-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AXmUbgLq8qnyCX4jOJs/FUMFXliNQjFSGtmSmIwH61EN3h7DAjmgP0Qq4GMrCSMX NEjk/W9msMe+7bf0Aji67w== 0000935069-06-002945.txt : 20061030 0000935069-06-002945.hdr.sgml : 20061030 20061030151037 ACCESSION NUMBER: 0000935069-06-002945 CONFORMED SUBMISSION TYPE: 485APOS PUBLIC DOCUMENT COUNT: 8 FILED AS OF DATE: 20061030 DATE AS OF CHANGE: 20061030 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RBB FUND INC CENTRAL INDEX KEY: 0000831114 IRS NUMBER: 510312196 STATE OF INCORPORATION: MD FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 485APOS SEC ACT: 1933 Act SEC FILE NUMBER: 033-20827 FILM NUMBER: 061171803 BUSINESS ADDRESS: STREET 1: 400 BELLEVUE PKWY STE 100 CITY: WILMINGTON STATE: DE ZIP: 19809 BUSINESS PHONE: 3027911700 MAIL ADDRESS: STREET 1: 400 BELLEVUE PKWY STREET 2: SUITE 152 CITY: WILMINGTON STATE: DE ZIP: 19809 FORMER COMPANY: FORMER CONFORMED NAME: FUND INC /DE/ DATE OF NAME CHANGE: 19600201 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RBB FUND INC CENTRAL INDEX KEY: 0000831114 IRS NUMBER: 510312196 STATE OF INCORPORATION: MD FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 485APOS SEC ACT: 1940 Act SEC FILE NUMBER: 811-05518 FILM NUMBER: 061171804 BUSINESS ADDRESS: STREET 1: 400 BELLEVUE PKWY STE 100 CITY: WILMINGTON STATE: DE ZIP: 19809 BUSINESS PHONE: 3027911700 MAIL ADDRESS: STREET 1: 400 BELLEVUE PKWY STREET 2: SUITE 152 CITY: WILMINGTON STATE: DE ZIP: 19809 FORMER COMPANY: FORMER CONFORMED NAME: FUND INC /DE/ DATE OF NAME CHANGE: 19600201 0000831114 S000001093 RBB MONEY MARKET PORTFOLIO C000002980 BEDFORD BDMXX C000002981 SANSOM SANXX 485APOS 1 g36369_n1afiling.txt 485A FILING OCTOBER 2006 As filed with the Securities and Exchange Commission on October 30, 2006 Securities Act File No. 33-20827 Investment Company Act File No. 811-5518 ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM N-1A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |X| Pre-Effective Amendment No. ___ |_| Post-Effective Amendment No. 105 |X| and REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |X| Amendment No. 107 |X| -------------------- THE RBB FUND, INC. (Exact Name of Registrant as Specified in Charter) Bellevue Park Corporate Center 103 Bellevue Parkway Wilmington, DE 19809 (Address of Principal Executive Offices) Registrant's Telephone Number: (302) 791-1112 -------------- Copies to: MICHAEL P. MALLOY, ESQUIRE JAMES SHAW Drinker Biddle & Reath LLP PFPC Inc. One Logan Square 103 Bellevue Parkway 18th & Cherry Streets Wilmington, DE 19809 Philadelphia, PA 19103-6996 -------------------------------------------------------------- (Name and Address of Agent for Service) It is proposed that this filing will become effective (check appropriate box) |_| immediately upon filing pursuant to paragraph (b) |_| on ________________ pursuant to paragraph (b) |X| 60 days after filing pursuant to paragraph (a)(1) |_| on ________________ pursuant to paragraph (a)(1) |_| 75 days after filing pursuant to paragraph (a)(2) |_| on ______ pursuant to paragraph (a)(2) of Rule 485 If appropriate, check the following box: |_| This post-effective amendment designates a new effective date for a previously filed post-effective amendment. Title of Securities Being Registered ______________ Shares of Common Stock THE BEDFORD SHARES OF THE MONEY MARKET PORTFOLIO OF THE RBB FUND, INC. This prospectus gives vital information about this money market mutual fund, advised by BlackRock Institutional Management Corporation ("BIMC" or the "Adviser"), including information on investment policies, risks and fees. For your own benefit and protection, please read it before you invest and keep it on hand for future reference. Please note that the Money Market Portfolio: o is not a bank deposit; o is not federally insured; o is not an obligation of, or guaranteed or endorsed by PNC Bank N.A., PFPC Trust Company or any other bank; o is not an obligation of, or guaranteed or endorsed or otherwise supported by the U.S. Government, the Federal Deposit Insurance Corporation, the Federal Reserve Board or any other governmental agency; o is not guaranteed to achieve its goal(s); and o may not be able to maintain a stable $1 share price and you may lose money. - -------------------------------------------------------------------------------- THE SECURITIES DESCRIBED IN THIS PROSPECTUS HAVE BEEN REGISTERED WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION ("SEC"). THE SEC, HOWEVER, HAS NOT JUDGED THESE SECURITIES FOR THEIR INVESTMENT MERIT AND HAS NOT DETERMINED THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANYONE WHO TELLS YOU OTHERWISE IS COMMITTING A CRIMINAL OFFENSE. - -------------------------------------------------------------------------------- PROSPECTUS December __, 2006 (THIS PAGE INTENTIONALLY LEFT BLANK.) TABLE OF CONTENTS - -------------------------------------------------------------------------------- ================================================================================ A LOOK AT THE GOALS, STRATEGIES, RISKS, EXPENSES AND FINANCIAL HISTORY OF THE PORTFOLIO. DETAILS ABOUT THE SERVICE PROVIDERS. POLICIES AND INSTRUCTIONS FOR OPENING, MAINTAINING AND CLOSING AN ACCOUNT IN THE PORTFOLIO. DETAILS ON DISTRIBUTION PLAN. ================================================================================ INTRODUCTION TO THE RISK/RETURN SUMMARY ........................... 5 MONEY MARKET PORTFOLIO ............................................ 6 PORTFOLIO MANAGEMENT Investment Adviser ............................................. 11 Disclosure of Portfolio Holdings ............................... 11 Other Service Providers ........................................ 12 SHAREHOLDER INFORMATION Pricing Shares ................................................. 13 Market Timing .................................................. 13 Purchase of Shares ............................................. 13 Redemption of Shares ........................................... 15 Dividends and Distributions .................................... 18 Taxes .......................................................... 18 DISTRIBUTION ARRANGEMENTS ......................................... 19 FOR MORE INFORMATION .............................................. Back Cover 3 (THIS PAGE INTENTIONALLY LEFT BLANK.) INTRODUCTION TO THE RISK/RETURN SUMMARY - -------------------------------------------------------------------------------- This prospectus has been written to provide you with the information you need to make an informed decision about whether to invest in the Bedford Shares of the Money Market Portfolio (the "Portfolio") of The RBB Fund, Inc. (the "Company"). The class of common stock (the "Bedford Class") of the Company offered by this prospectus represents interests in the Bedford Class of the Portfolio. This prospectus has been organized so that there is a short section with important facts about the Portfolio's goals, strategies, risks and financial history. Once you read this short section, read the sections about Purchase and Redemption of shares of the Bedford Class ("Bedford Shares" or "Shares"). 5 MONEY MARKET PORTFOLIO - -------------------------------------------------------------------------------- ================================================================================ IMPORTANT DEFINITIONS ASSET-BACKED SECURITIES: Debt securities that are backed by a pool of assets, usually loans such as installment sale contracts or credit card receivables. COMMERCIAL PAPER: Short-term securities with maturities of 1 to 397 days which are issued by banks, corporations and others. DOLLAR WEIGHTED AVERAGE MATURITY: The average amount of time until the organizations that issued the debt securities in the Portfolio must pay off the principal amount of the debt. "Dollar weighted" means the larger the dollar value of a debt security in the Portfolio, the more weight it gets in calculating this average. LIQUIDITY: Liquidity is the ability to convert investments easily into cash without losing a significant amount of money in the process. NET ASSET VALUE ("NAV"): The value of everything the Portfolio owns, minus everything it owes, divided by the number of shares held by investors. REPURCHASE AGREEMENT: A special type of a short-term investment. A dealer sells securities to a fund and agrees to buy them back later at a set price. In effect, the dealer is borrowing the Portfolio's money for a short time, using the securities as collateral. VARIABLE OR FLOATING RATE SECURITIES: Securities whose interest rates adjust automatically after a certain period of time and/or whenever a predetermined standard interest rate changes. ================================================================================ INVESTMENT GOAL The Portfolio seeks to generate current income, to provide you with liquidity and to protect your investment. PRIMARY INVESTMENT STRATEGIES To achieve this goal, we invest in a diversified investment portfolio of short term, high quality, U.S.-dollar-denominated instruments, including government, bank, commercial and other obligations. Specifically, we may invest in: o U.S. dollar-denominated obligations issued or supported by the credit of U.S. or foreign banks or savings institutions with total assets of more than $1 billion (including obligations of foreign branches of such banks). o High quality commercial paper and other obligations issued or guaranteed (or otherwise supported) by U.S. and foreign corporations and other issuers rated (at the time of purchase) A-2 or higher by Standard and Poor's(R), Prime-2 or higher by Moody's Investor's Service, Inc., or F-2 or higher by Fitch, Inc., as well as high quality corporate bonds rated AA (or Aa) or higher at the time of purchase by those rating agencies. These ratings must be provided by at least two rating agencies, or by the only rating agency providing a rating. o Unrated notes, paper and other instruments that are determined by us to be of comparable quality to the instruments described above. o Asset-backed securities (including interests in pools of assets such as mortgages, installment purchase obligations and credit card receivables). o Securities issued or guaranteed by the U.S. government or by its agencies or authorities. o Dollar-denominated securities issued or guaranteed by foreign governments or their political subdivisions, agencies or authorities. o Securities issued or guaranteed by state or local governmental bodies. o Repurchase agreements relating to the above instruments. The Portfolio seeks to maintain a net asset value of $1.00 per share. At least 25% of the Fund's total assets will be invested in banking obligations. 6 QUALITY Under guidelines established by the Company's Board of Directors, we will only purchase securities if such securities or their issuers have (or such securities are guaranteed or otherwise supported by entities which have) short-term debt ratings at the time of purchase in the two highest rating categories from at least two nationally recognized statistical ratings organizations ("NRSRO"), or one such rating if the security is rated by only one NRSRO. Securities that are unrated must be determined to be of comparable quality. MATURITY The dollar-weighted average maturity of all the investments of the Portfolio will be 90 days or less. Only those securities which have remaining maturities of 397 days or less (except for certain variable and floating rate instruments and securities collateralizing repurchase agreements) will be purchased. KEY RISKS o The value of money market investments tends to fall when current interest rates rise. Money market investments are generally less sensitive to interest rate changes than longer-term securities. o The Portfolio's investment securities may not earn as high a level of income as longer term or lower quality securities, which generally have greater risk and more fluctuation in value. o The Portfolio's concentration of its investments in the banking industry could increase risks. The profitability of banks depends largely on the availability and cost of funds, which can change depending upon economic conditions. Banks are also exposed to losses if borrowers get into financial trouble and cannot repay their loans. o The obligations of foreign banks and other foreign issuers may involve certain risks in addition to those of domestic issuers, including higher transaction costs, less complete financial information, political and economic instability, less stringent regulatory requirements and less market liquidity. o Unrated notes, paper and other instruments may be subject to the risk that an issuer may default on its obligation to pay interest and repay principal. o The obligations issued or guaranteed by state or local governmental bodies may be issued by entities in the same state and may have interest which is paid from revenues of similar projects. As a result, changes in economic, business or political conditions relating to a particular state or types of projects may impact the Portfolio. o Treasury obligations differ only in their interest rates, maturities and time of issuance. These differences could result in fluctuations in the value of such securities depending upon the market. Obligations of U.S. governmental agencies and authorities are supported by varying degrees of credit. The U.S. government gives no assurances that it will provide financial support to its agencies and authorities if it is not obligated by law to do so. Default in these issuers could negatively impact the Portfolio. o The Portfolio's investment in asset-backed securities may be negatively impacted by interest rate fluctuations or when an issuer pays principal on an obligation held by the Portfolio earlier or later than expected. These events may affect their value and the return on your investment. o The Portfolio could lose money if a seller under a repurchase agreement defaults or declares bankruptcy. o We may purchase variable and floating rate instruments. Like all debt instruments, their value is dependent on the credit paying ability of the issuer. If the issuer were unable to make interest payments or default, the value of the securities would decline. The absence of an active market for these securities could make it difficult to dispose of them if the issuer defaults. 7 ALTHOUGH WE SEEK TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE PORTFOLIO. WHEN YOU INVEST IN THE PORTFOLIO YOU ARE NOT MAKING A BANK DEPOSIT. YOUR INVESTMENT IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR BY ANY BANK OR GOVERNMENTAL AGENCY. RISK / RETURN INFORMATION The chart and table below illustrate the variability of the Portfolio's long-term performance for Bedford Shares. The information shows you how the Portfolio's performance has varied year by year and provides some indication of the risks of investing in the Portfolio. The chart and the table both assume reinvestment of dividends and distributions. As with all such investments, past performance is not an indication of future results. Performance reflects fee waivers in effect. If fee waivers were not in place, the Portfolio's performance would be reduced. TOTAL RETURNS FOR THE CALENDAR YEARS ENDED DECEMBER 31 [THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.] 4.65% 4.88% 4.75% 4.38% 5.64% 3.42% 1.20% 0.29% 0.49% - ------------------------------------------------------------------------------ 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Best and Worst Quarterly Performance (for the periods reflected in the chart above): Best Quarter: ______% (quarter ended ____________________) Worst Quarter: ______% (quarter ended ____________________) Year-to-date total return for the nine months ended September 30, 2006: ______% AVERAGE ANNUAL TOTAL RETURNS FOR THE YEARS ENDED DECEMBER 31, 2005 1 YEAR 5 YEARS 10 YEARS ------ ------- -------- MONEY MARKET PORTFOLIO _____% ____% ____% CURRENT YIELD: The seven-day yield for the period ended December 31, 2005 for the Portfolio was ____%. Past performance is not an indication of future results. Yields will vary. You may call (800) 888-9723 to obtain the current seven-day yield of the Portfolio. EXPENSES AND FEES As a shareholder you pay certain fees and expenses. Annual fund operating expenses are paid out of Portfolio assets and are reflected in the Portfolio's price. 8 The table below describes the fees and expenses that you may pay if you buy and hold Bedford Shares of the Money Market Portfolio. The table is based on expenses for the most recent fiscal year. ================================================================================ IMPORTANT DEFINITIONS MANAGEMENT FEES: Fees paid to the investment adviser and administrator for portfolio management services. OTHER EXPENSES: Include transfer agency, custody, professional fees and registration fees. DISTRIBUTION AND SERVICE FEES: Fees that are paid to the Distributor for distribution of the Portfolio's Bedford Shares. ================================================================================ ANNUAL FUND OPERATING EXPENSES* (Expenses that are deducted from Portfolio assets) Management Fees(1) ............................... 0.45% Distribution and Service (12b-1) Fees(2) ......... 0.65% Other Expenses(3) ................................ 0.13% ----- Total Annual Fund Operating Expenses(1) .......... 1.23% ===== * The table does not reflect charges or credits which investors might incur if they invest through a financial institution. Shareholders requesting redemptions by wire are charged a transaction fee of $7.50. 1. Management fees include investment advisory and administration fees. The Adviser voluntarily waived a portion of its Management Fees and/or reimbursed expenses for the Portfolio during the fiscal year ended August 31, 2006. The Adviser expects that it will continue to voluntarily waive a portion of these fees and/or reimburse expenses through the fiscal year ending August 31, 2007. The Portfolio's service providers may also voluntarily waive a portion of their fees and/or reimburse expenses during these fiscal years. After these fee waivers and/or reimbursements, the Portfolio's Management Fees, Distribution and Service (12b-1) Fees, Other Expenses and ordinary Total Annual Fund Operating Expenses are not expected to exceed: Management Fees 0.16% Distribution and Service (12b-1) Fees 0.60% Other Expenses 0.15% ----- Total Annual Fund Operating Expenses 0.91% Although the Adviser expects the waivers and/or reimbursements to continue through August 31, 2007, these fee waivers and/or reimbursements are voluntary and may be terminated at any time. 2. Distribution and Service (12b-1) Fees reflect fees incurred by the Portfolio during the fiscal year ended August 31, 2006. The Portfolio may pay the Distributor up to a maximum of 0.65% of the average daily net assets of the Bedford Class under the Portfolio's distribution plan during the current fiscal year. The Distributor may voluntarily waive these fees at its discretion. The Distributor voluntarily waived [0.05%] of its Distribution and Service Fee during the fiscal year ended August 31, 2006. These voluntary fee waivers may be terminated at any time. 3. A $15.00 retirement custodial maintenance fee is charged per IRA account per year. EXAMPLE: The example is intended to help you compare the cost of investing in the Portfolio with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Portfolio for the time periods indicated and then redeem all of your shares at the end of each period. The example also assumes that your investment has a 5% return each year, that the Portfolio's operating expenses remain the same, and that you reinvested all dividends and distributions. Although your actual costs may be higher or lower, based on these assumptions your cost would be: 1 YEAR 3 YEARS 5 YEARS 10 YEARS ------ ------- ------- -------- BEDFORD SHARES $125 $390 $676 $1,489 9 FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- The table below sets forth certain financial information for the periods indicated, including per share information results for a single Share. The term "Total Return" indicates how much your investment would have increased or decreased during this period of time and assumes that you have reinvested all dividends and distributions. Information for the fiscal years ended August 31, 2004 through August 31, 2006 has been derived from the Portfolio's financial statements audited by _______________________, the Portfolio's independent registered public accounting firm. This information should be read in conjunction with the Portfolio's financial statements which, together with the report of the independent registered public accounting firm, are included in the Portfolio's annual report, which is available upon request (see back cover for ordering instructions). The information for the fiscal years ended August 31, 2002 and August 31, 2003 was audited by the Portfolio's former independent registered public accounting firm. FINANCIAL HIGHLIGHTS (1) (FOR A BEDFORD SHARE OUTSTANDING THROUGHOUT EACH YEAR) MONEY MARKET PORTFOLIO
FOR THE FOR THE FOR THE FOR THE FOR THE YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED AUGUST 31, 2006 AUGUST 31, 2005 AUGUST 31, 2004 AUGUST 31, 2003 AUGUST 31, 2002 --------------- --------------- --------------- --------------- --------------- Net asset value, beginning of year ......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 --------------- --------------- --------------- --------------- Income from investment operations: Net investment income ................... 0.0162 0.0025 0.0046 0.0157 Net gain on securities .................. -- -- 0.0005 -- --------------- --------------- --------------- --------------- Total from investment operations ........................ 0.0162 0.0025 0.0051 0.0157 --------------- --------------- --------------- --------------- Less distributions Dividends (from net investment income) .. (0.0162) (0.0025) (0.0046) (0.0157) Distributions (from capital gains) ...... -- -- (0.0005) -- --------------- --------------- --------------- --------------- Total distributions ..................... (0.0162) (0.0025) 0.0051 (0.0157) --------------- --------------- --------------- --------------- Net asset value, end of year ............... $ 1.00 $ 1.00 $ 1.00 $ 1.00 =============== =============== =============== =============== Total Return ............................... 1.63% 0.25% 0.53% 1.59% Ratios/Supplemental Data Net assets, end of year (000) ........... $ 109,495 $ 72,001 $ 80,406 $ 52,878 Ratios of expenses to average net assets (2) ....................... 0.97% 0.94% 0.98% 1.00% Ratios of net investment income to average net assets ................... 1.68% 0.24% 0.46% 1.75%
(1) Financial Highlights relate solely to the Bedford Class of shares within the Portfolio. (2) 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 Portfolio would have been ____%, 1.23%, 1.34%, 1.30% and 1.25% for the years ended August 31, 2006, 2005, 2004, 2003 and 2002, respectively. 10 PORTFOLIO MANAGEMENT - -------------------------------------------------------------------------------- INVESTMENT ADVISER BIMC is a wholly-owned subsidiary of BlackRock, Inc. ("BlackRock"). On September 29, 2006, Merrill Lynch & Co., Inc. ("Merrill Lynch") contributed its investment management business, Merrill Lynch Investment Managers, to BlackRock (the "Transaction"). As a result of the Transaction, Merrill Lynch has a 49.80% economic interest and a 45% voting interest in BlackRock and The PNC Financial Services Group, Inc., which held a majority interest in BlackRock prior to the Transaction, has approximately a 34% economic and voting interest. BIMC has its principal offices at Bellevue Park Corporate Center, 100 Bellevue Parkway, Wilmington, DE 19809. Under the Investment Company Act of 1940, the Transaction may be considered an assignment of the Fund's prior Investment Advisory and Administration Agreement with BIMC ("Prior Advisory Agreement"), resulting in the Prior Advisory Agreement's automatic termination. On September 29, 2006, the Company entered into an Interim Investment Advisory and Administration Agreement with BIMC with respect to the Fund (the "Interim Advisory Agreement"). The Interim Advisory Agreement will remain in effect for up to 150 days while the Fund seeks shareholder approval of a new Investment Advisory and Administration Agreement with BIMC (the "New Advisory Agreement"). As required by the 1940 Act, BIMC's fees under the Interim Advisory Agreement will be placed in an escrow account with the Fund's custodian. If the Fund's shareholders approve the New Advisory Agreement within 150 days of the date of the Interim Advisory Agreement, such approval will be viewed as implicit approval of the Interim Advisory Agreement by shareholders and BIMC will receive any fees paid in to the escrow account, including interest earned. If shareholders of the Fund do not approve the New Advisory Agreement within 150 days of the date of the Interim Advisory Agreement, then BIMC will be paid, out of the escrow account, the lesser of: (i) any costs incurred in performing the Interim Advisory Agreement, plus interest earned on the amount while in escrow; or (ii) the total amount in the escrow account, plus interest if earned. The Interim Advisory Agreement and the New Advisory Agreement were approved by the Board of Directors of the Company, including a majority of those Directors who are not "interested persons" of the Company or BIMC, at a meeting held on May 25, 2006. For the fiscal year ended August 31, 2006, BIMC received an advisory fee of __% of the Portfolio's average net assets. A discussion regarding the basis for the Company's Board of Directors approving the Portfolio's investment advisory agreement with BIMC is available in the Portfolio's annual report to shareholders dated August 31, 2006. DISCLOSURE OF PORTFOLIO HOLDINGS A description of the Company's policies and procedures with respect to the disclosure of the Portfolio's underlying investments is available in the SAI. 11 OTHER SERVICE PROVIDERS The following chart shows the Portfolio's other service providers and includes their addresses and principal activities.
======================================== SHAREHOLDERS ======================================== _______________________________|____________________________ | | Distribution ========================================= ========================================= and Shareholder PRINCIPAL DISTRIBUTOR TRANSFER AGENT AND Services DISBURSING AGENT PFPC DISTRIBUTORS, INC. 760 MOORE ROAD PFPC INC. KING OF PRUSSIA, PA 19406 301 BELLEVUE PARKWAY* WILMINGTON, DE 19809 Distributes shares of the Portfolio. Handles shareholder services, ========================================= including recordkeeping and Asset ========================================= statements, distribution of dividends Management and processing of buy and sell INVESTMENT ADVISER requests. BLACKROCK INSTITUTIONAL *DO NOT USE THIS ADDRESS FOR MANAGEMENT CORPORATION PURCHASES AND REDEMPTIONS. PLEASE 100 BELLEVUE PARKWAY SEE "PURCHASE OF FUND SHARES" AND WILMINGTON, DE 19809 "REDEMPTION OF FUNDS" SECTIONS FOR FURTHER INSTRUCTIONS. Manages the Portfolio's business ========================================= and investment activities. ========================================= CUSTODIAN ========================================= Portfolio ========================================= PFPC TRUST COMPANY Operations 8800 TINICUM BOULEVARD ADMINISTRATOR AND PORTFOLIO SUITE 200 ACCOUNTING AGENT PHILADELPHIA, PA 19153 PFPC INC. Holds the Portfolio's assets, settles 301 BELLEVUE PARKWAY all portfolio trades and collects most WILMINGTON, DE 19809 of the valuation data required for calculating the Portfolio's NAV. Provides facilities, equipment and ========================================= personnel to carry out administrative services related to the Portfolio and calculates the Portfolio's NAV, dividends and distributions. ========================================= | ======================================== BOARD OF DIRECTORS Supervises the Portfolio's activities. ========================================
12 SHAREHOLDER INFORMATION PRICING SHARES PFPC Inc. ("PFPC") determines the NAV per share twice daily at 12:00 noon and at 4:00 p.m., Eastern time, each day on which both the New York Stock Exchange ("NYSE") and the Federal Reserve Bank of Philadelphia (the "FRB") are open. These entities are generally open Monday through Friday, except national holidays. Currently, the only days on which the NYSE is open and the FRB is closed are Columbus Day and Veterans Day. The only day on which the NYSE is closed and the FRB is open is Good Friday. NAV is calculated by dividing the Portfolio's total assets, less its liabilities, by the number of shares outstanding. During certain emergency closings of the NYSE, however, the Portfolio may open for business if it can maintain its operations. In this event, the Portfolio will determine its NAV as described above. To determine if the Portfolio is open for business on a day the NYSE is closed for an emergency, please contact us by calling the telephone number listed on the last page of this prospectus. On any business day when the Bond Market Association ("BMA") recommends that the securities markets close early, the Portfolio reserves the right to close at or prior to the BMA recommended closing time. If the Portfolio does so, it will process purchase and redemption orders received after the Portfolio's closing time on the next business day. The BMA generally recommends that the securities markets close at 2:00 p.m. on the day before a national holiday, the Friday before a national holiday that falls on a Monday and the Friday after Thanksgiving. The Portfolio values its securities using amortized cost. This method values a Portfolio holding initially at its cost and then assumes a constant amortization to maturity of any discount or premium. The amortized cost method ignores any impact of changing interest rates. MARKET TIMING Market timing is defined as effecting frequent trades into or out of a fund in an effort to anticipate or time market movements. Due to the frequent and disruptive nature of this activity, it can adversely impact the ability of the Adviser to invest assets in an orderly, long-term manner, which, in turn, may adversely impact the performance of the Portfolio. In addition, such activity also may result in dilution in the value of Fund shares held by long-term shareholders, adverse tax consequences to shareholders and increased brokerage and administrative costs. There is no assurance that the Portfolio will be able to identify market timers, particularly if they are investing through intermediaries. The Board of Directors of the Company has adopted policies and procedures with respect to frequent trading of Portfolio shares by shareholders. The Company reserves the right, in its sole discretion, to reject purchase orders when, in the judgment of management, such rejection is in the best interest of the Portfolio and its shareholders. PURCHASE OF SHARES GENERAL. You may purchase Bedford Shares through an account maintained by your brokerage firm (the "Account") and you may also purchase Shares directly by mail or wire. The minimum initial investment is $1,000, and the minimum subsequent investment is $100. The Company in its sole discretion may accept or reject any order for purchases of Bedford Shares. Purchases will be effected at the NAV next determined after PFPC, the Company's transfer agent and administrative and accounting agent, has received a purchase order in good order and the Company's custodian has Federal Funds immediately available to it. In those cases where payment is made by check, Federal Funds will generally become 13 available two Business Days after the check is received. A "Business Day" is any day that both the NYSE and the FRB are open. On any Business Day, orders which are accompanied by Federal Funds and received by the Company by 4:00 p.m. Eastern time, and orders as to which payment has been converted into Federal Funds by 4:00 p.m. Eastern time, will be executed as of 4:00 p.m. Eastern time on that Business Day. Orders which are accompanied by Federal Funds and received by the Company after the close of regular trading on the NYSE, and orders as to which payment has been converted to Federal Funds after the close of regular trading on the NYSE on a Business Day will be processed as of the deadline on the following Business Day. The Company's officers are authorized to waive the minimum initial and subsequent investment requirements. PURCHASES THROUGH AN ACCOUNT. Purchases of Shares may be effected through an Account with your broker through procedures and requirements established by your broker. In such event, beneficial ownership of Bedford Shares will be recorded by your broker and will be reflected in the Account statements provided to you by your broker. Your broker may impose minimum investment Account requirements. Even if your broker does not impose a sales charge for purchases of Bedford Shares, depending on the terms of your Account with your broker, the broker may charge to your Account fees for automatic investment and other services provided to your Account. Information concerning Account requirements, services and charges should be obtained from your broker, and you should read this prospectus in conjunction with any information received from your broker. Shares are held in the street name account of your broker and if you desire to transfer such shares to the street name account of another broker, you should contact your current broker. A broker with whom you maintain an Account may offer you the ability to purchase Bedford Shares under an automatic purchase program (a "Purchase Program") established by a participating broker. If you participate in a Purchase Program, then you will have your "free-credit" cash balances in your Account automatically invested in Shares of the Bedford Class. The frequency of investments and the minimum investment requirement will be established by the broker and the Company. In addition, the broker may require a minimum amount of cash and/or securities to be deposited in your Account to participate in its Purchase Program. The description of the particular broker's Purchase Program should be read for details, and any inquiries concerning your Account under a Purchase Program should be directed to your broker. If your broker makes special arrangements under which orders for Bedford Shares are received by PFPC prior to 4:00 p.m. Eastern time, and your broker guarantees that payment for such Shares will be made in available Federal Funds to the Company's custodian prior to the close of regular trading on the NYSE on the same day, such purchase orders will be effective and Shares will be purchased at the offering price in effect as of 4:00 p.m. Eastern time on the date the purchase order is received by PFPC. Otherwise, if the broker has not made such an arrangement, pricing of Shares will occur as described above under "General." DIRECT PURCHASES. You may also make direct investments at any time in the Bedford Class through any broker that has entered into a dealer agreement with the Distributor (a "Dealer"). You may make an initial investment in the Bedford Class by mail by fully completing and signing an application obtained from a Dealer (the "Application"), and mailing it, together with a check payable to "The RBB Fund - Money Market Portfolio (Bedford Class)," to Bedford Money Market Portfolio, c/o PFPC, P.O. Box 9841, Providence, RI 02940-8041; for overnight delivery mail to The RBB Fund - Money Market Portfolio (Bedford Class), c/o PFPC, 101 Sabin Street, Pawtucket, RI 02860-1427. The Application will be returned to you unless it contains the name of the Dealer from whom you obtained it. Subsequent purchases may be made through a Dealer or by forwarding payment to the Company's transfer agent at the foregoing address. Provided that your investment is at least $2,500, you may also purchase Shares by having your bank or Dealer wire Federal Funds to the Company's custodian, PFPC Trust Company. Your bank or Dealer may impose a charge for this 14 service. The Company does not currently charge for effecting wire transfers but reserves the right to do so in the future. In order to ensure prompt receipt of your Federal Funds wire, for an initial investment, it is important that you follow these steps: A. Telephone the Company's transfer agent, PFPC, toll-free at (800) 888-9723 and provide your name, address, telephone number, social security or tax identification number, the amount being wired, and by which bank or Dealer. PFPC will then provide you with an account number. (If you have an existing account, you should also notify PFPC prior to wiring funds.) B. Instruct your bank or Dealer to wire the specified amount, together with your assigned account number, to PFPC's account with PNC Bank N.A. PNC Bank, N.A., Philadelphia, PA ABA-0310-0005-3. FROM: (shareholder or account name) ACCOUNT NUMBER: (assigned account number) FOR PURCHASE OF: The RBB Fund - Money Market Portfolio (Bedford Class) AMOUNT: (amount to be invested) C. Fully complete and sign the Application and mail it to the address shown thereon. PFPC will not process initial purchases until it receives a fully completed and signed Application. For subsequent investments, you should follow steps A and B above. GOOD ORDER. You must include complete and accurate required information on your purchase request. Please see "Purchase of Shares" for instructions. Purchase requests not in good order may be rejected. CUSTOMER IDENTIFICATION PROGRAM. Federal law requires the Company to obtain, verify and record identifying information, which may include the name, residential or business street address, date of birth (for an individual), social security or taxpayer identification number or other identifying information for each investor who opens or reopens an account with the Company. Applications without the required information, or without any indication that a social security or taxpayer identification number has been applied for, may not be accepted. After acceptance, to the extent permitted by applicable law or its customer identification program, the Company reserves the right (a) to place limits on transactions in any account until the identity of the investor is verified; or (b) to refuse an investment in a Company portfolio or to involuntarily redeem an investor's shares and close an account in the event that an investor's identity is not verified. The Company and its agents will not be responsible for any loss in an investor's account resulting from the investor's delay in providing all required identifying information or from closing an account and redeeming an investor's shares when an investor's identity cannot be verified. RETIREMENT PLANS. Bedford Shares may be purchased in conjunction with individual retirement accounts ("IRAs") and rollover IRAs where PFPC Trust Company acts as custodian. A $15.00 custodial maintenance fee is charged per IRA account per year. For further information as to applications and annual fees, contact the Distributor or your broker. To determine whether the benefits of an IRA are available and/or appropriate, you should consult with your tax advisor. REDEMPTION OF SHARES GENERAL. Redemption orders are effected at the NAV per share next determined after receipt of the order in proper form by the Company's transfer agent, PFPC. You may redeem all or some of your Shares in accordance with one of the procedures described below. 15 REDEMPTION OF SHARES IN AN ACCOUNT. If you beneficially own Bedford Shares through an Account, you may redeem Bedford Shares in your Account in accordance with instructions and limitations pertaining to your Account by contacting your broker. If the redemption request is received by PFPC by 4:00 p.m. Eastern time on any Business Day, the redemption will be effective as of 4:00 p.m. Eastern time on that day. Payment of the redemption proceeds will be made after 4:00 p.m. Eastern time on the day the redemption is effected, provided that the Company's custodian is open for business. If the custodian is not open, payment will be made on the next bank business day. If all of your Shares are redeemed, all accrued but unpaid dividends on those Shares will be paid with the redemption proceeds. Your brokerage firm may also redeem each day a sufficient number of Shares of the Bedford Class to cover debit balances created by transactions in your Account or instructions for cash disbursements. Shares will be redeemed on the same day that a transaction occurs that results in such a debit balance or charge. Each brokerage firm reserves the right to waive or modify criteria for participation in an Account or to terminate participation in an Account for any reason. REDEMPTION OF SHARES OWNED DIRECTLY. If you own Shares directly, you may redeem any number of Shares by sending a written request to The RBB Fund - Money Market Portfolio (Bedford Class) c/o PFPC, P.O. Box 9841, Providence, RI 02940-8041; for overnight delivery mail to The RBB Fund - Money Market Portfolio (Bedford Class), c/o PFPC, 101 Sabin Street, Pawtucket, RI 02860-1427. It is recommended that such requests be sent by registered or certified mail if share certificates accompany the request. Redemption requests must be signed by each shareholder in the same manner as the Shares are registered. Redemption requests for joint accounts require the signature of each joint owner. On redemption requests of $5,000 or more, each signature must be guaranteed. A signature guarantee may be obtained from a domestic bank or trust company, broker, dealer, clearing agency or savings association who are participants in a medallion signature guarantee program recognized by the Securities Transfer Association. A medallion imprint or medallion stamp indicates that the financial institution is a member of a medallion signature guarantee program and is an acceptable signature guarantor. The three recognized medallion programs are Securities Transfer Agents Medallion Program ("STAMP"), Stock Exchanges Medallion Program ("SEMP") and New York Stock Exchange, Inc. Medallion Signature Program ("MSP"). Signature guarantees that are not part of these programs will not be accepted. If you are a direct investor, you may redeem your Shares without charge by telephone if you have completed and returned an Application containing the appropriate telephone election. To add a telephone option to an existing account that previously did not provide for this option, you must submit a Telephone Authorization Form to PFPC. This form is available from PFPC. Once this election has been made, you may simply contact PFPC by telephone to request the redemption by calling (800) 888-9723. Neither the Company, the Distributor, the Portfolio, PFPC nor any other Company agent will be liable for any loss, liability, cost or expense for following the procedures below or for following instructions communicated by telephone that they reasonably believe to be genuine. The Company's telephone transaction procedures include the following measures: (1) requiring the appropriate telephone transaction privilege forms; (2) requiring the caller to provide the names of the account owners, and the account social security number, all of which must match the Company's records; (3) requiring the Company's service representative to complete a telephone transaction form, listing all of the above caller identification information; (4) requiring that redemption proceeds be sent only by check to the account owners of record at the address of record, or by wire only to the owners of record at the bank account of record; (5) sending a written confirmation for each telephone transaction to the owners of record at the address of record within five business days of the call; and (6) maintaining tapes of telephone transactions for six months, if the Company elects to record shareholder telephone transactions. For accounts held of record by broker-dealers (other than the Distributor), financial institutions, securities dealers, financial planners or other industry professionals, additional documentation or information regarding the scope of authority is required. Finally, for telephone transactions in accounts held jointly, additional information regarding other account holders is required. Telephone transactions will not be permitted in connection with IRA or other retirement plan accounts or by attorney-in-fact under power of attorney. 16 Proceeds of a telephone redemption request will be mailed by check to your registered address unless you have designated in your Application or Telephone Authorization Form that such proceeds are to be sent by wire transfer to a specified checking or savings account. If proceeds are to be sent by wire transfer, a telephone redemption request received prior to the close of regular trading on the NYSE will result in redemption proceeds being wired to your bank account on the next day that a wire transfer can be effected. The minimum redemption for proceeds sent by wire transfer is $2,500. There is no maximum for proceeds sent by wire transfer. The Company may modify this redemption service at any time or charge a service fee upon prior notice to shareholders. A wire charge of $7.50 is assessed and charged to the shareholder. REDEMPTION BY CHECK. If you are a direct investor or you do not have check writing privileges for your Account, the Company will provide to you forms of drafts ("checks") payable through PNC Bank. These checks may be made payable to the order of anyone. The minimum amount of a check is $100; however, your broker may establish a higher minimum. If you wish to use this check writing redemption procedure, you should complete specimen signature cards (available from PFPC), and then forward such signature cards to PFPC. PFPC will then arrange for the checks to be honored by PNC Bank. If you own Shares through an Account, you should contact your broker for signature cards. Investors with joint accounts may elect to have checks honored with a single signature. Check redemptions will be subject to PNC Bank's rules governing checks. An investor will be able to stop payment on a check redemption. The Company or PNC Bank may terminate this redemption service at any time, and neither shall incur any liability for honoring checks, for effecting redemptions to pay checks, or for returning checks which have not been accepted. When a check is presented to PNC Bank for clearance, PNC Bank, as your agent, will cause the Company to redeem a sufficient number of your full and fractional Shares to cover the amount of the check. Pursuant to rules under the Investment Company Act of 1940, as amended (the "1940 Act"), checks may not be presented for cash payment at the offices of PNC Bank. This limitation does not affect checks used for the payment of bills or cash at other banks. ADDITIONAL REDEMPTION INFORMATION. The Company ordinarily will make payment for all Shares redeemed within seven days after receipt by PFPC of a redemption request in proper form. Although the Company will redeem Shares purchased by check before the check clears, payment of the redemption proceeds may be delayed for a period of up to fifteen days after their purchase, pending a determination that the check has cleared. This procedure does not apply to Shares purchased by wire payment. You should consider purchasing Shares using a certified or bank check or money order if you anticipate an immediate need for redemption proceeds. Redemption proceeds will ordinarily be paid within seven business days after a redemption request is received by the Transfer Agent in proper form. The Fund may suspend the right of redemption or postpone the date at times when the NYSE or the bond market is closed or under any emergency circumstances as determined by the SEC. The Company does not impose a charge when Shares are redeemed. The Company reserves the right to redeem any account in the Bedford Class involuntarily, on thirty days' notice, if such account falls below $500 and during such 30-day notice period the amount invested in such account is not increased to at least $500. Payment for Shares redeemed may be postponed or the right of redemption suspended as provided by the rules of the SEC. If the Board of Directors determines that it would be detrimental to the best interest of the remaining shareholders of the Portfolio to make payment wholly or partly in cash, redemption proceeds may be paid in whole or in part by an in-kind distribution of readily marketable securities held by the Portfolio instead of cash in conformity with applicable rules of the SEC. Investors generally will incur brokerage charges on the sale of investment securities so received in payment of redemptions. The Company has elected, however, to be governed by Rule 18f-1 under the 1940 Act, so that the Portfolio is obligated to redeem its Shares solely in cash up to the lesser of $250,000 or 1% of its NAV during any 90-day period for any one shareholder of the Portfolio. PROPER FORM. You must include complete and accurate required information on your redemption request. Please see "Redemption of Shares" for instructions. Redemption requests not in proper form may be delayed. 17 DIVIDENDS AND DISTRIBUTIONS The Company will distribute substantially all of the net investment income and net realized capital gains, if any, of the Portfolio to shareholders. All distributions are reinvested in the form of additional full and fractional Shares of the Bedford Class unless a shareholder elects otherwise. The net investment income (not including any net short-term capital gains) earned by the Portfolio will be declared as a dividend on a daily basis and paid monthly. Dividends are payable to shareholders of record as of the determination of NAV made as of 4:00 p.m. (Eastern time) each day. Shares will begin accruing dividends on the day the purchase order for the Shares is effected and continue to accrue dividends through the day before such shares are redeemed. Net short-term capital gains, if any, will be distributed at least annually. TAXES Distributions from the Portfolio will generally be taxable to shareholders. It is expected that all, or substantially all, of these distributions will consist of ordinary income. You will be subject to income tax on these distributions regardless of whether they are paid in cash or reinvested in additional Shares. The Portfolio contemplates declaring as dividends each year all or substantially all of its net taxable income. The one major exception to these tax principles is that distributions on shares held in an IRA (or other tax-qualified plan) will not be currently taxable. Dividends declared in October, November or December of any year that are payable to shareholders of record on a specified date in such months will be deemed to have been received by shareholders and paid by the Portfolio on December 31 of such year if such dividends are actually paid during January of the following year. The Portfolio will be required in certain cases to withhold and remit to the United States Treasury a percentage of taxable dividends or gross sale proceeds paid to any shareholder who (i) has failed to provide a correct tax identification number, (ii) is subject to backup withholding by the Internal Revenue Service for failure to properly include on his or her return payments of taxable interest or dividends, or (iii) has failed to certify to the Portfolio that he or she is not subject to backup withholding when required to do so or that he or she is an "exempt recipient." The backup withholding rate for 2006 is 28%. The foregoing is only a summary of certain tax considerations under the current law, which may be subject to change in the future. Shareholders may also be subject to state and local taxes on distributions. Shareholders who are nonresident aliens, foreign trusts or estates, or foreign corporations or partnerships may be subject to different United States Federal income tax treatment. You should consult your tax advisor for further information regarding federal, state, local and/or foreign tax consequences relevant to your specific situation. 