,486 United States Treasury Notes 2.250% due 02/15/07. Market Value of collateral is $3,485,836.) 0.990%, 03/01/04 ............................... $ 3,400 $ 3,400,000 ------------ TOTAL REPURCHASE AGREEMENTS (Cost $48,400,000) ......................... 48,400,000 ------------ TOTAL INVESTMENTS AT VALUE--98.8% (Cost $274,217,710) ............................ 274,217,710 ------------ ASSETS IN EXCESS OF OTHER LIABILITIES--0.2% ........................ 520,242 ------------ NET ASSETS (Applicable to 85,081,614 Bedford Shares and 189,654,642 Sansom Street shares and 800 other shares)--100.0% ................................ $274,737,952 ============ NET ASSET VALUE, Offering and Redemption Price Per Share ($274,737,952 / 274,737,056) ................... $1.00 ===== + Variable Rate Demand Note -- The interest rate shown is the rate as of February 29, 2004 and the maturity date shown is the longer of the next interest rate readjustment date or the date the principal amount shown can be recovered through demand. ++ Variable Rate Obligations -- The interest rate shown is the rate as of February 29, 2004 and the maturity date shown is the next interest rate readjustment date or the maturity date. INVESTMENT ABBREVIATIONS IDR ..............................................Industrial Development Revenue LOC ............................................................Letter of Credit RAN ...................................................Revenue Anticipation Note RB .................................................................Revenue Bond VRDN ..................................................Variable Rate Demand Note See Accompanying Notes to Financial Statements. 2 THE SANSOM STREET CLASS THE RBB FUND, INC. MONEY MARKET PORTFOLIO STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED FEBRUARY 29, 2004 (UNAUDITED) Investment Income Interest ................................................. $1,504,730 ---------- Expenses Investment advisory and administration fees .............. 610,972 Distribution fees ........................................ 265,046 Transfer agent fees ...................................... 64,700 Printing fees ............................................ 48,001 Custodian fees ........................................... 32,745 Legal fees ............................................... 23,194 Directors' fees .......................................... 18,879 Audit fees ............................................... 16,353 Registration fees ........................................ 4,500 Insurance expense ........................................ 3,608 Service organization fees ................................ 3,342 Miscellaneous ............................................ 1,633 ---------- Total Expenses ...................................... 1,092,973 Less fees waived ......................................... (489,806) Less expense reimbursement by advisor .................... (23,851) ---------- Net total expenses .................................. 579,316 ---------- Net investment income ....................................... 925,414 ---------- Realized gain on investments ................................ 896 ---------- Net increase in net assets resulting from operations ........ $ 926,310 ========== See Accompanying Notes to Financial Statements. 3 THE SANSOM STREET CLASS THE RBB FUND, INC. MONEY MARKET PORTFOLIO STATEMENT OF CHANGES IN NET ASSETS
FOR THE FOR THE SIX MONTHS ENDED YEAR ENDED FEBRUARY 29, 2004 AUGUST 31, 2003 ----------------- --------------- (UNAUDITED) Increase (decrease) in net assets: Operations: Net investment income .................................... $ 925,414 $ 2,499,023 Net gain on investments .................................. 896 3,622 ------------ ------------ Net increase in net assets resulting from operations ..... 926,310 2,502,645 ------------ ------------ Distributions to shareholders: Dividends to shareholders from Net Investment Income: Bedford shares ......................................... (83,300) (377,857) Sansom Street shares ................................... (842,114) (2,121,166) Distributions to shareholders from Net realized short-term gains: Bedford shares ......................................... (1,077) (42,292) Sansom Street shares ................................... (2,545) (96,036) ------------ ------------ Total distributions to shareholders .................. (929,036) (2,637,351) ------------ ------------ Net capital share transactions (See Note 3) ................ (4,038,046) (18,176,747) ------------ ------------ Total decrease in net assets ............................... (4,040,772) (18,311,453) Net Assets: Beginning of period ...................................... 278,778,724 297,090,177 ------------ ------------ End of period ............................................ $274,737,952 $278,778,724 ============ ============
See Accompanying Notes to Financial Statements. 4 THE SANSOM STREET CLASS THE RBB FUND, INC. FINANCIAL HIGHLIGHTS (a) (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
MONEY MARKET PORTFOLIO ----------------------------------------------------------------------------------------- FOR THE FOR THE FOR THE FOR THE FOR THE SIX MONTHS YEAR YEAR YEAR YEAR ENDED ENDED ENDED ENDED ENDED FEBRUARY 29, 2004 AUGUST 31, 2003 AUGUST 31, 2002 AUGUST 31, 2001 AUGUST 31, 2000 ----------------- --------------- --------------- --------------- --------------- (UNAUDITED) Net asset value, beginning of year ....... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 -------- -------- -------- -------- -------- Income from investment operations: Net investment income ................. 0.0047 0.0114 0.0209 0.0511 0.0560 Net gains on securities ............... -- 0.0005 -- -- -- -------- -------- -------- -------- -------- Total net income from investment operations ........................ 0.0047 0.0119 0.0209 0.0511 0.0560 -------- -------- -------- -------- -------- Less distributions Dividends (from net investment income) ............................. (0.0047) (0.0114) (0.0209) (0.0511) (0.0560) Distributions (from capital gains) .... -- (0.0005) -- -- -- -------- -------- -------- -------- -------- Total distributions ................. (0.0047) (0.0119) (0.0209) (0.0511) (0.0560) -------- -------- -------- -------- -------- Net asset value, end of year ............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ======== ======== ======== ======== ======== Total Return ........................ 0.94% 1.21% 2.11% 5.23% 5.75% Ratios/Supplemental Data Net assets, end of year (000) ......... $189,656 $198,373 $244,212 $201,632 $326,745 Ratios of expenses to average net assets(b) ....................... .20% .30% .49% .49% .49% Ratios of net investment income to average net assets ............... .94% 1.14% 2.10% 5.23% 5.42% (a) Financial highlights relate solely to the Sansom Street Class of shares within this portfolio. (b) Without the waiver of advisory fees and reimbursement of certain operating expenses, the ratios of expenses to average net assets for the Money Market Portfolio would have been .57% for the six months ended February 29, 2004 and .57%, .64%, .61% and .61% for the years ended August 31, 2003, 2002, 2001 and 2000, respectively.
See Accompanying Notes to Financial Statements. 5 THE SANSOM STREET CLASS THE RBB FUND, INC. NOTES TO FINANCIAL STATEMENTS FEBRUARY 29, 2004 (UNAUDITED) NOTE 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES The RBB Fund, Inc. ("RBB" or the "Fund") 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 "1940 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 1940 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 active investment portfolios, including the Money Market Portfolio ("Portfolio"), which comprises the RBB family of funds. RBB has authorized capital of thirty billion shares of common stock of which 26.073 billion shares are currently classified into ninety-seven classes of Common Stock. Each class represents an interest in an active or inactive RBB investment portfolio. The active classes have been grouped into eight separate "families," seven of which have begun investment operations. A) SECURITY VALUATION -- Portfolio securities are valued under the amortized cost method, which approximates current market value. Under this method, securities are valued at cost when purchased and thereafter a constant proportionate amortization of any discount or premium is recorded until maturity of the security. Regular review and monitoring of the valuation is performed to ensure that cost continues to approximate market value and to avoid dilution or other unfair results to shareholders. The Portfolio seeks to maintain net asset value per share at $1.00. B) SECURITY TRANSACTIONS, INVESTMENT INCOME, AND EXPENSES -- Security transactions are accounted for on the trade date. The cost of investments sold is determined by use of the specific identification method for both financial reporting and income tax purposes. Interest income is accrued when earned. Certain expenses, such as distribution, transfer agency and printing, are class specific expenses and vary by class. Expenses not directly attributable to a specific portfolio or class are allocated based on relative net assets of each portfolio and class, respectively. Expenses incurred on behalf of a specific class, fund or fund family are charged directly to the class, fund or fund family (in proportion to net assets). Expenses incurred for all portfolios within the RBB family of funds (such as director or professional fees) are charged to all portfolios in proportion to their average net assets. C) DISTRIBUTIONS TO SHAREHOLDERS -- Dividends from net investment income are declared daily, recorded on the ex-date and paid monthly. All distributions from net investment income are taxed as ordinary income. Any net realized capital gains are distributed at least annually. Income distributions and capital gain distributions are determined in accordance with income tax regulations, which may differ from accounting principles generally accepted in the United States of America. D) FEDERAL INCOME TAXES -- No provision is made for federal income taxes. It is the Fund's intention to have each portfolio continue to qualify for and elect the tax treatment applicable to regulated investment companies under the Internal Revenue Code and make the requisite distributions to its shareholders which will be sufficient to relieve it from Federal income and excise taxes. 6 THE SANSOM STREET CLASS THE RBB FUND, INC. NOTES TO FINANCIAL STATEMENTS FEBRUARY 29, 2004 (UNAUDITED) NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) E) REPURCHASE AGREEMENTS -- Money market instruments may be purchased subject to the seller's agreement to repurchase them at an agreed upon date and price. The seller will be required on a daily basis to maintain the value of the securities subject to the agreement at not less than the repurchase price plus accrued interest. If the value of the underlying securities falls below 102% of the value of the repurchase price plus accrued interest, the Portfolio will require the seller to deposit additional collateral by the next Portfolio business day. In the event that the seller under the agreement defaults on its repurchase obligation or fails to deposit sufficient collateral, the Portfolio has the contractual right, subject to the requirements of applicable bankruptcy and insolvency laws, to sell the underlying securities and may claim any resulting loss from the seller. The agreements are conditioned upon the collateral being deposited under the Federal Reserve Book Entry System or with the Portfolio's custodian or a third party sub-custodian. F) 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. These estimates and assumptions 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 reporting period. Actual results could differ from those estimates. NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES Pursuant to Investment Advisory Agreements, BlackRock Institutional Management Corp. ("BIMC"), an indirect majority-owned subsidiary of The PNC Financial Services Group, Inc., serves as investment adviser and as administrator for the Money Market Portfolio. For the Money Market Portfolio, BIMC and PFPC Inc. ("PFPC") have entered into a delegation agreement, wherein PFPC has agreed to perform Administration and Accounting services for an annual fee of .10% of the average net assets of the Portfolio, paid out of the fee paid to BIMC. For its advisory services, BIMC is entitled to receive the following fees, computed daily and payable monthly, and based on the Portfolio's average daily net assets: PORTFOLIO ANNUAL RATE ------------------------- --------------------------------------------- Money Market Portfolio .45% of first $250 million of net assets; .40% of next $250 million of net assets; .35% of net assets in excess of $500 million. BIMC may, at its discretion, voluntarily waive all or any portion of its advisory fee for this Portfolio. For each class of shares within the Portfolio, the net advisory fee charged to each class is the same on a relative basis. For the six months ended February 29, 2004, advisory fees and waivers for the investment portfolio were as follows: GROSS NET ADVISORY ADVISORY FEE WAIVER FEE --------- ---------- -------- Money Market Portfolio $587,778 $(489,806) $97,972 As of February 29, 2004, the Money Market Portfolio owed BIMC $6,632 in advisory fees. 7 THE SANSOM STREET CLASS THE RBB FUND, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) FEBRUARY 29, 2004 (UNAUDITED) NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (CONTINUED) For providing regulatory administrative services to RBB, PFPC is entitled to receive compensation as agreed to by the Fund and PFPC. This agreement commenced on June 1, 2003. This fee is allocated to each portfolio of RBB based on the Portfolio's average net assets as a percentage of the total RBB net assets. The Portfolio portion of this fee for the period September 1, 2003 to February 29, 2004 was $23,194. The investment advisor/administrator may voluntarily waive and/or reimburse the Portfolio for the amount, if any, by which the total operating and management expenses exceed the expense cap. For the six months ended February 29, 2004, the expense caps were as follows: PORTFOLIO CLASS OF SHARES EXPENSE CAP ---------- --------------- ----------- Money Market Portfolio Bedford .97% Sansom Street .20% Effective January 7, 2003, the Money Market Portfolio expense caps for the Bedford Class and Sansom Street Class changed from 1.00% to .97% and .49% to .20%, respectively. Reimbursed expenses for the six months ended February 29, 2004 were $23,851 for the Money Market Portfolio. The Fund, on behalf of each class of shares within the investment portfolio, has adopted Distribution Plans pursuant to Rule 12b-1 under the 1940 Act. The Fund has entered into a Distribution Contract with PFPC Distributors, Inc. ("PFPC Distributors"). PFPC Distributors is a wholly-owned subsidiary of PFPC Worldwide Inc. and an indirect wholly-owned subsidiary of The PNC Financial Services Group, Inc. The plans provide for each class to make monthly payments, based on average net assets, to PFPC Distributors of up to .65% on an annualized basis for the Bedford Class and up to .20% on an annualized basis for the Sansom Street Class. For the six months ended February 29, 2004, distribution fees paid to PFPC Distributors for each class were as follows: DISTRIBUTION FEE ------------ Money Market Portfolio Bedford Class $265,046 Sansom Street Class -- -------- Total Money Market Portfolio $265,046 ======== PFPC serves as each class's transfer and dividend disbursing agent. Both PFPC Trust Co. and PFPC are wholly-owned subsidiaries of PFPC Worldwide Inc., an indirect wholly-owned subsidiary of The PNC Financial Services Group, Inc. 8 THE SANSOM STREET CLASS THE RBB FUND, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) FEBRUARY 29, 2004 (UNAUDITED) NOTE 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES (CONTINUED) PFPC may, at its discretion, voluntarily waive all or any portion of its transfer agency fee for any class of shares. For the six months ended February 29, 2004, transfer agency fees and waivers for each class of shares within the investment portfolio were as follows: TRANSFER AGENCY FEE --------------- Money Market Portfolio Bedford Class $51,500 Sansom Street Class 13,200 ------- Total Money Market Portfolio $64,700 ======= PFPC Trust Co. serves as custodian for the Fund's Portfolio. As compensation for such custodial services, PFPC Trust Co. is entitled to receive the following fees, computed daily and payable monthly, and based on the Portfolio's average gross assets: PORTFOLIO ANNUAL RATE ------------------------ ------------------------------------------------ Money Market Portfolio .025% of first $50 million of gross assets; .020% of next $50 million of gross assets; .015% of gross assets in excess of $100 million. The Fund has entered into service agreements with banks affiliated with PNC who render support services to customers who are the beneficial owners of the Sansom Street Class in consideration of the payment of .10% of the daily net asset value of such shares. For the six months ended February 29, 2004, service organization fees were $3,342 for the Money Market Portfolio. As of February 29, 2004, the Money Market Portfolio owed PFPC and its affiliates $60,107 for their services. 9 THE SANSOM STREET CLASS THE RBB FUND, INC. NOTES TO FINANCIAL STATEMENTS (CONTINUED) FEBRUARY 29, 2004 (UNAUDITED) NOTE 3. CAPITAL SHARES Transactions in capital shares (at $1 per capital share) for each year were as follows: MONEY MARKET PORTFOLIO ----------------------------------- FOR THE FOR THE SIX MONTHS ENDED YEAR ENDED FEBRUARY 29, 2004 AUGUST 31, 2003 ----------------- --------------- (UNAUDITED) VALUE VALUE ----------------- --------------- Shares sold: Bedford Class $ 187,153,525 $ 312,708,677 Sansom Street Class 1,007,523,224 1,864,927,379 --------------- --------------- Total Shares Sold 1,194,676,749 2,177,636,056 Shares issued on reinvestment of dividends: Bedford Class 85,919 430,446 Sansom Street Class 41,616 172,379 --------------- --------------- Total Shares Reinvested 127,535 602,825 Shares repurchased: Bedford Class (182,566,088) (285,586,385) Sansom Street Class (1,016,276,242) (1,910,829,243) --------------- --------------- Total Shares Repurchased (1,198,842,330) (2,196,415,628) --------------- --------------- Net decrease $ (4,038,046) $ (18,176,747) =============== =============== Sansom Shares authorized 1,500,000,000 1,500,000,000 =============== =============== NOTE 4. PROXY VOTING Policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, by calling (800) 430-9618 and on the Securities and Exchange Commission's website at http://www.sec.gov. NOTE 5. NET ASSETS At February 29, 2004, net assets consisted of the following: MONEY MARKET PORTFOLIO ------------ Paid-in capital $274,737,056 Accumulated net realized gain/(loss) on investments 896 ------------ Total net assets $274,737,952 ============ 10 THE SANSOM STREET CLASS THE RBB FUND, INC. NOTES TO FINANCIAL STATEMENTS (CONCLUDED) FEBRUARY 29, 2004 (UNAUDITED) NOTE 6. OTHER FINANCIAL HIGHLIGHTS The Fund currently offers one other class of shares representing interest in the Money Market Portfolio: Bedford. The Bedford Class is marketed to different types of investors. Additional information regarding the Bedford shares is available in its annual report. The financial highlights of the Bedford Class are as follows: THE BEDFORD FAMILY (a)
MONEY MARKET PORTFOLIO ----------------------------------------------------------------------------------------- FOR THE FOR THE FOR THE FOR THE FOR THE SIX MONTHS YEAR YEAR YEAR YEAR ENDED ENDED ENDED ENDED ENDED FEBRUARY 29, 2004 AUGUST 31, 2003 AUGUST 31, 2002 AUGUST 31, 2001 AUGUST 31, 2000 ----------------- --------------- --------------- --------------- --------------- Net asset value, beginning of year ....... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 -------- -------- -------- -------- -------- Income from investment operations: Net investment income ................. 0.0010 0.0046 0.0157 0.0460 0.0512 Net gains on securities ............... -- 0.0005 -- -- -- -------- -------- -------- -------- -------- Total from investment operations ........................ 0.0010 0.0051 0.0157 0.0460 0.0512 -------- -------- -------- -------- -------- Less distributions Dividends (from net investment income) ............................. (0.0010) (0.0046) (0.0157) (0.0460) (0.0512) Distributions (from capital gains) .... -- (0.0005) -- -- -- -------- -------- -------- -------- -------- Total distributions ................. (0.0010) (0.0051) (0.0157) (0.0460) (0.0512) -------- -------- -------- -------- -------- Net asset value, end of year ............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ======== ======== ======== ======== ======== Total Return ............................. 0.20% 0.53% 1.59% 4.70% 5.24% Ratios /Supplemental Data Net assets, end of year (000) ......... $85,082 $ 80,406 $ 52,878 $676,964 $423,977 Ratios of expenses to average net assets(b) ....................... .95% .98% 1.00% 1.00% .97% Ratios of net investment income to average net assets ............... .20% .46% 1.75% 4.46% 5.15% (a) Financial Highlights relate solely to the Bedford Class of shares within this portfolio. (b) Without the waiver of advisory, administration and transfer agent fees and without the reimbursement of certain operating expenses, the ratios of expenses to average net assets for the Money Market Portfolio would have been 1.37% for the six months ended February 29, 2004 and 1.30%, 1.25%, 1.19% and 1.05% for the years ended August 31, 2003, 2002, 2001 and 2000, respectively.
11 ADDITIONAL INFORMATION PricewaterhouseCoopers LLP ("PwC") resigned as the auditor of the Money Market Portfolio of RBB on December 11, 2003 due to PwC's business relationship with certain affiliates of BIMC. As a result of PwC's engagement to provide certain contemplated services to BIMC affiliates in the future, PwC will no longer be independent with respect to the Money Market Portfolio of RBB. On December 11, 2003, RBB by action of the Board of Directors and upon the recommendation of its Audit Committee engaged Deloitte & Touche LLP to serve as the independent auditors to audit RBB's financial statements with respect to the Money Market Portfolio for the fiscal year ending August 31, 2004. PwC's reports on RBB's financial statements for the fiscal year ended August 31, 2003 contained no adverse opinion or disclaimer of opinion nor were they qualified or modified as to uncertainty, audit scope or accounting principles. During RBB's fiscal year ended August 31, 2003, (i) there were no disagreements with PwC on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of PwC, would have caused it to make reference to the subject matter of the disagreements in connection with its reports on the Registrant's financial statements for such years, and (ii) there were no "reportable events" of the kind described in Item 304(a)(1)(v) of Regulation S-K under the Securities Exchange Act of 1934, as amended. During RBB's fiscal year ended August 31, 2003, neither RBB, its portfolios nor anyone on their behalf has consulted Deloitte & Touche LLP on items which (i) concerned the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on RBB's financial statements or (ii) concerned the subject of a disagreement (as defined in paragraph (a)(1)(iv) of Item 304 of Regulation S-K) or reportable events (as described in paragraph (a)(1)(v) of said Item 304). The above information is required to be included in our shareholder reports for two years following a change of independent auditors. 12 THE SANSOM STREET CLASS THE RBB FUND, INC. FUND MANAGEMENT (UNAUDITED) Information pertaining to the Directors and Officers of the Fund is set forth below. The statement of additional information (SAI) includes additional information about the Directors and is available without charge, upon request, by calling (800) 430-9618.
------------------------------------------------------------------------------------------------------------------------------------ NUMBER OF TERM OF OFFICE PORTFOLIOS IN OTHER NAME, ADDRESS, POSITION(S) HELD AND LENGTH OF PRINCIPAL OCCUPATION(S) DURING PAST FUND COMPLEX DIRECTORSHIPS AND DATE OF BIRTH WITH FUND TIME SERVED 1 5 YEARS OVERSEEN BY HELD BY DIRECTOR DIRECTOR ------------------------------------------------------------------------------------------------------------------------------------ DISINTERESTED DIRECTORS ------------------------------------------------------------------------------------------------------------------------------------ Julian A. Brodsky Director - 1988 to present Since 1969, Director and Vice 16 Director, Comcast Corporation Chairman, Comcast Corporation Comcast 1500 Market Street, 35th Fl. (cable television and Corporation. Philadelphia, PA 19102 communications); Director, NDS DOB: 7/16/33 Group PLC (provider of systems and applications for digital pay TV). ------------------------------------------------------------------------------------------------------------------------------------ Francis J. McKay Director - 1988 to present Since 2000, Vice President, Fox 16 None Fox Chase Cancer Center Chase Cancer Center (biomedical 333 Cottman Avenue research and medical care); prior Philadelphia, PA 19111 to 2000, Executive Vice President, DOB: 12/06/35 Fox Chase Cancer Center. ------------------------------------------------------------------------------------------------------------------------------------ Arnold M. Reichman Director - 1991 to present Since December 2000, Director, 16 None 106 Pierrepont Street Gabelli Partners, L.P. (an Brooklyn, NY 11201 investment partnership); Chief DOB: 5/21/48 Operating Officer and member of the Board of Directors of Outercurve Technologies (wireless enabling services) until April 2001; Chief Operating Officer and member of the Executive Operating Committee of Warburg Pincus Asset Management, Inc.; Executive Officer and Director of Credit Suisse Asset Management Securities, Inc. (formerly Counsellors Securities, Inc.) and Director/Trustee of various investment companies advised by Warburg Pincus Asset Management, Inc. until September 15, 1999; Prior to 1997, Managing Director of Warburg Pincus Asset Management, Inc. ------------------------------------------------------------------------------------------------------------------------------------ Marvin E. Sternberg Director - 1991 to present Since 1974, Chairman, Director and 16 Director, Moyco Technologies, Inc. President, Moyco Technologies, Inc. Moyco 200 Commerce Drive (manufacturer of precision coated Technologies, Montgomeryville, PA 18936 and industrial abrasives); Since Inc. DOB: 3/24/34 1999, Director, Pennsylvania Business Bank. ------------------------------------------------------------------------------------------------------------------------------------
13 THE SANSOM STREET CLASS THE RBB FUND, INC. FUND MANAGEMENT (CONTINUED) (UNAUDITED)
------------------------------------------------------------------------------------------------------------------------------------ NUMBER OF TERM OF OFFICE PORTFOLIOS IN OTHER NAME, ADDRESS, POSITION(S) HELD AND LENGTH OF PRINCIPAL OCCUPATION(S) DURING PAST FUND COMPLEX DIRECTORSHIPS AND DATE OF BIRTH WITH FUND TIME SERVED 5 YEARS OVERSEEN BY HELD BY DIRECTOR DIRECTOR ------------------------------------------------------------------------------------------------------------------------------------ INTERESTED DIRECTORS 2 ------------------------------------------------------------------------------------------------------------------------------------ Robert Sablowsky Director - 1991 to present Since July 2002, Senior Vice 16 None Oppenheimer & Company, Inc. President and prior thereto, 200 Park Avenue Executive Vice President of New York, NY 10166 Oppenheimer & Company, Inc. DOB:4/16/38 (formerly Fahnestock & Co., Inc., a registered broker-dealer). ------------------------------------------------------------------------------------------------------------------------------------ J. Richard Carnall Director - 2002 to present Director of PFPC Inc. from January 16 None 400 Bellevue Parkway 1987 to April 2002; Chairman and Wilmington, DE 19809 Chief Executive Officer of PFPC DOB: 9/25/38 Inc. until April 2002; Executive Vice President of PNC Bank, National Association from October 1981 to April 2002; Director of PFPC International Ltd. (financial services) from August 1993 to April 2002; Director of PFPC International (Cayman) Ltd. (financial services) from September 1996 to April 2002, and Director of International Dollar Reserve Fund, Ltd. (Cayman mutual fund Company) from September 1993 to present; Governor of the Investment Company Institute (investment company industry trade organization) from July 1996 to January 2002; Director of PNC Asset Management, Inc. (investment advisory) from September 1994 to March 1998; Director of PNC National Bank from October 1995 to November 1997; Director of Haydon Bolts, Inc. (bolt manufacturer) and Parkway Real Estate Company (subsidiary of Haydon Bolts, Inc.) since 1984. Mr. Carnall provides consulting services from time to time to PFPC Inc. ------------------------------------------------------------------------------------------------------------------------------------
14 THE SANSOM STREET CLASS THE RBB FUND, INC. FUND MANAGEMENT (CONCLUDED) (UNAUDITED)
------------------------------------------------------------------------------------------------------------------------------------ NUMBER OF TERM OF OFFICE PORTFOLIOS IN OTHER NAME, ADDRESS, POSITION(S) HELD AND LENGTH OF PRINCIPAL OCCUPATION(S) DURING PAST FUND COMPLEX DIRECTORSHIPS AND DATE OF BIRTH WITH FUND TIME SERVED 5 YEARS OVERSEEN BY HELD BY DIRECTOR DIRECTOR ------------------------------------------------------------------------------------------------------------------------------------ OFFICER(S) WHO ARE NOT DIRECTORS ------------------------------------------------------------------------------------------------------------------------------------ Edward J. Roach President and - 1991 to present Certified Public Accountant; Vice N/A N/A 400 Bellevue Parkway Treasurer and Chairman of the Board, Fox Chase 4th Floor - 1988 to present Cancer Center; Trustee Emeritus, Wilmington, DE 19809 Pennsylvania School for the Deaf; DOB: 6/29/24 Trustee Emeritus, Immaculata University; President or Vice President and Treasurer of various investment companies advised by subsidiaries of PNC Bank Corp. from 1981 to 1997; Managing General Partner, President and Treasurer of Chestnut Street Exchange Fund; Director of the Bradford Funds, Inc. from 1996 to 2000. ------------------------------------------------------------------------------------------------------------------------------------ Lisa M. King Secretary - Since 2003 Since 2000, Vice President and N/A N/A 301 Bellevue Parkway Counsel, PFPC Inc. (financial 2nd Floor services company); Associate, Wilmington, DE 19809 Stradley, Ronon, Stevens & Young, DOB: 1/27/68 LLC(law firm) from 1996-2000. ------------------------------------------------------------------------------------------------------------------------------------ 1 Each Director serves for an indefinite period of time until his successor is elected and qualified or until his death, resignation or removal. Each officer holds office at the pleasure of the Board of Directors until the next annual meeting of the Company or until his or her successor is duly elected and qualified, or until he or she dies, resigns, is removed or becomes disqualified. 2 Messrs. Carnall and Sablowsky are considered "interested persons" of the Company as that term is defined in the 1940 Act. Mr. Carnall is an "interested Director" of the Company because he owns shares of The PNC Financial Services Group, Inc. The investment adviser to the Company's Money Market Portfolio, BlackRock Institutional Management Corporation, and the Company's principal underwriter, PFPC Distributors, Inc., are indirect subsidiaries of the PNC Financial Services Group, Inc. Mr. Sablowsky is considered an "interested Director" of the Company by virtue of his position as an officer of a registered broker-dealer.
15 INVESTMENT ADVISER BlackRock Institutional Management Corporation 100 Bellevue Parkway Wilmington, DE 19809 TRANSFER AGENT PFPC Inc. 301 Bellevue Parkway Wilmington, DE 19809 DISTRIBUTOR PFPC Distributors, Inc. 760 Moore Road King of Prussia, PA 19406 CUSTODIAN PFPC Trust Company 8800 Tinicum Blvd. Suite 200 Philadelphia, PA 19153 INDEPENDENT AUDITORS Deloitte & Touche LLP 1700 Market Street Philadelphia, PA 19103-3984 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 Portfolio. It is not authorized for the distribution to prospective investors in the Portfolio unless it is preceded or accompanied by a current prospectus which includes details regarding the Portfolio's objectives, policies and other information. Total investment return is based on historical results and is not intended to indicate future performance. Current performance may be higher or lower than the performance data provided in the report. [LOGO OMITTED] n/i NUMERIC INVESTORS FAMILY OF FUNDS n/i NUMERIC INVESTORS Emerging Growth Fund n/i NUMERIC INVESTORS Growth Fund n/i NUMERIC INVESTORS Mid Cap Fund n/i NUMERIC INVESTORS Small Cap Value Fund Semi-Annual Report February 29, 2004 [LOGO OMITTED] n/i NUMERIC INVESTORS FAMILY OF FUNDS EMERGING GROWTH FUND GROWTH FUND MID CAP FUND SMALL CAP VALUE FUND ADVISER'S REPORT April 20, 2004 Dear Shareholder: We are pleased to provide you with a semi-annual report on the performance of the n/i NUMERIC INVESTORS FAMILY OF FUNDS (each, a "Fund" and collectively, the "Funds") for the period September 1, 2003 through February 29, 2004, the first half of our Funds' current fiscal year. The table below compares the returns of our four Funds with the returns of their respective benchmarks for several time periods all ended on February 29, 2004. TOTAL RETURNS -------------
THREE YEARS FIVE YEARS AVERAGE SIX MONTHS ONE YEAR ENDED ENDED ANNUAL ENDED ENDED FEBRUARY 29, 2004 FEBRUARY 29, 2004 RETURN SINCE FEBRUARY 29, 2004 FEBRUARY 29, 2004 (ANNUALIZED) (ANNUALIZED) INCEPTION* ----------------- ----------------- ----------------- ----------------- ------------ EMERGING GROWTH FUND +25.93% +76.04% +17.00% +17.93% +18.31% Russell 2000 Growth Index +15.42% +64.86% +1.94% +2.93% +1.98% DIFFERENCE +10.51% +11.18% +15.06% +15.00% +16.33% GROWTH FUND +24.02% +67.06% +9.24% +11.59% +9.95% Russell 2500 Growth Index +15.23% +61.02% +2.60% +6.06% +5.00% DIFFERENCE +8.79% +6.04% +6.64% +5.53% +4.95% MID CAP FUND +17.11% +48.58% +6.05% +8.98% +12.44% S&P Midcap Index +16.60% +49.69% +7.76% +12.27% +13.96% Russell Mid Cap Index** +18.31% +52.29% +6.87% +9.08% +11.20% DIFFERENCE (S&P MIDCAP) +0.51% (1.11)% (1.71)% (3.29)% (1.52)% SMALL CAP VALUE FUND +23.96% +63.92% +25.11% +24.89% +22.11% Russell 2000 Value Index +21.31% +63.98% +14.85% +15.60% +13.36% DIFFERENCE +2.65% (0.06)% +10.26% +9.29% +8.75% ---------- * Inception Dates: June 3, 1996 for all Funds except n/i Small Cap Value Fund, which launched on November 30, 1998. ** This is not a benchmark of the Fund. Results of index performance are shown for general comparative purposes. All performance quoted in this report is past performance and is no guarantee of future results. Investment return and principal value will fluctuate with changing market conditions so that shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the return figures quoted. Returns are net of the Funds' management fee and other operating expenses. Returns would have been lower if certain of the Funds' fees and expenses had not been waived. Please keep in mind that recent high double-digit returns were achieved during favorable market conditions and may not be sustained. For the Funds' most recent month-end performance please call 1-800-686-3742 or visit www.numeric.com.
1 The most recent six-month period ended February 29, 2004 has been productive for all four of our Funds, whether measured in absolute or benchmark-relative returns. Indeed, absolute returns were strong as all four Funds continued to participate in the resounding equity market rebound. The Emerging Growth Fund and the Growth Fund posted the best absolute returns despite the fact that the small-cap growth sector of the market did not enjoy the best returns during the period. The greater success of these two funds stems from the substantial alpha generated by our process over the period. The Small Cap Value Fund performed almost as well as the two growth Funds, more because this sector of the market performed well than because of extraordinary alpha. The Mid Cap Fund produced positive returns but was the weakest of our four Funds because this sector of the market was not particularly in vogue and because our alpha was only modestly positive. On a benchmark-relative basis, all four Funds outperformed their respective benchmarks during the most recent six-month period, with the strongest out-performance coming from the Emerging Growth and Growth Funds. Lastly, over the most recent one-year period the growth-related Funds achieved significant out-performance of benchmarks that were up over 60%, the Mid Cap Fund trailed its benchmark by 1.1%, while the Small Cap Value Fund was even with its benchmark. The equity markets continued to improve over this semi-annual reporting period, as an economic recovery, particularly as measured by corporate earnings, became more and more priced into stock valuations. The major U.S. equity indices were all up in excess of 12% over this six-month period, with the closely followed S&P 500 up 14.6%. The economic data released during the period continued to point toward expansion, albeit with some initial concern during the month of September. Specifically, the lagging labor market, which is perhaps the most talked about economic data point, posted larger than expected job losses during September. These job losses, combined with a weaker than expected consumer confidence reading during the month, created sufficient concern for investors to lead to the only down month for the broad market indices during this period. But one month does not make a trend. Effectively every other economic data point released during the period, including other employment readings, confirmed the underlying economic growth and the equity markets responded accordingly. In fact, the index of leading economic indicators posted its tenth consecutive monthly gain in February; the longest stretch of gains in over 20 years. It is interesting to recall how the world of equity investments looked one year ago. Casting the clock back twelve months, we see investors fearful about a stalling economy and sharply declining corporate profitability. There was also the geopolitical uncertainty of war in Iraq and the looming threat of additional terrorist attacks. There was even talk by many market and economic commentators of price deflation. Indeed, it was a world view filled with doom and gloom, apparently leaving no room on the upside for equities. The market came back with all major U.S. equity indices up well over 30%, including the twelve-month return of 64.9% for the leading Russell 2000 Growth Index. Commentators have begun mentioning inflation, not deflation, after the higher than expected CPI report this February. The geopolitical uncertainty, while not being resolved, appears to have been somewhat mitigated by the initial success of the military action in Iraq. Investors, while still remaining wary and concerned about the geopolitical landscape, appear to be more focused on economic data and corporate profits. February 29, 2004, the end of this semi-annual reporting period, precedes by only nine days the fourth anniversary of the "New Economy Bubble" popping and the subsequent bear market. The effects of the bear market have been damaging to growth stocks, as the NASDAQ composite index is still down over 56% from the end of February 2000. Value stocks have appreciated over this period irrespective of capitalization. Small cap value stocks, as measured by the Russell 2000 Value Index, have led the charge by returning over 84% during these four years--leading some to ask "what bear market?" The chart below shows the performance of our four Funds and their respective benchmarks over this four year period. Three of the four Funds enjoy excess returns relative to their benchmarks, with only the Mid Cap Fund trailing over this period. The Small Cap Value Fund, while competing against a rising benchmark, still added about 120% of excess return. It should also be pointed out that while the Russell 2000 Growth Index is down over 37% during this four-year period, the Emerging Growth Fund is up over 31%. We are proud of this accomplishment considering the importance of preserving wealth during 2 a falling market; a topic that was discussed in detail in last year's semi-annual report. Of course, we must emphasize that PRIOR RETURNS ARE NOT NECESSARILY INDICATIVE OF FUTURE SUCCESS and there is no guarantee that we will be successful in adding value or earning positive returns. FOUR YEAR CUMULATIVE RETURN THROUGH FEBRUARY 2004 OF THE n/i NUMERIC INVESTORS' MUTUAL FUNDS & BENCHMARKS [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA USED IN PRINTED GRAPHIC AS FOLLOWS: FUND BENCHMARK ---- --------- GROWTH -11.69% -34.69% EMERGING GROWTH 31.38% -37.23% SMALL CAP VALUE 204.85% 84.87% MIDCAP 20.96% 36.22% Examining the market's return in greater detail during this most recent six-month period, small-cap stocks outpaced their large-cap counterparts by about 3.5%, using the Russell 2000 and Russell 1000 indices as proxies for small caps and large caps, respectively. This period was also favorable for value over growth by about 5%, irrespective of capitalization, according to the Russell style indices. The confluence of these two forces made small cap value stocks the best performing equity asset class, with the Russell 2000 Value Index up 21.3%. For the most recent twelve-month period, small caps dominated large caps by almost 25% as the Russell 2000 was up 64.4% and the Russell 1000 was up "only" 39.7%. There was no meaningful difference between the returns to value versus growth stocks over the past year however. As you will recall, we construct our portfolios using a bottom-up stock selection process that is based on our proprietary quantitative stock-selection models. These models allow us to formulate a view on the fair price for a stock, considering its growth and stability, and take into account analysts' estimate revisions, and the quality of a company's earnings. In addition, while always seeking to have strong absolute performance, we are primarily focused on the benchmark-relative return of each Fund. For this reason, we seek to mitigate unnecessary risks by managing portfolios that are effectively economic-sector neutral with respect to their benchmark. Specifically, we seek to maintain sector weights that are only a few percentage points away from their respective benchmark sector weights. Furthermore, we try to avoid large stock-specific risk by broadly diversifying the portfolio across many stocks and by preventing any one holding from exceeding approximately 2% of a Fund's overall weight. During this most recent six-month period, all of our proprietary models added value across all of our Funds with the exception of our estimate trend following model in the Emerging Growth Fund. Our valuation model, known as Fair Value, did particularly well across all of the Funds. 3 Considering each Fund separately, the following table summarizes which sectors made the largest contribution to the total return of each Fund during the most recent six-month period. FUND LARGEST CONTRIBUTING SECTORS SECTOR'S RETURN ---- ---------------------------- --------------- Emerging Growth Technology 31.7% Consumer Non-Cyclicals 23.4% Growth Technology 26.2% Consumer Non-Cyclicals 25.5% Mid Cap Consumer Non-Cyclicals 22.4% Financials 17.4% Small Cap Value Financials 23.1% Technology 45.3% At the level of individual securities, the following companies provided the most positive and negative contributions to each of our four Funds: For the Emerging Growth Fund, the contact center solutions company, Aspect Communications (up 119% during the period, for a +74bps contribution to the Fund's total return) was the Fund's largest contributor to return during the six-month period. The largest detractor to return was QuickLogic (down 58% over the six-month period, and down 54% during the five months we held it for a -33bps contribution), a semiconductor company. The strong performers in the Growth Fund for the six month period was the telecommunications equipment company, Ditech Communications (up 180% during the six month period, and up 129% while we held it for a +59bps contribution). The largest declining position in the Growth Fund during the period was another telecommunications equipment company, Sonus Networks (which was down 16% during the entire period, and down 34% for the period we held it for a -29bps contribution). The largest contributor to the Mid Cap Fund's return was the medical products company, Varian Medical Systems (up 50% for a contribution of +61bps). The largest detractor to performance was United Online (down 32% for a contribution of -20bps), the internet service provider. Lastly, the best performing holdings for the Small Cap Value Fund over the past six months include the petroleum refining company, Tesoro Petroleum (up 104% for a +54bps contribution). The position which lost the most value during the period was PMA Capital (down 55% for a contribution of -68bps), the property & casualty insurance company. 4 IN CONCLUSION Thank you for being a shareholder in the n/i NUMERIC INVESTORS FAMILY OF FUNDS. We appreciate your business and your confidence in entrusting us to manage some of your savings. We hope that you are pleased with recent results, as we are, even as you may be concerned about the state of the mutual fund industry. We at Numeric will strive to put your interests first. Sincerely, /s/ L. B. Wheeler ----------------- Langdon B. Wheeler, CFA President & Chief Investment Officer Numeric Investors L.P.(R) ---------- Small-cap funds typically carry additional risks, since smaller companies generally have a higher risk of failure than well-established larger companies. Historically, stocks of smaller companies have experienced a greater degree of market volatility than stocks on average. In addition to historical information, this report contains forward-looking statements, which may concern, among other things, the domestic market, industry and economic trends and developments and government regulation and their potential impact on each Fund's investment portfolio. These statements are subject to risks and uncertainties and actual trends, developments and regulations in the future and their impact on the Funds could be materially different from those projected, anticipated or implied. The Funds have no obligation to update or revise forward-looking statements. Performance results do not reflect the deduction of taxes that a shareholder would pay on a Fund's distributions. The total returns of each Fund assumes reinvestment of all dividends and capital gains distributions at net asset value on the ex-dividend date. 5 [LOGO OMITTED] n/i NUMERIC INVESTORS FAMILY OF FUNDS EMERGING GROWTH FUND PORTFOLIO OF INVESTMENTS FEBRUARY 29, 2004 (UNAUDITED) -------------------------------------------------------------------------------- VALUE SHARES (NOTE 1) -------------------------------------------------------------------------------- COMMON STOCKS--94.4% AEROSPACE & DEFENSE--0.9% 10,700 Innovative Solutions and Support, Inc.* ......... $ 147,339 64,300 Teledyne Technologies Inc.* ..................... 1,302,718 ------------ 1,450,057 ------------ AIRLINES--2.1% 107,100 AMR Corp.* ...................................... 1,627,920 87,800 ExpressJet Holdings, Inc.* ...................... 1,205,494 47,593 Mesa Air Group, Inc.* ........................... 427,861 ------------ 3,261,275 ------------ APPAREL--0.8% 5,200 Carter's, Inc.* ................................. 156,000 15,400 Haggar Corp. .................................... 304,920 26,600 UniFirst Corp. .................................. 734,426 ------------ 1,195,346 ------------ AUTOMOBILE PARTS & EQUIPMENT--0.7% 3,300 Asbury Automotive Group Inc.* ................... 58,905 59,700 Audiovox Corp., Class A* ........................ 982,662 ------------ 1,041,567 ------------ BANKS--2.6% 22,238 City Holding Co. ................................ 753,646 22,400 CVB Financial Corp. ............................. 456,960 5,900 First Community Bancorp ......................... 231,988 11,300 Frontier Financial Corp. ........................ 376,403 19,750 Sterling Financial Corp ......................... 464,915 36,700 U.S.B. Holding Co., Inc. ........................ 854,376 17,400 Virginia Commerce Bancorp, Inc.* ................ 534,354 18,888 W Holding Company, Inc. ......................... 378,515 ------------ 4,051,157 ------------ BIOTECH--3.4% 7,700 Adolor Corp.* ................................... 119,581 17,300 Alkermes, Inc.* ................................. 246,525 12,400 Amylin Pharmaceuticals, Inc.* ................... 284,208 16,200 Applera Corp. - Celera Genomics Group* .......... 234,900 20,400 BioMarin Pharmaceutical Inc.* ................... 156,060 28,700 Bone Care International, Inc* ................... 491,918 23,500 Cell Therapeutics, Inc.* ........................ 207,740 17,100 deCODE genetics, Inc.* .......................... 207,423 15,200 EXACT Sciences Corp* ............................ 110,504 24,600 Exelixis, Inc.* ................................. 226,812 400 Eyetech Pharmaceuticals Inc.* ................... 14,516 47,200 ILEX Oncology, Inc.* ............................ 1,180,000 -------------------------------------------------------------------------------- VALUE SHARES (NOTE 1) -------------------------------------------------------------------------------- BIOTECH--(CONTINUED) 29,700 Kosan Biosciences, Inc.* ........................ $ 347,490 9,700 Ligand Pharmaceuticals Inc., Class B* ........... 149,283 10,143 Medicines Co. (The)* ............................ 275,484 14,800 Seattle Genetics, Inc.* ......................... 145,780 9,100 Telik, Inc.* .................................... 214,032 15,800 Tularik Inc.* ................................... 290,720 12,600 Vicuron Pharmaceuticals Inc.* ................... 295,848 ------------ 5,198,824 ------------ BROADCASTING--0.0% 2,000 Young Broadcasting Inc., Class A* ............... 38,600 ------------ BUILDING SUPPLIES--0.9% 66,300 Comfort Systems USA, Inc.* ...................... 430,287 13,600 Drew Industries Inc.* ........................... 495,176 21,100 NCI Building Systems, Inc.* ..................... 511,886 ------------ 1,437,349 ------------ BUSINESS SERVICES--0.3% 17,400 Brink's Co. (The) ............................... 460,752 ------------ CHEMICALS - SPECIALTY--1.8% 19,900 Georgia Gulf Corp. .............................. 541,479 39,100 MacDermid, Inc. ................................. 1,485,800 23,200 Octel Corp. ..................................... 635,448 9,900 Penford Corp. ................................... 159,390 ------------ 2,822,117 ------------ COMPUTER COMPONENTS--0.8% 86,900 Dot Hill Systems Corp.* ......................... 1,219,207 ------------ COMPUTER NETWORKING PRODUCTS--0.5% 1,800 Atheros Communications* ......................... 32,706 114,500 Sonus Networks, Inc.* ........................... 678,985 ------------ 711,691 ------------ COMPUTER PERIPHERALS--0.7% 92,200 InFocus Corp.* .................................. 1,086,116 ------------ COMPUTER SERVICES--1.8% 65,700 Carreker Corp.* ................................. 870,525 38,300 DigitalNet Holdings, Inc.* ...................... 764,851 35,595 SI International Inc.* .......................... 802,311 27,900 Tyler Technologies, Inc.* ....................... 259,749 ------------ 2,697,436 ------------ The accompanying notes are an integral part of the financial statements. 6 [LOGO OMITTED] n/i NUMERIC INVESTORS FAMILY OF FUNDS EMERGING GROWTH FUND PORTFOLIO OF INVESTMENTS (CONTINUED) FEBRUARY 29, 2004 (UNAUDITED) -------------------------------------------------------------------------------- VALUE SHARES (NOTE 1) -------------------------------------------------------------------------------- COMPUTER SOFTWARE--5.0% 39,375 Ascential Software Corp.* ....................... $ 888,300 92,800 BindView Development Corp.* ..................... 371,200 17,610 Lawson Software, Inc.* .......................... 154,440 111,750 Micromuse Inc.* ................................. 1,001,280 24,200 Netsmart Technologies, Inc. ..................... 378,730 71,000 Omnicell, Inc.* ................................. 1,446,980 14,700 Open Solutions Inc.* ............................ 358,680 26,100 Progress Software Corp.* ........................ 543,141 26,000 SS&C Technologies, Inc. ......................... 1,321,060 41,700 SYNNEX Corp.* ................................... 804,810 35,000 Witness Systems, Inc* ........................... 425,250 ------------ 7,693,871 ------------ CONSUMER PRODUCTS--1.4% 6,900 Central Garden & Pet Co.* ....................... 238,326 6,200 Rayovac Corp.* .................................. 161,076 8,500 Toro Co. (The) .................................. 467,925 55,000 Wolverine World Wide, Inc. ...................... 1,295,250 ------------ 2,162,577 ------------ ELECTRICAL EQUIPMENT--0.7% 23,900 Acuity Brands, Inc. ............................. 583,877 9,709 Genlyte Group Inc. (The)* ....................... 546,325 ------------ 1,130,202 ------------ ELECTRONIC COMPONENTS & ACCESSORIES--5.1% 9,000 Applied Films Corp.* ............................ 313,380 77,000 Artesyn Technologies, Inc.* ..................... 839,300 111,600 Caliper Life Sciences, Inc.* .................... 830,304 7,100 Cherokee International Corp.* ................... 116,085 42,500 CyberOptics Corp.* .............................. 775,625 46,326 Helix Technology Corp. .......................... 1,201,233 24,600 Photon Dynamics, Inc.* .......................... 878,466 9,200 Rofin-Sinar Technologies, Inc.* ................. 275,448 18,700 SBS Technologies, Inc.* ......................... 292,094 98,200 Silicon Storage Technology, Inc.* ............... 1,229,464 6,787 Synaptics Inc.* ................................. 124,067 61,700 TTM Technologies, Inc.* ......................... 997,072 ------------ 7,872,538 ------------ ELECTRONIC MEASUREMENTS - INSTRUMENTS--1.0% 18,900 Metrologic Instruments, Inc.* ................... 485,541 40,400 MTS Systems Corp. ............................... 1,085,548 ------------ 1,571,089 ------------ -------------------------------------------------------------------------------- VALUE SHARES (NOTE 1) -------------------------------------------------------------------------------- FINANCIAL SERVICES--4.6% 20,800 ACE Cash Express, Inc.* ......................... $ 701,792 10,600 Advanta Corp., Class B .......................... 168,222 1,800 Asset Acceptance Capital Corp.* ................. 32,760 45,900 Cash America International, Inc. ................ 1,039,176 30,200 First Cash Financial Services, Inc.* ............ 1,023,780 60,100 Fremont General Corp. ........................... 1,349,245 33,175 New Century Financial Corp. ..................... 1,625,575 51,000 World Acceptance Corp.* ......................... 1,097,520 ------------ 7,038,070 ------------ FOOD & AGRICULTURE--2.5% 34,700 Chiquita Brands International, Inc.* ............ 788,731 32,583 Fresh Del Monte Produce Inc. .................... 829,563 22,200 J & J Snack Foods Corp.* ........................ 1,049,172 35,250 Sanderson Farms, Inc. ........................... 1,249,613 ------------ 3,917,079 ------------ FUNERAL SERVICES--0.9% 102,700 Alderwoods Group, Inc.* ......................... 953,056 78,700 Stewart Enterprises, Inc., Class A* ............. 474,561 ------------ 1,427,617 ------------ HEALTH CARE--2.1% 62,100 Amedisys, Inc.* ................................. 1,123,389 34,400 Genesis HealthCare Corp.* ....................... 937,400 36,300 Sierra Health Services, Inc.* ................... 1,213,509 ------------ 3,274,298 ------------ HOME FURNISHINGS--0.3% 20,100 Bassett Furniture Industries, Inc. .............. 415,869 ------------ HOSPITALS--0.8% 78,200 Select Medical Corp. ............................ 1,248,854 1,700 Symbion, Inc.* .................................. 32,487 ------------ 1,281,341 ------------ HOTELS & MOTELS--0.5% 17,400 Choice Hotels International, Inc.* .............. 762,990 ------------ INSURANCE - PROPERTY & CASUALTY--0.8% 2,600 Bristol West Holdings Inc.* ..................... 56,472 14,400 Direct General Corp. ............................ 478,080 11,900 PXRE Group Ltd. ................................. 320,229 8,759 United Fire & Casualty Co. ...................... 376,199 ------------ 1,230,980 ------------ The accompanying notes are an integral part of the financial statements. 7 [LOGO OMITTED] n/i NUMERIC INVESTORS FAMILY OF FUNDS EMERGING GROWTH FUND PORTFOLIO OF INVESTMENTS (CONTINUED) FEBRUARY 29, 2004 (UNAUDITED) -------------------------------------------------------------------------------- VALUE SHARES (NOTE 1) -------------------------------------------------------------------------------- INTERNET CONTENT--1.2% 42,500 NetRatings, Inc.* ............................... $ 456,875 81,624 United Online, Inc.* ............................ 1,405,565 ------------ 1,862,440 ------------ INTERNET SOFTWARE--3.3% 20,400 Blue Coat Systems, Inc.* ........................ 836,828 48,854 Digital River, Inc.* ............................ 1,069,414 44,700 Kana Software, Inc.* ............................ 216,348 37,900 PC-Tel, Inc.* ................................... 432,060 71,453 RSA Security Inc.* .............................. 1,188,263 134,566 SonicWALL, Inc.* ................................ 1,291,834 ------------ 5,034,747 ------------ LEISURE & ENTERTAINMENT--0.9% 7,500 Argosy Gaming Co.* .............................. 232,050 45,973 Penn National Gaming, Inc.* ..................... 1,207,251 ------------ 1,439,301 ------------ MACHINERY--0.5% 16,555 Middleby Corp. (The) ............................ 678,755 4,600 Thomas Industries Inc. .......................... 149,040 ------------ 827,795 ------------ MANUFACTURING--3.3% 16,600 A.S.V., Inc.* ................................... 577,348 20,400 CIRCOR International, Inc. ...................... 457,980 16,500 CLARCOR Inc. .................................... 711,975 41,200 Monaco Coach Corp. .............................. 1,174,200 15,100 Ocular Sciences, Inc.* .......................... 431,256 16,400 Stanley Furniture Company, Inc. ................. 618,772 41,300 Wabash National Corp.* .......................... 1,174,985 ------------ 5,146,516 ------------ MEDICAL & MEDICAL SERVICES--1.3% 17,700 Option Care, Inc.* .............................. 231,516 20,300 Pediatrix Medical Group, Inc.* .................. 1,263,675 34,730 US Oncology, Inc.* .............................. 432,388 ------------ 1,927,579 ------------ MEDICAL INSTRUMENTS & SUPPLIES--8.2% 54,500 Advanced Medical Optics, Inc.* .................. 1,253,500 67,400 ALARIS Medical Systems, Inc.* ................... 1,442,360 66,000 Align Technology, Inc.* ......................... 1,302,180 28,300 Candela Corp.* .................................. 636,184 32,600 CONMED Corp.* ................................... 940,510 37,000 Dade Behring Holdings Inc.* ..................... 1,511,450 24,600 Dionex Corp.* ................................... 1,301,340 -------------------------------------------------------------------------------- VALUE SHARES (NOTE 1) -------------------------------------------------------------------------------- MEDICAL INSTRUMENTS & SUPPLIES--(CONTINUED) 53,000 Kensey Nash Corp.* .............................. $ 1,387,010 9,500 LabOne, Inc.* ................................... 298,775 50,600 Luminex Corp.* .................................. 486,772 15,500 Owens & Minor, Inc. ............................. 383,935 47,600 Sybron Dental Specialties, Inc.* ................ 1,352,316 42,100 Urologix, Inc. .................................. 332,590 ------------ 12,628,922 ------------ MULTIMEDIA/PUBLISHING--0.4% 14,600 R.H. Donnelley Corp.* ........................... 632,910 ------------ OFFICE & BUSINESS EQUIPMENT--0.4% 15,581 United Stationers Inc.* ......................... 618,722 ------------ OIL & GAS EQUIPMENT & SERVICES--1.7% 34,800 Gulf Island Fabrication, Inc. ................... 696,696 5,000 Lufkin Industries, Inc. ......................... 152,500 38,300 Oceaneering International, Inc.* ................ 1,309,094 15,100 Universal Compression Holdings, Inc.* ........... 470,063 ------------ 2,628,353 ------------ OIL & GAS FIELD EXPLORATION--1.5% 2,103 Clayton Williams Energy, Inc.* .................. 69,399 30,800 Denbury Resources Inc.* ......................... 465,388 2,200 Edge Petroleum Corp.* ........................... 24,506 29,600 Unit Corp.* ..................................... 786,768 43,100 Whiting Petroleum Corp.* ........................ 900,790 ------------ 2,246,851 ------------ OIL REFINING--0.2% 13,100 Frontier Oil Corp. .............................. 252,306 ------------ PACKAGING--0.8% 27,900 Silgan Holdings Inc.* ........................... 1,242,666 ------------ PHARMACEUTICALS--2.0% 55,200 CollaGenex Pharmaceuticals, Inc.* ............... 611,616 22,000 Eon Labs, Inc.* ................................. 1,273,800 62,400 First Horizon Pharmaceutical Corp.* ............. 1,165,008 ------------ 3,050,424 ------------ PRINTING--0.8% 32,000 Consolidated Graphics, Inc.* .................... 1,192,320 ------------ REAL ESTATE INVESTMENT TRUSTS--1.6% 11,700 Macerich Co. (The) .............................. 577,980 14,300 PS Business Parks, Inc. ......................... 650,650 50,000 Taubman Centers, Inc. ........................... 1,190,000 ------------ 2,418,630 ------------ The accompanying notes are an integral part of the financial statements. 8 [LOGO OMITTED] n/i NUMERIC INVESTORS FAMILY OF FUNDS EMERGING GROWTH FUND PORTFOLIO OF INVESTMENTS (CONTINUED) FEBRUARY 29, 2004 (UNAUDITED) -------------------------------------------------------------------------------- VALUE SHARES (NOTE 1) -------------------------------------------------------------------------------- RESIDENTIAL CONSTRUCTION--0.8% 35,100 Brookfield Homes Corp. .......................... $ 998,595 16,100 Champion Enterprises, Inc.* ..................... 171,465 ------------ 1,170,060 ------------ RESTAURANTS--0.3% 32,400 Checkers Drive-In Restaurants, Inc.* ............ 387,504 ------------ RETAIL - DISCOUNT--0.2% 7,000 Tuesday Morning Corp.* .......................... 231,000 ------------ RETAIL - SPECIALTY--4.0% 69,100 7-Eleven, Inc* .................................. 1,126,330 40,200 Aeropostale, Inc.* .............................. 1,378,860 12,800 Brookstone, Inc.* ............................... 316,800 53,187 EZCORP, Inc.* ................................... 611,650 63,400 Genesco Inc.* ................................... 1,275,608 34,300 Sportsman's Guide, Inc. (The)* .................. 747,740 14,000 Stein Mart, Inc.* ............................... 154,420 9,000 World Fuel Services Corp. ....................... 318,150 5,500 Yankee Candle Company, Inc. (The)* .............. 154,220 ------------ 6,083,778 ------------ SAVINGS & LOAN ASSOCIATIONS--2.6% 40,067 Commercial Capital Bancorp, Inc.* ............... 829,781 29,725 Doral Financial Corp. ........................... 1,014,217 14,300 Downey Financial Corp. .......................... 769,769 4,700 ITLA Capital Corp.* ............................. 225,553 31,700 Oriental Financial Group Inc. ................... 910,741 7,400 Westcorp ........................................ 316,720 ------------ 4,066,781 ------------ SCHOOLS--1.2% 26,500 Bright Horizons Family Solutions, Inc.* ......... 1,224,830 20,365 Sylvan Learning Systems, Inc.* .................. 629,279 ------------ 1,854,109 ------------ SEMICONDUCTORS--4.6% 74,440 Alliance Semiconductor Corp.* ................... 576,910 46,400 August Technology Corp.* ........................ 804,112 91,200 AXT, Inc.* ...................................... 372,096 29,400 Lattice Semiconductor Corp.* .................... 303,702 83,249 LTX Corp.* ...................................... 1,289,527 101,036 Mattson Technology, Inc.* ....................... 1,203,339 21,070 NPTest Holding Corp.* ........................... 306,147 19,500 Semitool, Inc.* ................................. 242,190 34,300 Standard Microsystems Corp.* .................... 1,033,459 -------------------------------------------------------------------------------- VALUE SHARES (NOTE 1) -------------------------------------------------------------------------------- SEMICONDUCTORS--(CONTINUED) 33,000 Tessera Technologies Inc.* ...................... $ 640,200 37,269 Vitesse Semiconductor Corp.* .................... 297,779 ------------ 7,069,461 ------------ SERVICES - MANAGEMENT CONSULTING--0.7% 147,700 Answerthink Inc.* ............................... 1,126,951 ------------ TELECOMMUNICATIONS EQUIPMENT & SERVICES--6.1% 83,601 Aspect Communications Corp.* .................... 1,509,834 23,662 Brooktrout Inc.* ................................ 461,645 79,900 C-COR.net Corp.* ................................ 1,313,556 44,010 Carrier Access Corp.* ........................... 506,115 26,937 Comtech Telecommunications Corp.* ............... 762,856 54,900 Crown Castle International Corp.* ............... 661,545 56,898 Ditech Communications Corp.* .................... 1,063,424 116,000 Intervoice, Inc.* ............................... 1,408,240 13,100 NII Holdings Inc., Class B* ..................... 1,419,385 39,300 US LEC Corp., Class A* .......................... 277,065 ------------ 9,383,665 ------------ TOBACCO--0.2% 18,500 Standard Commercial Corp. ....................... 350,205 ------------ TRANSPORTATION--2.6% 36,900 Celadon Group, Inc.* ............................ 563,094 34,300 Genesee & Wyoming Inc., Class A* ................ 1,241,660 30,000 Hub Group, Inc., Class A* ....................... 852,900 41,500 Pacer International, Inc.* ...................... 891,420 23,600 SCS Transportation, Inc.* ....................... 496,780 ------------ 4,045,854 ------------ Total Common Stocks (Cost $118,343,959) ........................... 145,369,865 ------------ The accompanying notes are an integral part of the financial statements. 9 [LOGO OMITTED] n/i NUMERIC INVESTORS FAMILY OF FUNDS EMERGING GROWTH FUND PORTFOLIO OF INVESTMENTS (CONCLUDED) FEBRUARY 29, 2004 (UNAUDITED) -------------------------------------------------------------------------------- PRINCIPAL VALUE AMOUNT (000'S) (NOTE 1) -------------------------------------------------------------------------------- REPURCHASE AGREEMENTS--4.9% $1,136 Bear, Stearns & Co. Inc. (Agreement dated 02/27/04 to be repurchased at $1,135,889), 0.5312%, 03/01/04 (Note 6)** .................. $ 1,135,839 6,424 Bear, Stearns & Co. Inc. (Agreement dated 02/27/04 to be repurchased at $6,424,717), 1.00%, 03/01/04 (Note 7) ...................... 6,424,182 ------------ Total Repurchase Agreements (Cost $7,560,021) ............................. 7,560,021 ------------ Total Investments -- 99.3% (Cost $125,903,980) ..................................... 152,929,886 ------------ Other Assets in Excess of Liabilities -- 0.7% .............. 1,148,339 ------------ Net Assets -- 100.0% ....................................... $154,078,225 ============ --------- * Non-income producing. ** Investment purchased with collateral received for securities on loan. The accompanying notes are an integral part of the financial statements. 10 [LOGO OMITTED] n/i NUMERIC INVESTORS FAMILY OF FUNDS GROWTH FUND PORTFOLIO OF INVESTMENTS FEBRUARY 29, 2004 (UNAUDITED) -------------------------------------------------------------------------------- VALUE SHARES (NOTE 1) -------------------------------------------------------------------------------- COMMON STOCKS--96.8% AEROSPACE & DEFENSE--2.3% 6,600 Alliant Techsystems Inc.* ....................... $ 376,860 12,300 Teledyne Technologies Inc.* ..................... 249,198 9,400 United Defense Industries, Inc.* ................ 288,110 ----------- 914,168 ----------- AIRLINES--1.8% 25,500 AMR Corp.* ...................................... 387,600 22,400 ExpressJet Holdings, Inc.* ...................... 307,552 3,466 Mesa Air Group, Inc.* ........................... 31,159 ----------- 726,311 ----------- APPAREL--0.2% 3,900 Tommy Hilfiger Corp.* ........................... 63,063 ----------- AUTOMOBILE PARTS & EQUIPMENT--2.3% 8,500 American Axle & Manufacturing Holdings, Inc.* ......................................... 323,085 13,800 ArvinMeritor, Inc. .............................. 311,328 3,100 Audiovox Corp., Class A* ........................ 51,026 23,600 Visteon Corp. ................................... 238,360 ----------- 923,799 ----------- BANKS--1.0% 5,400 First BanCorp ................................... 229,230 4,000 Virginia Commerce Bancorp, Inc.* ................ 122,840 3,100 W Holding Company, Inc. ......................... 62,124 ----------- 414,194 ----------- BIOTECH--2.0% 2,000 Adolor Corp.* ................................... 31,060 2,600 Alkermes, Inc.* ................................. 37,050 3,200 Amylin Pharmaceuticals, Inc.* ................... 73,344 2,100 BioMarin Pharmaceutical Inc.* ................... 16,065 4,700 deCODE genetics, Inc.* .......................... 57,011 9,100 Exelixis, Inc.* ................................. 83,902 100 Eyetech Pharmaceuticals Inc.* ................... 3,629 8,122 ILEX Oncology, Inc.* ............................ 203,050 1,600 ImClone Systems Inc.* ........................... 67,168 1,800 Medicines Co. (The)* ............................ 48,888 695 Neurocrine Biosciences, Inc.* ................... 38,642 2,000 Sepracor Inc.* .................................. 56,840 1,700 Telik, Inc.* .................................... 39,984 1,700 Vicuron Pharmaceuticals Inc.* ................... 39,916 ----------- 796,549 ----------- -------------------------------------------------------------------------------- VALUE SHARES (NOTE 1) -------------------------------------------------------------------------------- BROADCASTING--0.2% 3,300 Citadel Broadcasting Company* ................... $ 61,710 ----------- BUILDING SUPPLIES--0.4% 5,800 NCI Building Systems, Inc.* ..................... 140,708 ----------- BUSINESS SERVICES--0.1% 2,200 Brink's Co. (The) ............................... 58,256 ----------- CHEMICALS - SPECIALTY--1.3% 6,800 MacDermid, Inc. ................................. 258,400 1,400 OM Group, Inc.* ................................. 43,008 12,400 RPM International, Inc. ......................... 201,376 ----------- 502,784 ----------- COMPUTER COMPONENTS--0.8% 23,900 Dot Hill Systems Corp.* ......................... 335,317 ----------- COMPUTER NETWORKING PRODUCTS--0.6% 500 Atheros Communications* ......................... 9,085 36,800 Sonus Networks, Inc.* ........................... 218,224 ----------- 227,309 ----------- COMPUTER PERIPHERALS--1.9% 28,027 InFocus Corp.* .................................. 330,158 26,000 Symbol Technologies, Inc. ....................... 442,520 ----------- 772,678 ----------- COMPUTER SERVICES--0.6% 13,900 Carreker Corp.* ................................. 184,175 3,100 DigitalNet Holdings, Inc.* ...................... 61,907 ----------- 246,082 ----------- COMPUTER SOFTWARE--3.8% 11,600 Ascential Software Corp.* ....................... 261,696 27,148 Micromuse Inc.* ................................. 243,246 16,100 Omnicell, Inc.* ................................. 328,118 1,000 Open Solutions Inc.* ............................ 24,400 5,100 Progress Software Corp.* ........................ 106,131 7,100 SS&C Technologies, Inc. ......................... 360,751 10,300 SYNNEX Corp.* ................................... 198,790 ----------- 1,523,132 ----------- CONSUMER PRODUCTS--1.4% 3,600 Blyth, Inc. ..................................... 122,220 2,200 Maytag Corp. .................................... 62,106 1,700 Rayovac Corp.* .................................. 44,166 700 Toro Co. (The) .................................. 38,535 12,100 Wolverine World Wide, Inc. ...................... 284,955 ----------- 551,982 ----------- The accompanying notes are an integral part of the financial statements. 11 [LOGO OMITTED] n/i NUMERIC INVESTORS FAMILY OF FUNDS GROWTH FUND PORTFOLIO OF INVESTMENTS (CONTINUED) FEBRUARY 29, 2004 (UNAUDITED) -------------------------------------------------------------------------------- VALUE SHARES (NOTE 1) -------------------------------------------------------------------------------- ELECTRICAL EQUIPMENT--0.6% 5,000 Acuity Brands, Inc. ............................. $ 122,150 1,800 Genlyte Group Inc. (The)* ....................... 101,286 ----------- 223,436 ----------- ELECTRONIC COMPONENTS & ACCESSORIES--3.6% 2,300 Applied Films Corp.* ............................ 80,086 8,900 Artesyn Technologies, Inc.* ..................... 97,010 1,900 Cherokee International Corp.* ................... 31,065 12,621 Helix Technology Corp. .......................... 327,263 7,900 Photon Dynamics, Inc.* .......................... 282,109 25,100 Silicon Storage Technology, Inc.* ............... 314,252 19,200 TTM Technologies, Inc.* ......................... 310,272 ----------- 1,442,057 ----------- ELECTRONIC MEASUREMENTS - INSTRUMENTS--0.4% 6,000 Metrologic Instruments, Inc.* ................... 154,140 ----------- ENGINEERING--0.9% 1,100 Jacobs Engineering Group Inc.* .................. 48,543 9,900 URS Corp.* ...................................... 302,940 ----------- 351,483 ----------- FINANCIAL SERVICES--3.1% 2,000 ACE Cash Express, Inc.* ......................... 67,480 500 Asset Acceptance Capital Corp.* ................. 9,100 8,500 Cash America International, Inc. ................ 192,440 3,800 First Cash Financial Services, Inc.* ............ 128,820 3,700 First Marblehead Corp. (The)* ................... 113,516 18,500 Fremont General Corp. ........................... 415,325 4,120 New Century Financial Corp. ..................... 201,880 5,400 World Acceptance Corp.* ......................... 116,208 ----------- 1,244,769 ----------- FOOD & AGRICULTURE--2.9% 13,900 Chiquita Brands International, Inc.* ............ 315,947 3,500 Corn Products International, Inc. ............... 132,650 10,600 Flowers Foods, Inc. ............................. 285,140 9,100 Fresh Del Monte Produce Inc. .................... 231,686 800 J & J Snack Foods Corp.* ........................ 37,808 4,600 Sanderson Farms, Inc. ........................... 163,070 ----------- 1,166,301 ----------- FUNERAL SERVICES--0.2% 13,800 Stewart Enterprises, Inc., Class A* ............. 83,214 ----------- HEALTH CARE--2.2% 4,600 Coventry Health Care, Inc.* ..................... 200,422 8,800 Genesis HealthCare Corp.* ....................... 239,800 -------------------------------------------------------------------------------- VALUE SHARES (NOTE 1) -------------------------------------------------------------------------------- HEALTH CARE--(CONTINUED) 10,500 Sierra Health Services, Inc.* ................... $ 351,015 1,704 UnitedHealth Group Inc. ......................... 105,648 ----------- 896,885 ----------- HOME FURNISHINGS--0.3% 7,300 Tempur-Pedic International Inc.* ................ 121,180 ----------- HOSPITALS--1.0% 2,200 Community Health Systems Inc.* .................. 61,710 20,500 Select Medical Corp. ............................ 327,385 500 Symbion, Inc.* .................................. 9,555 ----------- 398,650 ----------- HOTELS & MOTELS--0.8% 4,600 Choice Hotels International, Inc.* .............. 201,710 7,300 Marcus Corp. (The) .............................. 127,677 ----------- 329,387 ----------- INSURANCE - PROPERTY & CASUALTY--1.2% 700 Bristol West Holdings Inc.* ..................... 15,204 3,300 Everest Re Group, Ltd. .......................... 288,387 4,965 IPC Holdings, Ltd. .............................. 193,387 ----------- 496,978 ----------- INTERNET CONTENT--1.5% 56,500 HomeStore, Inc.* ................................ 275,720 19,824 United Online, Inc.* ............................ 341,369 ----------- 617,089 ----------- INTERNET SOFTWARE--3.4% 3,500 Blue Coat Systems, Inc.* ........................ 143,574 15,034 Digital River, Inc.* ............................ 329,094 14,900 PC-Tel, Inc.* ................................... 169,860 19,713 RSA Security Inc.* .............................. 327,827 38,700 SonicWALL, Inc.* ................................ 371,520 ----------- 1,341,875 ----------- LEISURE & ENTERTAINMENT--0.9% 7,300 MGM MIRAGE* ..................................... 317,915 1,500 Penn National Gaming, Inc.* ..................... 39,390 ----------- 357,305 ----------- MACHINERY--1.6% 4,400 Gardner Denver Inc.* ............................ 128,040 1,900 Graco Inc. ...................................... 80,674 2,000 Middleby Corp. (The) ............................ 82,000 9,600 Terex Corp.* .................................... 336,288 ----------- 627,002 ----------- The accompanying notes are an integral part of the financial statements. 12 [LOGO OMITTED] n/i NUMERIC INVESTORS FAMILY OF FUNDS GROWTH FUND PORTFOLIO OF INVESTMENTS (CONTINUED) FEBRUARY 29, 2004 (UNAUDITED) -------------------------------------------------------------------------------- VALUE SHARES (NOTE 1) -------------------------------------------------------------------------------- MANUFACTURING--3.1% 3,800 A.S.V., Inc.* ................................... $ 132,164 2,800 Harman International Industries, Inc. ........... 218,372 11,600 Monaco Coach Corp. .............................. 330,600 5,400 Tecumseh Products Co., Class A .................. 243,162 11,100 Wabash National Corp.* .......................... 315,795 ----------- 1,240,093 ----------- MEDICAL & MEDICAL SERVICES--0.8% 2,600 Pediatrix Medical Group, Inc.* .................. 161,850 12,100 US Oncology, Inc.* .............................. 150,645 ----------- 312,495 ----------- MEDICAL INSTRUMENTS & SUPPLIES--9.4% 10,200 Advanced Medical Optics, Inc.* .................. 234,600 14,200 ALARIS Medical Systems, Inc.* ................... 303,880 17,700 Align Technology, Inc.* ......................... 349,221 3,554 Candela Corp.* .................................. 79,894 7,000 CONMED Corp.* ................................... 201,950 10,000 Dade Behring Holdings Inc.* ..................... 408,500 800 Diagnostic Products Corp. ....................... 38,592 4,700 Dionex Corp.* ................................... 248,630 20,000 Encore Medical Corp.* ........................... 167,600 9,900 Kensey Nash Corp.* .............................. 259,083 100 Kinetic Concepts, Inc.* ......................... 4,035 5,300 Luminex Corp.* .................................. 50,986 4,100 Owens & Minor, Inc. ............................. 101,557 2,100 PerkinElmer, Inc. ............................... 43,764 8,100 Respironics, Inc.* .............................. 423,711 12,000 Sybron Dental Specialties, Inc.* ................ 340,920 5,900 Varian Medical Systems, Inc.* ................... 494,066 ----------- 3,750,989 ----------- MULTIMEDIA/PUBLISHING--0.9% 3,016 Pixar* .......................................... 198,272 4,100 R.H. Donnelley Corp.* ........................... 177,735 ----------- 376,007 ----------- OFFICE & BUSINESS EQUIPMENT--0.4% 3,624 United Stationers Inc.* ......................... 143,909 ----------- OIL & GAS EQUIPMENT & SERVICES--0.9% 10,800 Oceaneering International, Inc.* ................ 369,144 ----------- OIL & GAS FIELD EXPLORATION--2.3% 10,700 Denbury Resources Inc.* ......................... 161,677 200 Edge Petroleum Corp.* ........................... 2,228 6,600 Houston Exploration Co. (The)* .................. 248,292 -------------------------------------------------------------------------------- VALUE SHARES (NOTE 1) -------------------------------------------------------------------------------- OIL & GAS FIELD EXPLORATION--(CONTINUED) 7,100 Unit Corp.* ..................................... $ 188,718 15,100 Whiting Petroleum Corp.* ........................ 315,590 ----------- 916,505 ----------- OIL REFINING--0.4% 5,300 Giant Industries, Inc.* ......................... 102,820 3,600 Tesoro Petroleum Corp.* ......................... 65,700 ----------- 168,520 ----------- PACKAGING--0.5% 4,200 Silgan Holdings Inc.* ........................... 187,068 ----------- PHARMACEUTICALS--4.4% 10,700 Affymetrix, Inc.* ............................... 363,693 14,400 Andrx Corp.* .................................... 431,424 14,600 Endo Pharmaceuticals Holdings Inc.* ............. 354,342 6,600 Eon Labs, Inc.* ................................. 382,140 12,600 First Horizon Pharmaceutical Corp.* ............. 235,242 ----------- 1,766,841 ----------- PRINTING--0.3% 3,300 Consolidated Graphics, Inc.* .................... 122,958 ----------- REAL ESTATE INVESTMENT TRUSTS--1.1% 4,300 Mills Corp. (The) ............................... 214,398 8,100 Taubman Centers, Inc. ........................... 192,780 2,900 Trizec Properties, Inc. ......................... 47,212 ----------- 454,390 ----------- RESIDENTIAL CONSTRUCTION--1.7% 3,300 Brookfield Homes Corp. .......................... 93,885 3,600 M.D.C. Holdings, Inc. ........................... 253,548 700 NVR, Inc.* ...................................... 323,750 ----------- 671,183 ----------- RESTAURANTS--0.7% 1,024 CBRL Group, Inc. ................................ 38,892 9,600 Jack in the Box Inc.* ........................... 238,752 ----------- 277,644 ----------- RETAIL - DISCOUNT--0.1% 1,200 Tuesday Morning Corp.* .......................... 39,600 ----------- RETAIL - SPECIALTY--4.5% 7,300 7-Eleven, Inc* .................................. 118,990 1,300 Advance Auto Parts, Inc.* ....................... 51,285 9,700 Aeropostale, Inc.* .............................. 332,710 200 Barnes & Noble, Inc.* ........................... 6,980 The accompanying notes are an integral part of the financial statements. 13 [LOGO OMITTED] n/i NUMERIC INVESTORS FAMILY OF FUNDS GROWTH FUND PORTFOLIO OF INVESTMENTS (CONCLUDED) FEBRUARY 29, 2004 (UNAUDITED) -------------------------------------------------------------------------------- VALUE SHARES (NOTE 1) -------------------------------------------------------------------------------- RETAIL - SPECIALTY--(CONTINUED) 15,100 Borders Group, Inc. ............................. $ 362,400 3,400 Brown Shoe Company, Inc. ........................ 133,926 12,300 Claire's Stores, Inc. ........................... 248,706 15,500 Genesco Inc.* ................................... 311,860 900 Regis Corp. ..................................... 38,898 1,400 Timberland Co. (The), Class A* .................. 86,436 2,000 World Fuel Services Corp. ....................... 70,700 1,400 Yankee Candle Company, Inc. (The)* .............. 39,256 ----------- 1,802,147 ----------- SAVINGS & LOAN ASSOCIATIONS--5.3% 3,000 American Capital Strategies, Ltd. ............... 99,690 6,433 Commercial Capital Bancorp, Inc.* ............... 133,234 13,450 Doral Financial Corp. ........................... 458,914 5,100 Downey Financial Corp. .......................... 274,533 5,700 FirstFed Financial Corp.* ....................... 247,380 5,000 Independence Community Bank Corp. ............... 197,850 1,600 MAF Bancorp, Inc. ............................... 71,120 7,600 Oriental Financial Group Inc. ................... 218,348 1,400 Trustmark Corp. ................................. 42,686 6,000 Webster Financial Corp. ......................... 302,100 2,000 Westcorp ........................................ 85,600 ----------- 2,131,455 ----------- SCHOOLS--2.4% 5,700 Bright Horizons Family Solutions, Inc.* ......... 263,454 7,500 ITT Educational Services, Inc.* ................. 284,775 3,900 Sylvan Learning Systems, Inc.* .................. 120,510 6,600 Universal Technical Institute Inc.* ............. 250,008 700 University of Phoenix Online* ................... 56,252 ----------- 974,999 ----------- SEMICONDUCTORS--3.7% 2,600 Alliance Semiconductor Corp.* ................... 20,150 12,500 AMIS Holdings, Inc.* ............................ 220,625 3,900 Lattice Semiconductor Corp.* .................... 40,287 11,400 LSI Logic Corp.* ................................ 115,140 21,400 LTX Corp.* ...................................... 331,486 28,100 Mattson Technology, Inc.* ....................... 334,671 9,323 Standard Microsystems Corp.* .................... 280,902 7,500 Tessera Technologies Inc.* ...................... 145,500 ----------- 1,488,761 ----------- TELECOMMUNICATIONS EQUIPMENT & SERVICES--6.6% 21,399 Aspect Communications Corp.* .................... 386,466 5,600 Brooktrout Inc.* ................................ 109,256 21,000 C-COR.net Corp.* ................................ 345,240 -------------------------------------------------------------------------------- VALUE SHARES (NOTE 1) -------------------------------------------------------------------------------- TELECOMMUNICATIONS EQUIPMENT & SERVICES--(CONTINUED) 6,100 Carrier Access Corp.* ........................... $ 70,150 5,282 Comtech Telecommunications Corp.* ............... 149,586 22,800 Crown Castle International Corp.* ............... 274,740 16,083 Ditech Communications Corp.* .................... 300,591 25,600 Intervoice, Inc.* ............................... 310,784 3,300 NII Holdings Inc., Class B* ..................... 357,555 16,200 Polycom, Inc.* .................................. 357,534 ----------- 2,661,902 ----------- TOBACCO--0.2% 2,300 Loews Corp. - Carolina Group .................... 65,389 ----------- TRANSPORTATION--1.4% 5,500 Genesee & Wyoming Inc., Class A* ................ 199,100 5,600 Laidlaw International Inc.* ..................... 81,200 10,200 Overnite Corp. .................................. 223,380 2,100 Pacer International, Inc.* ...................... 45,108 ----------- 548,788 ----------- UTILITIES--0.4% 2,700 ONEOK, Inc. ..................................... 59,967 10,000 Reliant Resources, Inc.* ........................ 76,000 2,200 Westar Energy, Inc. ............................. 42,350 ----------- 178,317 ----------- Total Common Stocks (Cost $33,653,075) ............................ 38,758,897 ----------- PRINCIPAL AMOUNT (000'S) -------------- REPURCHASE AGREEMENT--0.7% $300 Bear, Stearns & Co. Inc. (Agreement dated 02/27/04 to be repurchased at $300,012), 0.5312%, 03/01/04 (Cost $299,999) (Note 6)** .................... 299,999 ----------- Total Investments -- 97.5% (Cost $33,953,074) ...................................... 39,058,896 ----------- Other Assets in Excess of Liabilities -- 2.5% ............. 989,628 ----------- Net Assets -- 100.0% ....................................... $40,048,524 =========== --------- * Non-income producing. ** Investment purchased with collateral received for securities on loan. The accompanying notes are an integral part of the financial statements. 14 [LOGO OMITTED] n/i NUMERIC INVESTORS FAMILY OF FUNDS MID CAP FUND PORTFOLIO OF INVESTMENTS FEBRUARY 29, 2004 (UNAUDITED) -------------------------------------------------------------------------------- VALUE SHARES (NOTE 1) -------------------------------------------------------------------------------- COMMON STOCKS--95.9% AEROSPACE & DEFENSE--1.5% 1,200 General Dynamics Corp. .......................... $ 110,544 3,100 Northrop Grumman Corp. .......................... 313,441 1,500 Rockwell Collins, Inc. .......................... 48,810 ----------- 472,795 ----------- AIRLINES--1.1% 18,900 AMR Corp.* ...................................... 287,280 5,200 Delta Air Lines, Inc.* .......................... 46,696 ----------- 333,976 ----------- APPAREL--0.5% 1,300 Jones Apparel Group, Inc. ....................... 48,490 3,400 Liz Claiborne, Inc. ............................. 125,460 ----------- 173,950 ----------- AUTOMOBILE--1.0% 6,600 General Motors Corp. ............................ 317,592 ----------- AUTOMOBILE PARTS & EQUIPMENT--1.8% 8,200 American Axle & Manufacturing Holdings, Inc.* ......................................... 311,682 10,900 ArvinMeritor, Inc. .............................. 245,904 ----------- 557,586 ----------- BANKS--2.9% 1,200 Compass Bancshares, Inc. ........................ 49,896 3,800 First Tennessee National Corp. .................. 175,712 1,800 Hibernia Corp., Class A ......................... 42,732 9,300 National City Corp. ............................. 332,010 6,800 Regions Financial Corp. ......................... 250,920 1,900 SouthTrust Corp. ................................ 63,840 ----------- 915,110 ----------- BEVERAGES--1.2% 1,000 Adolph Coors Co., Class B ....................... 67,780 11,200 Pepsi Bottling Group, Inc. (The) ................ 324,016 ----------- 391,796 ----------- BROADCASTING--0.8% 8,100 Cox Communications, Inc., Class A* .............. 262,440 ----------- BUSINESS SERVICES--0.3% 600 Affiliated Computer Services, Inc., Class A* .... 28,956 2,900 Sybase, Inc.* ................................... 62,379 ----------- 91,335 ----------- -------------------------------------------------------------------------------- VALUE SHARES (NOTE 1) -------------------------------------------------------------------------------- CHEMICALS - SPECIALTY--4.3% 6,700 Ashland Inc. .................................... $ 320,997 4,500 Dow Chemical Co. (The) .......................... 195,615 5,100 Engelhard Corp. ................................. 148,002 23,500 RPM International, Inc. ......................... 381,640 8,900 Sherwin-Williams Co. (The) ...................... 311,500 ----------- 1,357,754 ----------- COMMERCIAL SERVICES--0.1% 1,200 Deluxe Corp. .................................... 47,256 ----------- COMPUTER NETWORKING PRODUCTS--1.9% 4,098 Avocent Corp.* .................................. 158,470 14,600 Storage Technology Corp.* ....................... 428,802 ----------- 587,272 ----------- COMPUTER PERIPHERALS--0.4% 1,500 Lexmark International, Inc.* .................... 123,435 ----------- COMPUTER SOFTWARE--1.8% 2,300 Adobe Systems Inc. .............................. 85,652 10,800 Computer Associates International, Inc. ......... 286,848 4,200 Intuit Inc.* .................................... 186,312 ----------- 558,812 ----------- CONSUMER PRODUCTS--3.6% 6,000 Black & Decker Corp. (The) ...................... 309,240 11,100 Eastman Kodak Co. ............................... 316,794 8,900 Energizer Holdings, Inc.* ....................... 415,363 1,300 Whirlpool Corp. ................................. 94,822 ----------- 1,136,219 ----------- DATA PROCESSING--0.4% 3,300 Fiserv, Inc.* ................................... 127,413 ----------- DRILLING OIL & GAS WELLS--0.3% 3,200 Transocean Inc.* ................................ 94,336 ----------- ENERGY--0.3% 3,200 TXU Corp. ....................................... 90,016 ----------- ENERGY & UTILITIES--0.2% 900 Exelon Corp. .................................... 60,426 ----------- FINANCIAL SERVICES--3.2% 3,900 Federated Investors, Inc., Class B .............. 125,853 4,600 H&R Block, Inc. ................................. 248,630 11,400 MBNA Corp. ...................................... 311,562 2,100 MGIC Investment Corp. ........................... 138,978 6,600 Nuveen Investments, Class A ..................... 185,592 ----------- 1,010,615 ----------- The accompanying notes are an integral part of the financial statements. 15 [LOGO OMITTED] n/i NUMERIC INVESTORS FAMILY OF FUNDS MID CAP FUND PORTFOLIO OF INVESTMENTS (CONTINUED) FEBRUARY 29, 2004 (UNAUDITED) -------------------------------------------------------------------------------- VALUE SHARES (NOTE 1) -------------------------------------------------------------------------------- FOOD & AGRICULTURE--2.1% 2,800 Bunge Limited ................................... $ 109,340 3,700 Fresh Del Monte Produce Inc. .................... 94,202 9,800 Monsanto Co. .................................... 323,792 1,500 Sara Lee Corp. .................................. 32,730 7,100 Tyson Foods, Inc., Class A ...................... 112,748 ----------- 672,812 ----------- HAZARDOUS WASTE MANAGEMENT--0.9% 6,000 Stericycle, Inc.* ............................... 277,440 ----------- HEALTH CARE--1.2% 1,100 Coventry Health Care, Inc.* ..................... 47,927 5,500 UnitedHealth Group Inc. ......................... 341,000 ----------- 388,927 ----------- HOSPITALS--1.6% 6,900 Community Health Systems Inc.* .................. 193,545 18,900 Select Medical Corp. ............................ 301,833 ----------- 495,378 ----------- INSURANCE - PROPERTY & CASUALTY--5.4% 7,600 ACE Limited ..................................... 341,696 6,900 Allstate Corp. (The) ............................ 314,847 4,400 Everest Re Group, Ltd. .......................... 384,516 6,000 IPC Holdings, Ltd. .............................. 233,700 5,300 Old Republic International Corp. ................ 125,080 16,800 Travelers Property Casualty Corp., Class B ....................................... 306,432 ----------- 1,706,271 ----------- INTERNET CONTENT--0.7% 4,400 Netflix Inc.* ................................... 151,360 4,150 United Online, Inc.* ............................ 71,463 ----------- 222,823 ----------- INTERNET SOFTWARE--0.3% 2,900 CheckFree Corp.* ................................ 84,187 ----------- LEISURE & ENTERTAINMENT--2.1% 26,500 Caesars Entertainment, Inc.* .................... 325,950 3,200 Mattel, Inc. .................................... 60,800 6,700 MGM MIRAGE* ..................................... 291,785 ----------- 678,535 ----------- MANUFACTURING--0.9% 2,100 Crane Co. ....................................... 67,494 2,400 Pentair, Inc. ................................... 129,624 1,900 Roper Industries, Inc. .......................... 92,245 ----------- 289,363 ----------- -------------------------------------------------------------------------------- VALUE SHARES (NOTE 1) -------------------------------------------------------------------------------- MEDICAL & MEDICAL SERVICES--0.6% 3,000 Cardinal Health, Inc. ........................... $ 195,690 ----------- MEDICAL INSTRUMENTS & SUPPLIES--4.6% 800 Beckman Coulter, Inc. ........................... 42,064 2,300 Becton, Dickinson & Co. ......................... 111,895 2,000 C.R. Bard, Inc. ................................. 188,780 5,300 Hillenbrand Industries, Inc. .................... 350,065 4,100 IDEXX Laboratories, Inc.* ....................... 209,387 100 Kinetic Concepts, Inc.* ......................... 4,035 6,100 Respironics, Inc.* .............................. 319,091 2,600 Varian Medical Systems, Inc.* ................... 217,724 ----------- 1,443,041 ----------- MULTIMEDIA/PUBLISHING--1.6% 4,100 McGraw-Hill Companies, Inc. (The) ............... 320,497 2,800 Pixar* .......................................... 184,072 ----------- 504,569 ----------- OIL & GAS EQUIPMENT & SERVICES--2.6% 11,400 Questar Corp. ................................... 408,690 12,400 Tidewater Inc. .................................. 412,052 ----------- 820,742 ----------- OIL & GAS FIELD EXPLORATION--1.6% 5,100 Amerada Hess Corp. .............................. 328,185 3,900 Marathon Oil Corp. .............................. 137,046 1,100 Noble Energy, Inc. .............................. 51,458 ----------- 516,689 ----------- OIL REFINING--1.7% 5,500 Sunoco, Inc. .................................... 338,250 3,500 Valero Energy Corp. ............................. 210,000 ----------- 548,250 ----------- PACKAGING--0.7% 3,500 Ball Corp. ...................................... 225,995 ----------- PAPER & ALLIED PRODUCTS--0.6% 2,800 Temple-Inland Inc. .............................. 182,420 ----------- PHARMACEUTICALS--1.7% 3,700 Andrx Corp.* .................................... 110,852 14,600 Endo Pharmaceuticals Holdings Inc.* ............. 354,342 1,400 Watson Pharmaceuticals, Inc.* ................... 64,288 ----------- 529,482 ----------- The accompanying notes are an integral part of the financial statements. 16 [LOGO OMITTED] n/i NUMERIC INVESTORS FAMILY OF FUNDS MID CAP FUND PORTFOLIO OF INVESTMENTS (CONTINUED) FEBRUARY 29, 2004 (UNAUDITED) -------------------------------------------------------------------------------- VALUE SHARES (NOTE 1) -------------------------------------------------------------------------------- REAL ESTATE INVESTMENT TRUSTS--1.7% 5,400 Friedman, Billings, Ramsey Group, Inc., Class A ....................................... $ 143,748 10,700 General Growth Properties, Inc. ................. 334,482 1,300 Rouse Company (The) ............................. 65,000 ----------- 543,230 ----------- RESIDENTIAL CONSTRUCTION--1.4% 4,700 KB HOME ......................................... 340,045 1,500 M.D.C. Holdings, Inc. ........................... 105,645 ----------- 445,690 ----------- RESTAURANTS--0.9% 7,743 CBRL Group, Inc. ................................ 294,079 ----------- RETAIL - DISCOUNT--0.9% 7,300 Costco Wholesale Corp.* ......................... 284,189 ----------- RETAIL - SPECIALTY--4.7% 1,600 Advance Auto Parts, Inc.* ....................... 63,120 8,300 Barnes & Noble, Inc.* ........................... 289,670 17,200 Borders Group, Inc. ............................. 412,800 9,100 RadioShack Corp. ................................ 314,496 10,853 Staples, Inc. ................................... 284,566 1,900 Timberland Co. (The), Class A* .................. 117,306 ----------- 1,481,958 ----------- SAVINGS & LOAN ASSOCIATIONS--8.6% 9,600 American Capital Strategies, Ltd. ............... 319,008 10,600 Astoria Financial Corp. ......................... 427,604 8,700 Charter One Financial, Inc. ..................... 315,114 9,600 Doral Financial Corp. ........................... 327,552 10,400 Independence Community Bank Corp. ............... 411,528 3,066 New York Community Bancorp, Inc. ................ 107,678 7,200 North Fork Bancorporation, Inc. ................. 304,056 1,800 TCF Financial Corp. ............................. 93,564 8,000 Webster Financial Corp. ......................... 402,800 ----------- 2,708,904 ----------- SCHOOLS--1.3% 1,700 Apollo Group, Inc., Class A* .................... 129,455 7,100 ITT Educational Services, Inc.* ................. 269,587 ----------- 399,042 ----------- SEMICONDUCTORS--4.3% 11,800 Cree, Inc.* ..................................... 282,610 18,000 Cypress Semiconductor Corp.* .................... 388,440 8,900 Lam Research Corp.* ............................. 227,573 -------------------------------------------------------------------------------- VALUE SHARES (NOTE 1) -------------------------------------------------------------------------------- SEMICONDUCTORS--(CONTINUED) 30,300 LSI Logic Corp.* ................................ $ 306,030 2,600 Varian Semiconductor Equipment Associates, Inc.* ............................. 106,054 7,500 Vitesse Semiconductor Corp.* .................... 59,925 ----------- 1,370,632 ----------- SERVICES - EMPLOYMENT AGENCIES--0.4% 2,600 Manpower Inc. ................................... 116,350 ----------- TELECOMMUNICATIONS--0.8% 13,400 Sprint Corp. - Fon Group ........................ 237,582 ----------- TELECOMMUNICATIONS EQUIPMENT & SERVICES--5.3% 10,700 Amdocs Limited* ................................. 298,316 5,800 American Tower Corp., Class A* .................. 64,090 26,500 Crown Castle International Corp.* ............... 319,325 3,900 EchoStar Communications Corp., Class A* ...................................... 140,868 3,100 NII Holdings Inc., Class B* ..................... 335,885 4,900 PanAmSat Corp.* ................................. 111,965 18,452 Polycom, Inc.* .................................. 407,235 ----------- 1,677,684 ----------- TRANSPORTATION--2.3% 9,800 Burlington Northern Santa Fe Corp. .............. 315,364 14,200 Norfolk Southern Corp. .......................... 314,672 1,700 Union Pacific Corp. ............................. 108,188 ----------- 738,224 ----------- UTILITIES--3.8% 1,300 DTE Energy Co. .................................. 52,598 10,900 Northeast Utilities ............................. 209,716 15,800 ONEOK, Inc. ..................................... 350,918 36,500 Reliant Resources, Inc.* ........................ 277,400 8,500 Texas Genco Holdings, Inc. ...................... 313,140 ----------- 1,203,772 ----------- WHOLESALE - GROCERIES & GENERAL LINE--1.0% 10,700 SUPERVALU INC ................................... 302,810 ----------- Total Common Stocks (Cost $27,545,379) 30,296,894 ----------- The accompanying notes are an integral part of the financial statements. 17 [LOGO OMITTED] n/i NUMERIC INVESTORS FAMILY OF FUNDS MID CAP FUND PORTFOLIO OF INVESTMENTS (CONCLUDED) FEBRUARY 29, 2004 (UNAUDITED) -------------------------------------------------------------------------------- PRINCIPAL VALUE AMOUNT (000'S) (NOTE 1) -------------------------------------------------------------------------------- REPURCHASE AGREEMENTS--4.7% $ 166 Bear, Stearns & Co. Inc. (Agreement dated 02/27/04 to be repurchased at $166,036), 0.5312%, 03/01/04 (Note 6)** ................... $ 166,029 1,306 Bear, Stearns & Co. Inc. (Agreement dated 02/27/04 to be repurchased at $1,306,017), 1.00%, 03/01/04 (Note 7) ....................... 1,305,909 ----------- Total Repurchase Agreements (Cost $1,471,938) .............................. 1,471,938 ----------- Total Investments -- 100.6% (Cost $29,017,317) ....................................... 31,768,832 ----------- Liabilities in Excess of Other Assets -- (0.6)% ............. (174,661) ----------- Net Assets -- 100.0% ........................................ $31,594,171 =========== --------- * Non-income producing. ** Investment purchased with collateral received for securities on loan. The accompanying notes are an integral part of the financial statements. 18 [LOGO OMITTED] n/i NUMERIC INVESTORS FAMILY OF FUNDS SMALL CAP VALUE FUND PORTFOLIO OF INVESTMENTS FEBRUARY 29, 2004 (UNAUDITED) -------------------------------------------------------------------------------- VALUE SHARES (NOTE 1) -------------------------------------------------------------------------------- COMMON STOCKS--98.0% AEROSPACE & DEFENSE--1.8% 99,800 AAR CORP.* ...................................... $ 1,289,416 19,900 Alliant Techsystems Inc.* ....................... 1,136,290 24,714 Engineered Support Systems, Inc. ................ 1,290,071 ------------ 3,715,777 ------------ AIRLINES--1.9% 73,400 AMR Corp.* ...................................... 1,115,680 70,000 Continental Airlines, Inc., Class B* ............ 1,025,500 88,500 ExpressJet Holdings, Inc.* ...................... 1,215,105 76,800 Mesa Air Group, Inc.* ........................... 690,432 ------------ 4,046,717 ------------ APPAREL--0.9% 34,200 Kellwood Co. .................................... 1,435,032 32,500 Tommy Hilfiger Corp.* ........................... 525,525 ------------ 1,960,557 ------------ AUTOMOBILE PARTS & EQUIPMENT--2.8% 30,100 American Axle & Manufacturing Holdings, Inc.* ......................................... 1,144,101 42,200 ArvinMeritor, Inc. .............................. 952,032 18,000 Dura Automotive Systems, Inc., Class A* ......... 230,400 19,800 Sonic Automotive, Inc. .......................... 487,080 306,300 Visteon Corp. ................................... 3,093,630 ------------ 5,907,243 ------------ BANKS--1.2% 20,300 City Holding Co. ................................ 687,967 13,000 Cullen/Frost Bankers, Inc. ...................... 551,460 3,800 First BanCorp ................................... 161,310 18,000 Pacific Capital Bancorp ......................... 709,560 5,776 Sterling Financial Corp.* ....................... 210,420 8,200 U.S.B. Holding Co., Inc. ........................ 190,896 ------------ 2,511,613 ------------ BROADCASTING--0.1% 9,000 Young Broadcasting Inc., Class A* ............... 173,700 ------------ BUILDING & BUILDING MATERIALS--0.2% 28,500 Building Materials Holding Corp. ................ 483,930 ------------ BUILDING SUPPLIES--1.1% 99,800 Jacuzzi Brands, Inc.* ........................... 897,202 57,000 NCI Building Systems, Inc.* ..................... 1,382,820 ------------ 2,280,022 ------------ -------------------------------------------------------------------------------- VALUE SHARES (NOTE 1) -------------------------------------------------------------------------------- CHEMICALS - SPECIALTY--4.4% 50,700 Cabot Corp. ..................................... $ 1,754,220 53,700 Georgia Gulf Corp. .............................. 1,461,177 22,000 Octel Corp. ..................................... 602,580 21,000 OM Group, Inc.* ................................. 645,120 157,400 RPM International, Inc. ......................... 2,556,176 293,600 Wellman, Inc. ................................... 2,366,416 ------------ 9,385,689 ------------ COMMERCIAL SERVICES--0.8% 13,500 Deluxe Corp. .................................... 531,630 39,500 McGrath Rentcorp ................................ 1,203,960 ------------ 1,735,590 ------------ COMPUTER COMPONENTS--0.2% 27,300 Pomeroy IT Solutions, Inc. ...................... 405,678 ------------ COMPUTER PERIPHERALS--0.4% 78,800 InFocus Corp.* .................................. 928,264 ------------ COMPUTER SERVICES--1.2% 82,900 Carreker Corp.* ................................. 1,098,425 9,000 DigitalNet Holdings, Inc.* ...................... 179,730 8,100 SI International Inc.* .......................... 182,574 103,100 Tier Technologies, Inc., Class B* ............... 1,015,535 ------------ 2,476,264 ------------ COMPUTER SOFTWARE--1.7% 45,637 Ascential Software Corp.* ....................... 1,029,571 58,400 Netsmart Technologies, Inc.* .................... 913,960 35,400 Progress Software Corp.* ........................ 736,674 52,600 SYNNEX Corp.* ................................... 1,015,180 ------------ 3,695,385 ------------ CONSUMER PRODUCTS--2.4% 27,100 Blyth, Inc. ..................................... 920,045 16,980 Central Garden & Pet Co.* ....................... 586,489 90,000 Salton, Inc.* ................................... 916,200 113,400 Wolverine World Wide, Inc. ...................... 2,670,570 ------------ 5,093,304 ------------ ELECTRICAL EQUIPMENT--1.4% 118,400 Acuity Brands, Inc. ............................. 2,892,512 ------------ ELECTRONIC COMPONENTS & ACCESSORIES--1.7% 21,742 Artesyn Technologies, Inc.* ..................... 236,988 67,806 Helix Technology Corp. .......................... 1,758,210 52,100 SBS Technologies, Inc.* ......................... 813,802 51,616 TTM Technologies, Inc.* ......................... 834,114 ------------ 3,643,114 ------------ The accompanying notes are an integral part of the financial statements. 19 [LOGO OMITTED] n/i NUMERIC INVESTORS FAMILY OF FUNDS SMALL CAP VALUE FUND PORTFOLIO OF INVESTMENTS (CONTINUED) FEBRUARY 29, 2004 (UNAUDITED) -------------------------------------------------------------------------------- VALUE SHARES (NOTE 1) -------------------------------------------------------------------------------- ELECTRONIC MEASUREMENTS - INSTRUMENTS--1.3% 106,541 MTS Systems Corp. ............................... $ 2,862,757 ------------ ENGINEERING--0.7% 46,200 URS Corp.* ...................................... 1,413,720 ------------ FINANCIAL SERVICES--7.2% 17,255 Accredited Home Lenders Holding Co.* ............ 580,113 27,100 Advanta Corp., Class B .......................... 430,077 119,400 Cash America International, Inc. ................ 2,703,216 44,900 First Cash Financial Services, Inc.* ............ 1,522,110 142,500 Fremont General Corp. ........................... 3,199,125 56,500 IndyMac Bancorp, Inc. ........................... 1,988,800 203,600 LaBranche & Co. Inc. ............................ 2,095,044 80,100 MCG Capital Corp. ............................... 1,589,985 57,500 World Acceptance Corp.* ......................... 1,237,400 ------------ 15,345,870 ------------ FOOD & AGRICULTURE--1.9% 23,000 Chiquita Brands International, Inc.* ............ 522,790 33,700 Fresh Del Monte Produce Inc. .................... 858,002 20,500 J & J Snack Foods Corp.* ........................ 968,830 29,300 Ralcorp Holdings, Inc.* ......................... 940,823 21,600 Sanderson Farms, Inc. ........................... 765,720 ------------ 4,056,165 ------------ HEALTH CARE--0.6% 38,600 Sierra Health Services, Inc.* ................... 1,290,398 ------------ HOME FURNISHINGS--0.3% 34,100 Bassett Furniture Industries, Inc. .............. 705,529 ------------ HOSPITALS--1.1% 136,900 Select Medical Corp. ............................ 2,186,293 2,400 Symbion, Inc.* .................................. 45,864 ------------ 2,232,157 ------------ HOTELS & MOTELS--1.1% 14,300 Choice Hotels International, Inc.* .............. 627,055 40,800 Marcus Corp. (The) .............................. 713,592 99,200 Prime Hospitality Corp.* ........................ 1,060,448 ------------ 2,401,095 ------------ INSURANCE--0.6% 90,000 UICI* ........................................... 1,227,600 ------------ INSURANCE - PROPERTY & CASUALTY--3.9% 3,600 Bristol West Holdings Inc.* ..................... 78,192 54,700 Direct General Corp. ............................ 1,816,040 49,323 IPC Holdings, Ltd. .............................. 1,921,131 -------------------------------------------------------------------------------- VALUE SHARES (NOTE 1) -------------------------------------------------------------------------------- INSURANCE - PROPERTY & CASUALTY--(CONTINUED) 91,400 PXRE Group Ltd. ................................. $ 2,459,574 9,303 United Fire & Casualty Co. ...................... 399,564 40,600 Zenith National Insurance Corp. ................. 1,626,436 ------------ 8,300,937 ------------ INTERNET SOFTWARE--1.6% 64,787 RSA Security Inc.* .............................. 1,077,408 76,900 SCO Group, Inc. (The)* .......................... 936,642 154,800 SonicWALL, Inc.* ................................ 1,486,080 ------------ 3,500,130 ------------ LEISURE & ENTERTAINMENT--0.8% 42,600 Boyd Gaming Corp. ............................... 868,188 29,356 Penn National Gaming, Inc.* ..................... 770,889 ------------ 1,639,077 ------------ MACHINERY--2.5% 10,800 Gardner Denver Inc.* ............................ 314,280 43,300 Manitowoc Company, Inc. (The) ................... 1,342,300 57,100 Terex Corp.* .................................... 2,000,213 54,000 Thomas Industries Inc. .......................... 1,749,600 ------------ 5,406,393 ------------ MANUFACTURING--1.2% 6,300 Briggs & Stratton Corp. ......................... 430,605 56,600 CIRCOR International, Inc. ...................... 1,270,670 28,800 Monaco Coach Corp. .............................. 820,800 ------------ 2,522,075 ------------ MEDICAL & MEDICAL SERVICES--0.8% 52,100 Option Care, Inc.* .............................. 681,468 73,844 US Oncology, Inc.* .............................. 919,358 ------------ 1,600,826 ------------ MEDICAL INSTRUMENTS & SUPPLIES--2.0% 58,400 Advanced Medical Optics, Inc.* .................. 1,343,200 14,200 CONMED Corp.* ................................... 409,670 48,500 Owens & Minor, Inc. ............................. 1,201,345 25,300 Respironics, Inc.* .............................. 1,323,443 ------------ 4,277,658 ------------ MINERALS--0.6% 71,000 Compass Minerals International, Inc. ............ 1,182,150 ------------ MULTIMEDIA/PUBLISHING--0.3% 14,100 R.H. Donnelley Corp.* ........................... 611,235 ------------ The accompanying notes are an integral part of the financial statements. 20 [LOGO OMITTED] n/i NUMERIC INVESTORS FAMILY OF FUNDS SMALL CAP VALUE FUND PORTFOLIO OF INVESTMENTS (CONTINUED) February 29, 2004 (unaudited) -------------------------------------------------------------------------------- VALUE SHARES (NOTE 1) -------------------------------------------------------------------------------- OFFICE & BUSINESS EQUIPMENT--0.3% 12,500 Global Imaging Systems, Inc.* ................... $ 377,000 7,300 United Stationers Inc.* ......................... 289,883 ------------ 666,883 ------------ OIL & GAS EQUIPMENT & SERVICES--1.9% 2,100 Gulf Island Fabrication, Inc. ................... 42,042 43,800 Oceaneering International, Inc.* ................ 1,497,084 76,900 Tidewater Inc. .................................. 2,555,387 ------------ 4,094,513 ------------ OIL & GAS FIELD EXPLORATION--1.8% 86,500 Denbury Resources Inc.* ......................... 1,307,015 37,500 Spinnaker Exploration Co.* ...................... 1,240,875 64,300 Swift Energy Co.* ............................... 1,221,700 ------------ 3,769,590 ------------ OIL REFINING--0.6% 31,100 Giant Industries, Inc.* ......................... 603,340 40,600 Tesoro Petroleum Corp.* ......................... 740,950 ------------ 1,344,290 ------------ PACKAGING--1.7% 64,100 Greif Inc., Class A ............................. 2,294,780 29,323 Silgan Holdings Inc.* ........................... 1,306,046 ------------ 3,600,826 ------------ PAPER & ALLIED PRODUCTS--0.1% 25,900 Caraustar Industries, Inc.* ..................... 310,282 ------------ REAL ESTATE INVESTMENT TRUSTS--9.7% 126,300 Associated Estates Realty Corp. ................. 1,043,238 12,200 Bedford Property Investors, Inc. ................ 375,150 15,400 Colonial Properties Trust ....................... 615,692 94,900 Equity Inns Inc. ................................ 876,876 134,600 Hersha Hospitality Trust ........................ 1,534,440 100,800 LTC Properties, Inc. ............................ 1,704,528 11,300 Mid-America Apartment Communities, Inc. ......... 405,218 52,800 Mills Corp. (The) ............................... 2,632,608 87,400 Newcastle Investment Corp. ...................... 2,520,616 243,900 OMEGA Healthcare Investors, Inc. ................ 2,502,414 64,600 PS Business Parks, Inc. ......................... 2,939,300 4,300 Tanger Factory Outlet Centers, Inc. ............. 182,277 117,300 Taubman Centers, Inc. ........................... 2,791,740 21,000 Trizec Properties, Inc. ......................... 341,880 ------------ 20,465,977 ------------ RESIDENTIAL CONSTRUCTION--0.1% 6,500 Brookfield Homes Corp. .......................... 184,925 ------------ -------------------------------------------------------------------------------- SHARES/ VALUE UNITS (NOTE 1) -------------------------------------------------------------------------------- RESTAURANTS--1.0% 16,258 CBRL Group, Inc. ................................ $ 617,479 62,200 Jack in the Box Inc.* ........................... 1,546,914 ------------ 2,164,393 ------------ RETAIL - SPECIALTY--4.9% 37,100 Barnes & Noble, Inc.* ........................... 1,294,790 86,600 Borders Group, Inc. ............................. 2,078,400 41,800 Brown Shoe Company, Inc. ........................ 1,646,502 31,300 Dillard's, Inc., Class A ........................ 550,880 48,700 Genesco Inc.* ................................... 979,844 31,000 Guitar Center, Inc.* ............................ 1,126,540 13,900 Sportsman's Guide, Inc. (The)* .................. 303,020 36,550 Stage Stores, Inc.* ............................. 1,304,469 17,000 Timberland Co. (The), Class A* .................. 1,049,580 ------------ 10,334,025 ------------ SAVINGS & LOAN ASSOCIATIONS--9.4% 78,400 American Capital Strategies, Ltd. ............... 2,605,232 9,300 Chittenden Corp. ................................ 306,714 12,100 Colonial BancGroup, Inc. (The) .................. 223,003 38,047 Commercial Capital Bancorp, Inc.* ............... 787,953 8,500 Commercial Federal Corp. ........................ 238,340 4,100 Dime Bancorp, Inc., Litigation Tracking Warrants* ..................................... 820 34,700 First Federal Capital Corp. ..................... 734,599 5,200 FirstFed Financial Corp.* ....................... 225,680 100,600 Flagstar Bancorp, Inc. .......................... 2,600,510 6,800 Flushing Financial Corp. ........................ 128,520 66,500 Hudson United Bancorp ........................... 2,596,160 63,999 Independence Community Bank Corp. ............... 2,532,440 10,299 MAF Bancorp, Inc. ............................... 457,791 194,210 Republic Bancorp Inc. ........................... 2,680,098 34,100 Trustmark Corp. ................................. 1,039,709 54,000 Webster Financial Corp. ......................... 2,718,900 ------------ 19,876,469 ------------ SCHOOLS--0.9% 5,700 Bright Horizons Family Solutions, Inc.* ......... 263,454 10,000 ITT Educational Services, Inc.* ................. 379,700 38,900 Sylvan Learning Systems, Inc.* .................. 1,202,010 ------------ 1,845,164 ------------ SEMICONDUCTORS--0.2% 15,800 Lattice Semiconductor Corp.* .................... 163,214 17,864 LTX Corp.* ...................................... 276,713 ------------ 439,927 ------------ The accompanying notes are an integral part of the financial statements. 21 [LOGO OMITTED] n/i NUMERIC INVESTORS FAMILY OF FUNDS SMALL CAP VALUE FUND PORTFOLIO OF INVESTMENTS (CONCLUDED) February 29, 2004 (unaudited) -------------------------------------------------------------------------------- VALUE SHARES (NOTE 1) -------------------------------------------------------------------------------- SERVICES - MANAGEMENT CONSULTING--0.5% 46,400 Kroll Inc.* ..................................... $ 1,088,544 ------------ STEEL--0.7% 84,000 Steel Technologies Inc. ......................... 1,442,280 ------------ TELECOMMUNICATIONS--0.2% 61,620 Primus Telecommunications Group, Inc.* .......... 466,463 ------------ TELECOMMUNICATIONS EQUIPMENT & SERVICES--2.6% 37,400 Applied Signal Technology, Inc. ................. 995,588 63,009 Aspect Communications Corp.* .................... 1,137,943 15,910 Commonwealth Telephone Enterprises, Inc.* ......................................... 653,105 12,200 Ditech Communications Corp.* .................... 228,018 23,600 Inet Technolgies, Inc.* ......................... 297,360 15,966 Intervoice, Inc.* ............................... 193,827 5,300 NII Holdings Inc., Class B* ..................... 574,255 60,400 Polycom, Inc.* .................................. 1,333,028 ------------ 5,413,124 ------------ TRANSPORTATION--3.5% 6,300 Celadon Group, Inc.* ............................ 96,138 41,100 Genesee & Wyoming Inc., Class A* ................ 1,487,820 11,900 Interpool, Inc. ................................. 176,120 15,500 Kirby Corp.* .................................... 492,900 49,600 Laidlaw International Inc.* ..................... 719,200 107,000 Overnite Corp. .................................. 2,343,300 56,000 Overseas Shipholding Group, Inc. ................ 2,010,400 ------------ 7,325,878 ------------ UTILITIES--5.2% 61,000 Allegheny Energy, Inc.* ......................... 804,590 133,000 CMS Energy Corp.* ............................... 1,223,600 26,500 Northeast Utilities ............................. 509,860 100,400 ONEOK, Inc. ..................................... 2,229,885 74,300 PNM Resources Inc. .............................. 2,263,178 141,900 Reliant Resources, Inc.* ........................ 1,078,440 151,100 Westar Energy, Inc. ............................. 2,908,675 ------------ 11,018,228 ------------ Total Common Stocks (Cost $191,347,863) ........................... 207,762,912 ------------ -------------------------------------------------------------------------------- PRINCIPAL VALUE AMOUNT (000'S) (NOTE 1) -------------------------------------------------------------------------------- REPURCHASE AGREEMENTS--3.5% $ 778 Bear, Stearns & Co. Inc. (Agreement dated 02/27/04 to be repurchased at $778,500), 0.5312%, 03/01/04 (Note 6)** .................. $ 778,465 6,701 Bear, Stearns & Co. Inc. (Agreement dated 02/27/04 to be repurchased at $6,701,879), 1.00%, 03/01/04 (Note 7) ...................... 6,701,320 ------------ Total Repurchase Agreements (Cost $7,479,785) ............................. 7,479,785 ------------ Total Investments -- 101.5% (Cost $198,827,648) ..................................... 215,242,697 ------------ Liabilities in Excess of Other Assets -- (1.5)% ............ (3,277,656) ------------ Net Assets -- 100.0% ....................................... $211,965,041 ============ --------- * Non-income producing. ** Investment purchased with collateral received for securities on loan. The accompanying notes are an integral part of the financial statements. 22 [THIS PAGE INTENTIONALLY LEFT BLANK.] [LOGO OMITTED] n/i NUMERIC INVESTORS FAMILY OF FUNDS STATEMENTS OF ASSETS AND LIABILITIES FEBRUARY 29, 2004 (UNAUDITED)
EMERGING GROWTH GROWTH MID CAP SMALL CAP VALUE FUND FUND FUND FUND --------------- ----------- ----------- -------------- ASSETS Investments, at value including collateral for securities on loan (Note 6) (Cost -- $125,903,980, $33,953,074, $29,017,317, $198,827,648, respectively) ...... $152,929,886 $39,058,896 $31,768,832 $215,242,697 Receivable for investments sold .................. 5,310,828 4,490,235 1,089,419 10,282,269 Dividends and interest receivable ................ 41,679 10,808 41,344 222,259 Receivable for Fund shares sold .................. 15,745 38,006 200 236,629 Prepaid expenses and other assets ................ 13,128 9,364 8,382 16,022 ------------ ----------- ----------- ------------ Total assets .................................. 158,311,266 43,607,309 32,908,177 225,999,876 ------------ ----------- ----------- ------------ LIABILITIES Payable for investments purchased ................ 2,860,459 1,210,430 1,077,212 12,595,921 Payable upon return of securities loaned (Note 6) 1,135,839 299,999 166,029 778,465 Due to custodian ................................. -- 1,982,591 -- -- Payable for Fund shares redeemed ................. 74,820 -- 26,412 509,778 Investment advisory fee payable .................. 90,602 27,272 8,775 74,997 Accrued expenses and other liabilities ........... 71,321 38,493 35,578 75,674 ------------ ----------- ----------- ------------ Total liabilities ............................. 4,233,041 3,558,785 1,314,006 14,034,835 ------------ ----------- ----------- ------------ NET ASSETS Capital stock, $0.001 par value .................. 7,891 2,801 1,955 10,435 Additional paid-in capital ....................... 99,826,766 39,350,716 30,950,266 167,832,817 Undistributed net investment income/(accumulated loss) ..................... (511,954) (136,057) 65,096 301,592 Accumulated net realized gain/(loss) from investments ................................... 27,729,616 (4,274,758) (2,174,661) 27,405,148 Net unrealized appreciation on investments ....... 27,025,906 5,105,822 2,751,515 16,415,049 ------------ ----------- ----------- ------------ Net assets applicable to shares outstanding ...... $154,078,225 $40,048,524 $31,594,171 $211,965,041 ============ =========== =========== ============ Shares outstanding .................................. 7,891,040 2,801,262 1,954,730 10,434,532 ------------ ----------- ----------- ------------ Net asset value, offering and redemption price per share ....................................... $19.53 $14.30 $16.16 $20.31 ====== ====== ====== ======
The accompanying notes are an integral part of the financial statements. 24 [LOGO OMITTED] n/i NUMERIC INVESTORS FAMILY OF FUNDS STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED FEBRUARY 29, 2004 (UNAUDITED)
EMERGING GROWTH GROWTH MID CAP SMALL CAP VALUE FUND FUND FUND FUND --------------- ---------- ---------- --------------- INVESTMENT INCOME Dividends* ..................................... $ 268,030 $ 85,652 $ 204,224 $ 1,674,036 Interest ....................................... 20,431 5,994 5,238 20,679 Securities lending ............................. 11,865 2,043 964 10,691 ----------- ---------- ---------- ----------- Total investment income ..................... 300,326 93,689 210,426 1,705,406 ----------- ---------- ---------- ----------- EXPENSES Investment advisory fees ....................... 536,331 130,767 66,211 606,934 Co-Administration fees and expenses ............ 141,061 54,572 51,052 183,887 Administrative services fees ................... 107,266 28,653 21,204 146,183 Transfer agent fees and expenses ............... 31,728 23,333 27,716 39,777 Audit and legal fees ........................... 21,758 10,312 9,849 31,344 Printing ....................................... 21,500 7,500 7,000 29,500 Custodian fees and expenses .................... 22,253 5,731 4,241 29,236 Shareholder service fees ....................... 20,693 3,496 8,398 16,913 Federal and state registration fees ............ 7,290 5,918 5,826 12,083 Directors' fees and expenses ................... 7,435 1,618 1,909 12,882 Other .......................................... 4,019 1,196 908 5,112 ----------- ---------- ---------- ----------- Total expenses before waivers and reimbursements, if any ................... 921,334 273,096 204,314 1,113,851 Less: waivers and reimbursements, if any .... (109,054) (43,350) (59,019) (148,619) ----------- ---------- ---------- ----------- Net expenses after waivers and reimbursements, if any ................... 812,280 229,746 145,295 965,232 ----------- ---------- ---------- ----------- Net Investment Income/(Loss) ................ (511,954) (136,057) 65,131 740,174 ----------- ---------- ---------- ----------- NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS: Net realized gain from investments ............. 31,264,854 8,209,543 4,122,913 42,329,315 Net change in unrealized appreciation on investments ................................. 2,010,536 35,553 304,163 (1,335,641) ----------- ---------- ---------- ----------- Net realized and unrealized gain on investments ................................. 33,275,390 8,245,096 4,427,076 40,993,674 ----------- ---------- ---------- ----------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ................................ $32,763,436 $8,109,039 $4,492,207 $41,733,848 =========== ========== ========== =========== --------- * Net of foreign withholding taxes of $1,999, $453, $301 and $2,393 for the Emerging Growth Fund, Growth Fund, Mid Cap Fund and Small Cap Value Fund, respectively.