18 DISTRIBUTION ARRANGEMENTS - -------------------------------------------------------------------------------- Bedford Shares of the Portfolio are sold without a sales load on a continuous basis by the Distributor, whose principal business address is at 760 Moore Road, King of Prussia, PA 19406. The Board of Directors of the Company approved a Distribution Agreement and adopted a separate Plan of Distribution for the Bedford Class (the "Plan") pursuant to Rule 12b-1 under the 1940 Act. Under the Plan, the Distributor is entitled to receive from the Bedford Class a distribution fee, which is accrued daily and paid monthly, of up to 0.65% on an annualized basis of the average daily net assets of the Bedford Class. The actual amount of such compensation is agreed upon from time to time by the Company's Board of Directors and the Distributor. Under the Distribution Agreement, the Distributor has agreed to accept compensation for its services thereunder and under the Plan in the amount of 0.65% of the average daily net assets of the Bedford Class on an annualized basis in any year. The Distributor may, in its discretion, voluntarily waive from time to time all or any portion of its distribution fee. Under the Distribution Agreement and the Plan, the Distributor may reallocate an amount up to the full fee that it receives to financial institutions, including broker-dealers, based upon the aggregate investment amounts maintained by and services provided to shareholders of the Bedford Class serviced by such financial institutions. The Distributor may also reimburse broker-dealers for other expenses incurred in the promotion of the sale of Bedford Shares. The Distributor and/or broker-dealers pay for the cost of printing (excluding typesetting) and mailing to prospective investors prospectuses and other materials relating to the Bedford Class as well as for related direct mail, advertising and promotional expenses. The Plan obligates the Company, during the period it is in effect, to accrue and pay to the Distributor on behalf of the Bedford Class the fee agreed to under the Distribution Agreement. Payments under the Plan are not based on expenses actually incurred by the Distributor, and the payments may exceed distribution expenses actually incurred. Because these fees are paid out of the Portfolio's assets on an on-going basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges. 19 (THIS PAGE INTENTIONALLY LEFT BLANK.) (THIS PAGE INTENTIONALLY LEFT BLANK.) (THIS PAGE INTENTIONALLY LEFT BLANK.) ================================================================================ NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS OR IN THE PORTFOLIO'S SAI INCORPORATED HEREIN BY REFERENCE, IN CONNECTION WITH THE OFFERING MADE BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ITS DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE COMPANY OR BY THE DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE. INVESTMENT ADVISER BlackRock Institutional Management Corporation Wilmington, Delaware DISTRIBUTOR PFPC Distributors, Inc. King of Prussia, Pennsylvania CUSTODIAN PFPC Trust Company Philadelphia, Pennsylvania ADMINISTRATOR AND TRANSFER AGENT PFPC Inc. Wilmington, Delaware COUNSEL Drinker Biddle & Reath LLP Philadelphia, Pennsylvania INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ___________________________ Philadelphia, Pennsylvania ================================================================================ ================================================================================ PROSPECTUS THE BEDFORD SHARES MONEY MARKET PORTFOLIO DECEMBER __, 2006 ================================================================================ THE BEDFORD SHARES OF THE MONEY MARKET PORTFOLIO 1-800-888-9723 FOR MORE INFORMATION: This prospectus contains important information you should know before you invest. Read it carefully and keep it for future reference. More information about the Bedford Shares of The RBB Money Market Portfolio is available free of charge upon request, including: ANNUAL/SEMI-ANNUAL REPORTS These reports contain additional information about the Portfolio's investments, describe the Portfolio's performance and list its holdings. STATEMENT OF ADDITIONAL INFORMATION An SAI, dated December __, 2006, has been filed with the SEC. The SAI, which includes additional information about the Bedford Shares, along with the Bedford Shares annual and semi-annual reports, are not available on the Adviser's website but may be obtained free of charge, by calling (800) 888-9723. The SAI, as supplemented from time to time, is incorporated by reference into this prospectus (and is legally considered a part of this prospectus). SHAREHOLDER ACCOUNT SERVICE REPRESENTATIVES Representatives are available to discuss account balance information, mutual fund prospectuses, literature, programs and services available. Hours: 8 a.m. to 5 p.m. (Eastern time) Monday-Friday. Call: (800) 888-9723. PURCHASES AND REDEMPTIONS Call your broker or (800) 888-9723. WRITTEN CORRESPONDENCE Street Address: Bedford Shares c/o PFPC Inc. 101 Sabin Street Pawtucket, RI 02860-1427 SECURITIES AND EXCHANGE COMMISSION (SEC) You may also view and copy information about the Company and the Portfolio, including the SAI, by visiting the SEC's Public Reference Room in Washington, D.C. or the EDGAR Database on the SEC's Internet site at WWW.SEC.GOV. You may also obtain copies of Portfolio documents by paying a duplicating fee and sending an electronic request to the following e-mail address: PUBLICINFO@SEC.GOV., or by sending your written request and a duplicating fee to the SEC's Public Reference Section, Washington, D.C. 20549-0102. You may obtain information on the operation of the public reference room by calling the SEC at 1-202-942-8090. INVESTMENT COMPANY ACT FILE NO. 811-05518 SANSOM STREET SHARES OF THE MONEY MARKET PORTFOLIO OF THE RBB FUND, INC. This prospectus gives vital information about this money market mutual fund, advised by BlackRock Institutional Management Corporation ("BIMC" or the "Adviser"), including information on investment policies, risks and fees. For your own benefit and protection, please read it before you invest and keep it on hand for future reference. Please note that the Money Market Portfolio: o is not a bank deposit; o is not federally insured; o is not an obligation of, or guaranteed or endorsed by PNC Bank, N.A., PFPC Trust Company or any other bank; o is not an obligation of, or guaranteed or endorsed or otherwise supported by the U.S. Government, the Federal Deposit Insurance Corporation, the Federal Reserve Board or any other governmental agency; o is not guaranteed to achieve its goals; and o may not be able to maintain a stable $1 share price and you may lose money. - -------------------------------------------------------------------------------- THE SECURITIES DESCRIBED IN THIS PROSPECTUS HAVE BEEN REGISTERED WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION ("SEC"). THE SEC, HOWEVER, HAS NOT JUDGED THESE SECURITIES FOR THEIR INVESTMENT MERIT AND HAS NOT DETERMINED THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANYONE WHO TELLS YOU OTHERWISE IS COMMITTING A CRIMINAL OFFENSE. - -------------------------------------------------------------------------------- PROSPECTUS December __, 2006 (THIS PAGE INTENTIONALLY LEFT BLANK.) TABLE OF CONTENTS - -------------------------------------------------------------------------------- ================================================================================ A LOOK AT THE GOALS, STRATEGIES, RISKS, EXPENSES AND FINANCIAL HISTORY OF THE PORTFOLIO. DETAILS ABOUT THE SERVICE PROVIDERS. POLICIES AND INSTRUCTIONS FOR OPENING, MAINTAINING AND CLOSING AN ACCOUNT IN THE PORTFOLIO. DETAILS ON THE DISTRIBUTION PLAN. ================================================================================ INTRODUCTION TO THE RISK/RETURN SUMMARY ........................... 5 MONEY MARKET PORTFOLIO ............................................ 6 PORTFOLIO MANAGEMENT Investment Adviser .............................................. 11 Disclosure of Portfolio Holdings ................................ 11 Other Service Providers ......................................... 12 SHAREHOLDER INFORMATION Pricing Shares .................................................. 13 Market Timing ................................................... 13 Purchase of Shares .............................................. 13 Redemption of Shares ............................................ 14 Dividends and Distributions ..................................... 17 Taxes ........................................................... 17 DISTRIBUTION ARRANGEMENTS ......................................... 17 FOR MORE INFORMATION .............................................. Back Cover 3 (THIS PAGE INTENTIONALLY LEFT BLANK.) INTRODUCTION TO THE RISK/RETURN SUMMARY - -------------------------------------------------------------------------------- This prospectus has been written to provide you with the information you need to make an informed decision about whether to invest in the Sansom Street shares of the Money Market Portfolio (the "Portfolio") of The RBB Fund, Inc. (the "Company"). The class of common stock (the "Sansom Street Class") of the Company offered by this prospectus represents interests in the Sansom Street Class of the Portfolio. This prospectus has been organized so that there is a short section with important facts about the Portfolio's goals, strategies, risks, expenses and financial history. Once you read this short section, read the sections about Purchase and Redemption of shares of the Sansom Street Class ("Sansom Street Shares" or "Shares"). 5 MONEY MARKET PORTFOLIO - -------------------------------------------------------------------------------- ================================================================================ IMPORTANT DEFINITIONS ASSET-BACKED SECURITIES: Debt securities that are backed by a pool of assets, usually loans such as installment sale contracts or credit card receivables. COMMERCIAL PAPER: Short-term securities with maturities of 1 to 397 days which are issued by banks, corporations and others. DOLLAR WEIGHTED AVERAGE MATURITY: The average amount of time until the organizations that issued the debt securities in the Portfolio must pay off the principal amount of the debt. "Dollar weighted" means the larger the dollar value of a debt security in the Portfolio, the more weight it gets in calculating this average. LIQUIDITY: Liquidity is the ability to convert investments easily into cash without losing a significant amount of money in the process. NET ASSET VALUE ("NAV"): The value of everything the Portfolio owns, minus everything it owes, divided by the number of shares held by investors. REPURCHASE AGREEMENT: A special type of a short-term investment. A dealer sells securities to a fund and agrees to buy them back later at a set price. In effect, the dealer is borrowing the Portfolio's money for a short time, using the securities as collateral. VARIABLE OR FLOATING RATE SECURITIES: Securities whose interest rates adjust automatically after a certain period of time and/or whenever a predetermined standard interest rate changes. ================================================================================ INVESTMENT GOAL The Portfolio seeks to generate current income, to provide you with liquidity and to protect your investment. PRIMARY INVESTMENT STRATEGIES To achieve this goal, we invest in a diversified investment portfolio of short term, high quality, U.S. dollar-denominated instruments, including government, bank, commercial and other obligations. Specifically, we may invest in: o U.S. dollar-denominated obligations issued or supported by the credit of U.S. or foreign banks or savings institutions with total assets of more than $1 billion (including obligations of foreign branches of such banks). o High quality commercial paper and other obligations issued or guaranteed (or otherwise supported) by U.S. and foreign corporations and other issuers rated (at the time of purchase) A-2 or higher by Standard and Poor's(R), Prime-2 or higher by Moody's or F-2 or higher by Fitch, Inc., as well as high quality corporate bonds rated AA (or Aa) or higher at the time of purchase by those rating agencies. These ratings must be provided by at least two rating agencies or by the only rating agency providing a rating. o Unrated notes, paper and other instruments that are determined by us to be of comparable quality to the instruments described above. o Asset-backed securities (including interests in pools of assets such as mortgages, installment purchase obligations and credit card receivables). o Securities issued or guaranteed by the U.S. government or by its agencies or authorities. o Dollar-denominated securities issued or guaranteed by foreign governments or their political subdivisions, agencies or authorities. o Securities issued or guaranteed by state or local governmental bodies. o Repurchase agreements relating to the above instruments. The Portfolio seeks to maintain a net asset value of $1.00 per share. At least 25% of the Fund's total assets will be invested in banking obligations. 6 QUALITY Under guidelines established by the Company's Board of Directors, we will only purchase securities if such securities or their issuers have (or such securities are guaranteed or otherwise supported by entities which have) short-term debt ratings at the time of purchase in the two highest rating categories from at least two nationally recognized statistical ratings organizations ("NRSRO"), or one such rating if the security is rated by only one NRSRO. Securities that are unrated must be determined to be of comparable quality. MATURITY The dollar-weighted average maturity of all the investments of the Portfolio will be 90 days or less. Only those securities which have remaining maturities of 397 days or less (except for certain variable and floating rate instruments and securities collateralizing repurchase agreements) will be purchased. KEY RISKS o The value of money market investments tends to fall when current interest rates rise. Money market investments are generally less sensitive to interest rate changes than longer-term securities. o The Portfolio's investment securities may not earn as high a level of income as longer term or lower quality securities, which generally have greater risk and more fluctuation in value. o The Portfolio's concentration of its investments in the banking industry could increase risks. The profitability of banks depends largely on the availability and cost of funds, which can change depending upon economic conditions. Banks are also exposed to losses if borrowers get into financial trouble and cannot repay their loans. o The obligations of foreign banks and other foreign issuers may involve certain risks in addition to those of domestic issuers, including higher transaction costs, less complete financial information, political and economic instability, less stringent regulatory requirements and less market liquidity. o Unrated notes, paper and other instruments may be subject to the risk that an issuer may default on its obligation to pay interest and repay principal. o The obligations issued or guaranteed by state or local governmental bodies may be issued by entities in the same state and may have interest which is paid from revenues of similar projects. As a result, changes in economic, business or political conditions relating to a particular state or types of projects may impact the Portfolio. o Treasury obligations differ only in their interest rates, maturities and time of issuance. These differences could result in fluctuations in the value of such securities depending upon the market. Obligations of U.S. government agencies and authorities are supported by varying degrees of credit. The U.S. government gives no assurances that it will provide financial support to its agencies and authorities if it is not obligated by law to do so. Default in these issuers could negatively impact the Portfolio. o The Portfolio's investment in asset-backed securities may be negatively impacted by interest rate fluctuations or when an issuer pays principal on an obligation held by the Portfolio earlier or later than expected. These events may affect their value and the return on your investment. o The Portfolio could lose money if a seller under a repurchase agreement defaults or declares bankruptcy. o We may purchase variable and floating rate instruments. Like all debt instruments, their value is dependent on the credit paying ability of the issuer. If the issuer were unable to make interest payments or default, the value of the securities would decline. The absence of an active market for these securities could make it difficult to dispose of them if the issuer defaults. 7 ALTHOUGH WE SEEK TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE PORTFOLIO. WHEN YOU INVEST IN THE PORTFOLIO YOU ARE NOT MAKING A BANK DEPOSIT. YOUR INVESTMENT IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR BY ANY BANK OR GOVERNMENTAL AGENCY. RISK/RETURN INFORMATION The chart and table below illustrate the variability of the Portfolio's long-term performance for Sansom Street Shares. The information shows you how the Portfolio's performance has varied year by year and provides some indication of the risks of investing in the Portfolio. The chart and the table both assume reinvestment of dividends and distributions. As with all such investments, past performance is not an indication of future results. Performance reflects fee waivers in effect. If fee waivers were not in place, the Portfolio's performance would be reduced. TOTAL RETURNS FOR THE CALENDAR YEARS ENDED DECEMBER 31 [THE FOLLOWING TABLE WAS REPRESENTED BY A BAR CHART IN THE PRINTED MATERIAL.] 5.03% 5.39% 5.23% 4.88% 6.16% 3.94% 1.72% 1.05% 1.25% ------------------------------------------------------------------------- 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Best and Worst Quarterly Performance (for the periods reflected in the chart above): Best Quarter: ________% (quarter ended _______________________) Worst Quarter: _______% (quarter ended ________________) Year-to-date total return for the nine months ended September 30, 2006: _____% AVERAGE ANNUAL TOTAL RETURNS FOR THE YEARS ENDED DECEMBER 31, 2005 1 YEAR 5 YEARS 10 YEARS ------ ------- -------- MONEY MARKET PORTFOLIO ____% _____% ______% CURRENT YIELD: The seven-day yield for the period ended December 31, 2005 for the Portfolio was ____%. Past performance is not an indication of future results. Yields will vary. You may call (800) 430-9618 to obtain the current seven-day yield of the Portfolio. 8 EXPENSES AND FEES As a shareholder you pay certain fees and expenses. Annual fund operating expenses are paid out of Portfolio assets and are reflected in the Portfolio's price. The table below describes the fees and expenses that you may pay if you buy and hold Sansom Street Shares of the Money Market Portfolio. The table is based on expenses for the most recent fiscal year. ================================================================================ IMPORTANT DEFINITIONS MANAGEMENT FEES: Fees paid to the investment adviser and administrator for portfolio management services. OTHER EXPENSES: Include transfer agency, custody, professional fees and registration fees. DISTRIBUTION AND SERVICE FEES: Fees that are paid to the Distributor for distribution of the Portfolio's Sansom Street Shares. ================================================================================ ANNUAL FUND OPERATING EXPENSES* (Expenses that are deducted from Portfolio assets) Management Fees(1) ............................... 0.45% Distribution and Service (12b-1) Fees(2) ......... 0.05% Other Expenses(3) ................................ 0.17% Total Annual Fund Operating Expenses(1) .......... 0.67% * The table does not reflect charges or credits which investors might incur if they invest through a financial institution. Shareholders requesting redemptions by wire are charged a transaction fee of $7.50. 1. Management fees include investment advisory and administration fees. The Adviser voluntarily waived a portion of its Management Fees and/or reimbursed expenses for the Portfolio during the fiscal year ended August 31, 2006. The Adviser expects that it will continue to voluntarily waive a portion of these fees and/or reimburse expenses through the fiscal year ending August 31, 2007. The Portfolio's service providers may also voluntarily waive a portion of their fees and/or reimburse expenses during these fiscal years. After these fee waivers and/or reimbursements, the Portfolio's Management Fees, Distribution and Service (12b-1) Fees, Other Expenses and ordinary Total Annual Fund Operating Expenses are not expected to exceed: Management Fees 0.16% Distribution and Service (12b-1) Fees 0.05% Other Expenses 0.14% ----- Total Annual Fund Operating Expenses 0.35% Although the Adviser expects the waivers and/or reimbursements to continue through August 31, 2007, these fee waivers and/or reimbursements are voluntary and may be terminated at any time. 2. Distribution and Service (12b-1) Fees reflect fees incurred by the Portfolio during the fiscal year ended August 31, 2006. The Portfolio may pay the Distributor up to a maximum of [0.05%] of the average daily net assets of the Sansom Street Class under the Portfolio's distribution plan during the current fiscal year. The Distributor may voluntarily waive these fees at its discretion. 3 A $15.00 retirement custodial maintenance fee is charged per IRA account per year. EXAMPLE The example is intended to help you compare the cost of investing in the Portfolio with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the Portfolio for the time periods indicated and then redeem all of your shares at the end of each period. The example also assumes that your investment has a 5% return each year, that the Portfolio's operating expenses remain the same, and that you reinvested all dividends and distributions. Although your actual costs may be higher or lower, based on these assumptions your cost would be: 1 YEAR 3 YEARS 5 YEARS 10 YEARS ------ ------- ------- -------- SANSOM STREET $ 64 $ 202 $ 351 $786 9 FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- The table below sets forth certain financial information for the periods indicated, including per share information results for a single share. The term "Total Return" indicates how much your investment would have increased or decreased during this period of time and assumes that you have reinvested all dividends and distributions. Information for the fiscal years ended August 31, 2004 through August 31, 2006 has been derived from the Portfolio's financial statements audited by _________________ the Portfolio's independent registered public accounting firm. This information should be read in conjunction with the Portfolio's financial statements which, together with the report of the independent registered public accounting firm, are included in the Portfolio's annual report, which is available upon request (see back cover for ordering instructions). The information for the fiscal years ended August 31, 2002 and August 31, 2003 was audited by the Portfolio's former independent registered public accounting firm. FINANCIAL HIGHLIGHTS (1) (FOR A SANSOM STREET SHARE OUTSTANDING THROUGHOUT EACH YEAR) MONEY MARKET PORTFOLIO
FOR THE FOR THE FOR THE FOR THE FOR THE YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED AUGUST 31, 2006 AUGUST 31, 2005 AUGUST 31, 2004 AUGUST 31, 2003 AUGUST 31, 2002 --------------- --------------- --------------- --------------- --------------- Net asset value, beginning of year ......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 --------------- --------------- --------------- --------------- Income from investment operations: Net investment income ................... 0.0239 0.0100 0.0114 0.0209 Net gains on securities ................. -- -- 0.0005 -- --------------- --------------- --------------- --------------- Total net income from investment operations ........................ 0.0239 0.0100 0.0119 0.0209 --------------- --------------- --------------- --------------- Less distributions Dividends (from net investment income) .. (0.0239) (0.0100) (0.0114) (0.0209 Distributions (from capital gains) ...... -- -- (0.0005) -- --------------- --------------- --------------- --------------- Total distributions .................. (0.0239) (0.0100) (0.0119) (0.0209 --------------- --------------- --------------- --------------- Net asset value, end of year ............... $ 1.00 $ 1.00 $ 1.00 $ 1.00 =============== =============== =============== =============== Total Return ............................... 2.41% 1.00% 1.21% 2.11% Ratios/Supplemental Data Net assets, end of year (000) ........... $ 87,304 $ 141,372 $ 198,373 $ 244,212 Ratios of expenses to average net assets (2) ........................... 0.20% .20% .30% .49% Ratios of net investment income to average net assets ................... 2.39% .98% 1.14% 2.10%
(1) Financial Highlights relate solely to the Sansom Street Class of shares of the Portfolio. (2) Without the waiver of advisory fees and reimbursement of certain operating expenses, the ratios of expenses to average net assets for the Portfolio would have been [____%], .67%, .59%, .57% and .64% for the years ended August 31, 2006, 2005, 2004, 2003 and 2002, respectively. 10 PORTFOLIO MANAGEMENT - -------------------------------------------------------------------------------- INVESTMENT ADVISER BIMC is a wholly-owned subsidiary of BlackRock, Inc. ("BlackRock"). On September 29, 2006, Merrill Lynch & Co., Inc. ("Merrill Lynch") contributed its investment management business, Merrill Lynch Investment Managers, to BlackRock (the "Transaction"). As a result of the Transaction, Merrill Lynch has a 49.80% economic interest and a 45% voting interest in BlackRock and The PNC Financial Services Group, Inc., which held a majority interest in BlackRock prior to the Transaction, has approximately a 34% economic and voting interest. BIMC has its principal offices at Bellevue Park Corporate Center, 100 Bellevue Parkway, Wilmington, DE 19809. Under the Investment Company Act of 1940, the Transaction may be considered an assignment of the Fund's prior Investment Advisory and Administration Agreement with BIMC ("Prior Advisory Agreement"), resulting in the Prior Advisory Agreement's automatic termination. On September 29, 2006, the Company entered into an Interim Investment Advisory and Administration Agreement with BIMC with respect to the Fund (the "Interim Advisory Agreement"). The Interim Advisory Agreement will remain in effect for up to 150 days while the Fund seeks shareholder approval of a new Investment Advisory and Administration Agreement with BIMC (the "New Advisory Agreement"). As required by the 1940 Act, BIMC's fees under the Interim Advisory Agreement will be placed in an escrow account with the Fund's custodian. If the Fund's shareholders approve the New Advisory Agreement within 150 days of the date of the Interim Advisory Agreement, such approval will be viewed as implicit approval of the Interim Advisory Agreement by shareholders and BIMC will receive any fees paid in to the escrow account, including interest earned. If shareholders of the Fund do not approve the New Advisory Agreement within 150 days of the date of the Interim Advisory Agreement, then BIMC will be paid, out of the escrow account, the lesser of: (i) any costs incurred in performing the Interim Advisory Agreement, plus interest earned on the amount while in escrow; or (ii) the total amount in the escrow account, plus interest if earned. The Interim Advisory Agreement and the New Advisory Agreement were approved by the Board of Directors of the Company, including a majority of those Directors who are not "interested persons" of the Company or BIMC, at a meeting held on May 25, 2006. For the fiscal year ended August 31, 2006, BIMC received an advisory fee of ____% of the Portfolio's average net assets. A discussion regarding the basis for the Company's Board of Directors approving the Portfolio's investment advisory agreement with BIMC is available in the Portfolio's annual report to shareholders dated August 31, 2006. DISCLOSURE OF PORTFOLIO HOLDINGS A description of the Company's policies and procedures with respect to the disclosure of the Portfolio's underlying investments is available in the SAI. 11 OTHER SERVICE PROVIDERS The following chart shows the Portfolio's other service providers and includes their addresses and principal activities.
====================================== SHAREHOLDERS ====================================== __________________________|_________________________ | | Distribution ========================================= ========================================= and Shareholder PRINCIPAL DISTRIBUTOR TRANSFER AGENT AND DIVIDEND Services DISPURSING AGENT PFPC DISTRIBUTORS, INC. 760 MOORE ROAD PFPC INC. KING OF PRUSSIA, PA 19406 301 BELLEVUE PARKWAY* WILMINGTON, DE 19809 Distributes shares of the Portfolio. Handles shareholder services, including ========================================= recordkeeping and Asset ========================================= statements, distribution of dividends Management and processing of buy and sell requests. INVESTMENT ADVISER *DO NOT USE THIS ADDRESS FOR BLACKROCK INSTITUTIONAL PURCHASES AND REDEMPTIONS. PLEASE MANAGEMENT CORPORATION SEE "PURCHASES OF FUND SHARES" AND 100 BELLEVUE PARKWAY "REDEMPTION OF FUND SHARES" WILMINGTON, DE 19809 SECTIONS FOR FURTHER INSTRUCTIONS. Manages the Portfolio's ========================================= investment activities. ========================================= ========================================= CUSTODIAN Portfolio ========================================= Operations PFPC TRUST COMPANY ADMINISTRATOR AND PORTFOLIO 8800 TINICUM BOULEVARD ACCOUNTING AGENT SUITE 200 PHILADELPHIA, PA 19153 PFPC INC. 301 BELLEVUE PARKWAY Holds the Portfolio's assets, settles WILMINGTON, DE 19809 all portfolio trades and collects most of the valuation data required for Provides facilities, equipment and calculating the Portfolio's NAV. personnel to carry out administrative services related to the Portfolio and ========================================= calculates the Portfolio's NAV, dividends and distributions. ========================================= | ====================================== BOARD OF DIRECTORS Supervises the Portfolio's activities. ======================================
12 SHAREHOLDER INFORMATION - -------------------------------------------------------------------------------- PRICING SHARES PFPC Inc. ("PFPC") determines the NAV per share twice daily at 12:00 noon and at 4:00 p.m., Eastern time, each day on which both the New York Stock Exchange (the "NYSE") and the Federal Reserve Bank of Philadelphia (the "FRB") are open. These entities are generally open Monday through Friday, except national holidays. Currently, the only days on which the NYSE is open and the FRB is closed are Columbus Day and Veterans Day. The only day on which the NYSE is closed and the FRB is open is Good Friday. The NAV is calculated by dividing the Portfolio's total assets, less its liabilities, by the number of shares outstanding. During certain emergency closings of the NYSE, however, the Portfolio may open for business if it can maintain its operations. In this event, the Portfolio will determine its NAV as described above. To determine if the Portfolio is open for business on a day the NYSE is closed for an emergency, please contact us by calling the telephone number listed on the last page of this prospectus. On any business day when the Bond Market Association ("BMA") recommends that the securities markets close early, the Portfolio reserves the right to close at or prior to the BMA recommended closing time. If the Portfolio does so, it will process purchase and redemption orders received after the Portfolio's closing time on the next business day. The BMA generally recommends that the securities markets close at 2:00 p.m. on the day before a national holiday, the Friday before a national holiday that falls on a Monday and the Friday after Thanksgiving. The Portfolio values its securities using amortized cost. This method values a Portfolio holding initially at its cost and then assumes a constant amortization to maturity of any discount or premium. The amortized cost method ignores any impact of changing interest rates. MARKET TIMING Market timing is defined as effecting frequent trades into or out of a fund in an effort to anticipate or time market movements. Due to the frequent and disruptive nature of this activity, it can adversely impact the ability of the Adviser to invest assets in an orderly, long-term manner, which, in turn, may adversely impact the performance of the Portfolio. In addition, such activity also may result in dilution in the value of Fund shares held by long-term shareholders, adverse tax consequences to shareholders and increased brokerage and administrative costs. There is no assurance that the Portfolio will be able to identify market timers, particularly if they are investing through intermediaries. The Board of Directors of the Company has adopted policies and procedures with respect to frequent trading of Portfolio shares by shareholders. The Company reserves the right, in its sole discretion, to reject purchase orders when, in the judgment of management, such rejection is in the best interest of the Portfolio and its shareholders. PURCHASE OF SHARES GENERAL. Shares may be purchased through PNC Bank, N.A. or its affiliates ("PNC") acting on behalf of its customers, including individuals, trusts, partnerships and corporations who maintain accounts (such as custody, trust or escrow accounts) with PNC and who have authorized PNC to invest in the Sansom Street Class on a customer's behalf. Shares may also be purchased through a broker-dealer that has entered into a dealer agreement with the Company's Distributor (a "Dealer"). The minimum initial investment is $1,500. There is no minimum subsequent investment. The Company in its sole discretion may accept or reject any order for purchases of Sansom Street Shares. Purchases will be effected at the NAV next determined after PFPC, the Company's transfer agent and administrative and accounting agent, has received a purchase order in good order and the Company's custodian has Federal Funds immediately available to it. In those cases where payment is made by check, Federal Funds will generally become available two business days after the check is received. A "business day" is any day that both the NYSE and the FRB are open. On any business day, orders which are accompanied by Federal Funds and received by the Company by 4:00 p.m. Eastern time, and orders as to which payment has been converted into Federal Funds by 4:00 p.m. Eastern time, will be executed as of 4:00 p.m. on that business day. Orders which are accompanied by Federal Funds and received by the Company after the close of regular trading on the NYSE, and orders as to which payment has been converted to Federal Funds after the close of regular trading 13 on the NYSE on a business day will be processed as of 4:00 p.m. Eastern time on the following business day. The Company's officers are authorized to waive the minimum initial and subsequent investment requirements. PURCHASES THROUGH AN ACCOUNT WITH PNC OR A DEALER. Shares may be purchased through your accounts at PNC or a Dealer through procedures and requirements established by PNC or a Dealer. Confirmations of Share purchases and redemptions will be sent to PNC or the Dealer. Beneficial ownership of Sansom Street Shares will be recorded by PNC or the Dealer and reflected in your account statements provided by them. If you wish to purchase Sansom Street Shares, contact PNC or a Dealer. PNC may also impose minimum customer account requirements. Although PNC does not impose a sales charge for purchases of Sansom Street Shares, depending upon the terms of your account, PNC may charge account fees for automatic investment and other cash management services. Information concerning these minimum account requirements, services and any charges will be provided by PNC before you authorize the initial purchase of Shares. This prospectus should be read in conjunction with any information you receive from PNC. DIRECT PURCHASES THROUGH A DEALER. You may also make an initial investment by mail by fully completing and signing an application obtained from a Dealer (an "Application") and mailing it, together with a check payable to The RBB Fund - - Money Market Portfolio (Sansom Street Class), c/o PFPC, P.O. Box 9841, Providence, RI 02940; for overnight delivery mail to The RBB Fund - Money Market Portfolio (Sansom Street Class), c/o PFPC, 101 Sabin Street, Pawtucket, RI 02860-1427. An Application will be returned unless it contains the name of the Dealer from whom it was obtained. Subsequent purchases may be made through a Dealer or by forwarding payment to the Company's transfer agent at the address above. Conflict of interest restrictions may apply to an institution's receipt of compensation paid by the Company in connection with the investment of fiduciary funds in Sansom Street Shares. Institutions, including banks regulated by the Comptroller of the Currency and investment advisers and other money managers subject to the jurisdiction of the SEC, the Department of Labor or state securities commissions, are urged to consult their legal advisers before investing fiduciary funds in Sansom Street Shares. GOOD ORDER. You must include complete and accurate required information on your purchase request. Please see "Purchase of Shares" for instructions. Purchase requests not in good order may be rejected. CUSTOMER IDENTIFICATION PROGRAM. Federal law requires the Company to obtain, verify and record identifying information, which may include the name, residential or business street address, date of birth (for an individual), social security or taxpayer identification number or other identifying information for each investor who opens or reopens an account with the Company. Applications without the required information, or without any indication that a social security or taxpayer identification number has been applied for, may not be accepted. After acceptance, to the extent permitted by applicable law or its customer identification program, the Company reserves the right (a) to place limits on transactions in any account until the identity of the investor is verified; or (b) to refuse an investment in a Company portfolio or to involuntarily redeem an investor's shares and close an account in the event that an investor's identity is not verified. The Company and its agents will not be responsible for any loss in an investor's account resulting from the investor's delay in providing all required identifying information or from closing an account and redeeming an investor's shares when an investor's identity cannot be verified. RETIREMENT PLANS. Sansom Shares may be purchased in conjunction with individual retirement accounts ("IRAs") and rollover IRAs where PFPC Trust Company acts as custodian. A $15.00 retirement custodial maintenance fee is charged per IRA account per year. For further information as to applications and annual fees, contact the Distributor or your broker. To determine whether the benefits of an IRA are available and/or appropriate, you should consult with your tax advisor. REDEMPTION OF SHARES GENERAL. Redemption orders are effected at the NAV per share next determined after receipt of the order in proper form by the Company's transfer agent, PFPC. It is the responsibility of PNC and Dealers to transmit promptly to PFPC your redemption request. If you hold share certificates, the certificates must accompany the redemption request. You may redeem all or some of your Shares in accordance with one of the procedures described below. REDEMPTION OF SHARES IN AN ACCOUNT AT PNC. If you beneficially own Shares through an account at PNC, you may redeem Sansom Street Shares in accordance with instructions and limitations pertaining to your account. If the redemption 14 request is received by PFPC by 4:00 p.m. Eastern time on any business day, the redemption will be effective as of 4:00 p.m. Eastern time on that day. Payment for redemption orders effected before 4:00 p.m. Eastern time will be wired the same day in Federal Funds to your account at PNC, provided that the Company's custodian is open for business. If the custodian is not open, payment will be made on the next bank business day. No charge for wiring redemption payments is imposed by the Company, although PNC may charge your account for redemption services. REDEMPTION OF SHARES IN AN ACCOUNT FOR NON-PNC CUSTOMERS. If you beneficially own Shares through an account at a Dealer, you may redeem Shares in your account in accordance with instructions and limitations pertaining to the account by contacting the Dealer. If such notice is received by PFPC from the broker before 4:00 p.m. Eastern time on any business day, the redemption will be effective immediately before 4:00 p.m. Eastern time on that day. Payment of the redemption proceeds will be made after 4:00 p.m. Eastern time on the day the redemption is effected, provided that the Company's custodian is open for business. If the custodian is not open, payment will be made on the next bank business day. If all Shares are redeemed, all accrued but unpaid dividends on those Shares will be paid with the redemption proceeds. A Dealer may also redeem each day a sufficient number of your Shares to cover debit balances created by transactions in your account or instructions for cash disbursements. Shares will be redeemed on the same day that a transaction occurs that results in such a debit-balance or charge. Each Dealer reserves the right to waive or modify criteria for participation in an account or to terminate participation in an account for any reason. REDEMPTION OF SHARES OWNED DIRECTLY. If you own Shares directly, you may redeem any number of Shares by sending a written request to The RBB Fund - Money Market Portfolio (Sansom Street Class), c/o PFPC, P.O. Box 9841, Providence, RI 02940; for overnight delivery mail to The RBB Fund - Money Market Portfolio (Sansom Street Class), c/o PFPC, 101 Sabin Street, Pawtucket, RI 02860-1427. It is recommended that such request be sent by registered or certified mail if share certificates accompany the request. Redemption requests must be signed by each shareholder in the same manner as the Shares are registered. Redemption requests for joint accounts require the signature of each joint owner. On redemption requests of $5,000 or more, a signature guarantee is required. A signature guarantee may be obtained from a domestic bank or trust company, broker, dealer, clearing agency or savings association who are participants in a medallion signature guarantee program recognized by the Securities Transfer Association. A medallion imprint or medallion stamp indicates that the financial institution is a member of a medallion signature guarantee program and is an acceptable signature guarantor. The three recognized medallion programs are Securities Transfer Agents Medallion Program ("STAMP"), Stock Exchanges Medallion Program ("SEMP") and New York Stock Exchange, Inc. Medallion Signature Program ("MSP"). Signature guarantees that are not part of these programs will not be accepted. If you are a direct investor, you may redeem Shares without charge by telephone if you have completed and returned an Application containing the appropriate telephone election. To add a telephone option to an existing account that previously did not provide for this option, you must submit a Telephone Authorization Form to PFPC. This form is available from PFPC. Once this election has been made, you may simply contact PFPC by telephone to request a redemption by calling (800) 430-9618. Neither the Company, the Portfolio, the Distributor, PFPC nor any other Company agent will be liable for any loss, liability, cost or expense for following the procedures described below or for following instructions communicated by telephone that they reasonably believe to be genuine. The Company's telephone transaction procedures include the following measures: (1) requiring the appropriate telephone transaction privilege forms; (2) requiring the caller to provide the names of the account owners, the account social security number and the name of the Portfolio, all of which must match the Company's records; (3) requiring the Company's service representative to complete a telephone transaction form, listing all of the above caller identification information; (4) requiring that redemption proceeds be sent only by check to the account owners of record at the address of record, or by wire only to the owners of record at the bank account of record; (5) sending a written confirmation for each telephone transaction to the owners of record at the address of record within five business days of the call; and (6) maintaining tapes of telephone transactions for six months, if the Company elects to record shareholder telephone transactions. For accounts held of record by broker-dealers (other than the Distributor), financial institutions, securities dealers, financial planners or other industry professionals, additional documentation or information regarding the scope of a caller's authority is required. Finally, for telephone transactions in accounts held jointly, additional information regarding other account holders is required. 15 Telephone transactions will not be permitted in connection with IRA or other retirement plan accounts or by an attorney-in-fact under power of attorney. Proceeds of a telephone redemption request will be mailed by check to your registered address unless you have designated in the Application or telephone authorization form that such proceeds are to be sent by wire transfer to a specified checking or savings account. If proceeds are to be sent by wire transfer, a telephone redemption request received prior to the close of regular trading on the NYSE will result in redemption proceeds being wired to your bank account on the next bank business day. The minimum redemption for proceeds sent by wire transfer is $2,500. There is no maximum for proceeds sent by wire transfer. The Company may modify this redemption service at any time or charge a service fee upon prior notice to shareholders. A wire charge of $7.50 is assessed and charged to the shareholder. REDEMPTION BY CHECK. If you are a direct investor or you do not have check writing privileges for your account, the Company will provide forms of drafts ("checks") payable through PNC Bank. These checks may be made payable to the order of anyone. The minimum amount of a check is $100; however, a Dealer may establish a higher minimum. If you wish to use this check writing redemption procedure, you should complete specimen signature cards (available from PFPC), and forward them to PFPC. PFPC will then arrange for the checks to be honored by PNC Bank. If you own Shares through an account, you should contact your Dealer for signature cards. Investors with joint accounts may elect to have checks honored with a single signature. Check redemptions will be subject to PNC Bank's rules governing checks. You will be able to stop payment on a check redemption. The Company or PNC Bank may terminate this redemption service at any time, and neither shall incur any liability for honoring checks, for effecting redemptions to pay checks, or for returning checks which have not been accepted. When a check is presented to PNC Bank for clearance, PNC Bank, as your agent, will cause the Company to redeem a sufficient number of your full and fractional Shares to cover the amount of the check. Pursuant to rules under the Investment Company Act of 1940, as amended (the "1940 Act"), checks may not be presented for cash payment at the offices of PNC Bank. This limitation does not affect checks used for the payment of bills or cash at other banks. ADDITIONAL REDEMPTION INFORMATION. The Company ordinarily will make payment for all Shares redeemed within seven days after receipt by PFPC of a redemption request in proper form. Although the Company will redeem Shares purchased by check before the check clears, payment of redemption proceeds may be delayed for a period of up to fifteen days after their purchase, pending a determination that the check has cleared. This procedure does not apply to Shares purchased by wire payment. Investors should consider purchasing Shares using a certified or bank check or money order if they anticipate an immediate need for redemption proceeds. Redemption proceeds will ordinarily be paid within seven business days after a redemption request is received by the Transfer Agent in proper form. The Fund may suspend the right of redemption or postpone the date at times when the NYSE or the bond market is closed or under any emergency circumstances as determined by the SEC. The Company does not impose a charge when Shares are redeemed. The Company reserves the right to redeem any account in the Sansom Street Class involuntarily, on thirty days' notice, if that account falls below $500 as a result of redemptions, not market movement, and during that thirty-day notice period the amount invested in the account is not increased to at least $500. Payment for Shares redeemed may be postponed or the right of redemption suspended as provided by the rules of the SEC. If the Board of Directors determines that it would be detrimental to the best interest of the remaining shareholders of the Portfolio to make payment wholly or partly in cash, redemption proceeds may be paid in whole or in part by an in-kind distribution of readily marketable securities held by the Portfolio instead of cash in conformity with applicable rules of the SEC. Investors generally will incur brokerage charges on the sale of investment securities so received in payment of redemptions. The Company has elected, however, to be governed by Rule 18f-1 under the 1940 Act, so that the Portfolio is obligated to redeem its Shares solely in cash up to the lesser of $250,000 or 1% of its NAV during any 90-day period for any one shareholder of the Portfolio. PROPER FORM. You must include complete and accurate required information on your redemption request. Please see "Redemption of Shares" for instructions. Redemption requests not in proper form may be delayed. 