The accompanying notes are an integral part of the financial statements. 25 [LOGO OMITTED] n/i NUMERIC INVESTORS FAMILY OF FUNDS STATEMENTS OF CHANGES IN NET ASSETS
EMERGING GROWTH GROWTH FUND FUND ---------------------------------- ---------------------------------- FOR THE FOR THE FOR THE FOR THE SIX MONTHS ENDED FISCAL SIX MONTHS ENDED FISCAL FEBRUARY 29, 2004 YEAR ENDED FEBRUARY 29, 2004 YEAR ENDED (UNAUDITED) AUGUST 31, 2003 (UNAUDITED) AUGUST 31, 2003 ----------------- --------------- ----------------- --------------- INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS: Net investment income/(loss) ....................... $ (511,954) $ (571,054) $ (136,057) $ (271,085) Net realized gain/(loss) from investments .......... 31,264,854 9,440,716 8,209,543 2,126,107 Net change in unrealized appreciation/(depreciation) on investments .................................. 2,010,536 24,531,048 35,553 6,516,833 ------------ ------------ ----------- ----------- Net increase in net assets resulting from operations ...................................... 32,763,436 33,400,710 8,109,039 8,371,855 ------------ ------------ ----------- ----------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income .............................. -- -- -- -- Net realized capital gains ......................... (2,757,589) -- -- -- ------------ ------------ ----------- ----------- Total dividends and distributions to shareholders .. (2,757,589) -- -- -- ------------ ------------ ----------- ----------- INCREASE/(DECREASE) IN NET ASSETS DERIVED FROM CAPITAL SHARE TRANSACTIONS (NOTE 5) ................ (6,213,342) 19,899 (1,869,709) (8,596,538) ------------ ------------ ----------- ----------- Total increase/(decrease) in net assets ............ 23,792,505 33,420,609 6,239,330 (224,683) NET ASSETS Beginning of period ................................ 130,285,720 96,865,111 33,809,194 34,033,877 ------------ ------------ ----------- ----------- End of period* ..................................... $154,078,225 $130,285,720 $40,048,524 $33,809,194 ============ ============ =========== =========== MID CAP SMALL CAP VALUE FUND FUND ----------------- ---------------- ---------------------------------- FOR THE FOR THE FOR THE FOR THE SIX MONTHS ENDED FISCAL SIX MONTHS ENDED FISCAL FEBRUARY 29, 2004 YEAR ENDED FEBRUARY 29, 2004 YEAR ENDED (UNAUDITED) AUGUST 31, 2003 (UNAUDITED) AUGUST 31, 2003 ----------------- --------------- ----------------- --------------- INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS: Net investment income/(loss) ....................... $ 65,131 $ 158,640 $ 740,174 $ 440,105 Net realized gain/(loss) from investments .......... 4,122,913 (57,630) 42,329,315 7,190,545 Net change in unrealized appreciation/(depreciation) on investments .................................. 304,163 3,661,873 (1,335,641) 20,141,144 ----------- ----------- ------------ ------------ Net increase in net assets resulting from operations ...................................... 4,492,207 3,762,883 41,733,848 27,771,794 ----------- ----------- ------------ ------------ DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income .............................. (158,675) (167,268) (878,687) -- Net realized capital gains ......................... -- -- (21,277,125) (10,075,786) ----------- ----------- ------------ ------------ Total dividends and distributions to shareholders .. (158,675) (167,268) (22,155,812) (10,075,786) ----------- ----------- ------------ ------------ INCREASE/(DECREASE) IN NET ASSETS DERIVED FROM CAPITAL SHARE TRANSACTIONS (NOTE 5) ................ 1,148,855 (2,592,660) 11,890,423 32,420,258 ----------- ----------- ------------ ------------ Total increase/(decrease) in net assets ............ 5,482,387 1,002,955 31,468,459 50,116,266 NET ASSETS Beginning of period ................................ 26,111,784 25,108,829 180,496,582 130,380,316 ----------- ----------- ------------ ------------ End of period* ..................................... $31,594,171 $26,111,784 $211,965,041 $180,496,582 =========== =========== ============ ============ --------- * Includes undistributed net investment income/(accumulated loss) as follows:
FOR THE FOR THE SIX MONTHS ENDED FISCAL FEBRUARY 29, 2004 YEAR ENDED (UNAUDITED) AUGUST 31, 2003 ----------------- --------------- Emerging Growth Fund .............. $(511,954) -- Growth Fund ....................... (136,057) -- Mid Cap Fund ...................... 65,096 $158,640 Small Cap Value Fund .............. 301,592 440,105 The accompanying notes are an integral part of the financial statements. 26 and 27 [LOGO OMITTED] n/i NUMERIC INVESTORS FAMILY OF FUNDS 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 respective periods. This information has been derived from information provided in the financial statements. --------------------------------------------------------------------------------
EMERGING GROWTH FUND ------------------------------------------------------------------------------------- FOR THE SIX MONTHS ENDED FOR THE FISCAL YEARS ENDED AUGUST 31, FEBRUARY 29, 2004 ----------------------------------------------------------------- (UNAUDITED) 2003 2002 2001 2000 1999 ----------------- ------- ------- ------- ------- ------- PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period ....... $ 15.81 $ 11.81 $ 12.73 $ 20.99 $ 18.03 $ 12.52 ------- ------- ------- ------- ------- ------- Net investment loss ........................ (0.06) (0.07)(1) (0.10) (0.07) (0.10) (0.18) Net realized and unrealized gain/(loss) on investments(2) .......................... 4.12 4.07 (0.82) (3.58) 7.39 6.72 ------- ------- ------- ------- ------- ------- Net increase/(decrease) in net assets resulting from operations ............... 4.06 4.00 (0.92) (3.65) 7.29 6.54 ------- ------- ------- ------- ------- ------- Distributions to shareholders from: Net realized capital gains ................. (0.34) -- -- (4.61) (4.33) (1.03) ------- ------- ------- ------- ------- ------- Redemption fees (Note 5)** ................. -- -- -- -- -- -- ------- ------- ------- ------- ------- ------- Net asset value, end of period ............. $ 19.53 $ 15.81 $ 11.81 $ 12.73 $ 20.99 $ 18.03 ======= ======= ======= ======= ======= ======= Total investment return(3) ................. 25.93% 33.87% (7.23)% (20.16)% 54.42% 56.09% ======= ======= ======= ======= ======= ======= RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) .. $154,078 $130,286 $96,865 $139,927 $134,533 $76,349 Ratio of expenses to average net assets(4) . 1.14%(5) 1.20% 1.12% 1.07% 1.00% 1.00% Ratio of expenses to average net assets without waivers and expense reimbursements, if any .................. 1.29%(5) 1.36% 1.26% 1.25% 1.28% 1.26% Ratio of net investment loss to average net assets(4) ........................... (0.72)%(5) (0.55)% (0.75)% (0.67)% (0.55)% (0.46)% Portfolio turnover rate .................... 123.42% 227.46% 216.40% 280.00% 297.08% 316.02% GROWTH FUND -------------------------------------------------------------------------------- FOR THE SIX MONTHS ENDED FOR THE FISCAL YEARS ENDED AUGUST 31, FEBRUARY 29, 2004 ------------------------------------------------------------ (UNAUDITED) 2003 2002 2001 2000 1999 ----------------- ------ ------- ------- ------- ------ PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period ....... $ 11.53 $ 9.07 $ 10.48 $ 23.69 $ 14.89 $ 9.75 ------- ------ ------- ------- ------- ------ Net investment loss ........................ (0.05) (0.08)(1) (0.10) (0.10) (0.12) (0.18) Net realized and unrealized gain/(loss) on investments(2) .......................... 2.82 2.54 (1.31) (6.59) 9.29 5.33 ------- ------ ------- ------- ------- ------ Net increase/(decrease) in net assets resulting from operations ............... 2.77 2.46 (1.41) (6.69) 9.17 5.15 ------- ------ ------- ------- ------- ------ Distributions to shareholders from: Net realized capital gains ................. -- -- -- (6.52) (0.37) (0.01) ------- ------ ------- ------- ------- ------ Redemption fees (Note 5)** ................. -- -- -- -- -- -- ------- ------ ------- ------- ------- ------ Net asset value, end of period ............. $ 14.30 $ 11.53 $ 9.07 $ 10.48 $ 23.69 $ 14.89 ======= ======= ====== ======= ======= ======= Total investment return(3) ................. 24.02% 27.12% (13.45)% (36.45)% 63.11% 52.80% ======= ======= ====== ======= ======= ======= RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) .. $40,049 $33,809 $34,034 $39,930 $79,520 $62,376 Ratio of expenses to average net assets(4) . 1.20%(5) 1.49% 1.35% 1.08% 1.00% 1.00% Ratio of expenses to average net assets without waivers and expense reimbursements, if any .................. 1.43%(5) 1.79% 1.54% 1.36% 1.32% 1.30% Ratio of net investment loss to average net assets(4) ........................... (0.71)%(5) (0.81)% (0.96)% (0.70)% (0.59)% (0.45)% Portfolio turnover rate .................... 148.83% 237.59% 241.28% 271.29% 228.69% 309.60% --------- ** Amount is less than $0.01 per share. (1) Calculated based on average shares outstanding for the year. (2) The amounts shown for a share outstanding throughout the respective periods are not in accord with the changes in the aggregate gains and losses on investments during the respective periods because of the timing of the sales and repurchases of fund shares in relation to fluctuating net asset values during the respective periods. (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 reinvestment of dividends and distributions, if any. Total investment returns are not annualized. (4) Reflects waivers and expense reimbursements, if any. (5) Annualized.
The accompanying notes are an integral part of the financial statements. 28 and 29 [LOGO OMITTED] n/i NUMERIC INVESTORS FAMILY OF FUNDS FINANCIAL HIGHLIGHTS (CONCLUDED) -------------------------------------------------------------------------------- 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 respective periods. This information has been derived from information provided in the financial statements. --------------------------------------------------------------------------------
MID CAP FUND ------------------------------------------------------------------------------- FOR THE SIX MONTHS ENDED FOR THE FISCAL YEARS ENDED AUGUST 31, FEBRUARY 29, 2004 ---------------------------------------------------------- (UNAUDITED) 2003 2002 2001 2000 1999 ----------------- ------- ------- ------- ------- ------ PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period ........ $ 13.88 $ 11.98 $ 13.16 $ 19.22 $ 16.89 $ 13.30 ------- ------- ------- ------- ------- ------- Net investment income/(loss) ................ 0.04 0.08 0.08 0.06 0.08 0.05 Net realized and unrealized gain/(loss) on investments and futures transactions, if any(1) ................................ 2.33 1.90 (1.22) (2.98) 4.25 4.97 ------- ------- ------- ------- ------- ------- Net increase/(decrease) in net assets resulting from operations ................ 2.37 1.98 (1.14) (2.92) 4.33 5.02 ------- ------- ------- ------- ------- ------- Dividends and distributions to shareholders from: Net investment income ....................... (0.09) (0.08) (0.06) (0.08) (0.03) (0.06) Net realized capital gains .................. -- -- -- (3.06) (1.97) (1.37) ------- ------- ------- ------- ------- ------- Total dividends and distributions to shareholders (0.09) (0.08) (0.06) (3.14) (2.00) (1.43) ------- ------- ------- ------- ------- ------- Redemption fees (Note 5) .................... --** --** 0.02 --** --** --** ------- ------- ------- ------- ------- ------- Net asset value, end of period .............. $ 16.16 $ 13.88 $ 11.98 $ 13.16 $ 19.22 $ 16.89 ======= ======= ======= ======= ======= ======= Total investment return(2) .................. 17.11% 16.70% (8.48)% (17.42)% 29.61% 41.61% ======= ======= ======= ======= ======= ======= RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) ... $31,594 $26,112 $25,109 $31,198 $44,430 $49,156 Ratio of expenses to average net assets(3) .. 1.03%(4) 1.00% 0.85% 0.91% 1.00% 1.00% Ratio of expenses to average net assets without waivers and expense reimbursements, if any 1.45%(4) 1.52% 1.27% 1.39% 1.61% 1.33% Ratio of net investment income/(loss) to average net assets(3) ............................ 0.46%(4) 0.66% 0.59% 0.39% 0.40% 0.31% Portfolio turnover rate ..................... 139.04% 227.20% 270.77% 318.28% 378.17% 384.71% SMALL CAP FUND ------------------------------------------------------------------------------------ FOR THE FOR THE PERIOD SIX MONTHS ENDED FOR THE FISCAL YEARS ENDED AUGUST 31, NOVEMBER 30, 1998* FEBRUARY 29, 2004 ------------------------------------------ THROUGH (UNAUDITED) 2003 2002 2001 2000 AUGUST 31, 1999 ----------------- ------- ------- ------- ------- ------------------ PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period ........ $ 18.46 $ 16.86 $ 17.61 $ 12.91 $ 12.86 $ 12.00 ------- ------- ------- ------- ------- ------- Net investment income/(loss) ................ 0.08 0.05 (0.05) 0.02 0.15 0.10 Net realized and unrealized gain/(loss) on investments and futures transactions, if any(1) ................................ 4.09 2.90 1.71 4.79 1.32 0.76 ------- ------- ------- ------- ------- ------- Net increase/(decrease) in net assets resulting from operations ................ 4.17 2.95 1.66 4.81 1.47 0.86 ------- ------- ------- ------- ------- ------- Dividends and distributions to shareholders from: Net investment income ....................... (0.09) -- (0.02) (0.14) (0.10) -- Net realized capital gains .................. (2.24) (1.41) (2.58) -- (1.32) -- ------- ------- ------- ------- ------- ------- Total dividends and distributions to shareholders (2.33) (1.41) (2.60) (0.14) (1.42) -- ------- ------- ------- ------- ------- ------- Redemption fees (Note 5) .................... 0.01 0.06 0.19 0.03 --** --** ------- ------- ------- ------- ------- ------- Net asset value, end of period .............. $ 20.31 $ 18.46 $ 16.86 $ 17.61 $ 12.91 $ 12.86 ======= ======= ======= ======= ======= ======= Total investment return(2) .................. 23.96% 20.51% 13.31% 37.97% 13.94% 7.17% ======= ======= ======= ======= ======= ======= RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) ... 211,965 $180,497 $130,380 $35,564 $13,481 $11,498 Ratio of expenses to average net assets(3) .. 0.99%(4) 1.55% 1.73% 1.67% 1.00% 1.00%(4) Ratio of expenses to average net assets without waivers and expense reimbursements, if any 1.14%(4) 1.70% 1.88% 2.14% 2.34% 2.59%(4) Ratio of net investment income/(loss) to average net assets(3) ............................ 0.76%(4) 0.33% (0.35)% 0.17% 1.35% 1.15%(4) Portfolio turnover rate ..................... 186.28% 268.07% 275.73% 277.28% 256.28% 212.55% ----------- * Commencement of operations. ** Amount is less than $0.01 per share. (1) The amounts shown for a share outstanding throughout the respective periods are not in accord with the changes in the aggregate gains and losses on investments during the respective periods because of the timing of the sales and repurchases of fund shares in relation to fluctuating net asset values during the respective periods. (2) 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 reinvestment of dividends and distributions, if any. Total investment returns are not annualized. (3) Reflects waivers and expense reimbursements, if any. (4) Annualized.
The accompanying notes are an integral part of the financial statements. 30 and 31 [LOGO OMITTED] n/i NUMERIC INVESTORS FAMILY OF FUNDS EMERGING GROWTH FUND GROWTH FUND MID CAP FUND SMALL CAP VALUE FUND NOTES TO FINANCIAL STATEMENTS (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 active investment portfolios, including the n/i NUMERIC INVESTORS FAMILY OF FUNDS ("n/i numeric investors Family") which consists of four diversified portfolios: n/i NUMERIC INVESTORS Emerging Growth Fund ("Emerging Growth Fund"), n/i NUMERIC INVESTORS Growth Fund ("Growth Fund"), n/i NUMERIC INVESTORS Mid Cap Fund ("Mid Cap Fund") and n/i NUMERIC INVESTORS Small Cap Value Fund ("Small Cap Value Fund") (each, a "Fund," and collectively, the "Funds"). RBB has authorized capital of thirty billion shares of common stock of which 26.073 billion are currently classified into ninety-seven classes of common stock. Each class represents an interest in an active or inactive RBB investment portfolio. The active classes have been grouped into eight separate "families," seven of which have begun investment operations. 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. 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, and 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. Short-term obligations with maturities of 60 days or less are valued at amortized cost, which approximates market value. 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.(R) (the Funds' "Adviser" or "Numeric") 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. Numeric marks to market daily the value of the collateral, and, if necessary, requires the seller to deposit additional collateral by the next business day, so that the value of the collateral 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. 32 [LOGO OMITTED] n/i NUMERIC INVESTORS FAMILY OF FUNDS EMERGING GROWTH FUND GROWTH FUND MID CAP FUND SMALL CAP VALUE FUND NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) INVESTMENT TRANSACTIONS, INVESTMENT INCOME AND EXPENSES -- The Funds record security transactions 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 accrued when earned. Dividend income is recorded on the ex-dividend date. Expenses incurred on behalf of a specific fund or fund family are charged directly to the fund or fund family (in proportion to net assets). Expenses incurred for all of the RBB families (such as director or professional fees) are charged to all funds in proportion to their net assets of the RBB Funds. 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 Funds. DISTRIBUTIONS TO SHAREHOLDERS -- Distributions from net investment income and from net realized capital gains, if any, will be declared and recorded on the ex-dividend date and paid at least annually to shareholders. Income and capital gain distributions are determined in accordance with U.S. federal income tax regulations, which may differ from accounting principles generally accepted in the United States of America. These differences can include the treatment of non-taxable dividends, expiring capital loss carryforwards, foreign currency gain/loss, 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 within the composition of net assets. U.S. TAX STATUS -- No provision is made for U.S. income taxes as it is each 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 all or substantially all U.S. federal income and excise taxes. 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES Numeric serves as each Fund's investment adviser. Numeric is entitled to a performance-based fee for its advisory services for the Growth, Mid Cap and Small Cap Value Funds calculated at the end of each month using a basic fee of 0.85% of average daily net assets and a performance fee adjustment based on each Fund's performance during the last rolling 12-month period. Each Fund's net performance is compared with the performance of its benchmark index during that same rolling 12-month period. When a Fund's performance is at least 5.00% better than its benchmark, it would pay Numeric more than the basic fee. If a Fund did not perform at least 4.00% better than its benchmark, Numeric would be paid less than the basic fee. Each 1.00% of the difference in performance between a Fund and its benchmark plus 4.00% during the performance period would result in a 0.10% adjustment to the basic fee. The maximum annualized performance adjustment rate would be + or - 0.50% of average daily net assets which would be added to or deducted from the basic fee. Numeric is entitled to receive 0.75% of the Emerging Growth Fund's average daily net assets, computed daily and payable monthly for its advisory services. Numeric has agreed that until December 31, 2004, it will waive its advisory fee and/or reimburse expenses (other than brokerage commissions, extraordinary items, interest and taxes) in an aggregate amount equal to the amount by which the 33 [LOGO OMITTED] n/i NUMERIC INVESTORS FAMILY OF FUNDS EMERGING GROWTH FUND GROWTH FUND MID CAP FUND SMALL CAP VALUE FUND NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) Growth, Mid Cap and/or Small Cap Value Funds' total other expenses (other than investment advisory fees, expenses attributable to the Shareholder Services Plan, brokerage commissions, extraordinary items, interest and taxes) exceed 0.50% of such Fund's average daily net assets. Numeric has agreed that until December 31, 2004, it will limit the Emerging Growth Fund's total expenses to the extent that such expenses, other than expenses attributable to the Shareholder Services Plan, exceed 1.25% of average daily net assets. As necessary, these limitations were effected in waivers of advisory fees and reimbursements of expenses exceeding the advisory fee. For the six months ended February 29, 2004, investment advisory fees, waivers and expense reimbursements were as follows:
TOTAL INVESTMENT NET INVESTMENT EXPENSE FUND ADVISORY FEES WAIVERS ADVISORY FEES REIMBURSEMENT ---- --------------- --------- -------------- ------------- Emerging Growth Fund .................... $536,331 -- $536,331 -- Growth Fund ............................. 130,767 $(16,017) 114,750 -- Mid Cap Fund ............................ 66,211 (37,770) 28,441 $373 Small Cap Value Fund .................... 606,934 -- 606,934 --
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"), a wholly-owned subsidiary of PFPC Worldwide, Inc. and an indirect wholly-owned subsidiary of The PNC Financial Services Group, Inc., and Bear Stearns Funds Management Inc. ("BSFM"), a wholly-owned subsidiary of The Bear Stearns Companies Inc., serve as co-administrators for each Fund. 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% on the first $150 million and 0.02% of each Fund's average daily net assets thereafter. For the six months ended February 29, 2004, PFPC, voluntarily agreed to waive a portion of its administration fees. During such period, PFPC's co-administration fees and related waivers were as follows:
TOTAL PFPC NET PFPC CO-ADMINISTRATION FEES PFPC CO-ADMINISTRATION FEES FUND AND EXPENSES WAIVERS AND EXPENSES ---- -------------------- --------- -------------------- Emerging Growth Fund .................... $ 93,837 $(16,090) $ 77,747 Growth Fund ............................. 41,932 (2,500) 39,432 Mid Cap Fund ............................ 41,685 (2,500) 39,185 Small Cap Value Fund .................... 125,985 (21,927) 104,058
For providing regulatory administrative services to RBB, PFPC is entitled to receive compensation as agreed to by the Funds and PFPC. This fee is allocated to each portfolio of RBB based on each portfolio's average net assets as a percentage of the total RBB related net assets. For the six months ended February 29, 2004, the regulatory administrative services fees were $11,603, $3,089, $2,299 and $16,034 for the Emerging Growth Fund, Growth Fund, Mid Cap Fund and Small Cap Value Fund, respectively. 34 [LOGO OMITTED] n/i NUMERIC INVESTORS FAMILY OF FUNDS EMERGING GROWTH FUND GROWTH FUND MID CAP FUND SMALL CAP VALUE FUND NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) In addition, PFPC serves as each Fund's transfer and dividend disbursing agent. For the six months ended February 29, 2004, transfer agency fees and expenses were $31,728, $23,333, $27,716 and $39,777 for the Emerging Growth Fund, Growth Fund, Mid Cap Fund and Small Cap Value Fund, respectively. PFPC Distributors, Inc. ("PFPC Distributors"), a wholly-owned subsidiary of PFPC Worldwide, Inc. and an indirect wholly-owned subsidiary of The PNC Financial Services Group, Inc., provides certain administrative services to each Fund. As compensation for such administrative services, PFPC Distributors received a monthly fee equal to an annual rate of 0.15% of each Fund's average daily net assets. For the six months ended February 29, 2004, PFPC Distributors, voluntarily agreed to waive a portion of its administrative services fees for each Fund. During such period, administrative services fees were as follows:
TOTAL ADMINISTRATIVE NET ADMINISTRATIVE FUND SERVICES FEES WAIVERS SERVICES FEES ---- -------------- ---------- ------------------ Emerging Growth Fund ......................... $107,266 $ (92,964) $14,302 Growth Fund .................................. 28,653 (24,833) 3,820 Mid Cap Fund ................................. 21,204 (18,376) 2,828 Small Cap Value Fund ......................... 146,183 (126,692) 19,491
The Emerging Growth Fund, Growth Fund,Mid Cap Fund and Small Cap Value Fund owed PFPC and its affiliates $23,502, $13,275, $12,855 and $25,738, respectively, for their services as of February 29, 2004. 3. SHAREHOLDER SERVICES PLAN The Board of Directors approved a Shareholder Services Plan which permits the Funds to pay fees to certain Shareholder Organizations of up to 0.25% of the average daily net assets of each Fund for which such Shareholder Organizations provide services for the benefit of customers. 4. INVESTMENT IN SECURITIES For the six months ended February 29, 2004, aggregate purchases and sales of investment securities (excluding short-term investments) were as follows: FUND PURCHASES SALES ---- ------------ ------------ Emerging Growth Fund ..................... $169,983,935 $183,390,666 Growth Fund .............................. 54,199,957 56,493,533 Mid Cap Fund ............................. 38,633,245 37,953,461 Small Cap Value Fund ..................... 356,938,613 367,267,910 35 [LOGO OMITTED] n/i NUMERIC INVESTORS FAMILY OF FUNDS EMERGING GROWTH FUND GROWTH FUND MID CAP FUND SMALL CAP VALUE FUND NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) 5. CAPITAL SHARE TRANSACTIONS As of February 29, 2004, each Fund has 50,000,000 shares of $0.001 par value capital stock authorized. Transactions in capital shares for the respective periods were as follows:
EMERGING GROWTH FUND ---------------------------------------------------- FOR THE SIX MONTHS ENDED FOR THE FEBRUARY 29, 2004 FISCAL YEAR ENDED (UNAUDITED) AUGUST 31, 2003 ----------------------- --------------------- SHARES AMOUNT SHARES AMOUNT -------- ------------- -------- ----------- Sales ............................... 225,359 $ 4,068,873 804,076 $ 9,594,697 Repurchases ......................... (730,810) (13,003,194) (766,322) (9,574,798) Reinvestments ....................... 155,841 2,720,979 -- -- -------- ------------- -------- ----------- Net increase/(decrease) ............. (349,610) $ (6,213,342) 37,754 $ 19,899 ======== ============= ======== =========== GROWTH FUND ---------------------------------------------------- FOR THE SIX MONTHS ENDED FOR THE FEBRUARY 29, 2004 FISCAL YEAR ENDED (UNAUDITED) AUGUST 31, 2003 ----------------------- --------------------- SHARES AMOUNT SHARES AMOUNT -------- ------------- -------- ----------- Sales ............................... 200,757 $ 2,716,578 78,665 $ 733,076 Repurchases ......................... (330,752) (4,586,287) (898,509) (9,329,614) -------- ------------ -------- ----------- Net decrease ........................ (129,995) $(1,869,709) (819,844) $(8,596,538) ======== ============ ======== =========== MID CAP FUND ---------------------------------------------------- FOR THE SIX MONTHS ENDED FOR THE FEBRUARY 29, 2004 FISCAL YEAR ENDED (UNAUDITED) AUGUST 31, 2003 ----------------------- ---------------------- SHARES AMOUNT SHARES AMOUNT -------- ------------- --------- ----------- Sales ............................... 218,155 $ 3,323,474 92,608 $ 1,080,079 Repurchases ......................... (154,441) (2,327,165) (321,954) (3,835,656) Reinvestments ....................... 10,217 152,546 14,677 162,917 -------- ------------ -------- ----------- Net increase/(decrease) ............. 73,931 $ 1,148,855 (214,669) $(2,592,660) ======== ============ ========= ===========
36 [LOGO OMITTED] n/i NUMERIC INVESTORS FAMILY OF FUNDS EMERGING GROWTH FUND GROWTH FUND MID CAP FUND SMALL CAP VALUE FUND NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
SMALL CAP VALUE FUND ------------------------------------------------------------ FOR THE SIX MONTHS ENDED FOR THE FEBRUARY 29, 2004 FISCAL YEAR ENDED (UNAUDITED) AUGUST 31, 2003 --------------------------- ---------------------------- SHARES AMOUNT SHARES AMOUNT ---------- ------------ ---------- ------------ Sales .............................. 449,566 $ 8,872,880 5,928,003 $ 91,225,551 Repurchases ........................ (887,265) (17,142,594) (4,558,315) (68,285,924) Reinvestments ...................... 1,092,619 20,160,137 676,704 9,480,631 ---------- ------------ ---------- ------------ Net increase ....................... 654,920 $ 11,890,423 2,046,392 $ 32,420,258 ========== ============ ========== ============
There is a 2.00% redemption fee on shares redeemed which have been held for less than one year on each of the Funds. For the six months ended February 29, 2004, these fees amounted to $3,915, $637, $1,051 and $68,915 for the Emerging Growth Fund, Growth Fund, Mid Cap Fund and Small Cap Value Fund, respectively. The redemption fees are collected and retained by each Fund for the benefit of the remaining shareholders and recorded as additional paid-in capital. 6. SECURITIES LENDING Loans of securities are required at all times to be secured by collateral equal to at least 100% 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 collateral being maintained by the lender is insufficient to cover the value of loaned securities, the borrower is obligated to pay the amount of the shortfall (and interest thereon) to the Funds. However, there can be no assurance the Funds can recover this amount. The value of securities on loan to brokers and the aggregate value of collateral by the Funds and pledged to borrowers at February 29, 2004, were as follows: VALUE OF FUND SECURITIES ON LOAN VALUE OF COLLATERAL ---- ------------------ ------------------- Emerging Growth Fund ............. $10,571,265 $10,845,676 Growth Fund ...................... 1,654,798 1,693,283 Mid Cap Fund ..................... 678,894 696,217 Small Cap Value Fund ............. 9,245,479 9,489,576 Collateral pledged by borrowers for securities out on loan to broker/dealers is in the form of U.S. Treasury securities. Cash collateral received by the Funds is invested into repurchase agreements with Bear, Stearns & Co. Inc., which in turn are collateralized by various U.S. Treasury securities. The stated interest rate on repurchase agreements is net of rebate paid to the borrower on securities loaned. 37 [LOGO OMITTED] n/i NUMERIC INVESTORS FAMILY OF FUNDS EMERGING GROWTH FUND GROWTH FUND MID CAP FUND SMALL CAP VALUE FUND NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED) Collateral for repurchase agreements in connection with securities lending at February 29, 2004 are listed below:
EMERGING GROWTH FUND ------------------------------------------------------------------------------------ PRINCIPAL AMOUNT ACCRUED ISSUER (000'S) INTEREST RATE MATURITY MARKET VALUE INTEREST TOTAL VALUE ------ --------- ------------- -------- ------------ -------- ----------- Related Collateral: United States Treasury Bond .......... $945 6.625% 02/15/27 $1,168,105 $2,261 $1,170,366 GROWTH FUND ------------------------------------------------------------------------------------ PRINCIPAL AMOUNT ACCRUED ISSUER (000'S) INTEREST RATE MATURITY MARKET VALUE INTEREST TOTAL VALUE ------ --------- ------------- -------- ------------ -------- ----------- Related Collateral: United States Treasury Note .......... $255 3.500% 01/15/11 $ 313,348 $1,066 $ 314,414 MID CAP FUND ------------------------------------------------------------------------------------ PRINCIPAL AMOUNT ACCRUED ISSUER (000'S) INTEREST RATE MATURITY MARKET VALUE INTEREST TOTAL VALUE ------ --------- ------------- -------- ------------ -------- ----------- Related Collateral: United States Treasury Note .......... $140 3.500% 01/15/11 $ 172,034 $ 585 $ 172,619 SMALL CAP VALUE FUND ------------------------------------------------------------------------------------ PRINCIPAL AMOUNT ACCRUED ISSUER (000'S) INTEREST RATE MATURITY MARKET VALUE INTEREST TOTAL VALUE ------ --------- ------------- -------- ------------ -------- ----------- Related Collateral: United States Treasury Note .......... $650 3.500% 01/15/11 $ 798,730 $2,717 $ 801,447
7. COLLATERAL FOR REPURCHASE AGREEMENTS Listed below is the collateral associated with the repurchase agreements with Bear, Stearns & Co. Inc., outstanding at February 29, 2004:
EMERGING GROWTH FUND ------------------------------------------------------------------------------------ PRINCIPAL AMOUNT ACCRUED ISSUER (000'S) INTEREST RATE MATURITY MARKET VALUE INTEREST TOTAL VALUE ------ --------- ------------- -------- ------------ -------- ----------- United States Treasury Bond .......... $3,185 6.625% 02/15/27 $3,936,947 $ 7,619 $3,944,566 United States Treasury Note .......... 2,165 3.500 01/15/11 2,660,384 9,051 2,669,435 ---------- ------- ---------- $6,597,331 $16,670 $6,614,001 ========== ======= ==========
38 [LOGO OMITTED] n/i NUMERIC INVESTORS FAMILY OF FUNDS EMERGING GROWTH FUND GROWTH FUND MID CAP FUND SMALL CAP VALUE FUND NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
MID CAP FUND ------------------------------------------------------------------------------------ PRINCIPAL AMOUNT ACCRUED ISSUER (000'S) INTEREST RATE MATURITY MARKET VALUE INTEREST TOTAL VALUE ------ --------- ------------- -------- ------------ -------- ----------- United States Treasury Note .......... $1,090 3.500% 01/15/11 $1,339,408 $ 4,557 $1,343,965 SMALL CAP VALUE FUND ------------------------------------------------------------------------------------ PRINCIPAL AMOUNT ACCRUED ISSUER (000'S) INTEREST RATE MATURITY MARKET VALUE INTEREST TOTAL VALUE ------ --------- ------------- -------- ------------ -------- ----------- United States Treasury Note .......... $5,595 3.500% 01/15/11 $6,875,218 $23,390 $6,898,608
The Growth Fund did not have repurchase agreements with Bear, Stearns & Co. Inc., outstanding at February 29, 2004 (other than in connection with securities lending shown under Note 6). 8. PROXY VOTING Policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities are available without charge, upon request, by calling (800) 348-5031 and on the Securities and Exchange Commission's website at http://www.sec.gov. 9. FEDERAL INCOME TAX INFORMATION At February 29, 2004, Federal tax cost, aggregate gross unrealized appreciation and depreciation of securities held by each Fund were as follows:
FEDERAL TAX UNREALIZED UNREALIZED NET UNREALIZED FUND COST APPRECIATION DEPRECIATION APPRECIATION ---- ------------ ----------- ------------ -------------- Emerging Growth Fund ............................. $126,092,599 $28,559,473 $(1,722,186) $26,837,287 Growth Fund ...................................... 33,997,001 5,616,528 (554,633) 5,061,895 Mid Cap Fund ..................................... 29,106,227 3,014,838 (352,233) 2,662,605 Small Cap Value Fund ............................. 199,460,550 19,086,493 (3,304,346) 15,782,147
As of August 31, 2003, the components of distributable earnings on a tax basis were as follows: UNDISTRIBUTED UNDISTRIBUTED ORDINARY LONG-TERM FUND INCOME GAINS ---- ------------- ------------- Emerging Growth Fund ....................... -- -- Growth Fund ................................ -- -- Mid Cap Fund ............................... $ 158,640 -- Small Cap Value Fund ....................... 5,307,459 $2,043,029 39 [LOGO OMITTED] n/i NUMERIC INVESTORS FAMILY OF FUNDS EMERGING GROWTH FUND GROWTH FUND MID CAP FUND SMALL CAP VALUE FUND NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONCLUDED) At August 31, 2003, the Funds had capital loss carryforwards available to offset future capital gains through the indicated expiration dates: EXPIRING AUGUST 31, ------------------------------------------- FUND 2009 2010 2011 ---- -------- ----------- -------- Emerging Growth Fund .......... -- $ 410,152 -- Growth Fund ................... -- 12,271,077 -- Mid Cap Fund .................. $506,551 5,467,943 $206,720 Small Cap Value Fund .......... -- -- -- During the year ended August 31, 2003, the Emerging Growth Fund and Growth Fund utilized $8,924,857 and $1,986,321 respectively, of prior year capital loss carryforwards. The tax character of dividends and distributions paid during the last two fiscal years were as follows:
ORDINARY LONG-TERM FUND YEAR INCOME GAINS TOTAL ---- ---- ---------- ---------- ----------- Emerging Growth Fund 2003 -- -- -- 2002 -- -- -- Growth Fund 2003 -- -- -- 2002 -- -- -- Mid Cap Fund 2003 $ 167,268 -- $ 167,268 2002 145,129 -- 145,129 Small Cap Value Fund 2003 8,972,686 $1,103,100 10,075,786 2002 4,929,706 909,019 5,838,725
40 [LOGO OMITTED] n/i NUMERIC INVESTORS FAMILY OF FUNDS EMERGING GROWTH FUND GROWTH FUND MID CAP FUND SMALL CAP VALUE FUND FUND MANAGEMENT (UNAUDITED) Information pertaining to the Directors and Officers of the Fund is set forth below. The statement of additional information (SAI) includes additional information about the Directors and is available without charge, upon request, by calling (800) 348-5031.
------------------------------------------------------------------------------------------------------------------------------------ NUMBER OF TERM OF PORTFOLIOS OTHER POSITION(S) OFFICE IN FUND DIRECTORSHIPS NAME, ADDRESS, HELD AND LENGTH PRINCIPAL OCCUPATION(S) DURING PAST COMPLEX HELD BY AND DATE OF BIRTH WITH FUND OF TIME 5 YEARS OVERSEEN BY DIRECTOR SERVED 1 DIRECTOR ------------------------------------------------------------------------------------------------------------------------------------ DISINTERESTED DIRECTORS ------------------------------------------------------------------------------------------------------------------------------------ Julian A. Brodsky Director 1988 to Since 1969, Director and Vice Chairman, 16 Director, Comcast Comcast Corporation present Comcast Corporation (cable television and Corporation 1500 Market Street, communications); Director, NDS Group PLC 35th Floor (provider of systems and applications for Philadelphia, PA 19102 digital pay TV). DOB: 7/16/33 ------------------------------------------------------------------------------------------------------------------------------------ Francis J. McKay Director 1988 to Since 2000, Vice President, Fox Chase Cancer 16 None Fox Chase Cancer Center present Center (biomedical research and medical 333 Cottman Avenue care); prior to 2000, Executive Vice Philadelphia, PA 19111 President, Fox Chase Cancer Center. DOB: 12/06/35 ------------------------------------------------------------------------------------------------------------------------------------ Arnold M. Reichman Director 1991 to Since December 2000, Director, Gabelli 16 None 106 Pierrepont Street present Partners, L.P. (an investment partnership); Brooklyn, NY 11201 Chief Operating Officer and member of the DOB: 5/21/48 Board of Directors of Outercurve Technologies (wireless enabling services) until April 2001; Chief Operating Officer and member of the Executive Operating Committee of Warburg Pincus Asset Management, Inc.; Executive Officer and Director of Credit Suisse Asset Management Securities, Inc. (formerly Counsellors Securities, Inc.) and Director/Trustee of various investment companies advised by Warburg Pincus Asset Management, Inc. until September 15, 1999; Prior to 1997, Managing Director of Warburg Pincus Asset Management, Inc. ------------------------------------------------------------------------------------------------------------------------------------ Marvin E. Sternberg Director 1991 to Since 1974, Chairman, Director and 16 Director, Moyco Technologies, Inc. present President, Moyco Technologies, Inc. Moyco 200 Commerce Drive (manufacturer of precision coated and Technologies, Inc. Montgomeryville, PA 18936 industrial abrasives). Since 1999, Director, DOB: 3/24/34 Pennsylvania Business Bank. ------------------------------------------------------------------------------------------------------------------------------------
41 [LOGO OMITTED] n/i NUMERIC INVESTORS FAMILY OF FUNDS EMERGING GROWTH FUND GROWTH FUND MID CAP FUND SMALL CAP VALUE FUND FUND MANAGEMENT (UNAUDITED)
------------------------------------------------------------------------------------------------------------------------------------ NUMBER OF TERM OF PORTFOLIOS OTHER POSITION(S) OFFICE IN FUND DIRECTORSHIPS NAME, ADDRESS, HELD AND LENGTH PRINCIPAL OCCUPATION(S) DURING PAST COMPLEX HELD BY AND DATE OF BIRTH WITH FUND OF TIME 5 YEARS OVERSEEN BY DIRECTOR SERVED 1 DIRECTOR ------------------------------------------------------------------------------------------------------------------------------------ INTERESTED DIRECTORS 2 ------------------------------------------------------------------------------------------------------------------------------------ Robert Sablowsky Director 1991 to Since July 2002, Senior Vice President and 16 None Oppenheimer & Company, Inc. present prior thereto, Executive Vice President of 200 Park Avenue Oppenheimer & Co., Inc., formerly New York, NY 10166 Fahnestock & Co., Inc. (a registered DOB: 4/16/38 broker-dealer). ------------------------------------------------------------------------------------------------------------------------------------ J. Richard Carnall Director 2002 to Director of PFPC Inc. from January 1987 to 16 None 400 Bellevue Parkway present April 2002, Chairman and Chief Executive Wilmington, DE 19809 Officer of PFPC Inc. until April 2002, DOB: 9/25/38 Executive Vice President of PNC Bank, National Association from October 1981 to April 2002, Director of PFPC International Ltd. (financial services) from August 1993 to April 2002, Director of PFPC International (Cayman) Ltd. (financial services) from September 1996 to April 2002, and Director of International Dollar Reserve Fund, Ltd. (Cayman mutual fund company) from September 1993 to present; Governor of the Investment Company Institute (investment company industry trade organization) from July 1996 to January 2002; Director of PNC Asset Management, Inc. (investment advisory) from September 1994 to March 1998; Director of PNC National Bank from October 1995 to November 1997; Director of Haydon Bolts, Inc. (bolt manufacturer) and Parkway Real Estate Company (subsidiary of Haydon Bolts, Inc.) since 1984. Mr. Carnall provides consulting services from time to time to PFPC Inc. ------------------------------------------------------------------------------------------------------------------------------------
42 [LOGO OMITTED] n/i NUMERIC INVESTORS FAMILY OF FUNDS EMERGING GROWTH FUND GROWTH FUND MID CAP FUND SMALL CAP VALUE FUND FUND MANAGEMENT (UNAUDITED)
------------------------------------------------------------------------------------------------------------------------------------ NUMBER OF TERM OF PORTFOLIOS OTHER POSITION(S) OFFICE IN FUND DIRECTORSHIPS NAME, ADDRESS, HELD AND LENGTH PRINCIPAL OCCUPATION(S) DURING PAST COMPLEX HELD BY AND DATE OF BIRTH WITH FUND OF TIME 5 YEARS OVERSEEN BY DIRECTOR SERVED 1 DIRECTOR ------------------------------------------------------------------------------------------------------------------------------------ OFFICER(S) WHO ARE NOT DIRECTORS ------------------------------------------------------------------------------------------------------------------------------------ Edward J. Roach President 1991 to Certified Public Accountant; Vice Chairman N/A N/A 400 Bellevue Parkway and present of the Board, Fox Chase Cancer Center; 4th Floor Treasurer and Trustee Emeritus, Pennsylvania School for Wilmington, DE 19809 1988 to the Deaf; Trustee Emeritus, Immaculata DOB: 6/29/24 present University; President or Vice President and Treasurer of various investment companies advised by subsidiaries of PNC Bank Corp. from 1981 to 1997; Managing General Partner, President and Treasurer of Chestnut Street Exchange Fund; Director of the Bradford Funds, Inc. from 1996 to 2000. ------------------------------------------------------------------------------------------------------------------------------------ Lisa M. King Secretary Since 2003 Since 2000, Vice President and Counsel, N/A N/A 301 Bellevue Parkway PFPC Inc. (financial services company); 2nd Floor Associate, Stradley, Ronon, Stevens & Wilmington, DE 19809 Young, LLC (law firm) from 1996-2000. DOB: 1/27/68 ------------------------------------------------------------------------------------------------------------------------------------ 1 Each Director serves for an indefinite period of time until his successor is elected and qualified or until his death, resignation or removal. Each officer holds office at the pleasure of the Board of Directors until the next annual meeting of the Company or until his or her successor is duly elected and qualified, or until he or she dies, resigns, is removed or becomes disqualified. 2 Messrs. Carnall and Sablowsky are considered "interested persons" of the Company as that term is defined in the 1940 Act. Mr. Carnall is an "interested Director" of the Company because he owns shares of The PNC Financial Services Group, Inc. The investment adviser to the Company's Money Market Portfolio, BlackRock Institutional Management Corporation and the Company's principal underwriter, PFPC Distributors, Inc. are indirect subsidiaries of The PNC Financial Services Group, Inc. Mr. Sablowsky is considered an "interested Director" of the Company by virtue of his position as an officer of a registered broker-dealer.
43 [THIS PAGE INTENTIONALLY LEFT BLANK.] [THIS PAGE INTENTIONALLY LEFT BLANK.] [THIS PAGE INTENTIONALLY LEFT BLANK.] [LOGO OMITTED] n/i NUMERIC INVESTORS FAMILY OF FUNDS One Memorial Drive Cambridge, MA 02142 1-800-numeric [686-3742] http://www.numeric.com INVESTMENT ADVISER Numeric Investors L.P.(R) One Memorial Drive Cambridge, MA 02142 CO-ADMINISTRATORS Bear Stearns Funds Management Inc. 383 Madison Avenue New York, NY 10179 PFPC Inc. Bellevue Corporate Center 301 Bellevue Parkway Wilmington, DE 19809 DISTRIBUTOR PFPC Distributors,Inc. 760 Moore Road King of Prussia, PA 19406 CUSTODIAN Custodial Trust Company 101 Carnegie Center Princeton, NJ 08540 TRANSFER AGENT PFPC Inc. 301 Bellevue Parkway Wilmington, DE 19809 INDEPENDENT AUDITORS PricewaterhouseCoopers LLP Two Commerce Square Philadelphia, PA 19103 COUNSEL Drinker Biddle & Reath LLP One Logan Square 18th and Cherry Streets Philadelphia, PA 19103 The financial information included herein is taken from the records of each Fund without examination by independent accountants who do not express an opinion thereon. 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 investment return is based on historical results and is not intended to indicate future performance. The total 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. Current perforrmance may be lower or higher than the performance data provided in the report. [LOGO OMITTED] n/i NUMERIC INVESTORS FAMILY OF FUNDS One Memorial Drive Cambridge, MA 02142 1-800-numeric [686-3742] http://www.numeric.com BOSTON PARTNERS FAMILY OF FUNDS OF THE RBB FUND, INC. [GRAPHIC OMITTED] SEMI-ANNUAL REPORT FEBRUARY 29, 2004 SMALL CAP VALUE FUND II LONG/SHORT EQUITY FUND LARGE CAP VALUE FUND MID CAP VALUE FUND ALL-CAP VALUE FUND (LOGO) bp BOSTON PARTNERS ASSET MANAGEMENT, L.L.C. ------------------------------------------------ ONE PHILOSOPHY o ONE CULTURE o ONE FOCUS [GRAPHIC OMITTED] BOSTON PARTNERS FAMILY OF FUNDS -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- GENERAL MARKET COMMENTARY -------------------------------------------------------------------------------- April 15, 2004 Dear Shareholder, The market rally continued over the six month period ended February 29, 2004, with all major indexes posting double digit returns. Interest rates remained at a 40 year low over the period aiding gains in the market. We witnessed a renewed focus on quality and profitability and value outperformed growth during the period. This renewed focus has resulted in a shift from speculative companies with poor fundamentals to companies with strong balance sheets, positive free cash flow, predictable earnings and dividends, and sound management. Our investment strategy favors such companies and we believe our portfolios are positioned to do well over the long-term. Underneath the market's broad based performance, the valuations of its various capitalization and economic sectors continue to converge. Consequently, the markets valuation landscape in terms of cap size and sector is flat. We do not feel the market is paying the investor to take the added risk of second and third tier companies and this is especially true with technology stocks. The following pages contain investment discussion on each of the Boston Partners Funds. Please take a minute to review them and contact us with any questions. Warm Regards, Boston Partners Asset Management SEMI-ANNUAL REPORT 2004 | 1 BOSTON PARTNERS FAMILY OF FUNDS -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- SMALL CAP VALUE FUND II -------------------------------------------------------------------------------- Dear Shareholder: The Boston Partners Small Cap Value Fund II outperformed the Russell 2000 Value and Russell 2000 indices for the six month period ended February 29, 2004. The Institutional Share Class returned 22.50% for the period as small cap stocks continued to lead the way. SIX MONTHS ENDED FEBRUARY 29, 2004 ----------------- Boston Partners Small Cap Value Fund II Institutional Shares 22.50% Investor Shares 22.32% Russell 2000 Value Index 21.32% Russell 2000 Index 1 18.34% The Boston Partners Small Cap Value Fund II is invested on a stock-specific basis across a broad cross section of businesses. At the industry level, pockets of value have been centered in the insurance stocks where well-capitalized businesses have benefited from a strong pricing environment, the Health Care Sector where fundamentally strong companies have been enduring potential regulatory changes, and niche consumer service businesses whose operating strengths have been obscured by macroeconomic concerns. The Boston Partners Small Cap Value Fund II continues to maintain attractive value characteristics which, combined with the portfolios' profitability attributes and stock-specific catalysts, enhanced the portfolios potential to perform over the long-term. As always, we remain dedicated to our bottom-up, value-based investment discipline. Sincerely, David Dabora Small Cap Value Fund II Portfolio Manager ---------- 1 This is not a benchmark of the Fund. Results of index performance are presented for general comparative purposes. ----------------------------------------------------- TOP TEN POSITIONS % OF PORTFOLIO ----------------------------------------------------- Apria Healthcare Group, Inc. 3.03% ----------------------------------------------------- IPC Holdings Ltd. 2.35% ----------------------------------------------------- Hollywood Entertainment Corp. 2.32% ----------------------------------------------------- Champion Enterprises, Inc. 1.97% ----------------------------------------------------- Sierra Pacific Resources 1.57% ----------------------------------------------------- Sola International, Inc. 1.54% ----------------------------------------------------- Scottish Re Group Ltd. 1.45% ----------------------------------------------------- Redwood Trust, Inc. 1.44% ----------------------------------------------------- Terex Corp. 1.30% ----------------------------------------------------- Coinstar, Inc. 1.27% ----------------------------------------------------- ----------------------------------------------------- SECTOR BREAKDOWN % OF PORTFOLIO ----------------------------------------------------- Basic Industries 2.5% ----------------------------------------------------- Capital Goods 8.5% ----------------------------------------------------- Communications 1.4% ----------------------------------------------------- Consumer Durables 4.3% ----------------------------------------------------- Consumer Non-Durables 7.7% ----------------------------------------------------- Consumer Services 23.8% ----------------------------------------------------- Energy 1.6% ----------------------------------------------------- Finance 18.2% ----------------------------------------------------- Health Care 9.5% ----------------------------------------------------- Technology 5.0% ----------------------------------------------------- Transportation 2.3% ----------------------------------------------------- Utilities 1.8% ----------------------------------------------------- Other 13.4% ----------------------------------------------------- ----------------------------------------------------- PORTFOLIO REVIEW ----------------------------------------------------- P/E: Price/Earnings* 12.7x ----------------------------------------------------- P/B: Price/Book 1.7x ----------------------------------------------------- Holdings 206 ----------------------------------------------------- Wtd. Average Mkt. Cap (mil) $858 ----------------------------------------------------- ROE: Return on Equity 5.5 ----------------------------------------------------- OROA: Operating Return on Assets* 29.9 ----------------------------------------------------- ---------- * For the trailing one year period. 2 | SEMI-ANNUAL REPORT 2004 BOSTON PARTNERS FAMILY OF FUNDS -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- LONG/SHORT EQUITY FUND -------------------------------------------------------------------------------- Dear Shareholder: The Boston Partners Long/Short Equity Fund Institutional shares returned 0.56% for the six month period ended February 29, 2004. SIX MONTHS ENDED FEBRUARY 29, 2004 ----------------- Boston Partners Long/Short Equity Fund Institutional Shares 0.56% Investor Shares 0.42% Salomon Smith Barney U.S. 1 Month Treasury Bill Index 0.45% During this six month period, we have seen the markets begin to reward companies of a higher quality nature; namely, those companies which have higher profitability characteristics and strong balance sheets. This trend has benefited the fund, as the long side of the portfolio owns many companies with these same characteristics. Conversely, the stocks of companies which have a more cyclical earnings stream and lower levels of profitability on average have begun to lose favor over the latter half of this period. Areas of opportunity on the long side included Health Care, Consumer Services, and Capital Goods. Areas of weakness include Technology, Consumer Services, and Health Care. We continue to build the long portfolio by purchasing companies that exhibit strong value characteristics, sound business fundamentals, and positive business momentum. These companies maintain clean balance sheets and generate free cash flow. Sincerely, Ted Kellogg Long/Short Equity Fund Portfolio Manager ----------------------------------------------------- % OF PORTFOLIO TOP TEN HOLDINGS LONG ----------------------------------------------------- Webzen, Inc. 2.42% ----------------------------------------------------- 4Kids Entertainment, Inc. 2.26% ----------------------------------------------------- Corrections Corporation of America 1.94% ----------------------------------------------------- CONSOL Energy, Inc. 1.76% ----------------------------------------------------- Pinnacle Systems, Inc. 1.52% ----------------------------------------------------- Computer Horizons Corp. 1.38% ----------------------------------------------------- Global Power Equipment Group, Inc. 1.37% ----------------------------------------------------- FTI Consulting, Inc. 1.31% ----------------------------------------------------- Integrated Alarm Services Group, Inc. 1.30% ----------------------------------------------------- Hypercom Corp. 1.30% ----------------------------------------------------- ----------------------------------------------------- % OF PORTFOLIO SECTOR BREAKDOWN LONG SHORT ----------------------------------------------------- Basic Industries 3.1% 2.9% ----------------------------------------------------- Capital Goods 6.0% 10.0% ----------------------------------------------------- Communications 8.5% 3.1% ----------------------------------------------------- Consumer Durables 1.0% 7.1% ----------------------------------------------------- Consumer Non-Durables 1.6% 6.4% ----------------------------------------------------- Consumer Services 24.5% 25.5% ----------------------------------------------------- Energy 7.5% 0.8% ----------------------------------------------------- Finance 6.1% 4.5% ----------------------------------------------------- Health Care 18.4% 16.6% ----------------------------------------------------- Technology 17.6% 18.5% ----------------------------------------------------- Transportation 1.7% 1.0% ----------------------------------------------------- Utilities 0.0% 2.6% ----------------------------------------------------- Other 4.0% 1.0% ----------------------------------------------------- ----------------------------------------------------- PORTFOLIO REVIEW LONG SHORT ----------------------------------------------------- P/E: Price/Earnings* 17.6x 23.0x ----------------------------------------------------- P/B: Price/Book 1.4x 2.4x ----------------------------------------------------- Holdings 132 232 ----------------------------------------------------- Wtd. Average Mkt. Cap (mil) $4,753 $2,333 ----------------------------------------------------- OROA: Operating Return on Assets* 28.3 14.7 ----------------------------------------------------- * For the trailing one year period. SEMI-ANNUAL REPORT 2004 | 3 BOSTON PARTNERS FAMILY OF FUNDS -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- LARGE CAP VALUE FUND -------------------------------------------------------------------------------- Dear Shareholder: The Boston Partners Large Cap Value Fund outperformed the Russell 1000 Value Index and S&P 500 Stock Index for the six month period ended February 29, 2004. The Institutional Share Class returned 19.46% for the six month period whereas the Russell 1000 Value Index returned 17.52% and the S&P 500 Stock Index returned 14.59%. SIX MONTHS ENDED FEBRUARY 29, 2004 ----------------- Boston Partners Large Cap Value Fund Institutional Shares 19.46% Investor Shares 19.27% S&P 500 Stock Index 14.59% Russell 1000 Value Index 17.52% During the six month period, value outperformed growth in the large cap area of the market. We have experienced a shift from speculative, higher P/E companies to companies with strong balance sheets, positive free cash flow, predictable earnings and dividends, and sound management. We believe that in this environment, our fundamentally driven, value based investment style is positioned to do well. We had positive returns across all economic sectors for the period. Leading the way were Capital Goods, Finance, Energy, Health Care, and Utilities which all posted returns in excess of 20%. We continue to have an overweight relative to the value benchmark in the energy sector. Although crude oil and natural gas prices have risen, we believe that opportunities still exist in this area. We have decreased our exposure in the finance sector due primarily to our view that most bank stocks are fully priced. Many banks trade at 2 to 2.5 times book value and in an environment where interest rates are likely to increase, we feel bank margins are subject to downward pressure. Sincerely, Mark Donovan Large Cap Value Fund Portfolio Manager ----------------------------------------------------- TOP TEN POSITIONS % OF PORTFOLIO ----------------------------------------------------- Freddie Mac 3.43% ----------------------------------------------------- Citigroup, Inc. 2.90% ----------------------------------------------------- Xerox Corp. 2.89% ----------------------------------------------------- MBIA, Inc. 2.85% ----------------------------------------------------- Berkshire Hathaway, Inc., Class B 2.72% ----------------------------------------------------- Pfizer, Inc. 2.63% ----------------------------------------------------- ACE Ltd. 2.54% ----------------------------------------------------- Transocean, Inc. 2.50% ----------------------------------------------------- ChevronTexaco Corp. 2.48% ----------------------------------------------------- Countrywide Financial Corp. 2.47% ----------------------------------------------------- ----------------------------------------------------- SECTOR BREAKDOWN % OF PORTFOLIO ----------------------------------------------------- Basic Industries 1.3% ----------------------------------------------------- Capital Goods 6.9% ----------------------------------------------------- Communications 7.1% ----------------------------------------------------- Consumer Durables 0.0% ----------------------------------------------------- Consumer Non-Durables 10.7% ----------------------------------------------------- Consumer Services 7.5% ----------------------------------------------------- Energy 17.6% ----------------------------------------------------- Finance 28.7% ----------------------------------------------------- Health Care 9.4% ----------------------------------------------------- Technology 6.9% ----------------------------------------------------- Transportation 0.0% ----------------------------------------------------- Utilities 1.5% ----------------------------------------------------- Other 2.4% ----------------------------------------------------- ----------------------------------------------------- PORTFOLIO REVIEW ----------------------------------------------------- P/E: Price/Earnings* 15.1x ----------------------------------------------------- P/B: Price/Book 2.2x ----------------------------------------------------- Holdings 76 ----------------------------------------------------- Wtd. Average Mkt. Cap (mil) $59,259 ----------------------------------------------------- ROE: Return on Equity 22.3 ----------------------------------------------------- OROA: Operating Return on Assets* 31.9 ----------------------------------------------------- * For the trailing one year period. 4 | SEMI-ANNUAL REPORT 2004 BOSTON PARTNERS FAMILY OF FUNDS -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- MID CAP VALUE FUND -------------------------------------------------------------------------------- Dear Shareholder: The Boston Partners Mid Cap Value Fund Institutional shares returned 17.78% for the six month period ended February 29, 2004, but lagged the Russell 2500 Value Index which returned 21.78% for the period. SIX MONTHS ENDED FEBRUARY 29, 2004 ----------------- Boston Partners Mid Cap Value Fund Institutional Shares 17.78% Investor Shares 17.59% Russell 2500 Index 18.82% Russell 2500 Value Index 21.78% Russell Midcap Value Index 1 20.24% We attribute much of the underperformance to the benchmark's exposure to the small cap universe. A percentage of the benchmark is comprised of companies that have market caps of less than $400 milllion which is an area the fund generally does not purchase. These small cap companies led the way over the last six months outpacing all indexes. With a median market cap of $3 billion, we stayed true to our mid cap strategy, but lacked the exposure to the smaller caps that drove the market. Areas of strength for the Fund have been in Finance, Consumer Non-Durables, and Technology. An area of weakness was in Communications which was the only detractor for the period. Sectors of current interest to us are Health Care and Consumer Non-Durables where we maintain overweight positions against the index. We will continue to add companies based on the individual merits of each stock paying careful attention to such characteristics as Return on Equity and Return on Assets. Sincerely, Steve Pollack Mid Cap Value Fund Portfolio Manager ---------- 1 This is not a benchmark of the Fund. Results of index performance are presented for general comparative purposes. ----------------------------------------------------- TOP TEN POSITIONS % OF PORTFOLIO ----------------------------------------------------- Mercury General Corp. 2.85% ----------------------------------------------------- Radian Group, Inc. 2.32% ----------------------------------------------------- Dial Corp., (The) 2.17% ----------------------------------------------------- Smithfield Foods, Inc. 2.07% ----------------------------------------------------- Viad Corp. 1.79% ----------------------------------------------------- Affiliated Managers Group, Inc. 1.65% ----------------------------------------------------- Michaels Stores, Inc. 1.61% ----------------------------------------------------- Loews Corp. - Carolina Group 1.55% ----------------------------------------------------- W.W. Grainger, Inc. 1.54% ----------------------------------------------------- Sierra Pacific Resources 1.54% ----------------------------------------------------- ----------------------------------------------------- SECTOR BREAKDOWN % OF PORTFOLIO ----------------------------------------------------- Basic Industries 6.3% ----------------------------------------------------- Capital Goods 6.7% ----------------------------------------------------- Communications 2.9% ----------------------------------------------------- Consumer Durables 1.5% ----------------------------------------------------- Consumer Non-Durables 13.2% ----------------------------------------------------- Consumer Services 18.0% ----------------------------------------------------- Energy 4.0% ----------------------------------------------------- Finance 20.0% ----------------------------------------------------- Health Care 8.4% ----------------------------------------------------- Technology 8.1% ----------------------------------------------------- Transportation 0.7% ----------------------------------------------------- Utilities 4.2% ----------------------------------------------------- Other 6.0% ----------------------------------------------------- ----------------------------------------------------- PORTFOLIO REVIEW ----------------------------------------------------- P/E: Price/Earnings* 16.1x ----------------------------------------------------- P/B: Price/Book 1.9x ----------------------------------------------------- Holdings 95 ----------------------------------------------------- Wtd. Average Mkt. Cap (mil) $3,257 ----------------------------------------------------- ROE: Return on Equity 28.8 ----------------------------------------------------- OROA: Operating Return on Assets* 35.0 ----------------------------------------------------- * For the trailing one year period. SEMI-ANNUAL REPORT 2004 | 5 BOSTON PARTNERS FAMILY OF FUNDS -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- ALL-CAP VALUE FUND -------------------------------------------------------------------------------- Dear Shareholder: The Boston Partners All-Cap Value Fund Institutional shares outperformed the Russell 3000 Value Index for the six month period ended February 29, 2004, with a return of 23.31%. SIX MONTHS ENDED FEBRUARY 29, 2004 ----------------- Boston Partners All-Cap Value Fund Institutional Shares 23.31% Investor Shares 23.13% Russell 3000 Value Index 17.81% Russell 3000 Index 1 15.06% The All-Cap Value Fund's stock selection drove returns for the period. The strong returns had contributors from across the small, mid and large cap universe. Areas of strength included the Finance (primarily insurance businesses), Health Care (primarily pharmaceutical companies) and REIT sectors. Performance did lag the benchmark in Consumer Durables, Consumer Non-Durables, and Consumer Services. The portfolio is invested on a stock-by-stock basis across the capitalization spectrum in businesses that have attractive value characteristics and sound fundamentals. Consequently, the All-Cap Value Fund holds a diverse mix of stocks which collectively have better valuation and profitability characteristics than the value benchmark and the broad market. Currently, we are finding the most opportunities in large cap companies and have increased our market capitalization profile. Regardless of what the market may bring, we continue to implement our bottom-up stock selection discipline of finding companies that have attractive valuation characteristics, sound business fundamentals, and stock-specific catalysts. Sincerely, Harry Rosenbluth All-Cap Value Fund Portfolio Manager ---------- 1 This is not a benchmark of the Fund. Results of index performance are presented for general comparative purposes. ----------------------------------------------------- TOP TEN POSITIONS % OF PORTFOLIO ----------------------------------------------------- ACE Ltd. 3.41% ----------------------------------------------------- UST, Inc. 3.10% ----------------------------------------------------- Countrywide Financial Corp. 2.82% ----------------------------------------------------- Loews Corp. 2.80% ----------------------------------------------------- White Mountains Insurance Group Ltd. 2.50% ----------------------------------------------------- Freddie Mac 2.23% ----------------------------------------------------- Shire Pharmaceuticals Group PLC 1.74% ----------------------------------------------------- Tyco International Ltd. 1.72% ----------------------------------------------------- Radian Group, Inc. 1.69% ----------------------------------------------------- Alleghany Corp. 1.61% ----------------------------------------------------- ----------------------------------------------------- SECTOR BREAKDOWN % OF PORTFOLIO ----------------------------------------------------- Basic Industries 1.7% ----------------------------------------------------- Capital Goods 3.1% ----------------------------------------------------- Communications 3.5% ----------------------------------------------------- Consumer Durables 0.5% ----------------------------------------------------- Consumer Non-Durables 14.9% ----------------------------------------------------- Consumer Services 8.4% ----------------------------------------------------- Energy 9.3% ----------------------------------------------------- Finance 30.2% ----------------------------------------------------- Health Care 13.3% ----------------------------------------------------- Technology 4.9% ----------------------------------------------------- Transportation 0.6% ----------------------------------------------------- Utilities 3.1% ----------------------------------------------------- Other 6.5% ----------------------------------------------------- ----------------------------------------------------- PORTFOLIO REVIEW ----------------------------------------------------- P/E: Price/Earnings* 12.3x ----------------------------------------------------- P/B: Price/Book 1.6x ----------------------------------------------------- Holdings 110 ----------------------------------------------------- Wtd. Average Mkt. Cap (mil) $21,069 ----------------------------------------------------- ROE: Return on Equity 14.4 ----------------------------------------------------- OROA: Operating Return on Assets* 53.7 ----------------------------------------------------- * For the trailing one year period. 6 | SEMI-ANNUAL REPORT 2004 BOSTON PARTNERS FAMILY OF FUNDS FEBRUARY 29, 2004 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- SMALL CAP VALUE FUND II (Unaudited) PORTFOLIO OF INVESTMENTS -------------------------------------------------------------------------------- Number of Shares Value --------- ------------ COMMON STOCK--95.6% AEROSPACE & DEFENSE--0.5% DRS Technologies, Inc.* ......................... 88,525 $ 2,669,914 ------------ AIRLINES--0.7% ExpressJet Holdings, Inc.* ...................... 72,145 990,551 Pinnacle Airlines Corp.* ........................ 170,810 2,490,410 ------------ 3,480,961 ------------ APPAREL--1.1% Brown Shoe Co., Inc. ............................ 8,200 322,998 Russell Corp. ................................... 75,500 1,324,270 Steven Madden Ltd.* ............................. 43,300 828,329 Vans, Inc.* ..................................... 78,000 948,480 Warnaco Group, Inc., (The)* ..................... 119,250 2,086,875 ------------ 5,510,952 ------------ AUTOMOTIVE PARTS & EQUIPMENT--0.6% Standard Motor Products, Inc. ................... 210,800 2,925,904 ------------ BANKS - REGIONAL--0.7% Bancorp Bank, (The)* ............................ 59,700 941,469 First Community Bancorp ......................... 16,100 633,052 Franklin Bank Corp., Class A 144A* ......................................... 119,100 1,470,885 Local Financial Corp.* .......................... 19,900 437,203 ------------ 3,482,609 ------------ BROADCASTING--1.1% Alliance Atlantis Communications, Inc., Class B* ...................................... 302,670 4,988,002 Liberty Corp., (The) ............................ 10,400 525,200 ------------ 5,513,202 ------------ BUILDING & CONSTRUCTION--3.3% Butler Manufacturing Co.* ....................... 26,500 592,010 Champion Enterprises, Inc.* ..................... 951,710 10,135,711 Monaco Coach Corp.* ............................. 63,600 1,812,600 National R.V. Holdings, Inc.* ................... 88,400 917,592 Palm Harbor Homes, Inc.* ........................ 178,543 3,722,622 ------------ 17,180,535 ------------ Number of Shares Value --------- ------------ BUILDING MATERIALS--0.6% Drew Industries, Inc.* .......................... 85,900 $ 3,127,619 ElkCorp ......................................... 1,200 32,520 ------------ 3,160,139 ------------ COMPUTER EQUIPMENT & SERVICES--1.6% American Management Systems, Inc.* ......................................... 60,800 929,632 Covansys Corp.* ................................. 130,900 1,459,535 Insight Enterprises, Inc.* ...................... 69,500 1,478,265 Keane, Inc.* .................................... 134,500 1,993,290 National Processing, Inc.* ...................... 34,000 673,200 Pinnacle Systems, Inc.* ......................... 124,700 940,238 Tier Technologies, Inc., Class B* ............... 97,000 955,450 ------------ 8,429,610 ------------ COMPUTER SOFTWARE--1.3% FileNET Corp.* .................................. 54,700 1,548,010 MSC.Software Corp.* ............................. 130,600 1,257,678 NetIQ Corp.* .................................... 184,900 2,446,227 SPSS, Inc.* ..................................... 68,400 1,398,780 ------------ 6,650,695 ------------ CONSUMER PRODUCTS--0.4% Natuzzi S.p.A. - ADR ............................ 199,600 2,111,768 ------------ CONSUMER SPECIALTIES--3.1% Oakley, Inc. .................................... 43,700 659,433 Rayovac Corp.* .................................. 179,500 4,663,410 RC2 Corp.* ...................................... 53,200 1,352,876 Sola International, Inc.* ....................... 338,455 7,916,462 Tupperware Corp. ................................ 71,400 1,363,740 ------------ 15,955,921 ------------ ELECTRONICS--1.9% Bell Microproducts, Inc.* ....................... 10,300 94,966 CompuCom Systems, Inc.* ......................... 114,100 626,409 DuPont Photomasks, Inc.* ........................ 54,600 1,213,212 Hypercom Corp.* ................................. 254,400 1,750,272 Paxar Corp.* .................................... 211,700 2,946,864 Pomeroy IT Solutions, Inc.* ..................... 86,496 1,285,331 Technitrol, Inc.* ............................... 97,700 1,793,772 ------------ 9,710,826 ------------ THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. SEMI-ANNUAL REPORT 2004 | 7 BOSTON PARTNERS FAMILY OF FUNDS FEBRUARY 29, 2004 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- SMALL CAP VALUE FUND II (Unaudited) (continued) PORTFOLIO OF INVESTMENTS -------------------------------------------------------------------------------- Number of Shares Value --------- ------------ ENGINEERING & CONSTRUCTION--3.1% EMCOR Group, Inc.* .............................. 162,400 $ 6,081,880 Granite Construction, Inc. ...................... 38,400 931,200 Integrated Electrical Services, Inc.* ......................................... 371,500 4,071,640 Modtech Holdings, Inc.* ......................... 72,600 646,140 URS Corp.* ...................................... 143,614 4,394,588 ------------ 16,125,448 ------------ ENVIRONMENTAL CONTROL--0.7% Tetra Tech, Inc.* ............................... 171,100 3,644,430 ------------ FINANCIAL SERVICES--4.1% Advanta Corp., Class B .......................... 260,000 4,126,200 Affiliated Managers Group, Inc.* ......................................... 16,000 1,352,000 Bay View Capital Corp.* ......................... 349,700 825,292 BKF Capital Group, Inc.* ........................ 23,500 593,375 CMET Finance Holdings, Inc. 144A* ......................................... 15,000 1,500,000 Federal Agricultural Mortgage Corp., Class C* ............................... 193,400 5,260,480 IndyMac Bancorp, Inc. ........................... 138,000 4,857,600 MCG Capital Corp. ............................... 59,900 1,189,015 Oxford Financial Corp. 144A ..................... 130,000 1,170,000 Value Line, Inc. ................................ 6,300 307,188 ------------ 21,181,150 ------------ FOODS--1.2% NBTY, Inc.* ..................................... 172,800 5,747,328 Topps Co., Inc., (The) .......................... 25,800 237,102 ------------ 5,984,430 ------------ HEALTH CARE - SERVICES--8.1% American Medical Security Group, Inc.* .................................. 46,900 1,106,371 Apria Healthcare Group, Inc.* ................... 499,200 15,604,992 First Consulting Group, Inc.* ................... 102,240 677,851 Kendle International, Inc.* ..................... 80,200 745,860 Kindred Healthcare, Inc.* ....................... 73,265 4,313,111 LifePoint Hospitals, Inc.* ...................... 145,190 4,863,865 Medical Staffing Network Holdings, Inc.* ............................... 53,200 485,184 Option Care, Inc.* .............................. 479,650 6,273,822 Number of Shares Value --------- ------------ HEALTH CARE - SERVICES--(CONTINUED) RehabCare Group, Inc.* .......................... 175,900 $ 3,913,775 Renal Care Group, Inc.* ......................... 60,000 2,799,600 Res-Care, Inc.* ................................. 95,300 933,940 ------------ 41,718,371 ------------ HEALTH CARE - SUPPLIES--1.4% CONMED Corp.* ................................... 78,000 2,250,300 Cooper Companies, Inc., (The) ................... 40,500 1,916,055 Owens & Minor, Inc. ............................. 40,700 1,008,139 Priority Healthcare Corp., Class B* ...................................... 97,700 2,159,170 ------------ 7,333,664 ------------ INSURANCE - LIFE--2.0% AmerUs Group Co. ................................ 71,500 2,787,070 Scottish Re Group Ltd. .......................... 315,400 7,437,132 ------------ 10,224,202 ------------ INSURANCE - OTHER--10.9% Allmerica Financial Corp.* ...................... 41,290 1,522,775 American Physicians Capital, Inc.* ......................................... 74,300 1,515,720 Arch Capital Group Ltd.* ........................ 19,900 843,959 Aspen Insurance Holdings Ltd.* .................. 90,215 2,354,611 CNA Surety Corp.* ............................... 187,086 2,063,559 Hilb, Rogal & Hamilton Co. ...................... 151,400 5,571,520 Hub International Ltd. .......................... 195,400 3,224,100 Infinity Property & Casualty Corp. ......................................... 145,600 4,746,560 IPC Holdings Ltd. ............................... 310,300 12,086,185 Max Re Capital Ltd. ............................. 161,500 3,669,280 Navigators Group, Inc., (The)* .................. 128,270 3,713,416 Odyssey Re Holdings Corp. ....................... 56,620 1,508,923 Penn-America Group, Inc. ........................ 47,000 658,940 Platinum Underwriters Holdings Ltd. ................................. 141,460 4,613,011 Quanta Capital Holdings Ltd. 144A* ......................................... 370,900 4,506,435 RLI Corp. ....................................... 30,850 1,234,000 United National Group Ltd., Class A* ...................................... 112,740 2,040,594 ------------ 55,873,588 ------------ THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. 8 | SEMI-ANNUAL REPORT 2004 BOSTON PARTNERS FAMILY OF FUNDS FEBRUARY 29, 2004 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- SMALL CAP VALUE FUND II (Unaudited) (continued) PORTFOLIO OF INVESTMENTS -------------------------------------------------------------------------------- Number of Shares Value --------- ------------ INTERNET SERVICES--1.2% EarthLink, Inc.* ................................ 650,300 $ 5,937,239 Stonepath Group, Inc.* .......................... 46,370 169,250 ------------ 6,106,489 ------------ IRON & STEEL--0.8% GrafTech International Ltd.* .................... 206,500 2,802,205 Ryerson Tull, Inc. .............................. 94,100 1,276,937 ------------ 4,079,142 ------------ LEISURE & LODGING--1.6% Argosy Gaming Co.* .............................. 78,600 2,431,884 Dover Downs Gaming & Entertainment, Inc. ........................... 50,475 553,206 Interstate Hotels & Resorts, Inc.* ......................................... 123,250 719,780 Intrawest Corp. ................................. 119,100 2,105,688 La Quinta Corp.* ................................ 202,865 1,568,146 MTR Gaming Group, Inc.* ......................... 73,860 731,214 ------------ 8,109,918 ------------ MACHINERY--3.3% Actuant Corp., Class A* ......................... 41,000 1,636,310 CIRCOR International, Inc. ...................... 46,400 1,041,680 Global Power Equipment Group, Inc.* .................................. 320,470 3,454,666 Joy Global, Inc. ................................ 89,700 2,474,823 Manitowoc Co., Inc., (The) ...................... 41,000 1,271,000 Tecumseh Products Co., Class A ....................................... 5,660 254,870 Terex Corp.* .................................... 191,200 6,697,736 ------------ 16,831,085 ------------ MANUFACTURING--1.0% Spartech Corp. .................................. 208,800 4,933,944 ------------ METALS & MINING--0.3% Olin Corp. ...................................... 95,900 1,741,544 ------------ OIL & GAS EXPLORATION--0.5% Swift Energy Co.* ............................... 138,100 2,623,900 ------------ Number of Shares Value --------- ------------ OIL SERVICES--1.1% Cal Dive International, Inc.* ................... 87,700 $ 2,126,725 Grant Prideco, Inc.* ............................ 58,400 885,928 Offshore Logistics, Inc.* ....................... 14,800 340,252 Parker Drilling Co.* ............................ 178,700 755,901 Todco, Class A* ................................. 47,500 707,750 Trico Marine Services, Inc.* .................... 343,500 645,780 ------------ 5,462,336 ------------ PAPER FOREST PRODUCTS & PACKAGING--1.3% Anchor Glass Container Corp.* ........................................ 52,700 838,984 Constar International, Inc.* .................... 77,100 405,546 Packaging Dynamics Corp.* ....................... 52,860 632,734 Schweitzer-Mauduit International, Inc. ........................... 56,800 1,894,280 Silgan Holdings, Inc.* .......................... 69,300 3,086,622 ------------ 6,858,166 ------------ PUBLISHING & INFORMATION SERVICES--2.2% ADVO, Inc.* ..................................... 53,648 1,733,367 Bowne & Co., Inc. ............................... 111,700 1,809,540 Catalina Marketing Corp.* ....................... 170,000 2,969,900 infoUSA, Inc.* .................................. 173,940 1,774,188 Pulitzer, Inc. .................................. 21,900 1,130,040 Reader's Digest Association, Inc., (The) ................................... 153,900 2,077,650 ------------ 11,494,685 ------------ RAILROAD & BULK SHIPPING--1.3% CP Ships Ltd. ................................... 53,200 969,836 RailAmerica, Inc.* .............................. 328,200 3,767,736 Stonepath Group, Inc. 144A* ..................... 559,600 2,042,540 ------------ 6,780,112 ------------ REAL ESTATE--8.7% Affordable Residential Communities* .................................. 193,195 3,651,385 American Financial Realty Trust (REIT) ........................................ 103,525 1,889,331 American Financial Realty Trust 144A (REIT) ................................... 202,300 3,691,975 Arbor Realty Trust 144A (REIT) ........................................ 20,200 1,535,200 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. SEMI-ANNUAL REPORT 2004 | 9 BOSTON PARTNERS FAMILY OF FUNDS FEBRUARY 29, 2004 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- SMALL CAP VALUE FUND II (Unaudited) (continued) PORTFOLIO OF INVESTMENTS -------------------------------------------------------------------------------- Number of Shares Value --------- ------------ REAL ESTATE--(CONTINUED) Ashford Hospitality Trust (REIT)* ....................................... 55,725 $ 551,678 Bimini Mortgage Management 144A (REIT)* .................................. 290,025 4,350,375 Brandywine Realty Trust (REIT) ........................................ 60,800 1,732,800 Falcon Financial Investment Trust (REIT)* ................................. 109,555 1,034,199 Fieldstone Investment Corp. 144A (REIT) ................................... 105,000 2,021,250 Gladstone Commercial Corp. (REIT) ........................................ 136,575 2,298,557 Government Properties Trust, Inc. (REIT)* .................................. 146,475 2,036,003 Jones Lang LaSalle, Inc.* ....................... 22,600 542,400 LNR Property Corp. ............................ 31,400 1,654,780 Luminent Mortgage Capital, Inc. 144A (REIT) ................................... 155,000 2,328,100 Luminent Mortgage Capital, Inc. (REIT) ........................................ 16,200 243,324 MFA Mortgage Investments, Inc. (REIT) ........................................ 85,525 889,460 Redwood Trust, Inc. (REIT) ...................... 122,100 7,417,575 Trammell Crow Co.* .............................. 368,700 5,172,861 Ventas, Inc. (REIT) ............................. 55,800 1,475,910 ------------ 44,517,163 ------------ RECREATIONAL PRODUCTS - TOYS--0.5% Scientific Games Corp., Class A* ...................................... 88,700 1,499,917 WMS Industries, Inc.* ........................... 41,200 1,094,684 ------------ 2,594,601 ------------ RETAIL - HARD GOODS--4.5% Barnes & Noble, Inc.* ........................... 36,000 1,256,400 Friedman's, Inc., Class A ....................... 614,300 4,459,818 GameStop Corp., Class A* ........................ 76,115 1,419,545 Hollywood Entertainment Corp.* ........................................ 1,060,155 11,926,744 Lithia Motors, Inc., Class A .................... 87,800 2,421,524 School Specialty, Inc.* ......................... 50,800 1,727,200 ------------ 23,211,231 ------------ Number of Shares Value --------- ------------ RETAIL - SOFT GOODS--1.2% Charming Shoppes, Inc.* ......................... 373,100 $ 2,443,805 J. Jill Group, Inc.* ............................ 81,900 1,264,536 Payless ShoeSource, Inc.* ....................... 195,765 2,613,463 ------------ 6,321,804 ------------ SAVINGS & LOANS--0.8% Brookline Bancorp, Inc. ......................... 64,537 1,016,458 Franklin Bank Corp.* ............................ 29,400 559,188 ITLA Capital Corp.* ............................. 12,500 599,875 Westcorp ........................................ 50,200 2,148,560 ------------ 4,324,081 ------------ SERVICES - BUSINESS--9.9% Century Business Services, Inc.* ......................................... 428,100 1,892,202 Clark, Inc.* .................................... 174,480 2,939,988 Consolidated Graphics, Inc.* .................... 37,500 1,397,250 Cornell Companies, Inc.* ........................ 95,580 1,173,722 Geo Group, Inc., (The)* ......................... 53,700 1,156,698 Harland (John H.) Co. ........................... 74,730 2,254,604 IKON Office Solutions, Inc. ..................... 373,200 4,385,100 Insurance Auto Auctions, Inc.* .................. 54,114 751,644 Integrated Alarm Services Group, Inc.* .................................. 725,113 6,533,268 Kforce, Inc.* ................................... 324,516 3,228,934 Korn/Ferry International* ....................... 339,290 4,210,589 MPS Group, Inc.* ................................ 453,100 4,417,725 Navigant International, Inc.* ................... 323,100 5,634,864 On Assignment, Inc.* ............................ 219,700 1,250,093 PRG-Schultz International, Inc.* ................ 428,890 1,869,960 ProQuest Co.* ................................... 23,650 710,919 SOURCECORP, Inc.* ............................... 68,740 1,836,733 Spherion Corp.* ................................. 232,600 2,002,686 World Fuel Services Corp. ....................... 85,600 3,025,960 ------------ 50,672,939 ------------ SERVICES - CONSUMER--2.6% Ambassadors International, Inc. ................. 25,000 320,000 Coinstar, Inc.* ................................. 362,300 6,546,761 Service Corporation International* ................................ 837,600 5,670,552 Steiner Leisure Ltd.* ........................... 59,300 1,073,330 ------------ 13,610,643 ------------ THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. 10 | SEMI-ANNUAL REPORT 2004 BOSTON PARTNERS FAMILY OF FUNDS FEBRUARY 29, 2004 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- SMALL CAP VALUE FUND II (Unaudited) (concluded) PORTFOLIO OF INVESTMENTS -------------------------------------------------------------------------------- Number of Shares Value --------- ------------ SOAPS & TOILETRIES--1.0% Nu Skin Enterprises, Inc., Class A ....................................... 125,600 $ 2,405,240 Playtex Products, Inc.* ......................... 428,850 2,710,332 ------------ 5,115,572 ------------ TELECOMMUNICATIONS--0.2% Lightbridge, Inc.* .............................. 176,200 1,286,260 ------------ TELECOMMUNICATIONS EQUIPMENT--0.2% Adaptec, Inc.* .................................. 103,600 945,868 ------------ TOBACCO--0.9% DIMON, Inc. ..................................... 187,600 1,303,820 Standard Commercial Corp. ....................... 80,700 1,527,651 Universal Corp. ................................. 36,700 1,850,414 ------------ 4,681,885 ------------ TRUCKING--0.3% Marten Transport Ltd.* .......................... 19,500 345,150 Overnite Corp. .................................. 58,365 1,278,194 ------------ 1,623,344 ------------ UTILITIES - ELECTRIC--1.8% El Paso Electric Co.* ........................... 47,200 642,392 Green Mountain Power Corp. ...................... 15,600 409,812 Sierra Pacific Resources* ....................... 1,002,400 8,079,344 ------------ 9,131,548 ------------ TOTAL COMMON STOCK (Cost $375,571,757) ......................... 491,926,579 ------------ Number of Shares Value --------- ------------ MUTUAL FUNDS--0.2% Gladstone Capital Corp. ......................... 42,000 $ 905,562 ------------ TOTAL MUTUAL FUNDS (Cost $749,576) ............................. 905,562 ------------ SHORT TERM INVESTMENTS--4.3% Galaxy Institutional Money Market Fund 0.970% 03/01/04 ............................... 11,031,725 11,031,725 Wilmington Money Market Fund 0.607% 03/01/04 ............................... 11,031,725 11,031,725 ------------ TOTAL SHORT TERM INVESTMENTS (Cost $22,063,450) .......................... 22,063,450 ------------ TOTAL INVESTMENTS--100.1% (Cost $398,384,783) ............................. 514,895,591 ------------ LIABILITIES IN EXCESS OF OTHER ASSETS--(0.1)% ............................ (589,437) ------------ NET ASSETS--100.0% ................................. $514,306,154 ============ ---------- * -- Non-income producing. ADR -- American Depository Receipt. 144A -- Security was purchased pursuant to Rule 144A under Securities Act of 1933 and may not be resold subject to that rule except to qualified institutional buyers. As of February 29, 2004, these securities amounted to 4.79% of net assets. REIT -- Real Estate Investment Trust. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. SEMI-ANNUAL REPORT 2004 | 11 BOSTON PARTNERS FAMILY OF FUNDS FEBRUARY 29, 2004 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- LONG/SHORT EQUITY FUND (Unaudited) PORTFOLIO OF INVESTMENTS -------------------------------------------------------------------------------- Number of Shares Value --------- ------------ LONG POSITIONS--112.8% COMMON STOCK--94.8% AEROSPACE & DEFENSE--1.3% DRS Technologies, Inc.+* ........................ 26,200 $ 790,192 InVision Technologies, Inc.+* ................... 4,505 157,945 ------------ 948,137 ------------ AIRLINES--0.6% ABX Air, Inc.+* ................................. 56,145 412,666 ------------ APPAREL--0.6% Skechers U.S.A., Inc., Class A+* ................ 35,165 443,431 ------------ AUTOMOTIVE PARTS & EQUIPMENT--1.0% Hayes Lemmerz International, Inc.+* ........................................ 28,300 447,140 LKQ Corp.+* ..................................... 13,200 248,160 ------------ 695,300 ------------ BANKS - REGIONAL--0.6% Banc Corp., (The) ............................... 21,455 168,207 Capital Bank Corp. .............................. 6,159 108,399 Riggs National Corp.+ ........................... 10,900 185,082 ------------ 461,688 ------------ BUILDING MATERIALS--0.7% Griffon Corp.+* ................................. 22,655 509,284 ------------ CHEMICALS - SPECIALTY--0.6% OM Group, Inc.* ................................. 15,500 476,160 ------------ COMPUTER EQUIPMENT & SERVICES--6.5% BISYS Group, Inc., (The)+* ...................... 35,200 621,280 Computer Horizons Corp.* ........................ 234,360 1,000,717 CSG Systems International, Inc.+* ............... 59,100 827,400 Pegasus Solutions, Inc.+* ....................... 63,485 768,168 Pinnacle Systems, Inc.+* ........................ 147,057 1,108,810 TechTeam Global, Inc.+* ......................... 49,000 390,040 ------------ 4,716,415 ------------ COMPUTER SOFTWARE--4.3% i2 Technologies, Inc.* .......................... 319,765 425,287 Onyx Software Corp.* ............................ 84,000 307,440 Peregrine Systems, Inc.+* ....................... 35,800 841,300 Pervasive Software, Inc.+* ...................... 46,500 312,015 Number of Shares Value --------- ------------ COMPUTER SOFTWARE--(CONTINUED) Transaction Systems Architects, Inc., Class A+* ............................... 34,500 $ 620,655 Witness Systems, Inc.+* ......................... 53,765 653,245 ------------ 3,159,942 ------------ CONSUMER SPECIALTIES--0.5% Boyds Collection Ltd., (The)+* .................. 90,420 332,746 ------------ ELECTRONICS--4.6% ActivCard Corp.+* ............................... 74,155 499,063 Cirrus Logic, Inc.+* ............................ 28,300 208,288 CompuCom Systems, Inc.+* ........................ 117,500 645,075 Hypercom Corp.+* ................................ 137,290 944,555 Planar Systems, Inc.+* .......................... 39,965 632,247 White Electronic Designs Corp.+* ................ 52,475 417,701 ------------ 3,346,929 ------------ ENGINEERING & CONSTRUCTION--0.3% Washington Group International, Inc.+* ........................................ 5,000 192,500 ------------ ENVIRONMENTAL CONTROL--1.1% Republic Services, Inc.+ ........................ 31,900 837,056 ------------ FINANCIAL SERVICES--0.3% BKF Capital Group, Inc.* ........................ 9,400 237,350 ------------ FOODS--0.5% Darling International, Inc.* .................... 92,825 248,771 Embrex, Inc.+* .................................. 9,127 100,397 ------------ 349,168 ------------ HEALTH CARE - BIOTECH--1.3% Applera Corp. - Celera Genomics Group+* ....................................... 23,255 337,198 Gene Logic, Inc.+* .............................. 40,185 229,456 SFBC International, Inc.+* ...................... 11,915 356,735 ------------ 923,389 ------------ HEALTH CARE - DRUGS--2.1% Pfizer, Inc.+ ................................... 22,600 828,290 Watson Pharmaceuticals, Inc.+* .................. 15,700 720,944 ------------ 1,549,234 ------------ THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. 12 | SEMI-ANNUAL REPORT 2004 BOSTON PARTNERS FAMILY OF FUNDS FEBRUARY 29, 2004 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- LONG/SHORT EQUITY FUND (Unaudited) (continued) PORTFOLIO OF INVESTMENTS -------------------------------------------------------------------------------- Number of Shares Value --------- ------------ HEALTH CARE - SERVICES--9.3% Apria Healthcare Group, Inc.+* .................. 15,700 $ 490,782 Curative* ....................................... 37,100 448,539 Express Scripts, Inc.+* ......................... 10,700 778,532 Hanger Orthopedic Group, Inc.+* ................. 40,200 651,240 IMPAC Medical Systems, Inc.+* ................... 29,160 726,376 Laboratory Corporation of America Holdings+* ............................ 18,900 740,691 Medical Staffing Network Holdings, Inc.+* .............................. 58,400 532,608 MedQuist, Inc.+* ................................ 23,966 404,546 Odyssey Healthcare, Inc.* ....................... 6,600 143,220 Orthodontic Centers of America, Inc.+* ........................................ 57,600 431,424 Renal Care Group, Inc.+* ........................ 15,500 723,230 US Oncology, Inc.+* ............................. 55,300 688,485 ------------ 6,759,673 ------------ HEALTH CARE - SUPPLIES--4.8% Analogic Corp.+ ................................. 9,029 376,419 Baxter International, Inc.+ ..................... 30,300 882,336 Cytyc Corp.+* ................................... 50,300 828,944 D&K Healthcare Resources, Inc.+ ................. 41,100 402,780 HealthTronics Surgical Services, Inc.+* ........................................ 71,030 457,433 Osteotech, Inc.* ................................ 78,960 525,084 ------------ 3,472,996 ------------ INSURANCE - LIFE--1.2% MONY Group, Inc., (The)+ ........................ 27,900 878,850 ------------ INSURANCE - OTHER--1.5% Assurant, Inc.+* ................................ 29,065 748,133 Bristol West Holdings, Inc.+* ................... 16,035 348,280 ------------ 1,096,413 ------------ INTERNET SERVICES--5.9% Imergent, Inc.+* ................................ 29,625 333,281 IONA Technologies PLC - ADR+* ................... 27,945 198,969 ITXC Corp.+* .................................... 130,100 473,564 Keynote Systems, Inc.+* ......................... 25,600 330,752 Plumtree Software, Inc.+* ....................... 112,910 520,515 Register.com, Inc.+* ............................ 133,220 707,398 Webzen, Inc. - ADR+* ............................ 171,320 1,756,030 ------------ 4,320,509 ------------ Number of Shares Value --------- ------------ LEISURE & LODGING--4.2% Dover Downs Gaming & Entertainment, Inc.+ .......................... 7,500 $ 82,200 Interstate Hotels & Resorts, Inc.+* ........................................ 69,945 408,479 Intrawest Corp.+ ................................ 11,600 205,088 MTR Gaming Group, Inc.+* ........................ 79,770 789,723 Penn National Gaming, Inc.* ..................... 31,400 824,564 Pinnacle Entertainment, Inc.+* .................. 48,780 713,651 ------------ 3,023,705 ------------ MACHINERY--3.0% Federal Signal Corp.+ ........................... 26,820 505,557 Global Power Equipment Group, Inc.+* ........................................ 92,415 996,234 Milacron, Inc. .................................. 232,700 658,541 ------------ 2,160,332 ------------ MANUFACTURING--0.5% Buckeye Technologies, Inc.+* .................... 37,200 350,052 ------------ METALS & MINING--1.8% CONSOL Energy, Inc.+ ............................ 50,635 1,277,521 ------------ OIL & GAS EXPLORATION--5.2% ATP Oil & Gas Corp.* ............................ 67,885 365,221 Canadian Superior Energy, Inc.* ................. 186,720 636,715 Clayton Williams Energy, Inc.+* ................. 5,040 166,320 EnCana Corp.+ ................................... 16,500 716,925 PetroQuest Energy, Inc.* ........................ 100,500 355,770 Pogo Producing Co.+ ............................. 6,900 313,053 Range Resources Corp.+ .......................... 28,400 315,240 Remington Oil & Gas Corp.+* ..................... 31,000 618,450 Resource America, Inc., Class A+ ................ 18,735 310,252 ------------ 3,797,946 ------------ OIL SERVICES--1.9% Todco, Class A+* ................................ 18,525 276,022 Trico Marine Services, Inc.* .................... 155,355 292,067 Veritas DGC, Inc.+* ............................. 26,760 424,949 W-H Energy Services, Inc.+* ..................... 22,275 370,879 ------------ 1,363,917 ------------ PRECIOUS METALS--0.5% Stillwater Mining Co.+* ......................... 31,925 387,569 ------------ THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. SEMI-ANNUAL REPORT 2004 | 13 BOSTON PARTNERS FAMILY OF FUNDS FEBRUARY 29, 2004 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- LONG/SHORT EQUITY FUND (Unaudited) (continued) PORTFOLIO OF INVESTMENTS -------------------------------------------------------------------------------- Number of Shares Value --------- ------------ PUBLISHING--0.7% Catalina Marketing Corp.+* ...................... 30,200 $ 527,594 ------------ REAL ESTATE--1.8% American Financial Realty Trust (REIT) 144A ................................... 51,500 939,875 Texas Pacific Land Trust+ ....................... 6,300 362,880 ------------ 1,302,755 ------------ RESTAURANTS--0.4% Landry's Restaurants, Inc.+ ..................... 5,605 167,309 Total Entertainment Restaurant Corp.* ........................................ 6,540 91,626 ------------ 258,935 ------------ RETAIL - FOOD & DRUG--1.3% PetMed Express, Inc.+* .......................... 18,220 195,683 Winn-Dixie Stores, Inc.+ ........................ 119,500 731,340 ------------ 927,023 ------------ RETAIL - HARD GOODS--3.7% Blockbuster, Inc., Class A+ ..................... 20,000 343,600 Friedman's, Inc., Class A+ ...................... 68,075 494,224 GameStop Corp., Class A+* ....................... 40,000 746,000 Hollywood Entertainment Corp.* .................. 30,800 346,500 Toys "R" Us, Inc.+* ............................. 49,000 769,300 ------------ 2,699,624 ------------ RETAIL - SOFT GOODS--0.6% Circle Group Holdings, Inc.* .................... 10,100 54,136 Wet Seal, Inc., (The), Class A+* ................ 48,100 400,192 ------------ 454,328 ------------ SAVINGS & LOANS--2.0% CFS Bancorp, Inc.+ .............................. 11,400 170,658 Citizens First Bancorp, Inc.+ ................... 7,505 180,870 Franklin Bank Corp.+* ........................... 36,400 692,328 HF Financial Corp. .............................. 6,025 105,437 Home Federal Bancorp ............................ 6,221 169,087 LSB Corp. ....................................... 9,855 175,518 ------------ 1,493,898 ------------ Number of Shares Value --------- ------------ SERVICES - BUSINESS--12.0% 4Kids Entertainment, Inc.+* ..................... 61,440 $ 1,644,749 Answerthink, Inc.+* ............................. 48,385 369,178 Century Business Services, Inc.* ................ 116,900 516,698 Corrections Corporation of America+* ..................................... 42,100 1,413,297 EDGAR Online, Inc.* ............................. 89,565 132,556 EPIQ Systems, Inc.+* ............................ 37,100 654,073 FTI Consulting, Inc.+* .......................... 57,900 950,718 Integrated Alarm Services Group, Inc.+* ........................................ 104,900 945,149 Kforce, Inc.+* .................................. 49,055 488,097 On Assignment, Inc.+* ........................... 39,025 222,052 PRG-Schultz International, Inc.* ................ 198,755 866,572 Watson Wyatt & Co. Holdings+* ................... 21,200 502,440 ------------ 8,705,579 ------------ SERVICES - CONSUMER--1.2% Coinstar, Inc.+* ................................ 49,000 885,430 ------------ TELECOMMUNICATIONS--2.1% Boston Communications Group, Inc.* ......................................... 25,380 273,089 Knology, Inc.+* ................................. 76,700 639,678 MCI, Inc.+* ..................................... 26,900 591,800 ------------ 1,504,567 ------------ TELECOMMUNICATIONS EQUIPMENT--1.3% Centillium Communications, Inc.+* ........................................ 188,500 925,535 ------------ TRUCKING--1.0% Laidlaw International, Inc.+* ................... 51,725 750,013 ------------ TOTAL COMMON STOCK (Cost $61,236,971) .......................... 68,916,159 ------------ THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. 14 | SEMI-ANNUAL REPORT 2004 BOSTON PARTNERS FAMILY OF FUNDS FEBRUARY 29, 2004 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- LONG/SHORT EQUITY FUND (Unaudited) (continued) PORTFOLIO OF INVESTMENTS -------------------------------------------------------------------------------- Par (000) Value --------- ------------ CONVERTIBLE BONDS--0.1% Interpool, Inc. 9.25% 12/27/22 ................................ $75 $ 75,000 ------------ TOTAL CONVERTIBLE BONDS (Cost $75,000) .............................. 75,000 ------------ Number of Shares --------- SHORT-TERM INVESTMENTS--17.9% Galaxy Institutional Money Market Fund 0.970% 03/01/04 ............................... 6,498,714 6,498,714 Wilmington Money Market Fund 0.607% 03/01/04 ............................... 6,498,714 6,498,714 ------------ TOTAL SHORT-TERM INVESTMENTS (Cost $12,997,428) .......................... 12,997,428 ------------ TOTAL LONG POSITIONS--112.8% (Cost $74,309,399) .............................. 81,988,587 ------------ SECURITIES SOLD SHORT--(79.2%) AEROSPACE & DEFENSE--(3.7%) AAR Corp.* ...................................... (22,785) (294,382) Applied Signal Technology, Inc. ................. (9,100) (242,242) BE Aerospace, Inc.* ............................. (25,500) (166,770) Ducommun, Inc.* ................................. (12,760) (286,462) Empresa Brasileira de Aeronautica S.A. (Embraer) - ADR .......................... (8,300) (250,577) Esterline Technologies Corp.* ................... (9,400) (261,320) Goodrich Corp. .................................. (13,500) (398,115) Hexcel Corp.* ................................... (23,630) (178,407) KVH Industries, Inc.* ........................... (28,560) (463,814) Triumph Group, Inc.* ............................ (3,800) (127,110) ------------ (2,669,199) ------------ AIRLINES--(0.6%) Continental Airlines, Inc., Class B* ...................................... (28,600) (418,990) UAL Corp.* ...................................... (1,200) (3,408) ------------ (422,398) ------------ Number of Shares Value --------- ------------ APPAREL--(0.9%) Cherokee, Inc. .................................. (6,900) $ (145,659) Phillips-Van Heusen Corp. ....................... (25,250) (482,780) ------------ (628,439) ------------ AUTOMOTIVE & TRUCKS--(1.4%) DaimlerChrysler AG .............................. (11,700) (525,681) Harley-Davidson, Inc. ........................... (9,500) (504,640) ------------ (1,030,321) ------------ AUTOMOTIVE PARTS & EQUIPMENT--(1.6%) Apogee Enterprises, Inc. ........................ (13,000) (163,930) Collins & Aikman Corp.* ......................... (43,100) (228,861) Dura Automotive Systems, Inc.* .................. (21,700) (277,760) Goodyear Tire & Rubber Co., (The)* ........................................ (16,700) (140,614) Noble International Ltd. ........................ (9,300) (213,621) Sports Resorts International, Inc.* ......................................... (34,600) (162,274) ------------ (1,187,060) ------------ BANKS - REGIONAL--(0.4%) First Tennessee National Corp. .................. (6,900) (319,056) ------------ BEVERAGES--(0.2%) Boston Beer Co., Inc., (The)* ................... (9,435) (167,471) ------------ BROADCASTING--(0.8%) Cox Radio, Inc., Class A* ....................... (6,200) (136,090) Cumulus Media, Inc., Class A* ................... (7,200) (143,280) Entravision Communications Corp., Class A* ............................... (13,600) (130,560) Saga Communications, Inc., Class A* ...................................... (8,000) (148,800) ------------ (558,730) ------------ BUILDING & CONSTRUCTION--(2.3%) Coachmen Industries, Inc. ....................... (8,200) (135,382) Fleetwood Enterprises, Inc.* .................... (12,400) (163,060) Hovnanian Enterprises, Inc., Class A* ...................................... (4,200) (338,898) Meritage Corp.* ................................. (4,700) (348,176) Pulte Homes, Inc. ............................... (7,100) (374,596) Toll Brothers, Inc.* ............................ (7,900) (346,810) ------------ (1,706,922) ------------ THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. SEMI-ANNUAL REPORT 2004 | 15 BOSTON PARTNERS FAMILY OF FUNDS FEBRUARY 29, 2004 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- LONG/SHORT EQUITY FUND (Unaudited) (continued) PORTFOLIO OF INVESTMENTS -------------------------------------------------------------------------------- Number of Shares Value --------- ------------ BUILDING MATERIALS--(0.7%) RTI International Metals, Inc.* ................. (9,600) $ (163,008) Trex Co., Inc.* ................................. (10,700) (375,891) ------------ (538,899) ------------ CHEMICALS - SPECIALTY--(0.6%) Albemarle Corp. ................................. (4,900) (138,425) NOVA Chemicals Corp. ............................ (11,600) (318,420) ------------ (456,845) ------------ COMPUTER EQUIPMENT & SERVICES--(2.3%) Acxiom Corp. .................................... (7,900) (153,892) Carreker Corp.* ................................. (18,300) (242,475) ConSyGen, Inc.* ................................. (200) 0 Dot Hill Systems Corp.* ......................... (17,500) (245,525) Level 3 Communications, Inc.* ................... (108,400) (466,120) ManTech International Corp., Class A* ...................................... (10,000) (208,800) Total Systems Services, Inc. .................... (13,100) (278,113) Xybernaut Corp.* ................................ (35,000) (58,800) ------------ (1,653,725) ------------ COMPUTER SOFTWARE--(1.8%) Altiris, Inc.* .................................. (14,600) (397,850) Magma Design Automation, Inc.* .................. (17,600) (419,232) Mercury Interactive Corp.* ...................... (6,300) (305,802) Red Hat, Inc.* .................................. (10,200) (184,416) ------------ (1,307,300) ------------ CONSUMER PRODUCTS--(0.2%) Libbey, Inc. .................................... (5,300) (150,414) ------------ CONSUMER SPECIALTIES--(0.2%) DHB Industries, Inc.* ........................... (20,500) (115,825) ------------ ELECTRONICS--(8.1%) Cable Design Techologies Corp.* ................. (13,600) (132,600) CEVA, Inc.* ..................................... (12,700) (129,286) EMS Technologies, Inc.* ......................... (13,170) (313,183) Environmental Tectonics Corp.* .................. (19,600) (173,264) FEI Co.* ........................................ (13,200) (300,300) Identix, Inc.* .................................. (29,100) (151,611) Interpharm Holdings, Inc.* ...................... (4,470) (22,842) Intersil Corp., Class A ......................... (17,000) (401,030) Number of Shares Value --------- ------------ ELECTRONICS--(CONTINUED) KEMET Corp.* .................................... (30,900) $ (454,848) Kronos, Inc.* ................................... (4,300) (144,695) Lexar Media, Inc.* .............................. (18,200) (251,160) MagneTek, Inc.* ................................. (23,000) (149,500) Mechanical Technology, Inc.* .................... (38,600) (229,670) Merix Corp.* .................................... (25,300) (622,380) Micrel, Inc.* ................................... (27,100) (407,042) National Instruments Corp. ...................... (5,700) (196,992) Newport Corp.* .................................. (6,900) (120,957) OSI Systems, Inc.* .............................. (7,200) (140,400) Power-One, Inc.* ................................ (26,500) (324,890) Radiant Systems, Inc.* .......................... (18,600) (132,990) Semtech Corp.* .................................. (20,800) (501,696) SureBeam Corp., Class A* ........................ (111,800) (1,453) Veeco Instruments, Inc.* ........................ (14,100) (411,297) Vicor Corp.* .................................... (11,900) (150,535) ------------ (5,864,621) ------------ ENGINEERING & CONSTRUCTION--(0.9%) Insituform Technologies, Inc., Class A* ...................................... (25,700) (404,775) Shaw Group, Inc., (The)* ........................ (22,100) (266,084) ------------ (670,859) ------------ ENVIRONMENTAL CONTROL--(1.7%) Clean Harbors, Inc.* ............................ (31,645) (257,590) Ionics, Inc.* ................................... (8,800) (244,640) Waste Connections, Inc.* ........................ (20,200) (761,136) ------------ (1,263,366) ------------ FINANCIAL SERVICES--(2.2%) Allied Capital Corp. ............................ (10,700) (328,811) Chicago Mercantile Exchange, (The) ......................................... (5,200) (484,900) Harris & Harris Group, Inc. ..................... (15,200) (250,648) NextCard, Inc.* ................................. (128,500) (899) W.P. Stewart & Co. Ltd. ......................... (27,700) (546,798) ------------ (1,612,056) ------------ FOODS--(1.6%) ConAgra Foods, Inc. ............................. (17,000) (462,230) Lifeway Foods, Inc.* ............................ (3,600) (89,820) Peet's Coffee & Tea, Inc.* ...................... (7,000) (143,360) THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. 16 | SEMI-ANNUAL REPORT 2004 BOSTON PARTNERS FAMILY OF FUNDS FEBRUARY 29, 2004 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- LONG/SHORT EQUITY FUND (Unaudited) (continued) PORTFOLIO OF INVESTMENTS -------------------------------------------------------------------------------- Number of Shares Value --------- ------------ FOODS--(CONTINUED) Tootsie Roll Industries, Inc. ................... (8,137) $ (303,103) Wimm-Bill-Dann Foods OJSC - ADR* .......................................... (10,500) (196,665) ------------ (1,195,178) ------------ HEALTH CARE - BIOTECH--(5.5%) Abgenix, Inc.* .................................. (9,700) (142,978) Amylin Pharmaceuticals, Inc.* ................... (15,800) (362,136) Gilead Sciences, Inc.* .......................... (5,300) (287,313) ICOS Corp.* ..................................... (7,500) (287,100) IDEXX Laboratories, Inc.* ....................... (5,700) (291,099) Indevus Pharmaceuticals, Inc.* .................. (20,900) (125,191) Isis Pharmaceuticals, Inc.* ..................... (20,000) (159,000) Medicines Co., (The)* ........................... (4,700) (127,652) Myriad Genetics, Inc.* .......................... (9,500) (155,800) NaPro BioTherapeutics, Inc.* .................... (96,900) (266,475) NeoPharm, Inc.* ................................. (16,400) (344,728) Neurocrine Biosciences, Inc.* ................... (5,000) (278,000) NPS Pharmaceuticals, Inc.* ...................... (4,300) (128,871) OSI Pharmaceuticals, Inc.* ...................... (4,600) (150,650) Q-Med, Inc.* .................................... (13,400) (130,248) Regeneron Pharmaceuticals, Inc.* ................ (9,200) (130,824) SuperGen, Inc.* ................................. (28,385) (221,403) Vertex Pharmaceuticals, Inc.* ................... (14,800) (166,944) Vicuron Pharmaceuticals, Inc.* .................. (10,700) (251,236) ------------ (4,007,648) ------------ HEALTH CARE - DRUGS--(1.2%) Columbia Laboratories, Inc.* .................... (22,900) (135,339) Connectics Corp.* ............................... (17,000) (374,510) Inspire Pharmaceuticals, Inc.* .................. (10,900) (149,439) Zila, Inc.* ..................................... (43,520) (189,312) ------------ (848,600) ------------ HEALTH CARE - SERVICES--(1.8%) Alderwoods Group, Inc.* ......................... (32,900) (305,312) America Service Group, Inc.* .................... (9,480) (305,351) MedCath Corp.* .................................. (12,100) (179,818) Merge Technologies, Inc.* ....................... (7,800) (111,774) Oxford Health Plans, Inc.* ...................... (5,200) (249,392) TriZetto Group, Inc., (The)* .................... (23,400) (162,396) ------------ (1,314,043) ------------ Number of Shares Value --------- ------------ HEALTH CARE - SUPPLIES--(4.7%) Align Technology, Inc.