16 DIVIDENDS AND DISTRIBUTIONS The Company will distribute substantially all of the net investment income and net realized capital gains, if any, of the Portfolio to its shareholders. All distributions are reinvested in the form of additional full and fractional Shares of the Sansom Street Class unless a shareholder elects otherwise. The net investment income (not including any net short-term capital gains) earned by the Portfolio will be declared as a dividend on a daily basis and paid monthly. Dividends are payable to shareholders of record as of the determination of net asset value made as of 4:00 p.m. (Eastern time) each day. Shares will begin accruing dividends on the day the purchase order for the shares is effected and continue to accrue dividends through the day before such Shares are redeemed. Net short-term capital gains, if any, will be distributed at least annually. TAXES Distributions from the Portfolio will generally be taxable to shareholders. It is expected that all, or substantially all, of these distributions will consist of ordinary income. You will be subject to income tax on these distributions regardless of whether they are paid in cash or reinvested in additional Shares. The Portfolio contemplates declaring as dividends each year all or substantially all of its net taxable income. The one major exception to these tax principles is that distributions on Shares held in an IRA (or other tax-qualified plan) will not be currently taxable. Dividends declared in October, November or December of any year that are payable to shareholders of record on a specified date in such months will be deemed to have been received by shareholders and paid by the Portfolio on December 31 of such year if such dividends are actually paid during January of the following year. The Portfolio will be required in certain cases to withhold and remit to the United States Treasury a percentage of taxable dividends or gross sale proceeds paid to any shareholder who (i) has failed to provide a correct tax identification number, (ii) is subject to backup withholding by the Internal Revenue Service for failure to properly include on his on her return payments of taxable interest or dividends, or (iii) has failed to certify to the Portfolio that he or she is not subject to backup withholding when required to do so or that he or she is an "exempt recipient." The backup withholding rate for 2006 is 28%. The foregoing is only a summary of certain tax considerations under the current law, which may be subject to change in the future. Shareholders may also be subject to state and local taxes on distributions. Shareholders who are nonresident aliens, foreign trusts or estates, or foreign corporations or partnerships may be subject to different United States Federal income tax treatment. You should consult your tax advisor for further information regarding federal, state, local and/or foreign tax consequences relevant to your specific situation. DISTRIBUTION ARRANGEMENTS - -------------------------------------------------------------------------------- Sansom Street Shares of the Portfolio are sold without a sales load on a continuous basis by the Distributor, whose principal business address is at 760 Moore Road, King of Prussia, PA 19406. The Board of Directors of the Company approved a Distribution Agreement and adopted a separate Plan of Distribution for the Sansom Street Class (the "Plan") pursuant to Rule 12b-1 under the 1940 Act. Under the Plan, the Distributor is entitled to receive from the Sansom Street Class a distribution fee, which is accrued daily and paid monthly, of up to 0.20% on an annualized basis of the average daily net assets of the Sansom Street Class. The actual amount of such compensation is agreed upon from time to time by the Company's Board of Directors and the Distributor. Under the Distribution Agreement, the Distributor has agreed to accept compensation for its services thereunder and under the Plan in the amount of [0.05%] of the average daily net assets of the Class on an annualized basis in any year. The Distributor may, in its discretion, voluntarily waive from time to time all or any portion of its distribution fee. Under the Distribution Agreement and the Plan, the Distributor may reallocate an amount up to the full fee that it receives to financial institutions, including broker-dealers, based upon the aggregate investment amounts maintained by and services provided to shareholders of the Sansom Street Class serviced by such financial institutions. The Distributor may also reimburse broker-dealers for other expenses incurred in the promotion of the sale of Sansom Street Shares. The 17 Distributor and/or broker-dealers pay for the cost of printing (excluding typesetting) and mailing to prospective investors prospectuses and other materials relating to the Sansom Street Class as well as for related direct mail, advertising and promotional expenses. The Plan obligates the Company, during the period it is in effect, to accrue and pay to the Distributor on behalf of the Sansom Street Class the fee agreed to under the Distribution Agreement. Payments under the Plan are not based on expenses actually incurred by the Distributor, and the payments may exceed distribution expenses actually incurred. Because these fees are paid out of the Portfolio's assets on an on-going basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges. 18 NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS OR IN THE PORTFOLIO'S SAI INCORPORATED HEREIN BY REFERENCE, IN CONNECTION WITH THE OFFERING MADE BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ITS DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE COMPANY OR BY THE DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE. INVESTMENT ADVISER BlackRock Institutional Management Corporation Wilmington, Delaware DISTRIBUTOR PFPC Distributors, Inc. King of Prussia, Pennsylvania CUSTODIAN PFPC Trust Company Philadelphia, Pennsylvania ADMINISTRATOR AND TRANSFER AGENT PFPC Inc. Wilmington, Delaware COUNSEL Drinker Biddle & Reath LLP Philadelphia, Pennsylvania INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ___________________________ Philadelphia, Pennsylvania THE SANSOM STREET SHARES OF THE MONEY MARKET PORTFOLIO Prospectus December __, 2006 THE SANSOM STREET SHARES OF THE MONEY MARKET PORTFOLIO 1-800-430-9618 FOR MORE INFORMATION: This prospectus contains important information you should know before you invest. Read it carefully and keep it for future reference. More information about the Sansom Street Money Market Portfolio is available free of charge upon request, including: ANNUAL/SEMI-ANNUAL REPORTS These reports contain additional information about the Portfolio's investments, describe the Portfolio's performance and list its holdings. STATEMENT OF ADDITIONAL INFORMATION An SAI, dated December __, 2006, has been filed with the SEC. The SAI, which includes additional information about the Sansom Street Money Market Portfolio, along with the Sansom Street Money Market Portfolio's annual and semi-annual reports, are not available on the adviser's website but may be obtained free of charge, by calling (800) 430-9618. The SAI, as supplemented from time to time, is incorporated by reference into this prospectus (and is legally considered a part of this prospectus). SHAREHOLDER ACCOUNT SERVICE REPRESENTATIVES Representatives are available to discuss account balance information, mutual fund prospectuses, literature, programs and services available. Hours: 8 a.m. to 5 p.m. (Eastern time) Monday-Friday. Call: (800) 430-9618. WRITTEN CORRESPONDENCE Sansom Street Money Market Portfolio c/o PFPC Inc. 101 Sabin Street Pawtucket, RI 02860-1427 SECURITIES AND EXCHANGE COMMISSION You may also view and copy information about the Company and the Portfolio, including the SAI, by visiting the SEC's Public Reference Room in Washington, D.C. or the EDGAR Database on the SEC's Internet site at WWW.SEC.GOV. You may also obtain copies of Portfolio documents by paying a duplicating fee and sending an electronic request to the following e-mail address: PUBLICINFO@SEC.GOV., or by sending your written request and a duplicating fee to the SEC's Public Reference Section, Washington, D.C. 20549-0102. You may obtain information on the operation of the public reference room by calling the SEC at 1-202-942-8090. INVESTMENT COMPANY ACT FILE NO. 811-05518 BEDFORD SHARES OF THE MONEY MARKET PORTFOLIO OF THE RBB FUND, INC. STATEMENT OF ADDITIONAL INFORMATION December __, 2006 This Statement of Additional Information ("SAI") provides information about the Company's Bedford Class of the Money Market Portfolio (the "Portfolio") of The RBB Fund, Inc. (the "Company"). This information is in addition to the information that is contained in the Bedford Family Money Market Portfolio Prospectus dated December __, 2006 (the "Prospectus"). This SAI is not a prospectus. It should be read in conjunction with the Prospectus and the Portfolio's Annual Report dated August 31, 2006. The financial statements and notes contained in the Annual Report _____________this SAI. Copies of the Portfolio's Prospectus and Annual Report may be obtained free of charge by telephoning (800) 447-1139. No other part of the Annual Report is incorporated by reference herein. TABLE OF CONTENTS GENERAL INFORMATION............................................................3 INVESTMENT INSTRUMENTS AND POLICIES............................................3 ADDITIONAL INFORMATION ON PORTFOLIO INVESTMENTS.............................3 INVESTMENT LIMITATIONS........................................................13 FUNDAMENTAL INVESTMENT LIMITATIONS AND POLICIES............................13 NON-FUNDAMENTAL INVESTMENT LIMITATIONS AND POLICIES........................15 DISCLOSURE OF PORTFOLIO HOLDINGS..............................................16 MANAGEMENT OF THE COMPANY.....................................................17 THE BOARD AND STANDING COMMITTEES..........................................21 DIRECTOR OWNERSHIP OF SHARES OF THE COMPANY................................21 DIRECTORS' AND OFFICERS' COMPENSATION......................................22 CODE OF ETHICS................................................................24 PROXY VOTING..................................................................24 CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES...........................25 INVESTMENT ADVISORY AND OTHER SERVICES........................................25 ADVISORY AND SUB-ADVISORY AGREEMENTS.......................................25 ADMINISTRATION AGREEMENT...................................................28 CUSTODIAN AND TRANSFER AGENCY AGREEMENTS...................................29 DISTRIBUTION AND SERVICING AGREEMENT.......................................30 PORTFOLIO TRANSACTIONS........................................................31 ADDITIONAL INFORMATION CONCERNING COMPANY SHARES..............................32 PURCHASE AND REDEMPTION INFORMATION...........................................35 VALUATION OF SHARES...........................................................36 TAXES.........................................................................38 SHAREHOLDER APPROVALS.........................................................38 MISCELLANEOUS.................................................................38 COUNSEL....................................................................38 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM..............................38 FINANCIAL STATEMENTS..........................................................39 APPENDIX A...................................................................A-1 APPENDIX B...................................................................B-1 -i- GENERAL INFORMATION The Company is an open-end management investment company currently operating seventeen separate investment portfolios. The Company is registered under the Investment Company Act of 1940 (the "1940 Act"), and was organized as a Maryland corporation on February 29, 1988. This SAI pertains to the Bedford Class shares representing interests in one diversified investment portfolio of the Company, which is offered by a Prospectus. BlackRock Institutional Management Corporation ("BIMC" or the "Adviser") serves as the investment adviser to the Portfolio. INVESTMENT INSTRUMENTS AND POLICIES The following supplements the information contained in the Prospectus concerning the investment objective and policies of the Money Market Portfolio (the "Portfolio"). The Portfolio seeks to generate current income to provide you with liquidity and to protect your investment. The Adviser may not invest in all of the instruments or use all of the investment techniques permitted by the Portfolio's Prospectus and this SAI or invest in such instruments or engage in such techniques to the full extent permitted by the Portfolio's investment policies and limitations. ADDITIONAL INFORMATION ON PORTFOLIO INVESTMENTS ASSET-BACKED SECURITIES. The Portfolio may invest in asset-backed securities which are backed by mortgages, installment sales contracts, credit card receivables or other assets and CMOs issued or guaranteed by U.S. government agencies and instrumentalities. It may also invest in asset-backed securities issued by private companies. Asset-backed securities also include adjustable rate securities. The estimated life of an asset-backed security varies with the prepayment experience with respect to the underlying debt instruments. For this and other reasons, an asset-backed security's stated maturity may be shortened, and the security's total return may be difficult to predict precisely. Such difficulties are not expected, however, to have a significant effect on the Portfolio since the remaining maturity of any asset-backed security acquired will be 397 days or less. Asset-backed securities are considered an industry for industry concentration purposes (see "Fundamental Investment Limitations and Policies"). In periods of falling interest rates, the rate of mortgage prepayments tends to increase. During these periods, the reinvestment of proceeds by the Portfolio will generally be at lower rates than the rates on the prepaid obligations. Asset-backed securities are generally issued as pass-through certificates, which represent undivided fractional ownership interests in an underlying pool of assets, or as debt instruments, which are also known as collateralized obligations, and are generally issued as the debt of a special purpose entity organized solely for the purpose of owning such assets and issuing such debt. Asset-backed securities are often backed by a pool of assets representing the obligations of a number of different parties. In general, the collateral supporting non-mortgage asset-backed securities is of shorter maturity than mortgage-related securities. Like other fixed-income securities, when interest rates 3 rise the value of an asset-backed security generally will decline; however, when interest rates decline, the value of an asset-backed security with prepayment features may not increase as much as that of other fixed-income securities. BANK OBLIGATIONS. The Portfolio will invest at least 25% of its total assets in obligations of issuers in the banking industry, such as short-term obligations of bank holding companies, certificates of deposit, bankers' acceptances and time deposits, including U.S. dollar-denominated instruments issued or supported by the credit of U.S. or foreign banks or savings institutions having total assets at the time of purchase in excess of $1 billion. The Portfolio may invest substantially in obligations of foreign banks or foreign branches of U.S. banks where the investment adviser deems the instrument to present minimal credit risks. Such investments may nevertheless entail risks in addition to those of domestic issuers, including higher transaction costs, less complete financial information, less stringent regulatory requirements, less market liquidity, future unfavorable political and economic developments, possible withholding taxes on interest income, seizure or nationalization of foreign deposits, currency controls, interest limitations, or other governmental restrictions which might affect the payment of principal or interest on the securities held in the Portfolio. Additionally, these institutions may be subject to less stringent reserve requirements and to different accounting, auditing, reporting and recordkeeping requirements than those applicable to domestic branches of U.S. banks. The Portfolio will invest in obligations of domestic branches of foreign banks and foreign branches of domestic banks only when its investment adviser believes that the risks associated with such investment are minimal. The Portfolio may also make interest-bearing savings deposits in commercial and savings banks in amounts not in excess of 5% of its total assets. COMMERCIAL PAPER. The Portfolio may purchase commercial paper rated (i) (at the time of purchase) in the two highest rating categories of at least two nationally recognized statistical rating organizations ("NRSRO") or, by the only NRSRO providing a rating; or (ii) issued by issuers (or, in certain cases guaranteed by persons) with short-term debt having such ratings. These rating categories are described in Appendix A to this SAI. The Portfolio may also purchase unrated commercial paper provided that such paper is determined to be of comparable quality by the Portfolio's investment adviser in accordance with guidelines approved by the Company's Board of Directors. Commercial paper purchased by the Portfolio may include instruments issued by foreign issuers, such as Canadian Commercial Paper ("CCP"), which is U.S.-dollar-denominated commercial paper issued by a Canadian corporation or a Canadian counterpart of a U.S. corporation, and in Europaper, which is U.S.-dollar-denominated commercial paper of a foreign issuer, subject to the criteria stated above for other commercial paper issuers. ELIGIBLE SECURITIES. The Portfolio will only purchase "eligible securities" that present minimal credit risks as determined by the investment adviser pursuant to guidelines adopted by the Board of Directors. Eligible securities generally include: (1) U.S. government securities; (2) securities that (a) are rated (at the time of purchase) by two or more nationally recognized statistical rating organizations ("NRSROs") in the two highest short-term rating categories for such securities (e.g., commercial paper rated "A-1" or "A-2," by Standard & Poor's(R) Ratings Services ("S&P(R)"), or rated "Prime-1" or "Prime-2" by Moody's Investor's Service, Inc. 4 ("Moody's"), or (b) are rated (at the time of purchase) by the only NRSRO rating the security in one of its two highest rating categories for such securities; (3) short-term obligations and, subject to certain SEC requirements, long-term obligations that have remaining maturities of 397 days or less, provided in each instance that such obligations have no short-term rating and are comparable in priority and security to a class of short-term obligations of the issuer that has been rated in accordance with (2)(a) or (b) above ("comparable obligations"); (4) securities that are not rated and are issued by an issuer that does not have comparable obligations rated by a NRSRO ("Unrated Securities"), provided that such securities are determined to be of comparable quality to a security satisfying (2)(a) or (b) above; and (5) subject to certain conditions imposed under SEC rules, obligations guaranteed or otherwise supported by persons which meet the requisite rating requirements. GUARANTEED INVESTMENT CONTRACTS. The Portfolio may make investments in obligations, such as guaranteed investment contracts and similar funding agreements (collectively, "GICs"), issued by highly rated U.S. insurance companies. A GIC is a general obligation of the issuing insurance company and not a separate account. The Portfolio's investments in GICs are not expected to exceed 5% of its total assets at the time of purchase absent unusual market conditions. GICs are considered illiquid securities and will be subject to the Portfolio's 10% limitation on illiquid investments, unless there is an active and substantial secondary market for the particular instrument and market quotations are readily available. ILLIQUID SECURITIES. The Portfolio may not invest more than 10% of its net assets in illiquid securities including repurchase agreements that have a maturity of longer than seven days, and including securities that are illiquid by virtue of the absence of a readily available market or legal or contractual restrictions on resale. Other securities considered illiquid are time deposits with maturities in excess of seven days, variable rate demand notes with demand periods in excess of seven days unless the Portfolio's investment adviser determines that such notes are readily marketable and could be sold promptly at the prices at which they are valued and GICs. Repurchase agreements subject to demand are deemed to have a maturity equal to the notice period. Securities that have legal or contractual restrictions on resale but have a readily available market are not considered illiquid for purposes of this limitation. The Portfolio's investment adviser will monitor the liquidity of such restricted securities under the supervision of the Board of Directors. Historically, illiquid securities have included securities subject to contractual or legal restrictions on resale because they have not been registered under the Securities Act, as amended, securities which are otherwise not readily marketable and repurchase agreements having a maturity of longer than seven days. Securities which have not been registered under the Securities Act are referred to as private placements or restricted securities and are purchased directly from the issuer or in the secondary market. Mutual funds do not typically hold a significant amount of illiquid securities because of the potential for delays on resale and uncertainty in valuation. Limitations on resale may have an adverse effect on the marketability of portfolio securities and a mutual fund might be unable to dispose of restricted or other illiquid securities promptly or at reasonable prices and might thereby experience difficulty in satisfying redemptions within seven days. A mutual fund might also have to register such restricted securities in order to dispose of them, resulting in additional expense and delay. Adverse market 5 conditions could impede such a public offering of securities. Illiquid securities would be more difficult to dispose of than liquid securities to satisfy redemption requests. The Portfolio may purchase securities which are not registered under the Securities Act but which may be sold to "qualified institutional buyers" in accordance with Rule 144A under the Securities Act. These securities will not be considered illiquid so long as it is determined by the Adviser that an adequate trading market exists for the securities. This investment practice could have the effect of increasing the level of illiquidity in the Portfolio during any period that qualified institutional buyers become uninterested in purchasing restricted securities. The Portfolio's investment adviser will monitor the liquidity of restricted securities in the Portfolio under the supervision of the Board of Directors. In reaching liquidity decisions, the investment adviser may consider, among others, the following factors: (1) the unregistered nature of the security; (2) the frequency of trades and quotes for the security; (3) the number of dealers wishing to purchase or sell the security and the number of other potential purchasers; (4) dealer undertakings to make a market in the security; and (5) the nature of the security and the nature of the marketplace trades (e.g., the time needed to dispose of the security, the method of soliciting offers and the mechanics of the transfer). MORTGAGE-RELATED SECURITIES. Mortgage-related securities consist of mortgage loans which are assembled into pools, the interests in which are issued and guaranteed by an agency or instrumentality of the U.S. government, though not necessarily by the U.S. government itself. There are a number of important differences among the agencies and instrumentalities of the U.S. government that issue mortgage-related securities and among the securities that they issue. Mortgage-related securities guaranteed by the Government National Mortgage Association ("GNMA") include GNMA Mortgage Pass-Through Certificates (also known as "Ginnie Maes") which are guaranteed as to the timely payment of principal and interest by GNMA and such guarantee is backed by the full faith and credit of the United States. GNMA is a wholly-owned U.S. government corporation within the Department of Housing and Urban Development. GNMA certificates also are supported by the authority of GNMA to borrow funds from the U.S. Treasury to make payments under its guarantee. Mortgage-related securities issued by Fannie Mae include Fannie Mae guaranteed Mortgage Pass-Through Certificates (also known as "Fannie Maes") which are solely the obligations of Fannie Mae, are not backed by or entitled to the full faith and credit of the United States and are supported by the right of the issuer to borrow from the Treasury. Fannie Mae is a government-sponsored organization owned entirely by private stockholders. Fannie Maes are guaranteed as to timely payment of principal and interest by Fannie Mae. Mortgage-related securities issued by Freddie Mac include Freddie Mac Mortgage Participation Certificates (also known as "Freddie Macs" or "PCs"). Freddie Mac is a corporate instrumentality of the United States, created pursuant to an Act of Congress, which is owned entirely by Federal Home Loan Banks. Freddie Macs are not guaranteed by the United States or by any Federal Home Loan Banks and do not constitute a debt or obligation of the United States or of any Federal Home Loan Bank. Freddie Macs entitle the holder to timely payment of interest, which is guaranteed by Freddie Mac. Freddie Mac guarantees either ultimate collection or timely payment of all principal payments on the underlying mortgage loans. When Freddie Mac does not guarantee timely payment of principal, Freddie Mac may 6 remit the amount due on account of its guarantee of ultimate payment of principal at any time after default on an underlying mortgage, but in no event later than one year after it becomes payable. The Portfolio may invest in multiple class pass-through securities, including collateralized mortgage obligations ("CMOs"). These multiple class securities may be issued by U.S. government agencies or instrumentalities, including Fannie Mae and Freddie Mac, or by trusts formed by private originators of, or investors in, mortgage loans. In general, CMOs are debt obligations of a legal entity that are collateralized by a pool of residential or commercial mortgage loans or mortgage pass-through securities (the "Mortgage Assets"), the payments on which are used to make payments on the CMOs. Investors may purchase beneficial interests in CMOs, which are known as "regular" interests or "residual" interests. The residual in a CMO structure generally represents the interest in any excess cash flow remaining after making required payments of principal of and interest on the CMOs, as well as the related administrative expenses of the issuer. Residual interests generally are junior to, and may be significantly more volatile than, "regular" CMO interests. The Portfolio does not currently intend to purchase CMOs, except as collateral for repurchase agreements. Each class of CMOs, often referred to as a "tranche," is issued at a specific adjustable or fixed interest rate and must be fully retired no later than its final distribution date. Principal prepayments on the Mortgage Assets underlying the CMOs may cause some or all of the classes of CMOs to be retired substantially earlier than their final distribution dates. Generally, interest is paid or accrues on all classes of CMOs on a monthly basis. The principal of and interest on the Mortgage Assets may be allocated among the several classes of CMOs in various ways. In certain structures (known as "sequential pay" CMOs), payments of principal, including any principal prepayments, on the Mortgage Assets generally are applied to the classes of CMOs in the order of their respective final distribution dates. Thus, no payment of principal will be made on any class of sequential pay CMOs until all other classes having an earlier final distribution date have been paid in full. Additional structures of CMOs include, among others, "parallel pay" CMOs. Parallel pay CMOs are those which are structured to apply principal payments and prepayments of the Mortgage Assets to two or more classes concurrently on a proportionate or disproportionate basis. These simultaneous payments are taken into account in calculating the final distribution date of each class. The relative payment rights of the various CMO classes may be subject to greater volatility and interest-rate risk than other types of mortgage-backed securities. The average life of asset-backed securities varies with the underlying instruments or assets and market conditions, which in the case of mortgages have maximum maturities of forty years. The average life of a mortgage-backed instrument, in particular, is likely to be substantially less than the original maturity of the mortgages underlying the securities as the result of unscheduled principal payments and mortgage prepayments. The relationship between mortgage prepayment and interest rates may give some high-yielding mortgage-backed securities less potential for growth in value than conventional bonds with comparable maturities. In addition, in periods of falling 7 interest rates, the rate of mortgage prepayments tends to increase. During such periods, the reinvestment of prepayment proceeds by a Portfolio will generally be at lower rates than the rates that were carried by the obligations that have been prepaid. When interest rates rise, the value of an asset-backed security generally will decline; however, when interest rates decline, the value of an asset-backed security with prepayment features may not increase as much as that of other fixed-income securities. Because of these and other reasons, an asset-backed security's total return may be difficult to predict precisely. MUNICIPAL OBLIGATIONS. The Portfolio may invest in short-term Municipal Obligations which are determined by its investment adviser to present minimal credit risks and that meet certain ratings criteria pursuant to guidelines established by the Company's Board of Directors. The Portfolio may also purchase Unrated Securities provided that such securities are determined to be of comparable quality to eligible rated securities. The applicable Municipal Obligations ratings are described in the Appendix to this Statement of Additional Information. The two principal classifications of Municipal Obligations are "general obligation" securities and "revenue" securities. General obligation securities are secured by the issuer's pledge of its full faith, credit and taxing power for the payment of principal and interest. Revenue securities are payable only from the revenues derived from a particular facility or class of facilities or, in some cases, from the proceeds of a special excise tax or other specific excise tax or other specific revenue source such as the user of the facility being financed. Revenue securities include private activity bonds which are not payable from the unrestricted revenues of the issuer. Consequently, the credit quality of private activity bonds is usually directly related to the credit standing of the corporate user of the facility involved. Municipal Obligations may also include "moral obligation" bonds, which are normally issued by special purpose public authorities. If the issuer of moral obligation bonds is unable to meet its debt service obligations from current revenues, it may draw on a reserve fund, the restoration of which is a moral commitment but not a legal obligation of the state or municipality which created the issuer. Therefore, risk exists that the reserve fund will not be restored. Municipal Obligations may include variable rate demand notes. Such notes are frequently not rated by credit rating agencies, but unrated notes purchased by the Portfolio will have been determined by the Portfolio's investment adviser to be of comparable quality at the time of the purchase to rated instruments purchasable by the Portfolio. Where necessary to ensure that a note is of eligible quality, the Portfolio will require that the issuer's obligation to pay the principal of the note be backed by an unconditional bank letter or line of credit, guarantee or commitment to lend. While there may be no active secondary market with respect to a particular variable rate demand note purchased by the Portfolio, the Portfolio may, upon the notice specified in the note, demand payment of the principal of the note at any time or during specified periods not exceeding 13 months, depending upon the instrument involved. The absence of such an active secondary market, however, could make it difficult for the Portfolio to dispose of a variable rate demand note if the issuer defaulted on its payment obligation or during the periods that the Portfolio is not entitled to exercise its demand rights. The Portfolio could, for this or other reasons, suffer a loss to the extent of the default. The Portfolio invests in variable rate demand notes only when the Portfolio's investment adviser deems the investment to 8 involve minimal credit risk. The Portfolio's investment adviser also monitors the continuing creditworthiness of issuers of such notes to determine whether the Portfolio should continue to hold such notes. In addition, the Portfolio may, when deemed appropriate by its investment adviser in light of the Portfolio's investment objective, invest without limitation in high quality, short-term Municipal Obligations issued by state and local governmental issuers, the interest on which may be taxable or tax-exempt for federal income tax purposes, provided that such obligations carry yields that are competitive with those of other types of money market instruments of comparable quality. Opinions relating to the validity of Municipal Obligations and to the exemption of interest thereon from federal income tax are rendered by bond counsel to the respective issuers at the time of issuance and relied upon by the Portfolio in purchasing such securities. Neither the Company nor its investment adviser will review the proceedings relating to the issuance of Municipal Obligations or the basis for such opinions. REPURCHASE AGREEMENTS. The Portfolio 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 securities held subject to a repurchase agreement may have stated maturities exceeding 397 days, provided the repurchase agreement itself matures in less than 13 months. Default by or bankruptcy of the seller would, however, expose the Portfolio to possible loss because of adverse market action or delays in connection with the disposition of the underlying obligations. The repurchase price under the repurchase agreements described above generally equals the price paid by the Portfolio plus interest negotiated on the basis of current short-term rates (which may be more or less than the rate on the securities underlying the repurchase agreement). The financial institutions with which the Portfolio may enter into repurchase agreements will be banks and non-bank dealers of U.S. government securities that are listed on the Federal Reserve Bank of New York's list of reporting dealers, if such banks and non-bank dealers are deemed creditworthy by the Adviser. The Adviser will continue to monitor creditworthiness of the seller under a repurchase agreement, and will require the seller to maintain during the term of the agreement the value of the securities subject to the agreement to equal at least the repurchase price (including accrued interest). In addition, the Portfolio's adviser will require that the value of this collateral, after transaction costs (including loss of interest) reasonably expected to be incurred on a default, be equal to or greater than the repurchase price including either: (i) accrued premium provided in the repurchase agreement; or (ii) the daily amortization of the difference between the purchase price and the repurchase price specified in the repurchase agreement. The Portfolio's adviser will mark to market daily the value of the securities. Securities subject to repurchase agreements will be held by the Company's custodian in the Federal Reserve/Treasury book-entry system or by another authorized securities depository. Repurchase agreements are considered to be loans by the Portfolio under the 1940 Act. REVERSE REPURCHASE AGREEMENTS. The Portfolio may enter into reverse repurchase agreements with respect to portfolio securities. A reverse repurchase agreement involves a sale 9 by the Portfolio of securities that it holds concurrently with an agreement by the Portfolio to repurchase them at an agreed upon time, price and rate of interest. Reverse repurchase agreements involve the risk that the market value of the securities sold by the Portfolio may decline below the price at which the Portfolio is obligated to repurchase them and the return on the cash exchanged for the securities. Reverse repurchase agreements are considered to be borrowings under the 1940 Act and may be entered into only for temporary or emergency purposes. While reverse repurchase transactions are outstanding, the Portfolio will maintain in a segregated account with the Company's custodian or a qualified sub-custodian, cash or other liquid securities of an amount at least equal to the market value of the securities, plus accrued interest, subject to the agreement. SECTION 4(2) PAPER. "Section 4(2) paper" is commercial paper which is issued in reliance on the "private placement" exemption from registration which is afforded by Section 4(2) of the Securities Act of 1933, as amended (the "Securities Act"). Section 4(2) paper is restricted as to disposition under the federal securities laws and is generally sold to institutional investors such as the Company which agree that they are purchasing the paper for investment and not with a view to public distribution. Any resale by the purchaser must be in an exempt transaction. Section 4(2) paper normally is resold to other institutional investors through or with the assistance of investment dealers who make a market in the Section 4(2) paper, thereby providing liquidity. See "Illiquid Securities" below. STAND-BY COMMITMENTS. The Portfolio may enter into stand-by commitments with respect to obligations issued by or on behalf of states, territories, and possessions of the United States, the District of Columbia, and their political subdivisions, agencies, instrumentalities and authorities (collectively, "Municipal Obligations") held in its portfolio. Under a stand-by commitment, a dealer would agree to purchase at the Portfolio's option a specified Municipal Obligation at its amortized cost value to the Portfolio plus accrued interest, if any. Stand-by commitments may be exercisable by the Portfolio at any time before the maturity of the underlying Municipal Obligations and may be sold, transferred or assigned only with the instruments involved. The Portfolio expects that stand-by commitments will generally be available without the payment of any direct or indirect consideration. However, if necessary or advisable, the Portfolio may pay for a stand-by commitment either in cash or by paying a higher price for portfolio securities which are acquired subject to the commitment (thus reducing the yield to maturity otherwise available for the same securities). The total amount paid in either manner for outstanding stand-by commitments held by the Portfolio will not exceed 1/2 of 1% of the value of the Portfolio's total assets calculated immediately after each stand-by commitment is acquired. The Portfolio intends to enter into stand-by commitments only with dealers, banks and broker-dealers which, in the investment adviser's opinion, present minimal credit risks. The Portfolio's reliance upon the credit of these dealers, banks and broker-dealers will be secured by the value of the underlying Municipal Obligations that are subject to the commitment. The acquisition of a stand-by commitment may increase the cost, and thereby reduce the yield, of the Municipal Obligation to which such commitment relates. 10 The Portfolio will acquire stand-by commitments solely to facilitate portfolio liquidity and does not intend to exercise its rights thereunder for trading purposes. The acquisition of a stand-by commitment will not affect the valuation or assumed maturity of the underlying Municipal Obligation which will continue to be valued in accordance with the amortized cost method. The actual stand-by commitment will be valued at zero in determining ("NAV"). Accordingly, where the Portfolio pays directly or indirectly for a stand-by commitment, its cost will be reflected as an unrealized loss for the period during which the commitment is held by the Portfolio and will be reflected in realized gain or loss when the commitment is exercised or expires. U.S. GOVERNMENT OBLIGATIONS. The Portfolio may purchase U.S. government agency and instrumentality obligations that are debt securities issued by U.S. government-sponsored enterprises and federal agencies. Some obligations of agencies and instrumentalities of the U.S. government are supported by the full faith and credit of the U.S. government or by U.S. Treasury guarantees, such as securities of the Government National Mortgage Association ("GNMA") and the Federal Housing Authority; others, by the ability of the issuer to borrow, provided approval is granted, from the U.S. Treasury, such as securities of Freddie Mac and others, only by the credit of the agency or instrumentality issuing the obligation, such as securities of Fannie Mae and the Federal Home Loan Banks. Such guarantees of U.S. government securities held by a Fund do not, however, guarantee the market value of the shares of the Fund. There is no guarantee that the U.S. government will continue to provide support to its agencies or instrumentalities in the future. U.S. government obligations that are not backed by the full faith and credit of the U.S. government are subject to greater risks than those that are backed by the full faith and credit of the U.S. government. All U.S. government obligations are subject to interest rate risk. The Portfolio's net assets may be invested in obligations issued or guaranteed by the U.S. Treasury or the agencies or instrumentalities of the U.S. government. The maturities of U.S. government securities usually range from three months to thirty years. Examples of types of U.S. government obligations include U.S. Treasury Bills, Treasury Notes and Treasury Bonds and the obligations of Federal Home Loan Banks, Federal Farm Credit Banks, Federal Land Banks, the Federal Housing Administration, Farmers Home Administration, Export-Import Bank of the United States, Small Business Administration, Federal National Mortgage Association, Government National Mortgage Association, General Services Administration, Central Bank for Cooperatives, Federal Home Loan Mortgage Corporation, Federal Intermediate Credit Banks, the Maritime Administration, the Asian-American Development Bank and the Inter-American Development Bank. U.S. government securities may include inflation-indexed fixed income securities, such as U.S. Treasury Inflation Protected Securities (TIPS). The interest rate of TIPS, which is set at auction, remains fixed throughout the term of the security and the principal amount of the security is adjusted for inflation. The inflation-adjusted principal is not paid until maturity. VARIABLE RATE DEMAND INSTRUMENTS. The Portfolio may purchase variable rate demand notes, which are unsecured instruments that permit the indebtedness thereunder to vary and provide for periodic adjustment in the interest rate. Although the notes are not normally traded 11 and there may be no active secondary market in the notes, the Portfolio will be able to demand payment of the principal of a note. The notes are not typically rated by credit rating agencies, but issuers of variable rate demand notes must satisfy the same criteria as issuers of commercial paper. If an issuer of a variable rate demand note defaulted on its payment obligation, the Portfolio might be unable to dispose of the note because of the absence of an active secondary market. For this or other reasons, the Portfolio might suffer a loss to the extent of the default. The Portfolio invests in variable rate demand notes only when the Portfolio's investment adviser deems the investment to involve minimal credit risk. The Portfolio's investment adviser also monitors the continuing creditworthiness of issuers of such notes to determine whether the Portfolio should continue to hold such notes. Variable rate demand instruments held by the Portfolio may have maturities of more than 397 calendar days, provided: (i) the Portfolio is entitled to the payment of principal at any time, or during specified intervals not exceeding 397 calendar days, upon giving the prescribed notice (which may not exceed 30 days); and (ii) the rate of interest on such instruments is adjusted at periodic intervals which may extend up to 397 calendar days. In determining the average weighted maturity of the Portfolio and whether a variable rate demand instrument has a remaining maturity of 397 calendar days or less, each long-term instrument will be deemed by the Portfolio to have a maturity equal to the longer of the period remaining until its next interest rate adjustment or the period remaining until the principal amount can be recovered through demand. The absence of an active secondary market with respect to particular variable and floating rate instruments could make it difficult for the Portfolio to dispose of variable or floating rate notes if the issuer defaulted on its payment obligations or during periods that the Portfolio is not entitled to exercise its demand right, and the Portfolio could, for these or other reasons, suffer a loss with respect to such instruments. WHEN-ISSUED OR DELAYED DELIVERY SECURITIES. The Portfolio may purchase "when-issued" and delayed delivery securities purchased for delivery beyond the normal settlement date at a stated price and yield. The Portfolio will generally not pay for such securities or start earning interest on them until they are received. Securities purchased on a when-issued basis are recorded as an asset at the time the commitment is entered into and are subject to changes in value prior to delivery based upon changes in the general level of interest rates. While the Portfolio has such commitments outstanding, the Portfolio will maintain in a segregated account with the Company's custodian or a qualified sub-custodian, cash or liquid securities of an amount at least equal to the purchase price of the securities to be purchased. Normally, the custodian for the Portfolio will set aside portfolio securities to satisfy a purchase commitment and, in such a case, the Portfolio may be required subsequently to place additional assets in the separate account in order to ensure that the value of the account remains equal to the amount of the Portfolio's commitment. It may be expected that the Portfolio's net assets will fluctuate to a greater degree when it sets aside portfolio securities to cover such purchase commitments than when it sets aside cash. Because the Portfolio's liquidity and ability to manage its portfolio might be affected when it sets aside cash or portfolio securities to cover such purchase commitments, it is expected that commitments to purchase "when-issued" securities will not exceed 25% of the value of the Portfolio's total assets absent unusual market conditions. When the Portfolio engages in when-issued transactions, it relies on the seller to 12 consummate the trade. Failure of the seller to do so may result in the Portfolio's incurring a loss or missing an opportunity to obtain a price considered to be advantageous. The Portfolio does not intend to purchase when-issued securities for speculative purposes but only in furtherance of its investment objective. INVESTMENT LIMITATIONS FUNDAMENTAL INVESTMENT LIMITATIONS AND POLICIES A fundamental limitation or policy of the Portfolio may not be changed with respect to the Portfolio without the affirmative vote of the holders of a majority of the Portfolio's outstanding shares (as defined in Section 2(a) (42) of the 1940 Act). As used in this SAI and in the Prospectus, "shareholder approval" and a "majority of the outstanding shares" of a Portfolio means, with respect to the approval of an investment advisory agreement, a distribution plan or a change in a fundamental investment limitation, the lesser of: (1) 67% of the shares of the particular Portfolio represented at a meeting at which the holders of more than 50% of the outstanding shares of such Portfolio are present in person or by proxy; or (2) more than 50% of the outstanding shares of such Portfolio. The Company's Board of Directors can change the investment objective of the Portfolio without Shareholder approval. Shareholders will be given notice before any such change is made. The Portfolio may not: 1. borrow money, except from banks for temporary purposes and for reverse repurchase agreements and then in amounts not in excess of 10% of the value of the Portfolio's total assets at the time of such borrowing, and only if after such borrowing there is asset coverage of at least 300% for all borrowings of the Portfolio; or mortgage, pledge, or hypothecate any of its assets except in connection with such borrowings and then in amounts not in excess of 10% of the value of the Portfolio's total assets at the time of such borrowing or purchase portfolio securities while borrowings are in excess of 5% of the Portfolio's net assets. (This borrowing provision is not for investment leverage, but solely to facilitate management of the Portfolio's securities by enabling the Portfolio to meet redemption requests where the liquidation of portfolio securities is deemed to be disadvantageous or inconvenient.); 2. purchase securities on margin, except for short-term credit necessary for clearance of portfolio transactions; 3. underwrite securities of other issuers, except to the extent that, in connection with the disposition of portfolio securities, the Portfolio may be deemed an underwriter under federal securities laws and except to the extent that the purchase of Municipal Obligations directly from the issuer thereof in accordance with the 13 Portfolio's investment objective, policies and limitations may be deemed to be an underwriting; 4. make short sales of securities or maintain a short position or write or sell puts, calls, straddles, spreads or combinations thereof; 5. purchase or sell real estate, provided that the Portfolio may invest in securities secured by real estate or interests therein or issued by companies which invest in real estate or interests therein; 6. purchase or sell commodities or commodity contracts; 7. invest in oil, gas or mineral exploration or development programs; 8. make loans except that the Portfolio may purchase or hold debt obligations in accordance with its investment objective, policies and limitations and may enter into repurchase agreements; 9. purchase any securities issued by any other investment company except in connection with the merger, consolidation, acquisition or reorganization of all the securities or assets of such an issuer; 10. make investments for the purpose of exercising control or management; 11. purchase securities of any one issuer, other than securities issued or guaranteed by the U.S. government or its agencies or instrumentalities, if immediately after and as a result of such purchase more than 5% of the Portfolio's total assets would be invested in the securities of such issuer, or more than 10% of the outstanding voting securities of such issuer would be owned by the Portfolio, except that up to 25% of the value of the Portfolio's assets may be invested without regard to this 5% limitation; 12. purchase any securities other than money market instruments, some of which may be subject to repurchase agreements, but the Portfolio may make interest-bearing savings deposits in amounts not in excess of 5% of the value of the Portfolio's assets and may make time deposits; 13.* purchase any securities which would cause, at the time of purchase, less than 25% of the value of the total assets of the Portfolio to be invested in the obligations of issuers in the banking industry, or in obligations, such as repurchase agreements, secured by such obligations (unless the Portfolio is in a temporary defensive position) or which would cause, at the time of purchase, more than 25% of the value of its total assets to be invested in the obligations of issuers in any other industry; and 14 14. invest more than 5% of its total assets (taken at the time of purchase) in securities of issuers (including their predecessors) with less than three years of continuous operations. 15. Issue any class of senior security or to sell any senior security of which it is the issuer, as defined in Section 18(f) of the Investment Company Act of 1940, except to the extent permitted by the 1940 Act. * WITH RESPECT TO THIS LIMITATION, THE PORTFOLIO WILL CONSIDER WHOLLY-OWNED FINANCE COMPANIES TO BE IN THE INDUSTRIES OF THEIR PARENTS IF THEIR ACTIVITIES ARE PRIMARILY RELATED TO FINANCING THE ACTIVITIES OF THE PARENTS, AND WILL DIVIDE UTILITY COMPANIES ACCORDING TO THEIR SERVICES. FOR EXAMPLE, GAS, GAS TRANSMISSION, ELECTRIC AND GAS, ELECTRIC AND TELEPHONE WILL EACH BE CONSIDERED A SEPARATE INDUSTRY. THE POLICY AND PRACTICES STATED IN THIS PARAGRAPH MAY BE CHANGED WITHOUT SHAREHOLDER APPROVAL, HOWEVER, ANY CHANGE WOULD BE SUBJECT TO ANY APPLICABLE REQUIREMENTS OF THE SEC AND WOULD BE DISCLOSED IN THE PROSPECTUS PRIOR TO BEING MADE. NON-FUNDAMENTAL INVESTMENT LIMITATIONS AND POLICIES A non-fundamental investment limitation or policy may be changed by the Board of Directors without shareholder approval. However, shareholders will be notified of any changes to any of the following limitations or policies. So long as it values its portfolio securities on the basis of the amortized cost method of evaluation pursuant to Rule 2a-7 under the 1940 Act, the Portfolio will, subject to certain exceptions, limit its purchases of: 1. The securities of any one issuer, other than issuers of U.S. government securities, to 5% of its total assets, except that the Portfolio may invest more than 5% of its total assets in First Tier Securities of one issuer for a period of up to three business days. "First Tier Securities" include eligible securities that: (i) if rated by more than one NRSRO (as defined in the Prospectus), are rated (at the time of purchase) by two or more NRSROs in the highest rating category for such securities; (ii) if rated by only one NRSRO, are rated by such NRSRO in its highest rating category for such securities; (iii) have no short-term rating and are comparable in priority and security to a class of short-term obligations of the issuer of such securities that have been rated in accordance with (i) or (ii) above; or (iv) are Unrated Securities that are determined to be of comparable quality to such securities, 2. Second Tier Securities (which are eligible securities other than First Tier Securities) to 5% of its total assets; and 3. Second Tier Securities of one issuer to the greater of 1% of its total assets or $1 million. 14 In addition, so long as it values its portfolio securities on the basis of the amortized cost method of valuation pursuant to Rule 2a-7 under the 1940 Act, the Portfolio will not purchase any Guarantees or Demand Features (as defined in Rule 2a-7) if after the acquisition of the Guarantees or Demand Features the Portfolio has more than 10% of its total assets invested in instruments issued by or subject to Guarantees or Demand Features from the same institution, except that the foregoing condition shall only be applicable with respect to 75% of the Portfolio's total assets. DISCLOSURE OF PORTFOLIO HOLDINGS The Company has adopted, on behalf of the Portfolio, a policy relating to the disclosure of the Portfolio's securities holdings. The policies relating to the disclosure of the Portfolio's securities holdings are designed to allow disclosure of portfolio holdings information where necessary to the Portfolio's operation without compromising the integrity or performance of the Portfolio. It is the policy of the Company that disclosure of the Portfolio's holdings to a select person or persons prior to the release of such holdings to the public ("selective disclosure") is prohibited, unless there are legitimate business purposes for selective disclosure. The Company discloses portfolio holdings information as required in regulatory filings and shareholder reports, discloses portfolio holdings information as required by federal and state securities laws and may disclose portfolio holdings information in response to requests by governmental authorities. As required by the federal securities laws, including the 1940 Act, the Company will disclose the Portfolio's holdings in applicable regulatory filings, including shareholder reports, reports on Form N-CSR and Form N-Q or such other filings, reports or disclosure documents as the applicable regulatory authorities may require. The Company may distribute or authorize the distribution of information about the portfolio holdings that is not publicly available to its third-party service providers of the Company, which include PFPC Trust Company, the custodian; PFPC Inc., the administrator, accounting agent and transfer agent; ________________, the Portfolio's independent registered public accounting firm; Drinker Biddle & Reath LLP, legal counsel; and GCom(2)Solutions and R.R. Donnelly, the financial printers. These service providers are required to keep such information confidential, and are prohibited from trading based on the information or otherwise using the information except as necessary in providing services to the Portfolio. Such holdings are released on conditions of confidentiality, which include appropriate trading prohibitions. "Conditions of confidentiality" include confidentiality terms included in written agreements, implied by the nature of the relationship (e.g. attorney-client relationship), or required by fiduciary or regulatory principles (e.g., custody services provided by financial institutions). Portfolio holdings may also be provided earlier to shareholders and their agents who receive redemptions in kind that reflect a pro rata allocation of all securities held in the portfolio. The Company may disclose portfolio holdings to certain independent reporting agencies. The disclosure of portfolio holdings in this context is conditioned on the recipient agreeing to treat such portfolio holdings as confidential (provided that reporting agencies may publish portfolio positions upon the consent of the Portfolio), and to not allow the portfolio holdings to 16 be used by it or its employees in connection with the purchase or sale of shares of the Portfolio. A designated officer of the Adviser must authorize the disclosure of the Portfolio's holdings to each reporting agency. Any violations of the policy set forth above as well as any corrective action undertaken to address such violations must be reported by the Adviser, director, officer or third party service provider to the Company's Chief Compliance Officer who will determine whether the violation should be reported immediately to the Board of Directors of the Company or at its next quarterly board meeting. MANAGEMENT OF THE COMPANY 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.