* ......................... (7,000) $ (138,110) Bio-Rad Laboratories, Inc., Class A* ...................................... (11,900) (619,990) BriteSmile, Inc.* ............................... (22,210) (281,179) Conceptus, Inc.* ................................ (15,200) (141,056) CTI Molecular Imaging, Inc.* .................... (18,900) (321,300) Diagnostic Products Corp. ....................... (9,000) (434,160) Digene Corp.* ................................... (6,800) (258,400) DJ Orthopedics, Inc.* ........................... (14,700) (323,400) Flamel Technologies S.A. - ADR* ................. (6,600) (161,634) Immucor, Inc.* .................................. (15,820) (319,248) Penwest Pharmaceuticals Co.* .................... (8,000) (133,520) STAAR Surgical Co.* ............................. (34,880) (271,366) ------------ (3,403,363) ------------ INSURANCE - OTHER--(0.8%) 21st Century Insurance Group .................... (10,400) (152,048) Harleysville Group, Inc. ........................ (7,200) (140,832) Progressive Corp., (The) ........................ (3,700) (305,842) ------------ (598,722) ------------ INTERNET SERVICES--(2.0%) Digital Insight Corp.* .......................... (13,100) (283,746) eCollege.com* ................................... (21,200) (425,060) Interliant, Inc.* ............................... (600) (1) Lionbridge Technologies, Inc.* .................. (21,100) (174,497) Stellent, Inc.* ................................. (18,000) (159,300) webMethods, Inc.* ............................... (13,500) (143,100) Zix Corp.* ...................................... (24,960) (299,520) ------------ (1,485,224) ------------ LEISURE & LODGING--(1.3%) Extended Stay America, Inc.* .................... (20,200) (313,908) Polaris Industries, Inc. ........................ (5,300) (448,857) Starwood Hotels & Resorts Worldwide, Inc. ............................... (4,700) (183,347) ------------ (946,112) ------------ MACHINERY--(2.2%) EnPro Industries, Inc.* ......................... (10,000) (196,000) Flowserve Corp.* ................................ (6,900) (149,937) Lincoln Electric Holdings, Inc. ................. (18,230) (475,985) PACCAR, Inc. .................................... (4,650) (257,657) THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. SEMI-ANNUAL REPORT 2004 | 17 BOSTON PARTNERS FAMILY OF FUNDS FEBRUARY 29, 2004 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- LONG/SHORT EQUITY FUND (Unaudited) (continued) PORTFOLIO OF INVESTMENTS -------------------------------------------------------------------------------- Number of Shares Value --------- ------------ MACHINERY--(CONTINUED) Robbins & Myers, Inc. ........................... (7,800) $ (158,340) Trinity Industries, Inc. ........................ (4,400) (128,040) Wabash National Corp.* .......................... (9,100) (258,895) ------------ (1,624,854) ------------ MANUFACTURING--(0.4%) Lydall, Inc.* ................................... (14,100) (143,115) Walter Industries, Inc. ......................... (11,500) (130,985) ------------ (274,100) ------------ MEDIA & ENTERTAINMENT--(1.1%) New Frontier Media, Inc.* ....................... (34,800) (295,452) TiVo, Inc.* ..................................... (46,000) (491,740) ------------ (787,192) ------------ OIL SERVICES--(0.7%) Helmerich & Payne, Inc. ......................... (5,400) (160,488) Noble Corp.* .................................... (4,000) (162,400) SEACOR SMIT, Inc.* .............................. (3,600) (158,580) ------------ (481,468) ------------ PAPER FOREST PRODUCTS & PACKAGING--(1.7%) Caraustar Industries, Inc.* ..................... (29,800) (357,004) Glatfelter ...................................... (11,900) (138,635) International Paper Co. ......................... (3,400) (150,484) Mobile Mini, Inc.* .............................. (13,900) (258,262) Myers Industries, Inc. .......................... (11,900) (146,251) Pope & Talbot, Inc. ............................. (8,700) (149,640) ------------ (1,200,276) ------------ PUBLISHING--(0.8%) Dow Jones & Co., Inc. ........................... (8,500) (413,950) Scripps (E.W.) Co., (The), Class A .............. (1,600) (155,776) ------------ (569,726) ------------ RAILROAD & BULK SHIPPING--(0.2%) Kansas City Southern* ........................... (10,200) (143,310) ------------ REAL ESTATE--(0.4%) Shurgard Storage Centers, Inc., Class A (REIT) ................................ (8,100) (301,725) ------------ Number of Shares Value --------- ------------ RECREATIONAL PRODUCTS - TOYS--(1.6%) Electronic Arts, Inc.* .......................... (10,100) $ (476,316) K2, Inc.* ....................................... (17,600) (304,832) Marvel Enterprises, Inc.* ....................... (10,100) (345,925) ------------ (1,127,073) ------------ RESTAURANTS--(2.2%) California Pizza Kitchen, Inc.* ................. (8,300) (152,305) Cheesecake Factory, Inc., (The)* ................ (3,500) (165,305) Chicago Pizza & Brewery, Inc.* .................. (13,800) (201,204) CKE Restaurants, Inc.* .......................... (38,700) (334,755) Panera Bread Co., Class A* ...................... (14,500) (562,020) Ryan's Family Steak Houses, Inc.* ............... (8,800) (153,120) ------------ (1,568,709) ------------ RETAIL - FOOD & DRUG--(1.6%) Pathmark Stores, Inc.* .......................... (21,900) (180,675) Safeway, Inc.* .................................. (18,900) (432,243) United Natural Foods, Inc.* ..................... (3,790) (174,908) Whole Foods Market, Inc. ........................ (3,400) (262,990) Wild Oats Markets, Inc.* ........................ (11,400) (144,780) ------------ (1,195,596) ------------ RETAIL - HARD GOODS--(1.1%) A.C. Moore Arts & Crafts, Inc.* ................. (6,800) (154,700) AutoNation, Inc.* ............................... (18,100) (301,908) CarMax, Inc.* ................................... (4,600) (156,400) Pep Boys - Manny, Moe & Jack, (The) ......................................... (7,500) (176,925) ------------ (789,933) ------------ RETAIL - SOFT GOODS--(2.3%) 99 Cents Only Stores* ........................... (5,500) (142,175) Alloy, Inc.* .................................... (27,300) (146,328) Big Lots, Inc.* ................................. (20,000) (288,000) Charlotte Russe Holding, Inc.* .................. (11,600) (176,088) Netflix, Inc.* .................................. (16,900) (581,360) Retail Ventures, Inc.* .......................... (27,300) (163,254) ValueVision Media, Inc., Class A* ............... (8,800) (146,960) ------------ (1,644,165) ------------ THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. 18 | SEMI-ANNUAL REPORT 2004 BOSTON PARTNERS FAMILY OF FUNDS FEBRUARY 29, 2004 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- LONG/SHORT EQUITY FUND (Unaudited) (concluded) PORTFOLIO OF INVESTMENTS -------------------------------------------------------------------------------- Number of Shares Value --------- ------------ SAVINGS & LOANS--(0.4%) Capitol Federal Financial ....................... (4,000) $ (147,600) First Indiana Corp. ............................. (7,800) (169,182) ------------ (316,782) ------------ SERVICES - BUSINESS--(3.9%) Administaff, Inc.* .............................. (16,100) (242,305) CDI Corp. ....................................... (8,155) (234,864) Deluxe Corp. .................................... (8,800) (346,544) Iron Mountain, Inc.* ............................ (3,600) (161,460) Learning Tree International, Inc.* .............. (8,000) (136,320) MAXIMUS, Inc.* .................................. (7,460) (260,354) PLATO Learning, Inc.* ........................... (12,000) (157,800) Robert Half International, Inc.* ................ (13,200) (296,604) SM&A* ........................................... (20,070) (208,929) Stamps.com, Inc.* ............................... (21,800) (123,824) Steelcase, Inc., Class A ........................ (11,100) (156,510) United Stationers, Inc.* ........................ (8,900) (353,419) Wireless Facilities, Inc.* ...................... (11,300) (147,691) ------------ (2,826,624) ------------ SERVICES - CONSUMER--(3.5%) Bankrate, Inc.* ................................. (46,030) (734,132) DeVry, Inc.* .................................... (20,000) (594,400) Greg Manning Auctions, Inc.* .................... (15,870) (183,140) Rollins, Inc. ................................... (12,400) (288,052) Strayer Education, Inc. ......................... (6,900) (749,754) ------------ (2,549,478) ------------ SOAPS & TOILETRIES--(0.6%) Inter Parfums, Inc. ............................. (15,795) (442,260) ------------ TELECOMMUNICATIONS--(0.4%) Choice One Communications, Inc.* ......................................... (41,800) (35,530) CTC Communications Group, Inc.*[] ....................................... (184,600) (18) SBA Communications Corp.* ....................... (29,400) (129,948) SureWest Communications ......................... (3,800) (123,842) WorldCom, Inc. - WorldCom Group* ........................................ (147,900) (3,417) ------------ (292,755) ------------ Number of Shares Value --------- ------------ TELECOMMUNICATIONS EQUIPMENT--(2.5%) CIENA Corp.* .................................... (18,700) $ (107,151) Extreme Networks, Inc.* ......................... (17,700) (142,485) Inter-Tel, Inc. ................................. (20,590) (622,848) Symmetricom, Inc.* .............................. (14,100) (129,438) Trimble Navigation Ltd.* ........................ (8,595) (284,838) UTStarcom, Inc.* ................................ (15,700) (520,157) ------------ (1,806,917) ------------ UTILITIES - ELECTRIC--(1.5%) Cleco Corp. ..................................... (8,000) (151,760) Northeast Utilities ............................. (15,400) (296,296) Reliant Resources, Inc.* ........................ (62,400) (474,240) TECO Energy, Inc. ............................... (10,400) (156,728) ------------ (1,079,024) ------------ UTILITIES - GAS & WATER--(0.6%) Dynegy, Inc., Class A* .......................... (43,200) (176,688) Nicor, Inc. ..................................... (7,100) (256,594) ------------ (433,282) ------------ TOTAL SECURITIES SOLD SHORT (Proceeds $58,866,173) ...................... (57,577,645) ------------ OTHER ASSETS IN EXCESS OF LIABILITIES--66.4% ........................... 48,300,668 ------------ NET ASSETS--100.0% ................................. $ 72,711,610 ============ -------------- * -- Non-income producing. [] -- Security is valued at fair market value as determined in good faith by or under the direction of RBB's Board of Directors. + -- Security position is either entirely or partially held in a segregated account as collateral for securities sold short aggregating a total market value of $59,441,735. ADR -- American Depository Receipt. 144A -- Security was purchased pursuant to Rule 144A under Securities Act of 1933 and may not be resold subject to that rule except to qualified institutional buyers. As of February 29, 2004, these securities amounted to 1.29% of net assets. REIT -- Real Estate Investment Trust. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. SEMI-ANNUAL REPORT 2004 | 19 BOSTON PARTNERS FAMILY OF FUNDS FEBRUARY 29, 2004 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- LARGE CAP VALUE FUND (Unaudited) PORTFOLIO OF INVESTMENTS -------------------------------------------------------------------------------- Number of Shares Value --------- ----------- COMMON STOCK--97.8% AEROSPACE & DEFENSE--1.7% Alliant Techsystems, Inc.* ...................... 5,500 $ 314,050 Lockheed Martin Corp. ........................... 14,200 657,176 ----------- 971,226 ----------- APPAREL--1.9% Liz Claiborne, Inc. ............................. 16,000 590,400 Reebok International Ltd. ....................... 12,600 501,606 ----------- 1,092,006 ----------- BANKS - MAJOR--2.0% Comerica, Inc. .................................. 14,900 857,346 National City Corp. ............................. 7,900 282,030 ----------- 1,139,376 ----------- BUILDING MATERIALS--1.4% Masco Corp. ..................................... 10,400 291,616 Mohawk Industries, Inc.* ........................ 6,200 516,460 ----------- 808,076 ----------- COMPUTER EQUIPMENT & SERVICES--1.9% Accenture Ltd., Class A* ........................ 8,400 194,040 Hewlett-Packard Co. ............................. 39,400 894,774 ----------- 1,088,814 ----------- COMPUTER SOFTWARE--2.1% BMC Software, Inc.* ............................. 16,700 327,320 Microsoft Corp. ................................. 33,200 879,800 ----------- 1,207,120 ----------- ELECTRONICS--2.9% Xerox Corp.* .................................... 115,600 1,634,584 ----------- ENVIRONMENTAL CONTROL--0.5% Republic Services, Inc. ......................... 9,900 259,776 ----------- FINANCIAL SERVICES--13.0% Citigroup, Inc. ................................. 32,599 1,638,426 Countrywide Financial Corp. ..................... 15,233 1,395,800 Fannie Mae ...................................... 9,800 734,020 Freddie Mac ..................................... 31,300 1,938,096 Number of Shares Value --------- ----------- FINANCIAL SERVICES--(CONTINUED) Goldman Sachs Group, Inc. (The) ................. 4,200 $ 444,654 J.P. Morgan Chase & Co. ......................... 29,500 1,210,090 ----------- 7,361,086 ----------- FOODS--2.2% H.J. Heinz Co. .................................. 11,800 450,878 PepsiCo, Inc. ................................... 10,100 524,190 Smithfield Foods, Inc.* ......................... 11,100 283,938 ----------- 1,259,006 ----------- HEALTH CARE - DRUGS--6.0% Johnson & Johnson ............................... 9,000 485,190 Merck & Co., Inc. ............................... 11,600 557,728 Pfizer, Inc. .................................... 40,600 1,487,990 Shire Pharmaceuticals Group PLC - ADR* .................................... 27,300 844,116 ----------- 3,375,024 ----------- HEALTH CARE - SERVICES--1.6% Aetna, Inc. ..................................... 10,900 880,611 ----------- HEALTH CARE - SUPPLIES--1.9% Beckman Coulter, Inc. ........................... 5,000 262,900 Becton, Dickinson and Co. ....................... 16,300 792,995 ----------- 1,055,895 ----------- INSURANCE--13.7% ACE Ltd. ........................................ 32,000 1,438,720 American International Group, Inc. .......................................... 12,595 932,030 Berkshire Hathaway, Inc., Class B* ...................................... 490 1,535,170 MBIA, Inc. ...................................... 24,450 1,608,565 Nationwide Financial Services, Inc., Class A ....................................... 8,300 315,732 Radian Group, Inc. .............................. 17,600 769,120 Travelers Property Casualty Corp., Class A ................................ 47,249 858,042 XL Capital Ltd., Class A ........................ 3,600 275,976 ----------- 7,733,355 ----------- THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. 20 | SEMI-ANNUAL REPORT 2004 BOSTON PARTNERS FAMILY OF FUNDS FEBRUARY 29, 2004 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- LARGE CAP VALUE FUND (Unaudited) (continued) PORTFOLIO OF INVESTMENTS -------------------------------------------------------------------------------- Number of Shares Value --------- ----------- LEISURE & LODGING--1.6% GTECH Holdings Corp. ............................ 5,400 $ 317,142 Harrah's Entertainment, Inc. .................... 11,300 587,035 ----------- 904,177 ----------- MANUFACTURING--3.8% American Power Conversion Corp. ......................................... 11,900 269,178 ITT Industries, Inc. ............................ 7,600 573,800 Tyco International Ltd. ......................... 45,500 1,299,935 ----------- 2,142,913 ----------- MEDIA & ENTERTAINMENT--1.5% Liberty Media Corp., Class A* ................... 73,932 842,825 ----------- OIL & GAS - INTEGRATED MAJORS--7.4% ChevronTexaco Corp. ............................. 15,900 1,404,765 ConocoPhillips .................................. 13,300 915,971 Exxon Mobil Corp. ............................... 21,900 923,523 Petroleo Brasileiro S.A. - ADR .................. 20,900 652,080 Shell Transport & Trading Co. PLC - ADR ..................................... 6,600 277,794 ----------- 4,174,133 ----------- OIL & GAS - REFINING & MARKETING--2.9% Ashland, Inc. ................................... 9,400 450,354 Marathon Oil Corp. .............................. 33,700 1,184,218 ----------- 1,634,572 ----------- OIL & GAS EXPLORATION--4.9% Anadarko Petroleum Corp. ........................ 11,900 609,875 Canadian Natural Resources Ltd. ................. 17,300 948,559 Kerr-McGee Corp. ................................ 22,800 1,191,300 ----------- 2,749,734 ----------- OIL SERVICES--2.5% Transocean, Inc.* ............................... 47,900 1,412,092 ----------- PAPER FOREST PRODUCTS & PACKAGING--1.3% Abitibi-Consolidated, Inc. ...................... 59,500 471,240 Smurfit-Stone Container Corp.* .................. 14,600 270,976 ----------- 742,216 ----------- Number of Shares Value --------- ----------- RECREATIONAL PRODUCTS - TOYS--1.9% Hasbro, Inc. .................................... 26,100 $ 570,807 Mattel, Inc. .................................... 25,600 486,400 ----------- 1,057,207 ----------- RESTAURANTS--0.6% McDonald's Corp. ................................ 12,100 342,430 ----------- RETAIL - FOOD & DRUG--1.3% CVS Corp. ....................................... 18,900 708,750 ----------- RETAIL - HARD GOODS--1.2% RadioShack Corp. ................................ 20,400 705,024 ----------- RETAIL - SOFT GOODS--0.8% Limited Brands .................................. 23,100 456,225 ----------- SOAPS & TOILETRIES--2.1% Avon Products, Inc. ............................. 3,600 254,160 Procter & Gamble Co., (The) ..................... 9,200 943,092 ----------- 1,197,252 ----------- TELECOMMUNICATIONS--7.1% AT&T Wireless Services, Inc.* ................... 41,400 562,212 BellSouth Corp. ................................. 29,800 821,288 CenturyTel, Inc. ................................ 23,200 662,824 Chunghwa Telecom Co. Ltd. - ADR ........................................... 30,300 498,132 Nextel Communications, Inc., Class A* ...................................... 15,900 421,191 SBC Communications, Inc. ........................ 21,600 518,616 Vodafone Group PLC - ADR ........................ 22,000 549,340 ----------- 4,033,603 ----------- TOBACCO--2.6% Altria Group, Inc. .............................. 11,100 638,805 UST, Inc. ....................................... 21,500 818,720 ----------- 1,457,525 ----------- THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. SEMI-ANNUAL REPORT 2004 | 21 BOSTON PARTNERS FAMILY OF FUNDS FEBRUARY 29, 2004 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- LARGE CAP VALUE FUND (Unaudited) (concluded) PORTFOLIO OF INVESTMENTS -------------------------------------------------------------------------------- Number of Shares Value --------- ----------- UTILITIES - ELECTRIC--1.5% DTE Energy Co. .................................. 8,000 $ 323,680 NSTAR ........................................... 10,300 526,845 ----------- 850,525 ----------- TOTAL COMMON STOCK (Cost $45,128,296) .......................... 55,277,158 ----------- SHORT TERM INVESTMENTS--2.2% Galaxy Institutional Money Market Fund 0.970% 03/01/04 ............................... 617,487 617,487 Wilmington Money Market Fund 0.607% 03/01/04 ............................... 617,488 617,488 ----------- TOTAL SHORT TERM INVESTMENTS (Cost $1,234,975) ........................... 1,234,975 ----------- TOTAL INVESTMENTS--100.0% (Cost $46,363,271) .............................. 56,512,133 ----------- OTHER ASSETS IN EXCESS OF LIABILITIES--0.0% ............................ 26,547 ----------- NET ASSETS--100.0% ................................. $56,538,680 =========== ---------- * -- Non-income producing. ADR -- American Depository Receipt. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. 22 | SEMI-ANNUAL REPORT 2004 BOSTON PARTNERS FAMILY OF FUNDS FEBRUARY 29, 2004 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- MID CAP VALUE FUND (Unaudited) PORTFOLIO OF INVESTMENTS -------------------------------------------------------------------------------- Number of Shares Value --------- ----------- COMMON STOCK--96.6% APPAREL--0.5% V. F. Corp. ..................................... 6,100 $ 274,073 ----------- AUTOMOTIVE PARTS & EQUIPMENT--0.9% Lear Corp. ...................................... 8,700 536,181 ----------- BANKS - MAJOR--0.3% Popular, Inc. ................................... 4,600 206,080 ----------- BANKS - REGIONAL--0.4% Associated Banc-Corp ............................ 5,280 234,379 ----------- CHEMICALS - COMMODITY--1.4% Eastman Chemical Co. ............................ 13,000 550,550 Engelhard Corp. ................................. 10,500 304,710 ----------- 855,260 ----------- CHEMICALS - SPECIALTY--1.9% Ferro Corp. ..................................... 22,000 572,000 Georgia Gulf Corp.* ........................... 19,300 525,153 ----------- 1,097,153 ----------- COMPUTER EQUIPMENT & SERVICES--2.1% BearingPoint, Inc.* ............................. 58,015 617,860 BISYS Group, Inc., (The)* ....................... 36,200 638,930 ----------- 1,256,790 ----------- COMPUTER SOFTWARE--2.2% Network Associates, Inc.* ....................... 43,587 764,516 Sybase, Inc.* ................................... 24,445 525,812 ----------- 1,290,328 ----------- CONSUMER PRODUCTS--0.5% Newell Rubbermaid, Inc. ......................... 12,500 319,875 ----------- ELECTRONICS--3.8% Amis Holdings, Inc.* ............................ 25,600 451,840 Arrow Electronics, Inc.* ........................ 20,500 504,300 Avnet, Inc.* .................................... 20,700 487,485 Diebold, Inc. ................................... 12,800 674,432 Molex, Inc., Class A ............................ 3,970 105,721 ----------- 2,223,778 ----------- Number of Shares Value --------- ----------- FINANCIAL SERVICES--3.4% A.G. Edwards, Inc. .............................. 18,800 $ 719,100 Affiliated Managers Group, Inc.* ................ 11,500 971,750 Student Loan Corp., (The) ....................... 1,900 291,859 ----------- 1,982,709 ----------- FOODS--5.7% Bunge Ltd. ...................................... 17,700 691,185 Delta and Pine Land Co. ......................... 26,700 680,850 Hormel Foods Corp. .............................. 15,700 435,204 McCormick & Co., Inc. ........................... 11,400 356,478 Smithfield Foods, Inc.* ......................... 47,700 1,220,166 ----------- 3,383,883 ----------- HEALTH CARE - DRUGS--0.5% Shire Pharmaceuticals Group PLC - ADR* .................................... 10,400 321,568 ----------- HEALTH CARE - SERVICES--4.2% Apria Healthcare Group, Inc.* ................... 19,105 597,222 Express Scripts, Inc.* .......................... 10,200 742,152 Manor Care, Inc. ................................ 7,500 265,575 WellChoice, Inc.* ............................... 23,800 879,172 ----------- 2,484,121 ----------- HEALTH CARE - SUPPLIES--3.7% C.R. Bard, Inc. ................................. 7,000 660,730 Edwards Lifesciences Corp.* ..................... 24,000 772,800 Pall Corp. ...................................... 28,000 732,760 ----------- 2,166,290 ----------- INSURANCE - OTHER--13.8% Allmerica Financial Corp.* ...................... 11,970 441,454 Ambac Financial Group, Inc. ..................... 6,900 539,580 Assurant, Inc.* ................................. 12,900 332,046 Bristol West Holdings, Inc.* .................... 14,600 317,112 IPC Holdings Ltd. ............................... 8,900 346,655 MBIA, Inc. ...................................... 10,000 657,900 Mercury General Corp. ........................... 32,965 1,684,511 Nationwide Financial Services, Inc., Class A ....................................... 16,755 637,360 PartnerRe Ltd. .................................. 4,290 236,980 PMI Group, Inc., (The) .......................... 18,100 716,760 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. SEMI-ANNUAL REPORT 2004 | 23 BOSTON PARTNERS FAMILY OF FUNDS FEBRUARY 29, 2004 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- MID CAP VALUE FUND (Unaudited) (continued) PORTFOLIO OF INVESTMENTS -------------------------------------------------------------------------------- Number of Shares Value --------- ----------- INSURANCE - OTHER--(CONTINUED) Radian Group, Inc. .............................. 31,300 $ 1,367,810 White Mountains Insurance Group Ltd. .................................... 1,755 856,493 ----------- 8,134,661 ----------- INSURANCE - LIFE--0.7% UnumProvident Corp. ............................. 28,500 422,370 ----------- INTERNET SERVICES--1.0% EarthLink, Inc.* ................................ 64,700 590,711 ----------- IRON & STEEL--0.7% Nucor Corp. ..................................... 6,900 434,010 ----------- LEISURE & LODGING--3.3% Argosy Gaming Co.* .............................. 8,000 247,520 Harrah's Entertainment, Inc. .................... 11,900 618,205 Hilton Hotels Corp. ............................. 48,000 769,440 Penn National Gaming, Inc.* ..................... 12,900 338,754 ----------- 1,973,919 ----------- MACHINERY--2.7% Terex Corp.* .................................... 19,120 669,773 W.W. Grainger, Inc. ............................. 19,295 911,689 ----------- 1,581,462 ----------- MANUFACTURING--4.0% Dover Corp. ..................................... 21,700 850,423 ITT Industries, Inc. ............................ 8,400 634,200 Spartech Corp. .................................. 37,300 881,399 ----------- 2,366,022 ----------- OIL & GAS EXPLORATION--1.0% Kerr-McGee Corp. ................................ 10,800 564,300 ----------- OIL SERVICES--3.1% Diamond Offshore Drilling, Inc. ................. 14,300 357,643 ENSCO International, Inc. ....................... 29,900 878,163 Nabors Industries Ltd.* ......................... 12,400 587,140 ----------- 1,822,946 ----------- Number of Shares Value --------- ----------- PAPER FOREST PRODUCTS & PACKAGING--2.3% Abitibi-Consolidated, Inc. ...................... 38,200 $ 302,544 Pactiv Corp.* ................................... 11,600 249,284 Sealed Air Corp.* ............................... 15,700 782,645 ----------- 1,334,473 ----------- PUBLISHING--4.2% Catalina Marketing Corp.* ....................... 31,200 545,064 Lamar Advertising Co.* .......................... 19,405 770,378 Media General, Inc., Class A .................... 7,100 460,080 Valassis Communications, Inc.* .................. 23,700 721,665 ----------- 2,497,187 ----------- REAL ESTATE--2.6% Maguire Properties, Inc. (REIT) ................. 23,625 581,175 St. Joe Co., (The) ............................. 11,700 479,466 Ventas, Inc. (REIT) ............................ 18,350 485,358 ----------- 1,545,999 ----------- RECREATIONAL PRODUCTS - TOYS--3.3% Brunswick Corp. ................................. 18,000 708,480 Leapfrog Enterprises, Inc.* ..................... 27,100 697,825 WMS Industries, Inc.* ........................... 19,975 530,736 ----------- 1,937,041 ----------- RESTAURANTS--0.7% Wendy's International, Inc. ..................... 10,600 431,102 ----------- RETAIL - HARD GOODS--3.9% Blockbuster, Inc., Class A ...................... 33,200 570,376 Hollywood Entertainment Corp.* .................. 67,200 756,000 Michaels Stores, Inc. ........................... 19,800 951,192 ----------- 2,277,568 ----------- RETAIL - SOFT GOODS--3.0% Abercrombie & Fitch Co., Class A* ...................................... 22,300 703,119 Foot Locker, Inc. ............................... 25,600 670,720 Payless ShoeSource, Inc.* ....................... 30,300 404,505 ----------- 1,778,344 ----------- THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. 24 | SEMI-ANNUAL REPORT 2004 BOSTON PARTNERS FAMILY OF FUNDS FEBRUARY 29, 2004 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- MID CAP VALUE FUND (Unaudited) (concluded) PORTFOLIO OF INVESTMENTS -------------------------------------------------------------------------------- Number of Shares Value --------- ----------- SAVINGS & LOANS--1.4% Westcorp ........................................ 19,500 $ 834,600 ----------- SERVICES - BUSINESS--2.8% Sirva, Inc.* .................................... 26,600 591,052 Viad Corp. ...................................... 43,300 1,058,685 ----------- 1,649,737 ----------- SOAPS & TOILETRIES--2.2% Dial Corp., (The) ............................... 44,500 1,278,930 ----------- TELECOMMUNICATIONS--1.9% CenturyTel, Inc. ................................ 27,500 785,675 PanAmSat Corp.* ................................. 14,200 324,470 ----------- 1,110,145 ----------- TOBACCO--1.6% Loews Corp. - Carolina Group .................... 32,200 915,446 ----------- TRUCKING--0.7% Laidlaw International, Inc.* .................... 29,200 423,400 ----------- UTILITIES - ELECTRIC--4.2% Constellation Energy Group, Inc. ................ 11,700 465,075 NSTAR ........................................... 6,100 312,015 Pinnacle West Capital Corp. ..................... 9,500 371,355 PPL Corp. ....................................... 8,500 395,505 Sierra Pacific Resources* ....................... 112,900 909,974 ----------- 2,453,924 ----------- TOTAL COMMON STOCK (Cost $44,074,695) .......................... 56,990,765 ----------- Number of Shares Value --------- ----------- SHORT TERM INVESTMENTS--3.6% Galaxy Institutional Money Market Fund 0.970% 03/01/04 ............................... 1,065,192 $ 1,065,192 Wilmington Money Market Fund 0.607% 03/01/04 ............................... 1,065,192 1,065,192 ----------- TOTAL SHORT TERM INVESTMENTS (Cost $2,130,384) ........................... 2,130,384 ----------- TOTAL INVESTMENTS--100.2% (Cost $46,205,079) .............................. 59,121,149 ----------- LIABILITIES IN EXCESS OF OTHER ASSETS--(0.2)% ............................ (103,675) ----------- NET ASSETS--100.0% ................................. $59,017,474 =========== ---------- * -- Non-income producing. ADR -- American Depository Receipt. REIT -- Real Estate Investment Trust. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. SEMI-ANNUAL REPORT 2004 | 25 BOSTON PARTNERS FAMILY OF FUNDS FEBRUARY 29, 2004 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- ALL-CAP VALUE FUND (Unaudited) PORTFOLIO OF INVESTMENTS -------------------------------------------------------------------------------- Number of Shares Value --------- ---------- COMMON STOCK--91.5% AIRLINES--0.5% ExpressJet Holdings, Inc.* ...................... 1,810 $ 24,851 ---------- APPAREL--3.9% Jones Apparel Group, Inc. ....................... 1,350 50,355 Liz Claiborne, Inc. ............................. 1,320 48,708 Polo Ralph Lauren Corp. ......................... 475 15,946 Reebok International Ltd. ....................... 1,085 43,194 V. F. Corp. ..................................... 425 19,095 ---------- 177,298 ---------- BEVERAGES--0.2% Constellation Brands, Inc., Class A* ............ 335 10,619 ---------- BUILDING MATERIALS--1.0% Makita Corp. - ADR .............................. 2,560 30,464 Watsco, Inc. .................................... 635 17,374 ---------- 47,838 ---------- COMPUTER EQUIPMENT & SERVICES--2.2% Global Payments, Inc. ........................... 790 34,175 Hewlett-Packard Co. ............................. 2,145 48,713 Perot Systems Corp., Class A* ................... 1,300 17,966 ---------- 100,854 ---------- COMPUTER SOFTWARE--1.6% BMC Software, Inc.* ............................. 2,700 52,920 Microsoft Corp. ................................. 720 19,080 ---------- 72,000 ---------- CONSUMER PRODUCTS--0.4% National Presto Industries, Inc. ................ 505 19,463 ---------- ELECTRONICS--0.3% Amphenol Corp., Class A ......................... 250 15,462 ---------- FINANCIAL SERVICES--9.4% AmeriCredit Corp.* .............................. 1,800 34,236 BKF Capital Group, Inc.* ........................ 475 11,994 Countrywide Financial Corp. ..................... 1,413 129,473 Fannie Mae ...................................... 765 57,298 Freddie Mac ..................................... 1,650 102,168 Leucadia National Corp. ......................... 720 37,440 Number of Shares Value --------- ---------- FINANCIAL SERVICES--(CONTINUED) MCG Capital Corp. ............................... 690 $ 13,697 Wesco Financial Corp. ........................... 115 44,016 ---------- 430,322 ---------- FOODS--1.3% Lancaster Colony Corp. .......................... 790 33,488 Nestle S.A. - ADR ............................... 375 24,728 ---------- 58,216 ---------- HEALTH CARE - DRUGS--5.1% Bristol-Myers Squibb Co. ........................ 1,155 32,132 Johnson & Johnson ............................... 335 18,060 Merck & Co., Inc. ............................... 900 43,272 Pfizer, Inc. .................................... 1,686 61,792 Shire Pharmaceuticals Group PLC - ADR* .................................... 2,580 79,773 ---------- 235,029 ---------- HEALTH CARE - SERVICES--3.3% Kindred Healthcare, Inc.* ....................... 690 40,621 Lincare Holdings, Inc.* ......................... 1,295 41,880 Renal Care Group, Inc.* ......................... 1,435 66,957 ---------- 149,458 ---------- HEALTH CARE - SUPPLIES--3.5% Alcon, Inc. ..................................... 410 25,772 Becton, Dickinson and Co. ....................... 995 48,407 C.R. Bard, Inc. ................................. 435 41,060 INAMED Corp.* ................................... 982 47,038 ---------- 162,277 ---------- INSURANCE - LIFE--1.1% Scottish Re Group Ltd. .......................... 2,070 48,811 ---------- INSURANCE - OTHER--16.9% ACE Ltd. ........................................ 3,485 156,686 Alleghany Corp.* ................................ 315 74,053 Allmerica Financial Corp.* ...................... 1,050 38,724 American Physicians Capital, Inc.* .............. 1,320 26,928 Assurant, Inc.* ................................. 1,295 33,333 IPC Holdings Ltd. ............................... 1,670 65,046 MBIA, Inc. ...................................... 1,090 71,711 Merchants Group, Inc. ........................... 70 1,731 THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. 26 | SEMI-ANNUAL REPORT 2004 BOSTON PARTNERS FAMILY OF FUNDS FEBRUARY 29, 2004 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- ALL-CAP VALUE FUND (Unaudited) (continued) PORTFOLIO OF INVESTMENTS -------------------------------------------------------------------------------- Number of Shares Value --------- ---------- INSURANCE - OTHER--(CONTINUED) Millea Holdings, Inc. - ADR ..................... 210 $ 13,537 PartnerRe Ltd. .................................. 270 14,915 Quanta Capital Holdings Ltd. 144A* .............. 4,245 51,577 Radian Group, Inc. .............................. 1,775 77,568 Travelers Property Casualty Corp., Class A ....................................... 425 7,718 White Mountains Insurance Group Ltd. .......................................... 235 114,687 Willis Group Holdings Ltd. ...................... 685 26,270 ---------- 774,484 ---------- MANUFACTURING--1.7% Tyco International Ltd. ......................... 2,770 79,139 ---------- MEDIA & ENTERTAINMENT--0.7% Liberty Media Corp., Class A* ................... 2,859 32,593 ---------- METALS & MINING--1.6% CONSOL Energy, Inc. 144A ........................ 1,580 39,863 CONSOL Energy, Inc. ............................. 1,250 31,538 ---------- 71,401 ---------- OIL & GAS - INTEGRATED MAJORS--2.4% Eni S.p.A. - ADR ................................ 375 37,058 Petroleo Brasileiro S.A. - ADR .................. 1,130 35,256 Royal Dutch Petroleum Co. ....................... 755 37,440 ---------- 109,754 ---------- OIL & GAS - REFINING & MARKETING--0.9% Marathon Oil Corp. .............................. 1,200 42,168 ---------- OIL & GAS EXPLORATION--5.1% Anadarko Petroleum Corp. ........................ 1,235 63,294 Burlington Resources, Inc. ...................... 405 23,708 EOG Resources, Inc. ............................. 555 24,692 Kerr-McGee Corp. ................................ 995 51,989 Occidental Petroleum Corp. ...................... 1,540 68,376 ---------- 232,059 ---------- PUBLISHING & INFORMATION SERVICES--1.0% Reader's Digest Association, Inc., (The) ......................................... 3,540 47,790 ---------- Number of Shares Value --------- ---------- REAL ESTATE--6.4% American Financial Realty Trust 144A (REIT) ................................... 2,850 $ 52,012 American Financial Realty Trust (REIT) ........................................ 1,730 31,572 Archstone-Smith Trust (REIT) .................... 840 23,520 Ashford Hospitality Trust (REIT)* ............... 1,275 12,622 Consolidated-Tomoka Land Co. .................... 305 10,751 Fieldstone Investment Corp. 144A (REIT) ........................................ 1,175 22,619 Friedman, Billings, Ramsey Group, Inc., Class A (REIT) .......................... 2,614 69,585 LNR Property Corp. .............................. 345 18,182 Luminent Mortgage Capital, Inc. 144A (REIT) ................................... 685 10,289 Luminent Mortgage Capital, Inc. (REIT) ........................................ 340 5,107 National Health Investors, Inc. (REIT) ........................................ 625 17,438 Ventas, Inc. (REIT) ............................. 845 22,350 ---------- 296,047 ---------- RECREATIONAL PRODUCTS - TOYS--1.0% Activision, Inc.* ............................... 1,092 22,943 Mattel, Inc. .................................... 1,100 20,900 ---------- 43,843 ---------- RESTAURANTS--0.5% Yum! Brands, Inc.* .............................. 620 22,959 ---------- RETAIL - FOOD & DRUG--0.6% CVS Corp. ....................................... 720 27,000 ---------- RETAIL - HARD GOODS--2.0% Barnes & Noble, Inc.* ........................... 1,195 41,705 Borders Group, Inc.* ............................ 1,115 26,760 Hollywood Entertainment Corp.* .................. 1,290 14,513 Home Depot, Inc., (The) ......................... 295 10,711 ---------- 93,689 ---------- RETAIL - SOFT GOODS--1.1% Abercrombie & Fitch Co., Class A* ............... 1,100 34,683 BJ's Wholesale Club, Inc. ....................... 585 13,894 ---------- 48,577 ---------- THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. SEMI-ANNUAL REPORT 2004 | 27 BOSTON PARTNERS FAMILY OF FUNDS FEBRUARY 29, 2004 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- ALL-CAP VALUE FUND (Unaudited) (continued) PORTFOLIO OF INVESTMENTS -------------------------------------------------------------------------------- Number of Shares Value --------- ---------- SERVICES - BUSINESS--1.6% D & B Corp.* .................................... 575 $ 30,601 Harland (John H.) Co. ........................... 1,030 31,075 Viad Corp. ...................................... 455 11,125 ---------- 72,801 ---------- SOAPS & TOILETRIES--0.3% Dial Corp., (The) ............................... 480 13,795 ---------- TELECOMMUNICATIONS--3.1% AT&T Wireless Services, Inc.* ................... 3,160 42,913 BellSouth Corp. ................................. 1,790 49,332 CenturyTel, Inc. ................................ 1,455 41,569 SBC Communications, Inc. ........................ 390 9,364 ---------- 143,178 ---------- TELECOMMUNICATIONS EQUIPMENT--1.1% Tellabs, Inc.* .................................. 5,000 48,500 ---------- TOBACCO--6.7% Loews Corp. ..................................... 2,130 128,418 Universal Corp. ................................. 755 38,067 UST, Inc. ....................................... 3,735 142,229 ---------- 308,714 ---------- UTILITIES - ELECTRIC--1.8% Korea Electric Power (KEPCO) Corp. - ADR ................................... 3,980 41,114 Sierra Pacific Resources* ....................... 5,435 43,806 ---------- 84,920 ---------- UTILITIES - GAS & WATER--1.2% El Paso Corp. ................................... 7,200 53,568 ---------- TOTAL COMMON STOCK (Cost $3,197,053) ........................... 4,199,477 ---------- Number of Shares Value --------- ---------- PREFERRED STOCK--1.5% CONSTRUCTION & BUILDING MATERIALS--0.4% Fleetwood Capital II 9.5% 2/15/04 $22.00 ........................................ 155 $ 3,933 Fleetwood Capital Trust 6.0% 10/10/03 $51.12 ............................... 325 13,934 ---------- 17,867 ---------- FOODS--0.1% Constellation Brands, Inc. 5.75% 09/01/06 ...................................... 170 5,073 ---------- INSURANCE - OTHER--0.6% Hartford Financial Services Group, Inc., (The) 7.00% 8/16/06 ..................... 135 8,841 Scottish Re Group 5.875% 05/21/07 ...................................... 265 7,924 UnumProvident Corp. 8.25% 5/15/06 ....................................... 395 12,699 ---------- 29,464 ---------- MEDICAL EQUIPMENT & SUPPLIES--0.1% Baxter International, Inc. 7.0% 02/16/06 ...................................... 105 5,497 ---------- OFFICE EQUIPMENT & SUPPLIES--0.3% Xerox Corp. 6.25% 07/01/06 ...................... 85 11,221 ---------- TOTAL PREFERRED STOCK (Cost $51,094) .............................. 69,122 ---------- Par (000) ----- CORPORATE BONDS--0.8% Sierra Pacific Resources 144A 7.25% 02/14/10 ................................ $19 38,903 ---------- TOTAL CORPORATE BONDS (Cost $19,384) .............................. 38,903 ---------- THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. 28 | SEMI-ANNUAL REPORT 2004 BOSTON PARTNERS FAMILY OF FUNDS FEBRUARY 29, 2004 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- ALL-CAP VALUE FUND (Unaudited) (concluded) PORTFOLIO OF INVESTMENTS -------------------------------------------------------------------------------- Number of Contracts Value ------------ ---------- WRITTEN OPTIONS--(1.2%) AmeriCredit Corp. Call Option Strike Price $7.50 expires 12/18/04 .............................. (7) $ (8,347) BMC Software, Inc. Call Option Strike Price $12.50 expires 06/18/04 .............................. (27) (20,582) El Paso Corp. Call Option Strike Price $7.00 expires 01/22/05 .............................. (48) (6,500) El Paso Corp. Call Option Strike Price $7.00 expires 03/19/05 .............................. (24) (3,584) Tellabs, Inc. Call Option Strike Price $7.50 expires 01/22/05 .............................. (50) (16,000) ---------- TOTAL WRITTEN OPTIONS (Cost $(32,295)) ............................ (55,013) ---------- Number of Shares --------- RIGHTS/WARRANTS--0.2% BANKS - MAJOR--0.2% Citigroup, Inc. Litigation Tracking Warrants ...................................... 6,915 7,261 ---------- TOTAL RIGHTS/WARRANTS (Cost $7,865) ............................... 7,261 ---------- Par (000) ----- MUTUAL FUNDS--0.1% Morgan Stanley Asia-Pacific Fund, Inc. .......................................... $285 3,280 ---------- TOTAL MUTUAL FUNDS (Cost $2,397) ............................... 3,280 ---------- Number of Shares Value --------- ---------- SHORT TERM INVESTMENTS--5.8% Galaxy Institutional Money Market Fund 0.970% 03/01/04 ............................... 134,311 $ 134,311 Wilmington Money Market Fund 0.607% 03/01/04 ............................... 134,311 134,311 ---------- TOTAL SHORT TERM INVESTMENTS (Cost $268,622) ............................. 268,622 ---------- TOTAL INVESTMENTS--98.7% (Cost $3,514,120) ............................... 4,531,652 ---------- OTHER ASSETS IN EXCESS OF LIABILITIES--1.3% ............................ 58,277 ---------- NET ASSETS--100.0% ................................. $4,589,929 ========== ---------- * -- Non-income producing. ADR -- American Depository Receipt. 144A -- Security was purchased pursuant to Rule 144A under Securities Act of 1933 and may not be resold subject to that rule except to qualified institutional buyers. As of February 29, 2004, these sucurities amounted to 4.47% of net assets. REIT -- Real Estate Investment Trust. THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. SEMI-ANNUAL REPORT 2004 | 29
BOSTON PARTNERS FAMILY OF FUNDS FEBRUARY 29, 2004 ------------------------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------------------------ STATEMENTS OF ASSETS AND LIABILITIES (Unaudited) ------------------------------------------------------------------------------------------------------------------------------------ SMALL CAP LONG/SHORT LARGE CAP MID CAP ALL-CAP VALUE FUND II EQUITY FUND VALUE FUND VALUE FUND VALUE FUND ------------- ------------ ----------- ----------- ---------- ASSETS Investments, at value (cost--$398,384,783, $74,309,399, $46,363,271, $46,205,079 and $3,546,415, respectively) ................................. $514,895,591 $ 81,988,587 1 $56,512,133 $59,121,149 $4,586,665 Cash ........................................................ -- 1,204 -- -- -- Receivable from Investment Adviser .......................... -- -- -- -- 12,824 Deposits with brokers for securities sold short ............. -- 48,496,298 -- -- -- Receivable for investments sold ............................. 711,752 3,900,706 567,854 298,287 24,716 Receivable for Fund shares sold ............................. 804,685 35,691 15,911 -- 22,500 Dividends and interest receivable ........................... 173,924 32,209 58,765 49,583 3,523 Prepaid expenses and other assets ........................... 31,881 16,402 15,669 10,829 10,296 ------------ ------------ ----------- ----------- ---------- Total assets .............................................. 516,617,833 134,471,097 57,170,332 59,479,848 4,660,524 ------------ ------------ ----------- ----------- ---------- LIABILITIES Payable for investments purchased ........................... 1,009,403 3,826,809 431,715 393,579 -- Securities sold short (proceeds $58,866,173) ................ -- 57,577,645 -- -- -- Options written, at value (premiums received $32,295) ....... -- -- -- -- 55,013 Payable to Investment Adviser ............................... 500,771 124,046 25,415 24,835 -- Payable for fund shares redeemed ............................ 581,808 132,528 134,619 5,911 -- Payable for distribution fees ............................... 71,404 2,967 1,465 778 34 Accrued expenses and other liabilities ...................... 148,293 74,570 38,438 37,271 15,548 Payable for dividends on securities sold short .............. -- 20,922 -- -- -- ------------ ------------ ----------- ----------- ---------- Total liabilities ......................................... 2,311,679 61,759,487 631,652 462,374 70,595 ------------ ------------ ----------- ----------- ---------- NET ASSETS Capital stock, $0.001 per value ............................. 21,152 5,056 4,396 4,360 346 Paid-in capital ............................................. 383,764,800 78,446,333 52,025,575 44,865,381 3,478,076 Undistributed net investment income/(accumulated loss) ...... (1,503,118) (976,819) 210,033 44,651 241 Accumulated net realized gain/(loss) from investments and foreign exchange transactions, if any ................. 15,512,512 (13,730,676) (5,850,186) 1,187,012 93,734 Net unrealized appreciation on investments and foreign exchange transactions, if any ..................... 116,510,808 7,679,188 10,148,862 12,916,070 1,017,532 Net unrealized appreciation on investments sold short -- 1,288,528 -- -- -- ------------ ------------ ----------- ----------- ---------- Net assets ................................................ $514,306,154 $ 72,711,610 $56,538,680 $59,017,474 $4,589,929 ============ ============ =========== =========== ========== INSTITUTIONAL CLASS Net assets .................................................. $146,712,241 $ 58,149,897 $49,286,338 $54,790,908 $4,379,870 ------------ ------------ ----------- ----------- ---------- Shares outstanding .......................................... 5,987,363 4,040,080 3,840,034 4,044,247 330,176 ------------ ------------ ----------- ----------- ---------- Net asset value, offering and redemption price per share ........................................... $24.51 $14.39 $12.84 $13.55 $13.27 ============ ============ =========== =========== ========== INVESTOR CLASS Net assets .................................................. $367,593,913 $ 14,561,713 $ 7,252,342 $ 4,226,566 $ 210,059 ------------ ------------ ----------- ----------- ---------- Shares outstanding .......................................... 15,164,773 1,016,235 555,752 315,384 15,846 ------------ ------------ ----------- ----------- ---------- Net asset value, offering and redemption price per share ........................................... $24.24 $14.33 $13.05 $13.40 $13.26 ============ ============ =========== =========== ========== ---------- 1 Includes $59,441,735 of investments segregated as collateral for securities sold short.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. 30 | SEMI-ANNUAL REPORT 2004
BOSTON PARTNERS FAMILY OF FUNDS FEBRUARY 29, 2004 ------------------------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------------------------ STATEMENTS OF OPERATIONS (Unaudited) ------------------------------------------------------------------------------------------------------------------------------------ SMALL CAP LONG/SHORT LARGE CAP MID CAP ALL-CAP VALUE FUND II EQUITY FUND VALUE FUND VALUE FUND VALUE FUND ------------- ------------ ----------- ----------- ---------- INVESTMENT INCOME Dividends 1 .......................................... $ 2,203,878 $ 201,070 $ 485,597 $ 338,451 $ 34,705 Interest ............................................. -- 32,279 -- -- 648 ----------- ------------ ----------- ----------- -------- 2,203,878 233,349 485,597 338,451 35,353 ----------- ------------ ----------- ----------- -------- EXPENSES Advisory fees ........................................ 2,771,791 836,270 200,785 231,513 18,572 Administration fees and expenses ..................... 266,667 54,201 41,688 42,749 37,584 Administrative services fees ......................... 21,861 3,684 2,647 2,875 183 Transfer agent fees and expenses ..................... 87,225 40,374 37,133 37,990 36,078 Custodian fees and expenses .......................... 25,704 26,160 8,830 8,414 8,240 Printing ............................................. 35,538 5,218 5,300 10,594 436 Federal and state registration fees .................. 15,088 12,744 10,932 12,399 12,091 Audit and legal fees ................................. 54,155 13,967 12,088 13,858 4,855 Distribution fees .................................... 397,880 18,290 7,848 4,405 161 Directors ............................................ 20,299 4,186 2,784 3,202 22 Insurance ............................................ 10,333 2,668 1,580 1,738 88 Dividend expense ..................................... -- 262,610 -- -- -- Other ................................................ 455 455 364 337 500 ----------- ------------ ----------- ----------- -------- Total expenses before waivers and reimbursements ................................... 3,706,996 1,280,827 331,979 370,074 118,810 Less: waivers and reimbursements ................... -- (70,739) (56,417) (76,278) (95,433) ----------- ------------ ----------- ----------- -------- Total expenses after waivers and reimbursements ................................... 3,706,996 1,210,088 275,562 293,796 23,377 ----------- ------------ ----------- ----------- -------- Net investment income/(loss) ......................... (1,503,118) (976,739) 210,035 44,655 11,976 ----------- ------------ ----------- ----------- -------- NETREALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS Net realized gain/(loss) from: Investments ........................................ 21,316,349 16,864,085 1,715,032 4,845,561 145,289 Investments sold short ............................. -- (17,329,655) -- -- -- Foreign currency related transactions .............. -- 43 -- -- -- Net change in unrealized appreciation on investments ........................................ 70,243,283 1,823,290 7,712,932 4,464,337 623,536 ----------- ------------ ----------- ----------- -------- Net realized and unrealized gain on investments ........................................ 91,559,632 1,357,763 9,427,964 9,309,898 768,825 ----------- ------------ ----------- ----------- -------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ......................................... $90,056,514 $ 381,024 $ 9,637,999 $ 9,354,553 $780,801 =========== ============ =========== =========== ======== ---------------- 1 Net of foreign taxes withheld of $4,455, $2,086, $4,037, $718 and $310 for the Small Cap Value Fund II, Long/Short Equity Fund, Large Cap Value Fund, Mid Cap Value Fund and All-Cap Value Fund, respectively.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. SEMI-ANNUAL REPORT 2004 | 31
BOSTON PARTNERS FAMILY OF FUNDS FEBRUARY 29, 2004 ------------------------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------------------------ STATEMENTS OF CHANGES IN NET ASSETS ------------------------------------------------------------------------------------------------------------------------------------ SMALL CAP VALUE FUND II LONG/SHORT EQUITY FUND ---------------------------------- ---------------------------------- FOR THE SIX FOR THE FOR THE SIX FOR THE MONTHS ENDED YEAR ENDED MONTHS ENDED YEAR ENDED FEBRUARY 29, 2004 AUGUST 31, 2003 FEBRUARY 29, 2004 AUGUST 31, 2003 ----------------- --------------- ----------------- --------------- (UNAUDITED) (UNAUDITED) INCREASE/(DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income/(loss) ............................ $ (1,503,118) $ (1,928,867) $ (976,739) $ (2,007,713) Net realized gain/(loss) from investments and foreign exchange transactions, if any ................. 21,316,349 5,302,281 (465,527) (12,815,174) Net change in unrealized appreciation from investments .. 70,243,283 65,896,478 1,823,290 13,245,664 ------------ ------------ ----------- ------------ Net increase/(decrease) in net assets resulting from operations ............................................ 90,056,514 69,269,892 381,024 (1,577,223) ------------ ------------ ----------- ------------ LESS DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income Institutional shares .............. -- -- -- -- Net investment income Investor shares ................... -- -- -- -- Net realized capital gains Institutional shares ......... (1,196,652) (13,998) -- (2,067,148) Net realized capital gains Investor shares .............. (2,970,276) (57,054) -- (1,519,486) Tax return of capital Institutional shares .............. -- -- -- (807,035) Tax return of capital Investor shares ................... -- -- -- (508,389) ------------ ------------ ----------- ------------ Total dividends and distributions to shareholders ....... (4,166,928) (71,052) -- (4,902,058) ------------ ------------ ----------- ------------ INCREASE/(DECREASE) IN NET ASSETS DERIVED FROM CAPITAL SHARE TRANSACTIONS (NOTE 4) ................... 50,440,175 14,463,939 (401,092) (36,024,347) ------------ ------------ ----------- ------------ Total increase/(decrease) in net assets ................. 136,329,761 83,662,779 (20,068) (42,503,628) ------------ ------------ ----------- ------------ NET ASSETS Beginning of period ..................................... 377,976,393 294,313,614 72,731,678 115,235,306 ------------ ------------ ----------- ------------ End of period* .......................................... $514,306,154 $377,976,393 $72,711,610 $ 72,731,678 ============ ============ =========== ============ LARGE CAP VALUE FUND MID CAP VALUE FUND ---------------------------------- ---------------------------------- FOR THE SIX FOR THE FOR THE SIX FOR THE MONTHS ENDED YEAR ENDED MONTHS ENDED YEAR ENDED FEBRUARY 29, 2004 AUGUST 31, 2003 FEBRUARY 29, 2004 AUGUST 31, 2003 ----------------- --------------- ----------------- --------------- (UNAUDITED) (UNAUDITED) INCREASE/(DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income/(loss) ............................ $ 210,035 $ 456,136 $ 44,655 $ 293,385 Net realized gain/(loss) from investments and foreign exchange transactions, if any ................. 1,715,032 (5,079,850) 4,845,561 (2,354,765) Net change in unrealized appreciation from investments .. 7,712,932 7,821,931 4,464,337 12,356,003 ----------- ----------- ------------ ----------- Net increase/(decrease) in net assets resulting from operations ............................................ 9,637,999 3,198,217 9,354,553 10,294,623 ----------- ----------- ------------ ----------- LESS DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income Institutional shares .............. (415,914) (262,849) (282,692) (1,576) Net investment income Investor shares ................... (40,176) (26,147) (10,717) -- Net realized capital gains Institutional shares ......... -- (380,478) -- -- Net realized capital gains Investor shares .............. -- (56,805) -- -- Tax return of capital Institutional shares .............. -- -- -- -- Tax return of capital Investor shares ................... -- -- -- -- ----------- ----------- ------------ ----------- Total dividends and distributions to shareholders ....... (456,090) (726,279) (293,409) (1,576) ----------- ----------- ------------ ----------- INCREASE/(DECREASE) IN NET ASSETS DERIVED FROM CAPITAL SHARE TRANSACTIONS (NOTE 4) ................... (1,481,188) (6,593,547) (10,254,800) (6,386,579) ----------- ----------- ------------ ----------- Total increase/(decrease) in net assets ................. 7,700,721 (4,121,609) (1,193,656) 3,906,468 ----------- ----------- ------------ ----------- NET ASSETS Beginning of period ..................................... 48,837,959 52,959,568 60,211,130 56,304,662 ----------- ----------- ------------ ----------- End of period* .......................................... $56,538,680 $48,837,959 $ 59,017,474 $60,211,130 =========== =========== ============ =========== ALL-CAP VALUE FUND ----------------------------------- FOR THE SIX FOR THE MONTHS ENDED YEAR ENDED FEBRUARY 29, 2004 AUGUST 31, 2003 ----------------- --------------- (UNAUDITED) INCREASE/(DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income/(loss) ............................ $ 11,976 $ 15,648 Net realized gain/(loss) from investments and foreign exchange transactions, if any ................. 145,289 (42,196) Net change in unrealized appreciation from investments .. 623,536 479,313 ---------- ---------- Net increase/(decrease) in net assets resulting from operations ............................................ 780,801 452,765 ---------- ---------- LESS DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income Institutional shares .............. (20,303) (6,990) Net investment income Investor shares ................... (385) (181) Net realized capital gains Institutional shares ......... -- -- Net realized capital gains Investor shares .............. -- -- Tax return of capital Institutional shares .............. -- -- Tax return of capital Investor shares ................... -- -- ---------- ---------- Total dividends and distributions to shareholders ....... (20,688) (7,171) ---------- ---------- INCREASE/(DECREASE) IN NET ASSETS DERIVED FROM CAPITAL SHARE TRANSACTIONS (NOTE 4) ................... 834,080 656,211 ---------- ---------- Total increase/(decrease) in net assets ................. 1,594,193 1,101,805 ---------- ---------- NET ASSETS Beginning of period ..................................... 2,995,736 1,893,931 ---------- ---------- End of period* .......................................... $4,589,929 $2,995,736 ========== ========== *Includes undistributed net investment income/(loss) as follows: FOR THE SIX FOR THE MONTHS ENDED YEAR ENDED FEBRUARY 29, 2004 AUGUST 31, 2003 ----------------- --------------- (UNAUDITED) Small Cap Value Fund II ................................. $(1,503,118) $ -- Long/Short Equity Fund .................................. (976,739) (80) Large Cap Value Fund .................................... 210,035 456,088 Mid Cap Value Fund Fund ................................. 44,655 293,405 All-Cap Value Fund ...................................... 11,976 8,953
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. 32 | SEMI-ANNUAL REPORT 2004 AND SEMI-ANNUAL REPORT 2004 | 33
BOSTON PARTNERS FAMILY OF FUNDS ------------------------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------------------------ FINANCIAL HIGHLIGHTS PER SHARE OPERATING PERFORMANCE ------------------------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------------------------ Contained below is per share operating performance data for each class of shares outstanding, total investment return, ratios to average net assets and other supplemental data for the respective periods. This information has been derived from information provided in the financial statements. ------------------------------------------------------------------------------------------------------------------------------------ NET DIVIDENDS TO DISTRIBUTIONS TO DISTRIBUTIONS TO ASSET NET REALIZED SHAREHOLDERS SHAREHOLDERS SHAREHOLDERS VALUE, NET AND UNREALIZED FROM NET FROM NET FROM BEGINNING INVESTMENT GAIN/(LOSS) ON INVESTMENT REALIZED TAX RETURN REDEMPTION OF PERIOD INCOME/(LOSS) INVESTMENTS INCOME GAINS OF CAPITAL FEES ------------------------------------------------------------------------------------------------------------------------------------ SMALL CAP VALUE FUND II ----------------------- INSTITUTIONAL CLASS 9/1/03 through 2/29/04+ $20.19 $(0.04) $ 4.55 $ -- $(0.20) $ -- $0.01 8/31/03 15.71 (0.09)** 4.55** -- -- 4 -- 0.02** 8/31/02 17.17 (0.13)** (1.23)** -- (0.21) -- 0.11** 8/31/01 11.39 (0.05)** 6.05** -- (0.29) -- 0.07** 8/31/00 8.67 (0.01) 2.73 -- -- -- -- 8/31/99 7.62 (0.01) 1.06 -- -- -- -- INVESTOR CLASS 9/1/03 through 2/29/04+ $20.00 $(0.08) $ 4.52 $ -- $(0.20) $ -- $0.01 8/31/03 15.61 (0.12)** 4.49** -- -- 4 -- 0.02** 8/31/02 17.09 (0.17)** (1.21)** -- (0.21) -- 0.11** 8/31/01 11.36 (0.09)** 6.04** -- (0.29) -- 0.07** 8/31/00 8.65 (0.03) 2.74 -- -- -- -- 8/31/99 7.63 (0.02) 1.04 -- -- -- -- ------------------------------------------------------------------------------------------------------------------------------------ LONG/SHORT EQUITY FUND ---------------------- INSTITUTIONAL CLASS 9/1/03 through 2/29/04+ $14.31 $ 0.21 $(0.14) $ -- $ -- $ -- $0.01 8/31/03 15.17 (0.28)** 0.10** -- (0.51) (0.20) 0.03** 8/31/02 15.88 0.05** (0.31)** (0.02) (0.50) -- 0.07** 8/31/01 10.57 0.07** 5.14** (0.13) -- -- 0.23** 8/31/00 9.46 0.13 1.12 (0.14) -- -- -- 11/17/98* to 8/31/99 10.00 0.12 (0.66) -- -- -- -- INVESTOR CLASS 9/1/03 through 2/29/04+ $14.27 $ 0.16 $(0.11) $ -- $ -- $ -- $0.01 8/31/03 15.13 (0.31)** 0.10** -- (0.51) (0.17) 0.03** 8/31/02 15.87 0.04** (0.33)** (0.01) (0.50) -- 0.06** 8/31/01 10.57 0.03** 5.18** (0.11) -- -- 0.20** 8/31/00 9.43 0.11 1.16 (0.13) -- -- -- 11/17/98* to 8/31/99 10.00 0.06 (0.63) -- -- -- -- RATIO OF RATIO OF RATIO OF RATIO OF EXPENSES TO EXPENSES TO EXPENSES TO EXPENSES TO AVERAGE NET AVERAGE NET AVERAGE NET AVERAGE NET NET NET ASSETS WITH ASSETS WITH ASSETS WITHOUT ASSETS WITHOUT ASSET ASSETS, WAIVERS AND WAIVERS AND WAIVERS AND WAIVERS AND VALUE, TOTAL END OF REIMBURSEMENTS REIMBURSEMENTS REIMBURSEMENTS REIMBURSEMENTS END OF INVESTMENT PERIOD (INCLUDING (EXCLUDING (EXCLUDING (INCLUDING PERIOD RETURN 1,2 (000) DIVIDEND EXPENSE) DIVIDEND EXPENSE) DIVIDEND EXPENSE) DIVIDEND EXPENSE) ------------------------------------------------------------------------------------------------------------------------------------ SMALL CAP VALUE FUND II ----------------------- INSTITUTIONAL CLASS 9/1/03 through 2/29/04+ $24.51 22.50% $146,712 1.49% --% --% 1.49% 8/31/03 20.19 28.55 98,383 1.55 -- -- 1.79 8/31/02 15.71 (7.39) 40,475 1.55 -- -- 1.71 8/31/01 17.17 54.57 21,547 1.55 -- -- 2.03 8/31/00 11.39 31.43 1,965 1.55 -- -- 14.23 8/31/99 8.67 13.78 1,309 1.55 -- -- 17.84 INVESTOR CLASS 9/1/03 through 2/29/04+ $24.24 22.32% $367,594 1.74% --% --% 1.74% 8/31/03 20.00 28.16 279,593 1.80 -- -- 2.04 8/31/02 15.61 (7.54) 253,838 1.79 -- -- 1.92 8/31/01 17.09 54.27 230,507 1.77 -- -- 2.13 8/31/00 11.36 31.33 382 1.77 -- -- 14.33 8/31/99 8.65 13.37 293 1.80 -- -- 18.09 ------------------------------------------------------------------------------------------------------------------------------------ LONG/SHORT EQUITY FUND ---------------------- INSTITUTIONAL CLASS 9/1/03 through 2/29/04+ $14.39 0.56% $ 58,150 3.38% 2.50% 2.68% 3.21% 8/31/03 14.31 (1.13) 57,351 3.05 2.50 2.90 3.44 8/31/02 15.17 (1.17) 65,951 3.04 2.50 2.85 3.39 8/31/01 15.88 51.85 25,857 3.22 2.50 4.25 4.97 8/31/00 10.57 13.74 1,080 2.86 2.50 21.86 22.22 11/17/98* to 8/31/99 9.46 (5.40) 941 2.91 3 2.50 3 26.36 3 26.77 INVESTOR CLASS 9/1/03 through 2/29/04+ $14.33 0.42% $ 14,562 3.63% 2.75% 2.93% 3.45% 8/31/03 14.27 (1.32) 15,381 3.32 2.75 3.12 3.69 8/31/02 15.13 (1.44) 49,284 3.29 2.75 3.06 3.60 8/31/01 15.87 51.51 11,244 3.44 2.72 4.35 5.07 8/31/00 10.57 13.87 310 3.08 2.72 21.96 22.32 11/17/98* to 8/31/99 9.43 (5.70) 231 3.16 3 2.75 3 26.61 3 27.02 RATIOS OF NET INVESTMENT INCOME TO AVERAGE NET ASSETS WITH WAIVERS PORTFOLIO AND TURNOVER REIMBURSEMENTS RATE ---------------------------------------------------- SMALL CAP VALUE FUND II ----------------------- INSTITUTIONAL CLASS 9/1/03 through 2/29/04+ (0.50)% 18.04% 8/31/03 (0.54) 72.72 8/31/02 (0.76) 119.30 8/31/01 (0.32) 35.50 8/31/00 (0.18) 161.75 8/31/99 (0.17) 87.48 INVESTOR CLASS 9/1/03 through 2/29/04+ (0.75)% 18.04% 8/31/03 (0.77) 72.72 8/31/02 (1.00) 119.30 8/31/01 (0.54) 35.50 8/31/00 (0.40) 161.75 8/31/99 (0.42) 87.48 ---------------------------------------------------- LONG/SHORT EQUITY FUND ---------------------- INSTITUTIONAL CLASS 9/1/03 through 2/29/04+ (2.57)% 143.82% 8/31/03 (1.94) 282.36 8/31/02 0.30 219.52 8/31/01 0.46 332.25 8/31/00 1.12 363.34 11/17/98* to 8/31/99 1.57 3 218.41 INVESTOR CLASS 9/1/03 through 2/29/04+ (2.81)% 143.82% 8/31/03 (2.13) 282.36 8/31/02 0.27 219.52 8/31/01 0.24 332.25 8/31/00 0.90 363.34 11/17/98* to 8/31/99 1.32 3 218.41 ---------------- * Commencement of operations. ** Calculated based on average shares outstanding for the period. + Unaudited. 1 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. 2 Redemption fees are reflected in total return calculations. 3 Annualized. 4 Amount is less than $.01 per share.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. 34 | SEMI-ANNUAL REPORT 2004 AND SEMI-ANNUAL REPORT 2004 | 35
BOSTON PARTNERS FAMILY OF FUNDS ------------------------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------------------------ FINANCIAL HIGHLIGHTS (continued) PER SHARE OPERATING PERFORMANCE ------------------------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------------------------ Contained below is per share operating performance data for each class of shares outstanding, total investment return, ratios to average net assets and other supplemental data for the respective periods. This information has been derived from information provided in the financial statements. ------------------------------------------------------------------------------------------------------------------------------------ NET DIVIDENDS TO DISTRIBUTIONS TO NET ASSET NET REALIZED SHAREHOLDERS SHAREHOLDERS ASSET VALUE, NET AND UNREALIZED FROM NET FROM NET VALUE, TOTAL BEGINNING INVESTMENT GAIN/(LOSS) ON INVESTMENT REALIZED END OF INVESTMENT OF PERIOD INCOME/(LOSS) INVESTMENTS INCOME GAINS PERIOD RETURN 1 ------------------------------------------------------------------------------------------------------------------------------------ LARGE CAP VALUE FUND -------------------- INSTITUTIONAL CLASS 9/1/03 through 2/29/04+ $10.84 $ 0.05 $ 2.05 $(0.10) $ -- $12.84 19.46% 8/31/03 10.33 0.09** 0.57** (0.06) (0.09) 10.84 6.54 8/31/02 13.52 0.08** (1.54)** (0.12) (1.61) 10.33 (12.67) 8/31/01 12.82 0.12** 1.10** (0.13) (0.39) 13.52 9.65 8/31/00 12.24 0.14 1.25 (0.11) (0.70) 12.82 11.99 8/31/99 10.58 0.05 1.76 (0.04) (0.11) 12.24 17.12 INVESTOR CLASS 9/1/03 through 2/29/04+ $11.01 $ 0.03 $ 2.08 $(0.07) $ -- $13.05 19.27% 8/31/03 10.50 0.07** 0.57** (0.04) (0.09) 11.01 6.22 8/31/02 13.73 0.04** (1.56)** (0.10) (1.61) 10.50 (12.87) 8/31/01 13.02 0.09** 1.13** (0.12) (0.39) 13.73 9.45 8/31/00 12.36 0.10 1.27 (0.01) (0.70) 13.02 11.67 8/31/99 10.70 0.15 1.65 (0.03) (0.11) 12.36 16.86 ------------------------------------------------------------------------------------------------------------------------------------ MID CAP VALUE FUND ------------------ INSTITUTIONAL CLASS 9/1/03 through 2/29/04+ $11.57 $ 0.01 $ 2.04 $(0.07) $ -- $13.55 17.78% 8/31/03 9.69 0.05** 1.83** -- 2 -- 11.57 19.41 8/31/02 12.55 0.00** (0.94)** (0.06) (1.86) 9.69 (8.97) 8/31/01 11.66 0.04** 0.91** (0.06) -- 12.55 8.23 8/31/00 11.47 0.06 0.29 (0.02) (0.14) 11.66 3.21 8/31/99 9.48 0.02 1.98 (0.01) -- 11.47 21.08 INVESTOR CLASS 9/1/03 through 2/29/04+ $11.43 $ 0.00 2 $ 2.01 $(0.04) $ -- $13.40 17.59% 8/31/03 9.58 0.02** 1.83** -- -- 11.43 19.31 8/31/02 12.43 (0.02)** (0.94)** (0.03) (1.86) 9.58 (9.26) 8/31/01 11.55 0.01** 0.91** (0.04) -- 12.43 7.96 8/31/00 11.38 0.03 0.28 -- (0.14) 11.55 2.90 8/31/99 9.42 (0.01) 1.97 -- -- 11.38 20.81 RATIO OF RATIO OF RATIO OF NET NET EXPENSES TO EXPENSES TO INVESTMENT ASSETS, AVERAGE NET AVERAGE NET INCOME TO AVERAGE END OF ASSETS WITH ASSETS WITHOUT NET ASSETS PORTFOLIO PERIOD WAIVERS AND WAIVERS AND WITH WAIVERS TURNOVER (000) REIMBURSEMENTS REIMBURSEMENTS AND REIMBURSEMENTS RATE ------------------------------------------------------------------------------------------------------------ LARGE CAP VALUE FUND -------------------- INSTITUTIONAL CLASS 9/1/03 through 2/29/04+ $ 49,286 1.00% 1.21% 0.82% 25.58% 8/31/03 43,722 1.00 1.41 0.94 81.13 8/31/02 45,067 1.00 1.40 0.62 88.65 8/31/01 40,368 1.00 1.43 0.89 105.71 8/31/00 39,897 1.00 1.43 0.92 120.99 8/31/99 53,112 1.00 1.30 0.61 156.16 INVESTOR CLASS 9/1/03 through 2/29/04+ $ 7,252 1.25% 1.46% 0.53% 25.58% 8/31/03 5,116 1.25 1.66 0.66 81.13 8/31/02 7,893 1.25 1.61 0.37 88.65 8/31/01 3,746 1.22 1.53 0.67 105.71 8/31/00 1,414 1.22 1.53 0.70 120.99 8/31/99 1,637 1.25 1.55 0.36 156.16 ------------------------------------------------------------------------------------------------------------ MID CAP VALUE FUND ------------------ INSTITUTIONAL CLASS 9/1/03 through 2/29/04+ $ 54,791 1.00% 1.26% 0.17% 29.69% 8/31/03 57,052 1.00 1.40 0.55 77.87 8/31/02 50,073 1.00 1.33 0.01 99.23 8/31/01 116,605 1.00 1.30 0.29 234.52 8/31/00 152,696 1.00 1.24 0.53 206.65 8/31/99 173,224 1.00 1.25 0.17 200.09 INVESTOR CLASS 9/1/03 through 2/29/04+ $ 4,226 1.25% 1.52% (0.06)% 29.69% 8/31/03 3,159 1.25 1.65 0.21 77.87 8/31/02 6,232 1.25 1.57 (0.18) 99.23 8/31/01 1,787 1.22 1.40 0.07 234.52 8/31/00 1,929 1.22 1.34 0.31 206.65 8/31/99 2,762 1.25 1.50 0.01 200.09 ---------------- ** Calculated based on average shares outstanding for the period. + Unaudited. 1 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 will include reinvestments of dividends and distributions, if any. 2 Amount is less than $.01 per share.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. 36 | SEMI-ANNUAL REPORT 2004 AND SEMI-ANNUAL REPORT 2004 | 37