- ------------------------------------------------------------------------------------------------------------------------------------ NUMBER OF PORTFOLIOS IN FUND OTHER POSITION(S) TERM OF OFFICE COMPLEX DIRECTORSHIPS NAME, ADDRESS, AND HELD WITH AND LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY HELD BY DATE OF BIRTH FUND TIME SERVED(1) DURING PAST 5 YEARS DIRECTOR * DIRECTOR - ------------------------------------------------------------------------------------------------------------------------------------ DISINTERESTED DIRECTORS - ------------------------------------------------------------------------------------------------------------------------------------ Julian A. Brodsky Director 1988 to Since 1969, Director and Vice 17 Director, Comcast Comcast Corporation present Chairman, Comcast Corporation Corporation 1500 Market Street, (cable television and 35th Floor communications); Director, NDS Philadelphia, PA 19102 Group PLC (provider of systems DOB: 7/16/33 and applications for digital pay TV). - ------------------------------------------------------------------------------------------------------------------------------------ Nicholas A. Giordano Director Since 2006 Consultant, financial services 17 Kalmar Pooled 103 Bellevue Parkway organizations from 1997 to present Investment Trust; WT Wilmington, DE 19809 Mutual Fund; DOB: 03/7/43 Independence Blue Cross; IntriCon Corporation (industrial furnaces and ovens) - ------------------------------------------------------------------------------------------------------------------------------------
17
- ------------------------------------------------------------------------------------------------------------------------------------ NUMBER OF PORTFOLIOS IN FUND OTHER POSITION(S) TERM OF OFFICE COMPLEX DIRECTORSHIPS NAME, ADDRESS, AND HELD WITH AND LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY HELD BY DATE OF BIRTH FUND TIME SERVED(1) DURING PAST 5 YEARS DIRECTOR * DIRECTOR - ------------------------------------------------------------------------------------------------------------------------------------ Francis J. McKay Director 1988 to Since 2000, Vice President, Fox 17 None Fox Chase Cancer Center present Chase Cancer Center (biomedical 333 Cottman Avenue research and medical care). Philadelphia, PA 19111 DOB: 12/6/35 - ------------------------------------------------------------------------------------------------------------------------------------ Arnold M. Reichman Director 1991 to Director, Gabelli Group Capital 17 None 106 Pierrepont Street present Partners, L.P. (an investment Brooklyn, NY 11201 Chairman 2005 to partnership) from 2000 to 2006. DOB: 5/21/48 Present - ------------------------------------------------------------------------------------------------------------------------------------ Mark A. Sargent Director Since 2006 Dean and Professor of Law, 17 Director, WT Villanova University School Villanova University School of Mutual Fund of Law Law since July 1997. 299 North Spring Mill Road Villanova, PA 19085 DOB: 4/28/51 - ------------------------------------------------------------------------------------------------------------------------------------ Marvin E. Sternberg Director 1991 to Since 1974, Chairman, Director 17 Director, Moyco Moyco Technologies, Inc. present and President, Moyco Technologies, Inc. 200 Commerce Drive Technologies, Inc. (manufacturer Montgomeryville, PA 18936 of precision coated and DOB: 3/24/34 industrial abrasives). Since 1999, Director, Pennsylvania Business Bank. - ------------------------------------------------------------------------------------------------------------------------------------ Robert A. Straniere Director Since 2006 Member, New York State Assembly 17 Director, 300 East 57th Street (1981-2004); Founding Partner, Reich and Tang New York, NY 10022 Straniere Law Firm (1980 to Group; DOB: 3/28/41 date); Partner, Gotham Director, The Strategies (consulting firm) Sparx Japan (2005 to date); Partner, The Fund Gotham Global Group (consulting firm) (2005 to date); President, The New York City Hot Dog Company (2005 to date); Director; Weiss, Peck & Greer Fund Group (1992 to 2005); and Partner, Kantor-Davidoff (law firm) (2006 to date). - ------------------------------------------------------------------------------------------------------------------------------------
18
- ------------------------------------------------------------------------------------------------------------------------------------ INTERESTED DIRECTORS(2) - ------------------------------------------------------------------------------------------------------------------------------------ Robert Sablowsky Director 1991 to Since July 2002, Senior Vice 17 Director, Oppenheimer & Company, Inc. present President and prior thereto, Kensington 200 Park Avenue Executive Vice President of Funds New York, NY 10166 Oppenheimer & Co., Inc., DOB: 4/16/38 formerly Fahnestock & Co., Inc. (a registered broker-dealer). Since November 2004, Director of Kensington Funds. - ------------------------------------------------------------------------------------------------------------------------------------ J. Richard Carnall Director 2002 to Director of PFPC Inc. from 17 Director, 103 Bellevue Parkway present January 1987 to April 2002, Cornerstone Wilmington, DE 19809 Chairman and Chief Executive Bank 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; Governor of the Investment Company Institute (investment company industry trade organization) from July 1996 to January 2002; Director of Haydon Bolts, Inc. (bolt manufacturer) and Parkway Real Estate Company (subsidiary of Haydon Bolts, Inc.) since 1984; and Director of Cornerstone Bank since March 2004. - ------------------------------------------------------------------------------------------------------------------------------------
19
- ------------------------------------------------------------------------------------------------------------------------------------ OFFICERS - ------------------------------------------------------------------------------------------------------------------------------------ Edward J. Roach President 1991 to Certified Public Accountant; Vice N/A N/A 103 Bellevue Parkway and present and Chairman of the Board, Fox Chase Wilmington, DE 19809 Treasurer 1988 to Cancer Center; Trustee Emeritus, DOB: 6/29/24 present Pennsylvania School for the Deaf; Trustee Emeritus, Immaculata University; Managing General Partner, President since 2002, Treasurer since 1981 and Chief Compliance Officer since September 2004 of Chestnut Street Exchange Fund. - ------------------------------------------------------------------------------------------------------------------------------------ Tina M. Payne Secretary 2004 to Since 2003, Vice President and N/A N/A 301 Bellevue Parkway present Associate Counsel, PFPC Inc. 2nd Floor (financial services company); Wilmington, DE 19809 Associate, Stradley, Ronon, DOB: 5/19/74 Stevens & Young, LLC (law firm) from 2001 to 2003. - ------------------------------------------------------------------------------------------------------------------------------------ Salvatore Faia, Esquire, CPA Chief 2004 to President, Vigilant Compliance N/A N/A Vigilant Compliance Services Compliance present Services since 2004; Senior 186 Dundee Drive, Suite 700 Officer Legal Counsel, PFPC Inc. from Williamstown, NJ 08094 2002 to 2004; Chief Legal DOB: 12/25/62 Counsel, Corviant Corporation (Investment Adviser, Broker-Dealer and Service Provider to Investment Advisers and Separate Account Providers) from 2001 to 2002. - ------------------------------------------------------------------------------------------------------------------------------------
* Each Director oversees seventeen portfolios of the Company that are currently offered for sale. 1. Subject to the Company's Retirement Policy, each Director, except Messrs. Giordano, Sargent and Straniere, may continue to serve as a Director until the last day of year 2011 or until his successor is elected and qualified or his death, resignation, or removal. Subject to the Company's Retirement Policy, Messrs. Giordano, Sargent and Straniere serve until the last day of the calendar year in which the applicable Director attains age 75 or until his successor is elected and qualified or his death, resignation or removal. The Board reserves the right to waive the requirements of the Policy with respect to an individual Director. 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 qualified. 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 and Merrill Lynch & Co., Inc. The investment adviser to the Company's Senbanc Fund, Hilliard Lyons Research Advisors, a division of J.J.B. Hilliard, W.L. Lyons, Inc. 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. 20 THE BOARD AND STANDING COMMITTEES BOARD. The Board of Directors is comprised of nine individuals, two of whom are considered "interested" Directors as defined by the 1940 Act. The remaining Directors are referred to as "Disinterested" or "Independent" Directors. The Board meets at least quarterly to review the investment performance of each portfolio in the mutual fund family and other operational matters, including policies and procedures with respect to compliance with regulatory and other requirements. Currently, the Board of Directors has an Audit Committee, an Executive Committee and a Nominating Committee. The responsibilities of each committee and its members are described below. AUDIT COMMITTEE. The Board has an Audit Committee comprised only of Independent Directors. The current members of the Audit Committee are Messrs. McKay, Sternberg and Brodsky. The Audit Committee, among other things, reviews results of the annual audit and approves the firm(s) to serve as independent auditors. The Audit Committee convened six times during the fiscal year ended August 31, 2006. EXECUTIVE COMMITTEE. The Board has an Executive Committee comprised only of Independent Directors. The current members of the Executive Committee are Messrs. Reichman and McKay. The Executive Committee may generally carry on and manage the business of the Company when the Board of Directors is not in session. The Executive Committee did not convene during the fiscal year ended August 31, 2006. NOMINATING COMMITTEE. The Board has a Nominating Committee comprised only of Independent Directors. The current members of the Nominating Committee are Messrs. McKay and Brodsky. The Nominating Committee recommends to the Board of Directors all persons to be nominated as Directors of the Company. The Nominating Committee will consider nominees recommended by shareholders. Recommendations should be submitted to the Committee in care of the Company's Secretary. The Nominating Committee convened once during the fiscal year ended August 31, 2006. DIRECTOR OWNERSHIP OF SHARES OF THE COMPANY The following table sets forth the dollar range of equity securities beneficially owned by each Director in the Portfolio and in all of the portfolios (which for each Director comprise all registered investment companies within the Company's family of investment companies overseen by him), as of December 31, 2005. Messrs. Giordano, Sargent and Straniere were not Directors of the Company as of December 31, 2005. 21
- ------------------------------------------------------------------------------------------------------------------------------------ AGGREGATE DOLLAR RANGE OF EQUITY SECURITIES IN ALL REGISTERED INVESTMENT COMPANIES OVERSEEN BY DOLLAR RANGE OF DIRECTOR WITHIN THE FAMILY OF NAME OF DIRECTOR EQUITY SECURITIES IN THE FUND INVESTMENT COMPANIES - ------------------------------------------------------------------------------------------------------------------------------------ DISINTERESTED DIRECTORS - ------------------------------------------------------------------------------------------------------------------------------------ Julian A. Brodsky None None - ------------------------------------------------------------------------------------------------------------------------------------ Francis J. McKay None Over $100,000 - ------------------------------------------------------------------------------------------------------------------------------------ Arnold M. Reichman None Over $100,000 - ------------------------------------------------------------------------------------------------------------------------------------ Marvin E. Sternberg None None - ------------------------------------------------------------------------------------------------------------------------------------ INTERESTED DIRECTORS - ------------------------------------------------------------------------------------------------------------------------------------ J. Richard Carnall None None - ------------------------------------------------------------------------------------------------------------------------------------ Robert Sablowsky None Over $100,000 - ------------------------------------------------------------------------------------------------------------------------------------
DIRECTORS' AND OFFICERS' COMPENSATION Since February 15, 2006, the Company pays each Director at the rate of $17,500 annually and $3,500 per meeting of the Board of Directors or any committee thereof that was not held in conjunction with a Board meeting. In addition, the Chairman of the Board receives an additional fee of $12,000 per year for his services in this capacity, and the Chairman of the Audit Committee of the Board of the Company receives an additional fee of $4,000 per year for his services. Prior to February 15, 2006, the Company paid each Director at the rate of $16,500 annually and $1,375 per meeting of the Board of Directors or any committee thereof that was not held in conjunction with a Board meeting. In addition, the Chairman of the Board received an additional fee of $6,600 per year for his services in this capacity. Directors are reimbursed for any reasonable out-of-pocket expenses incurred in attending meetings of the Board of Directors or any committee thereof. The Company also compensates its President and Treasurer and Chief Compliance Officer for their respective services to the Company. For the fiscal year ended August 31, 2006, each of the following members of the Board of Directors and the President and Treasurer and Chief Compliance Officer received compensation from the Company in the following amounts: 22
- ------------------------------------------------------------------------------------------------------------------------------------ TOTAL PENSION OR COMPENSATION RETIREMENT ESTIMATED FROM FUND AGGREGATE BENEFITS ANNUAL AND FUND COMPENSATION ACCRUED AS BENEFITS COMPLEX PAID FROM PART OF FUND UPON TO DIRECTORS OR NAME OF DIRECTOR/OFFICER REGISTRANT EXPENSES RETIREMENT OFFICERS - ------------------------------------------------------------------------------------------------------------------------------------ INDEPENDENT DIRECTORS: Julian A. Brodsky, Director $______ N/A N/A $______ Nicholas A. Giordano, Director* $______ N/A N/A $______ Francis J. McKay, Director $______ N/A N/A $______ Arnold M. Reichman, Director and Chairman $______ N/A N/A $______ Mark A. Sargent, Director* $______ N/A N/A $______ Marvin E. Sternberg, Director $______ N/A N/A $______ Robert A. Straniere, Director* $______ N/A N/A $______ - ------------------------------------------------------------------------------------------------------------------------------------ INTERESTED DIRECTORS: J. Richard Carnall, Director and former Chairman $______ N/A N/A $______ Robert Sablowsky, Director $______ N/A N/A $______ - ------------------------------------------------------------------------------------------------------------------------------------ OFFICERS: Salvatore Faia, Esquire, CPA Chief Compliance Officer $______ N/A N/A $______ Edward J. Roach President and Treasurer $______ N/A N/A $______ - ------------------------------------------------------------------------------------------------------------------------------------ * Mr. Straniere was elected to the Board of Directors at a meeting held on May 25, 2006 and, therefore, the compensation reflected is for the period May 25, 2006 through August 31, 2006. Messrs. Giordano and Sargent were elected to the Board of Directors at a meeting held on September 6, 2006 and, therefore, received no compensation during the fiscal year ended August 31, 2006.
23 As of December 31, 2005, the Independent Directors and their respective immediate family members (spouse or dependent children) did not own beneficially or of record any securities of the Company's investment advisers or distributor, or of any person directly or indirectly controlling, controlled by, or under common control with the investment advisers or distributor. On October 24, 1990, the Company adopted, as a participating employer, the Fund Office Retirement Profit-Sharing Plan and Trust Agreement, a retirement plan for employees (currently Edward J. Roach), pursuant to which the Company will contribute on a quarterly basis amounts equal to 10% of the quarterly compensation of each eligible employee. By virtue of the services performed by the Company's investment advisers, custodians, administrators and distributor, the Company itself requires only one part-time employee. No officer, director or employee of the Adviser or the distributor currently receives any compensation from the Company. CERTAIN INTERESTS OF INDEPENDENT DIRECTOR Mr. Brodsky serves as a member of the Board of Directors of Comcast Corporation ("Comcast"). Comcast has a $5 billion revolving credit facility with a lending syndicate of 27 banks, one of which is Merrill Lynch Bank USA ("ML Bank"), an affiliate of Merrill Lynch & Co., Inc. ("Merrill Lynch"), which owns a controlling interest in BlackRock, Inc., the parent company of BIMC. ML Bank's obligation as part of the syndicate is limited to $100 million, or approximately 2.0% of the total amount of the credit facility. The credit facility is used for working capital, capital expenditures, commercial paper backup and other lawful corporate purposes. The highest amount outstanding on the ML Bank pro rata share of the credit facility during the period January 1, 2004 through December 31, 2005 (including any predecessor credit facility in effect during such period), based on month-end balances, was $21.8 million. The balance outstanding on the ML Bank pro rata share of the credit facility as of December 1, 2006 was $________. The interest rate on amounts drawn under the credit facility is based upon Comcast's credit ratings. As of December 1, 2006, the interest rates are (i) for amounts undrawn, London Interbank Offered Rate ("LIBOR") plus 8 basis points; (ii) for the first draw up to 50% drawn, LIBOR plus 35 basis points; and (iii) for amounts drawn greater than 50% drawn, LIBOR plus 45 basis points. During the period January 1, 2004 through December 31, 2005, Merrill Lynch participated as an underwriter in 1 (one) Comcast debt offering. Merrill Lynch did not serve as a joint book-running manager in that debt offering. Comcast has advised the Company that on average its institutional debt offerings include 23 firms in the underwriting syndicate and its retail debt offerings include 53 firms in the underwriting syndicate. For the underwriting services provided during this period, Merrill Lynch received fees from Comcast of approximately $300,000. Merrill Lynch also serves as the administrator to Comcast's stock option plan and restricted stock plan and received an annual fee of no more than $800,000 for each of the two years in the period January 1, 2004 through December 31, 2005. CODE OF ETHICS The Company and PFPC Distributors, Inc. ("PFPC Distributors") have each adopted a code of ethics under Rule 17j-1 of the 1940 Act that permits personnel subject to the codes to invest in securities, including securities that may be purchased or held by the Company. PROXY VOTING The Board of Directors has delegated the responsibility of voting proxies with respect to the portfolio securities purchased and/or held by the Portfolio to the Adviser, subject to the Board's continuing oversight. In exercising its voting obligations, the Adviser is guided by its general fiduciary duty to act prudently and in the interest of the Portfolio. The Adviser will consider factors affecting the value of the Portfolio's investments and the rights of shareholders in its determination on voting portfolio securities. The Adviser has adopted proxy voting procedures with respect to voting proxies relating to portfolio securities held by the Portfolio. The Adviser employs a third party service provider to assist in the voting of proxies. These procedures have been provided to the service provider, who analyzes the proxies and makes recommendations, based on the Adviser's policy, as to how to vote such proxies. A copy of the Adviser's Proxy Voting Policy is included with this SAI. Please see Appendix B to this SAI for further information. Information regarding how the Portfolio voted proxies relating to underlying portfolio securities for the most recent 12-month period ended June 30 is available, without charge, upon request, by calling 1-800-888-9723 and by visiting the SEC website at http://www.sec.gov. 24 CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES As of October 18, 2006, to the Company's knowledge, the following named persons at the addresses shown below were owners of record of approximately 5% or more of the total outstanding shares of the classes of the Portfolio indicated below. See "Additional Information Concerning Company Shares" below. The Company does not know whether such persons also beneficially own such shares. Any shareholder that owns 25% or more of the outstanding shares of a portfolio or class may be presumed to "control" (as that term is defined in the 1940 Act) the portfolio or class. Shareholders controlling a portfolio or class could have the ability to vote a majority of the shares of the portfolio or class on any matter requiring approval of the shareholders of the portfolio or class.
- ------------------------------------------------------------------------------------------------------------------------------------ NUMBER AND PERCENTAGE OF SHARES OWNED AS OF OCTOBER 18, 2006 *(PERCENTAGE OF SHARES OWNED ROUNDED TO THE NEAREST WHOLE NAME OF FUND SHAREHOLDER NAME AND ADDRESS PERCENTAGE) - ------------------------------------------------------------------------------------------------------------------------------------ Bedford Money Market Portfolio Sharebuilder Securities Corporation 168,465,879.68 98.97% 1445-120th Avenue NE Bellevue, WA 98005 - ------------------------------------------------------------------------------------------------------------------------------------
As of October 18, 2006 Directors and officers as a group owned less than 1% of the shares of the Portfolio's Bedford class. INVESTMENT ADVISORY AND OTHER SERVICES ADVISORY AND SUB-ADVISORY AGREEMENTS On September 29, 2006, Merrill Lynch & Co., Inc. ("Merrill Lynch") contributed its asset management business, Merrill Lynch Investment Managers, to BlackRock, Inc. ("BlackRock"), the parent company of BIMC (the "Transaction"). As a result of the Transaction, Merrill Lynch has a 49.80% economic interest and 45% voting interest in BlackRock and The PNC Financial Services Group, Inc., which held a majority interest in BlackRock prior to the Transaction, has approximately a 34% economic and voting interest in BlackRock. Under the Investment Company Act of 1940, the Transaction may be considered an assignment of the Fund's prior Investment Advisory and Administration Agreement with BIMC ("Prior Advisory Agreement"), resulting in the Prior Advisory Agreement's automatic termination. On September 29, 2006, the Company entered into an Interim Investment Advisory and Administration Agreement with BIMC with respect to the Fund (the "Interim Advisory Agreement"). The Interim Advisory Agreement will remain in effect for up to 150 days while the Fund seeks shareholder approval of a new Investment Advisory and Administration Agreement with BIMC (the "New Advisory Agreement" and together with the Prior Advisory Agreement and Interim Advisory Agreement, 25 the "Advisory Agreements"). As required by the 1940 Act, BIMC's fees under the Interim Advisory Agreement will be placed in an escrow account with the Fund's custodian. If the Fund's shareholders approve the New Advisory Agreement within 150 days of the date of the Interim Advisory Agreement, such approval will be viewed as implicit approval of the Interim Advisory Agreement by shareholders and BIMC will receive any fees paid in to the escrow account, including interest earned. If shareholders of the Fund do not approve the New Advisory Agreement within 150 days of the date of the Interim Advisory Agreement, then BIMC will be paid, out of the escrow account, the lesser of: (i) any costs incurred in performing the Interim Advisory Agreement, plus interest earned on the amount while in escrow; or (ii) the total amount in the escrow account, plus interest if earned. The Interim Advisory Agreement and the New Advisory Agreement were approved by the Board of Directors of the Company, including a majority of those Directors who are not "interested persons" of the Company or BIMC, at a meeting held on May 25, 2006. A Special Meeting of Shareholders in connection with the approval of the New Advisory Agreement was held on October 20, 2006. However, a quorum was not present at such meeting, and it was adjourned until November 28, 2006. As a result of the automatic termination of the Fund's Advisory and Administration Agreement with BIMC, the Delegation Agreement between the Company, BIMC and PFPC also terminated. As of September 29, 2006, the parties entered into an Interim Delegation Agreement. The Interim Delegation Agreement provides that (a) any fees payable to PFPC pursuant to the terms of the Agreement will be paid to PFPC when BIMC is paid its fees under the Interim Advisory Agreement, (b) if shareholders of the Fund do not approve the New Advisory Agreement within 150 days of the Interim Delegation Agreement, PFPC shall receive from PFPC the lesser of (i) all costs incurred by PFPC in performing the Interim Delegation Agreement plus interest earned on such amount, or (ii) the total amount of the fees payable to PFPC pursuant to the Interim Delegation Agreement plus interest earned on such amount, and (c) the Interim Delegation Agreement will automatically terminate upon termination of the Interim Advisory Agreement. If the Interim Advisory Agreement terminates as a result of shareholder approval of the New Advisory Agreement, the Company, BIMC and PFPC will enter into a new Delegation Agreement. The Interim Delegation Agreement and the new Delegation Agreement were approved by the Company's Board of Directors, including a majority of those Directors who are not interested persons of the Company or BIMC, at a special meeting held on September 25, 2006. The Advisory Agreements provide for a maximum fee paid to BIMC, computed daily and payable monthly, at the annual rate of 0.45% of the first $250 million of the Portfolio's average daily net assets, 0.40% of the next $250 million of the Portfolio's average daily net assets and 0.35% of the Portfolio's average daily net assets in excess of $500 million. For the fiscal years ended August 31, the Company on behalf of the Portfolio paid advisory fees to BIMC (excluding fees for administrative services obligated under the Prior Advisory Agreement) as follows: 26 FEES PAID (AFTER WAIVERS AND YEAR REIMBURSEMENTS) WAIVERS REIMBURSEMENTS 2006 $_____ $ ______ $______ 2005 $208,966 $72,915 $56,669 2004 $218,098 $911,521 $78,531 The Portfolio bears all of its own expenses not specifically assumed by BIMC. General expenses of the Company not readily identifiable as belonging to a portfolio of the Company are allocated among all investment portfolios by or under the direction of the Company's Board of Directors in such manner as it deems to be fair and equitable. Expenses borne by a portfolio include, but are not limited to the expenses listed in the prospectus and the following (or a portfolio's share of the following): (a) the cost (including brokerage commissions) of securities purchased or sold by a portfolio and any losses incurred in connection therewith; (b) fees payable to and expenses incurred on behalf of a portfolio by BIMC; (c) any costs, expenses or losses arising out of a liability of or claim for damages or other relief asserted against the Company or a portfolio for violation of any law; (d) any extraordinary expenses; (e) fees, voluntary assessments and other expenses incurred in connection with membership in investment company organizations; (f) the cost of investment company literature and other publications provided by the Company to its directors and officers; (g) organizational costs; (h) fees paid to the investment adviser and PFPC Inc. ("PFPC"); (i) fees and expenses of officers and Directors who are not affiliated with the Portfolio's investment adviser or distributor; (j) taxes; (k) interest; (l) legal fees; (m) custodian fees; (n) auditing fees; (o) brokerage fees and commissions; (p) certain of the fees and expenses of registering and qualifying the portfolio and its shares for distribution under federal and state securities laws; (q) expenses of preparing prospectuses and statements of additional information and distributing annually to existing shareholders that are not attributable to a particular class of shares of the Company; (r) the expense of reports to shareholders, shareholders' meetings and proxy solicitations that are not attributable to a particular class of shares of the Company; (s) fidelity bond and directors' and officers' liability insurance premiums; (t) the expense of using independent pricing services; and (u) other expenses which are not expressly assumed by the portfolio's investment adviser under its advisory agreement with the portfolio. The Bedford Class of the Company pays its own distribution fees, and may pay a different share than other classes of the Company (excluding advisory and custodial fees) if those expenses are actually incurred in a different amount by the Bedford Class or if it receives different services. Under the Advisory Agreements, BIMC will not be liable for any error of judgment or mistake of law or for any loss suffered by the Company or the Portfolio in connection with the performance of the Advisory Agreements, except a loss resulting from a breach of fiduciary duty with respect to the receipt of compensation for services or a loss resulting from willful misfeasance, bad faith or gross negligence on the part of BIMC in the performance of its duties or from reckless disregard of its duties and obligations thereunder. The New Advisory Agreement provides that: (i) to the extent permitted by applicable law, BIMC may enter into contracts with one or more sub-advisors, including without limitation, affiliates of BIMC, to perform investment sub-advisory services with respect to the Portfolio, 27 subject to approval by the Company's Board of Directors but not the approval by a vote of the outstanding voting securities of the Portfolio; (ii) to the extent permitted by applicable law, BIMC may reallocate all or a portion of its investment advisory responsibilities under the New Advisory Agreement to any of its affiliates; (iii) BIMC is required to supervise and oversee the activities of each sub-advisor under its sub-advisory contract; and (iv) to the extent permitted by applicable law and subject to approval by the Company's Board of Directors, BIMC may terminate any or all sub-advisors in its sole discretion at any time. Unlike the New Advisory Agreement, the Prior Advisory Agreement permitted BIMC to engage PNC Bank, N.A. ("PNC Bank") to provide statistical and credit advice, as well as computer and research services as sub-adviser to the Portfolio. PNC Bank provided these services to the Portfolio pursuant to a Sub-Advisory Agreement dated August 16, 1988. PNC Bank's sub-advisory fees were paid by BIMC from the fees it received from the Portfolio pursuant to the Prior Advisory Agreement. As of April 29, 1998, BIMC assumed the obligations of PNC Bank under the Sub-Advisory Agreement and eliminated BIMC's obligation to pay for such sub-advisory services. If the New Advisory Agreement is approved by shareholders of the Portfolio, the Company's Board of Directors intends to terminate the Sub-Advisory Agreement. Disclosure relating to the material factors and the conclusions with respect to those factors that formed the basis for the Board of Directors' approval of the Portfolio's Advisory Agreements may be reviewed in the Portfolios' annual report to shareholders dated August 31, 2006, which may be obtained by calling (800) 888-9723 or visiting the SEC's website at www.sec.gov. ADMINISTRATION AGREEMENT Under the Advisory Agreements, BIMC is obligated to render administrative services to the Portfolio. BIMC, pursuant to the terms of the Interim Delegation Agreement with PFPC, dated September 29, 2006, has delegated to PFPC its administrative responsibilities with respect to the Portfolio. For the fiscal years ended August 31, PFPC was paid administration fees as follows: FEES PAID (AFTER WAIVERS AND YEAR REIMBURSEMENTS) WAIVERS REIMBURSEMENTS ---- ------------------ ------- -------------- 2006 $_____ $____ $____ 2005 $87,396 $0 $0 2004 $8,828 $0 $0 On June 1, 2003, the Company entered into a regulatory administration services agreement with PFPC. Under this agreement, PFPC has agreed to provide regulatory administration services to the Company. These services include the preparation and coordination of the Company's annual post-effective amendment filing and supplements to the Company's registration statement, the preparation and assembly of board meeting materials, and certain other services necessary to the Company's regulatory administration. PFPC receives an annual 28 fee based on the average daily net assets of the portfolios of the Company. For the fiscal year ended August 31, 2006, PFPC received $______, for fiscal year ended August 31, 2005, PFPC received $31,803, and for the fiscal year ended August 31, 2004, PFPC received $41,138 in fees from the Portfolio for these services. CUSTODIAN AND TRANSFER AGENCY AGREEMENTS PFPC Trust Company, 8800 Tinicum Boulevard, Suite 200, Philadelphia, PA 19153, is custodian of the Company's assets pursuant to a custodian agreement dated August 16, 1988, as amended (the "Custodian Agreement"). Under the Custodian Agreement, PFPC Trust Company: (a) maintains a separate account or accounts in the name of the Portfolio; (b) holds and transfers portfolio securities on account of the Portfolio; (c) accepts receipts and makes disbursements of money on behalf of the Portfolio; (d) collects and receives all income and other payments and distributions on account of the Portfolio's portfolio securities; and (e) makes periodic reports to the Company's Board of Directors concerning the Portfolio's operations. PFPC Trust Company is authorized to select one or more banks or trust companies to serve as sub-custodian on behalf of the Company, provided that PFPC Trust Company remains responsible for the performance of all its duties under the Custodian Agreement and holds the Company harmless from the acts and omissions of any sub-custodian. For its services to the Company under the Custodian Agreement, PFPC Trust Company receives a fee which is calculated based upon the Portfolio's average daily gross assets as follows: $0.25 per $1,000 on the first $50 million of average daily gross assets; $.20 per $1,000 on the next $50 million of average daily gross assets; and $0.15 per $1,000 on average daily gross assets over $100 million, with a minimum monthly fee of $1,000, exclusive of transaction charges and out-of-pocket expenses, which are also charged to the Company. PFPC, whose principal offices are located at 301 Bellevue Parkway, Wilmington, Delaware 19809, serves as the transfer and dividend disbursing agent for the Company's Bedford Class pursuant to a Transfer Agency Agreement dated August 16, 1988 (the "Transfer Agency Agreement"), under which PFPC: (a) issues and redeems shares of the Bedford Class of the Portfolio; (b) addresses and mails all communications by the Portfolio to record owners of shares of such Class, including reports to shareholders, dividend and distribution notices and proxy materials for its meetings of shareholders; (c) maintains shareholder accounts and, if requested, sub-accounts; and (d) makes periodic reports to the Company's Board of Directors concerning the operations of the Bedford Class. PFPC may, on 30 days' notice to the Company, assign its duties as transfer and dividend disbursing agent to any other affiliate of PNC Bank Corp. For its services to the Company under the Transfer Agency Agreement, PFPC receives a fee at the annual rate of $15.00 per account in the Portfolio for orders which are placed via third parties and relayed electronically to PFPC, and at an annual rate of $17.00 per account in the Portfolio for all other orders, exclusive of out-of-pocket expenses, and also receives a fee for each redemption check cleared and reimbursement of its out-of-pocket expenses. PFPC also provides services relating to the implementation of the Company's Anti-Money Laundering Program. The Company will pay an annual fee, ranging from $3,000 - $50,000, based on the number of open accounts in each portfolio. In addition, PFPC provides services relating to the implementation of the Portfolio's Customer Identification Program, including verification of required customer information and the maintenance of records with respect to such verification. 29 The Portfolio will pay PFPC $2.25 per customer verification and $0.02 per month per record result maintained. PFPC has entered and in the future may enter into additional shareholder servicing agreements ("Shareholder Servicing Agreements") with various dealers ("Authorized Dealers") for the provision of certain support services to customers of such Authorized Dealers who are shareholders of the Portfolio. Pursuant to the Shareholder Servicing Agreements, the Authorized Dealers have agreed to prepare monthly account statements, process dividend payments from the Company on behalf of their customers and to provide sweep processing for uninvested cash balances for customers participating in a cash management account. In addition to the shareholder records maintained by PFPC, Authorized Dealers may maintain duplicate records for their customers who are shareholders of the Portfolio for purposes of responding to customer inquiries and brokerage instructions. In consideration for providing such services, Authorized Dealers may receive fees from PFPC. Such fees will have no effect upon the fees paid by the Company to PFPC. DISTRIBUTION AND SERVICING AGREEMENT PFPC Distributors whose principal business address is 760 Moore Road, King of Prussia, Pennsylvania 19406, serves as the Company's distributor. Pursuant to the terms of a distribution agreement, dated January 2, 2001 entered into by PFPC Distributors and the Company, (the "Distribution Agreement") and a separate Plan of Distribution, as amended, for the Bedford Class (the "Plan"), which was adopted by the Company in the manner prescribed by Rule 12b-1 under the 1940 Act, PFPC Distributors will use appropriate efforts to distribute shares of the Bedford Class. Payments to PFPC Distributors under the Plan are to compensate it for distribution assistance and expenses assumed and activities intended to result in the sale of shares of the Bedford Class. As compensation for its distribution services, PFPC Distributors receives, pursuant to the terms of the Distribution Agreement, a distribution fee, to be calculated daily and paid monthly, at the annual rate set forth in the Prospectus. PFPC Distributors currently proposes to reallow up to all of its distribution payments to broker/dealers for selling shares of the Portfolio based on a percentage of the amounts invested by their customers. The Plan was approved by the Company's Board of Directors, including the directors who are not "interested persons" of the Company (as defined in the 1940 Act) and who have no direct or indirect financial interest in the operation of the Plan or any agreements related to the Plan ("12b-1 Directors"). Among other things, the Plan provides that: (1) PFPC Distributors shall be required to submit quarterly reports to the directors of the Company regarding all amounts expended under the Plan and the purposes for which such expenditures were made, including commissions, advertising, printing, interest, carrying charges and any allocated overhead expenses; (2) the Plan will continue in effect only so long as it is approved at least annually, and any material amendment thereto is approved, by the Company's Directors, including a majority of those Directors who are not "interested persons" (as defined in the 1940 Act) and who have no direct or indirect financial interest in the operation of the Plan or any agreements related to the Plan, acting in person at a meeting called for said purpose; (3) the aggregate amount to be spent by the 30 Company on the distribution of the Company's shares of the Bedford Class under the Plan shall not be materially increased without the affirmative vote of the holders of a majority of the Company's shares in the Bedford Class; and (4) while the Plan remains in effect, the selection and nomination of the 12b-1 Directors shall be committed to the discretion of the directors who are not interested persons of the Company. For the fiscal years ended August 31, 2006, 2005, and 2004, the Portfolio paid PFPC Distributors fees as follows:
DISTRIBUTION FEES PAID (AFTER WAIVERS AND FEES PAID TO FEES RETAINED BY REIMBURSEMENTS)(1) BROKER DEALERS PFPC DISTRIBUTORS ---------------------- -------------- ----------------- Fiscal Year Ended August 31, 2006 $______ $______ $______ Fiscal Year Ended August 31, 2005 $616,138 $488,041 $128,097 Fiscal Year Ended August 31, 2004 $519,349 $399,538 $119,811 (1) There were no waivers or reimbursements for the periods stated.