BOSTON PARTNERS FAMILY OF FUNDS ------------------------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------------------------ FINANCIAL HIGHLIGHTS (continued) PER SHARE OPERATING PERFORMANCE ------------------------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------------------------ Contained below is per share operating performance data for each class of shares outstanding, total investment return, ratios to average net assets and other supplemental data for the respective periods. This information has been derived from information provided in the financial statements. ------------------------------------------------------------------------------------------------------------------------------------ NET DIVIDENDS TO DISTRIBUTIONS TO NET ASSET NET REALIZED SHAREHOLDERS SHAREHOLDERS ASSET VALUE, NET AND UNREALIZED FROM NET FROM NET VALUE, BEGINNING INVESTMENT GAIN/(LOSS) ON INVESTMENT REALIZED REDEMPTION END OF OF PERIOD INCOME/(LOSS) INVESTMENTS INCOME GAINS FEES PERIOD ------------------------------------------------------------------------------------------------------------------------------------ ALL-CAP VALUE FUND ------------------ INSTITUTIONAL CLASS 9/1/03 through 2/29/04+ $10.82 $0.04 $ 2.48 $(0.07) $ -- $ -- $13.27 8/31/03 9.45 0.06 1.34 (0.03) -- -- 10.82 7/1/02* to 8/31/02 10.00 -- (0.55) -- -- -- 9.45 INVESTOR CLASS 9/1/03 through 2/29/04+ $10.80 $0.03 $ 2.47 $(0.07) $ -- $ -- $13.26 8/31/03 9.44 0.04 1.34 (0.02) -- -- 10.80 7/1/02* to 8/31/02 10.00 -- (0.56) -- -- -- 9.44 RATIO OF RATIO OF RATIO OF NET NET EXPENSES TO EXPENSES TO INVESTMENT ASSETS, AVERAGE NET AVERAGE NET INCOME TO AVERAGE TOTAL END OF ASSETS WITH ASSETS WITHOUT NET ASSETS PORTFOLIO INVESTMENT PERIOD WAIVERS AND WAIVERS AND WITH WAIVERS TURNOVER RETURN 1,2 (000) REIMBURSEMENTS REIMBURSEMENTS AND REIMBURSEMENTS RATE ------------------------------------------------------------------------------------------------------------------------ ALL-CAP VALUE FUND ------------------ INSTITUTIONAL CLASS 9/1/03 through 2/29/04+ 23.31% $ 4,380 1.25% 6.39% 0.65% 14.73% 8/31/03 14.84 2,890 1.25 9.49 0.62 38.36 7/1/02* to 8/31/02 (5.50) 1,810 1.25 3 14.54 3 0.16 3 6.61 3 INVESTOR CLASS 9/1/03 through 2/29/04+ 23.13% $ 210 1.50% 6.65% 0.46% 14.73% 8/31/03 14.63 106 1.50 9.88 0.41 38.36 7/1/02* to 8/31/02 (5.60) 84 1.50 3 15.34 3 (0.01) 3 6.61 3 ---------- * Commencement of operations. + Unaudited. 1 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. 2 Redemption fees are reflected in total return calculations. 3 Annualized.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS. 38 | SEMI-ANNUAL REPORT 2004 AND SEMI-ANNUAL REPORT 2004 | 39 BOSTON PARTNERS FAMILY OF FUNDS -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (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 "1940 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 1940 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 active investment portfolios, including Boston Partners Small Cap Value Fund II ("Small Cap Value Fund II"), Boston Partners Long/Short Equity Fund ("Long/Short Equity Fund"), Boston Partners Large Cap Value Fund ("Large Cap Value Fund"), Boston Partners Mid Cap Value Fund ("Mid Cap Value Fund") and Boston Partners All-Cap Value Fund ("All-Cap Value Fund") (each a "Fund", collectively the "Funds"). The Funds each offer two classes of shares, Institutional Class and Investor Class. RBB has authorized capital of thirty billion shares of common stock of which 26.073 billion are currently classified into ninety-seven classes of common stock. Each class represents an interest in an active or inactive RBB investment portfolio. The active classes have been grouped into eight separate "families," seven of which have begun investment operations. PORTFOLIO VALUATION -- The net asset value of the Fund is determined as of 4:00 p.m. Eastern time on each business day. Each Fund's securities are valued at the closing price or the last reported sale price on the national securities exchange or in the principal over-the-counter market on which such shares are primarily traded. If no sales are reported, and 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. In determining the approximate market value of securities, the Funds may employ outside organizations, which may use a matrix or formula method that takes into consideration market indices, matrices, yield curves and other specific adjustments. 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. Short-term obligations with maturities of 60 days or less are valued at amortized cost which approximates market value. 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 Funds may agree 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 Funds enter into Repurchase Agreements are banks and broker/dealers that Boston Partners Asset Management, L.L.C. (the "Investment Adviser" or "Boston Partners") 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. Boston Partners marks to market daily the value of the collateral, and, if necessary, requires the seller to deposit additional collateral by the next day of business, to ensure that the value is not less than the repurchase price. Default by or bankruptcy of the seller would, however, expose the Funds to possible loss because of adverse market action or delays in connection with the disposition of the underlying securities. There were no Repurchase Agreements outstanding as of February 29, 2004. 40 | SEMI-ANNUAL REPORT 2004 BOSTON PARTNERS FAMILY OF FUNDS -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued) -------------------------------------------------------------------------------- INVESTMENT TRANSACTIONS, INVESTMENT INCOME AND EXPENSES -- The Funds record security transactions based on 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 accrued when earned. Dividend income is recorded on the ex-dividend date. The Funds' investment income, expenses (other than class specific distribution fees) and unrealized and realized gains and losses are allocated daily to each class of shares based upon the relative proportion of net assets of each class at the beginning of the day. Expenses incurred on behalf of a specific class, fund or fund family are charged directly to the class, fund or fund family (in proportion to net assets). Expenses incurred for all of the RBB families (such as director or professional fees) are charged to all funds in proportion to their net assets of the RBB funds. 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 Funds. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- Dividends from net investment income and distributions from net realized capital gains, if any, are declared and paid at least annually to shareholders and recorded on ex-date. 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, 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 within the components of net assets. U.S. TAX STATUS -- No provision is made for U.S. income taxes as it is the Funds' 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. income and excise taxes. SHORT SALES -- When the Investment Adviser believes that a security is overvalued, it may sell the security short by borrowing the same security from a broker or other institution and selling the security. A Fund will incur a loss as a result of a short sale if the price of the borrowed security increases between the date of the short sale and the date on which the Fund buys and replaces such borrowed security. A Fund will realize a gain if there is a decline in price of the security between those dates where decline exceeds costs of the borrowing the security and other transaction costs. There can be no assurance that a Fund will be able to close out a short position at any particular time or at an acceptable price. Although a Fund's gain is limited to the amount at which it sold a security short, its potential loss is unlimited in size. Until a Fund replaces a borrowed security, it will maintain at all times cash, U.S. Government securities, or other liquid securities in an amount which, when added to any amount deposited with a broker as collateral will at least equal the current market value of the security sold short. Depending on arrangements made with brokers, a Fund may not receive any payments (including interest) on collateral deposited with them. OPTIONS -- The All-Cap Value Fund may buy put and call options and write covered call and secured put options. Such options may relate to particular securities or domestic stock indices, and may or may not be listed on a domestic securities exchange or issued by the Options Clearing Corporation. The risk in writing a call option is that the Fund gives up the opportunity for profit if the market price of the security increases. The risk in writing a put option is that the Fund may incur a loss if the market price of the security decreases and the option is exercised. The risk in purchasing an option is that the Fund pays a premium whether or not the option is exercised. The Fund also has the additional risk of being unable to enter into a closing transaction at an acceptable price if a liquid secondary market does not exist. The Fund also may write over-the-counter options where completing the obligation depends upon the credit standing of the other party. Option contracts also involve the risk that they may result in loss due to unanticipated developments in market conditions or other causes. SEMI-ANNUAL REPORT 2004 | 41 BOSTON PARTNERS FAMILY OF FUNDS -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued) -------------------------------------------------------------------------------- Options purchased are recorded as an asset and written options are recorded as liabilities to the extent of premiums paid or received. The All-Cap Value Fund will realize a gain or loss when the option transaction expires or closes. When an option is exercised, the proceeds on sales for a written call option, the purchase cost for a written put option or the cost of a security for a purchased put or call option is adjusted by the amount of the premium received or paid. The All-Cap Value Fund had transactions in options written during the six months ended February 29, 2004 as follows: NUMBER OF PREMIUMS CONTRACTS RECEIVED ---------- -------- Options outstanding at August 31, 2003 54 $15,517 Options written 122 22,608 Options terminated in closing purchase transactions (20) (5,830) Options expired 0 0 Options exercised 0 0 --- ------- Options outstanding at February 29, 2004 156 $32,295 === ======= FOREIGN CURRENCY TRANSLATION -- The books and records of the portfolios are maintained in U.S. dollars as follows: (1) the foreign currency market value of investment securities and other assets and liabilities stated in foreign currencies are translated at the exchange rate prevailing at the end of the period; and (2) purchases, sales, income and expenses are translated at the rate of exchange prevailing on the respective dates of such transactions. The resulting exchange gains and losses are included in the Statement of Operations. LINE OF CREDIT -- Each portfolio may borrow an amount up to its prospectus-defined limitations, from a committed line of credit available to the Funds in the Boston Partners Fund Family. Borrowings from the line of credit will bear interest at the Federal Funds Rate. The Boston Partners Fund Family paid an annual initiation fee of $5,000. Each Fund is allocated a portion of this fee based on its net assets relative to the net assets of the Boston Partners Fund Family. The Funds had no outstanding borrowings at February 29, 2004 or at any time during the six months ended February 29, 2004. 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES Boston Partners Asset Management, L.L.C., a wholly owned subsidiary of Robeco, USA, serves as the Funds' Investment Adviser. For its advisory services, Boston Partners is entitled to receive 1.25% of the Small Cap Value Fund II's average daily net assets, 2.25% of the Long/Short Equity Fund's average daily net assets, 0.75% of the Large Cap Value Fund's average daily net assets, 0.80% of the Mid Cap Value Fund's average daily net assets and 1.00% of the All-Cap Value Fund's average daily net assets and, each accrued daily and payable monthly. The adviser has agreed to limit the Small Cap Value Fund II's total operating expenses to the extent that such expenses exceed 1.55% and 1.80% of the Small Cap Value Fund II's average daily net assets for the Institutional and Investor Classes, respectively. The adviser has agreed to limit the Long/Short Equity Fund's total operating expenses to the extent that such expenses exceed 2.50% and 2.75%, excluding short sale dividend expense of the Long/Short Equity Fund's average daily net assets for the Institutional and Investor Classes, respectively. The adviser has agreed to limit the Large Cap Value Fund's and the Mid Cap Value Fund's total operating expenses to the extent that such expenses exceeded 1.00% and 1.25% of the Large Cap Value Fund's and the Mid Cap Value Fund's average daily net assets for the Institutional and Investor Classes, respectively. The adviser has agreed to limit the All-Cap Value Fund's total operating expenses to the extent that such expenses 42 | SEMI-ANNUAL REPORT 2004 BOSTON PARTNERS FAMILY OF FUNDS -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued) -------------------------------------------------------------------------------- exceeded 1.25% and 1.50% of the All-Cap Value Fund's average daily net assets for the Institutional and Investor Classes, respectively. This limitation is effected in waivers of advisory fees and reimbursements of expenses exceeding the advisory fee as necessary. For the six months ended February 29, 2004, investment advisory fees, waivers and reimbursements of expenses were as follows:
GROSS NET EXPENSE FUND ADVISORY FEES WAIVERS ADVISORY FEES REIMBURSEMENT ---- ------------- ------- ------------- ------------- Small Cap Value Fund II $2,771,791 $ -- $2,771,791 $ -- Long/Short Equity Fund 836,270 (70,739) 765,531 -- Large Cap Value Fund 200,785 (56,417) 144,368 -- Mid Cap Value Fund 231,513 (76,278) 155,235 -- All-Cap Value Fund 18,572 (18,572) -- 38,361
The Funds will not pay the adviser at a later time for any amounts they waived or any amounts they assumed. PFPC Inc. ("PFPC"), a wholly-owned subsidiary of PFPC Worldwide Inc., an indirect wholly-owned subsidiary of The PNC Financial Services Group, Inc., serves as administrator for the Funds. For providing accounting and administration services, PFPC is entitled to receive a monthly fee equal to an annual rate of 0.1125% of the Funds' average daily net assets with a minimum of $70,000 annually. For providing regulatory administrative services to RBB, PFPC Inc. is entitled to receive compensation as agreed to by RBB and PFPC. This agreement commenced on June 1, 2003. This fee is charged to all funds in proportion to their net asets of the RBB Funds. For the six months ended February 29, 2004 the Funds' portions of this fee were $33,705, $6,164, $4,550, $5,096 and $289 for the Small Cap Value Fund II, Long/Short Equity Fund, Large Cap Value Fund, Mid Cap Value Fund and All-Cap Value Fund, respectively. PFPC voluntarily waived a portion of its accounting and administrative services fees for the Funds. For the six months ended February 29, 2004, fees and waivers were as follows: GROSS ACCOUNTING NET ACCOUNTING AND ADMINISTRATION AND ADMINISTRATION FUND FEES WAIVERS FEES ---- ------------------ --------- ------------------ All-Cap Value Fund $37,584 $(17,500) $20,084 In addition, PFPC serves as the Funds' transfer and disbursing agent. PFPC, at its discretion, voluntarily agreed to waive a portion of its transfer agency fees for the All-Cap Value Fund. For the six months ended February 29, 2004, PFPC's transfer agency fees and waivers for the All-Cap Value Fund were as follows: GROSS TRANSFER NET TRANSFER FUND AGENCY FEES WAIVERS AGENCY FEES ---- -------------- --------- ------------ All-Cap Value Fund $36,078 $(18,000) $18,078 PFPC Distributors, Inc., provides certain administrative services to the Funds. As compensation for such administrative services, PFPC Distributors, Inc. is entitled to receive a monthly fee of $5,208.33 which is allocated to the Funds in proportion to their net assets. SEMI-ANNUAL REPORT 2004 | 43 BOSTON PARTNERS FAMILY OF FUNDS -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued) -------------------------------------------------------------------------------- PFPC Trust Co., a wholly owned subsidiary of PFPC Worldwide Inc., an indirect wholly-owned subsidiary of The PNC Financial Services Group, Inc., provides certain custodial services to the Funds. As compensation for such custodial services, PFPC Trust Co. is entitled to receive a monthly fee equal to an annual rate of 0.010% of the Funds' average daily gross assets or a minimum fee of $12,000 annually. PFPC Trust Co. voluntarily waived a portion of its custodial fees for the All-Cap Value Fund. For the six months ended February 29, 2004, custodial fees and waivers for the All-Cap Value Fund were as follows: GROSS CUSTODIAL NET CUSTODIAL FUND FEES WAIVERS FEES ---- --------------- -------- ------------- All-Cap Value Fund $8,240 $(3,000) $5,240 The Funds will not pay PFPC or PFPC's affiliates at a later time for any amounts they waived or any amounts they assumed. At February 29, 2004, PFPC and its affiliates were due fees for their services of $80,204, $29,915, $17,568, $16,923 and $9,369 from the Small Cap Value Fund II, Long/Short Equity Fund, Large Cap Value Fund, Mid Cap Value Fund and All-Cap Value Fund, respectively. 3. INVESTMENT IN SECURITIES For the six months ended February 29, 2004, aggregate purchases and sales of investment securities (excluding short-term investments) were as follows: INVESTMENT SECURITIES ------------------------------ FUND PURCHASES SALES ---- ------------ ------------ Small Cap Value Fund II $118,442,334 $ 76,589,219 Long/Short Equity Fund 102,299,056 120,593,295 Large Cap Value Fund 13,261,197 14,351,398 Mid Cap Value Fund 16,430,551 25,319,349 All-Cap Value Fund 1,117,513 526,876 44 | SEMI-ANNUAL REPORT 2004 BOSTON PARTNERS FAMILY OF FUNDS -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued) -------------------------------------------------------------------------------- 4. CAPITAL SHARE TRANSACTIONS As of February 29, 2004, each class of each Fund has 100,000,000 shares of $0.001 par value common stock authorized. Transactions in capital shares for the respective periods were as follows:
SMALL CAP VALUE FUND II -------------------------------------------------------------- FOR THE SIX MONTHS ENDED FOR THE FEBRUARY 29, 2004 YEAR ENDED (UNAUDITED) AUGUST 31, 2003 --------------------------- ---------------------------- SHARES VALUE SHARES VALUE ---------- ----------- ---------- ------------ INSTITUTIONAL CLASS Sales ............................. 1,705,660 $36,878,202 3,602,488 $ 57,745,065 Repurchases ....................... (639,769) (14,173,999) (1,306,616) (20,258,455) Redemption Fees* .................. -- 34,318 -- 65,586 Reinvestments ..................... 48,875 1,094,808 810 12,113 ---------- ----------- ---------- ------------ Net Increase / (Decrease)............. 1,114,766 $23,833,329 2,296,682 $ 37,564,309 ========== =========== ========== ============ INVESTOR CLASS Sales ............................. 2,461,783 54,364,772 4,837,896 $ 82,360,580 Repurchases ....................... (1,407,414) (30,754,075) (7,128,794) (105,829,090) Redemption Fees ................... -- 86,902 -- 312,382 Reinvestments ..................... 131,225 2,909,247 3,757 55,758 ---------- ----------- ---------- ------------ Net Increase / (Decrease)............. 1,185,594 $26,606,846 (2,287,141) $(23,100,370) ========== =========== ========== ============ LONG/SHORT EQUITY FUND -------------------------------------------------------------- FOR THE SIX MONTHS ENDED FOR THE FEBRUARY 29, 2004 YEAR ENDED (UNAUDITED) AUGUST 31, 2003 --------------------------- ---------------------------- SHARES VALUE SHARES VALUE ---------- ----------- ---------- ------------ INSTITUTIONAL CLASS Sales ............................. 1,403,704 $20,180,460 1,681,429 $ 24,544,313 Repurchases ....................... (1,370,854) (19,755,811) (2,215,274) (32,149,027) Redemption Fees* .................. -- 39,968 -- 116,881 Reinvestments ..................... -- -- 193,425 2,827,683 ---------- ----------- ---------- ------------ Net Increase / (Decrease)............. 32,850 $ 464,617 (340,420) $ (4,660,150) ========== =========== ========== ============ INVESTOR CLASS Sales ............................. 260,496 $ 3,753,082 382,088 $ 5,541,664 Repurchases ....................... (322,493) (4,628,578) (2,697,620) (38,976,974) Redemption Fees ................... -- 9,787 -- 79,825 Reinvestments ..................... -- -- 136,483 1,991,288 ---------- ----------- ---------- ------------ Net Increase / (Decrease)............. (61,997) $ (865,709) (2,179,049) $(31,364,197) ========== =========== ========== ============
SEMI-ANNUAL REPORT 2004 | 45 BOSTON PARTNERS FAMILY OF FUNDS -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued) --------------------------------------------------------------------------------
LARGE CAP VALUE FUND -------------------------------------------------------------- FOR THE SIX MONTHS ENDED FOR THE FEBRUARY 29, 2004 YEAR ENDED (UNAUDITED) AUGUST 31, 2003 --------------------------- ---------------------------- SHARES VALUE SHARES VALUE ---------- ----------- ---------- ------------ INSTITUTIONAL CLASS Sales ............................. 215,744 $ 2,480,138 1,283,473 $ 12,551,509 Repurchases ....................... (443,420) (5,430,534) (1,677,587) (17,136,986) Reinvestments ..................... 34,867 415,263 65,681 642,365 ---------- ----------- ---------- ------------ Net Increase / (Decrease)............. (192,809) $(2,535,133) (328,433) $ (3,943,112) ========== =========== ========== ============ INVESTOR CLASS Sales ............................. 179,140 $ 2,140,461 183,613 $ 1,870,286 Repurchases ....................... (91,306) (1,126,680) (478,804) (4,601,207) Reinvestments ..................... 3,317 40,164 8,081 80,486 ---------- ----------- ---------- ------------ Net Increase / (Decrease)............. 91,151 $ 1,053,945 (287,110) $ (2,650,435) ========== =========== ========== ============ MID CAP VALUE FUND -------------------------------------------------------------- FOR THE SIX MONTHS ENDED FOR THE FEBRUARY 29, 2004 YEAR ENDED (UNAUDITED) AUGUST 31, 2003 --------------------------- ---------------------------- SHARES VALUE SHARES VALUE ---------- ----------- ---------- ------------ INSTITUTIONAL CLASS Sales ............................. 244,351 $ 3,106,543 1,958,419 $ 18,368,866 Repurchases ....................... (1,145,757) (14,067,928) (2,199,168) (21,583,778) Reinvestments ..................... 16,114 203,846 127 1,202 ---------- ----------- ---------- ------------ Net Increase / (Decrease)............. (885,292) $(10,757,539) (240,622) $ (3,213,710) ========== =========== ========== ============ INVESTOR CLASS Sales ............................. 72,775 $ 918,529 167,694 $ 1,797,768 Repurchases ....................... (34,556) (426,378) (541,625) (4,970,637) Reinvestments ..................... 846 10,588 -- -- ---------- ----------- ---------- ------------ Net Increase / (Decrease)............. 39,065 $ 502,739 (373,931) $ (3,172,869) ========== =========== ========== ============
46 | SEMI-ANNUAL REPORT 2004 BOSTON PARTNERS FAMILY OF FUNDS -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (Unaudited) (continued) --------------------------------------------------------------------------------
ALL-CAP VALUE FUND -------------------------------------------------------------- FOR THE SIX MONTHS ENDED FOR THE FEBRUARY 29, 2004 YEAR ENDED (UNAUDITED) AUGUST 31, 2003 --------------------------- ---------------------------- SHARES VALUE SHARES VALUE ---------- ----------- ---------- ------------ INSTITUTIONAL CLASS Sales ............................. 61,975 $741,435 78,400 $677,906 Repurchases ....................... (195) (2,379) (3,504) (32,342) Reinvestments ..................... 1,362 16,593 604 5,490 ------ -------- ------ -------- Net Increase / (Decrease)............. 63,142 $755,649 75,500 $651,054 ====== ======== ====== ======== INVESTOR CLASS Sales ............................. 6,897 $ 88,964 2,792 $ 24,996 Repurchases ....................... (859) (10,918) (1,916) (20,020) Reinvestments ..................... 31 385 20 181 ------ -------- ------ -------- Net Increase / (Decrease)............. 6,069 $ 78,431 896 $ 5,157 ====== ======== ====== ========
*There is a 1.00% redemption fee on shares redeemed which have been held 365 days or less on the Small Cap Value Fund II. There is a 2.00% redemption fee on shares redeemed which have been held 365 days or less on the Long/Short Equity Fund. The redemption fees are retained by the Fund for the benefit of the remaining shareholders and recorded as paid-in capital. 5. PROXY VOTING Policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities are available without charge, upon request, by calling (888) 261-4073 and on the Securities and Exchange Commmission's website at http://www.sec.gov. 6. FEDERAL INCOME TAX INFORMATION At February 29, 2004, Federal tax cost, aggregate gross unrealized appreciation and depreciation of securities held by each Fund were as follows:
NET UNREALIZED FEDERAL TAX UNREALIZED UNREALIZED APPRECIATION/ FUND COST APPRECIATION DEPRECIATION DEPRECIATION ---- ------------ ------------ ------------ -------------- Small Cap Value Fund II $400,563,917 $124,087,293 $(9,755,619) $114,331,674 Long/Short Equity Fund 16,426,946 13,415,505 (5,430,305) 7,985,200 Large Cap Value Fund 46,476,974 10,227,742 (192,583) 10,035,159 Mid Cap Value Fund 46,617,287 12,901,018 (397,156) 12,503,862 All-Cap Value Fund 3,514,879 1,069,939 (53,166) 1,016,773
SEMI-ANNUAL REPORT 2004 | 47 BOSTON PARTNERS FAMILY OF FUNDS -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (Unaudited) (concluded) -------------------------------------------------------------------------------- As of August 31, 2003, the components of distributable earnings on a tax basis were as follows: UNDISTRIBUTED UNDISTRIBUTED ORDINARY LONG-TERM FUND INCOME GAINS ------ ------------- ------------- Small Cap Value Fund II $ -- $833,321 Long/Short Equity Fund -- -- Large Cap Value Fund 456,086 -- Mid Cap Value Fund 293,405 -- All-Cap Value Fund 8,953 -- At August 31, 2003, the Funds had capital loss carryforwards available to offset future capital gains through the indicated expiration dates: EXPIRING AUGUST 31, FUND 2010 2011 ------ -------- ---------- Long/Short Equity Fund $ -- $1,343,012 Large Cap Value Fund -- 3,971,561 Mid Cap Value Fund 419,138 1,542,746 All-Cap Value Fund -- 26,692 Under Federal tax law, foreign currency and capital losses realized after October 31 may be deferred and treated as having arisen on the first day of the following fiscal year. For the year ended August 31, 2003, the Long/Short Equity Fund, Large Cap Value Fund, Mid Cap Value Fund and All-Cap Value Fund incurred post-October capital losses of $10,748,066, $3,473,304, $1,039,671 and $24,220, respectively. For the year ended August 31, 2003, the Long/Short Equity Fund incurred post-October currency losses of $80. The differences between the book and tax basis components of distributable earnings relate principally to the timing of recognition of income and gains for federal income tax purposes. Short-term and foreign currency gains are reported as ordinary income for federal tax purposes. The tax character of dividends and distributions paid during the last two fiscal years were as follows:
TAX ORDINARY LONG-TERM RETURN OF FUND INCOME GAINS CAPITAL TOTAL ---- ----------- ---------- ---------- ----------- Small Cap Value Fund II 2003 $ -- $ 71,052 -- $ 71,052 2002 4,099,661 238,190 -- 4,337,851 Long/Short Equity Fund 2003 $ 3,586,634 $ -- $1,315,424 $ 4,902,058 2002 1,290,287 86,215 -- 1,376,502 Large Cap Value Fund 2003 $ 289,984 $ 436,295 -- $ 726,279 2002 3,666,759 2,195,046 -- 5,861,805 Mid Cap Value Fund 2003 $ 1,576 $ -- -- $ 1,576 2002 13,058,496 -- -- 13,058,496 All-Cap Value Fund 2003 $ 7,171 $ -- -- $ 7,171 2002 -- -- -- --
48 | SEMI-ANNUAL REPORT 2004 BOSTON PARTNERS FAMILY OF FUNDS -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- FUND MANAGEMENT (Unaudited) -------------------------------------------------------------------------------- Information pertaining to the Directors and Officers of the Fund is set forth below. The statement of additional information (SAI) includes additional information about the Directors and is available without charge, upon request, by calling (888) 261-4073.
------------------------------------------------------------------------------------------------------------------------------------ NUMBER OF POSITION(S) TERM OF OFFICE PRINCIPAL OCCUPATION(S) PORTFOLIOS IN OTHER NAME, ADDRESS, HELD AND LENGTH OF DURING PAST FUND COMPLEX DIRECTORSHIPS AND DATE OF BIRTH WITH FUND TIME SERVED 1 5 YEARS OVERSEEN BY HELD BY DIRECTOR DIRECTOR ------------------------------------------------------------------------------------------------------------------------------------ DISINTERESTED DIRECTORS ------------------------------------------------------------------------------------------------------------------------------------ Julian A. Brodsky Director 1988 to present Since 1969, Director and Vice Chairman, 16 Director, Comcast Corporation Comcast Corporation (cable television Comcast 1500 Market Street, and communications); Director, NDS Group Corporation 35th Floor PLC (provider of systems and Philadelphia, PA 19102 applications for digital pay TV). DOB: 7/16/33 ------------------------------------------------------------------------------------------------------------------------------------ Francis J. McKay Director 1988 to present Since 2000, Vice President, Fox Chase 16 None Fox Chase Cancer Center Cancer Center (biomedical research and 333 Cottman Avenue medical care); prior to 2000, Executive Philadelphia, PA 19111 Vice President, Fox Chase Cancer Center. DOB: 12/06/35 ------------------------------------------------------------------------------------------------------------------------------------ Arnold M. Reichman Director 1991 to present Since December 2000, Director, Gabelli 16 None 106 Pierrepont Street Partners, L.P. (an investment Brooklyn, NY 11201 partnership); Chief Operating Officer DOB: 5/21/48 and member of the Board of Directors of Outercurve Technologies (wireless enabling services) until April 2001; Chief Operating Officer and member of the Executive Operating Committee of Warburg Pincus Asset Management, Inc.; Executive Officer and Director of Credit Suisse Asset Management Securities, Inc. (formerly Counsellors Securities, Inc.) and Director/Trustee of various investment companies advised by Warburg Pincus Asset Management, Inc. until September 15, 1999; Prior to 1997, Managing Director of Warburg Pincus Asset Management, Inc. ------------------------------------------------------------------------------------------------------------------------------------ Marvin E. Sternberg Director 1991 to present Since 1974, Chairman, Director and 16 Director, Moyco Technologies, Inc. President, Moyco Technologies, Inc. Moyco 200 Commerce Drive (manufacturer of precision coated and Technologies, Montgomeryville, PA 18936 industrial abrasives). Since 1999, Inc. DOB: 3/24/34 Director, Pennsylvania Business Bank. ------------------------------------------------------------------------------------------------------------------------------------
ANNUAL REPORT 2003 | 49 BOSTON PARTNERS FAMILY OF FUNDS -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- FUND MANAGEMENT (Unaudited) (continued) --------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------ NUMBER OF POSITION(S) TERM OF OFFICE PRINCIPAL OCCUPATION(S) PORTFOLIOS IN OTHER NAME, ADDRESS, HELD AND LENGTH OF DURING PAST FUND COMPLEX DIRECTORSHIPS AND DATE OF BIRTH WITH FUND TIME SERVED 1 5 YEARS OVERSEEN BY HELD BY DIRECTOR DIRECTOR ------------------------------------------------------------------------------------------------------------------------------------ INTERESTED DIRECTORS 2 ------------------------------------------------------------------------------------------------------------------------------------ Robert Sablowsky Director 1991 to present Since July 2002, Senior Vice President 16 None Oppenheimer & Company, Inc. and prior thereto, Executive Vice 200 Park Avenue President of Oppenheimer & Co., Inc., New York, NY 10166 formerly Fahnestock & Co., Inc. (a DOB: 4/16/38 registered broker-dealer). ------------------------------------------------------------------------------------------------------------------------------------ J. Richard Carnall Director 2002 to present Director of PFPC Inc. from January 1987 16 None 400 Bellevue Parkway to April 2002, Chairman and Chief Wilmington, DE 19809 Executive Officer of PFPC Inc. until DOB: 9/25/38 April 2002, Executive Vice President of PNC Bank, National Association from October 1981 to April 2002, Director of PFPC International Ltd. (financial services) from August 1993 to April 2002, Director of PFPC International (Cayman) Ltd. (financial services) from September 1996 to April 2002, and Director of International Dollar Reserve Fund, Ltd. (Cayman mutual fund company) from September 1993 to present; Governor of the Investment Company Institute (investment company industry trade organization) from July 1996 to January 2002; Director of PNC Asset Management, Inc. (investment advisory) from September 1994 to March 1998; Director of PNC National Bank from October 1995 to November 1997; Director of Haydon Bolts, Inc. (bolt manufacturer) and Parkway Real Estate Company (subsidiary of Haydon Bolts, Inc.) since 1984. Mr. Carnall provides consulting services from time to time to PFPC Inc. ------------------------------------------------------------------------------------------------------------------------------------
50 | SEMI-ANNUAL REPORT 2004 BOSTON PARTNERS FAMILY OF FUNDS -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- FUND MANAGEMENT (Unaudited) (concluded) --------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------ NUMBER OF POSITION(S) TERM OF OFFICE PRINCIPAL OCCUPATION(S) PORTFOLIOS IN OTHER NAME, ADDRESS, HELD AND LENGTH OF DURING PAST FUND COMPLEX DIRECTORSHIPS AND DATE OF BIRTH WITH FUND TIME SERVED 1 5 YEARS OVERSEEN BY HELD BY DIRECTOR DIRECTOR ------------------------------------------------------------------------------------------------------------------------------------ OFFICER(S) WHO ARE NOT DIRECTORS ------------------------------------------------------------------------------------------------------------------------------------ Edward J. Roach President 1991 to present Certified Public Accountant; Vice N/A N/A 400 Bellevue Parkway and and Chairman of the Board, Fox Chase Cancer 4th Floor Treasurer 1988 to present Center; Trustee Emeritus, Pennsylvania Wilmington, DE 19809 School for the Deaf; Trustee Emeritus, DOB: 6/29/24 Immaculata University; President or Vice President and Treasurer of various investment companies advised by subsidiaries of PNC Bank Corp. from 1981 to 1997; Managing General Partner, President and Treasurer of Chestnut Street Exchange Fund; Director of the Bradford Funds, Inc. from 1996 to 2000. ------------------------------------------------------------------------------------------------------------------------------------ Lisa M. King Secretary Since 2003 Since 2000, Vice President and Counsel, N/A N/A 301 Bellevue Parkway PFPC Inc. (financial services company); 2nd Floor Associate, Stradley, Ronon, Stevens & Wilmington, DE 19809 Young, LLC (law firm) from 1996-2000. DOB: 1/27/68 ------------------------------------------------------------------------------------------------------------------------------------ 1 Each Director serves for an indefinite period of time until his successor is elected and qualified or until his death, resignation or removal. Each officer holds office at the pleasure of the Board of Directors until the next annual meeting of the Company or until his or her successor is duly elected and qualified, or until he or she dies, resigns, is removed or becomes disqualified. 2 Messrs. Carnall and Sablowsky are considered "interested persons" of the Company as that term is defined in the 1940 Act. Mr. Carnall is an "interested Director" of the Company because he owns shares of The PNC Financial Services Group, Inc. The investment adviser to the Company's Money Market Portfolio, BlackRock Institutional Management Corporation and the Company's principal underwriter, PFPC Distributors, Inc. are indirect subsidiaries of The PNC Financial Services Group, Inc. Mr. Sablowsky is considered an "interested Director" of the Company by virtue of his position as an officer of a registered broker-dealer.
ANNUAL REPORT 2003 | 51 [THIS PAGE INTENTIONALLY LEFT BLANK] (LOGO) bp BOSTON PARTNERS ASSET MANAGEMENT, L.L.C. --------------------------------------------------------------- ONE PHILOSOPHY o ONE CULTURE o ONE FOCUS [GRAPHIC OMITTED] INVESTMENT ADVISER --------------------------- Boston Partners Asset Management, L.L.C. 28 State Street Boston, MA 02109 ADMINISTRATOR ----------------------- PFPC Inc. 301 Bellevue Parkway Wilmington, DE 19809 TRANSFER AGENT ----------------------- PFPC Inc. 301 Bellevue Parkway Wilmington, DE 19809 DISTRIBUTOR ----------------------- PFPC Distributors, Inc. 760 Moore Rd. King of Prussia, PA 19406 CUSTODIAN ----------------------- PFPC Trust Company 8800 Tinicum Blvd. Suite 200 Philadelphia, PA 19153 INDEPENDENT AUDITORS ---------------------------------- 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 each Fund. It is not authorized for the distribution to prospective investors in the Funds 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 Funds will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than original cost. Current performance may be lower or higher than the performance data provided in the report. UNION BUG [GRAPHIC OMITTED] ================================================================================ THE SCHNEIDER FUNDS ================================================================================ SCHNEIDER SMALL CAP VALUE FUND SCHNEIDER VALUE FUND ===================== SEMI-ANNUAL REPORT FEBRUARY 29, 2004 ===================== [LOGO OMITTED] ------------------------------------ SCHNEIDER CAPITAL MANAGEMENT THE SCHNEIDER FUNDS SEMI-ANNUAL INVESTMENT ADVISER'S REPORT FEBRUARY 29, 2004 (UNAUDITED) Dear Fellow Shareholder: We are pleased to provide you with the semi-annual report for the Schneider Funds for the six months ended February 29, 2004. INVESTMENT CLIMATE The rally in U.S. stocks continued during the period as mounting evidence pointed to a sustained global economic expansion. Growth in U.S. corporate profits, consumer spending and business investment, combined with persistently low interest rates, contributed to the healthy advance. The Russell 3000 Index, which represents the broad U.S. market, climbed 15.06% during the period. The Russell 2000 Index of small cap stocks rose 18.37%. SCHNEIDER SMALL CAP VALUE FUND -- INVESTMENT REVIEW AND PORTFOLIO STRATEGY The performance of the Small Cap Value Fund exceeded the performance of the benchmark Russell 2000 Value Index during the six months ending February 29, 2004, returning 39.75% versus 21.31% for the benchmark. Since inception on September 2, 1998, the Fund has performed well in delivering a 32.77% annualized total return versus 14.76% for the index. The Fund holdings were well positioned during the period in industrial companies that benefit greatly from a broad economic upturn. Performance leadership came from basic materials stocks, including U.S. Steel, Cleveland-Cliffs and Southern Peru Copper. We believe constrained industry capacity and disciplined cost-cutting are bearing fruit for many industrial commodity producers. We also believe the pickup in global demand from China and elsewhere set the stage for substantial price increases in certain commodities and accelerating profit growth for global producers. The upturn in technology spending by consumers and businesses has led to higher capacity utilization, cash flow and capital spending in the semiconductor industry. Integrated Silicon Solution and Kulicke & Soffa were among the semiconductor holdings that positively impacted Fund performance during the period. The Fund maintains a significant exposure to non-tech cyclical stocks in select materials, commodities and transportation sectors. We believe that increases in global business investment should result in sustained unit growth and margin improvement for many industrial companies that were severely hit by the downturn in the manufacturing sector from 2000 through 2002. SCHNEIDER VALUE FUND -- INVESTMENT REVIEW AND PORTFOLIO STRATEGY The Value Fund delivered favorable results over the six months ending February 29, 2004, returning 27.50% versus 17.53% for the benchmark Russell 1000 Value Index. Since the inception date of September 30, 2002, the Fund has performed well in delivering a 56.78% annualized total return versus 31.74% for the index. The Fund holdings were well positioned during the period in industrial cyclical companies that benefit greatly from the broad upturn in global economies. 1 THE SCHNEIDER FUNDS SEMI-ANNUAL INVESTMENT ADVISER'S REPORT (CONTINUED) FEBRUARY 29, 2004 (UNAUDITED) Growth in technology spending by consumers and businesses has led to higher capacity utilization, cash flow and capital spending in the semiconductor industry. We believe the group is in the early stages of recovery from the severe slump it suffered during the past few years. Testing equipment maker Teradyne was a strong performer during the period. We believe constrained industry capacity and disciplined cost-cutting are bearing fruit for many industrial commodity producers of copper, steel, uranium, aluminum, and coal. We also believe the pickup in global demand from China and elsewhere set the stage for substantial price increases in certain commodities and accelerating profit growth for global producers. U.S. Steel and Freeport McMoRan were major contributors to Fund returns. The Fund maintains a significant exposure to non-tech cyclicals stocks in select materials, commodities and transportation sectors. We believe that increases in global business investment should result in sustained unit growth and margin improvement for many industrial companies that were severely hit by the severe downturn in manufacturing from 2000 through 2002. We will continue to implement our time-tested approach to value investing that is grounded in a research foundation, an effort to discover new investment ideas, and a rigorous sell discipline. We appreciate your continuing support of the Funds. /s/ Arnold C. Schneider III Arnold C. Schneider III, CFA Portfolio Manager Schneider Capital Management 2 THE SCHNEIDER FUNDS SCHNEIDER SMALL CAP VALUE FUND SEMI-ANNUAL INVESTMENT ADVISER'S REPORT (CONTINUED) FEBRUARY 29, 2004 (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 USED IN PRINTED GRAPHIC AS FOLLOWS: Schneider Small Cap Value Fund Russell 2000 Value Index 9/2/98 $10,000.00 $10,000.00 9/30/98 10,000.00 10,362.46 10/31/98 11,930.00 10,670.14 11/30/98 12,410.00 10,958.97 12/31/98 12,470.71 11,302.59 1/31/99 13,785.55 11,046.05 2/28/99 12,531.39 10,291.88 3/31/99 13,006.76 10,206.99 4/30/99 15,221.75 11,138.79 5/31/99 16,233.16 11,481.15 6/30/99 18,043.59 11,896.87 7/31/99 18,731.35 11,614.52 8/31/99 18,245.87 11,189.98 9/30/99 17,517.66 10,966.27 10/31/99 16,759.10 10,746.81 11/30/99 17,456.97 10,802.52 12/31/99 18,340.82 11,134.43 1/31/00 17,832.99 10,843.25 2/29/00 18,069.19 11,505.98 3/31/00 19,391.91 11,559.95 4/30/00 19,391.91 11,628.35 5/31/00 19,769.82 11,450.93 6/30/00 19,840.68 11,785.51 7/31/00 19,734.39 12,178.19 8/31/00 20,750.05 12,722.64 9/30/00 20,844.53 12,650.54 10/31/00 20,490.23 12,605.62 11/30/00 19,415.52 12,349.02 12/31/00 21,494.55 13,675.90 1/31/01 24,177.81 14,053.39 2/28/01 23,127.22 14,034.00 3/31/01 22,034.04 13,808.88 4/30/01 23,325.98 14,448.03 5/31/01 24,546.94 14,819.59 6/30/01 25,100.63 15,415.83 7/31/01 24,873.48 15,070.14 8/31/01 24,887.67 15,017.92 9/30/01 20,855.67 13,360.11 10/31/01 21,863.67 13,709.06 11/30/01 23,950.66 14,694.12 12/31/01 25,657.04 15,593.79 1/31/02 25,477.20 15,800.78 2/28/02 25,447.23 15,897.00 3/31/02 28,414.57 17,087.52 4/30/02 29,388.70 17,688.99 5/31/02 29,088.97 17,103.97 6/30/02 27,785.14 16,725.28 7/31/02 22,824.58 14,240.28 8/31/02 22,210.13 14,177.00 9/30/02 19,767.30 13,164.30 10/31/02 19,887.20 13,362.30 11/30/02 23,484.00 14,428.60 12/31/02 21,848.00 13,812.20 1/31/03 20,911.90 13,423.30 2/28/03 20,292.80 12,972.05 3/31/03 20,126.74 13,110.59 4/30/03 23,010.62 14,355.89 5/31/03 26,664.53 15,821.69 6/30/03 27,313.78 16,089.78 7/31/03 30,469.44 16,892.13 8/31/03 34,002.57 17,533.79 9/30/03 33,202.00 17,333.00 10/31/03 38,366.00 18,746.00 11/30/03 42,292.00 19,466.00 12/31/03 45,017.00 20,170.00 1/31/04 46,405.00 20,867.00 2/29/04 47,518.00 21,271.00 Past performance is not predictive of future results.
---------------------------------------------------------------------------------------- Total Returns VALUE ON SIX MONTHS ENDED FEBRUARY 29, 2004 FEBRUARY 29, 2004 SINCE INCEPTION (3) ----------------- ----------------- ------------------- Schneider Small Cap Value $47,518 39.75% 32.77% Russell 2000 Value Index $21,271 21.31% 14.76% ----------------------------------------------------------------------------------------
The Fund's annualized total return since inception is based on an increase in net asset value from $10.00 per share on September 2, 1998 to $29.46 per share on February 29, 2004, adjusted for dividends and distributions totaling $8.32 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 Russell 2000 Value Index is unmanaged, does not incur sales charges and/or expenses and is 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 (inception) through February 29, 2004. 3 THE SCHNEIDER FUNDS SCHNEIDER VALUE FUND SEMI-ANNUAL INVESTMENT ADVISER'S REPORT (CONCLUDED) FEBRUARY 29, 2004 (UNAUDITED) Comparison of Change in Value of $10,000 Investment in Schneider Value Fund (1)(2) vs. Russell 1000 Value Index [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA USED IN PRINTED GRAPHIC AS FOLLOWS: Schneider Russell 1000 Value Value Index ---------- ------------ 9/30/02 $10,000.00 $10,000.00 10/31/02 10,660.00 10,740.90 11/30/02 11,950.00 11,417.50 12/31/02 11,237.20 10,921.60 1/31/03 10,635.80 10,657.30 2/28/03 10,565.60 10,373.10 3/31/03 10,796.20 10,390.50 4/30/03 11,638.20 11,304.90 5/31/03 13,041.60 12,034.70 6/30/03 13,252.10 12,185.30 7/31/03 13,983.90 12,366.80 8/31/03 14,846.00 12,559.40 9/30/03 14,495.00 12,437.00 10/31/03 15,628.00 13,198.00 11/30/03 16,430.00 13,377.00 12/31/03 17,738.00 14,201.00 1/31/04 18,396.00 14,451.00 2/29/04 18,929.00 14,761.00 Past performance is not predictive of future results.
---------------------------------------------------------------------------------------------------- Total Returns VALUE ON SIX MONTHS ENDED FEBRUARY 29, 2004 FEBRUARY 29, 2004 SINCE INCEPTION (3) ----------------- ----------------- ------------------- Schneider Value $18,929 27.50% 56.78% Russell 1000 Value Index $14,761 17.53% 31.74% ----------------------------------------------------------------------------------------------------
The Fund's aggregate total return since inception is based on an increase in net asset value from $10.00 per share on September 30, 2002 to $18.12 per share on February 29, 2004, adjusted for dividends and distributions totaling $0.71 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 30, 2002 (inception) and reflects Fund expenses. Investors should note that the Fund is a professionally managed mutual fund while the Russell 1000 Value Index is unmanaged, does not incur sales charges and/or expenses and is 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 30, 2002 (inception) through February 29, 2004. 4 THE SCHNEIDER FUNDS SCHNEIDER SMALL CAP VALUE FUND PORTFOLIO OF INVESTMENTS FEBRUARY 29, 2004 (UNAUDITED) SHARES VALUE ------ ----------- DOMESTIC COMMON STOCKS -- 89.0% AEROSPACE & DEFENSE -- 2.0% BE Aerospace, Inc.* ......................... 142,100 $ 929,334 CAE, Inc. ................................... 14,150 67,778 Orbital Sciences Corp.* ..................... 4,325 54,582 ----------- 1,051,694 ----------- AGRICULTURE -- 1.6% Corn Products International, Inc. ........... 21,275 806,322 ----------- AIRCRAFT PARTS & AUXILIARY EQUIPMENT, NEC -- 1.7% HEICO Corp. ................................. 5,737 75,155 Triumph Group, Inc.* ........................ 23,400 782,730 ----------- 857,885 ----------- AIRLINES -- 0.6% Northwest Airlines Corp.* ................... 26,850 291,054 ----------- ALUMINUM -- 0.2% Commonwealth Industries, Inc.* .............. 14,275 92,945 ----------- AUTOMOBILE PARTS & EQUIPMENT -- 1.5% Visteon Corp. ............................... 77,600 783,760 ----------- BANKS -- 1.0% Provident Financial Group, Inc. ............. 13,475 539,943 ----------- CHEMICALS -- 7.1% Airgas, Inc. ................................ 7,300 151,475 Celanese AG ................................. 15,575 626,115 Georgia Gulf Corp. .......................... 14,350 390,463 IMC Global, Inc. ............................ 93,750 1,059,375 Millennium Chemicals, Inc.* ................. 89,600 1,197,952 PolyOne Corp.* .............................. 45,825 263,494 ----------- 3,688,874 ----------- CHEMICALS - SPECIALTY -- 0.1% Cytec Industries, Inc. ...................... 2,000 69,580 ----------- COMMUNICATIONS -- 0.2% UnitedGlobalCom, Inc.* ...................... 11,750 111,507 ----------- COMPUTER COMPONENTS -- 0.6% Silicon Storage Technology, Inc.* ........... 24,200 302,984 ----------- COMPUTER SOFTWARE -- 0.6% MSC. Software Corp.* ........................ 32,300 311,049 ----------- SHARES VALUE ------ ----------- CONSTRUCTION -- 0.9% Shaw Group, Inc. (The)* ..................... 36,850 $ 443,674 ----------- ELECTRICAL EQUIPMENT -- 1.6% GrafTech International, Ltd.* ............... 60,750 824,377 ----------- ELECTRONIC COMPONENTS & ACCESSORIES -- 0.8% Avnet, Inc.* ................................ 17,400 409,770 ----------- ENERGY & UTILITIES -- 5.5% Allegheny Energy, Inc.* ..................... 28,075 370,309 Massey Energy Co. ........................... 45,550 959,739 Reliant Resources, Inc.* .................... 203,450 1,546,220 ----------- 2,876,268 ----------- FERTILIZERS -- 0.6% LESCO, Inc. ................................. 23,625 283,500 ----------- FINANCE -- 1.4% AmeriCredit Corp.* .......................... 18,000 342,360 Westcorp .................................... 9,420 403,176 ----------- 745,536 ----------- FOOD -- 1.6% Interstate Bakeries Corp. ................... 37,725 565,875 Tate & Lyle P.L.C. -- ADR ................... 13,300 285,326 ----------- 851,201 ----------- FOOTWEAR -- 0.3% Barry (R.G.) Corp.* ......................... 69,975 145,548 ----------- GENERAL INDUSTRIAL MACHINERY & EQUIPMENT -- 0.0% Metso Corp. ................................. 1,150 15,559 ----------- HOMEBUILDING -- 2.8% Champion Enterprises, Inc.* ................. 137,875 1,468,369 ----------- HOSPITALS -- 0.8% LifePoint Hospitals, Inc.* .................. 12,050 403,675 ----------- HOTEL/RESTAURANTS -- 0.8% Interstate Hotels & Resorts, Inc.* .......... 43,275 252,726 Triarc Companies, Inc. ...................... 13,850 152,211 ----------- 404,937 ----------- INDUSTRIAL GOODS & MATERIALS -- 0.4% Albany International Corp., Class A ......... 6,225 198,702 ----------- The accompanying notes are an integral part of the financial statements. 5 THE SCHNEIDER FUNDS SCHNEIDER SMALL CAP VALUE FUND PORTFOLIO OF INVESTMENTS (CONTINUED) FEBRUARY 29, 2004 (UNAUDITED) SHARES VALUE ------ ----------- INSURANCE -- 0.3% NCRIC Group, Inc.* .......................... 14,200 $ 140,438 ----------- INSURANCE - PROPERTY & CASUALTY -- 1.1% ProAssurance Corp.* ......................... 16,750 565,815 ----------- MACHINERY -- 0.8% Flowserve Corp.* ............................ 7,050 153,197 Joy Global, Inc. ............................ 3,675 101,393 UNOVA, Inc.* ................................ 7,050 153,549 ----------- 408,139 ----------- MANUFACTURED HOUSING -- 0.9% Fleetwood Enterprises, Inc.* ................ 35,125 461,894 ----------- MANUFACTURING -- 4.2% Hardinge, Inc. .............................. 2,500 30,325 Navistar International Corp.* ............... 23,475 1,093,935 Trinity Industries, Inc. .................... 15,389 447,820 York International Corp. .................... 16,725 624,344 ----------- 2,196,424 ----------- MEDICAL & MEDICAL SERVICES -- 1.0% American Physicians Capital, Inc.* .......... 25,050 511,020 ----------- METALS & MINING -- 4.1% Brush Engineered Materials, Inc.* ........... 43,900 880,195 Century Aluminum Co.* ....................... 17,925 487,560 Cleveland-Cliffs, Inc.* ..................... 11,700 692,055 Southern Peru Copper Corp. .................. 1,475 55,755 ----------- 2,115,565 ----------- OFFICE FURNISHINGS -- 1.1% Interface, Inc.* ............................ 78,395 591,098 ----------- OIL & GAS FIELD SERVICES -- 0.8% Newpark Resources, Inc.* .................... 15,600 78,780 Trico Marine Services, Inc.* ................ 14,950 28,106 Willbros Group, Inc.* ....................... 20,925 324,337 ----------- 431,223 ----------- OIL REFINING -- 1.8% Premcor, Inc.* .............................. 30,200 949,790 ----------- SHARES VALUE ------ ----------- PAPER -- 0.7% Glatfelter .................................. 30,275 $ 352,704 ----------- PAPER & FORESTRY PRODUCTS -- 2.2% Longview Fibre Co. .......................... 33,625 436,452 Votorantim Celulose e Papel S.A. -- ADR ...................................... 20,825 708,050 ----------- 1,144,502 ----------- RACETRACKS -- 0.4% Magna Entertainment Corp.* .................. 42,150 230,560 ----------- REAL ESTATE -- 8.4% American Real Estate Partners, L.P.* ........ 66,500 1,010,800 Boykin Lodging Co., REIT .................... 83,925 774,628 Jones Lang LaSalle, Inc.* ................... 46,125 1,107,000 MeriStar Hospitality Corp., REIT* ........... 124,600 778,750 MI Developments, Inc.* ...................... 22,875 671,610 ----------- 4,342,788 ----------- RESIDENTIAL CONSTRUCTION -- 0.3% WCI Communities, Inc.* ...................... 6,025 138,214 ----------- RESTAURANTS -- 0.5% Triarc Companies, Inc. ...................... 24,825 275,558 ----------- RETAIL -- 1.3% MarineMax, Inc.* ............................ 12,650 336,111 United Auto Group, Inc. ..................... 4,100 116,358 Warnaco Group, Inc. (The)* .................. 12,100 211,750 ----------- 664,219 ----------- RETAIL - SPECIALTY STORES -- 1.2% Goodyear Tire & Rubber Co. (The)* ........... 60,325 507,936 Linens 'n Things, Inc.* ..................... 2,675 90,683 ----------- 598,619 ----------- RETAIL MERCHANDISING -- 1.8% Dillard's, Inc. ............................. 22,000 387,200 Great Atlantic & Pacific Tea Company, Inc. (The)* .............................. 66,600 529,470 ----------- 916,670 ----------- The accompanying notes are an integral part of the financial statements. 6 THE SCHNEIDER FUNDS SCHNEIDER SMALL CAP VALUE FUND PORTFOLIO OF INVESTMENTS (CONTINUED) FEBRUARY 29, 2004 (UNAUDITED) SHARES VALUE ------ ----------- SEMICONDUCTORS & RELATED -- 1.5% ASM International N.V.* ..................... 33,375 $ 790,988 ----------- SEMICONDUCTOR EQUIPMENT -- 8.7% Alliance Semiconductor Corp.* ............... 141,425 1,096,044 Axcelis Technologies, Inc.* ................. 21,550 246,532 BE Semiconductor Industries N.V.* ........... 360,318 2,882,544 Integrated Silicon Solution, Inc.* .......... 9,125 146,730 Kulicke and Soffa Industries, Inc.* ......... 5,575 69,409 Ultratech, Inc.* ............................ 3,025 75,050 ----------- 4,516,309 ----------- STEEL -- 0.7% NS Group, Inc.* ............................. 4,650 43,710 United States Steel Corp. ................... 8,425 309,619 ----------- 353,329 ----------- TELECOMMUNICATIONS & EQUIPMENT -- 0.5% Triton PCS Holdings, Inc.* .................. 50,550 281,564 ----------- TRANSPORTATION -- 4.3% Covenant Transport, Inc., Class A* .......... 43,700 784,852 Stolt-Nielsen S.A. -- ADR ................... 26,875 429,462 U.S. Xpress Enterprises, Inc., Class A* ..... 17,850 256,862 Werner Enterprises, Inc. .................... 40,712 776,378 ----------- 2,247,554 ----------- TRUCK TRAILERS -- 4.2% Wabash National Corp.* ...................... 77,025 2,191,361 ----------- UTILITIES -- 1.5% Sierra Pacific Resources* ................... 99,600 802,776 ----------- TOTAL DOMESTIC COMMON STOCKS (Cost $30,193,505) ..................... 46,197,834 ----------- CANADIAN COMMON STOCK -- 1.3% Boardwalk Equities, Inc. .................... 11,675 154,362 Cameco Corp. ................................ 10,850 515,107 ----------- TOTAL CANADIAN COMMON STOCK (Cost $310,515) ........................ 669,467 ----------- SHARES VALUE ------ ----------- PREFERRED STOCKS -- 0.3% UTILITIES -- 0.3% Sierra Pacific Resources 9.00% .............. 4,400 $ 166,936 ----------- TOTAL PREFERRED STOCKS (Cost $148,400) ........................ 166,936 ----------- PAR (000) ------- CORPORATE BONDS -- 1.1% Mercer Int'l, Inc. SR SB CV144A 8.50%, 10/15/10 .......................... $500 580,625 ----------- TOTAL CORPORATE BONDS (Cost $500,000) ........................ 580,625 ----------- SHARES ------ EXCHANGE TRADED FUNDS -- 3.5% FINANCE -- 3.5% iShares Russell 2000 Value Index Fund ....... 10,835 1,837,616 ----------- TOTAL EXCHANGE TRADED FUNDS (Cost $1,795,433) ...................... 1,837,616 ----------- PAR (000) ------- SHORT-TERM INVESTMENTS -- 4.1% Galaxy Money Market Fund 0.97%, 03/01/04 .......................... $1,064 1,063,510 Wilmington Prime Money Market Portfolio 0.60%, 03/01/04 .......................... 1,064 1,063,510 ----------- TOTAL SHORT-TERM INVESTMENTS (Cost $2,127,020) ...................... 2,127,020 ----------- The accompanying notes are an integral part of the financial statements. 7 THE SCHNEIDER FUNDS SCHNEIDER SMALL CAP VALUE FUND PORTFOLIO OF INVESTMENTS (CONCLUDED) FEBRUARY 29, 2004 (UNAUDITED) VALUE ----------- TOTAL INVESTMENTS -- 99.3% (Cost $35,074,873) ....................... $51,579,498 ----------- ASSETS IN EXCESS OF OTHER LIABILITIES -- 0.7% ................ 358,301 ----------- NET ASSETS -- 100.0% ........................ $51,937,799 =========== ---------- * Non-income producing. ADR - American Depository Receipt REIT - Real Estate Investment Trust 144A - Security was purchased pursuant to Rule 144A under Securities Act of 1933 and may not be resold subject to that rule except to qualified institutional buyers. As of February 29, 2004, these securities amounted to 1.12% of net assets. The accompanying notes are an integral part of the financial statements. 8 THE SCHNEIDER FUNDS SCHNEIDER VALUE FUND PORTFOLIO OF INVESTMENTS FEBRUARY 29, 2004 (UNAUDITED) SHARES VALUE ------ ----------- COMMON STOCKS -- 93.7% AEROSPACE & DEFENSE -- 5.1% Boeing Co. (The) ............................ 29,200 $ 1,266,404 ----------- AIR TRANSPORT -- 0.7% Delta Air Lines, Inc. ....................... 18,600 167,028 ----------- AUTOMOBILE PARTS & EQUIPMENT -- 1.3% Visteon Corp. ............................... 32,200 325,220 ----------- BANKS -- 2.9% FleetBoston Financial Corp. ................. 14,400 648,432 National City Corp. ......................... 2,100 74,970 ----------- 723,402 ----------- BITUMINOUS COAL & LIGNITE MINING -- 1.8% CONSOL Energy, Inc. ......................... 17,875 450,986 ----------- BROADCASTING/CABLE TV -- 3.4% Liberty Media Corp.* ........................ 74,670 851,238 ----------- CHEMICALS -- 2.5% IMC Global, Inc. ............................ 54,775 618,957 ----------- CHEMICALS - SPECIALTY -- 1.5% Dow Chemical Co. (The) ...................... 8,775 381,449 ----------- COMPUTERS, SOFTWARE & SERVICING -- 2.3% BearingPoint, Inc.* ......................... 10,400 110,760 Electronic Data Systems Corp. ............... 25,000 478,750 ----------- 589,510 ----------- ELECTRONIC COMPONENTS -- 0.3% Celestica Inc.* ............................. 3,550 63,651 ----------- ELECTRONIC COMPONENTS & ACCESSORIES -- 9.1% Avnet, Inc.* ................................ 30,750 724,162 Circuit City Stores, Inc. ................... 8,450 94,471 Micron Technology, Inc.* .................... 40,700 612,128 Sanmina-SCI Corp.* .......................... 66,450 843,251 ----------- 2,274,012 ----------- ELECTRONICS -- 1.7% Agilent Technologies, Inc.* ................. 12,275 419,682 ----------- ENERGY & UTILITIES -- 2.2% Reliant Resources, Inc.* .................... 72,625 551,950 ----------- SHARES VALUE ------ ----------- FINANCIAL SERVICES -- 2.1% CIT Group, Inc. ............................. 13,250 $ 522,978 ----------- FOOD -- 2.6% Tate & Lyle P.L.C. -- ADR ................... 30,025 644,129 ----------- FOOD & BEVERAGE -- 2.4% Archer-Daniels-Midland Co. .................. 14,625 251,550 Smithfield Foods, Inc.* ..................... 13,725 351,086 ----------- 602,636 ----------- HEALTH CARE DIVERSIFIED -- 0.6% Baxter International, Inc. .................. 5,375 156,520 ----------- HOME FURNISHINGS/HOUSEWARES -- 1.3% Newell Rubbermaid, Inc. ..................... 12,775 326,912 ----------- HOTEL/RESTAURANTS -- 3.4% Starwood Hotels & Resorts Worldwide, Inc ...................................... 21,750 848,468 ----------- INDUSTRIAL GOODS & MATERIALS -- 4.6% Tyco International, Ltd. .................... 40,325 1,152,085 ----------- INSURANCE -- 2.3% CIGNA Corp. ................................. 6,900 382,467 Loews Corp. ................................. 3,125 188,406 UNUMProvident Corp. ......................... 1,150 17,043 ----------- 587,916 ----------- LEISURE & ENTERTAINMENT -- 2.2% Carnival Corp. .............................. 12,725 564,608 ----------- MANUFACTURING -- 3.5% Brunswick Corp. ............................. 7,525 296,184 Navistar International Corp.* ............... 12,275 572,015 ----------- 868,199 ----------- MEDICAL & MEDICAL SERVICES -- 1.4% Tenet Healthcare Corp.* ..................... 28,700 344,974 ----------- METALS -- 2.4% Alcan, Inc. ................................. 12,625 601,329 ----------- METALS & MINING -- 1.9% Freeport-McMoRan Copper & Gold, Inc., Class B .................................. 11,316 482,627 ----------- The accompanying notes are an integral part of the financial statements. 9 THE SCHNEIDER FUNDS SCHNEIDER VALUE FUND PORTFOLIO OF INVESTMENTS (CONCLUDED) FEBRUARY 29, 2004 (UNAUDITED) SHARES VALUE ------ ----------- OIL REFINING -- 1.6% Premcor, Inc.* .............................. 12,900 $ 405,705 ----------- PAPER & FORESTRY PRODUCTS -- 3.2% Abitibi-Consolidated, Inc. .................. 58,000 459,360 Domtar, Inc. ................................ 22,675 261,443 International Paper Co. ..................... 1,750 77,455 ----------- 798,258 ----------- REAL ESTATE -- 1.7% St. Joe Company (The) ....................... 10,280 421,274 ----------- RETAIL -- 4.2% J.C. Penney Co., Inc. ....................... 34,350 1,060,385 ----------- SEMICONDUCTORS & RELATED -- 1.1% Teradyne, Inc.* ............................. 11,275 277,929 ----------- TELECOMMUNICATIONS & EQUIPMENT -- 8.7% AT&T Wireless Services, Inc.* ............... 88,125 1,196,738 Nextel Communications, Inc.* ................ 20,600 545,694 Telephone & Data Systems, Inc. .............. 6,200 446,710 ----------- 2,189,142 ----------- TRANSPORTATION -- 3.3% CSX Corp. ................................... 15,950 502,904 Werner Enterprises, Inc. .................... 17,587 335,384 ----------- 838,288 ----------- UTILITIES -- 3.7% PG&E Corp.* ................................. 33,100 932,427 ----------- WHOLESALE - DRUG DISTRIBUTION -- 0.7% AmerisourceBergen Corp. ..................... 2,925 169,738 ----------- TOTAL COMMON STOCKS (Cost $18,849,416) ..................... 23,480,016 ----------- EXCHANGE TRADED FUNDS -- 1.3% FINANCIAL SERVICES -- 1.3% iShares Russell 1000 Value Index Fund ....... 5,280 320,179 ----------- TOTAL EXCHANGE TRADED FUNDS (Cost $317,408) ........................ 320,179 ----------- PAR (000) VALUE ------ ----------- SHORT-TERM INVESTMENTS -- 5.3% Galaxy Money Market Fund 0.97%, 03/01/04 .......................... $ 662 $ 661,863 Wilmington Prime Money Market Portfolio 0.60%, 03/01/04 .......................... 662 661,863 ----------- TOTAL SHORT-TERM INVESTMENTS (Cost $1,323,726) ...................... 1,323,726 ----------- TOTAL INVESTMENTS -- 100.3% (Cost $20,490,550) ....................... 25,123,921 ----------- LIABILITIES IN EXCESS OF OTHER ASSETS -- (0.3)% ................... (71,609) ----------- NET ASSETS -- 100.0% ........................ $25,052,312 =========== ------------------ * Non-income producing. ADR - American Depository Receipt The accompanying notes are an integral part of the financial statements. 10 THE SCHNEIDER FUNDS STATEMENT OF ASSETS AND LIABILITIES FEBRUARY 29, 2004 (UNAUDITED)
SCHNEIDER SCHNEIDER SMALL CAP VALUE FUND VALUE FUND -------------------- ----------- ASSETS Investments, at value (cost -- $35,074,873 and $20,490,550, respectively) ... $51,579,498 $25,123,921 Cash ........................................................................ -- 1,347 Receivable from Investment Adviser .......................................... -- 729 Receivable for investments sold ............................................. 1,222,079 16,307 Receivable for fund shares sold ............................................. -- 110,065 Dividends and interest receivable ........................................... 25,891 21,159 Prepaid expenses and other assets ........................................... 10,849 19,248 ----------- ----------- Total Assets .............................................................. 52,838,317 25,292,776 ----------- ----------- LIABILITIES Payable for investments purchased ........................................... 826,247 226,814 Payable for fund shares redeemed ............................................ 8,102 -- Payable to Investment Adviser ............................................... 23,698 -- Accrued expenses payable and other liabilities .............................. 42,471 13,650 ----------- ----------- Total Liabilities ......................................................... 900,518 240,464 ----------- ----------- NET ASSETS Capital stock, $0.001 par value ............................................. 1,763 1,383 Additional Paid-in capital .................................................. 24,851,305 19,284,897 Undistributed net investment income/(accumulated loss) ...................... (135,557) 5,428 Accumulated net realized gain from investments and foreign exchange transactions, if any ................................. 10,715,663 1,127,233 Net unrealized appreciation on investments and foreign exchange transactions, if any ..................................... 16,504,625 4,633,371 ----------- ----------- Net assets applicable to shares outstanding ................................. $51,937,799 $25,052,312 =========== =========== Shares outstanding ............................................................. 1,763,046 1,382,853 =========== =========== Net asset value, offering and redemption price per share ....................... $29.46 $18.12 =========== ===========
11 THE SCHNEIDER FUNDS STATEMENT OF OPERATIONS (UNAUDITED)
SCHNEIDER SCHNEIDER SMALL CAP VALUE FUND VALUE FUND -------------------- ----------------- FOR THE SIX FOR THE SIX MONTHS ENDED MONTHS ENDED FEBRUARY 29, 2004 FEBRUARY 29, 2004 -------------------- ----------------- INVESTMENT INCOME Dividends ................................................................. $ 111,036* $ 83,025* Interest .................................................................. 39,611 9,387 ----------- ---------- Net Investment Income ................................................... 150,647 92,412 ----------- ---------- EXPENSES Advisory fees ............................................................. 260,174 56,838 Administration fees and expenses .......................................... 57,779 53,447 Administrative services fees .............................................. 39,026 12,180 Custodian fees and expenses ............................................... 30,800 20,565 Transfer Agent fees ....................................................... 25,333 14,452 Printing fees ............................................................. 18,737 4,408 Federal and State Registration fees ....................................... 11,950 12,011 Audit and Legal fees ...................................................... 11,604 7,642 Directors fees ............................................................ 2,616 1,315 Insurance fees ............................................................ 1,257 350 Amortization of Offering costs ............................................ -- 1,432 Miscellaneous fees ........................................................ 876 683 ----------- ---------- Total expenses before waivers and reimbursements ........................ 460,152 185,323 Less: waivers ............................................................. (173,960) (100,582) Less: reimbursements ...................................................... -- (16,650) ----------- ---------- Total expenses after waivers and reimbursements ......................... 286,192 68,091 ----------- ---------- Net investment income/(loss) ................................................. (135,545) 24,321 ----------- ---------- NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENT AND FOREIGN CURRENCY TRANSACTIONS: Net realized gain from: Investments ............................................................. 16,553,411 1,286,366 Foreign currency transactions ........................................... 44 -- Net change in unrealized appreciation/(depreciation) on: Investments ............................................................. 802,668 2,571,629 Foreign currency transactions ........................................... (2) -- ----------- ---------- Net realized and unrealized gain on investments and foreign currency transactions ................................................... 17,356,121 3,857,995 ----------- ---------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ......................... $17,220,576 $3,882,316 =========== ========== ------------------ * Net of foreign withholding taxes of $235 and $1,083, respectively.
THE SCHNEIDER FUNDS STATEMENT OF CHANGES INNET ASSETS
SCHNEIDER SMALL CAP VALUE FUND ----------------------------------- FOR THE SIX MONTHS ENDED FOR THE FEBRUARY 29, 2004 YEAR ENDED (UNAUDITED) AUGUST 31, 2003 ----------------- --------------- INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS Net investment income/(loss) .................................................. $ (135,545) $ 212,476 Net realized gain/(loss) from investments and foreign currency transactions, if any ........................................................ 16,553,455 (1,556,261) Net change in unrealized appreciation on investments and foreign currency transactions, if any ................................... 802,666 18,896,189 ----------- ----------- Net increase in net assets resulting from operations .......................... 17,220,576 17,552,404 ----------- ----------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income ......................................................... (213,220) (84,186) Net realized capital gains .................................................... (3,215,235) (224,403) ----------- ----------- Total dividends and distributions to shareholders ........................... (3,428,455) (308,589) ----------- ----------- DECREASE IN NET ASSETS DERIVED FROM CAPITAL SHARE TRANSACTIONS (SEE NOTE 4) ..................................................... (10,774,785) (13,591,750) ----------- ----------- Total increase in net assets ................................................ 3,017,336 3,652,065 NET ASSETS Beginning of period ........................................................... 48,920,463 45,268,398 ----------- ----------- End of period* ................................................................ $51,937,799 $48,920,463 =========== =========== ------------------ * Includes accumulated net investment loss of $(135,557) and undistributed net investment income of $213,208 for the fiscal period ended February 29, 2004 and year ended August 31, 2003, respectively.
The accompanying notes are an integral part of the financial statements. 13 THE SCHNEIDER FUNDS STATEMENT OF CHANGES IN NET ASSETS
SCHNEIDER VALUE FUND -------------------------------------- FOR THE FOR THE PERIOD SIX MONTHS ENDED SEPTEMBER 30, 2002* FEBRUARY 29, 2004 THROUGH (UNAUDITED) AUGUST 31, 2003 ----------------- ------------------- INCREASE IN NET ASSETS RESULTING FROM OPERATIONS Net investment income ....................................................... $ 24,321 $ 37,671 Net realized gain from investments and foreign currency transactions, if any ...................................................... 1,286,366 451,547 Net change in unrealized appreciation on investments and foreign currency transactions, if any ................................. 2,571,629 2,061,742 ----------- ----------- Net increase in net assets resulting from operations ........................ 3,882,316 2,550,960 ----------- ----------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income ....................................................... (54,680) (9,472) Net realized capital gains .................................................. (610,325) (355) ----------- ----------- Total dividends and distributions to shareholders ......................... (665,005) (9,827) ----------- ----------- INCREASE IN NET ASSETS DERIVED FROM CAPITAL SHARE TRANSACTIONS (SEE NOTE 4) ................................................... 10,047,432 9,246,436 ----------- ----------- Total increase in net assets .............................................. 13,264,743 11,787,569 NET ASSETS Beginning of period ......................................................... 11,787,569 -- ----------- ----------- End of period** ............................................................. $25,052,312 $11,787,569 =========== =========== ------------------ * Commencement of operations. ** Includes undistributed net investment income of $5,428 and $35,787 for the fiscal periods ended February 29, 2004 and August 31, 2003, respectively.
The accompanying notes are an integral part of the financial statements. 14 THE SCHNEIDER FUNDS 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 ENDED FOR THE YEAR ENDED AUGUST 31, FEBRUARY 29, 2004 ---------------------------------------------------- (UNAUDITED) 2003 2002 2001 2000 ----------------- ------- ------- ------- ------- PER SHARE OPERATING PERFORMANCE* Net asset value, beginning of period ..................... $22.52 $ 14.82 $ 17.53 $ 17.57 $ 18.04 Net investment income/(loss) ............................. (0.06) 0.10 0.03 0.09 0.07 Net realized and unrealized gain/(loss) on investments and foreign currency transactions, if any(1) .......... 8.80 7.71 (1.83) 2.75 1.94 ------ ------- ------- ------- ------- Net increase/(decrease) in net assets resulting from operations ....................................... 8.74 7.81 (1.80) 2.84 2.01 ------ ------- ------- ------- ------- Dividends and distributions to shareholders from: Net investment income .................................... (0.11) (0.03) (0.07) (0.08) -- Net realized capital gains ............................... (1.69) (0.08) (0.84) (2.80) (2.48) ------ ------- ------- ------- ------- Total dividends and distributions to shareholders ........ (1.80) (0.11) (0.91) (2.88) (2.48) ------ ------- ------- ------- ------- Net asset value, end of period ........................... $ 29.46 $ 22.52 $ 14.82 $ 17.53 $ 17.57 ======= ======= ======= ======= ======= Total investment return(2) ............................... 39.75% 53.10% (10.76)% 19.94% 13.72% ======= ======= ======= ======= ======= RATIO/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) ................ $51,938 $48,920 $45,268 $38,912 $19,394 Ratio of expenses to average net assets(3) ............... 1.10% 1.10% 1.10% 1.10% 1.10% Ratio of expenses to average net assets without waivers and expense reimbursements .................... 1.77% 1.85% 1.65% 2.02% 2.37% Ratio of net investment income to average net assets(3) .. (0.52)% 0.53% 0.34% 0.71% 0.44% Portfolio turnover rate .................................. 62.52% 85.33% 102.46% 79.30% 84.93% ---------- * 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) 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. (2) 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. (3) Reflects waivers and reimbursements.
The accompanying notes are an integral part of the financial statements. 15 THE SCHNEIDER FUNDS SCHNEIDER 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 ENDED FOR THE PERIOD FEBRUARY 29, 2004 SEPTEMBER 30, 2002* (UNAUDITED) THROUGH AUGUST 31, 2003 ----------------- ----------------------- PER SHARE OPERATING PERFORMANCE** Net asset value, beginning of period ........................................... $ 14.81 $ 10.00 Net investment income .......................................................... 0.01 0.07 Net realized and unrealized gain on investments and foreign currency transactions, if any(1) ................................ 3.98 4.77 ------- ------- Net increase in net assets resulting from operations ........................... 3.99 4.84 ------- ------- Dividends and distributions to shareholders from: Net investment income .......................................................... (0.06) (0.03) Net realized capital gains ..................................................... (0.62) 0.00 ------- ------- Total dividends and distributions to shareholders .............................. (0.68) (0.03) ------- ------- Net asset value, end of period ................................................. $ 18.12 $ 14.81 ======= ======= Total investment return(2) ..................................................... 27.50% 48.46% ======= ======= RATIO/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) ...................................... $25,052 $11,788 Ratio of expenses to average net assets(3) ..................................... 0.85% 0.85%(4) Ratio of expenses to average net assets without waivers and expense reimbursements .......................................... 2.28% 4.01%(4) Ratio of net investment income to average net assets(3) ........................ 0.29% 0.72%(4) Portfolio turnover rate ........................................................ 64.23% 98.06% ---------- * 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) 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. (2) 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. (3) Reflects waivers and reimbursements. (4) Annualized.
The accompanying notes are an integral part of the financial statements. 16 THE SCHNEIDER FUNDS NOTES TO FINANCIAL STATEMENTS FEBRUARY 29, 2004 (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 "1940 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 1940 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 "Small Cap Value Fund") and the Schneider Value Fund (the "Value Fund") (each a "Fund", collectively the "Funds"), which commenced investment operations on September 2, 1998 and September 30, 2002, respectively. As of the date hereof, each Fund offers the Institutional Class. RBB has authorized capital of thirty billion shares of common stock of which 26.073 billion are currently classified into ninety-seven classes of Common Stock. Each class represents an interest in an active or inactive RBB investment portfolio. The active classes have been grouped into eight separate "families," seven of which have begun investment operations. 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 closing price or 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, and 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. Debt securities held by the Funds generally are valued based on the mean of the bid and asked prices. If a Fund holds foreign equities securities, the calculation of the Fund's net asset value (NAV) will not occur at the same time as the determination of the value of the foreign equities securities in the Fund's portfolio, since these securities are traded on foreign exchanges. 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, each 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. 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 Funds may 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 a Fund enters into repurchase agreements are banks and broker/dealers that Schneider Capital Management, LP ("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 deposit additional securities by the next Fund business day. Default by or bankruptcy of the seller would, however, expose a Fund to possible loss because of adverse market action or delays in connection with the disposition of the underlying securities. For the year/period ended February 29, 2004, the Funds did not enter into any repurchase agreements. 17 THE SCHNEIDER FUNDS NOTES TO FINANCIAL STATEMENTS (CONTINUED) FEBRUARY 29, 2004 (UNAUDITED) INVESTMENT TRANSACTIONS, INVESTMENT INCOME, AND EXPENSES -- 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 accrued as earned. Dividend income is recorded on the ex-dividend date. Expenses incurred on behalf of a specific class, fund or fund family are charged directly to the class, fund or fund family (in proportion to net assets). Expenses incurred for all of the RBB families (such as director or professional fees) are charged to all funds in proportion to their average net assets of the RBB funds. 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 Funds. 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. The books and records of the Funds are maintained in U.S. dollars. 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. DISTRIBUTIONS TO SHAREHOLDERS -- Distributions from net investment income and from net realized capital gains, if any, are declared, recorded on ex-date and paid at least annually to shareholders. 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 within the components of net assets. The following permanent differences as of February 29, 2004, primarily attributable to net investment losses, nondeductible expenses and foreign currency transactions, were reclassified to the following accounts:
INCREASE/(DECREASE) INCREASE/(DECREASE) ACCUMULATED INCREASE/(DECREASE) UNDISTRIBUTED NET REALIZED ADDITIONAL NET INVESTMENT GAIN/(LOSS) PAID-IN INCOME (LOSS) ON INVESTMENTS CAPITAL ------------------- ------------------- ------------------- Schneider Small Cap Value Fund $ 791 $(791) -- Schneider Value Fund 7,588 -- $(7,588)
U.S. TAX STATUS -- No provision is made for U.S. income taxes as it is each 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. income and excise taxes. 18 THE SCHNEIDER FUNDS NOTES TO FINANCIAL STATEMENTS (CONTINUED) FEBRUARY 29, 2004 (UNAUDITED) 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES SCM serves as each Fund's investment adviser. For its advisory services, SCM is entitled to receive 1.00% of the Small Cap Value Fund's average daily net assets and 0.70% of the Value Fund's average daily net assets, computed daily and payable monthly. The adviser agreed to limit the Small Cap Value Fund's and the Value Fund's operating expenses for the current fiscal year to the extent that such expenses exceeded 1.10% and 0.85%, of the Fund's average daily net assets, respectively. As necessary, this limitation is effected in waivers of advisory fees and reimbursements of other fund expenses. For the six months ended February 29, 2004, investment advisory fees and waivers of expenses were as follows:
EXPENSE GROSS ADVISORY WAIVERS NET ADVISORY REIMBURSEMENT -------------- ---------- ------------ ------------- Schneider Small Cap Value Fund $260,174 $(136,637) $123,537 -- Schneider Value Fund 56,838 (56,838) -- $16,650
The Funds will not pay SCM at a later time for any amounts it may waive or any amounts that SCM has assumed. PFPC Inc. ("PFPC"), serves as administrator for the Funds. PFPC Trust Co. serves as custodian of the Funds. Both PFPC and PFPC Trust Co. are wholly-owned subsidiaries of PFPC Worldwide, Inc., an indirect wholly-owned subsidiary of The PNC Financial Services Group, Inc. For providing administration and accounting 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 $8,333 per Fund plus out of pocket expenses. PFPC, at its discretion, voluntarily agreed to waive a portion of its administration and accounting fees for the Funds. For the six months ended February 29, 2004, PFPC's administration and accounting fees and related waivers were as follows:
GROSS ADMINISTRATION NET ADMINISTRATION AND ACCOUNTING AND ACCOUNTING SERVICE FEES AND EXPENSES WAIVERS SERVICE FEES AND EXPENSES ------------------------- --------- ------------------------- Schneider Small Cap Value Fund $53,616 $ (3,500) $50,116 Schneider Value Fund 52,217 (25,000) 27,217
For providing regulatory administrative services to The RBB Fund, Inc., PFPC is entitled to receive compensation as agreed to by the Fund and PFPC. This agreement commenced on June 1, 2003. This fee is allocated to each portfolio of The RBB Fund, Inc. based on the portfolio's average net assets as a percentage of the total The RBB Fund, Inc. net assets. The Schneider Small Cap Value Fund and Value Fund portions of these fees for the period September 1, 2003 to February 29, 2004 were $4,163 and $1,230, respectively. 19 THE SCHNEIDER FUNDS NOTES TO FINANCIAL STATEMENTS (CONTINUED) FEBRUARY 29, 2004 (UNAUDITED) In addition, PFPC serves as the Fund's transfer and dividend disbursing agent. For providing transfer agency services, PFPC is entitled to receive a monthly fee, subject to a minimum monthly fee of $2,000 per Fund, plus out of pocket expenses. PFPC, at its discretion, voluntarily agreed to waive a portion of its transfer agency fees for the Value Fund. For the six months ended February 29, 2004, transfer agency fees for the Funds were as follows:
GROSS TRANSFER NET TRANSFER AGENCY FEES WAIVERS AGENCY FEES -------------- -------- ------------ Schneider Small Cap Value Fund $25,333 -- $25,333 Schneider Value Fund 14,452 $(6,000) 8,452
For providing custodial services, PFPC Trust Co. is entitled to receive a monthly fee equal to an annual rate of .015% of each Fund's average daily gross assets. PFPC Trust Co., at its discretion, voluntarily agreed to waive a portion of their custodial fees for the Value Fund. For the six months ended February 29, 2004, custodial fees for the Funds were as follows:
GROSS CUSTODIAL NET CUSTODIAL FEES AND EXPENSES WAIVERS FEES AND EXPENSES ----------------- -------- ----------------- Schneider Small Cap Value Fund $30,800 -- $30,800 Schneider Value Fund 20,565 $(3,000) 17,565
PFPC Distributors, Inc., ("PFPC Distributors"), a wholly-owned subsidiary of PFPC Worldwide, Inc. and an indirect wholly-owned subsidiary of The PNC Financial Services Group, Inc., provided certain administrative services to the Funds. As compensation for such administrative services, PFPC Distributors receives a monthly fee equal to an annual rate of 0.15% of each Fund's average daily net assets. PFPC Distributors, at its discretion, voluntarily agreed to waive a portion of its administrative services fees for the Funds. For the six months ended February 29, 2004, administrative services fees were as follows:
GROSS ADMINISTRATIVE NET ADMINISTRATIVE SERVICES FEES WAIVERS SERVICES FEES -------------- --------- ------------------ Schneider Small Cap Value Fund $39,026 $(33,823) $5,203 Schneider Value Fund 12,180 (9,744) 2,436
As of February 29, 2004, the Small Cap Value Fund and Value Fund owed PFPC and affiliates $22,417 and $10,478, respectively, for their services. 3. INVESTMENT IN SECURITIES For the six months ended February 29, 2004, aggregate purchases and sales of investment securities (excluding short-term investments) were as follows: PURCHASES SALES ----------- ----------- Schneider Small Cap Value Fund $31,126,145 $45,499,660 Schneider Value Fund 19,459,074 10,609,270 20 THE SCHNEIDER FUNDS NOTES TO FINANCIAL STATEMENTS (CONTINUED) FEBRUARY 29, 2004 (UNAUDITED) 4. CAPITAL SHARE TRANSACTIONS As of February 29, 2004 the Funds have 100,000,000 shares of $0.001 par value common stock authorized. Transactions in capital shares for the respective periods were as follows:
SCHNEIDER SMALL CAP VALUE FUND -------------------------------------------------------------------------- FOR THE SIX MONTHS ENDED FOR THE FISCAL YEAR ENDED ------------------------------ ------------------------------ FEBRUARY 29, 2004 AUGUST 31, 2003 ------------------------------ ------------------------------ SHARES AMOUNT SHARES AMOUNT --------- ------------- --------- ------------- Sales ............................. 18,420 $ 515,900 86,783 $ 1,296,246 Reinvestments ..................... 120,296 3,183,023 19,345 285,921 Repurchases ....................... (547,993) (14,473,708) (987,915) (15,173,917) -------- ------------ -------- ------------- Net increase/(decrease) ........... (409,277) $(10,774,785) (881,787) $(13,591,750) ======== ============ ======== ============ SCHNEIDER VALUE FUND -------------------------------------------------------------------------- FOR THE PERIOD ------------------------------ FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2002 ------------------------------ ------------------------------ FEBRUARY 29, 2004 THROUGH AUGUST 31, 2003 ------------------------------ ------------------------------ SHARES AMOUNT SHARES AMOUNT --------- ------------- --------- ------------- Sales ............................. 655,557 $11,072,917 846,089 $9,869,042 Reinvestments ..................... 35,275 567,932 450 5,128 Repurchases ....................... (104,049) (1,593,417) (50,469) (627,734) -------- ----------- ------- ---------- Net increase ...................... 586,783 $10,047,432 796,070 $9,246,436 ======== =========== ======= ==========
5. PROXY VOTING Policies and procedures that the Funds use to determine how to vote proxies relating to portfolio securities is available without charge, upon request, by calling (888) 520-3277 and on the Securities and Exchange Commission's website at http://www.sec.gov. 21 THE SCHNEIDER FUNDS NOTES TO FINANCIAL STATEMENTS (CONCLUDED) FEBRUARY 29, 2004 (UNAUDITED) 6. FEDERAL INCOME TAX INFORMATION At February 29, 2004, Federal tax cost, aggregate gross unrealized appreciation and depreciation of securities held by the Funds were as follows:
NET UNREALIZED FEDERAL TAX UNREALIZED UNREALIZED APPRECIATION/ COST APPRECIATION DEPRECIATION DEPRECIATION ----------- ------------ ------------ -------------- Schneider Small Cap Value Fund $37,088,857 $14,694,315 $(203,674) $14,490,641 Schneider Value Fund 20,595,999 4,770,550 (242,628) 4,527,922
As of February 29, 2004, the components of distributable earnings on a tax basis were as follows: UNDISTRIBUTED UNDISTRIBUTED ORDINARY INCOME LONG-TERM GAINS --------------- --------------- Schneider Small Cap Value Fund $213,208 -- Schneider Value Fund 531,063 -- At February 29, 2004, the following Fund had capital loss carryforwards available to offset future capital gains. EXPIRING AUGUST 31, 2011 ------------------- Schneider Small Cap Value Fund $280,608 Under Federal tax law, foreign currency and capital losses realized after October 31 may be deferred and treated as having arisen on the first day of the following fiscal year. The differences between the book and tax basis components of distributable earnings relate principally to the timing of recognition of income and gains for federal income tax purposes. Short-term and foreign currency gains are reported as ordinary income for federal tax purposes. The tax character of dividends and distributions paid during the last two fiscal years were as follows:
ORDINARY LONG-TERM INCOME GAINS TOTAL -------- ---------- ---------- Schneider Small Cap Value Fund 2003 $ 84,186 $224,403 $ 308,589 2002 1,655,207 330,059 1,987,286 Schneider Value Fund 2003 $ 9,827 $ -- $ 9,827
22 THE SCHNEIDER FUNDS FUND MANAGEMENT (UNAUDITED) The business and affairs of the Company are managed under the direction of the Company's Board of Directors. The Company is organized under and managed pursuant to Maryland law. The Directors and executive officers of the Company, their dates of birth, business addresses and principal occupations during the past five years are set forth below.
TERM OF NUMBER OF POSITION(S) OFFICE PORTFOLIOS IN OTHER NAME, ADDRESS, HELD AND LENGTH PRINCIPAL OCCUPATION(S) DURING PAST FUND COMPLEX DIRECTORSHIPS AND DATE OF BIRTH WITH FUND OF TIME 5 YEARS OVERSEEN BY HELD BY DIRECTOR SERVED 1 DIRECTOR ------------------------------------------------------------------------------------------------------------------------------------ DISINTERESTED DIRECTORS ------------------------------------------------------------------------------------------------------------------------------------ Julian A. Brodsky Director 1988 to Since 1969, Director and Vice Chairman, 16 Director, Comcast Corporation present Comcast Corporation (cable television Comcast 1500 Market Street, and communications); Director, NDS Group Corporation. 35th Floor PLC (provider of systems and Philadelphia, PA 19102 applications for digital pay TV). DOB: 7/16/33 ------------------------------------------------------------------------------------------------------------------------------------ Francis J. McKay Director 1988 to Since 2000, Vice President, Fox Chase 16 None Fox Chase Cancer Center present Cancer Center (biomedical research and 333 Cottman Avenue medical care); prior to 2000, Executive Philadelphia, PA 19111 Vice President, Fox Chase Cancer Center. DOB: 12/06/35 ------------------------------------------------------------------------------------------------------------------------------------ Arnold M. Reichman Director 1991 to Since December 2000, Director, Gabelli 16 None 106 Pierrepont Street present Partners, L.P. (an investment Brooklyn, NY 11201 partnership); Chief Operating Officer DOB: 5/21/48 and member of the Board of Directors of Outercurve Technologies (wireless enabling services) until April 2001; Chief Operating Officer and member of the Executive Operating Committee of Warburg Pincus Asset Management, Inc.; Executive Officer and Director of Credit Suisse Asset Management Securities, Inc. (formerly Counsellors Securities, Inc.) and Director/Trustee of various investment companies advised by Warburg Pincus Asset Management, Inc. until September 15, 1999; Prior to 1997, Managing Director of Warburg Pincus Asset Management, Inc. ------------------------------------------------------------------------------------------------------------------------------------ Marvin E. Sternberg Director 1991 to Since 1974, Chairman, Director and 16 Director, Moyco Technologies, Inc. present President, Moyco Technologies, Inc. Moyco 200 Commerce Drive (manufacturer of precision coated and Technologies, Montgomeryville, PA 18936 industrial abrasives). Since 1999, Inc. DOB: 3/24/34 Director, Pennsylvania Business Bank. ------------------------------------------------------------------------------------------------------------------------------------
23 THE SCHNEIDER FUNDS FUND MANAGEMENT (CONTINUED) (UNAUDITED)
TERM OF NUMBER OF POSITION(S) OFFICE PORTFOLIOS IN OTHER NAME, ADDRESS, HELD AND LENGTH PRINCIPAL OCCUPATION(S) DURING PAST FUND COMPLEX DIRECTORSHIPS AND DATE OF BIRTH WITH FUND OF TIME 5 YEARS OVERSEEN BY HELD BY DIRECTOR SERVED 1 DIRECTOR ------------------------------------------------------------------------------------------------------------------------------------ INTERESTED DIRECTORS 2 ------------------------------------------------------------------------------------------------------------------------------------ Robert Sablowsky Director 1991 to Since July 2002, Senior Vice President 16 None Oppenheimer & Company, Inc. present and prior thereto, Executive Vice 200 Park Avenue President of Oppenheimer & Co., Inc., New York, NY 10166 formerly Fahnestock & Co., Inc. (a DOB: 4/16/38 registered broker-dealer). ------------------------------------------------------------------------------------------------------------------------------------ J. Richard Carnall Director 2002 to Director of PFPC Inc. from January 1987 16 None 400 Bellevue Parkway present to April 2002, Chairman and Chief Wilmington, DE 19809 Executive Officer of PFPC Inc. until DOB: 9/25/38 April 2002, Executive Vice President of PNC Bank, National Association from October 1981 to April 2002, Director of PFPC International Ltd. (financial services) from August 1993 to April 2002, Director of PFPC International (Cayman) Ltd. (financial services) from September 1996 to April 2002, and Director of International Dollar Reserve Fund, Ltd. (Cayman mutual fund company) from September 1993 to present; Governor of the Investment Company Institute (investment company industry trade organization) from July 1996 to January 2002; Director of PNC Asset Management, Inc. (investment advisory) from September 1994 to March 1998; Director of PNC National Bank from October 1995 to November 1997; Director of Haydon Bolts, Inc. (bolt manufacturer) and Parkway Real Estate Company (subsidiary of Haydon Bolts, Inc.) since 1984. Mr. Carnall provides consulting services from time to time to PFPC Inc. ------------------------------------------------------------------------------------------------------------------------------------
24 THE SCHNEIDER FUNDS FUND MANAGEMENT (CONCLUDED) (UNAUDITED)
TERM OF NUMBER OF POSITION(S) OFFICE PORTFOLIOS IN OTHER NAME, ADDRESS, HELD AND LENGTH PRINCIPAL OCCUPATION(S) DURING PAST FUND COMPLEX DIRECTORSHIPS AND DATE OF BIRTH WITH FUND OF TIME 5 YEARS OVERSEEN BY HELD BY DIRECTOR SERVED 1 DIRECTOR ------------------------------------------------------------------------------------------------------------------------------------ OFFICER(S) WHO ARE NOT DIRECTORS ------------------------------------------------------------------------------------------------------------------------------------ Edward J. Roach President 1991 to Certified Public Accountant; Vice N/A N/A 400 Bellevue Parkway and present Chairman of the Board, Fox Chase Cancer 4th Floor Treasurer and Center; Trustee Emeritus, Pennsylvania Wilmington, DE 19809 1988 to School for the Deaf; Trustee Emeritus, DOB: 6/29/24 present Immaculata University; President or Vice President and Treasurer of various investment companies advised by subsidiaries of PNC Bank Corp. from 1981 to 1997; Managing General Partner, President and Treasurer of Chestnut Street Exchange Fund; Director of the Bradford Funds, Inc. from 1996 to 2000. ------------------------------------------------------------------------------------------------------------------------------------ Lisa M. King Secretary Since 2003 Since 2000, Vice President and Counsel, N/A N/A 301 Bellevue Parkway PFPC Inc. (financial services company); 2nd Floor Associate, Stradley, Ronon, Stevens & Wilmington, DE 19809 Young, LLC (law firm) from 1996-2000. DOB: 1/27/68 ------------------------------------------------------------------------------------------------------------------------------------ 1 Each Director serves for an indefinite period of time until his successor is elected and qualified or until his death, resignation or removal. Each officer holds office at the pleasure of the Board of Directors until the next annual meeting of the Company or until his or her successor is duly elected and qualified, or until he or she dies, resigns, is removed or becomes disqualified. 2 Messrs. Carnall and Sablowsky are considered "interested persons" of the Company as that term is defined in the 1940 Act. Mr. Carnall is an "interested Director" of the Company because he owns shares of The PNC Financial Services Group, Inc. The investment adviser to the Company's Money Market Portfolio, BlackRock Institutional Management Corporation and the Company's principal underwriter, PFPC Distributors, Inc. are indirect subsidiaries of The PNC Financial Services Group, Inc. Mr. Sablowsky is considered an "interested Director" of the Company by virtue of his position as an officer of a registered broker-dealer.
25 [THIS PAGE INTENTIONALLY LEFT BLANK.] [THIS PAGE INTENTIONALLY LEFT BLANK.] INVESTMENT ADVISER Schneider Capital Management 460 E. Swedesford Road Wayne, PA 19087 ADMINISTRATOR PFPC Inc. 301 Bellevue Parkway Wilmington, DE 19809 TRANSFER AGENT PFPC Inc. 301 Bellevue Parkway Wilmington, DE 19809 DISTRIBUTOR PFPC Distributors, Inc. 760 Moore Road King of Prussia, PA 19406 CUSTODIAN PFPC Trust Company 8800 Tinicum Blvd. Suite 200 Philadelphia, PA 19153 INDEPENDENT AUDITORS 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 Funds. It is not authorized for the distribution to prospective investors in the Funds unless it is preceded or accompanied by a current prospectus which includes details regarding a 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 a Fund will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than original cost. Current performance may be lower or higher than the performance data provided in the report. BOGLE INVESTMENT MANAGEMENT SMALL CAP GROWTH FUND SEMI-ANNUAL REPORT FEBRUARY 29, 2004 ========================== -------------------------------------------------------------------------------- BOGLE INVESTMENT MANAGEMENT SMALL CAP GROWTH FUND SEMI-ANNUAL REPORT -------------------------------------------------------------------------------- Fellow Shareholder: During the most recent six-month period ending February 29, 2004, the Bogle Small Cap Growth Fund (the "Fund") outperformed its benchmark by +5.32%*, returning +23.66% for the Investor shares and +23.69% for the Institutional shares net of fees, while the unmanaged Russell 2000 index of smaller companies gained +18.34%. Following five months of very strong performance in the small cap market segment (as measured by the Russell 2000), this six-month period began with a pullback in September. The Fund was better able to weather this September decline, compared with the benchmark, due to strong stock selection. Following September's dip, the small cap market again gained strength from October through February; the Fund was also able to surpass the Russell 2000 for that period. In contrast to the six months ending August 31, 2003, where small cap companies of a more speculative nature were rewarded, for this period those speculative names garnered less attention. This shift has been positive for our investment process as each of our models added value in the six-month period. We will discuss our performance in more detail on the pages that follow, including a discussion of the market environment, our individual model performance, and the risk exposures of the Fund. We close with an update on developments at Bogle Investment Management. INVESTMENT PERFORMANCE - MULTIPERIODS BOGLE FUND VS. RUSSELL 2000 BENCHMARK [GRAPHIC OMITTED] BOGLE BOGLE INVESTOR INSTITUTIONAL RUSSELL VALUE CLASS CLASS 2000 ADDED Semi-Annual Period 9/1/03-2/29/04 23.7% 23.7% 18.3% 5.3% One-Year Period 3/1/03-2/29/04 75.1% 75.2% 64.4% 10.7% Two-Year Period 3/1/02-2/29/04 18.3% 18.4% 13.2% 5.2% Three-Year Period 3/1/01-2/29/04 15.1% 15.2% 8.7% 6.4% Since Inception 10/1/99-2/29/04 22.1% 22.2% 8.8% 13.3% All multi-year period returns are annualized. Past performance is not a guarantee of future results. * Russell 2000 Index versus investor class shares, net of fees MARKET ENVIRONMENT. The most recent six-month period (ending February 29, 2004) saw some changes in the trends of the previous six-month period (ending August 31, 2003). The period ending in August was a strong period across all capitalizations, though it was dominated by small cap stocks, and in particular, small cap growth stocks. Additionally, growth surpassed value in both large cap and small cap, though more modestly in the large cap segment. While the small cap market continued to surpass the large cap, as measured by the Russell indices, the dominance of small over large became less pronounced in the most recent period. For the six months ending February 29, 2004, the Russell 2000 Index returned +18.34%, compared with a +14.79% return for the Russell 1000. Style also shifted in both large and small cap as value stocks handily surpassed growth. Within the small cap market, the Russell 2000 Value returned +21.33%, compared with a +15.42% return for the Russell 2000 Growth. In general, small cap companies tend to be more sensitive than large caps to an improving economy. This was evidenced in 2003 as earnings and the economy showed improvement and small cap companies fared well. Additionally, the low interest rate environment has been beneficial to small cap companies; core inflation has remained low, thwarting any need for rate increases. In contrast to the previous six-months, the more recent period did not see the most speculative names (as measured by factors such as high price-to-sales and volatility) strongly outperform the more established companies. Additionally, in the six-month period ending August 31, 2003, stocks with low share prices (often interpreted as low quality stocks) strongly outperformed higher priced stocks. While this price phenomenon did continue into the most recent six-month period, the impact of price lessened. In fact, in the more mean-reversion market we witnessed in February, higher priced small cap stocks surpassed the lower priced stocks. PERFORMANCE ATTRIBUTION. According to our return attribution analysis, strong stock selection accounted for all of the Fund's outperformance relative to its benchmark in the semi-annual period. As we have discussed in the past, we maintain sector exposures quite similar to those of the benchmark, which means that we rarely can attribute much performance to sector over- or underweighting. In analyzing the portfolio's performance, we evaluate the success of our investment models. Recall that our three primary models seek to identify the following: 1) stocks that have demonstrated the ability to produce earnings growth (the earnings expectations model); 2) companies that do not have to manufacture earnings growth through aggressive accounting (financial quality model); and 3) stocks that trade at attractive valuations relative to their most similar peers (relative valuation model). In the most recent period, the Fund benefited from strong contributions from the relative valuation model. The expectations model also added value to the fund, particularly in September and October. The financial quality model also was a positive contributor to performance, but to a lesser degree. With respect to sectors, the fund benefited most significantly from stock selection in the technology, financial and energy sectors. Within technology, holdings in both software and communications provided solid returns. Some examples include: Aspect, Blue Coat, C-COR.net, Harmonic, and Sierra Wireless. Aspect Communications, a workforce management software company, and Blue Coat, an Internet security software company contributed in software. Both companies showed compelling relative value based on fundamental measures, as well as good financial quality. In communications, the Fund held C-COR.net (broadband equipment), Harmonic (broadband video, voice and data solutions) and Sierra Wireless (wireless data). These companies also appeared attractive in our financial quality model. In general, we have observed an improvement in the financial quality across the technology sector. We believe this reflects both the aggressive writeoffs these companies have taken over the past few years, as well as more conservative business and accounting practices in the sector. The financial sector also proved a strong contributor to the Fund. Financial stocks that paid off include American Home, a mortgage real estate investment trust that looked attractive in our relative valuation measures. Additionally, R&G Financial, a regional bank, was also a successful investment based on rel- 2 ative valuation and prospects for future earnings growth. In energy, Tesoro Petroleum Corp was added to the portfolio and proved to be a strong holding for the period, and the strongest in this minor sector. Tesoro, an independent refiner and marketer of petroleum products, scored well in all of our models and continues to be held in the Fund. While performance relative to our benchmark for the period was positive, we did hold a number of stocks that detracted, in absolute terms, from the Fund. For example, Elizabeth Arden, a fragrance and beauty products company, was bought during the period as its ranking improved; however, this holding has not yet contributed much to the portfolio. We believe that the company is currently showing very strong financial quality (and its valuation continues to improve!). The compelling rank of this company should translate into improved stock performance. Another example of a holding that has not yet contributed to the Fund is Quidel Corporation. Quidel is a health care company that develops and manufactures point-of-care rapid diagnostic tests including pregnancy, group A strep and influenza detection. As of the end of February, Quidel scored very well in all three models; earnings estimate revisions were increasing, the quality score was very attractive, as was the company's valuation. INVESTMENT POSITIONING. As has been the case for much of the Fund's history, Fund characteristics remain very much in line with the benchmark. As of the end of February, our median market capitalization is modestly below benchmark. By continuing to keep the size of the Fund controlled, we benefit from nimbly investing in the smaller companies within the small cap market. This agility is reflected in benchmark-like exposure to stocks at the smaller end of the investible universe. Other characteristics also remain well matched to our benchmark. As it has historically, the Fund maintains a bias to companies with somewhat higher long-term earnings growth rates. Also consistent with the Fund's characteristics historically, the price-to-earnings ratios are somewhat higher than those of the benchmark. However, the price-to-sales ratio continues to be lower than the benchmark, as that ratio is a significant component of our relative valuation model. -------------------------------------------------------------------------------- FUNDAMENTAL CHARACTERISTICS FEBRUARY 29, 2004 ----------------------------------------------- RUSSELL MEDIAN BOGLX 2000 -------- ------- -------- Median Market Cap ($mil.) $830 $854 Long-Term Estimated Earnings Growth Rate 17.2% 14.8% Price/Historical Earnings 31.45x 24.79x Price/Forward Earnings 22.09x 19.66x Price/Sales 1.4x 2.1x -------------------------------------------------------------------------------- PROGRESS AT BOGLE INVESTMENT MANAGEMENT. At the end of February 2004, assets in the Fund were around $330 million. While the Fund has been closed to new investors for two years now, existing investors have continued to modestly add to their Bogle Small Cap Growth position, investing net inflows of approximately $70 million since March of 2002. Closing at a conservatively low level of assets, we assumed some continued asset growth from existing investors. Having said that, we will continue to monitor inflows, market liquidity and trading costs to estimate what impact size is having on our investment performance. As mentioned earlier in this report, the Fund's market capitalization and absolute price exposures relative to the Russell 2000 Index suggest that we continue to achieve benchmark-like exposures to even the smallest of the small cap stocks. Finally, with regards to staffing, our ninth full-time employee joined us in early March and two other new hires are expected on board in April. As the business continues to grow (thanks to your continued support and confidence) we are reinvesting in the business to ensure that we are adequately staffed to meet our shareholder needs. As always, please let us know if there is any way we can improve your investment experience with us. 3 As a reminder, information about the Fund, including historical NAVs, sector allocation, fundamental characteristics, and top ten holdings, can be viewed on our website, www.boglefunds.com. The NAVs are updated daily while the other Fund information is updated quarterly. Please feel free to call on us at any time with questions you may have about the portfolio or anything else that might be on your mind. Respectfully, Bogle Investment Management, L.P. Management Office: 781-283-5000 Shareholder Services Toll Free: 1-877-BOGLEIM (264-5346) -------------------------------------------------------------------------------- PAST PERFORMANCE IS NOT A GUARANTEE OF 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. THIS MATERIAL MUST BE PRECEDED OR ACCOMPANIED BY A CURRENT PROSPECTUS. THE RUSSELL 2000 IS AN INDEX OF STOCKS 1001 THROUGH 3000 IN THE RUSSELL 3000 INDEX AS RANKED BY TOTAL MARKET CAPITALIZATION. A DIRECT INVESTMENT IN THE INDEX IS NOT POSSIBLE. INVESTING IN SMALL COMPANIES CAN INVOLVE MORE VOLATILITY, LESS LIQUIDITY, AND LESS PUBLICLY AVAILABLE INFORMATION THAN INVESTING IN LARGE COMPANIES. 4 BOGLE INVESTMENT MANAGEMENT SMALL CAP GROWTH FUND PORTFOLIO OF INVESTMENTS FEBRUARY 29, 2004 (UNAUDITED) NUMBER OF SHARES VALUE --------- ------------ COMMON STOCKS--94.9% BASIC INDUSTRY--3.1% Aceto Corp. ................................... 73,900 $ 1,078,940 Boise Cascade Corp. ........................... 38,094 1,283,768 Cleveland-Cliffs, Inc.* ....................... 15,100 893,165 Crompton Corp. ................................ 202,000 1,506,920 Crown Holdings, Inc.* ......................... 211,100 1,984,340 OM Group, Inc.* ............................... 118,500 3,640,320 ------------ 10,387,453 ------------ CONSUMER CYCLICAL--11.6% 7-Eleven, Inc.* ............................... 86,500 1,409,950 Audiovox Corporation, Class A* .................................... 98,100 1,614,726 Barnes & Noble, Inc.* ......................... 57,600 2,010,240 Brown Shoe Co., Inc. .......................... 40,700 1,603,173 Carlisle Cos., Inc. ........................... 22,700 1,292,765 Champion Enterprises, Inc.* ................... 205,600 2,189,640 Checkers Drive-In Restaurants, Inc.* .......................... 117,400 1,404,104 Choice Hotels International, Inc.* ....................................... 43,600 1,911,860 Claire's Stores, Inc. ......................... 48,600 982,692 Covenant Transport, Inc., Class A* .................................... 78,700 1,413,452 Culp, Inc.* ................................... 115,400 1,205,930 ExpressJet Holdings, Inc., Class A* .................................... 96,100 1,319,453 Guess?, Inc.* ................................. 124,300 1,926,650 Haverty Furniture Companies, Inc. ............................. 55,800 1,190,214 Hollinger International, Inc., Class A ..................................... 110,100 2,047,860 Insight Enterprises, Inc.* .................... 135,600 2,884,212 Kerzner International Ltd.* ................... 44,900 1,728,650 Monaco Coach Corp.* ........................... 88,400 2,519,400 Pantry, Inc. (The)* ........................... 72,000 1,521,360 Pep Boys-Manny, Moe & Jack, (The) ................................. 98,900 2,333,051 PETCO Animal Supplies, Inc.* ....................................... 55,500 1,802,640 Vans, Inc.* ................................... 170,400 2,072,064 ------------ 38,384,086 ------------ NUMBER OF SHARES VALUE --------- ------------ CONSUMER GROWTH--19.4% Abaxis, Inc.* ................................. 95,800 $ 1,822,116 ALARIS Medical Systems, Inc.* ....................................... 111,600 2,388,240 Align Technology, Inc.* ....................... 95,900 1,892,107 America Service Group, Inc.* .................. 68,300 2,199,943 Applera Corp. - Celera Genomics Group* ............................. 87,800 1,273,100 Bio-Reference Laboratories, Inc.* ....................................... 74,100 1,400,490 Bright Horizons Family Solutions, Inc.* ............................ 44,600 2,061,412 Candela Corp.* ................................ 72,100 1,620,808 Dade Behring Holdings, Inc.* ....................................... 56,400 2,303,940 Elizabeth Arden, Inc.* ........................ 92,700 1,765,008 Encore Medical Corp.* ......................... 243,100 2,037,178 Endo Pharmaceuticals Holdings, Inc.* ............................. 99,200 2,407,584 Eon Labs, Inc.* ............................... 39,500 2,287,050 First Horizon Pharmaceutical Corp.* ...................................... 135,500 2,529,785 Gen-Probe, Inc.* .............................. 65,200 2,229,188 Genencor International, Inc.* ................. 101,400 1,373,970 Great Atlantic & Pacific Tea Co., Inc., (The)* ........................... 69,800 554,910 GSI Commerce, Inc.* ........................... 68,300 643,386 Haemonetics Corp.* ............................ 69,200 2,006,108 IDEXX Laboratories, Inc.* ..................... 45,500 2,323,685 IDX Systems Corp.* ............................ 43,600 1,516,408 ITT Educational Services, Inc.* ....................................... 52,300 1,985,831 Kos Pharmaceuticals, Inc.* .................... 51,400 2,262,114 NeighborCare, Inc.* ........................... 45,100 1,170,345 PDI, Inc.* .................................... 54,800 1,370,000 Per-Se Technologies, Inc.* .................... 32,100 488,562 PerkinElmer, Inc. ............................. 122,100 2,544,564 PSS World Medical, Inc.* ...................... 155,200 1,885,680 Respironics, Inc.* ............................ 38,100 1,993,011 Roto-Rooter, Inc. ............................. 9,700 547,274 Sybron Dental Specialties, Inc.* ....................................... 65,900 1,872,219 Therasense, Inc.* ............................. 93,500 2,506,735 The accompanying notes are an integral part of the financial statements. 5 BOGLE INVESTMENT MANAGEMENT SMALL CAP GROWTH FUND PORTFOLIO OF INVESTMENTS (CONTINUED) FEBRUARY 29, 2004 (UNAUDITED) NUMBER OF SHARES VALUE --------- ------------ CONSUMER GROWTH--(CONTINUED) University of Phoenix Online* ..................................... 25,600 $ 2,057,216 Valeant Pharmaceuticals International ............................... 103,900 2,278,527 Varian Medical Systems, Inc.* ....................................... 21,200 1,775,288 WellChoice, Inc.* ............................. 22,900 845,926 ------------ 64,219,708 ------------ ENERGY--4.1% Giant Industries, Inc.* ....................... 50,400 977,760 Grey Wolf, Inc.* .............................. 201,200 851,076 KCS Energy, Inc.* ............................. 106,000 1,146,920 Nuevo Energy Co.* ............................. 59,500 1,693,965 Petroleum Development Corp.* ...................................... 58,000 1,658,800 Tesoro Petroleum Corp.* ....................... 157,100 2,867,075 Vintage Petroleum, Inc. ....................... 153,100 2,224,543 Western Gas Resources, Inc. ................... 45,400 2,225,508 ------------ 13,645,647 ------------ FINANCIAL--17.4% 21st Century Insurance Group ....................................... 17,200 251,464 ACE Cash Express, Inc.* ....................... 20,300 684,922 American Home Mortgage Investment Corp. ............................ 101,700 2,695,050 Arch Capital Group Ltd.* ...................... 42,000 1,781,220 Banco Itau Holding Financeira S.A. - ADR ....................... 46,300 2,199,250 BankAtlantic Bancorp, Inc., Class A ..................................... 148,200 2,655,744 Capital Crossing Bank* ........................ 19,700 1,301,776 Cash America International, Inc. ........................................ 91,500 2,071,560 CompuCredit Corp.* ............................ 70,800 1,533,528 eFunds Corp.* ................................. 94,600 1,533,466 First American Corp. .......................... 68,200 2,083,510 First BanCorp ................................. 49,300 2,092,785 First Cash Financial Services, Inc.* ....................................... 89,100 3,020,490 NUMBER OF SHARES VALUE --------- ------------ FINANCIAL--(CONTINUED) First Citizens BancShares, Inc., Class A ............................... 16,500 $ 2,062,005 Infinity Property & Casual Corp ........................................ 63,000 2,053,800 Knight Trading Group, Inc.* ................... 73,500 1,018,710 LandAmerica Financial Group, Inc. ................................. 33,500 1,567,800 Max Re Capital Ltd. ........................... 111,400 2,531,008 Ocwen Financial Corp.* ........................ 171,200 1,705,152 Providian Financial Corp.* .................... 141,500 1,829,595 R & G Financial Corp., Class B ..................................... 96,900 3,036,846 Raymond James Financial, Inc. ........................................ 61,500 2,350,530 Saxon Capital, Inc.* .......................... 11,900 322,252 Selective Insurance Group, Inc. ............... 36,700 1,354,230 StanCorp Financial Group, Inc. ................ 38,000 2,506,100 State Auto Financial Corp. .................... 54,400 1,326,761 Stewart Information Services Corp.* ...................................... 56,700 2,069,550 Unibanco-Uniao de Bancos Brasileiros S.A. - ADR ...................... 100,500 2,286,375 Westcorp ...................................... 59,300 2,538,040 WFS Financial, Inc.* .......................... 18,300 811,788 World Acceptance Corp.* ....................... 97,100 2,089,592 ------------ 57,364,899 ------------ INDUSTRIAL--14.4% A.S.V., Inc.* ................................. 58,500 2,034,630 Belden, Inc. .................................. 98,700 1,952,286 Briggs & Stratton Corp. ....................... 27,000 1,845,450 Brink's Co., (The) ............................ 73,400 1,943,632 Consolidated Graphics, Inc.* .................. 54,400 2,026,944 Flowserve Corp.* .............................. 92,700 2,014,371 FMC Technologies, Inc.* ....................... 12,300 323,490 Genlyte Group, Inc., (The)* ................... 30,700 1,727,489 Gevity HR, Inc. ............................... 101,900 2,315,168 Global Industries Ltd.* ....................... 282,700 1,430,462 GrafTech International Ltd.* .................. 137,200 1,861,804 The accompanying notes are an integral part of the financial statements. 6 BOGLE INVESTMENT MANAGEMENT SMALL CAP GROWTH FUND PORTFOLIO OF INVESTMENTS (CONTINUED) FEBRUARY 29, 2004 (UNAUDITED) NUMBER OF SHARES VALUE --------- ------------ INDUSTRIAL--(CONTINUED) Intelligroup, Inc.* ........................... 147,600 $ 1,406,628 Jacuzzi Brands, Inc.* ......................... 279,800 2,515,402 Kforce, Inc.* ................................. 206,900 2,058,655 MasTec, Inc.* ................................. 153,000 1,854,360 Mcdermott International, Inc.* ....................................... 185,800 2,132,984 Middleby Corp., (The)* ....................... 42,300 1,734,300 MPS Group, Inc.* .............................. 150,300 1,465,425 Pacer International, Inc.* .................... 68,700 1,475,676 Quanta Services, Inc.* ........................ 224,700 1,932,420 Rollins, Inc. ................................. 83,700 1,944,351 TeleTech Holdings, Inc.* ...................... 212,000 1,643,000 Terex Corp.* .................................. 37,500 1,313,625 United Stationers, Inc.* ...................... 35,600 1,413,676 UNOVA, Inc.* .................................. 124,100 2,702,898 Wabash National Corp.* ........................ 68,100 1,937,445 Watsco, Inc. .................................. 17,700 484,272 ------------ 47,490,843 ------------ TECHNOLOGY--23.9% AAR CORP.* .................................... 157,200 2,031,024 Advanced Digital Information Corp.* .......................... 52,400 659,192 Artesyn Technologies, Inc.* ................... 156,900 1,710,210 Aspect Communications Corp.* ...................................... 195,200 3,525,312 ATI Technologies, Inc.* ....................... 109,700 1,708,029 Avaya, Inc.* .................................. 136,800 2,346,120 Blue Coat Systems, Inc.* ...................... 51,100 2,096,173 Brightpoint, Inc.* ............................ 76,750 1,307,053 Brooktrout, Inc.* ............................. 111,300 2,171,463 C-COR.net Corp.* .............................. 186,600 3,067,704 Carreker Corp.* ............................... 148,800 1,971,600 Carrier Access Corp.* ......................... 160,100 1,841,150 CNET Networks, Inc.* .......................... 178,300 1,772,302 Comtech Telecommunications Corp.* ...................................... 60,000 1,699,200 Corillian Corp.* .............................. 222,500 1,170,350 Digitas, Inc.* ................................ 196,500 1,959,105 NUMBER OF SHARES VALUE --------- ------------ TECHNOLOGY--(CONTINUED) Ditech Communications Corp.* ...................................... 115,500 $ 2,158,695 EarthLink, Inc.* .............................. 214,500 1,958,385 Gateway, Inc.* ................................ 202,000 1,096,860 Harmonic, Inc.* ............................... 181,200 2,217,888 InFocus Corp.* ................................ 174,600 2,056,788 Informatica Corp.* ............................ 154,500 1,484,745 Intervoice, Inc.* ............................. 178,700 2,169,418 Mattson Technology, Inc.* ..................... 169,800 2,022,318 Microsemi Corp.* .............................. 95,400 1,488,240 MTS Systems Corp. ............................. 79,800 2,144,226 NDS Group PLC - ADR* .......................... 21,800 638,958 Netsmart Technologies, Inc.* .................. 84,500 1,322,425 Parametric Technology Corp.* ...................................... 340,200 1,551,312 QuickLogic Corp.* ............................. 235,100 898,082 Quidel Corp.* ................................. 165,400 1,703,620 SI International, Inc.* ....................... 66,200 1,492,148 Sierra Wireless, Inc.* ........................ 90,100 2,466,938 Silicon Storage Technology, Inc.* ....................................... 133,900 1,676,428 SonicWALL, Inc.* .............................. 68,800 660,480 Sonus Networks, Inc.* ......................... 189,600 1,124,328 SS&C Technologies, Inc. ....................... 57,500 2,921,575 Standard Microsystems Corp.* ...................................... 70,800 2,133,204 Sykes Enterprises, Inc.* ...................... 114,900 821,535 Telesystem International Wireless, Inc.* ............................. 159,000 2,035,200 Time Warner Telecom, Inc., Class A* .................................... 226,700 1,571,031 Transaction Systems Architects, Inc., Class A* .................. 84,900 1,527,351 UnitedGlobalCom, Inc., Class A* .................................... 228,400 2,167,516 ViaSat, Inc.* ................................. 24,900 666,075 Wavecom S.A. - ADR* ........................... 18,300 223,626 Westell Technologies, Inc., Class A* .................................... 131,500 1,007,290 Wireless Facilities, Inc.* .................... 49,500 646,965 ------------ 79,089,637 ------------ The accompanying notes are an integral part of the financial statements. 7 BOGLE INVESTMENT MANAGEMENT SMALL CAP GROWTH FUND PORTFOLIO OF INVESTMENTS (CONCLUDED) FEBRUARY 29, 2004 (UNAUDITED) NUMBER OF SHARES VALUE --------- ------------ UTILITY--1.0% Companhia Energetica de Minas Gerais - ADR .......................... 85,500 $ 1,511,640 Compania Anonima Nacional Telefonos de Venezuela (CANTV) - ADR ............................... 94,200 1,745,526 ------------ 3,257,166 ------------ TOTAL COMMON STOCKS (Cost $238,309,225) .................................... 313,839,439 ------------ SHORT TERM INVESTMENTS--5.1% Galaxy Institutional Money Market Fund 0.97% 03/01/04 .............................. 8,376,473 8,376,473 Wilmington Prime Money Market Portfolio 0.61% 03/01/04 .............................. 8,376,474 8,376,474 ------------ TOTAL SHORT TERM INVESTMENTS (Cost $ 16,752,947) .................................... 16,752,947 ------------ TOTAL INVESTMENTS--100.0% (Cost $255,062,172) ........................................ 330,592,386 ------------ ASSETS IN EXCESS OF OTHER LIABILITIES--0.0% .................................... 14,929 ------------ NET ASSETS--100.0% ............................................ $330,607,315 ============ ---------- * Non-income producing. ADR -- American Depository Receipt. The accompanying notes are an integral part of the financial statements. 8 BOGLE INVESTMENT MANAGEMENT SMALL CAP GROWTH FUND STATEMENT OF ASSETS AND LIABILITIES FEBRUARY 29, 2004 (UNAUDITED) ASSETS Investments, at value (cost - $255,062,172) .............. $330,592,386 Receivable for investments sold .......................... 4,851,104 Receivable for Fund shares sold .......................... 293,496 Dividends receivable ..................................... 263,684 Prepaid expenses and other assets ........................ 27,939 ------------ Total assets ........................................... 336,028,609 ------------ LIABILITIES Payable for investments purchased ........................ 4,699,099 Payable for Fund shares redeemed ......................... 365,186 Payable to the Adviser ................................... 264,571 Accrued expenses and other liabilities ................... 92,438 ------------ Total liabilities ...................................... 5,421,294 ------------ NET ASSETS Capital stock, $0.001 par value .......................... 11,784 Additional paid-in capital ............................... 234,547,393 Accumulated net investment loss .......................... (1,272,854) Accumulated net realized gain from investments ........... 21,790,778 Net unrealized appreciation on investments ............... 75,530,214 ------------ Net assets ............................................. $330,607,315 ============ INSTITUTIONAL CLASS Net assets ............................................... $187,844,876 ------------ Shares outstanding ....................................... 6,686,634 ------------ Net asset value, offering and redemption price per share . $ 28.09 ============ INVESTOR CLASS Net assets ............................................... $142,762,439 ------------ Shares outstanding ....................................... 5,096,982 ------------ Net asset value, offering and redemption price per share . $ 28.01 ============ The accompanying notes are an integral part of the financial statements. 9 BOGLE INVESTMENT MANAGEMENT SMALL CAP GROWTH FUND STATEMENT OF OPERATIONS (UNAUDITED) FOR THE SIX MONTHS ENDED FEBRUARY 29, 2004 ----------------- INVESTMENT INCOME Dividends(1) ............................................. $ 1,099,349 ----------- Total investment income ................................ 1,099,349 ----------- EXPENSES Advisory fees ............................................ 1,441,492 Administrative service fees .............................. 216,224 Administration and accounting fees and expenses .......... 204,372 Transfer agent fees and expenses ......................... 77,478 Shareholder servicing fees ............................... 64,601 Audit and legal fees ..................................... 44,530 Custodian fees and expenses .............................. 43,245 Printing fees ............................................ 19,830 Directors' fees and expenses ............................. 16,107 Federal and state registration fees ...................... 13,683 Insurance and other expenses ............................. 7,248 ----------- Total expenses before waivers and reimbursements ....... 2,148,810 Less: waivers and reimbursements ....................... (282,343) ----------- Net expenses ........................................... 1,866,467 ----------- Net investment loss ...................................... (767,118) ----------- NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS Net realized gain from investments ....................... 33,719,764 Net change in unrealized appreciation on investments ..... 26,652,964 ----------- Net realized and unrealized gain from investments ........ 60,372,728 ----------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ........ $59,605,610 =========== ---------- (1) Net of foreign taxes withheld of $27,538. The accompanying notes are an integral part of the financial statements. 10 BOGLE INVESTMENT MANAGEMENT SMALL CAP GROWTH FUND STATEMENT OF CHANGES IN NET ASSETS
FOR THE FOR THE SIX MONTHS ENDED YEAR ENDED FEBRUARY 29, 2004 AUGUST 31, 2003 ----------------- --------------- (UNAUDITED) INCREASE/(DECREASE) IN NET ASSETS FROM OPERATIONS Net investment loss ................................ $ (767,118) $ (1,155,006) Net realized gain/(loss) from investments .......... 33,719,764 (8,671,658) Net change in unrealized appreciation on investments 26,652,964 60,570,492 ------------ ------------ Net increase in net assets resulting from operations 59,605,610 50,743,828 ------------ ------------ LESS DIVIDENDS TO SHAREHOLDERS FROM: Net investment income Institutional shares ......... -- -- Net investment income Investor shares .............. -- -- ------------ ------------ Total dividends to shareholders .................. -- -- ------------ ------------ INCREASE IN NET ASSETS DERIVED FROM CAPITAL SHARE TRANSACTIONS (NOTE 4) ................ 25,648,439 25,050,315 ------------ ------------ Total increase in net assets ....................... 85,254,049 75,794,143 ------------ ------------ NET ASSETS Beginning of period ................................ 245,353,266 169,559,123 ------------ ------------ End of period* ..................................... $330,607,315 $245,353,266 ============ ============ ---------- * Includes undistributed net investment losses of $767,118 and $505,736 for the six months ended February 29, 2004, and for the year ended August 31, 2003, respectively.