The Company believes that the Plan may benefit the Company by increasing sales of shares. Mr. Sablowsky, a Director of the Company, had an indirect interest in the operation of the Plan by virtue of his position with Oppenheimer & Co., Inc., formerly Fahnestock & Co., Inc., a broker-dealer. PORTFOLIO TRANSACTIONS The Portfolio intends to purchase securities with remaining maturities of 13 months or less, except for securities that are subject to repurchase agreements (which in turn may have maturities of 13 months or less). However, the Portfolio may purchase variable rate securities with remaining maturities of 13 months or more so long as such securities comply with conditions established by the SEC under which they may be considered to have remaining maturities of 13 months or less. Because the Portfolio intends to purchase only securities with remaining maturities of 13 months or less, its portfolio turnover rate will be relatively high. However, because brokerage commissions will not normally be paid with respect to investments made by the Portfolio, the turnover rate should not adversely affect the Portfolio's NAV or net income. The Portfolio does not intend to seek profits through short term trading. Purchases of portfolio securities by the Portfolio are made from dealers, underwriters and issuers; sales are made to dealers and issuers. The Portfolio does not currently expect to incur any brokerage commission expense on such transactions because money market instruments are generally traded on a "net" basis with dealers acting as principal for their own accounts without a stated commission. The price of the security, however, usually includes a profit to the dealer. Securities purchased in underwritten offerings include a fixed amount of compensation to the underwriter, generally referred to as the underwriter's concession or discount. When securities are purchased directly from or sold directly to an issuer, no commissions or discounts are paid. 31 It is the policy of the Portfolio to give primary consideration to obtaining the most favorable price and efficient execution of transactions. In seeking to implement the policies of the Portfolio, BIMC will effect transactions with those dealers it believes provide the most favorable prices and are capable of providing efficient executions. In no instance will portfolio securities be purchased from or sold to PFPC Distributors or BIMC or any affiliated person of the foregoing entities except to the extent permitted by SEC exemptive order or by applicable law. BIMC may seek to obtain an undertaking from issuers of commercial paper or dealers selling commercial paper to consider the repurchase of such securities from the Portfolio prior to their maturity at their original cost plus interest (sometimes adjusted to reflect the actual maturity of the securities), if it believes that the Portfolio's anticipated need for liquidity makes such action desirable. Any such repurchase prior to maturity reduces the possibility that the Portfolio would incur a capital loss in liquidating commercial paper (for which there is no established market), especially if interest rates have risen since acquisition of the particular commercial paper. Investment decisions for the Portfolio and for other investment accounts managed by BIMC are made independently of each other in light of differing conditions. However, the same investment decision may be made for two or more of such accounts. In such cases, simultaneous transactions are inevitable. Purchases or sales are then averaged as to price and allocated as to amount according to a formula deemed equitable to each such account. While in some cases this practice could have a detrimental effect upon the price or value of the security as far as the Portfolio is concerned, in other cases it is believed to be beneficial to the Portfolio. The Portfolio will not purchase securities during the existence of any underwriting or selling group relating to such security of which BIMC or any affiliated person (as defined in the 1940 Act) thereof is a member except pursuant to procedures adopted by the Company's Board of Directors pursuant to Rule 10f-3 under the 1940 Act. Among other things, these procedures require that the commission paid in connection with such a purchase be reasonable and fair, that the purchase be at not more than the public offering price prior to the end of the first business day after the date of the public offer, and that BIMC not participate in or benefit from the sale to the Portfolio. ADDITIONAL INFORMATION CONCERNING COMPANY SHARES The Company has authorized capital of 30 billion shares of common stock at a par value of $0.001 per share. Currently, 26.573 billion shares have been classified into 104 classes as shown in the table below, however, the Company only has 26 active share classes that have begun investment operations. Under the Company's charter, the Board of Directors has the power to classify and reclassify any unissued shares of common stock from time to time.
NUMBER OF NUMBER OF AUTHORIZED SHARES AUTHORIZED SHARES CLASS OF COMMON STOCK (MILLIONS) CLASS OF COMMON STOCK (MILLIONS) - --------------------------------------------------------- ----------------------------------------------------------- A (Growth & Income) 100 BBB 100 B 100 CCC 100 C (Balanced) 100 DDD (Robeco Boston Partners Institutional Small Cap Value 100 Fund II)
32
NUMBER OF NUMBER OF AUTHORIZED SHARES AUTHORIZED SHARES CLASS OF COMMON STOCK (MILLIONS) CLASS OF COMMON STOCK (MILLIONS) - --------------------------------------------------------- ----------------------------------------------------------- D (Tax-Free) 100 EEE (Robeco Boston Partners Investors Small Cap Value Fund II) 100 E (Money) 500 FFF 100 F (Municipal Money) 500 GGG 100 G (Money) 500 HHH 100 H (Municipal Money) 500 III (Robeco Boston Partners Long/Short Equity-Institutional 100 Class) I (Sansom Money) 1,500 JJJ (Robeco Boston Partners Long/Short Equity-Investor Class) 100 J (Sansom Municipal Money) 500 KKK (Robeco Boston Partners Funds) 100 K (Sansom Government Money) 500 LLL (Robeco Boston Partners Funds) 100 L (Bedford Money) 1,500 MMM (n/i numeric Small Cap Value) 100 M (Bedford Municipal Money) 500 NNN (Bogle Investment Management Small Cap Growth - Institutional 100 Class) N (Bedford Government Money) 500 OOO (Bogle Investment Management Small Cap Growth - Investor Class) 100 O (Bedford N.Y. Money) 500 PPP (Schneider Value Fund) 100 P (RBB Government) 100 QQQ (Institutional Liquidity Fund 2,500 for Credit Unions) Q 100 RRR (Liquidity Fund for Credit 2,500 Unions) R (Municipal Money) 500 SSS (Robeco WPG Core Bond Fund - 100 Retirement Class) S (Government Money) 500 TTT (Robeco WPG Core Bond Fund - 50 Institutional Class) T 500 UUU (Robeco WPG Tudor Fund - 50 Institutional Fund) U 500 VVV (Robeco WPG Large Cap Growth 50 Fund - Institutional Class) V 500 WWW (Senbanc Fund) 50 W 100 XXX (Robeco WPG Core Bond Fund - 100 Investor Class) X 50 YYY (Bear Stearns CUFS MLP 100 Mortgage Portfolio) Y 50 Select (Money) 700 Z 50 Beta 2 (Municipal Money) 1 AA 50 Beta 3 (Government Money) 1 BB 50 Beta 4 (N.Y. Money) 1 CC 50 Principal Class (Money) 700 DD 100 Gamma 2 (Municipal Money) 1 EE 100 Gamma 3 (Government Money) 1 FF (n/i numeric Emerging Growth) 50 Gamma 4 (N.Y. Money) 1 GG (n/i numeric Growth) 50 Bear Stearns Money 2,500 HH (n/i numeric Mid Cap) 50 Bear Stearns Municipal Money 1,500 II (Baker 500 Growth Fund) 100 Bear Stearns Government Money 1,000 JJ (Baker 500 Growth Fund) 100 Delta 4 (N.Y. Money) 1 KK 100 Epsilon 1 (Money) 1 LL 100 Epsilon 2 (Municipal Money) 1 MM 100 Epsilon 3 (Government Money) 1 NN 100 Epsilon 4 (N.Y. Money) 1 OO 100 Zeta 1 (Money) 1 PP 100 Zeta 2 (Municipal Money) 1 QQ (Robeco Boston Partners Zeta 3 (Government Money) 1
33
NUMBER OF NUMBER OF AUTHORIZED SHARES AUTHORIZED SHARES CLASS OF COMMON STOCK (MILLIONS) CLASS OF COMMON STOCK (MILLIONS) - --------------------------------------------------------- ----------------------------------------------------------- Institutional Large Cap) 100 RR (Robeco Boston Partners Zeta 4 (N.Y. Money) 1 Investors Large Cap) 100 SS (Robeco Boston Partners Adviser Eta 1 (Money) 1 Large Cap) 100 TT (Robeco Boston Partners Eta 2 (Municipal Money) 1 Investors Mid Cap) 100 UU (Robeco Boston Partners Eta 3 (Government Money) 1 Institutional Mid Cap) 100 VV (Robeco Boston Partners Eta 4 (N.Y. Money) 1 Institutional All Cap Value) 100 WW (Robeco Boston Partners Theta 1 (Money) 1 Investors All Cap Value) 100 YY (Schneider Capital Small Cap Theta 2 (Municipal Money) 1 Value) 100 ZZ 100 Theta 3 (Government Money) 1 AAA 100 Theta 4 (N.Y. Money) 1
The classes of common stock have been grouped into separate "families." There are seven families that currently have operating portfolios, including: the Sansom Street Family and Bedford Family, the Schneider Capital Management Family, the n/i numeric investors family of funds, the Robeco Investment Funds Family, the Bogle Investment Management Family, and the Hilliard Lyons Family. The Sansom Street Family and Bedford Family represent interests in the Money Market Portfolio; the n/i numeric investors family of funds represents interests in four non-money market portfolios; the Robeco Investment Funds Family represents interests in eight non-money market portfolios; the Bogle Investment Management Family represents interests in one non-money market portfolio; the Schneider Capital Management Family represents interests in two non-money market portfolios; the Hilliard Lyons Family represents interests in one non-money market portfolio. Each share that represents an interest in the Portfolio has an equal proportionate interest in the assets belonging to such Portfolio with each other share that represents an interest in such Portfolio, even where a share has a different class designation than another share representing an interest in that Portfolio. Shares of the Company do not have preemptive or conversion rights. When issued for payment as described in the Prospectus, shares of the Company will be fully paid and non-assessable. The Company does not currently intend to hold annual meetings of shareholders except as required by the 1940 Act or other applicable law. The Company's amended By-Laws provide that shareholders owning at least 10% of the outstanding shares of all classes of Common Stock of the Company have the right to call for a meeting of shareholders to consider the removal of one or more directors. To the extent required by law, the Company will assist in shareholder communication in such matters. Shareholders of the Company are entitled to one vote for each full share held (irrespective of class or portfolio) and fractional votes for fractional shares held. Holders of 34 shares of each class of the Company will vote in the aggregate and not by class on all matters, except where otherwise required by law. Further, shareholders of the Company will vote in the aggregate and not by portfolio except as otherwise required by law or when the Board of Directors determines that the matter to be voted upon affects only the interests of the shareholders of a particular portfolio. Rule 18f-2 under the 1940 Act provides that any matter required to be submitted by the provisions of such Act or applicable state law, or otherwise, to the holders of the outstanding voting securities of an investment company such as the Company shall not be deemed to have been effectively acted upon unless approved by the holders of a majority of the outstanding voting securities, as defined in the 1940 Act, of each portfolio affected by the matter. Rule 18f-2 further provides that a portfolio shall be deemed to be affected by a matter unless it is clear that the interests of each portfolio in the matter are identical or that the matter does not affect any interest of the portfolio. Under the Rule the approval of an investment advisory agreement or any change in a fundamental investment objective or fundamental investment policy would be effectively acted upon with respect to a portfolio only if approved by the holders of a majority of the outstanding voting securities, as defined in the 1940 Act, of such portfolio. However, the Rule also provides that the ratification of the selection of independent public accountants, the approval of underwriting contracts and the election of directors are not subject to the separate voting requirements and may be effectively acted upon by shareholders of an investment company voting without regard to portfolio. Voting rights are not cumulative and, accordingly, the holders of more than 50% of the aggregate shares of Common Stock of the Company may elect all directors. Notwithstanding any provision of Maryland law requiring a greater vote of shares of the Company's common stock (or of any class voting as a class) in connection with any corporate action, unless otherwise provided by law (for example by Rule 18f-2 discussed above), or by the Company's Articles of Incorporation and By-Laws, the Company may take or authorize such action upon the favorable vote of the holders of more than 50% of all of the outstanding shares of Common Stock voting without regard to class (or portfolio). PURCHASE AND REDEMPTION INFORMATION You may purchase shares through an account maintained by your brokerage firm and you may also purchase shares directly by mail or wire. The Company reserves the right, if conditions exist which make cash payments undesirable, to honor any request for redemption or repurchase of the Portfolio's shares by making payment in whole or in part in securities chosen by the Company and valued in the same way as they would be valued for purposes of computing the Portfolio's NAV. If payment is made in securities, a shareholder may incur transaction costs in converting these securities into cash. The Company has elected, however, to be governed by Rule 18f-1 under the 1940 Act so that the Portfolio is obligated to redeem its shares solely in cash up to the lesser of $250,000 or 1% of its NAV during any 90-day period for any one shareholder of the Portfolio. A shareholder will bear the risk of a decline in market value and any tax consequences associated with a redemption in securities. Under the 1940 Act, the Company may suspend the right of redemption or postpone the date of payment upon redemption for any period during which the New York Stock Exchange, Inc. (the "NYSE") is closed (other than customary weekend and holiday closings), or during which trading on the NYSE is restricted, or during which (as determined by the SEC by rule or 35 regulation) an emergency exists as a result of which disposal or valuation of portfolio securities is not reasonably practicable, or for such other periods as the SEC may permit. (The Portfolio may also suspend or postpone the recordation of the transfer of its shares upon the occurrence of any of the foregoing conditions.) Shares of the Company are subject to redemption by the Company, at the redemption price of such shares as in effect from time to time, including, without limitation: (1) to reimburse a Portfolio for any loss sustained by reason of the failure of a shareholder to make full payment for shares purchased by the shareholder or to collect any charge relating to a transaction effected for the benefit of a shareholder as provided in the Prospectus from time to time; (2) if such redemption is, in the opinion of the Company's Board of Directors, desirable in order to prevent the Company or any Portfolio from being deemed a "personal holding company" within the meaning of the Internal Revenue Code of 1986, as amended (the "Internal Revenue Code"); or (3) if the net income with respect to any particular class of common stock should be negative or it should otherwise be appropriate to carry out the Company's responsibilities under the 1940 Act. VALUATION OF SHARES The Company intends to use its best efforts to maintain the NAV of each class of the Portfolio at $1.00 per share. NAV per share, the value of an individual share in the Portfolio, is computed by adding the value of the proportionate interest of the class in the Portfolio's securities, cash and other assets, subtracting the actual and accrued liabilities of the class and dividing the result by the number of outstanding shares of such class. The NAV of each class of the Company is determined independently of the other classes. The Portfolio's "net assets" equal the value of the Portfolio's investments and other securities less its liabilities. The Portfolio's NAV per share is computed twice each day, as of 12:00 noon (Eastern time) and as of 4:00 p.m. (Eastern time), on each Business Day. "Business Day" means each weekday when both the NYSE and the Federal Reserve Bank of Philadelphia (the "FRB") are open. Currently, the NYSE is closed weekends and on New Year's Day, Dr. Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day (observed), Labor Day, Thanksgiving Day and Christmas Day (observed) and the preceding Friday and subsequent Monday when one of these holidays falls on a Saturday or Sunday. The FRB is currently closed on weekends and the same holidays as the NYSE as well as Columbus Day and Veterans' Day. The only day on which the NYSE is closed and the FRB is open is Good Friday. The Portfolio's NAV may be computed as described above on days that the NYSE is closed in an emergency situation, if in the opinion of BIMC and PFPC, the Portfolio can otherwise maintain its operations. The Company calculates the value of the portfolio securities of the Portfolio by using the amortized cost method of valuation. Under this method the market value of an instrument is approximated by amortizing the difference between the acquisition cost and value at maturity of the instrument on a straight-line basis over the remaining life of the instrument. The effect of changes in the market value of a security as a result of fluctuating interest rates is not taken into account. The market value of debt securities usually reflects yields generally available on securities of similar quality. When such yields decline, market values can be expected to 36 increase, and when yields increase, market values can be expected to decline. In addition, if a large number of redemptions take place at a time when interest rates have increased, the Portfolio may have to sell portfolio securities prior to maturity and at a price which might not be as desirable. The amortized cost method of valuation may result in the value of a security being higher or lower than its market price, the price the Portfolio would receive if the security were sold prior to maturity. The Company's Board of Directors has established procedures for the purpose of maintaining a constant NAV of $1.00 per share for the Portfolio, which includes a review of the extent of any deviation of NAV per share, based on available market quotations, from the $1.00 amortized cost per share. Should that deviation exceed 1/2 of 1% for the Portfolio, the Board of Directors will promptly consider whether any action should be initiated to eliminate or reduce material dilution or other unfair results to shareholders. Such action may include redeeming shares in kind, selling portfolio securities prior to maturity, reducing or withholding dividends, and utilizing a NAV per share as determined by using available market quotations. The Portfolio will maintain a dollar-weighted average portfolio maturity of 90 days or less, will not purchase any instrument with a deemed maturity under Rule 2a-7 of the 1940 Act greater than 13 months, will limit portfolio investments, including repurchase agreements (where permitted), to those U.S.-dollar-denominated instruments that BIMC determines present minimal credit risks pursuant to guidelines adopted by the Board of Directors, and BIMC will comply with certain reporting and recordkeeping procedures concerning such credit determination. There is no assurance that constant NAV will be maintained. In the event amortized cost ceases to represent fair value in the judgment of the Company's Board of Directors, the Board will take such actions as it deems appropriate. In determining the approximate market value of portfolio investments, the Company 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. This may result in the securities being valued at a price that differs from the price that would have been determined had the matrix or formula method not been used. All cash, receivables and current payables are carried on the Company's books at their face value. Other assets, if any, are valued at fair value as determined in good faith by or under the direction of the Company's Board of Directors. 37 TAXES The Portfolio intends to qualify as a regulated investment company under Subchapter M of Subtitle A, Chapter 1 of the Internal Revenue Code, and to distribute its income to shareholders each year, so that the Portfolio generally will be relieved of federal income and excise taxes. If the Portfolio were to fail to so qualify: (1) the Portfolio would be taxed at regular corporate rates on its net taxable investment income without any deduction for distributions to shareholders; and (2) shareholders would recognize dividend income on distributions attributable to the Portfolio's earnings. Moreover, if the Portfolio were to fail to make sufficient distributions in a year, the Portfolio would be subject to corporate income taxes and/or excise taxes in respect of the shortfall or, if the shortfall is large enough, the Portfolio could be disqualified as a regulated investment company. A 4% non-deductible excise tax is imposed on regulated investment companies that fail to distribute with respect to each calendar year at least 98% of their ordinary taxable income for the calendar year and capital gain net income (excess of capital gains over capital losses) for the one year period ending October 31 of such calendar year and 100% of any such amounts that were not distributed in the prior year. The Portfolio intends to make sufficient distributions or deemed distributions of its ordinary taxable income and any capital gain net income prior to the end of each calendar year to avoid liability for this excise tax. SHAREHOLDER APPROVALS As used in this SAI and in the Prospectus, "shareholder approval" and a "majority of the outstanding shares" of a class, series or Portfolio means, with respect to the approval of an investment advisory agreement, a distribution plan or a change in the Portfolio's investment objective or a fundamental investment limitation, the lesser of (1) 67% of the shares of the particular class, series or Portfolio represented at a meeting at which the holders of more than 50% of the outstanding shares of such class, series or Portfolio are present in person or by proxy, or (2) more than 50% of the outstanding shares of such class, series or Portfolio. MISCELLANEOUS COUNSEL The law firm of Drinker Biddle & Reath LLP, One Logan Square, 18th and Cherry Streets, Philadelphia, Pennsylvania 19103-6996, serves as independent counsel to the Company and the Disinterested Directors. INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM _____________________ serves as the Portfolio's independent registered public accounting firm. 38 FINANCIAL STATEMENTS The audited financial statements and notes thereto in the Portfolio's Annual Report to Shareholders for the fiscal year ended ___________ (the "Annual Report") _______________ this SAI. No other parts of the Annual Report are incorporated by reference herein. The financial statements included in the Annual Report have been audited by the Portfolio's independent registered public accounting firm, _____________, whose report thereon also appears in the Annual Report and is incorporated herein by reference. Such financial statements have been incorporated herein in reliance upon such reports given upon their authority as experts in accounting and auditing. Copies of the Annual Report may be obtained at no charge by telephoning PFPC at the telephone number appearing on the front page of this SAI. 39 APPENDIX A DESCRIPTION OF SECURITIES RATINGS SHORT-TERM CREDIT RATINGS - ------------------------- A Standard & Poor's short-term issue credit rating is a current opinion of the creditworthiness of an obligor with respect to a specific financial obligation having an original maturity of no more than 365 days. The following summarizes the rating categories used by Standard & Poor's for short-term issues: "A-1" - Obligations are rated in the highest category and indicate that the obligor's capacity to meet its financial commitment on the obligation is strong. Within this category, certain obligations are designated with a plus sign (+). This indicates that the obligor's capacity to meet its financial commitment on these obligations is extremely strong. "A-2" - Obligations are somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher rating categories. However, the obligor's capacity to meet its financial commitment on the obligation is satisfactory. "A-3" - Obligations exhibit adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitment on the obligation. "B" - Obligations are regarded as having significant speculative characteristics. Ratings of "B-1," "B-2," and "B-3" may be assigned to indicate finer distinctions within the "B" category. The obligor currently has the capacity to meet its financial commitment on the obligation; however, it faces major ongoing uncertainties which could lead to the obligor's inadequate capacity to meet its financial commitment on the obligation. "B-1" - Obligations are regarded as having speculative characteristics, but the obligor has a relatively stronger capacity to meet its financial commitments over the short-term compared to other speculative - grade obligors. "B-2" - Obligations are regarded as having significant speculative characteristics, and the obligor has an average speculative - grade capacity to meet its financial commitments over the short-term compared to other speculative - - grade obligors. "B-3" - Obligations are regarded as having significant speculative characteristics, and the obligor has a relatively weak capacity to meet its financial commitments over the short-term compared to other speculative - grade obligations. "C" - Obligations are currently vulnerable to nonpayment and are dependent upon favorable business, financial and economic conditions for the obligor to meet its financial commitment on the obligation. A-1 "D" - Obligations are in payment default. The "D" rating category is used when payments on an obligation are not made on the date due even if the applicable grace period has not expired, unless Standard & Poor's believes that such payments will be made during such grace period. The "D" rating also will be used upon the filing of a bankruptcy petition or the taking of a similar action if payments on an obligation are jeopardized. Local Currency and Foreign Currency Risks - Country risk considerations are a standard part of Standard & Poor's analysis for credit ratings on any issuer or issue. Currency of repayment is a key factor in this analysis. An obligor's capacity to repay foreign currency obligations may be lower than its capacity to repay obligations in its local currency due to the sovereign government's own relatively lower capacity to repay external versus domestic debt. These sovereign risk considerations are incorporated in the debt ratings assigned to specific issues. Foreign Currency issuer ratings are also distinguished from local currency issuer ratings to identify those instances where sovereign risks make them different for the same issuer. Short-term ratings are opinions of the ability of issuers to honor short-term financial obligations. Ratings may be assigned to issuers, short-term programs or to individual short-term debt instruments. Such obligations generally have an original maturity not exceeding thirteen months, unless explicitly noted. Moody's employs the following: "P-1" - Issuers (or supporting institutions) rated Prime-1 have a superior ability to repay short-term debt obligations. "P-2" - Issuers (or supporting institutions) rated Prime-2 have a strong ability to repay short-term debt obligations. "P-3" - Issuers (or supporting institutions) rated Prime-3 have an acceptable ability to repay short-term debt obligations. "NP" - Issuers (or supporting institutions) rated Not Prime do not fall within any of the Prime rating categories. Fitch Ratings, Inc. ("Fitch") short-term ratings scale applies to foreign currency and local currency. A short-term rating has a time horizon of less than 13 months for most obligations, or up to three years for U.S. public finance in line with industry standards, to reflect unique risk characteristics of bond, tax, and revenue anticipation notes that are commonly issued with terms up to three years. Short-term ratings thus place greater emphasis on the liquidity necessary to meet financial commitments in a timely manner. The following summarizes the rating categories used by Fitch for short-term obligations: A-2 "F1" - Securities possess the highest credit quality. This designation indicates the strongest capacity for timely payment of financial commitments; may have an added "+" to denote any exceptionally strong credit feature. "F2" - Securities possess good credit quality. This designation indicates a satisfactory capacity for timely payment of financial commitments, but the margin of safety is not as great as in the case of the higher ratings. "F3" - Securities possess fair credit quality. This designation indicates that the capacity for timely payment of financial commitments is adequate; however, near term adverse changes could result in a reduction to non investment grade. "B" - Securities possess speculative credit quality. This designation indicates minimal capacity for timely payment of financial commitments, plus vulnerability to near-term adverse changes in financial and economic conditions. "C" - Securities possess high default risk. Default is a real possibility. This designation indicates a capacity for meeting financial commitments which is solely reliant upon a sustained, favorable business and economic environment. "RD" - Indicates an entity that has defaulted on one or more of its financial commitments, although it continues to meet other obligations. "D" - Indicates an entity or sovereign that has defaulted on all of its financial obligations. "NR" - This designation indicates that Fitch does not publicly rate the issuer or issue in question. "Withdrawn" - A rating is withdrawn when Fitch deems the amount of information available to be inadequate for rating purposes, or when an obligation matures, is called, or refinanced, or for any other reason Fitch deems sufficient. The following summarizes the ratings used by Dominion Bond Rating Service Limited ("DBRS") for commercial paper and short-term debt: "R-1 (high)" - Short-term debt rated "R-1 (high)" is of the highest credit quality, and indicates an entity possessing an unquestioned ability to repay current liabilities as they fall due. Entities rated in this category normally maintain strong liquidity positions, conservative debt levels, and profitability that is both stable and above average. Companies achieving an "R-1 (high)" rating are normally leaders in structurally sound industry segments with proven track records, sustainable positive future results and no substantial qualifying negative factors. Given the extremely tough definition DBRS has established for an "R-1 (high)", few entities are strong enough to achieve this rating. A-3 "R-1 (middle)" - Short-term debt rated "R-1 (middle)" is of superior credit quality and, in most cases, ratings in this category differ from "R-1 (high)" credits by only a small degree. Given the extremely tough definition DBRS has established for the "R-1 (high)" category, entities rated "R-1 (middle)" are also considered strong credits, and typically exemplify above average strength in key areas of consideration for the timely repayment of short-term liabilities. "R-1 (low)" - Short-term debt rated "R-1 (low)" is of satisfactory credit quality. The overall strength and outlook for key liquidity, debt and profitability ratios are not normally as favorable as with higher rating categories, but these considerations are still respectable. Any qualifying negative factors that exist are considered manageable, and the entity is normally of sufficient size to have some influence in its industry. "R-2 (high)" - Short-term debt rated "R-2 (high)" is considered to be at the upper end of adequate credit quality. The ability to repay obligations as they mature remains acceptable, although the overall strength and outlook for key liquidity, debt, and profitability ratios is not as strong as credits rated in the "R-1 (low)" category. Relative to the latter category, other shortcomings often include areas such as stability, financial flexibility, and the relative size and market position of the entity within its industry. "R-2 (middle)" - Short-term debt rated "R-2 (middle)" is considered to be of adequate credit quality. Relative to the "R-2 (high)" category, entities rated "R-2 (middle)" typically have some combination of higher volatility, weaker debt or liquidity positions, lower future cash flow capabilities, or hold a weaker industry position. Ratings in this category would also be more vulnerable to adverse changes in financial and economic conditions. "R-2 (low)" - Short-term debt rated "R-2 (low)" is considered to be of only just adequate credit quality, one step up from being speculative. While not yet defined as speculative, the "R-2 (low)" category signifies that although, repayment is still expected, the certainty of repayment could be impacted by a variety of possible adverse developments, many of which would be outside of the issuer's control. Entities in this area often have limited access to capital markets and may also have limitations in securing alternative sources of liquidity, particularly during periods of weak economic conditions. "R-3 (high)," "R-3 (middle)," "R-3 (low)" - Short-term debt rated "R-3" is speculative, and within the three sub-set grades, the capacity for timely repayment ranges from mildly speculative to doubtful. "R-3" credits tend to have weak liquidity and debt ratios, and the future trend of these ratios is also unclear. Due to its speculative nature, companies with "R-3" ratings would normally have very limited access to alternative sources of liquidity. Earnings and cash flow would typically be very unstable, and the level of overall profitability of the entity is also likely to be low. The industry environment may be weak, and strong negative qualifying factors are also likely to be present. "D" - A security rated "D" implies the issuer has either not met a scheduled payment or the issuer has made it clear that it will be missing such a payment in the near future. In some cases, DBRS may not assign a "D" rating under a bankruptcy announcement scenario, as allowances for grace periods may exist in the underlying legal documentation. Once assigned, A-4 the "D" rating will continue as long as the missed payment continues to be in arrears, and until such time as the rating is suspended, discontinued, or reinstated by DBRS. LONG-TERM CREDIT RATINGS - ------------------------ The following summarizes the ratings used by Standard & Poor's for long-term issues: "AAA" - An obligation rated "AAA" has the highest rating assigned by Standard & Poor's. The obligor's capacity to meet its financial commitment on the obligation is extremely strong. "AA" - An obligation rated "AA" differs from the highest-rated obligations only to a small degree. The obligor's capacity to meet its financial commitment on the obligation is very strong. "A" - An obligation rated "A" is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher-rated categories. However, the obligor's capacity to meet its financial commitment on the obligation is still strong. "BBB" - An obligation rated "BBB" exhibits adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitment on the obligation. Obligations rated "BB," "B," "CCC," "CC," and "C" are regarded as having significant speculative characteristics. "BB" indicates the least degree of speculation and "C" the highest. While such obligations will likely have some quality and protective characteristics, these may be outweighed by large uncertainties or major exposures to adverse conditions. "BB" - An obligation rated "BB" is less vulnerable to nonpayment than other speculative issues. However, it faces major ongoing uncertainties or exposure to adverse business, financial or economic conditions which could lead to the obligor's inadequate capacity to meet its financial commitment on the obligation. "B" - An obligation rated "B" is more vulnerable to nonpayment than obligations rated "BB," but the obligor currently has the capacity to meet its financial commitment on the obligation. Adverse business, financial or economic conditions will likely impair the obligor's capacity or willingness to meet its financial commitment on the obligation. "CCC" - An obligation rated "CCC" is currently vulnerable to nonpayment, and is dependent upon favorable business, financial and economic conditions for the obligor to meet its financial commitment on the obligation. In the event of adverse business, financial, or economic conditions, the obligor is not likely to have the capacity to meet its financial commitment on the obligation. "CC" - An obligation rated "CC" is currently highly vulnerable to nonpayment. A-5 "C" - A subordinated debt or preferred stock obligation rated "C" is currently highly vulnerable to nonpayment. The "C" rating may be used to cover a situation where a bankruptcy petition has been filed or similar action taken, but payments on this obligation are being continued. A "C" rating also be assigned to a preferred stock issue in arrears on dividends or sinking fund payments, but that is currently paying. "D" - An obligation rated "D" is in payment default. The "D" rating category is used when payments on an obligation are not made on the date due even if the applicable grace period has not expired, unless Standard & Poor's believes that such payment will be made during such grace period. The "D" rating also will be used upon the filing of a bankruptcy petition or the taking of a similar action if payments on an obligation are jeopardized. Plus (+) or minus (-) - The ratings from "AA" to "CCC" may be modified by the addition of a plus (+) or minus (-) sign to show relative standing within the major rating categories. "N.R." - This indicates that no rating has been requested, that there is insufficient information on which to base a rating or that Standard & Poor's does not rate a particular obligation as a matter of policy Local Currency and Foreign Currency Risks - Country risk considerations are a standard part of Standard & Poor's analysis for credit ratings on any issuer or issue. Currency of repayment is a key factor in this analysis. An obligor's capacity to repay Foreign Currency obligations may be lower than its capacity to repay obligations in its local currency due to the sovereign government's own relatively lower capacity to repay external versus domestic debt. These sovereign risk considerations are incorporated in the debt ratings assigned to specific issues. Foreign Currency issuer ratings are also distinguished from local currency issuer ratings to identify those instances where sovereign risks make them different for the same issuer. The following summarizes the ratings used by Moody's for long-term debt: "Aaa" - Obligations rated "Aaa" are judged to be of the highest quality, with minimal credit risk. "Aa" - Obligations rated "Aa" are judged to be of high quality and are subject to very low credit risk. "A" - Obligations rated "A" are considered upper-medium grade and are subject to low credit risk. "Baa" - Obligations rated "Baa" are subject to moderate credit risk. They are considered medium-grade and as such may possess certain speculative characteristics. "Ba" - Obligations rated "Ba" are judged to have speculative elements and are subject to substantial credit risk. A-6 "B" - Obligations rated "B" are considered speculative and are subject to high credit risk. "Caa" - Obligations rated "Caa" are judged to be of poor standing and are subject to very high credit risk. "Ca" - Obligations rated "Ca" are highly speculative and are likely in, or very near, default, with some prospect of recovery of principal and interest. "C" - Obligations rated "C" are the lowest rated class of bonds and are typically in default, with little prospect for recovery of principal or interest. Note: Moody's appends numerical modifiers 1, 2, and 3 to each generic rating classification from "Aa" through "Caa." The modifier 1 indicates that the obligation ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates a ranking in the lower end of that generic rating category. The following summarizes long-term ratings used by Fitch: "AAA" - Securities considered to be investment grade and of the highest credit quality. "AAA" ratings denote the lowest expectation of credit risk. They are assigned only in case of exceptionally strong capacity for payment of financial commitments. This capacity is highly unlikely to be adversely affected by foreseeable events. "AA" - Securities considered to be of very high credit quality. "AA" ratings denote expectations of low credit risk. They indicate very strong capacity for timely payment of financial commitments. This capacity is not significantly vulnerable to foreseeable events. "A" - Securities considered to be investment grade and of high credit quality. "A" ratings denote expectations of low credit risk. The capacity for payment of financial commitments is considered strong. This capacity may, nevertheless, be more vulnerable to changes in circumstances or in economic conditions than is the case for higher ratings. "BBB" - Securities considered to be investment grade and of good credit quality. "BBB" ratings indicate that there are currently expectations of low credit risk. The capacity for payment of financial commitments is considered adequate but adverse changes in circumstances and economic conditions are more likely to impair this capacity. This is the lowest investment grade category. "BB" - Securities considered to be speculative. "BB" ratings indicate that there is a possibility of credit risk developing, particularly as the result of adverse economic change over time; however, business or financial alternatives may be available to allow financial commitments to be met. Securities rated in this category are not investment grade. A-7 "B" - Securities considered to be highly speculative. "B" ratings indicate that significant credit risk is present, but a limited margin of safety remains. Financial commitments are currently being met; however, capacity for continued payment is contingent upon a sustained, favorable business and economic environment. "CCC," "CC" and "C" - Securities have high default risk. Default is a real possibility, and capacity for meeting financial commitments is solely reliant upon sustained, favorable business or economic developments. A "CC" rating indicates that default of some kind appears probable. "C" ratings signal imminent default. "DDD," "DD" and "D" - Securities are in default. The ratings of obligations in these categories are based on their prospects for achieving partial or full recovery in a reorganization or liquidation of the obligor. While expected recovery values are highly speculative and cannot be estimated with any precision, the following serve as general guidelines. "DDD" obligations have the highest potential for recovery, around 90%-100% of outstanding amounts and accrued interest. "DD" indicates potential recoveries in the range of 50%-90% and "D" the lowest recovery potential, i.e., below 50%. Entities rated in this category have defaulted on some or all of their obligations. Entities rated "DDD" have the highest prospect for resumption of performance or continued operation with or without a formal reorganization process. Entities rated "DD" and "D" are generally undergoing a formal reorganization or liquidation process; those rated "DD" are likely to satisfy a higher portion of their outstanding obligations, while entities rated "D" have a poor prospect of repaying all obligations. Plus (+) or minus (-) may be appended to a rating to denote relative status within major rating categories. Such suffixes are not added to the "AAA" category or to categories below "CCC". "NR" indicates that Fitch does not publicly rate the issuer or issue in question. The following summarizes the ratings used by DBRS for long-term debt: "AAA" - Long-term debt rated "AAA" is of the highest credit quality, with exceptionally strong protection for the timely repayment of principal and interest. Earnings are considered stable, the structure of the industry in which the entity operates is strong, and the outlook for future profitability is favorable. There are few qualifying factors present which would detract from the performance of the entity. The strength of liquidity and coverage ratios is unquestioned and the entity has established a creditable track record of superior performance. Given the extremely high standard which DBRS has set for this category, few entities are able to achieve a "AAA" rating. "AA" - Long-term debt rated "AA" is of superior credit quality, and protection of interest and principal is considered high. In many cases they differ from long-term debt rated "AAA" only to a small degree. Given the extremely restrictive definition DBRS has for the "AAA" category, entities rated "AA" are also considered to be strong credits, typically A-8 exemplifying above average strength in key areas of consideration and unlikely to be significantly affected by reasonably foreseeable events. "A" - Long-term debt rated "A" is of satisfactory credit quality. Protection of interest and principal is still substantial, but the degree of strength is less than that of "AA" rated entities. While "A" is a respectable rating, entities in this category are considered to be more susceptible to adverse economic conditions and have greater cyclical tendencies than higher-rated securities. "BBB" - Long-term debt rated "BBB" is of adequate credit quality. Protection of interest and principal is considered acceptable, but the entity is fairly susceptible to adverse changes in financial and economic conditions, or there may be other adverse conditions present which reduce the strength of the entity and its rated securities. "BB" - Long-term debt rated "BB" is defined to be speculative and non investment-grade, where the degree of protection afforded interest and principal is uncertain, particularly during periods of economic recession. Entities in the "BB" range typically have limited access to capital markets and additional liquidity support. In many cases, deficiencies in critical mass, diversification, and competitive strength are additional negative considerations. "B" - Long-term debt rated "B" is highly speculative and there is a reasonably high level of uncertainty as to the ability of the entity to pay interest and principal on a continuing basis in the future, especially in periods of economic recession or industry adversity. "CCC", CC" and "C" -Long-term debt rated in any of these categories is very highly speculative and is in danger of default of interest and principal. The degree of adverse elements present is more severe than long-term debt rated "B." Long-term debt rated below "B" often has characteristics which, if not remedied, may lead to default. In practice, there is little difference between these categories, with "CC" and "C" normally used for lower ranking debt of companies for which the senior debt is rated in the "CCC" to "B" range. "D" - A security rated "D" implies the issuer has either not met a scheduled payment of interest or principal or that the issuer has made it clear that it will miss such a payment in the near future. In some cases, DBRS may not assign a "D" rating under a bankruptcy announcement scenario, as allowances for grace periods may exist in the underlying legal documentation. Once assigned, the "D" rating will continue as long as the missed payment continues to be in arrears, and until such time as the rating is suspended, discontinued or reinstated by DBRS. ("high", "low") - Each rating category is denoted by the subcategories "high" and "low". The absence of either a "high" or "low" designation indicates the rating is in the "middle" of the category. The "AAA" and "D" categories do not utilize "high", "middle", and "low" as differential grades. A-9 NOTES TO SHORT-TERM AND LONG-TERM CREDIT RATINGS - ------------------------------------------------ STANDARD & POOR'S CREDITWATCH: CreditWatch highlights the potential direction of a short- or long-term rating. It focuses on identifiable events and short-term trends that cause ratings to be placed under special surveillance by Standard & Poor's analytical staff. These may include mergers, recapitalizations, voter referendums, regulatory action or anticipated operating developments. Ratings appear on CreditWatch when such an event or a deviation from an expected trend occurs and additional information is necessary to evaluate the current rating. A listing, however, does not mean a rating change is inevitable, and whenever possible, a range of alternative ratings will be shown. CreditWatch is not intended to include all ratings under review, and rating changes may occur without the ratings having first appeared on CreditWatch. The "positive" designation means that a rating may be raised; "negative" means a rating may be lowered; and "developing" means that a rating may be raised, lowered or affirmed. RATING OUTLOOK: A Standard & Poor's rating outlook assesses the potential direction of a long-term credit rating over the intermediate term (typically six months to two years). In determining a rating outlook, consideration is given to any changes in the economic and/or fundamental business conditions. An outlook is not necessarily a precursor of a rating change or future CreditWatch action. o "Positive" means that a rating may be raised. o "Negative" means that a rating may be lowered. o "Stable" means that a rating is not likely to change. o "Developing" means a rating may be raised or lowered. MOODY'S WATCHLIST: Moody's uses the Watchlist to indicate that a rating is under review for possible change in the short-term. A rating can be placed on review for possible upgrade ("UPG"), on review for possible downgrade ("DNG"), or more rarely with direction uncertain ("UNC"). A credit is removed from the Watchlist when the rating is upgraded, downgraded or confirmed. RATING OUTLOOKS: A Moody's rating outlook is an opinion regarding the likely direction of a rating over the medium term. Where assigned, rating outlooks fall into the following four categories: Positive ("POS"), Negative ("NEG"), Stable ("STA") and Developing ("DEV" -- contingent upon an event). In the few instances where an issuer has multiple outlooks of differing directions, an "(m)" modifier (indicating multiple, differing outlooks) will be displayed, and Moody's written research will describe any differences and provide the rationale for these differences. A "RUR" (Rating(s) Under Review) designation indicates that the issuer has one or more ratings under review for possible change, and thus overrides the outlook designation. When an outlook has not been assigned to an eligible entity, "NOO" (No Outlook) may be displayed. A-10 FITCH WITHDRAWN: A rating is withdrawn when Fitch deems the amount of information available to be inadequate for rating purposes, or when an obligation matures, is called, or refinanced. RATING WATCH: Ratings are placed on Rating Watch to notify investors that there is a reasonable probability of a rating change and the likely direction of such change. These are designated as "Positive", indicating a potential upgrade, "Negative", for a potential downgrade, or "Evolving", if ratings may be raised, lowered or maintained. Rating Watch is typically resolved over a relatively short period. RATING OUTLOOK: A Rating Outlook indicates the direction a rating is likely to move over a one-to two-year period. Outlooks may be "positive", "stable" or "negative". A positive" or "negative" Rating Outlook does not imply a rating change is inevitable. Similarly, ratings for which outlooks are "stable" could be upgraded or downgraded before an outlook moves to "positive" or "negative" if circumstances warrant such an action. Occasionally, Fitch may be unable to identify the fundamental trend. In these cases, the Rating Outlook may be described as "evolving". DBRS RATING TRENDS: Each DBRS rating category is appended with one of three rating trends - "Positive", "Stable", or "Negative". The rating trend helps to give the investor an understanding of DBRS's opinion regarding the outlook for the rating in question. However, the investor must not assume that a positive or negative trend necessarily indicates that a rating change is imminent. RATING ACTIONS: In addition to confirming or changing ratings, other rating actions include: (1) SUSPENDED RATINGS. Rating opinions are forward looking. While a rating will consider the historical performance of an issuer, a rating is an assessment of the issuer's future ability and willingness to meet outstanding obligations. As such, for a complete credit quality assessment, DBRS normally requires the cooperation of the issuer so that management strategies and projections may be evaluated and qualified. Since the availability of such information is critical to the rating assessment, any reluctance in management's willingness to supply such information (either perceived or actual) may cause a rating to be changed or even suspended. The eventual action will depend upon DBRS's assessment of the degree of accuracy of a rating, possibly without the cooperation of management. Suspended ratings indicate that an issuer still has outstanding debt, but DBRS no longer provides a current rating opinion on the credit quality of that outstanding debt. A-11 (2) DISCONTINUED RATINGS. When an entity retires all, or virtually all, of its outstanding debt within a particular category and has no plans to re-issue in the near future (e.g. commercial paper, long-term debt or preferred shares), DBRS may discontinue its rating. Other less common circumstances where DBRS may also discontinue ratings include situations where the rated debt is no longer in the public market, where a defeasance structure removes the credit risk of the issuer as a consideration or where the debt comes to be held by a few large institutions that do not require ongoing DBRS ratings. (3) RATINGS "Under Review." In practice, DBRS maintains continuous surveillance of the entities that it rates and therefore all ratings are always under review. Accordingly, when a significant event occurs that directly impacts the credit quality of a particular entity or group of entities, DBRS will attempt to provide an immediate rating opinion. However, if there is high uncertainty regarding the outcome of the event, and DBRS is unable to provide an objective, forward-looking opinion in a timely fashion, then the rating(s) of the issuer(s) will be placed "Under Review" since they may no longer be appropriate and can no longer be relied upon. Ratings which are "Under Review" are qualified with one of the following three provisional statements: "negative implications", "positive implications", or "developing implications". These qualifications indicate DBRS's preliminary evaluation of the impact on the credit quality of the security/issuer. Although the three provisional statements may provide some guidance to subscribers, situations and potential rating implications may vary widely and DBRS's final rating conclusion may depart from its preliminary assessment. For each of these three provisional statements, further due diligence has to be completed in order to determine the applicable rating. In this respect, and while the previous rating may no longer be appropriate and can no longer be relied upon to gauge credit quality, the three provisional statements are an attempt to provide initial guidance as to possible rating outcomes after the due diligence process has been completed and DBRS has finalized its view. MUNICIPAL NOTE RATINGS - ---------------------- A Standard & Poor's U.S. municipal note rating reflects the liquidity factors and market access risks unique to notes due in three years or less. Notes maturing beyond three years will most likely receive a long-term debt rating. The following summarizes the ratings used by Standard & Poor's for municipal notes: "SP-1" - The issuers of these municipal notes exhibit a strong capacity to pay principal and interest. Those issues determined to possess a very strong capacity to pay debt service are given a plus (+) designation. "SP-2" - The issuers of these municipal notes exhibit a satisfactory capacity to pay principal and interest, with some vulnerability to adverse financial and economic changes over the term of the notes. "SP-3" - The issuers of these municipal notes exhibit speculative capacity to pay principal and interest. A-12 Moody's uses three rating categories for short-term municipal obligations that are considered investment grade. These ratings are designated as Municipal Investment Grade ("MIG") and are divided into three levels - "MIG-1" through "MIG-3". In addition, those short-term obligations that are of speculative quality are designated "SG", or speculative grade. MIG ratings expire at the maturity of the obligation. The following summarizes the ratings used by Moody's for these short-term obligations: "MIG-1" - This designation denotes superior credit quality. Excellent protection is afforded by established cash flows, highly reliable liquidity support or demonstrated broad-based access to the market for refinancing. "MIG-2" - This designation denotes strong credit quality. Margins of protection are ample, although not as large as in the preceding group. "MIG-3" - This designation denotes acceptable credit quality. Liquidity and cash-flow protection may be narrow, and market access for refinancing is likely to be less well-established. "SG" - This designation denotes speculative-grade credit quality. Debt instruments in this category may lack sufficient margins of protection. In the case of variable rate demand obligations ("VRDOs"), a two-component rating is assigned; a long- or short-term debt rating and a demand obligation rating. The first element represents Moody's evaluation of the degree of risk associated with scheduled principal and interest payments. The second element represents Moody's evaluation of the degree of risk associated with the ability to receive purchase price upon demand ("demand feature"), using a variation of the MIG rating scale, the Variable Municipal Investment Grade or "VMIG" rating. When either the long- or short-term aspect of a VRDO is not rated, that piece is designated "NR", e.g., "Aaa/NR" or "NR/VMIG-1". VMIG rating expirations are a function of each issue's specific structural or credit features. "VMIG-1" - This designation denotes superior credit quality. Excellent protection is afforded by the superior short-term credit strength of the liquidity provider and structural and legal protections that ensure the timely payment of purchase price upon demand. "VMIG-2" - This designation denotes strong credit quality. Good protection is afforded by the strong short-term credit strength of the liquidity provider and structural and legal protections that ensure the timely payment of purchase price upon demand. "VMIG-3" - This designation denotes acceptable credit quality. Adequate protection is afforded by the satisfactory short-term credit strength of the liquidity provider and structural and legal protections that ensure the timely payment of purchase price upon demand. A-13 "SG" - This designation denotes speculative-grade credit quality. Demand features rated in this category may be supported by a liquidity provider that does not have an investment grade short-term rating or may lack the structural and/or legal protections necessary to ensure the timely payment of purchase price upon demand. Fitch uses the same ratings for municipal securities as described above for other short-term credit ratings. ABOUT CREDIT RATINGS - -------------------- A Standard & Poor's issue credit rating is a current opinion of the creditworthiness of an obligor with respect to a specific financial obligation, a specific class of financial obligations, or a specific financial program (including ratings on medium-term note programs and commercial paper programs). It takes into consideration the creditworthiness of guarantors, insurers or other forms of credit enhancement on the obligation and takes into account the currency in which the obligation is denominated. The issue credit rating is not a recommendation to purchase, sell or hold a financial obligation inasmuch as it does not comment as to market price or suitability for a particular investor. Moody's credit ratings must be construed solely as statements of opinion and not as statements of fact or recommendations to purchase, sell or hold any securities. Fitch credit ratings are an opinion on the relative ability of an entitiy's financial commitments, such as interest, preferred dividends, repayment of principal, insurance claims or counterparty obligations. Fitch credit ratings are used by investors as indications of the likelihood of receiving their money back in accordance with the terms on which they invested. Fitch's credit-ratings cover the global spectrum of corporate, sovereign (including supra-national and sub-national), financial, bank, insurance, municipal and other public finance entities and the securities or other obligations they issue, as well as structured finance securities backed by receivables or other financial assets. DBRS credit ratings are not buy, hold or sell recommendations, but rather the result of qualitative and quantitative analysis focusing solely on the credit quality of the issuer and its underlying obligations. A-14 APPENDIX B PROXY VOTING POLICY ------------------- For BLACKROCK ADVISORS, INC. ------------------------ AND ITS AFFILIATED REGISTERED INVESTMENT ADVISERS ------------------------------------------------- INTRODUCTION ------------ This Proxy Voting Policy ("Policy") for BlackRock Advisors, Inc. and its affiliated registered investment advisers ("B1ackRock") reflects our duty as a fiduciary under the Investment Advisers Act of 1940 (the "Advisers Act") to vote proxies in the best interests of our clients. In addition, the Department of Labor views the fiduciary act of managing ERISA plan assets to include the voting of proxies. Proxy voting decisions must be made solely in the best interests of the pension plan's participants and beneficiaries. The Department of Labor has interpreted this requirement as prohibiting a fiduciary from subordinating the retirement income interests of participants and beneficiaries to unrelated objectives. The guidelines in this Policy have been formulated to ensure decision-making consistent with these fiduciary responsibilities. Any general or specific proxy voting guidelines provided by an advisory client or its designated agent in writing will supercede the specific guidelines in this Policy. BlackRock will disclose to our advisory clients information about this Policy as well as disclose to our clients how they may obtain information on how we voted their proxies. Additionally, BlackRock will maintain proxy voting records for our advisory clients consistent with the Advisers Act. For those of our clients that are registered investment companies, BlackRock will disclose this Policy to the shareholders of such funds and make filings with the Securities and Exchange Commission and make available to fund shareholders the specific proxy votes that we cast in shareholder meetings of issuers of portfolio securities in accordance with the rules and regulations under the Investment Company Act of 1940. Registered investment companies that are advised by BlackRock as well as certain of our advisory clients may participate in securities lending programs, which may reduce or eliminate the amount of shares eligible for voting by BlackRock in accordance with this Policy if such shares are out on loan and cannot be recalled in time for the vote. Implicit in the initial decision to retain or invest in the security of a corporation is approval of its existing corporate ownership structure, its management, and its operations. Accordingly, proxy proposals that would change the existing status of a corporation will be reviewed carefully and supported only when it seems clear that the proposed changes are likely to benefit the corporation and its shareholders. Notwithstanding this favorable predisposition, management will be assessed on an ongoing basis both in terms of its business capability and its dedication to the shareholders to ensure that our continued confidence remains warranted. If B-1 it is determined that management is acting on its own behalf instead of for the well being of the corporation, we will vote to support shareholder proposals, unless other mitigating circumstances are present. Additionally, situations may arise that involve an actual or perceived conflict of interest. For example, we may manage assets of a pension plan of a company whose management is soliciting proxies, or a BlackRock employee involved with managing an account may have a close relative who serves as a director or executive of a company that is soliciting proxies regarding securities held in such account. In all cases, the manner in which we vote proxies must be based on our clients' best interests and not the product of a conflict. This Policy and its attendant recommendations attempt to generalize a complex subject. It should be clearly understood that specific fact situations, including differing voting practices in jurisdictions outside the United States, might warrant departure from these guidelines. In such instances, the relevant facts will be considered, and if a vote contrary to these guidelines is indicated it will be cast and the reasons therefor recorded in writing. Section I of the Policy describes proxy proposals that may be characterized as routine and lists examples of the types of proposals we would typically support. Section II of the Policy describes various types of non-routine proposals and provides general voting guidelines. These non-routine proposals are categorized as those involving: A. Social Issues, B. Financial/Corporate Issues, and C. Shareholder Rights. Finally, Section III of the Policy describes the procedures to be followed in casting a vote pursuant to these guidelines. B-2 SECTION I ROUTINE MATTERS Routine proxy proposals, amendments, or resolutions are typically proposed by management and meet the following criteria: 1. They do not measurably change the structure, management control, or operation of the corporation. 2. They are consistent with industry standards as well as the corporate laws of the state of incorporation. VOTING RECOMMENDATION BlackRock will normally support the following routine proposals: 1. To increase authorized common shares. 2. To increase authorized preferred shares as long as there are not disproportionate voting rights per preferred share. 3. To elect or re-elect directors. 4. To appoint or elect auditors. 5. To approve indemnification of directors and limitation of directors' liability. 6. To establish compensation levels. 7. To establish employee stock purchase or ownership plans. 8. To set time and location of annual meeting. B-3 SECTION II NON-ROUTINE PROPOSALS A. SOCIAL ISSUES Proposals in this category involve issues of social conscience. They are typically proposed by shareholders who believe that the corporation's internally adopted policies are ill-advised or misguided. VOTING RECOMMENDATION If we have determined that management is generally socially responsible, we will generally vote AGAINST the following shareholder proposals: 1. To enforce restrictive energy policies. 2. To place arbitrary restrictions on military contracting. 3. To bar or place arbitrary restrictions on trade with other countries. 4. To restrict the marketing of controversial products. 5. To limit corporate political activities. 6. To bar or restrict charitable contributions. 7. To enforce a general policy regarding human rights based on arbitrary parameters. 8. To enforce a general policy regarding employment practices based on arbitrary parameters. 9. To enforce a general policy regarding animal rights based on arbitrary parameters. 10. To place arbitrary restrictions on environmental practices. B. FINANCIAL/CORPORATE ISSUES Proposals in this category are usually offered by management and seek to change a corporation's legal, business or financial structure. B-4 VOTING RECOMMENDATION We will generally vote in favor of the following management proposals provided the position of current shareholders is preserved or enhanced: 1. To change the state of incorporation. 2. To approve mergers, acquisitions or dissolution. 3. To institute indenture changes. 4. To change capitalization. C. SHAREHOLDER RIGHTS Proposals in this category are made regularly both by management and shareholders. They can be generalized as involving issues that transfer or realign board or shareholder voting power. We typically would oppose any proposal aimed solely at thwarting potential takeover offers by requiring, for example, super-majority approval. At the same time, we believe stability and continuity promote profitability. The guidelines in this area seek to find a middle road, and they are no more than guidelines. Individual proposals may have to be carefully assessed in the context of their particular circumstances. VOTING RECOMMENDATION We will generally vote FOR the following management proposals: 1. To require majority approval of shareholders in acquisitions of a controlling share in the corporation. 2. To institute staggered board of directors. 3. To require shareholder approval of not more than 66 2/3% for a proposed amendment to the corporation's by-laws. 4. To eliminate cumulative voting. 5. To adopt anti-greenmail charter or by-law amendments or to otherwise restrict a company's ability to make greenmail payments. B-5 6. To create a dividend reinvestment program. 7. To eliminate preemptive rights. 8. To eliminate any other plan or procedure designed primarily to discourage a takeover or other similar action (commonly known as a "poison pill"). We will generally vote AGAINST the following management proposals: 1. To require greater than 66 2/3% shareholder approval for a proposed amendment to the corporation's by-laws ("super-majority provisions"). 2. To require that an arbitrary fair price be offered to all shareholders that is derived from a fixed formula ("fair price amendments"). 3. To authorize a new class of common stock or preferred stock which may have more votes per share than the existing common stock. 4. To prohibit replacement of existing members of the board of directors. 5. To eliminate shareholder action by written consent without a shareholder meeting. 6. To allow only the board of directors to call a shareholder meeting Q' to propose amendments to the articles of incorporation. 7. To implement any other action or procedure designed primarily to discourage a takeover or other similar action (commonly known as a "poison pill"). 8. To limit the ability of shareholders to nominate directors. We will generally vote FOR the following shareholder proposals: 1. To rescind share purchases rights or require that they be submitted for shareholder approval, but only if the vote required for approval is not more than 66 2/3%. 2. To opt out of state anti takeover laws deemed to be detrimental to the shareholder. 3. To change the state of incorporation for companies operating under the umbrella of anti-shareholder state corporation laws if another state is chosen with favorable laws in this and other areas. B-6 4. To eliminate any other plan or procedure designed primarily to discourage a takeover or other similar action. 5. To permit shareholders to participate in formulating management's proxy and the opportunity to discuss and evaluate management's director nominees, and/or to nominate shareholder nominees to the board. 6. To require that the board's audit, compensation, and/or nominating committees be comprised exclusively of independent directors. 7. To adopt anti-greenmail charter or by-law amendments or otherwise restrict a company's ability to make greenmail payments. 8. To create a dividend reinvestment program. 9. To recommend that votes to "abstain" not be considered votes "cast" at an annual meeting or special meeting, unless required by state law. 10. To require that "golden parachutes" be submitted for shareholder ratification. We will generally vote AGAINST the following shareholder proposals: 1. To restore preemptive rights. 2. To restore cumulative voting. 3. To require annual election of directors or to specify tenure. 4. To eliminate a staggered board of directors. 5. To require confidential voting. 6. To require directors to own a minimum amount of company stock in order to qualify as a director or to remain on the board. 7. To dock director pay for failing to attend board meetings. B-7 SECTION III VOTING PROCESS BlackRock has engaged a third-party service provider to assist us in the voting of proxies. These guidelines have been provided to this service provider, who then analyzes all proxy solicitations we receive for our clients and makes recommendations to us as to how, based upon our guidelines, the relevant votes should be cast. These recommendations are set out in a report that is provided to the relevant Portfolio Management Group team, who must approve the proxy vote in writing and return such written approval to the Operations Group. If any authorized member of a Portfolio Management Group team desires to vote in a manner that differs from the recommendations, the reason for such differing vote shall be noted in the written approval form. A copy of the written approval form is attached as an exhibit. The head of each relevant Portfolio Management Group team is responsible for making sure that proxies are voted in a timely manner. The Brokerage Allocation Committee shall receive regular reports of all proxy votes cast to review how proxies have been voted, including reviewing votes that differ from recommendations made by our third-party service provider and votes that may have involved a potential conflict of interest. The Committee shall also review these guidelines from time to time to determine their continued appropriateness and whether any changes to the guidelines or the proxy voting process should be made. IF THERE IS ANY POSSIBILITY THAT THE VOTE MAY INVOLVE A MATERIAL CONFLICT OF INTEREST BECAUSE, FOR EXAMPLE, THE ISSUER SOLICITING THE VOTE IS A BLACKROCK CLIENT OR THE MATTER BEING VOTED ON INVOLVES BLACKROCK, PNC OR ANY AFFILIATE (INCLUDING A PORTFOLIO MANAGEMENT GROUP EMPLOYEE) OF EITHER OF THEM, PRIOR TO APPROVING SUCH VOTE, THE BROKERAGE ALLOCATION COMMITTEE MUST BE CONSULTED AND THE MATTER DISCUSSED. The Committee, in consultation with the Legal and Compliance Department, shall determine whether the potential conflict is material and if so, the appropriate method to resolve such conflict, based on the particular facts and circumstances, the importance of the proxy issue, whether the Portfolio Management Group team is proposing a vote that differs from recommendations made by our third-party service provider with respect to the issue and the nature of the conflict, so as to ensure that the voting of the proxy is not affected by the potential conflict. If the conflict is determined not to be material, the relevant Portfolio Management Group team shall vote the proxy in accordance with this Policy. Determinations of the Committee with respect to votes involving material conflicts of interest shall be documented in writing and maintained for a period of at least six years. With respect to votes in connection with securities held on a particular record date but sold from a client account prior to the holding of the related meeting, BlackRock may take no action on proposals to be voted on in such meeting. With respect to voting proxies of non-U.S. companies, a number of logistical problems may arise that may have a detrimental effect on BlackRock's ability to vote such proxies in the best interests of our clients. These problems include, but are not limited to, (i) untimely and/or B-8 inadequate notice of shareholder meetings, (ii) restrictions on the ability of holders outside the issuer's jurisdiction of organization to exercise votes, (iii) requirements to vote proxies in person, if not practicable, (iv) the imposition of restrictions on the sale of the securities for a period of time in proximity to the shareholder meeting, and (v) impracticable or inappropriate requirements to provide local agents with power of attorney to facilitate the voting instructions. Accordingly, BlackRock may determine not to vote proxies if it believes that the restrictions or other detriments associated with such vote outweigh the benefits that will be derived by voting on the company's proposal. * * * * Any questions regarding this Policy may be directed to the General Counsel of BlackRock. Approved: October 21, 1998 Revised: May 27, 2003 B-9 SANSOM STREET SHARES OF THE MONEY MARKET PORTFOLIO OF THE RBB FUND, INC. STATEMENT OF ADDITIONAL INFORMATION December __, 2006 This Statement of Additional Information ("SAI") provides information about the Company's Sansom Street Class of the Money Market Portfolio (the "Portfolio") of The RBB Fund, Inc. (the "Company"). This information is in addition to the information that is contained in the Sansom Street Money Market Portfolio Prospectus dated December __, 2006 (the "Prospectus"). This SAI is not a prospectus. It should be read in conjunction with the Prospectus and the Portfolio's Annual Report dated August 31, 2006. The financial statements and notes contained in the Annual Report _________________ this SAI. Copies of the Portfolio's Prospectus and Annual Report may be obtained free of charge by telephoning (800) 430-9618. No other part of the Annual Report is incorporated by reference herein. TABLE OF CONTENTS GENERAL INFORMATION..........................................................4 INVESTMENT INSTRUMENTS AND POLICIES..........................................4 ADDITIONAL INFORMATION ON PORTFOLIO INVESTMENTS...........................4 INVESTMENT LIMITATIONS......................................................14 FUNDAMENTAL INVESTMENT LIMITATIONS AND POLICIES..........................14 NON-FUNDAMENTAL INVESTMENT LIMITATIONS AND POLICIES......................16 DISCLOSURE OF PORTFOLIO HOLDINGS............................................17 MANAGEMENT OF THE COMPANY...................................................18 THE BOARD AND STANDING COMMITTEES........................................22 DIRECTOR OWNERSHIP OF SHARES OF THE COMPANY..............................22 DIRECTORS' AND OFFICERS' COMPENSATION....................................23 CODE OF ETHICS..............................................................25 PROXY VOTING................................................................25 CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES.........................25 INVESTMENT ADVISORY AND OTHER SERVICES......................................26 ADVISORY AND SUB-ADVISORY AGREEMENTS.....................................26 ADMINISTRATION AGREEMENT.................................................28 CUSTODIAN AND TRANSFER AGENCY AGREEMENTS.................................28 DISTRIBUTION AND SERVICING AGREEMENT.....................................30 PORTFOLIO TRANSACTIONS......................................................31 ADDITIONAL INFORMATION CONCERNING COMPANY SHARES............................32 PURCHASE AND REDEMPTION INFORMATION.........................................35 VALUATION OF SHARES.........................................................36 TAXES.......................................................................37 SHAREHOLDER APPROVALS.......................................................38 MISCELLANEOUS...............................................................38 COUNSEL..................................................................38 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM............................38 FINANCIAL STATEMENTS........................................................38 APPENDIX A.................................................................A-1 APPENDIX B.................................................................B-1 -3- GENERAL INFORMATION The Company is an open-end management investment company currently operating seventeen separate investment portfolios. The Company is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), and was organized as a Maryland corporation on February 29, 1988. This SAI pertains to the Sansom Street Class shares representing interests in one diversified investment portfolio of the Company, which is offered by a Prospectus. BlackRock Institutional Management Corporation ("BIMC" or the "Adviser") serves as the investment adviser to the Portfolio. INVESTMENT INSTRUMENTS AND POLICIES The following supplements the information contained in the Prospectus concerning the investment objective and policies of the Money Market Portfolio (the "Portfolio"). The Portfolio seeks to generate current income to provide you with liquidity and to protect your investment. The Adviser may not invest in all of the instruments or use all of the investment techniques permitted by the Portfolio's Prospectus and this SAI or invest in such instruments or engage in such techniques to the full extent permitted by the Portfolio's investment policies and limitations. ADDITIONAL INFORMATION ON PORTFOLIO INVESTMENTS ASSET-BACKED SECURITIES. The Portfolio may invest in asset-backed securities which are backed by mortgages, installment sales contracts, credit card receivables or other assets and CMOs issued or guaranteed by U.S. government agencies and instrumentalities. It may also invest in asset-backed securities issued by private companies. Asset-backed securities also include adjustable rate securities. The estimated life of an asset-backed security varies with the prepayment experience with respect to the underlying debt instruments. For this and other reasons, an asset-backed security's stated maturity may be shortened, and the security's total return may be difficult to predict precisely. Such difficulties are not expected, however, to have a significant effect on the Portfolio since the remaining maturity of any asset-backed security acquired will be 397 days or less. Asset-backed securities are considered an industry for industry concentration purposes (see "Fundamental Investment Limitations and Policies"). In periods of falling interest rates, the rate of mortgage prepayments tends to increase. During these periods, the reinvestment of proceeds by the Portfolio will generally be at lower rates than the rates on the prepaid obligations. Asset-backed securities are generally issued as pass-through certificates, which represent undivided fractional ownership interests in an underlying pool of assets, or as debt instruments, which are also known as collateralized obligations, and are generally issued as the debt of a special purpose entity organized solely for the purpose of owning such assets and issuing such debt. Asset-backed securities are often backed by a pool of assets representing the obligations of a number of different parties. -4- In general, the collateral supporting non-mortgage asset-backed securities is of shorter maturity than mortgage-related securities. Like other fixed-income securities, when interest rates rise the value of an asset-backed security generally will decline; however, when interest rates decline, the value of an asset-backed security with prepayment features may not increase as much as that of other fixed-income securities. BANK OBLIGATIONS The Portfolio will invest at least 25% of its total assets in obligations of issuers in the banking industry, such as short-term obligations of bank holding companies, certificates of deposit, bankers' acceptances and time deposits, including U.S. dollar-denominated instruments issued or supported by the credit of U.S. or foreign banks or savings institutions having total assets at the time of purchase in excess of $1 billion. The Portfolio may invest substantially in obligations of foreign banks or foreign branches of U.S. banks where the investment adviser deems the instrument to present minimal credit risks. Such investments may nevertheless entail risks in addition to those of domestic issuers, including higher transaction costs, less complete financial information, less stringent regulatory requirements, less market liquidity, future unfavorable political and economic developments, possible withholding taxes on interest income, seizure or nationalization of foreign deposits, currency controls, interest limitations, or other governmental restrictions which might affect the payment of principal or interest on the securities held in the Portfolio. Additionally, these institutions may be subject to less stringent reserve requirements and to different accounting, auditing, reporting and recordkeeping requirements than those applicable to domestic branches of U.S. banks. The Portfolio will invest in obligations of domestic branches of foreign banks and foreign branches of domestic banks only when its investment adviser believes that the risks associated with such investment are minimal. The Portfolio may also make interest-bearing savings deposits in commercial and savings banks in amounts not in excess of 5% of its total assets. COMMERCIAL PAPER. The Portfolio may purchase commercial paper rated (i) (at the time of purchase) in the two highest rating categories of at least two nationally recognized statistical rating organizations ("NRSRO") or, by the only NRSRO providing a rating; or (ii) issued by issuers (or, in certain cases guaranteed by persons) with short-term debt having such ratings. These rating categories are described in Appendix "A" to this SAI. The Portfolio may also purchase unrated commercial paper provided that such paper is determined to be of comparable quality by the Portfolio's investment adviser in accordance with guidelines approved by the Company's Board of Directors. Commercial paper purchased by the Portfolio may include instruments issued by foreign issuers, such as Canadian Commercial Paper ("CCP"), which is U.S.-dollar-denominated commercial paper issued by a Canadian corporation or a Canadian counterpart of a U.S. corporation, and in Europaper, which is U.S.-dollar-denominated commercial paper of a foreign issuer, subject to the criteria stated above for other commercial paper issuers. ELIGIBLE SECURITIES. The Portfolio will only purchase "eligible securities" that present minimal credit risks as determined by the investment adviser pursuant to guidelines adopted by the Board of Directors. Eligible securities generally include: (1) U.S. government securities; (2) securities that (a) are rated (at the time of purchase) by two or more nationally recognized statistical rating organizations ("NRSROs") in the two highest short-term rating categories for -5- such securities (e.g., commercial paper rated "A-1" or "A-2," by Standard & Poor's(R) Ratings Services ("S&P(R)"), or rated "Prime-1" or "Prime-2" by Moody's Investor's Service, Inc. ("Moody's"), or (b) are rated (at the time of purchase) by the only NRSRO rating the security in one of its two highest rating categories for such securities; (3) short-term obligations and, subject to certain SEC requirements, long-term obligations that have remaining maturities of 397 days or less, provided in each instance that such obligations have no short-term rating and are comparable in priority and security to a class of short-term obligations of the issuer that has been rated in accordance with (2)(a) or (b) above ("comparable obligations"); (4) securities that are not rated and are issued by an issuer that does not have comparable obligations rated by a NRSRO ("Unrated Securities"), provided that such securities are determined to be of comparable quality to a security satisfying (2)(a) or (b) above; and (5) subject to certain conditions imposed under SEC rules, obligations guaranteed or otherwise supported by persons which meet the requisite rating requirements. GUARANTEED INVESTMENT CONTRACTS. The Portfolio may make investments in obligations, such as guaranteed investment contracts and similar funding agreements (collectively, "GICs"), issued by highly rated U.S. insurance companies. A GIC is a general obligation of the issuing insurance company and not a separate account. The Portfolio's investments in GICs are not expected to exceed 5% of its total assets at the time of purchase absent unusual market conditions. GICs are considered illiquid securities and will be subject to the Portfolio's 10% limitation on illiquid investments, unless there is an active and substantial secondary market for the particular instrument and market quotations are readily available. ILLIQUID SECURITIES. The Portfolio may not invest more than 10% of its net assets in illiquid securities including repurchase agreements that have a maturity of longer than seven days, and including securities that are illiquid by virtue of the absence of a readily available market or legal or contractual restrictions on resale. Other securities considered illiquid are time deposits with maturities in excess of seven days, variable rate demand notes with demand periods in excess of seven days unless the Portfolio's investment adviser determines that such notes are readily marketable and could be sold promptly at the prices at which they are valued and GICs. Repurchase agreements subject to demand are deemed to have a maturity equal to the notice period. Securities that have legal or contractual restrictions on resale but have a readily available market are not considered illiquid for purposes of this limitation. The Portfolio's investment adviser will monitor the liquidity of such restricted securities under the supervision of the Board of Directors. Historically, illiquid securities have included securities subject to contractual or legal restrictions on resale because they have not been registered under the Securities Act, as amended, securities which are otherwise not readily marketable and repurchase agreements having a maturity of longer than seven days. Securities which have not been registered under the Securities Act are referred to as private placements or restricted securities and are purchased directly from the issuer or in the secondary market. Mutual funds do not typically hold a significant amount of illiquid securities because of the potential for delays on resale and uncertainty in valuation. Limitations on resale may have an adverse effect on the marketability of portfolio securities and a mutual fund might be unable to dispose of restricted or other illiquid securities promptly or at reasonable prices and might thereby experience difficulty in satisfying -6- redemptions within seven days. A mutual fund might also have to register such restricted securities in order to dispose of them, resulting in additional expense and delay. Adverse market conditions could impede such a public offering of securities. Illiquid securities would be more difficult to dispose of than liquid securities to satisfy redemption requests. The Portfolio may purchase securities which are not registered under the Securities Act but which may be sold to "qualified institutional buyers" in accordance with Rule 144A under the Securities Act. These securities will not be considered illiquid so long as it is determined by the Adviser that an adequate trading market exists for the securities. This investment practice could have the effect of increasing the level of illiquidity in the Portfolio during any period that qualified institutional buyers become uninterested in purchasing restricted securities. The Portfolio's investment adviser will monitor the liquidity of restricted securities in the Portfolio under the supervision of the Board of Directors. In reaching liquidity decisions, the investment adviser may consider, among others, the following factors: (1) the unregistered nature of the security; (2) the frequency of trades and quotes for the security; (3) the number of dealers wishing to purchase or sell the security and the number of other potential purchasers; (4) dealer undertakings to make a market in the security; and (5) the nature of the security and the nature of the marketplace trades (e.g., the time needed to dispose of the security, the method of soliciting offers and the mechanics of the transfer). MORTGAGE-RELATED SECURITIES. Mortgage-related securities consist of mortgage loans which are assembled into pools, the interests in which are issued and guaranteed by an agency or instrumentality of the U.S. government, though not necessarily by the U.S. government itself. There are a number of important differences among the agencies and instrumentalities of the U.S. government that issue mortgage-related securities and among the securities that they issue. Mortgage-related securities guaranteed by the Government National Mortgage Association ("GNMA") include GNMA Mortgage Pass-Through Certificates (also known as "Ginnie Maes") which are guaranteed as to the timely payment of principal and interest by GNMA and such guarantee is backed by the full faith and credit of the United States. GNMA is a wholly-owned U.S. government corporation within the Department of Housing and Urban Development. GNMA certificates also are supported by the authority of GNMA to borrow funds from the U.S. Treasury to make payments under its guarantee. Mortgage-related securities issued by Fannie Mae include Fannie Mae guaranteed Mortgage Pass-Through Certificates (also known as "Fannie Maes") which are solely the obligations of Fannie Mae, are not backed by or entitled to the full faith and credit of the United States and are supported by the right of the issuer to borrow from the Treasury. Fannie Mae is a government-sponsored organization owned entirely by private stockholders. Fannie Maes are guaranteed as to timely payment of principal and interest by Fannie Mae. Mortgage-related securities issued by Freddie Mac include Freddie Mac Mortgage Participation Certificates (also known as "Freddie Macs" or "PCs"). Freddie Mac is a corporate instrumentality of the United States, created pursuant to an Act of Congress, which is owned entirely by Federal Home Loan Banks. Freddie Macs are not guaranteed by the United States or by any Federal Home Loan Banks and do not constitute a debt or obligation of the United States or of any Federal Home Loan Bank. Freddie Macs entitle the holder to timely payment of interest, which is guaranteed by Freddie Mac. Freddie Mac guarantees either ultimate collection -7- or timely payment of all principal payments on the underlying mortgage loans. When Freddie Mac does not guarantee timely payment of principal, Freddie Mac may remit the amount due on account of its guarantee of ultimate payment of principal at any time after default on an underlying mortgage, but in no event later than one year after it becomes payable. The Portfolio may invest in multiple class pass-through securities, including collateralized mortgage obligations ("CMOs"). These multiple class securities may be issued by U.S. government agencies or instrumentalities, including Fannie Mae and Freddie Mac, or by trusts formed by private originators of, or investors in, mortgage loans. In general, CMOs are debt obligations of a legal entity that are collateralized by a pool of residential or commercial mortgage loans or mortgage pass-through securities (the "Mortgage Assets"), the payments on which are used to make payments on the CMOs. Investors may purchase beneficial interests in CMOs, which are known as "regular" interests or "residual" interests. The residual in a CMO structure generally represents the interest in any excess cash flow remaining after making required payments of principal of and interest on the CMOs, as well as the related administrative expenses of the issuer. Residual interests generally are junior to, and may be significantly more volatile than, "regular" CMO interests. The Portfolio does not currently intend to purchase CMOs, except as collateral for repurchase agreements. Each class of CMOs, often referred to as a "tranche," is issued at a specific adjustable or fixed interest rate and must be fully retired no later than its final distribution date. Principal prepayments on the Mortgage Assets underlying the CMOs may cause some or all of the classes of CMOs to be retired substantially earlier than their final distribution dates. Generally, interest is paid or accrues on all classes of CMOs on a monthly basis. The principal of and interest on the Mortgage Assets may be allocated among the several classes of CMOs in various ways. In certain structures (known as "sequential pay" CMOs), payments of principal, including any principal prepayments, on the Mortgage Assets generally are applied to the classes of CMOs in the order of their respective final distribution dates. Thus, no payment of principal will be made on any class of sequential pay CMOs until all other classes having an earlier final distribution date have been paid in full. Additional structures of CMOs include, among others, "parallel pay" CMOs. Parallel pay CMOs are those which are structured to apply principal payments and prepayments of the Mortgage Assets to two or more classes concurrently