The accompanying notes are an integral part of the financial statements. 11 BOGLE INVESTMENT MANAGEMENT SMALL CAP GROWTH FUND FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- Contained below is per share operating performance data for each class of shares outstanding, total investment return, ratios to average net assets and other supplemental data for the respective periods. This information has been derived from information provided in the financial statements. --------------------------------------------------------------------------------
INSTITUTIONAL CLASS --------------------------------------------------------------------- FOR THE FOR THE FOR THE FOR THE FOR THE PERIOD SIX MONTHS YEAR YEAR YEAR 10/1/99* ENDED ENDED ENDED ENDED THROUGH 2/29/04 8/31/03 8/31/02 8/31/01 8/31/00 ----------- ------- ------- ------- ------- (UNAUDITED) PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period ........ $ 22.71 $ 17.83 $ 19.52 $ 20.91 $ 12.00 ------- ------- ------- ------- ------- Net investment loss ......................... (0.06) (0.11)** (0.02) (0.07)** (0.05)** Net realized and unrealized gain (loss) on investments ........................... 5.44 4.99** (1.67) (0.66)** 8.96** ------- ------- ------- ------- ------- Net increase (decrease) in net assets resulting from operations ................ 5.38 4.88 (1.69) (0.73) 8.91 ------- ------- ------- ------- ------- Distributions to shareholders from: Net investment income ....................... -- -- -- -- -- Net realized capital gains .................. -- -- -- (0.66) -- ------- ------- ------- ------- ------- Net asset value, end of period .............. $ 28.09 $ 22.71 $ 17.83 $ 19.52 $ 20.91 ======= ======= ======= ======= ======= Total investment return(1) .................. 23.69% 27.37% (8.66)% (3.39)% 74.25% ======= ======= ======= ======= ======= RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) ... $187,845 $132,845 $80,639 $36,526 $5,593 Ratio of expenses to average net assets with waivers and reimbursements .......... 1.25%(2) 1.25% 1.25% 1.25% 1.25%(2) Ratio of expenses to average net assets without waivers and reimbursements ........................... 1.45%(2) 1.50% 1.50% 1.68% 3.91%(2) Ratio of net investment loss to average net assets ............................... (0.49)%(2) (0.60)% (0.11)% (0.36)% (0.58)%(2) Portfolio turnover rate ..................... 57.14% 122.39% 140.27% 125.99% 94.31% ---------- * Commencement of operations. ** Calculated based on average shares outstanding for the period. (1) 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. (2) Annualized.
The accompanying notes are an integral part of the financial statements. 12 BOGLE INVESTMENT MANAGEMENT SMALL CAP GROWTH FUND FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- Contained below is per share operating performance data for each class of shares outstanding, total investment return, ratios to average net assets and other supplemental data for the respective periods. This information has been derived from information provided in the financial statements. --------------------------------------------------------------------------------
INVESTOR CLASS ------------------------------------------------------------------------- FOR THE FOR THE FOR THE FOR THE FOR THE PERIOD SIX MONTHS YEAR YEAR YEAR 10/1/99* ENDED ENDED ENDED ENDED THROUGH 2/29/04 8/31/03 8/31/02 8/31/01 8/31/00 ----------- ------- ------- ------- ------- (UNAUDITED) PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period ........ $ 22.65 $ 17.80 $ 19.49 $ 20.89 $ 12.00 ------- ------- ------- ------- ------- Net investment loss ......................... (0.07) (0.12)** (0.03) (0.09)** (0.06)** Net realized and unrealized gain (loss) on investments ........................... 5.43 4.97** (1.66) (0.65)** 8.95** ------- ------- ------- ------- ------- Net increase (decrease) in net assets resulting from operations ................ 5.36 4.85 (1.69) (0.74) 8.89 ------- ------- ------- ------- ------- Distributions to shareholders from: Net investment income ....................... -- -- -- -- -- Net realized capital gains .................. -- -- -- (0.66) -- ------- ------- ------- ------- ------- Net asset value, end of period .............. $ 28.01 $ 22.65 $ 17.80 $ 19.49 $ 20.89 ======= ======= ======= ======= ======= Total investment return(1) .................. 23.66% 27.25% (8.67)% (3.45)% 74.08% ======= ======= ======= ======= ======= RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) ... $142,762 $112,508 $88,920 $54,255 $19,358 Ratio of expenses to average net assets with waivers and reimbursements ........................... 1.35%(2) 1.35% 1.27% 1.35% 1.35%(2) Ratio of expenses to average net assets without waivers and reimbursements ........................... 1.55%(2) 1.60% 1.60% 1.78% 4.01%(2) Ratio of net investment loss to average net assets ............................... (0.58)%(2) (0.69)% (0.20)% (0.46)% (0.68)%(2) Portfolio turnover rate ..................... 57.14% 122.39% 140.27% 125.99% 94.31% ---------- * Commencement of operations. ** Calculated based on average shares outstanding for the period. (1) 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. (2) Annualized.
The accompanying notes are an integral part of the financial statements. 13 BOGLE INVESTMENT MANAGEMENT SMALL CAP GROWTH FUND NOTES TO FINANCIAL STATEMENTS (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. The 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 active investment portfolios, including the Bogle Investment Management Small Cap Growth Fund (the "Fund"), which commenced investment operations on October 1, 1999. As of the date hereof, the Fund offers two classes of shares, Institutional Class and Investor Class. RBB has authorized capital of thirty billion shares of common stock of which 26.073 billion are currently classified into ninety-seven classes of common stock. Each class represents an interest in an active or inactive RBB investment portfolio. The active classes have been grouped into eight separate "families", seven of which have begun investment operations. PORTFOLIO VALUATION -- The net asset value of the Fund is determined as of 4:00 p.m. Eastern time on each business day. The Fund's securities are valued at the closing price or the last reported sale price on the national securities exchange or in the principal over-the-counter market on which such shares are primarily traded. If no sales are reported, and in the case of some securities traded over-the-counter, portfolio securities are valued at the mean between the last reported bid and ask prices. Securities for which market quotations are not readily available are valued at fair value as determined in good faith by the Fair Value Committee according to procedures adopted by RBB's Board of Directors. With the approval of 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 that approximates market value. 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 may 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 that Bogle Investment Management, L.P. (the "Adviser") 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. The Adviser marks to market daily the value of the collateral, and, if necessary, requires the seller to deposit additional collateral by the next day of business, 14 BOGLE INVESTMENT MANAGEMENT SMALL CAP GROWTH FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) 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. For the six months ended February 29, 2004, the Fund did not enter into any repurchase agreements. INVESTMENT TRANSACTIONS, INVESTMENT INCOME AND EXPENSES -- The Fund records security transactions based on 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 accrued when earned. Dividend income is recorded on the ex-dividend date. The Fund's net investment income (other than class specific shareholder servicing fees) and unrealized and realized gains and losses are allocated daily to each class of shares based upon the relative proportion of net assets of each class at the beginning of the day. Expenses incurred on behalf of a specific class, fund or fund family are charged directly to the class, fund or fund family (in proportion to net assets). Expenses incurred for all of the RBB families (such as director or professional fees) are charged to all funds in proportion to their net assets of the RBB Funds. 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. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- Dividends from net investment income and distributions from net realized capital gains, if any, will be declared and paid at least annually to shareholders and recorded on ex-date. Income and capital gain distributions are determined in accordance with U.S. federal income tax regulations which may differ from accounting principles generally accepted in the United States. These differences include the treatment of non-taxable dividends, expiring capital loss carryforwards, foreign currency gain/loss, 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 within the components of net assets. U.S. TAX STATUS -- No provision is made for U.S. income taxes as it is the 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. income and excise taxes. 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES For its advisory services, the Adviser 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 exceed 1.25% of the average daily net assets of the Fund's Institutional Class and 1.35% of the average daily net assets of the Fund's Investor Class. As necessary, this limitation is effected in waivers of advisory fees and reimbursements of expenses exceeding the advisory fee. For the six months ended February 29, 2004, investment advisory fees and waivers were as follows: 15 BOGLE INVESTMENT MANAGEMENT SMALL CAP GROWTH FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) GROSS NET ADVISORY FEES WAIVERS ADVISORY FEES ------------- --------- ------------- Bogle Investment Management Small Cap Growth Fund $1,441,492 $(76,930) $1,364,562 The Fund will not pay the Adviser at a later time for any amounts they waived or any amounts assumed. In addition to serving as the Fund's investment adviser, Bogle Investment Management, L.P. provides certain shareholder services to the Investor Class of the Fund. As compensation for such services, Bogle Investment Management, L.P. receives a monthly fee equal to an annual rate of 0.10% of the average daily net assets of the Fund's Investor Class. PFPC Inc. ("PFPC"), a wholly-owned subsidiary of PFPC Worldwide Inc., and an indirect wholly-owned subsidiary of The PNC Financial Services Group, Inc., serves as administrator for the Fund. For providing administrative and accounting services, PFPC is entitled to receive a monthly fee equal to an annual rate of 0.115% of the Fund's average daily net assets. In addition, PFPC serves as the Fund's transfer and dividend disbursing agent. For providing regulatory administrative services to the RBB Fund, Inc., PFPC is entitled to receive compensation as agreed to by the Fund and PFPC. This agreement commenced on June 1, 2003. This fee is charged to all funds in proportion to their net assets of the RBB Funds. The Bogle Investment Management Small Cap Growth Fund's portion of this fee for the six months ended February 29, 2004 was $22,995. PFPC voluntarily agreed to waive a portion of its administration and accounting services fees for the Fund. For the six months ended February 29, 2004, administration and accounting services fees and waivers were as follows:
GROSS ADMINISTRATION NET ADMINISTRATION AND AND ACCOUNTING ACCOUNTING SERVICES SERVICES FEES AND EXPENSES WAIVERS FEES AND EXPENSES -------------------------- --------- ---------------------- Bogle Investment Management Small Cap Growth Fund $204,372 $(18,019) $186,353
PFPC Distributors, Inc., ("PFPC Distributors") a wholly-owned subsidiary of PFPC Worldwide, Inc. and an indirect wholly-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. PFPC Distributors voluntarily agreed to waive a portion of its administrative services fees for the Fund. 16 BOGLE INVESTMENT MANAGEMENT SMALL CAP GROWTH FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) For the six months ended February 29, 2004, administrative services fees and waivers were as follows:
GROSS ADMINISTRATIVE NET ADMINISTRATIVE SERVICES FEES WAIVERS SERVICES FEES -------------------- --------- ------------------ Bogle Investment Management Small Cap Growth Fund $216,224 $(187,394) $28,830
The Fund will not pay PFPC or PFPC's affiliates at a later time for any amounts they waived or any amounts assumed. PFPC Trust Company provides certain custodial services to the Fund. PFPC Trust Company is a wholly-owned subsidiary of PFPC Worldwide, Inc., an indirect wholly-owned subsidiary of The PNC Financial Services Group, Inc. As compensation for such custodial services, PFPC Trust Company is entitled to receive a monthly fee equal to an annual rate of 0.03% of the Fund's average daily net assets. PFPC and its affiliates were due fees from the Fund of $51,975 as of February 29, 2004. 3. INVESTMENT IN SECURITIES For the six months ended February 29, 2004, aggregate purchases and sales of investment securities (excluding short-term investments) were as follows: INVESTMENT SECURITIES ------------------------------- PURCHASES SALES ------------ ------------ Bogle Investment Management Small Cap Growth Fund $175,561,908 $157,881,002 17 BOGLE INVESTMENT MANAGEMENT SMALL CAP GROWTH FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) 4. CAPITAL SHARE TRANSACTIONS As of February 29, 2004, the Fund has 100,000,000 shares of $0.001 par value common stock authorized for the Institutional Class and 100,000,000 shares of $0.001 par value common stock authorized for the Investor Class. Transactions in capital shares were as follows:
INSTITUTIONAL CLASS ---------------------------------------------------------------- FOR THE SIX MONTHS ENDED FOR THE FEBRUARY 29, 2004 YEAR ENDED (UNAUDITED) AUGUST 31, 2003 ----------------------------- --------------------------- SHARES VALUE SHARES VALUE --------- ------------ --------- ------------ Sales ........................................ 1,312,644 $ 34,342,746 2,263,361 $ 41,292,855 Redemptions .................................. (476,679) (12,042,935) (936,265) (16,623,617) --------- ------------ --------- ------------ Net Increase ................................. 835,965 $ 22,299,811 1,327,096 $ 24,669,238 ========= ============ ========= ============ INVESTOR CLASS ---------------------------------------------------------------- FOR THE SIX MONTHS ENDED FOR THE FEBRUARY 29, 2004 YEAR ENDED (UNAUDITED) AUGUST 31, 2003 ----------------------------- --------------------------- SHARES VALUE SHARES VALUE --------- ----------- --------- ------------ Sales ........................................ 474,109 $12,379,765 685,239 $ 12,710,849 Redemptions .................................. (344,470) (9,031,137) (713,904) (12,329,772) --------- ----------- --------- ------------ Net Increase/(Decrease) ...................... 129,639 $ 3,348,628 (28,665) $ 381,077 ========= =========== ========= ============
5. PROXY VOTING Policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities is available without charge, upon request, by calling (877) 264-5346 and on the Securities and Exchange Commission's website at http://www.sec.gov. 18 BOGLE INVESTMENT MANAGEMENT SMALL CAP GROWTH FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) 6. FEDERAL INCOME TAX INFORMATION At February 29, 2004, Federal tax cost, aggregate gross unrealized appreciation and depreciation of securities held by the Fund were as follows:
FEDERAL TAX UNREALIZED UNREALIZED NET UNREALIZED COST APPRECIATION DEPRECIATION APPRECIATION ------------ ------------ ------------- -------------- Bogle Investment Management Small Cap Growth Fund $255,183,298 $79,669,866 $(4,260,778) $75,409,088
As of August 31, 2003, the components of distributable earnings on a tax basis were as follows: UNDISTRIBUTED UNDISTRIBUTED ORDINARY LONG-TERM INCOME GAINS ------------ ------------- Bogle Investment Management Small Cap Growth Fund $ -- $ -- At August 31, 2003, the Fund had capital loss carryforwards available to offset future capital gains through the indicated expiration dates:
EXPIRING AUGUST 31, ---------------------------------------------- 2009 2010 2011 ---------- ---------- ---------- Bogle Investment Management Small Cap Growth Fund $1,206,354 $1,749,940 $6,381,046
Under Federal tax law, foreign currency and capital losses realized after October 31 may be deferred and treated as having arisen on the first day of the following fiscal year. For the year ended August 31, 2003, the Fund incurred post-October capital losses of $2,439,440 The differences between the book and tax basis components of distributable earnings relate principally to the timing of recognition of income and gains for federal income tax purposes. Short-term and foreign currency gains are reported as ordinary income for federal tax purposes. The tax character of dividends and distributions paid during the last two fiscal years were as follows:
ORDINARY LONG-TERM INCOME GAINS TOTAL -------- --------- --------- Bogle Investment Management Small Cap Growth Fund 2003 -- -- -- 2002 -- -- --
19 BOGLE INVESTMENT MANAGEMENT SMALL CAP GROWTH FUND FUND MANAGEMENT (UNAUDITED) The business and affairs of the Company are managed under the direction of the Company's Board of Directors. The Company is organized under and managed pursuant to Maryland law. The Directors and executive officers of the Company, their dates of birth, business addresses and principal occupations during the past five years are set forth below.
------------------------------------------------------------------------------------------------------------------------------------ TERM OF OFFICE NUMBER OF AND LENGTH PORTFOLIOS IN OTHER NAME, ADDRESS, POSITION(S) HELD OF TIME PRINCIPAL OCCUPATION(S) DURING PAST FUND COMPLEX DIRECTORSHIPS AND DATE OF BIRTH WITH FUND SERVED 1 5 YEARS OVERSEEN BY HELD BY DIRECTOR DIRECTOR ------------------------------------------------------------------------------------------------------------------------------------ DISINTERESTED DIRECTORS ------------------------------------------------------------------------------------------------------------------------------------ Julian A. Brodsky Director 1988 to Since 1969, Director and Vice 16 Director, Comcast Comcast Corporation present Chairman, Comcast Corporation (cable Corporation 1500 Market Street, television and communications); 35th Floor Director, NDS Group PLC (provider of Philadelphia, PA 19102 systems and applications for digital DOB: 7/16/33 pay TV). ------------------------------------------------------------------------------------------------------------------------------------ Francis J. McKay Director 1988 to Since 2000, Vice President, Fox Chase 16 None Fox Chase Cancer Center present Cancer Center (biomedical research and 333 Cottman Avenue medical care); prior to 2000, Philadelphia, PA 19111 Executive Vice President, Fox Chase DOB: 12/06/35 Cancer Center. ------------------------------------------------------------------------------------------------------------------------------------ Arnold M. Reichman Director 1991 to Since December 2000, Director, Gabelli 16 None 106 Pierrepont Street present Partners, L.P. (an investment Brooklyn, NY 11201 partnership); Chief Operating Officer DOB: 5/21/48 and member of the Board of Directors of Outercurve Technologies (wireless enabling services) until April 2001; Chief Operating Officer and member of the Executive Operating Committee of Warburg Pincus Asset Management, Inc.; Executive Officer and Director of Credit Suisse Asset Management Securities, Inc. (formerly Counsellors Securities, Inc.) and Director/Trustee of various investment companies advised by Warburg Pincus Asset Management, Inc. until September 15, 1999; Prior to 1997, Managing Director of Warburg Pincus Asset Management, Inc. ------------------------------------------------------------------------------------------------------------------------------------ Marvin E. Sternberg Director 1991 to Since 1974, Chairman, Director and 16 Director, Moyco Technologies, Inc. present President, Moyco Technologies, Inc. Moyco 200 Commerce Drive (manufacturer of precision coated and Technologies, Inc. Montgomeryville, PA 18936 industrial abrasives). Since 1999, DOB: 3/24/34 Director, Pennsylvania Business Bank. ------------------------------------------------------------------------------------------------------------------------------------
20 BOGLE INVESTMENT MANAGEMENT SMALL CAP GROWTH FUND FUND MANAGEMENT (CONTINUED) (UNAUDITED)
------------------------------------------------------------------------------------------------------------------------------------ TERM OF OFFICE NUMBER OF AND LENGTH PORTFOLIOS IN OTHER NAME, ADDRESS, POSITION(S) HELD OF TIME PRINCIPAL OCCUPATION(S) DURING PAST FUND COMPLEX DIRECTORSHIPS AND DATE OF BIRTH WITH FUND SERVED 1 5 YEARS OVERSEEN BY HELD BY DIRECTOR DIRECTOR ------------------------------------------------------------------------------------------------------------------------------------ INTERESTED DIRECTORS ------------------------------------------------------------------------------------------------------------------------------------ Robert Sablowsky Director 1991 to Since July 2002, Senior Vice President 16 None Oppenheimer & Company, Inc. present and prior thereto, Executive Vice 200 Park Avenue President of Oppenheimer & Co., Inc., New York, NY 10166 formerly Fahnestock & Co., Inc. (a DOB: 4/16/38 registered broker-dealer). ------------------------------------------------------------------------------------------------------------------------------------ J. Richard Carnall Director 2002 to Director of PFPC Inc. from January 16 None 400 Bellevue Parkway present 1987 to April 2002, Chairman and Chief Wilmington, DE 19809 Executive Officer of PFPC Inc. until DOB: 9/25/38 April 2002, Executive Vice President of PNC Bank, National Association from October 1981 to April 2002, Director of PFPC International Ltd. (financial services) from August 1993 to April 2002, Director of PFPC International (Cayman) Ltd. (financial services) from September 1996 to April 2002, and Director of International Dollar Reserve Fund, Ltd. (Cayman mutual fund company) from September 1993 to present; Governor of the Investment Company Institute (investment company industry trade organization) from July 1996 to January 2002; Director of PNC Asset Management, Inc. (investment advisory) from September 1994 to March 1998; Director of PNC National Bank from October 1995 to November 1997; Director of Haydon Bolts, Inc. (bolt manufacturer) and Parkway Real Estate Company (subsidiary of Haydon Bolts, Inc.) since 1984. Mr. Carnall provides consulting services from time to time to PFPC Inc. ------------------------------------------------------------------------------------------------------------------------------------
21 BOGLE INVESTMENT MANAGEMENT SMALL CAP GROWTH FUND FUND MANAGEMENT (CONCLUDED) (UNAUDITED)
------------------------------------------------------------------------------------------------------------------------------------ TERM OF OFFICE NUMBER OF AND LENGTH PORTFOLIOS IN OTHER NAME, ADDRESS, POSITION(S) HELD OF TIME PRINCIPAL OCCUPATION(S) DURING PAST FUND COMPLEX DIRECTORSHIPS AND DATE OF BIRTH WITH FUND SERVED 1 5 YEARS OVERSEEN BY HELD BY DIRECTOR DIRECTOR ------------------------------------------------------------------------------------------------------------------------------------ OFFICER(S) WHO ARE NOT DIRECTORS ------------------------------------------------------------------------------------------------------------------------------------ Edward J. Roach President 1991 to Certified Public Accountant; Vice N/A N/A 400 Bellevue Parkway and present Chairman of the Board, Fox Chase 4th Floor Treasurer and Cancer Center; Trustee Emeritus, Wilmington, DE 19809 1988 to Pennsylvania School for the Deaf; DOB: 6/29/24 present Trustee Emeritus, Immaculata University; President or Vice President and Treasurer of various investment companies advised by subsidiaries of PNC Bank Corp. from 1981 to 1997; Managing General Partner, President and Treasurer of Chestnut Street Exchange Fund; Director of the Bradford Funds, Inc. from 1996 to 2000. ------------------------------------------------------------------------------------------------------------------------------------ Lisa M. King Secretary Since Since 2000, Vice President and N/A N/A 301 Bellevue Parkway 2003 Counsel, PFPC Inc. (financial services 2nd Floor company); Associate, Stradley, Ronon, Wilmington, DE 19809 Stevens & Young, LLC (law firm) from DOB: 1/27/68 1996-2000. ------------------------------------------------------------------------------------------------------------------------------------ 1 Each Director serves for an indefinite period of time until his successor is elected and qualified or until his death, resignation or removal. Each officer holds office at the pleasure of the Board of Directors until the next annual meeting of the Company or until his or her successor is duly elected and qualified, or until he or she dies, resigns, is removed or becomes disqualified. 2 Messrs. Carnall and Sablowsky are considered "interested persons" of the Company as that term is defined in the 1940 Act. Mr. Carnall is an "interested Director" of the Company because he owns shares of The PNC Financial Services Group, Inc. The investment adviser to the Company's Money Market Portfolio, BlackRock Institutional Management Corporation and the Company's principal underwriter, PFPC Distributors, Inc. are indirect subsidiaries of The PNC Financial Services Group, Inc. Mr. Sablowsky is considered an "interested Director" of the Company by virtue of his position as an officer of a registered broker-dealer.
22 [THIS PAGE INTENTIONALLY LEFT BLANK] INVESTMENT ADVISER Bogle Investment Management, L.P. 57 River Street Suite 206 Wellesley, MA 02481 ADMINISTRATOR PFPC Inc. 301 Bellevue Parkway Wilmington, DE 19809 TRANSFER AGENT PFPC Inc. 301 Bellevue Parkway Wilmington, DE 19809 DISTRIBUTOR PFPC Distributors, Inc. 760 Moore Road King of Prussia, PA 19406 CUSTODIAN PFPC Trust Company 8800 Tinicum Blvd. Suite 200 Philadelphia, PA 19153 INDEPENDENT AUDITORS PricewaterhouseCoopers LLP Two Commerce Square 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. Current performance may be lower or higher than the performance data provided in the report. [INSERT BAKER EDGAR HERE] ====================================== BAKER 500 CORPORATION ====================================== BAKER 500 GROWTH FUND OF THE RBB FUND, INC. [LOGO OMITTED] ==================== B 500 ==================== INSTITUTIONAL CLASS CLASS S ====================================== SEMI-ANNUAL REPORT FEBRUARY 29, 2004 ====================================== -------------------------------------------------------------------------------- BAKER 500 GROWTH FUND SEMI-ANNUAL REPORT -------------------------------------------------------------------------------- April 19, 2004 Dear Shareholder of the Baker 500 Growth Fund: The performance for the six months ended February 29, 2004, for the Institutional Class and Class S of the Baker 500 Growth Fund (the "Fund") increased 8.97% and 8.81%, respectively, while the S&P 500(R) Index increased 14.59% for the same period. For the period of September 2003, through mid-January 2004, the Fund was only 70% invested in equity securities which impacted the Fund's performance. The Fund was not fully invested in equity securities at this time due to our anticipation that the market would experience a correction. On January 21, 2004, the Fund became fully invested in equity securities and the Fund's performance for the balance of the semi-annual period improved. For the month of January 2004, the Fund experienced an increase of 4.20% versus the S&P 500(R)'s increase of 1.84%. During the month of December 2003, the Fund, at 70% invested, remained flat, experiencing a 0.08% increase, versus a 5.24% increase for the S&P 500(R) Index for the same one-month period. The primary reason the Fund trailed the S&P 500(R) Index during December 2003 was due to high sector rotation that the markets were experiencing. In January 2004, the sector rotations returned to the Fund and had a positive impact on the Fund's performance. During the first quarter of 2004, as companies announced their quarterly earnings, most publicly traded companies experienced continued growth in earnings, which caused the markets to continue to grow. As of February 29, 2004, the end date of this report, the Fund was fully invested in 20 different securities across 15 industries, satisfying our growth objective of the Fund in both share classes. Sincerely, L. Edward Baker Portfolio Manager BAKER 500 GROWTH FUND PORTFOLIO OF INVESTMENTS FEBRUARY 29, 2004 (UNAUDITED) NUMBER OF SHARES VALUE --------- ----------- COMMON STOCKS--96.9% BROADCASTING & CABLE TV--4.6% Univision Communications, Inc., Class A* .......................... 22,275 $ 793,658 ----------- CASINOS & GAMING--5.4% International Game Technology .............................. 24,200 949,608 ----------- COMPUTER & ELECTRONICS RETAIL--4.3% Best Buy Co., Inc.* ....................... 14,200 756,150 ----------- DRUG RETAIL--5.0% CVS Corp. ................................. 23,415 878,062 ----------- ELECTRONIC EQUIPMENT & INSTRUMENTS--9.5% Agilent Technologies, Inc.* ............... 25,980 888,256 Waters Corp.* ............................. 20,600 760,964 ----------- 1,649,220 ----------- HEALTH CARE EQUIPMENT --19.4% Medtronic, Inc. ........................... 17,200 806,680 St. Jude Medical, Inc.* ................... 12,000 871,800 Stryker Corp. ............................. 9,575 849,590 Zimmer Holdings, Inc.* .................... 11,225 849,059 ----------- 3,377,129 HOME IMPROVEMENT RETAIL--5.1% Lowe's Companies, Inc. .................... 15,925 891,800 ----------- HOUSEWARES & SPECIALTIES--4.3% Fortune Brands, Inc. ...................... 10,500 750,540 ----------- INDUSTRIAL MACHINERY--4.1% Danaher Corp. ............................. 8,050 721,522 ----------- NETWORKING EQUIPMENT--5.8% Avaya, Inc.* .............................. 58,825 1,008,849 ----------- NUMBER OF SHARES VALUE --------- ----------- PHARMACEUTICALS--5.7% Forest Laboratories, Inc.* ................ 13,200 $ 996,336 ----------- SPECIALTY STORES--14.4% AutoZone, Inc.* ........................... 9,975 894,757 Bed Bath & Beyond, Inc.* .................. 20,840 851,939 Staples, Inc.* ............................ 29,425 771,524 ----------- 2,518,220 ----------- SYSTEMS SOFTWARE--4.0% Novell, Inc.* ............................. 68,555 697,890 ----------- TELECOMMUNICATIONS EQUIPMENT--5.3% QUALCOMM, Inc. ............................ 14,525 921,611 ----------- TOTAL COMMON STOCKS (Cost $14,940,636) ................................. 16,910,595 ----------- SHORT TERM INVESTMENTS--3.2% MONEY MARKET FUNDS--3.2% Galaxy Money Market Fund 0.97% 03/01/04 .......................... 283,024 283,024 Wilmington Money Market Fund 0.61% 03/01/04 ..................... 283,025 283,025 ----------- 566,049 ----------- TOTAL SHORT TERM INVESTMENTS (Cost $566,049) .................................... 566,049 ----------- TOTAL INVESTMENTS--100.1% (Cost $15,506,685) ................................. 17,476,644 ----------- LIABILITIES IN EXCESS OF OTHER ASSETS--(0.1)% ............................... (21,669) ----------- NET ASSETS--100.0% ................................... $17,454,975 =========== ---------- *Non-income producing. The accompanying notes are an integral part of the financial statements. 2 BAKER 500 GROWTH FUND STATEMENT OF ASSETS AND LIABILITIES FEBRUARY 29, 2004 (UNAUDITED) ASSETS Investments, at value (cost - $15,506,685) ................ $17,476,644 Receivable for Fund shares sold ........................... 40,180 Prepaid expenses and other assets ......................... 16,464 Dividends and interest receivable ......................... 4,322 ----------- Total assets ............................................ 17,537,610 ----------- LIABILITIES Payable for Fund shares redeemed .......................... 46,970 Audit and legal fees payable .............................. 15,731 Shareholder servicing fees payable ........................ 923 Accrued expenses and other liabilities .................... 19,011 ----------- Total liabilities ....................................... 82,635 ----------- NET ASSETS Capital stock, $0.001 par value ........................... 1,331 Additional paid-in capital ................................ 15,829,376 Accumulated net investment loss ........................... (108,388) Accumulated net realized loss from investments ............ (237,303) Net unrealized appreciation on investments ................ 1,969,959 ----------- Net assets .............................................. $17,454,975 =========== INSTITUTIONAL CLASS Net assets ................................................ $12,446,901 ----------- Shares outstanding ........................................ 948,468 ----------- Net asset value, offering and redemption price per share .. $ 13.12 =========== CLASS S Net assets ................................................ $ 5,008,074 ----------- Shares outstanding ........................................ 382,561 ----------- Net asset value, offering and redemption price per share .. $ 13.09 =========== The accompanying notes are an integral part of the financial statements. 3 BAKER 500 GROWTH FUND STATEMENT OF OPERATIONS (UNAUDITED) FOR THE SIX MONTHS ENDED FEBRUARY 29, 2004 ----------------- INVESTMENT INCOME Dividends ............................................... $ 24,962 Interest ................................................ 16,277 ---------- Total investment income ............................... 41,239 ---------- EXPENSES Advisory fees ........................................... 84,386 Service fees and expenses ............................... 87,575 Offering costs .......................................... 26,206 Federal and state registration fees ..................... 12,853 Audit and legal fees .................................... 16,497 Shareholder servicing fees .............................. 6,685 Printing fees ........................................... 8,048 Directors fees and expenses ............................. 1,524 Insurance and other expenses ............................ 655 ---------- Total expenses before waivers and reimbursements ...... 244,429 Less: waivers and reimbursements ...................... (94,802) ---------- Total expenses after waivers and reimbursements ....... 149,627 ---------- Net investment loss ..................................... (108,388) ---------- NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS Net realized loss from investments ...................... (198,352) Net change in unrealized appreciation on investments .... 1,787,842 ---------- Net realized and unrealized gain from investments ....... 1,589,490 ---------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ....... $1,481,102 ========== The accompanying notes are an integral part of the financial statements. 4 BAKER 500 GROWTH FUND STATEMENT OF CHANGES IN NET ASSETS
FOR THE FOR THE PERIOD SIX MONTHS JANUARY 28, 2003* ENDED THROUGH FEBRUARY 29, 2004 AUGUST 31, 2003 ----------------- ----------------- (UNAUDITED) INCREASE/(DECREASE) IN NET ASSETS FROM OPERATIONS Net investment loss ................................ $ (108,388) $ (128,092) Net realized loss from investments ................. (198,352) (38,951) Net change in unrealized appreciation on investments 1,787,842 182,117 ----------- ----------- Net increase in net assets resulting from operations 1,481,102 15,074 ----------- ----------- LESS DIVIDENDS TO SHAREHOLDERS FROM: Net investment income Institutional Class shares ... -- -- Net investment income Class S shares ............... -- -- ----------- ----------- Total dividends to shareholders .................. -- -- ----------- ----------- INCREASE IN NET ASSETS DERIVED FROM CAPITAL SHARE TRANSACTIONS (NOTE 5) ................ 352,385 15,606,414 ----------- ----------- Total increase in net assets ....................... 1,833,487 15,621,488 ----------- ----------- NET ASSETS Beginning of period ................................ 15,621,488 -- ----------- ----------- End of period** .................................... $17,454,975 $15,621,488 =========== =========== ---------- * Commencement of operations. ** Includes undistributed net investment income/(loss) of $(108,388) for the six months ended February 29, 2004, and $0 for the period January 28, 2003 (commencement of operations) through August 31, 2003.
The accompanying notes are an integral part of the financial statements. 5 BAKER 500 GROWTH FUND FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- Contained below is per share operating performance data for each class of shares outstanding, total investment return, ratios to average net assets and other supplemental data for the respective periods. This information has been derived from information provided in the financial statements. --------------------------------------------------------------------------------
INSTITUTIONAL CLASS ------------------------------------- FOR THE FOR THE PERIOD SIX MONTHS JANUARY 28, 2003* ENDED THROUGH FEBRUARY 29, 2004 AUGUST 31, 2003 ----------------- ----------------- (UNAUDITED) PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period ........................ $12.04 $12.00 Net investment loss ......................................... (0.07)** (0.12)** Net realized and unrealized gain on investments ............. 1.15 0.16 ------ ------ Net increase in net assets resulting from operations ........ 1.08 0.04 ------ ------ Distributions to shareholders from: Net investment income ....................................... -- -- Net realized capital gains .................................. -- -- ------ ------ Net asset value, end of period .............................. $13.12 $12.04 ====== ====== Total investment return(1) .................................. 8.97% 0.33% ====== ====== RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) ................... $12,447 $10,067 Ratio of expenses to average net assets including waivers and reimbursements ........................................... 1.66%(2) 2.44%(2) Ratio of expenses to average net assets excluding waivers and reimbursements ........................................... 2.75%(2) 3.34%(2) Ratio of net investment loss to average net assets .......... (1.18)%(2) (1.64)%(2) Portfolio turnover rate ..................................... 61.51% 49.61% ---------- * Commencement of operations. ** Calculated based on average shares outstanding for the period. (1) 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. (2) Annualized.
The accompanying notes are an integral part of the financial statements. 6 BAKER 500 GROWTH FUND FINANCIAL HIGHLIGHTS
CLASS S -------------------------------------- FOR THE FOR THE PERIOD SIX MONTHS JANUARY 28, 2003* ENDED THROUGH FEBRUARY 29, 2004 AUGUST 31, 2003 ----------------- ----------------- (UNAUDITED) PER SHARE OPERATING PERFORMANCE Net asset value, beginning of period ................................. $12.03 $12.00 Net investment loss .................................................. (0.09)** (0.13)** Net realized and unrealized gain on investments ...................... 1.15 0.16 ------ ------ Net increase in net assets resulting from operations ................. 1.06 0.03 ------ ------ Distributions to shareholders from: Net investment income ................................................ -- -- Net realized capital gains ........................................... -- -- ------ ------ Net asset value, end of period ....................................... $13.09 $12.03 ====== ====== Total investment return(1) ........................................... 8.81% 0.25% ====== ====== RATIOS/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) ............................ $5,008 $5,554 Ratio of expenses to average net assets including waivers and reimbursements .................................................... 1.89%(2) 2.69%(2) Ratio of expenses to average net assets excluding waivers and reimbursements .................................................... 3.00%(2) 3.66%(2) Ratio of net investment loss to average net assets ................... (1.41)%(2) (1.81)%(2) Portfolio turnover rate .............................................. 61.51% 49.61% ---------- * Commencement of operations. ** Calculated based on average shares outstanding for the period. (1) 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. (2) Annualized.
The accompanying notes are an integral part of the financial statements. 7 BAKER 500 GROWTH FUND NOTES TO FINANCIAL STATEMENTS (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. The 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 active investment portfolios, including the Baker 500 Growth Fund (the "Fund"), which commenced investment operations on January 28, 2003. As of the date hereof, the Fund offers two classes of shares, Institutional Class and Class S. RBB has authorized capital of thirty billion shares of Common Stock of which 26.073 billion are currently classified into ninety-seven classes of Common Stock. Each class represents an interest in an active or inactive RBB investment portfolio. The active classes have been grouped into eight separate "families," seven of which have begun investment operations. PORTFOLIO VALUATION -- The net asset value of the Fund is determined as of 4:00 p.m. Eastern time on each business day. The Fund's securities are valued at the closing price or the last reported sale price on the national securities exchange or in the principal over-the-counter market on which such shares are primarily traded. If no sales are reported, and in the case of some securities traded over-the-counter, portfolio securities are valued at the mean between the last reported bid and ask prices. Securities for which market quotations are not readily available are valued at fair value as determined in good faith by the Fair Value Committee according to procedures adopted by RBB's Board of Directors. With the approval of 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 that approximates market value. 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 may 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 that Baker 500 Corporation (the "Adviser") 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. The Adviser marks to market daily the value of the collateral, and, if necessary, requires the seller to deposit additional collateral by the next day of business, 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. For the six months ended February 29, 2004, the Fund did not enter into any repurchase agreements. 8 BAKER 500 GROWTH FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) INVESTMENT TRANSACTIONS, INVESTMENT INCOME AND EXPENSES -- The Fund records security transactions 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 accrued when earned. Dividend income is recorded on the ex-dividend date. The Fund's net investment income (other than class specific shareholder servicing fees) and unrealized and realized gains and losses are allocated daily to each class of shares based upon the relative proportion of net assets of each class at the beginning of the day. Expenses incurred on behalf of a specific class, fund or fund family are charged directly to the class, fund or fund family (in proportion to net assets). Expenses incurred for all of the RBB families (such as director or professional fees) are charged to all funds in proportion to their net assets of the RBB Funds. 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. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- Dividends from net investment income and distributions from net realized capital gains, if any, will be declared and paid at least annually to shareholders and recorded on ex-date. Income and capital gain distributions are determined in accordance with U.S. federal income tax regulations which may differ from accounting principles generally accepted in the United States. These differences include the treatment of non-taxable dividends, expiring capital loss carryforwards, foreign currency gain/loss, 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 within the components of net assets. U.S. TAX STATUS -- No provision is made for U.S. income taxes as it is the 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. income and excise taxes. 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES Baker 500 Corporation serves as the Fund's investment adviser. For its advisory services, the Adviser is entitled to receive 0.98% of the Fund's average daily net assets, computed daily and payable monthly. The Adviser voluntarily agreed to waive the investment advisory fee. For the six months ended February 29, 2004, the fee waivers were as follows: INVESTMENT NET INVESTMENT ADVISORY FEES WAIVERS ADVISORY FEES ------------- --------- -------------- Baker 500 Growth Fund $84,386 $(84,386) $-- The Fund will not pay the Adviser at a later time for any amounts they waived or any they have assumed. 9 BAKER 500 GROWTH FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) PFPC Inc. ("PFPC"), a wholly-owned subsidiary of PFPC Worldwide Inc., and an indirect wholly-owned subsidiary of The PNC Financial Services Group, Inc., serves as administrator and transfer agent for the Fund. PFPC Distributors, Inc., a wholly-owned subsidiary of PFPC Worldwide, Inc. and an indirect wholly-owned subsidiary of the PNC Financial Services Group, Inc., provides certain administrative services to the Fund. PFPC Trust Company provides certain custodial services to the Fund. PFPC Trust Company is a wholly-owned subsidiary of PFPC Worldwide, Inc., and an indirect wholly-owned subsidiary of The PNC Financial Services Group, Inc. For providing accounting and administration, transfer agency, administrative and custodial services, PFPC and its affiliates are entitled to receive a monthly fee equal to an annual rate of 0.15% of the Fund's average daily net assets or a minimum of $125,000 annually. For providing regulatory administrative services to the RBB Fund, Inc., PFPC Inc. is entitled to receive compensation as agreed to by the Fund and PFPC. This agreement commenced on June 1, 2003. This fee is charged to all funds in proportion to their net assets of RBB. The Fund's portion of this fee for the six months ended February 29, 2004 was $1,515. PFPC and its affiliates voluntarily agreed to waive a portion of accounting and administration, transfer agency, administrative services and custodial services fees for the Fund. For the six months ended February 29, 2004, fees earned by PFPC and its affiliates and related fee waivers were as follows: GROSS PFPC NET PFPC SERVICES FEES SERVICES FEES AND EXPENSES WAIVERS AND EXPENSES ------------- --------- ------------- Baker 500 Growth Fund $87,575 $(10,416) $77,159 The Fund will not pay PFPC or PFPC's affiliates at a later time for any amounts they waived or any they have assumed. As of February 29, 2004, the Fund owed PFPC and its affiliates $15,756 for their services. 3. NON 12b-1 SHAREHOLDER SERVICES PLAN The Fund has a Non 12b-1 Shareholder Services Plan (the "Plan") which permits Class S shares of the Fund to pay fees to various service organizations of up to 0.25% of the average daily net assets of such class. Under the Plan, the Fund has entered into agreements with service organizations that provide support services to their customers who are the beneficial owners of shares in Class S. The Fund had a payable of $923 as of February 29, 2004 and paid $6,685 under the Plan for the six months ended February 29, 2004. 4. INVESTMENT IN SECURITIES For the six months ended February 29, 2004, aggregate purchases and sales of investment securities (excluding short-term investments) were as follows: INVESTMENT SECURITIES ----------------------------- PURCHASES SALES ----------- ---------- Baker 500 Growth Fund $16,853,906 $7,756,809 10 BAKER 500 GROWTH FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) (UNAUDITED) 5. CAPITAL SHARE TRANSACTIONS As of February 29, 2004, the Fund has 100,000,000 shares of $0.001 par value common stock authorized for the Institutional Class and 100,000,000 shares of $0.001 par value common stock authorized for Class S. Transactions in capital shares were as follows:
INSTITUTIONAL CLASS ---------------------------------------------------------------- FOR THE FOR THE SIX MONTHS ENDED PERIOD JANUARY 28, 2003* TO FEBRUARY 29, 2004 AUGUST 31, 2003 ---------------------------- --------------------------- SHARES VALUE SHARES VALUE -------- ---------- ------- ----------- Sales ......................................... 274,491 $3,426,876 916,574 $11,013,785 Redemptions ................................... (161,959) (2,040,512) (80,638) (969,206) Reinvestments ................................. -- -- -- -- -------- ---------- ------- ----------- Net Increase .................................. 112,532 $1,386,364 835,936 $10,044,579 ======== ========== ======= =========== CLASS S ---------------------------------------------------------------- FOR THE FOR THE SIX MONTHS ENDED PERIOD JANUARY 28, 2003* TO FEBRUARY 29, 2004 AUGUST 31, 2003 ---------------------------- ---------------------------- SHARES VALUE SHARES VALUE -------- ----------- -------- ----------- Sales ......................................... 85,508 $ 1,064,038 860,194 $10,338,903 Redemptions ................................... (164,690) (2,098,017) (398,451) (4,777,068) Reinvestments ................................. -- -- -- -- -------- ----------- -------- ----------- Net Increase/(Decrease) ....................... (79,182) $(1,033,979) 461,743 $ 5,561,835 ======== =========== ======== =========== ---------- * Commencement of operations.
6. PROXY VOTING Policies and procedures that the Fund uses to determine how to vote proxies relating to portfolio securities are available without charge, upon request, by calling (866) 253-8244 and on the Commission's website at http://www.sec.gov. 11 BAKER 500 GROWTH FUND NOTES TO FINANCIAL STATEMENTS (CONCLUDED) (UNAUDITED) 7. FEDERAL INCOME TAX INFORMATION At February 29, 2004, Federal tax cost, aggregate gross unrealized appreciation and depreciation of securities held by the Fund were as follows:
NET UNREALIZED FEDERAL TAX UNREALIZED UNREALIZED APPRECIATION/ COST APPRECIATION DEPRECIATION DEPRECIATION ----------- ------------ ------------ -------------- Baker 500 Growth Fund $15,506,685 $2,233,686 $(263,727) $1,969,959
As of August 31, 2003, the components of distributable earnings on a tax basis were as follows: UNDISTRIBUTED UNDISTRIBUTED ORDINARY LONG-TERM INCOME GAINS ------------- ------------- Baker 500 Growth Fund -- -- Under Federal tax law, foreign currency losses and capital losses realized after October 31 may be deferred and treated as having arisen on the first day of the following fiscal year. For the period January 28, 2003 (commencement of operations) through August 31, 2003, the Fund incurred post-October capital losses of $38,951. The differences between the book and tax basis components of distributable earnings relate principally to the timing of recognition of income and gains for federal income tax purposes. Short-term and foreign currency gains are reported as ordinary income for federal tax purposes. 12 BAKER 500 GROWTH FUND FUND MANAGEMENT (UNAUDITED) Information pertaining to the Directors and Officers of the Fund is set forth below. The statement of additional information (SAI) includes additional information about the Directors and is available without charge, upon request, by calling (877) 264-5346.
------------------------------------------------------------------------------------------------------------------------------------ TERM OF OFFICE AND NUMBER OF LENGTH OF PORTFOLIOS IN OTHER NAME, ADDRESS, POSITION(S) HELD TIME PRINCIPAL OCCUPATION(S) DURING PAST FUND COMPLEX DIRECTORSHIPS AND DATE OF BIRTH WITH FUND SERVED 1 5 YEARS OVERSEEN BY HELD BY DIRECTOR DIRECTOR ------------------------------------------------------------------------------------------------------------------------------------ DISINTERESTED DIRECTORS ------------------------------------------------------------------------------------------------------------------------------------ Julian A. Brodsky Director 1988 to Since 1969, Director and Vice Chairman, 16 Director, Comcast Corporation present Comcast Corporation (cable television and Comcast 1500 Market Street, communications); Director, NDS Group PLC Corporation 35th Floor (provider of systems and applications for Philadelphia, PA 19102 digital pay TV). DOB: 7/16/33 ------------------------------------------------------------------------------------------------------------------------------------ Francis J. McKay Director 1988 to Since 2000, Vice President, Fox Chase Cancer 16 None Fox Chase Cancer Center present Center (biomedical research and medical 333 Cottman Avenue care); prior to 2000, Executive Vice Philadelphia, PA 19111 President, Fox Chase Cancer Center. DOB: 12/06/35 ------------------------------------------------------------------------------------------------------------------------------------ Arnold M. Reichman Director 1991 to Since December 2000, Director, Gabelli 16 None 106 Pierrepont Street present Partners, L.P. (an investment partnership); Brooklyn, NY 11201 Chief Operating Officer and member of the DOB: 5/21/48 Board of Directors of Outercurve Technologies (wireless enabling services) until April 2001; Chief Operating Officer and member of the Executive Operating Committee of Warburg Pincus Asset Management, Inc.; Executive Officer and Director of Credit Suisse Asset Management Securities, Inc. (formerly Counsellors Securities, Inc.) and Director/Trustee of various investment companies advised by Warburg Pincus Asset Management, Inc. until September 15, 1999; Prior to 1997, Managing Director of Warburg Pincus Asset Management, Inc. ------------------------------------------------------------------------------------------------------------------------------------ Marvin E. Sternberg Director 1991 to Since 1974, Chairman, Director and 16 Director, Moyco Technologies, Inc. present President, Moyco Technologies, Inc. Moyco 200 Commerce Drive (manufacturer of precision coated and Technologies, Montgomeryville, PA 18936 industrial abrasives). Since 1999, Director, Inc. DOB: 3/24/34 Pennsylvania Business Bank. ------------------------------------------------------------------------------------------------------------------------------------
13 BAKER 500 GROWTH FUND FUND MANAGEMENT (CONTINUED) (UNAUDITED)
------------------------------------------------------------------------------------------------------------------------------------ TERM OF OFFICE AND NUMBER OF LENGTH OF PORTFOLIOS IN OTHER NAME, ADDRESS, POSITION(S) HELD TIME PRINCIPAL OCCUPATION(S) DURING PAST FUND COMPLEX DIRECTORSHIPS AND DATE OF BIRTH WITH FUND SERVED 1 5 YEARS OVERSEEN BY HELD BY DIRECTOR DIRECTOR ------------------------------------------------------------------------------------------------------------------------------------ INTERESTED DIRECTORS 2 ------------------------------------------------------------------------------------------------------------------------------------ Robert Sablowsky Director 1991 to Since July 2002, Senior Vice President and 16 None Oppenheimer & Company, Inc. present prior thereto, Executive Vice President of 200 Park Avenue Oppenheimer & Co., Inc., formerly New York, NY 10166 Fahnestock & Co., Inc. (a registered DOB: 4/16/38 broker-dealer). ------------------------------------------------------------------------------------------------------------------------------------ J. Richard Carnall Director 2002 to Director of PFPC Inc. from January 1987 to 16 None 400 Bellevue Parkway present April 2002, Chairman and Chief Executive Wilmington, DE 19809 Officer of PFPC Inc. until April 2002, DOB: 9/25/38 Executive Vice President of PNC Bank, National Association from October 1981 to April 2002, Director of PFPC International Ltd. (financial services) from August 1993 to April 2002, Director of PFPC International (Cayman) Ltd. (financial services) from September 1996 to April 2002, and Director of International Dollar Reserve Fund, Ltd. (Cayman mutual fund company) from September 1993 to present; Governor of the Investment Company Institute (investment company industry trade organization) from July 1996 to January 2002; Director of PNC Asset Management, Inc. (investment advisory) from September 1994 to March 1998; Director of PNC National Bank from October 1995 to November 1997; Director of Haydon Bolts, Inc. (bolt manufacturer) and Parkway Real Estate Company (subsidiary of Haydon Bolts, Inc.) since 1984. Mr. Carnall provides consulting services from time to time to PFPC Inc. ------------------------------------------------------------------------------------------------------------------------------------
14 BAKER 500 GROWTH FUND FUND MANAGEMENT (CONCLUDED) (UNAUDITED)
------------------------------------------------------------------------------------------------------------------------------------ TERM OF OFFICE AND NUMBER OF LENGTH OF PORTFOLIOS IN OTHER NAME, ADDRESS, POSITION(S) HELD TIME PRINCIPAL OCCUPATION(S) DURING PAST FUND COMPLEX DIRECTORSHIPS AND DATE OF BIRTH WITH FUND SERVED 1 5 YEARS OVERSEEN BY HELD BY DIRECTOR DIRECTOR ------------------------------------------------------------------------------------------------------------------------------------ OFFICER(S) WHO ARE NOT DIRECTORS ------------------------------------------------------------------------------------------------------------------------------------ Edward J. Roach President 1991 to Certified Public Accountant; Vice Chairman N/A N/A 400 Bellevue Parkway and present of the Board, Fox Chase Cancer Center; 4th Floor Treasurer and Trustee Emeritus, Pennsylvania School for Wilmington, DE 19809 1988 to the Deaf; Trustee Emeritus, Immaculata DOB: 6/29/24 present University; President or Vice President and Treasurer of various investment companies advised by subsidiaries of PNC Bank Corp. from 1981 to 1997; Managing General Partner, President and Treasurer of Chestnut Street Exchange Fund; Director of the Bradford Funds, Inc. from 1996 to 2000. ------------------------------------------------------------------------------------------------------------------------------------ Lisa M. King Secretary Since Since 2000, Vice President and Counsel, N/A N/A 301 Bellevue Parkway 2003 PFPC Inc. (financial services company); 2nd Floor Associate, Stradley, Ronon, Stevens & Wilmington, DE 19809 Young, LLC (law firm) from 1996-2000. DOB: 1/27/68 ------------------------------------------------------------------------------------------------------------------------------------ 1 Each Director serves for an indefinite period of time until his successor is elected and qualified or until his death, resignation or removal. Each officer holds office at the pleasure of the Board of Directors until the next annual meeting of the Company or until his or her successor is duly elected and qualified, or until he or she dies, resigns, is removed or becomes disqualified. 2 Messrs. Carnall and Sablowsky are considered "interested persons" of the Company as that term is defined in the 1940 Act. Mr. Carnall is an "interested Director" of the Company because he owns shares of The PNC Financial Services Group, Inc. The investment adviser to the Company's Money Market Portfolio, BlackRock Institutional Management Corporation and the Company's principal underwriter, PFPC Distributors, Inc. are indirect subsidiaries of The PNC Financial Services Group, Inc. Mr. Sablowsky is considered an "interested Director" of the Company by virtue of his position as an officer of a registered broker-dealer.
15 INVESTMENT ADVISER Baker 500 Corporation 601 Carlson Parkway Suite 1050 Minnetonka, MN 55305 ADMINISTRATOR PFPC Inc. 301 Bellevue Parkway Wilmington, DE 19809 TRANSFER AGENT PFPC Inc. 301 Bellevue Parkway Wilmington, DE 19809 DISTRIBUTOR PFPC Distributors, Inc. 760 Moore Road King of Prussia, PA 19406 CUSTODIAN PFPC Trust Company 8800 Tinicum Blvd. Suite 200 Philadelphia, PA 19153 INDEPENDENT AUDITORS PricewaterhouseCoopers LLP Two Commerce Square 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. Current performance may be lower or higher than the performance data provided in the report. ITEM 2. CODE OF ETHICS. Not applicable. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. Not applicable. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Not applicable. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable. ITEM 6. [RESERVED] ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. Not applicable. ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. There have been no material changes to the procedures by which the shareholders may recommend nominees to the registrant's board of directors, where those changes were implemented after the registrant last provided disclosure in response to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14A (17 CFR 240.14a-101), or this Item. ITEM 10. CONTROLS AND PROCEDURES. (a) The registrant's principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the "1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on their evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or 240.15d-15(b)). (b) There were no changes in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d)) that occurred during the registrant's last fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. ITEM 11. EXHIBITS. (a)(1) Not applicable. (a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto. (a)(3) Not applicable. (b) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (registrant) The RBB Fund, Inc. ------------------------------------------------------------------- By (Signature and Title)* /s/ Edward J. Roach ------------------------------------------------------- Edward J. Roach, President & Treasurer (principal executive officer) Date MAY 10, 2004 ------------------------------------------------------------------------- Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By (Signature and Title)* /s/ Edward J. Roach ------------------------------------------------------- Edward J. Roach, President & Treasurer (principal executive & principal financial officer) Date MAY 10, 2004 ------------------------------------------------------------------------- * Print the name and title of each signing officer under his or her signature.