on a proportionate or disproportionate basis. These simultaneous payments are taken into account in calculating the final distribution date of each class. The relative payment rights of the various CMO classes may be subject to greater volatility and interest-rate risk than other types of mortgage-backed securities. The average life of asset-backed securities varies with the underlying instruments or assets and market conditions, which in the case of mortgages have maximum maturities of forty years. The average life of a mortgage-backed instrument, in particular, is likely to be substantially less than the original maturity of the mortgages underlying the securities as the result of unscheduled principal payments and mortgage prepayments. The relationship between mortgage prepayment and interest rates may give some high-yielding mortgage-backed securities less potential for growth -8- in value than conventional bonds with comparable maturities. In addition, in periods of falling interest rates, the rate of mortgage prepayments tends to increase. During such periods, the reinvestment of prepayment proceeds by a Portfolio will generally be at lower rates than the rates that were carried by the obligations that have been prepaid. When interest rates rise, the value of an asset-backed security generally will decline; however, when interest rates decline, the value of an asset-backed security with prepayment features may not increase as much as that of other fixed-income securities. Because of these and other reasons, an asset-backed security's total return may be difficult to predict precisely. MUNICIPAL OBLIGATIONS. The Portfolio may invest in short-term Municipal Obligations which are determined by its investment adviser to present minimal credit risks and that meet certain ratings criteria pursuant to guidelines established by the Company's Board of Directors. The Portfolio may also purchase Unrated Securities provided that such securities are determined to be of comparable quality to eligible rated securities. The applicable Municipal Obligations ratings are described in the Appendix to this Statement of Additional Information. The two principal classifications of Municipal Obligations are "general obligation" securities and "revenue" securities. General obligation securities are secured by the issuer's pledge of its full faith, credit and taxing power for the payment of principal and interest. Revenue securities are payable only from the revenues derived from a particular facility or class of facilities or, in some cases, from the proceeds of a special excise tax or other specific excise tax or other specific revenue source such as the user of the facility being financed. Revenue securities include private activity bonds which are not payable from the unrestricted revenues of the issuer. Consequently, the credit quality of private activity bonds is usually directly related to the credit standing of the corporate user of the facility involved. Municipal Obligations may also include "moral obligation" bonds, which are normally issued by special purpose public authorities. If the issuer of moral obligation bonds is unable to meet its debt service obligations from current revenues, it may draw on a reserve fund, the restoration of which is a moral commitment but not a legal obligation of the state or municipality which created the issuer. Therefore, risk exists that the reserve fund will not be restored. Municipal Obligations may include variable rate demand notes. Such notes are frequently not rated by credit rating agencies, but unrated notes purchased by the Portfolio will have been determined by the Portfolio's investment adviser to be of comparable quality at the time of the purchase to rated instruments purchasable by the Portfolio. Where necessary to ensure that a note is of eligible quality, the Portfolio will require that the issuer's obligation to pay the principal of the note be backed by an unconditional bank letter or line of credit, guarantee or commitment to lend. While there may be no active secondary market with respect to a particular variable rate demand note purchased by the Portfolio, the Portfolio may, upon the notice specified in the note, demand payment of the principal of the note at any time or during specified periods not exceeding 13 months, depending upon the instrument involved. The absence of such an active secondary market, however, could make it difficult for the Portfolio to dispose of a variable rate demand note if the issuer defaulted on its payment obligation or during the periods that the Portfolio is not entitled to exercise its demand rights. The Portfolio could, for this or other reasons, suffer a loss to the extent of the default. The Portfolio invests in variable rate -9- demand notes only when the Portfolio's investment adviser deems the investment to involve minimal credit risk. The Portfolio's investment adviser also monitors the continuing creditworthiness of issuers of such notes to determine whether the Portfolio should continue to hold such notes. In addition, the Portfolio may, when deemed appropriate by its investment adviser in light of the Portfolio's investment objective, invest without limitation in high quality, short-term Municipal Obligations issued by state and local governmental issuers, the interest on which may be taxable or tax-exempt for federal income tax purposes, provided that such obligations carry yields that are competitive with those of other types of money market instruments of comparable quality. Opinions relating to the validity of Municipal Obligations and to the exemption of interest thereon from federal income tax are rendered by bond counsel to the respective issuers at the time of issuance and relied upon by the Portfolio in purchasing such securities. Neither the Company nor its investment adviser will review the proceedings relating to the issuance of Municipal Obligations or the basis for such opinions. REPURCHASE AGREEMENTS. The Portfolio 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 securities held subject to a repurchase agreement may have stated maturities exceeding 397 days, provided the repurchase agreement itself matures in less than 13 months. Default by or bankruptcy of the seller would, however, expose the Portfolio to possible loss because of adverse market action or delays in connection with the disposition of the underlying obligations. The repurchase price under the repurchase agreements described above generally equals the price paid by the Portfolio plus interest negotiated on the basis of current short-term rates (which may be more or less than the rate on the securities underlying the repurchase agreement). The financial institutions with which the Portfolio may enter into repurchase agreements will be banks and non-bank dealers of U.S. government securities that are listed on the Federal Reserve Bank of New York's list of reporting dealers, if such banks and non-bank dealers are deemed creditworthy by the Adviser. The Adviser will continue to monitor creditworthiness of the seller under a repurchase agreement, and will require the seller to maintain during the term of the agreement the value of the securities subject to the agreement to equal at least the repurchase price (including accrued interest). In addition, the Portfolio's adviser will require that the value of this collateral, after transaction costs (including loss of interest) reasonably expected to be incurred on a default, be equal to or greater than the repurchase price including either: (i) accrued premium provided in the repurchase agreement; or (ii) the daily amortization of the difference between the purchase price and the repurchase price specified in the repurchase agreement. The Portfolio's adviser will mark to market daily the value of the securities. Securities subject to repurchase agreements will be held by the Company's custodian in the Federal Reserve/Treasury book-entry system or by another authorized securities depository. Repurchase agreements are considered to be loans by the Portfolio under the 1940 Act. -10- REVERSE REPURCHASE AGREEMENTS. The Portfolio may enter into reverse repurchase agreements with respect to portfolio securities. A reverse repurchase agreement involves a sale by the Portfolio of securities that it holds concurrently with an agreement by the Portfolio to repurchase them at an agreed upon time, price and rate of interest. Reverse repurchase agreements involve the risk that the market value of the securities sold by the Portfolio may decline below the price at which the Portfolio is obligated to repurchase them and the return on the cash exchanged for the securities. Reverse repurchase agreements are considered to be borrowings under the 1940 Act and may be entered into only for temporary or emergency purposes. While reverse repurchase transactions are outstanding, the Portfolio will maintain in a segregated account with the Company's custodian or a qualified sub-custodian, cash or other liquid securities of an amount at least equal to the market value of the securities, plus accrued interest, subject to the agreement. SECTION 4(2) PAPER. "Section 4(2) paper" is commercial paper which is issued in reliance on the "private placement" exemption from registration which is afforded by Section 4(2) of the Securities Act of 1933 (the "Securities Act") as amended. Section 4(2) paper is restricted as to disposition under the federal securities laws and is generally sold to institutional investors such as the Company which agree that they are purchasing the paper for investment and not with a view to public distribution. Any resale by the purchaser must be in an exempt transaction. Section 4(2) paper normally is resold to other institutional investors through or with the assistance of investment dealers who make a market in the Section 4(2) paper, thereby providing liquidity. See "Illiquid Securities" below. STAND-BY COMMITMENTS. The Portfolio may enter into stand-by commitments with respect to obligations issued by or on behalf of states, territories, and possessions of the United States, the District of Columbia, and their political subdivisions, agencies, instrumentalities and authorities (collectively, "Municipal Obligations") held in its portfolio. Under a stand-by commitment, a dealer would agree to purchase at the Portfolio's option a specified Municipal Obligation at its amortized cost value to the Portfolio plus accrued interest, if any. Stand-by commitments may be exercisable by the Portfolio at any time before the maturity of the underlying Municipal Obligations and may be sold, transferred or assigned only with the instruments involved. The Portfolio expects that stand-by commitments will generally be available without the payment of any direct or indirect consideration. However, if necessary or advisable, the Portfolio may pay for a stand-by commitment either in cash or by paying a higher price for portfolio securities which are acquired subject to the commitment (thus reducing the yield to maturity otherwise available for the same securities). The total amount paid in either manner for outstanding stand-by commitments held by the Portfolio will not exceed 1/2 of 1% of the value of the Portfolio's total assets calculated immediately after each stand-by commitment is acquired. The Portfolio intends to enter into stand-by commitments only with dealers, banks and broker-dealers which, in the investment adviser's opinion, present minimal credit risks. The Portfolio's reliance upon the credit of these dealers, banks and broker-dealers will be secured by the value of the underlying Municipal Obligations that are subject to the commitment. The -11- acquisition of a stand-by commitment may increase the cost, and thereby reduce the yield, of the Municipal Obligation to which such commitment relates. The Portfolio will acquire stand-by commitments solely to facilitate portfolio liquidity and does not intend to exercise its rights thereunder for trading purposes. The acquisition of a stand-by commitment will not affect the valuation or assumed maturity of the underlying Municipal Obligation which will continue to be valued in accordance with the amortized cost method. The actual stand-by commitment will be valued at zero in determining net asset value ("NAV"). Accordingly, where the Portfolio pays directly or indirectly for a stand-by commitment, its cost will be reflected as an unrealized loss for the period during which the commitment is held by the Portfolio and will be reflected in realized gain or loss when the commitment is exercised or expires. U.S. GOVERNMENT OBLIGATIONS. The Portfolio may purchase U.S. government agency and instrumentality obligations that are debt securities issued by U.S. government-sponsored enterprises and federal agencies. Some obligations of agencies and instrumentalities of the U.S. government are supported by the full faith and credit of the U.S. government or by U.S. Treasury guarantees, such as securities of the Government National Mortgage Association ("GNMA") and the Federal Housing Authority; others, by the ability of the issuer to borrow, provided approval is granted, from the U.S. Treasury, such as securities of Freddie Mac and others, only by the credit of the agency or instrumentality issuing the obligation, such as securities of Fannie Mae and the Federal Home Loan Banks. Such guarantees of U.S. government securities held by a Fund do not, however, guarantee the market value of the shares of the Fund. There is no guarantee that the U.S. government will continue to provide support to its agencies or instrumentalities in the future. U.S. government obligations that are not backed by the full faith and credit of the U.S. government are subject to greater risks than those that are backed by the full faith and credit of the U.S. government. All U.S. government obligations are subject to interest rate risk. The Portfolio's net assets may be invested in obligations issued or guaranteed by the U.S. Treasury or the agencies or instrumentalities of the U.S. government. The maturities of U.S. government securities usually range from three months to thirty years. Examples of types of U.S. government obligations include U.S. Treasury Bills, Treasury Notes and Treasury Bonds and the obligations of Federal Home Loan Banks, Federal Farm Credit Banks, Federal Land Banks, the Federal Housing Administration, Farmers Home Administration, Export-Import Bank of the United States, Small Business Administration, Federal National Mortgage Association, Government National Mortgage Association, General Services Administration, Central Bank for Cooperatives, Federal Home Loan Mortgage Corporation, Federal Intermediate Credit Banks, the Maritime Administration, the Asian-American Development Bank and the Inter-American Development Bank. U.S. government securities may include inflation-indexed fixed income securities, such as U.S. Treasury Inflation Protected Securities (TIPS). The interest rate of TIPS, which is set at auction, remains fixed throughout the term of the security and the principal amount of the security is adjusted for inflation. The inflation-adjusted principal is not paid until maturity. VARIABLE RATE DEMAND INSTRUMENTS. The Portfolio may purchase variable rate demand notes, which are unsecured instruments that permit the indebtedness thereunder to vary and -12- provide for periodic adjustment in the interest rate. Although the notes are not normally traded and there may be no active secondary market in the notes, the Portfolio will be able to demand payment of the principal of a note. The notes are not typically rated by credit rating agencies, but issuers of variable rate demand notes must satisfy the same criteria as issuers of commercial paper. If an issuer of a variable rate demand note defaulted on its payment obligation, the Portfolio might be unable to dispose of the note because of the absence of an active secondary market. For this or other reasons, the Portfolio might suffer a loss to the extent of the default. The Portfolio invests in variable rate demand notes only when the Portfolio's investment adviser deems the investment to involve minimal credit risk. The Portfolio's investment adviser also monitors the continuing creditworthiness of issuers of such notes to determine whether the Portfolio should continue to hold such notes. Variable rate demand instruments held by the Portfolio may have maturities of more than 397 calendar days, provided: (i) the Portfolio is entitled to the payment of principal at any time, or during specified intervals not exceeding 397 calendar days, upon giving the prescribed notice (which may not exceed 30 days); and (ii) the rate of interest on such instruments is adjusted at periodic intervals which may extend up to 397 calendar days. In determining the average weighted maturity of the Portfolio and whether a variable rate demand instrument has a remaining maturity of 397 calendar days or less, each long-term instrument will be deemed by the Portfolio to have a maturity equal to the longer of the period remaining until its next interest rate adjustment or the period remaining until the principal amount can be recovered through demand. The absence of an active secondary market with respect to particular variable and floating rate instruments could make it difficult for the Portfolio to dispose of variable or floating rate notes if the issuer defaulted on its payment obligations or during periods that the Portfolio is not entitled to exercise its demand right, and the Portfolio could, for these or other reasons, suffer a loss with respect to such instruments. WHEN-ISSUED OR DELAYED DELIVERY SECURITIES. The Portfolio may purchase "when-issued" and delayed delivery securities purchased for delivery beyond the normal settlement date at a stated price and yield. The Portfolio will generally not pay for such securities or start earning interest on them until they are received. Securities purchased on a when-issued basis are recorded as an asset at the time the commitment is entered into and are subject to changes in value prior to delivery based upon changes in the general level of interest rates. While the Portfolio has such commitments outstanding, the Portfolio will maintain in a segregated account with the Company's custodian or a qualified sub-custodian, cash or liquid securities of an amount at least equal to the purchase price of the securities to be purchased. Normally, the custodian for the Portfolio will set aside portfolio securities to satisfy a purchase commitment and, in such a case, the Portfolio may be required subsequently to place additional assets in the separate account in order to ensure that the value of the account remains equal to the amount of the Portfolio's commitment. It may be expected that the Portfolio's net assets will fluctuate to a greater degree when it sets aside portfolio securities to cover such purchase commitments than when it sets aside cash. Because the Portfolio's liquidity and ability to manage its portfolio might be affected when it sets aside cash or portfolio securities to cover such purchase commitments, it is expected that commitments to purchase "when-issued" securities will not exceed 25% of the value of the Portfolio's total assets absent unusual market conditions. -13- When the Portfolio engages in when-issued transactions, it relies on the seller to consummate the trade. Failure of the seller to do so may result in the Portfolio's incurring a loss or missing an opportunity to obtain a price considered to be advantageous. The Portfolio does not intend to purchase when-issued securities for speculative purposes but only in furtherance of its investment objective. INVESTMENT LIMITATIONS FUNDAMENTAL INVESTMENT LIMITATIONS AND POLICIES A fundamental limitation or policy of the Portfolio may not be changed with respect to the Portfolio without the affirmative vote of the holders of a majority of the Portfolio's outstanding shares (as defined in Section 2(a) (42) of the 1940 Act). As used in this SAI and in the Prospectus, "shareholder approval" and a "majority of the outstanding shares" of a Portfolio means, with respect to the approval of an investment advisory agreement, a distribution plan or a change in a fundamental investment limitation, the lesser of: (1) 67% of the shares of the particular Portfolio represented at a meeting at which the holders of more than 50% of the outstanding shares of such Portfolio are present in person or by proxy; or (2) more than 50% of the outstanding shares of such Portfolio. The Company's Board of Directors can change the investment objective of the Portfolio without shareholder approval. Shareholders will be given notice before any such change is made. The Portfolio may not: 1. borrow money, except from banks for temporary purposes and for reverse repurchase agreements and then in amounts not in excess of 10% of the value of the Portfolio's total assets at the time of such borrowing, and only if after such borrowing there is asset coverage of at least 300% for all borrowings of the Portfolio; or mortgage, pledge, or hypothecate any of its assets except in connection with such borrowings and then in amounts not in excess of 10% of the value of the Portfolio's total assets at the time of such borrowing or purchase portfolio securities while borrowings are in excess of 5% of the Portfolio's net assets. (This borrowing provision is not for investment leverage, but solely to facilitate management of the Portfolio's securities by enabling the Portfolio to meet redemption requests where the liquidation of portfolio securities is deemed to be disadvantageous or inconvenient.); 2. purchase securities on margin, except for short-term credit necessary for clearance of portfolio transactions; 3. underwrite securities of other issuers, except to the extent that, in connection with the disposition of portfolio securities, the Portfolio may be deemed an underwriter under federal securities laws and except to the extent that the purchase of Municipal Obligations directly from the issuer thereof in accordance with the -14- Portfolio's investment objective, policies and limitations may be deemed to be an underwriting; 4. make short sales of securities or maintain a short position or write or sell puts, calls, straddles, spreads or combinations thereof; 5. purchase or sell real estate, provided that the Portfolio may invest in securities secured by real estate or interests therein or issued by companies which invest in real estate or interests therein; 6. purchase or sell commodities or commodity contracts; 7. invest in oil, gas or mineral exploration or development programs; 8. make loans except that the Portfolio may purchase or hold debt obligations in accordance with its investment objective, policies and limitations and may enter into repurchase agreements; 9. purchase any securities issued by any other investment company except in connection with the merger, consolidation, acquisition or reorganization of all the securities or assets of such an issuer; 10. make investments for the purpose of exercising control or management; 11. purchase securities of any one issuer, other than securities issued or guaranteed by the U.S. government or its agencies or instrumentalities, if immediately after and as a result of such purchase more than 5% of the Portfolio's total assets would be invested in the securities of such issuer, or more than 10% of the outstanding voting securities of such issuer would be owned by the Portfolio, except that up to 25% of the value of the Portfolio's assets may be invested without regard to this 5% limitation; 12. purchase any securities other than money market instruments, some of which may be subject to repurchase agreements, but the Portfolio may make interest-bearing savings deposits in amounts not in excess of 5% of the value of the Portfolio's assets and may make time deposits; 13.* purchase any securities which would cause, at the time of purchase, less than 25% of the value of the total assets of the Portfolio to be invested in the obligations of issuers in the banking industry, or in obligations, such as repurchase agreements, secured by such obligations (unless the Portfolio is in a temporary defensive position) or which would cause, at the time of purchase, more than 25% of the value of its total assets to be invested in the obligations of issuers in any other industry; and -15- 14. invest more than 5% of its total assets (taken at the time of purchase) in securities of issuers (including their predecessors) with less than three years of continuous operations. 15. Issue any class of senior security or to sell any senior security of which it is the issuer, as defined in Section 18(f) of the Investment Company Act of 1940, except to the extent permitted by the 1940 Act. * WITH RESPECT TO THIS LIMITATION, THE PORTFOLIO WILL CONSIDER WHOLLY-OWNED FINANCE COMPANIES TO BE IN THE INDUSTRIES OF THEIR PARENTS IF THEIR ACTIVITIES ARE PRIMARILY RELATED TO FINANCING THE ACTIVITIES OF THE PARENTS, AND WILL DIVIDE UTILITY COMPANIES ACCORDING TO THEIR SERVICES. FOR EXAMPLE, GAS, GAS TRANSMISSION, ELECTRIC AND GAS, ELECTRIC AND TELEPHONE WILL EACH BE CONSIDERED A SEPARATE INDUSTRY. THE POLICY AND PRACTICES STATED IN THIS PARAGRAPH MAY BE CHANGED WITHOUT SHAREHOLDER APPROVAL, HOWEVER, ANY CHANGE WOULD BE SUBJECT TO ANY APPLICABLE REQUIREMENTS OF THE SEC AND WOULD BE DISCLOSED IN THE PROSPECTUS PRIOR TO BEING MADE. NON-FUNDAMENTAL INVESTMENT LIMITATIONS AND POLICIES A non-fundamental investment limitation or policy may be changed by the Board of Directors without shareholder approval. However, shareholders will be notified of any changes to any of the following limitations or policies. So long as it values its portfolio securities on the basis of the amortized cost method of valuation pursuant to Rule 2a-7 under the 1940 Act, the Portfolio will, subject to certain exceptions, limit its purchases of: 1. The securities of any one issuer, other than issuers of U.S. government securities, to 5% of its total assets, except that the Portfolio may invest more than 5% of its total assets in First Tier Securities of one issuer for a period of up to three business days. "First Tier Securities" include eligible securities that: (i) if rated by more than one NRSRO (as defined in the Prospectus), are rated (at the time of purchase) by two or more NRSROs in the highest rating category for such securities; (ii) if rated by only one NRSRO, are rated by such NRSRO in its highest rating category for such securities; (iii) have no short-term rating and are comparable in priority and security to a class of short-term obligations of the issuer of such securities that have been rated in accordance with (i) or (ii) above; or (iv) are Unrated Securities that are determined to be of comparable quality to such securities, 2. Second Tier Securities (which are eligible securities other than First Tier Securities) to 5% of its total assets; and -16- 3. Second Tier Securities of one issuer to the greater of 1% of its total assets or $1 million. In addition, so long as it values its portfolio securities on the basis of the amortized cost method of valuation pursuant to Rule 2a-7 under the 1940 Act, the Portfolio will not purchase any Guarantees or Demand Features (as defined in Rule 2a-7) if after the acquisition of the Guarantees or Demand Features the Portfolio has more than 10% of its total assets invested in instruments issued by or subject to Guarantees or Demand Features from the same institution, except that the foregoing condition shall only be applicable with respect to 75% of the Portfolio's total assets. DISCLOSURE OF PORTFOLIO HOLDINGS The Company has adopted, on behalf of the Portfolio, a policy relating to the disclosure of the Portfolio's securities holdings. The policies relating to the disclosure of the Portfolio's securities holdings are designed to allow disclosure of portfolio holdings information where necessary to the Portfolio's operation without compromising the integrity or performance of the Portfolio. It is the policy of the Company that disclosure of the Portfolio's holdings to a select person or persons prior to the release of such holdings to the public ("selective disclosure") is prohibited, unless there are legitimate business purposes for selective disclosure. The Company discloses portfolio holdings information as required in regulatory filings and shareholder reports, discloses portfolio holdings information as required by federal and state securities laws and may disclose portfolio holdings information in response to requests by governmental authorities. As required by the federal securities laws, including the 1940 Act, the Company will disclose the Portolio's holdings in applicable regulatory filings, including shareholder reports, reports on Form N-CSR and Form N-Q or such other filings, reports or disclosure documents as the applicable regulatory authorities may require. The Company may distribute or authorize the distribution of information about the portfolio holdings that is not publicly available to its third-party service providers of the Company, which include PFPC Trust Company, the custodian; PFPC Inc., the administrator, accounting agent and transfer agent; ________________, the Portfolio's independent registered public accounting firm; Drinker Biddle & Reath LLP, legal counsel; and GCom(2)Solutions and RR Donnelley, the financial printers. These service providers are required to keep such information confidential, and are prohibited from trading based on the information or otherwise using the information except as necessary in providing services to the Portfolio. Such holdings are released on conditions of confidentiality, which include appropriate trading prohibitions. "Conditions of confidentiality" include confidentiality terms included in written agreements, implied by the nature of the relationship (e.g. attorney-client relationship), or required by fiduciary or regulatory principles (e.g., custody services provided by financial institutions). Portfolio holdings may also be provided earlier to shareholders and their agents who receive redemptions in kind that reflect a pro rata allocation of all securities held in the portfolio. The Company may disclose portfolio holdings to certain independent reporting agencies. The disclosure of portfolio holdings in this context is conditioned on the recipient agreeing to -17- treat such portfolio holdings as confidential (provided that reporting agencies may publish portfolio positions upon the consent of the Portfolio), and to not allow the portfolio holdings to be used by it or its employees in connection with the purchase or sale of shares of the Portfolio. A designated officer of the Adviser must authorize the disclosure of the Portfolio's holdings to each reporting agency. Any violations of the policy set forth above as well as any corrective action undertaken to address such violations must be reported by the Adviser, director, officer or third party service provider to the Company's Chief Compliance Officer who will determine whether the violation should be reported immediately to the Board of Directors of the Company or at its next quarterly board meeting. MANAGEMENT OF THE COMPANY 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.
- ------------------------------------------------------------------------------------------------------------------------------------ Number of Portfolios in Fund Other Position(s) Term of Office Complex Directorships Name, Address, and Held with and Length of Principal Occupation(s) Overseen by Held by Date of Birth Fund Time Served(1) During Past 5 Years Director * Director - ------------------------------------------------------------------------------------------------------------------------------------ DISINTERESTED DIRECTORS - ------------------------------------------------------------------------------------------------------------------------------------ Julian A. Brodsky Director 1988 to Since 1969, Director and Vice 17 Director, Comcast Comcast Corporation present Chairman, Comcast Corporation Corporation 1500 Market Street, (cable television and 35th Floor communications); Director, NDS Philadelphia, PA 19102 Group PLC (provider of systems and DOB: 7/16/33 applications for digital pay TV). - ------------------------------------------------------------------------------------------------------------------------------------ Nicholas A. Giordano Director Since 2006 Consultant, financial services 17 Kalmar Pooled 103 Bellevue Parkway organizations from 1997 to present Investment Trust; Wilmington, DE 19809 WT Mutual Fund; DOB: 03/7/43 Independence Blue Cross; IntriCon Corporation (industrial furnaces and ovens) - ------------------------------------------------------------------------------------------------------------------------------------ Francis J. McKay Director 1988 to Since 2000, Vice President, Fox 17 None Fox Chase Cancer Center present Chase Cancer Center (biomedical 333 Cottman Avenue research and medical care). Philadelphia, PA 19111 DOB: 12/06/35 - ------------------------------------------------------------------------------------------------------------------------------------
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- ------------------------------------------------------------------------------------------------------------------------------------ Number of Portfolios in Fund Other Position(s) Term of Office Complex Directorships Name, Address, and Held with and Length of Principal Occupation(s) Overseen by Held by Date of Birth Fund Time Served(1) During Past 5 Years Director * Director - ------------------------------------------------------------------------------------------------------------------------------------ Arnold M. Reichman Director 1991 to Director, Gabelli Group Capital 17 None 106 Pierrepont Street present Partners, L.P. (an investment Brooklyn, NY 11201 partnership) from 2000 to 2006. DOB: 5/21/48 - ------------------------------------------------------------------------------------------------------------------------------------ Mark A. Sargent Director Since 2006 Dean and Professor of Law, 17 Director, WT Villanova University School Villanova University School of Law Mutual Funds; of Law since July 1997. 299 North Spring Mill Road Villanova, PA 19085 DOB: 4/28/51 - ------------------------------------------------------------------------------------------------------------------------------------ Marvin E. Sternberg Director 1991 to Since 1974, Chairman, Director and 17 Director, Moyco Moyco Technologies, Inc. present President, Moyco Technologies, Inc. Technologies, Inc. 200 Commerce Drive (manufacturer of precision coated Montgomeryville, PA 18936 and industrial abrasives). Since DOB: 3/24/34 1999, Director, Pennsylvania Business Bank. - ------------------------------------------------------------------------------------------------------------------------------------ Robert A. Straniere Director Since 2006 Member, New York State Assembly 17 Director, Reich and 300 East 57th Street (1981-2004); Founding Partner, Tang Group; New York, NY 10022 Straniere Law Firm (1980 to date); Director, The Sparx DOB: 3/28/41 Partner, Gotham Strategies Japan Fund (consulting firm) (2005 to date); Partner, The Gotham Global Group (consulting firm) (2005 to date); President, The New York City Hot Dog Company (2005 to date); Director; Weiss, Peck & Greer Fund Group (1992 to 2005); and Partner, Kantor-Davidoff (law firm) (2006 to date). - ------------------------------------------------------------------------------------------------------------------------------------
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- ------------------------------------------------------------------------------------------------------------------------------------ Number of Portfolios in Fund Other Position(s) Term of Office Complex Directorships Name, Address, and Held with and Length of Principal Occupation(s) Overseen by Held by Date of Birth Fund Time Served(1) During Past 5 Years Director * Director - ------------------------------------------------------------------------------------------------------------------------------------ Robert Sablowsky Director 1991 to Since July 2002, Senior Vice 17 Director, Oppenheimer & Company, Inc. present President and prior thereto, Kensington 200 Park Avenue Executive Vice President of Funds New York, NY 10166 Oppenheimer & Co., Inc., formerly DOB: 4/16/38 Fahnestock & Co., Inc. (a registered broker-dealer). Since November 2004, Director of Kensington Funds. - ------------------------------------------------------------------------------------------------------------------------------------ J. Richard Carnall Director 2002 to Director of PFPC Inc. from January 17 Director, 103 Bellevue Parkway present 1987 to April 2002, Chairman and Cornerstone Wilmington, DE 19809 Chief Executive Officer of PFPC Bank 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; 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; and Director of Cornerstone Bank since March 2004. - ------------------------------------------------------------------------------------------------------------------------------------
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- ------------------------------------------------------------------------------------------------------------------------------------ Number of Portfolios in Fund Other Position(s) Term of Office Complex Directorships Name, Address, and Held with and Length of Principal Occupation(s) Overseen by Held by Date of Birth Fund Time Served(1) During Past 5 Years Director * Director - ------------------------------------------------------------------------------------------------------------------------------------ OFFICERS - ------------------------------------------------------------------------------------------------------------------------------------ Edward J. Roach President 1991 to Certified Public Accountant; Vice N/A N/A 103 Bellevue Parkway and present and Chairman of the Board, Fox Chase Wilmington, DE 19809 Treasurer 1988 to Cancer Center; Trustee Emeritus, DOB: 6/29/24 present Pennsylvania School for the Deaf; 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 since 2002, Treasurer since 1981 and Chief Compliance Officer since September 2004 of Chestnut Street Exchange Fund. - ------------------------------------------------------------------------------------------------------------------------------------ Tina M. Payne Secretary 2004 to Since 2003, Vice President and N/A N/A 301 Bellevue Parkway present Associate Counsel, PFPC Inc. 2nd Floor (financial services company); Wilmington, DE 19809 Associate, Stradley, Ronon, Stevens DOB: 5/19/74 & Young, LLC (law firm) from 2001 to 2003. - ------------------------------------------------------------------------------------------------------------------------------------ Salvatore Faia, Esquire, CPA Chief 2004 to President, Vigilant Compliance N/A N/A Vigilant Compliance Compliance present Services since 2004; Senior Legal Services Officer Counsel, PFPC Inc. from 2002 to 186 Dundee Drive, Suite 700 2004; Chief Legal Counsel, Corviant Williamstown, NJ 08094 Corporation (Investment Adviser, DOB: 12/25/62 Broker-Dealer and Service Provider to Investment Advisers and Separate Accountant Providers) from 2001 to 2002. - ------------------------------------------------------------------------------------------------------------------------------------ o Each Director oversees seventeen portfolios of the Company that are currently offered for sale. 1. Subject to the Company's Retirement Policy, each Director, except Messrs. Giordano, Sargent and Straniere, may continue to serve as a Director until the last day of year 2011 or until his successor is elected and qualified or his death, resignation or removal. Subject to the Company's Retirement Policy, Messrs. Giordano, Sargent and Straniere serve until the last day of the calendar year in which the applicable director attains age 75 or until his successor is elected and qualified or his death, resignation or removal. The Board reserves the right to waive the requirements of the Policy with respect to an individual Director. Each officer holds office at the pleasure of the Board of Directors until the next annual meeting o 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 qualified. 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. and Merrill Lynch & Co., Inc. The investment adviser to the Company's Money Market Portfolio, BlackRock Institutional Management Corporation; the investment adviser to the Company's Senbanc Fund, Hilliard Lyons Research Advisors, a division of J.J.B. Hilliard, W.L. Lyons, Inc.; 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.
-21- THE BOARD AND STANDING COMMITTEES BOARD. The Board of Directors is comprised of nine individuals, two of whom are considered "interested" Directors as defined by the 1940 Act. The remaining Directors are referred to as "Disinterested" or "Independent" Directors. The Board meets at least quarterly to review the investment performance of each portfolio in the mutual fund family and other operational matters, including policies and procedures with respect to compliance with regulatory and other requirements. Currently, the Board of Directors has an Audit Committee, an Executive Committee and a Nominating Committee. The responsibilities of each committee and its members are described below. AUDIT COMMITTEE. The Board has an Audit Committee comprised only of Independent Directors. The current members of the Audit Committee are Messrs. McKay, Sternberg and Brodsky. The Audit Committee, among other things, reviews results of the annual audit and approves the firm(s) to serve as independent auditors. The Audit Committee convened six times during the fiscal year ended August 31, 2006. EXECUTIVE COMMITTEE. The Board has an Executive Committee comprised only of Independent Directors. The current members of the Executive Committee are Messrs. Reichman and McKay. The Executive Committee may generally carry on and manage the business of the Company when the Board of Directors is not in session. The Executive Committee did not convene during the fiscal year ended August 31, 2006. NOMINATING COMMITTEE. The Board has a Nominating Committee comprised only of Independent Directors. The current members of the Nominating Committee are Messrs. McKay and Brodsky. The Nominating Committee recommends to the Board of Directors all persons to be nominated as Directors of the Company. The Nominating Committee will consider nominees recommended by shareholders. Recommendations should be submitted to the Committee in care of the Company's Secretary. The Nominating Committee convened once during the fiscal year ended August 31, 2006. DIRECTOR OWNERSHIP OF SHARES OF THE COMPANY The following table sets forth the dollar range of equity securities beneficially owned by each Director in the Portfolio and in all of the portfolios (which for each Director comprise all registered investment companies within the Company's family of investment companies overseen by him), as of December 31, 2005. Messrs. Giordano, Sargent and Strainere were not Directors of the Company as of December 31, 2005.
- ------------------------------------------------------------------------------------------------------------------------------------ Aggregate Dollar Range of Equity Securities in All Registered Investment Companies Overseen by Dollar Range of Director within the Family of Name of Director Equity Securities in the Portfolio Investment Companies - ------------------------------------------------------------------------------------------------------------------------------------ DISINTERESTED DIRECTORS - ------------------------------------------------------------------------------------------------------------------------------------ Julian A. Brodsky NONE NONE - ------------------------------------------------------------------------------------------------------------------------------------
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- ------------------------------------------------------------------------------------------------------------------------------------ Aggregate Dollar Range of Equity Securities in All Registered Investment Companies Overseen by Dollar Range of Director within the Family of Name of Director Equity Securities in the Portfolio Investment Companies - ------------------------------------------------------------------------------------------------------------------------------------ Francis J. McKay NONE Over $100,000 - ------------------------------------------------------------------------------------------------------------------------------------ Arnold M. Reichman NONE Over $100,000 - ------------------------------------------------------------------------------------------------------------------------------------ Marvin E. Sternberg NONE NONE - ------------------------------------------------------------------------------------------------------------------------------------ INTERESTED DIRECTORS - ------------------------------------------------------------------------------------------------------------------------------------ J. Richard Carnall NONE NONE - ------------------------------------------------------------------------------------------------------------------------------------ Robert Sablowsky NONE Over $100,000 - ------------------------------------------------------------------------------------------------------------------------------------
DIRECTORS' AND OFFICERS' COMPENSATION Since February 15, 2006, the Company pays each Director at the rate of $17,500 annually and $3,500 per meeting of the Board of Directors or any committee thereof that was not held in conjunction with a Board meeting. In addition, the Chairman of the Board receives an additional fee of $12,000 per year for his services in this capacity, and the Chairman of the Audit Committee of the Board of the Company receives an additional fee of $4,000 per year for his services. Prior to February 15, 2006, the Company paid each Director at the rate of $16,500 annually and $1,375 per meeting of the Board of Directors or any committee thereof that was not held in conjunction with a Board meeting. In addition, the Chairman of the Board received an additional fee of $6,600 per year for his services in this capacity. Directors are reimbursed for any reasonable out-of-pocket expenses incurred in attending meetings of the Board of Directors or any committee thereof. The Company also compensates its President and treasurer and Chief Compliance Officer for their respective services to the Company. For the fiscal year ended August 31, 2006, each of the following members of the Board of Directors and the President and Treasurer and Chief Compliance Officer received compensation from the company in the following amounts:
TOTAL PENSION OR COMPENSATION RETIREMENT ESTIMATED FROM FUND AND AGGREGATE BENEFITS ACCRUED ANNUAL FUND COMPLEX COMPENSATION AS PART OF FUND BENEFITS UPON PAID TO DIRECTORS NAME OF DIRECTOR/OFFICER FROM REGISTRANT EXPENSES RETIREMENT OR OFFICERS - --------------------------------------------------------------------------------------------------------------------- INDEPENDENT DIRECTORS: Julian A. Brodsky, Director $______ N/A N/A $______
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TOTAL PENSION OR COMPENSATION RETIREMENT ESTIMATED FROM FUND AND AGGREGATE BENEFITS ACCRUED ANNUAL FUND COMPLEX COMPENSATION AS PART OF FUND BENEFITS UPON PAID TO DIRECTORS NAME OF DIRECTOR/OFFICER FROM REGISTRANT EXPENSES RETIREMENT OR OFFICERS - --------------------------------------------------------------------------------------------------------------------- Nicholas A. Giordano, Director* $______ N/A N/A $______ Francis J. McKay, Director $______ N/A N/A $______ Arnold M. Reichman, Director and Chairman $______ N/A N/A $______ Mark A. Sargent, Director* $______ N/A N/A $______ Marvin E. Sternberg, Director $______ N/A N/A $______ Robert A. Straniere, Director* $______ N/A N/A $______ INTERESTED DIRECTORS: J. Richard Carnall, Director and former Chairman $______ N/A N/A $______ Robert Sablowsky, Director $______ N/A N/A $______ - --------------------------------------------------------------------------------------------------------------------- OFFICER: - --------------------------------------------------------------------------------------------------------------------- Salvatore Faia, Esquire, CPA Chief Compliance Officer $______ N/A N/A $______ Edward J. Roach President and Treasurer $______ N/A N/A $______ * Mr. Straniere was elected to the Board of Directors at a meeting held on May 25, 2006 and, therefore, the compensation reflected is for the period May 25, 2006 through August 31, 2006. Messrs. Giordano and Sargent were elected to the Board of Directors at a meeting held on September 6, 2006 and, therefore, received no compensation during the fiscal year ended August 31, 2006.
As of December 31, 2005, the Independent Directors and their respective immediate family members (spouse or dependent children) did not own beneficially or of record any securities of the Company's investment advisers or distributor, or of any person directly or indirectly controlling, controlled by, or under common control with the investment advisers or distributor. -24- On October 24, 1990, the Company adopted, as a participating employer, the Fund Office Retirement Profit-Sharing Plan and Trust Agreement, a retirement plan for employees (currently Edward J. Roach), pursuant to which the Company will contribute on a quarterly basis amounts equal to 10% of the quarterly compensation of each eligible employee. By virtue of the services performed by the Company's investment advisers, custodians, administrators and distributor, the Company itself requires only one part-time employee. No officer, director or employee of the Adviser or the distributor currently receives any compensation from the Company. CERTAIN INTERESTS OF INDEPENDENT DIRECTOR Mr. Brodsky serves as a member of the Board of Directors of Comcast Corporation ("Comcast"). Comcast has a $5 billion revolving credit facility with a lending syndicate of 27 banks, one of which is Merrill Lynch Bank USA ("ML Bank"), an affiliate of Merrill Lynch & Co., Inc. ("Merrill Lynch"), which owns a controlling interest in BlackRock, Inc., the parent company of BIMC. ML Bank's obligation as part of the syndicate is limited to $100 million, or approximately 2.0% of the total amount of the credit facility. The credit facility is used for working capital, capital expenditures, commercial paper backup and other lawful corporate purposes. The highest amount outstanding on the ML Bank pro rata share of the credit facility during the period January 1, 2004 through December 31, 2005 (including any predecessor credit facility in effect during such period), based on month-end balances, was $21.8 million. The balance outstanding on the ML Bank pro rata share of the credit facility as of December 1, 2006 was $________. The interest rate on amounts drawn under the credit facility is based upon Comcast's credit ratings. As of December 1, 2006, the interest rates are (i) for amounts undrawn, London Interbank Offered Rate ("LIBOR") plus 8 basis points; (ii) for the first draw up to 50% drawn, LIBOR plus 35 basis points; and (iii) for amounts drawn greater than 50% drawn, LIBOR plus 45 basis points. During the period January 1, 2004 through December 31, 2005, Merrill Lynch participated as an underwriter in 1 (one) Comcast debt offering. Merrill Lynch did not serve as a joint book-running manager in that debt offering. Comcast has advised the Company that on average its institutional debt offerings include 23 firms in the underwriting syndicate and its retail debt offerings include 53 firms in the underwriting syndicate. For the underwriting services provided during this period, Merrill Lynch received fees from Comcast of approximately $300,000. Merrill Lynch also serves as the administrator to Comcast's stock option plan and restricted stock plan and received an annual fee of no more than $800,000 for each of the two years in the period January 1, 2004 through December 31, 2005. CODE OF ETHICS The Company and PFPC Distributors, Inc. ("PFPC Distributors") have each adopted a code of ethics under Rule 17j-1 of the 1940 Act that permits personnel subject to the codes to invest in securities, including securities that may be purchased or held by the Company. PROXY VOTING The Board of Directors has delegated the responsibility of voting proxies with respect to the portfolio securities purchased and/or held by the Portfolio to the Adviser, subject to the Board's continuing oversight. In exercising its voting obligations, the Adviser is guided by its general fiduciary duty to act prudently and in the interest of the Portfolio. The Adviser will consider factors affecting the value of the Portfolio's investments and the rights of shareholders in its determination on voting portfolio securities. The Adviser has adopted proxy voting procedures with respect to voting proxies relating to portfolio securities held by the Portfolio. The Adviser employs a third party service provider to assist in the voting of proxies. These procedures have been provided to the service provider, who analyzes the proxies and makes recommendations, based on the Adviser's policy, as to how to vote such proxies. A copy of the Adviser's Proxy Voting Policy is included with this SAI. Please see Appendix B to this SAI for further information. Information regarding how the Portfolio voted proxies relating to underlying portfolio securities for the most recent 12-month period ended June 30 is available, without charge, upon request, by calling 1-800-888-9723 and by visiting the SEC website at http://www.sec.gov. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES As of October 18, 2006, to the Company's knowledge, the following named persons at the addresses shown below were owners of record of approximately 5% or more of the total outstanding shares of the classes of the Portfolio indicated below. See "Additional Information Concerning Company Shares" below. The Company does not know whether such persons also beneficially own such shares. Any shareholder that owns 25% or more of the outstanding shares of a portfolio or class may be presumed to "control" (as that term is defined in the 1940 Act) the portfolio or class. Shareholders controlling a portfolio or class could have the ability to vote a -25- majority of the shares of the portfolio or class on any matter requiring approval of the shareholders of the portfolio or class.
- ---------------------------------------------------------------------------------------------------------------------- NUMBER AND PERCENTAGE OF SHARES OWNED AS OF OCTOBER 18, 2006 *(PERCENTAGE OF SHARES OWNED ROUNDED TO THE NEAREST WHOLE NAME OF FUND SHAREHOLDER NAME AND ADDRESS PERCENTAGE) - ---------------------------------------------------------------------------------------------------------------------- Sansom Street Money Market Saxon & Co. Portfolio C/O PNC Bank NA 8800 Tinicum Blvd. 12,708,714.000 82% Philadelphia, PA 19153- - ---------------------------------------------------------------------------------------------------------------------- Kelmoore Investment Co. Inc. FBO Exclusive Benefit of Our S/H 2471 E Bayshore Rd, Suite 501 1,809,478.810 12% Palo Alto, CA 94303-3206 - ---------------------------------------------------------------------------------------------------------------------- PaineWebber C/O Sal Pace Managed Acct Services 1200 Harbor Blvd., Suite 3 978,048.900 6% Weehawken, NJ 07086-6728 - ----------------------------------------------------------------------------------------------------------------------
As of October 18, 2006 Directors and officers as a group owned less than 1% of the shares of the Portfolio's Sansom Street Class. INVESTMENT ADVISORY AND OTHER SERVICES ADVISORY AND SUB-ADVISORY AGREEMENTS On September 29, 2006, Merrill Lynch & Co., Inc. ("Merrill Lynch") contributed its asset management business, Merrill Lynch Investment Managers, to BlackRock, Inc. ("BlackRock"), the parent company of BIMC (the "Transaction"). As a result of the Transaction, Merrill Lynch has a 49.80% economic interest and 45% voting interest in BlackRock and The PNC Financial Services Group, Inc., which held a majority interest in BlackRock prior to the Transaction, has approximately a 34% economic and voting interest in BlackRock. Under the Investment Company Act of 1940, the Transaction may be considered an assignment of the Fund's prior Investment Advisory and Administration Agreement with BIMC ("Prior Advisory Agreement"), resulting in the Prior Advisory Agreement's automatic termination. On September 29, 2006, the Company entered into an Interim Investment Advisory and Administration Agreement with BIMC with respect to the Fund (the "Interim Advisory Agreement"). The Interim Advisory Agreement will remain in effect for up to 150 days while the Fund seeks shareholder approval of a new Investment Advisory and Administration Agreement with BIMC (the "New Advisory Agreement" and together with the Prior Advisory Agreement and Interim Advisory Agreement, the "Advisory Agreements"). As required by the 1940 Act, BIMC's fees under the Interim -26- Advisory Agreement will be placed in an escrow account with the Fund's custodian. If the Fund's shareholders approve the New Advisory Agreement within 150 days of the date of the Interim Advisory Agreement, such approval will be viewed as implicit approval of the Interim Advisory Agreement by shareholders and BIMC will receive any fees paid in to the escrow account, including interest earned. If shareholders of the Fund do not approve the New Advisory Agreement within 150 days of the date of the Interim Advisory Agreement, then BIMC will be paid, out of the escrow account, the lesser of: (i) any costs incurred in performing the Interim Advisory Agreement, plus interest earned on the amount while in escrow; or (ii) the total amount in the escrow account, plus interest if earned. The Interim Advisory Agreement and the New Advisory Agreement were approved by the Board of Directors of the Company, including a majority of those Directors who are not "interested persons" of the Company or BIMC, at a meeting held on May 25, 2006. A Special Meeting of Shareholders in connection with the approval of the New Advisory Agreement was held on October 20, 2006. However, a quorum was not present at such meeting, and it was adjourned until November 28, 2006. As a result of the automatic termination of the Fund's Advisory and Administration Agreement with BIMC, the Delegation Agreement between the Company, BIMC and PFPC also terminated. As of September 29, 2006, the parties entered into an Interim Delegation Agreement. The Interim Delegation Agreement provides that (a) any fees payable to PFPC pursuant to the terms of the Agreement will be paid to PFPC when BIMC is paid its fees under the Interim Advisory Agreement, (b) if shareholders of the Fund do not approve the New Advisory Agreement within 150 days of the Interim Delegation Agreement, PFPC shall receive from PFPC the lesser of (i) all costs incurred by PFPC in performing the Interim Delegation Agreement plus interest earned on such amount, or (ii) the total amount of the fees payable to PFPC pursuant to the Interim Delegation Agreement plus interest earned on such amount, and (c) the Interim Delegation Agreement will automatically terminate upon termination of the Interim Advisory Agreement. If the Interim Advisory Agreement terminates as a result of shareholder approval of the New Advisory Agreement, the Company, BIMC and PFPC will enter into a new Delegation Agreement. The Interim Delegation Agreement and the new Delegation Agreement were approved by the Company's Board of Directors, including a majority of those Directors who are not interested persons of the Company or BIMC, at a special meeting held on September 25, 2006. The Advisory Agreements provide for a maximum fee paid to BIMC, computed daily and payable monthly, at the annual rate of 0.45% of the first $250 million of the Portfolio's average daily net assets, 0.40% of the next $250 million of the Portfolio's average daily net assets and 0.35% of the Portfolio's average daily net assets in excess of $500 million. For the fiscal years ended August 31, the Company paid advisory fees to BIMC (excluding fees for administrative services obligated under the Prior Advisory Agreement) as follows: FEES PAID (AFTER WAIVERS AND YEAR REIMBURSEMENTS) WAIVERS REIMBURSEMENTS 2006 $________ $_______ $_______ 2005 $208,966 $726,915 $56,669 2004 $218,098 $911,521 $78,531 -27- The Portfolio bears all of its own expenses not specifically assumed by BIMC. General expenses of the Company not readily identifiable as belonging to a portfolio of the Company are allocated among all investment portfolios by or under the direction of the Company's Board of Directors in such manner as it deems to be fair and equitable. Expenses borne by a portfolio include, but are not limited to the expenses listed in the prospectus and the following (or a portfolio's share of the following): (a) the cost (including brokerage commissions) of securities purchased or sold by a portfolio and any losses incurred in connection therewith; (b) fees payable to and expenses incurred on behalf of a portfolio by BIMC; (c) any costs, expenses or losses arising out of a liability of or claim for damages or other relief asserted against the Company or a portfolio for violation of any law; (d) any extraordinary expenses; (e) fees, voluntary assessments and other expenses incurred in connection with membership in investment company organizations; (f) the cost of investment company literature and other publications provided by the Company to its directors and officers; (g) organizational costs; (h) fees paid to the investment adviser and PFPC Inc. ("PFPC"); (i) fees and expenses of officers and directors who are not affiliated with the Portfolio's investment adviser or PFPC Distributors; (j) taxes; (k) interest; (l) legal fees; (m) custodian fees; (n) auditing fees; (o) brokerage fees and commissions; (p) certain of the fees and expenses of registering and qualifying the portfolio and its shares for distribution under federal and state securities laws; (q) expenses of preparing prospectuses and statements of additional information and distributing annually to existing shareholders that are not attributable to a particular class of shares of the Company; (r) the expense of reports to shareholders, shareholders' meetings and proxy solicitations that are not attributable to a particular class of shares of the Company; (s) fidelity bond and directors' and officers' liability insurance premiums; (t) the expense of using independent pricing services; and (u) other expenses which are not expressly assumed by the portfolio's investment adviser under its advisory agreement with the portfolio. The Sansom Street Class of the Company pays its own distribution fees, and may pay a different share than other classes of the Company (excluding advisory and custodial fees) if those expenses are actually incurred in a different amount by the Sansom Street Class or if it receives different services. Under the Advisory Agreements, BIMC will not be liable for any error of judgment or mistake of law or for any loss suffered by the Company or the Portfolio in connection with the performance of the Advisory Agreements, except a loss resulting from a breach of fiduciary duty with respect to the receipt of compensation for services or a loss resulting from willful misfeasance, bad faith or gross negligence on the part of BIMC in the performance of its duties or from reckless disregard of its duties and obligations thereunder. The New Advisory Agreement provides that: (i) to the extent permitted by applicable law, BIMC may enter into contracts with one or more sub-advisors, including without limitation, affiliates of BIMC, to perform investment sub-advisory services with respect to the Portfolio, subject to approval by the Company's Board of Directors but not the approval by a vote of the outstanding voting securities of the Portfolio; (ii) to the extent permitted by applicable law, -28- BIMC may reallocate all or a portion of its investment advisory responsibilities under the New Advisory Agreement to any of its affiliates; (iii) BIMC is required to supervise and oversee the activities of each sub-advisor under its sub-advisory contract; and (iv) to the extent permitted by applicable law and subject to approval by the Company's Board of Directors, BIMC may terminate any or all sub-advisors in its sole discretion at any time. Unlike the New Advisory Agreement, the Prior Advisory Agreement permitted BIMC to engage PNC Bank, N.A. ("PNC Bank") to provide statistical and credit advice, as well as computer and research services as sub-adviser to the Portfolio. PNC Bank provided these services to the Portfolio pursuant to a Sub-Advisory Agreement dated August 16, 1988. PNC Bank's sub-advisory fees were paid by BIMC from the fees it received from the Portfolio pursuant to the Prior Advisory Agreement. As of April 29, 1998, BIMC assumed the obligations of PNC Bank under the Sub-Advisory Agreement and eliminated BIMC's obligation to pay for such sub-advisory services. If the New Agreement is approved by shareholders of the Portfolio, the Company's Board of Directors intends to terminate the Sub-Advisory Agreement. Disclosure relating to the material factors and the conclusions with respect to those factors that formed the basis for the Board of Directors' approval of the Portfolio's Advisory Agreement, may be reviewed in the Portfolio(s)' annual report to shareholders dated August 31, 2006, which may be obtained by calling (800) 888-9723 or visiting the SEC's website at www.sec.gov. ADMINISTRATION AGREEMENT Under the Advisory Agreements, BIMC is obligated to render administrative services to the Portfolio. BIMC, pursuant to the terms of the Interim Delegation Agreement with PFPC, dated September 29, 2006, has delegated to PFPC its administrative responsibilities with respect to the Portfolio. For the fiscal years ended August 31, PFPC was paid administration fees as follows: FEES PAID (AFTER WAIVERS AND YEAR REIMBURSEMENTS) WAIVERS REIMBURSEMENTS ---- ------------------ ------- ------------- 2006 $_______ $_______ $__ 2005 $87,396 $0 $0 2004 $8,828 $0 $0 On June 1, 2003, the Company entered into a regulatory administration services agreement with PFPC. Under this agreement, PFPC has agreed to provide regulatory administration services to the Company. These services include the preparation and coordination of the Company's annual post-effective amendment filing and supplements to the Company's registration statement, the preparation and assembly of board meeting materials, and certain other -29- services necessary to the Company's regulatory administration. PFPC receives an annual fee based on the average daily net assets of the portfolios of the Company. For the fiscal year ended August 31, 2006, PFPC received $______, for the fiscal year ended August 31, 2005, PFPC received $31,803, and for the fiscal year ended August 31, 2004, PFPC received $41,138 in fees from the Portfolio for these services. CUSTODIAN AND TRANSFER AGENCY AGREEMENTS PFPC Trust Company, 8800 Tinicum Boulevard, Suite 200, Philadelphia, PA 19153, is custodian of the Company's assets pursuant to a custodian agreement dated August 16, 1988, as amended (the "Custodian Agreement"). Under the Custodian Agreement, PFPC Trust Company: (a) maintains a separate account or accounts in the name of the Portfolio; (b) holds and transfers portfolio securities on account of the Portfolio; (c) accepts receipts and makes disbursements of money on behalf of the Portfolio; (d) collects and receives all income and other payments and distributions on account of the Portfolio's portfolio securities; and (e) makes periodic reports to the Company's Board of Directors concerning the Portfolio's operations. PFPC Trust Company is authorized to select one or more banks or trust companies to serve as sub-custodian on behalf of the Company, provided that PFPC Trust Company remains responsible for the performance of all its duties under the Custodian Agreement and holds the Company harmless from the acts and omissions of any sub-custodian. For its services to the Company under the Custodian Agreement, PFPC Trust Company receives a fee which is calculated based upon the Portfolio's average daily gross assets as follows: $0.25 per $1,000 on the first $50 million of average daily gross assets; $0.20 per $1,000 on the next $50 million of average daily gross assets; and $0.15 per $1,000 on average daily gross assets over $100 million, with a minimum monthly fee of $1,000, exclusive of transaction charges and out-of-pocket expenses, which are also charged to the Company. PFPC, whose corporate offices are located at 301 Bellevue Parkway, Wilmington, Delaware 19809, serves as the transfer and dividend disbursing agent for the Company's Sansom Street Class pursuant to a Transfer Agency Agreement dated August 16, 1988 (the "Transfer Agency Agreement"), under which PFPC: (a) issues and redeems shares of the Sansom Street Class of the Portfolio; (b) addresses and mails all communications by the Portfolio to record owners of shares of such Class, including reports to shareholders, dividend and distribution notices and proxy materials for its meetings of shareholders; (c) maintains shareholder accounts and, if requested, sub-accounts; and (d) makes periodic reports to the Company's Board of Directors concerning the operations of the Sansom Street Class. PFPC may, on 30 days' notice to the Company, assign its duties as transfer and dividend disbursing agent to any other affiliate of PNC Bank Corp. For its services to the Company under the Transfer Agency Agreement, PFPC receives a fee at the annual rate of $15.00 per account in the Portfolio for orders which are placed via third parties and relayed electronically to PFPC, and at an annual rate of $17.00 per account in the Portfolio for all other orders, exclusive of out-of-pocket expenses, and also receives a fee for each redemption check cleared and reimbursement of its out-of-pocket expenses. PFPC also provides services relating to the implementation of the Company's Anti-Money Laundering Program. The Company will pay an annual fee, ranging from $3,000 - $50,000, based on the number of open accounts in each portfolio. In addition, PFPC provides services relating to the implementation of the Portfolio's Customer Identification Program, -30- including verification of required customer information and the maintenance of records with respect to such verification. The Portfolio will pay PFPC $2.25 per customer verification and $0.02 per month per record result maintained. PFPC has entered and in the future may enter into additional shareholder servicing agreements ("Shareholder Servicing Agreements") with various dealers ("Authorized Dealers") for the provision of certain support services to customers of such Authorized Dealers who are shareholders of the Portfolio. Pursuant to the Shareholder Servicing Agreements, the Authorized Dealers have agreed to prepare monthly account statements, process dividend payments from the Company on behalf of their customers and to provide sweep processing for uninvested cash balances for customers participating in a cash management account. In addition to the shareholder records maintained by PFPC, Authorized Dealers may maintain duplicate records for their customers who are shareholders of the Portfolio for purposes of responding to customer inquiries and brokerage instructions. In consideration for providing such services, Authorized Dealers may receive fees from PFPC. Such fees will have no effect upon the fees paid by the Company to PFPC. DISTRIBUTION AND SERVICING AGREEMENT PFPC Distributors whose principal business address is 760 Moore Road, King of Prussia, Pennsylvania 19406, serves as the Company's distributor. Pursuant to the terms of a distribution agreement dated January 2, 2001 entered into by PFPC Distributors and the Company, (the "Distribution Agreement") and separate Plan of Distribution, as amended, for the Sansom Street Class (the "Plan"), which was adopted by the Company in the manner prescribed by Rule 12b-1 under the 1940 Act, PFPC Distributors will use appropriate efforts to distribute shares of the Sansom Street Class. Payments to PFPC Distributors under the Plan are to compensate it for distribution assistance and expenses assumed and activities intended to result in the sale of shares of the Sansom Street Class. As compensation for its distribution services, PFPC Distributors receives, pursuant to the terms of the Distribution Agreement, a distribution fee, to be calculated daily and paid monthly, at the annual rate set forth in the Prospectus. PFPC Distributors currently proposes to reallow up to all of its distribution payments to broker/dealers for selling shares of the Portfolio based on a percentage of the amounts invested by their customers. The Plan was approved by the Company's Board of Directors, including the directors who are not "interested persons" of the Company (as defined in the 1940 Act) and who have no direct or indirect financial interest in the operation of the Plan or any agreements related to the Plan ("12b-1 Directors"). Among other things, the Plan provides that: (1) PFPC Distributors shall be required to submit quarterly reports to the Directors of the Company regarding all amounts expended under the Plan and the purposes for which such expenditures were made, including commissions, advertising, printing, interest, carrying charges and any allocated overhead expenses; (2) the Plan will continue in effect only so long as it is approved at least annually, and any material amendment thereto is approved, by the Company's Directors, including a majority of those Directors who are not "interested persons" (as defined in the 1940 Act) and who have no direct or indirect financial interest in the operation of the Plan or any agreements related to the Plan, -31- acting in person at a meeting called for said purpose; (3) the aggregate amount to be spent by the Company on the distribution of the Company's shares of the Bedford Class under the Plan shall not be materially increased without shareholder approval; and (4) while the Plan remains in effect, the selection and nomination of the Company's Directors who are not "interested persons" of the Company (as defined in the 1940 Act) shall be committed to the discretion of such Directors who are not "interested persons" of the Company. For the fiscal years ended August 31, 2006, 2005, and 2004, the Portfolio paid PFPC Distributors fees as follows:
DISTRIBUTION FEES PAID (AFTER WAIVERS AND REIMBURSEMENTS) WAIVERS REIMBURSEMENTS Fiscal Year Ended August 31, 2006 $____ $______ $_____ Fiscal Year Ended August 31, 2005 $0 $56,669 $0 Fiscal Year Ended August 31, 2004 $0 $0 $0
The Company believes that the Plan may benefit the Company by increasing sales of shares. Mr. Sablowsky, a Director of the Company, had an indirect interest in the operation of the Plan by virtue of his position with Oppenheimer & Co., Inc., formerly Fahnestock & Co., Inc., a broker-dealer. PORTFOLIO TRANSACTIONS The Portfolio intends to purchase securities with remaining maturities of 13 months or less, except for securities that are subject to repurchase agreements (which in turn may have maturities of 13 months or less). However, the Portfolio may purchase variable rate securities with remaining maturities of 13 months or more so long as such securities comply with conditions established by the SEC under which they may be considered to have remaining maturities of 13 months or less. Because the Portfolio intends to purchase only securities with remaining maturities of 13 months or less, its portfolio turnover rate will be relatively high. However, because brokerage commissions will not normally be paid with respect to investments made by the Portfolio, the turnover rate should not adversely affect the Portfolio's NAV or net income. The Portfolio does not intend to seek profits through short term trading. Purchases of portfolio securities by the Portfolio are made from dealers, underwriters and issuers; sales are made to dealers and issuers. The Portfolio does not currently expect to incur any brokerage commission expense on such transactions because money market instruments are generally traded on a "net" basis with dealers acting as principal for their own accounts without a stated commission. The price of the security, however, usually includes a profit to the dealer. Securities purchased in underwritten offerings include a fixed amount of compensation to the underwriter, generally referred to as the underwriter's concession or discount. When securities are purchased directly from or sold directly to an issuer, no commissions or discounts are paid. It is the policy of the Portfolio to give primary consideration to obtaining the most favorable price and efficient execution of transactions. In seeking to implement the policies of the Portfolio, BIMC will effect transactions with those dealers it believes provide the most favorable prices and -32- are capable of providing efficient executions. In no instance will portfolio securities be purchased from or sold to PFPC Distributors or BIMC or any affiliated person of the foregoing entities except to the extent permitted by SEC exemptive order or by applicable law. BIMC may seek to obtain an undertaking from issuers of commercial paper or dealers selling commercial paper to consider the repurchase of such securities from the Portfolio prior to their maturity at their original cost plus interest (sometimes adjusted to reflect the actual maturity of the securities), if it believes that the Portfolio's anticipated need for liquidity makes such action desirable. Any such repurchase prior to maturity reduces the possibility that the Portfolio would incur a capital loss in liquidating commercial paper (for which there is no established market), especially if interest rates have risen since acquisition of the particular commercial paper. Investment decisions for the Portfolio and for other investment accounts managed by BIMC are made independently of each other in light of differing conditions. However, the same investment decision may be made for two or more of such accounts. In such cases, simultaneous transactions are inevitable. Purchases or sales are then averaged as to price and allocated as to amount according to a formula deemed equitable to each such account. While in some cases this practice could have a detrimental effect upon the price or value of the security as far as the Portfolio is concerned, in other cases it is believed to be beneficial to the Portfolio. The Portfolio will not purchase securities during the existence of any underwriting or selling group relating to such security of which BIMC or any affiliated person (as defined in the 1940 Act) thereof is a member except pursuant to procedures adopted by the Company's Board of Directors pursuant to Rule 10f-3 under the 1940 Act. Among other things, these procedures require that the commission paid in connection with such a purchase be reasonable and fair, that the purchase be at not more than the public offering price prior to the end of the first business day after the date of the public offer, and that BIMC not participate in or benefit from the sale to the Portfolio. ADDITIONAL INFORMATION CONCERNING COMPANY SHARES The Company has authorized capital of 30 billion shares of common stock at a par value of $0.001 per share. Currently, 26.573 billion shares have been classified into 104 classes as shown in the table below, however, the Company only has 26 active share classes that have begun investment operations. Under the Company's charter, the Board of Directors has the power to classify and reclassify any unissued shares of common stock from time to time.
NUMBER OF NUMBER OF AUTHORIZED SHARES AUTHORIZED SHARES CLASS OF COMMON STOCK (MILLIONS) CLASS OF COMMON STOCK (MILLIONS) - --------------------------------------------------------- ----------------------------------- ----------------- A (Growth & Income) 100 BBB 100 B 100 CCC 100 C (Balanced) 100 DDD (Robeco Boston Partners Institutional Small Cap Value 100 Fund II) D (Tax-Free) 100 EEE (Robeco Boston Partners Investors Small Cap Value Fund II) 100
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NUMBER OF NUMBER OF AUTHORIZED SHARES AUTHORIZED SHARES CLASS OF COMMON STOCK (MILLIONS) CLASS OF COMMON STOCK (MILLIONS) - --------------------------------------------------------- ----------------------------------- ----------------- E (Money) 500 FFF 100 F (Municipal Money) 500 GGG 100 G (Money) 500 HHH 100 H (Municipal Money) 500 III (Robeco Boston Partners Long/Short Equity-Institutional 100 Class) I (Sansom Money) 1,500 JJJ (Robeco Boston Partners Long/Short Equity-Investor Class) 100 J (Sansom Municipal Money) 500 KKK (Robeco Boston Partners Funds) 100 K (Sansom Government Money) 500 LLL (Robeco Boston Partners Funds) 100 L (Bedford Money) 1,500 MMM (n/i numeric Small Cap Value) 100 M (Bedford Municipal Money) 500 NNN (Bogle Investment Management Small Cap Growth - Institutional 100 Class) N (Bedford Government Money) 500 OOO (Bogle Investment Management Small Cap Growth - Investor Class) 100 O (Bedford N.Y. Money) 500 PPP (Schneider Value Fund) 100 P (RBB Government) 100 QQQ (Institutional Liquidity Fund 2,500 for Credit Unions) Q 100 RRR (Liquidity Fund for Credit 2,500 Unions) R (Municipal Money) 500 SSS (Robeco WPG Core Bond Fund - 100 Retirement Class) S (Government Money) 500 TTT (Robeco WPG Core Bond Fund - 50 Institutional Class) T 500 UUU (Robeco WPG Tudor Fund - 50 Institutional Fund) U 500 VVV (Robeco WPG Large Cap Growth 50 Fund - Institutional Class) V 500 WWW (Senbanc Fund) 50 W 100 XXX (Robeco WPG Core Bond Fund - 100 Investor Class) YYY (Bear Stearns CUFS MLP 100 Mortgage Portfolio) X 50 Select (Money) 700 Y 50 Beta 2 (Municipal Money) 1 Z 50 Beta 3 (Government Money) 1 AA 50 Beta 4 (N.Y. Money) 1 BB 50 Principal Class (Money) 700 CC 50 Gamma 2 (Municipal Money) 1 DD 100 Gamma 3 (Government Money) 1 EE 100 Gamma 4 (N.Y. Money) 1 FF (n/i numeric Emerging Growth) 50 Bear Stearns Money 2,500 GG (n/i numeric Growth) 50 Bear Stearns Municipal Money 1,500 HH (n/i numeric Mid Cap) 50 Bear Stearns Government Money 1,000 II (Baker 500 Growth Fund) 100 Delta 4 (N.Y. Money) 1 JJ (Baker 500 Growth Fund) 100 Epsilon 1 (Money) 1 KK 100 Epsilon 2 (Municipal Money) 1 LL 100 Epsilon 3 (Government Money) 1 MM 100 Epsilon 4 (N.Y. Money) 1 NN 100 Zeta 1 (Money) 1 OO 100 Zeta 2 (Municipal Money) 1 PP 100 Zeta 3 (Government Money) 1
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NUMBER OF NUMBER OF AUTHORIZED SHARES AUTHORIZED SHARES CLASS OF COMMON STOCK (MILLIONS) CLASS OF COMMON STOCK (MILLIONS) - --------------------------------------------------------- ----------------------------------- ----------------- QQ (Robeco Boston Partners Zeta 4 (N.Y. Money) 1 Institutional Large Cap) 100 RR (Robeco Boston Partners Eta 1 (Money) 1 Investors Large Cap) 100 SS (Robeco Boston Partners Adviser Eta 2 (Municipal Money) 1 Large Cap) 100 TT (Robeco Boston Partners Eta 3 (Government Money) 1 Investors Mid Cap) 100 UU (Robeco Boston Partners Eta 4 (N.Y. Money) 1 Institutional Mid Cap) 100 VV (Robeco Boston Partners Theta 1 (Money) 1 Institutional All Cap Value) 100 WW (Robeco Boston Partners Theta 2 (Municipal Money) 1 Investors All Cap Value) 100 YY (Schneider Capital Small Cap Theta 3 (Government Money) 1 Value) 100 ZZ 100 Theta 4 (N.Y. Money) 1 AAA 100
The classes of common stock have been grouped into separate "families." There are seven families that currently have operating portfolios, including: the Sansom Street Family and Bedford Family, the Schneider Capital Management Family, the n/i numeric investors family of funds, the Robeco Investment Funds Family, the Bogle Investment Management Family, and the Hilliard Lyons Family. The Sansom Street Family and Bedford Family represent interests in the Money Market Portfolio; the n/i numeric investors family of funds represents interests in four non-money market portfolios; the Robeco Investment Funds Family represents interest in eight non money-market portfolios; the Bogle Investment Management Family represents interests in one non-money market portfolio; the Schneider Capital Management Family represents interests in two non-money market portfolios; and the Hilliard Lyons Family represents interests in one non-money market portfolio. Each share that represents an interest in the Portfolio has an equal proportionate interest in the assets belonging to such Portfolio with each other share that represents an interest in such Portfolio, even where a share has a different class designation than another share representing an interest in that Portfolio. Shares of the Company do not have preemptive or conversion rights. When issued for payment as described in the Prospectus, shares of the Company will be fully paid and non-assessable. The Company does not currently intend to hold annual meetings of shareholders except as required by the 1940 Act or other applicable law. The Company's amended By-Laws provide that shareholders owning at least 10% of the outstanding shares of all classes of Common Stock of the Company have the right to call for a meeting of shareholders to consider the removal of one or more directors. To the extent required by law, the Company will assist in shareholder communication in such matters. -35- Shareholders of the Company are entitled to one vote for each full share held (irrespective of class or portfolio) and fractional votes for fractional shares held. Holders of shares of each class of the Company will vote in the aggregate and not by class on all matters, except where otherwise required by law. Further, shareholders of the Company will vote in the aggregate and not by portfolio except as otherwise required by law or when the Board of Directors determines that the matter to be voted upon affects only the interests of the shareholders of a particular portfolio. Rule 18f-2 under the 1940 Act provides that any matter required to be submitted by the provisions of such Act or applicable state law, or otherwise, to the holders of the outstanding voting securities of an investment company such as the Company shall not be deemed to have been effectively acted upon unless approved by the holders of a majority of the outstanding voting securities, as defined in the 1940 Act, of each portfolio affected by the matter. Rule 18f-2 further provides that a portfolio shall be deemed to be affected by a matter unless it is clear that the interests of each portfolio in the matter are identical or that the matter does not affect any interest of the portfolio. Under the Rule the approval of an investment advisory agreement or any change in a fundamental investment objective or fundamental investment policy would be effectively acted upon with respect to a portfolio only if approved by the holders of a majority of the outstanding voting securities, as defined in the 1940 Act, of such portfolio. However, the Rule also provides that the ratification of the selection of independent public accountants, the approval of underwriting contracts and the election of directors are not subject to the separate voting requirements and may be effectively acted upon by shareholders of an investment company voting without regard to portfolio. Voting rights are not cumulative and, accordingly, the holders of more than 50% of the aggregate shares of Common Stock of the Company may elect all directors. Notwithstanding any provision of Maryland law requiring a greater vote of shares of the Company's common stock (or of any class voting as a class) in connection with any corporate action, unless otherwise provided by law (for example by Rule 18f-2 discussed above), or by the Company's Articles of Incorporation and By-Laws, the Company may take or authorize such action upon the favorable vote of the holders of more than 50% of all of the outstanding shares of Common Stock voting without regard to class (or portfolio). PURCHASE AND REDEMPTION INFORMATION You may purchase shares through an account maintained by your brokerage firm and you may also purchase shares directly by mail or wire. The Company reserves the right, if conditions exist which make cash payments undesirable, to honor any request for redemption or repurchase of the Portfolio's shares by making payment in whole or in part in securities chosen by the Company and valued in the same way as they would be valued for purposes of computing the Portfolio's NAV. If payment is made in securities, a shareholder may incur transaction costs in converting these securities into cash. The Company has elected, however, to be governed by Rule 18f-1 under the 1940 Act so that the Portfolio is obligated to redeem its shares solely in cash up to the lesser of $250,000 or 1% of its NAV during any 90-day period for any one shareholder of the Portfolio. A shareholder will bear the risk of a decline in market value and any tax consequences associated with a redemption in securities. -36- Under the 1940 Act, the Company may suspend the right of redemption or postpone the date of payment upon redemption for any period during which the New York Stock Exchange, Inc. (the "NYSE") is closed (other than customary weekend and holiday closings), or during which trading on the NYSE is restricted, or during which (as determined by the SEC by rule or regulation) an emergency exists as a result of which disposal or valuation of portfolio securities is not reasonably practicable, or for such other periods as the SEC may permit. (The Portfolio may also suspend or postpone the recordation of the transfer of its shares upon the occurrence of any of the foregoing conditions.) Shares of the Company are subject to redemption by the Company, at the redemption price of such shares as in effect from time to time, including, without limitation: (1) to reimburse a Portfolio for any loss sustained by reason of the failure of a shareholder to make full payment for shares purchased by the shareholder or to collect any charge relating to a transaction effected for the benefit of a shareholder as provided in the Prospectus from time to time; (2) if such redemption is, in the opinion of the Company's Board of Directors, desirable in order to prevent the Company or any Portfolio from being deemed a "personal holding company" within the meaning of the Internal Revenue Code of 1986, as amended (the "Internal Revenue Code"); or (3) if the net income with respect to any particular class of common stock should be negative or it should otherwise be appropriate to carry out the Company's responsibilities under the 1940 Act. VALUATION OF SHARES The Company intends to use its best efforts to maintain the NAV of each class of the Portfolio at $1.00 per share. NAV per share, the value of an individual share in the Portfolio, is computed by adding the value of the proportionate interest of the class in the Portfolio's securities, cash and other assets, subtracting the actual and accrued liabilities of the class and dividing the result by the number of outstanding shares of such class. The NAV of each class of the Company is determined independently of the other classes. The Portfolio's "net assets" equal the value of the Portfolio's investments and other securities less its liabilities. The Portfolio's NAV per share is computed twice each day, as of 12:00 noon (Eastern time) and as of 4:00 p.m. (Eastern time), on each Business Day. "Business Day" means each weekday when both the NYSE and the Federal Reserve Bank of Philadelphia (the "FRB") are open. Currently, the NYSE is closed weekends and on New Year's Day, Dr. Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day (observed), Labor Day, Thanksgiving Day and Christmas Day (observed) and the preceding Friday and subsequent Monday when one of these holidays falls on a Saturday or Sunday. The FRB is currently closed on weekends and the same holidays as the NYSE as well as Columbus Day and Veterans' Day. The only day on which the NYSE is closed and the FRB is open is Good Friday. The Portfolio's NAV may be computed as described above on days that the NYSE is closed in an emergency situation, if in the opinion of BIMC and PFPC, the Portfolio can otherwise maintain its operations. The Company calculates the value of the portfolio securities of the Portfolio by using the amortized cost method of valuation. Under this method the market value of an instrument is approximated by amortizing the difference between the acquisition cost and value at maturity of the instrument on a straight-line basis over the remaining life of the instrument. The effect of -37- changes in the market value of a security as a result of fluctuating interest rates is not taken into account. The market value of debt securities usually reflects yields generally available on securities of similar quality. When such yields decline, market values can be expected to increase, and when yields increase, market values can be expected to decline. In addition, if a large number of redemptions take place at a time when interest rates have increased, the Portfolio may have to sell portfolio securities prior to maturity and at a price which might not be as desirable. The amortized cost method of valuation may result in the value of a security being higher or lower than its market price, the price the Portfolio would receive if the security were sold prior to maturity. The Company's Board of Directors has established procedures for the purpose of maintaining a constant NAV of $1.00 per share for the Portfolio, which includes a review of the extent of any deviation of NAV per share, based on available market quotations, from the $1.00 amortized cost per share. Should that deviation exceed 1/2 of 1% for the Portfolio, the Board of Directors will promptly consider whether any action should be initiated to eliminate or reduce material dilution or other unfair results to shareholders. Such action may include redeeming shares in kind, selling portfolio securities prior to maturity, reducing or withholding dividends, and utilizing a NAV per share as determined by using available market quotations. The Portfolio will maintain a dollar-weighted average portfolio maturity of 90 days or less, will not purchase any instrument with a deemed maturity under Rule 2a-7 of the 1940 Act greater than 13 months, will limit portfolio investments, including repurchase agreements (where permitted), to those U.S.-dollar-denominated instruments that BIMC determines present minimal credit risks pursuant to guidelines adopted by the Board of Directors, and BIMC will comply with certain reporting and recordkeeping procedures concerning such credit determination. There is no assurance that constant NAV will be maintained. In the event amortized cost ceases to represent fair value in the judgment of the Company's Board of Directors, the Board will take such actions as it deems appropriate. In determining the approximate market value of portfolio investments, the Company 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. This may result in the securities being valued at a price that differs from the price that would have been determined had the matrix or formula method not been used. All cash, receivables and current payables are carried on the Company's books at their face value. Other assets, if any, are valued at fair value as determined in good faith by or under the direction of the Company's Board of Directors. TAXES The Portfolio intends to qualify as a regulated investment company under Subchapter M of Subtitle A, Chapter 1 of the Internal Revenue Code, and to distribute its income to shareholders each year, so that the Portfolio generally will be relieved of federal income and excise taxes. If the Portfolio were to fail to so qualify: (1) the Portfolio would be taxed at regular corporate rates on its net taxable investment income without any deduction for distributions to shareholders; and (2) shareholders would recognize dividend income on distributions attributable to the Portfolio's earnings. Moreover, if the Portfolio were to fail to make sufficient distributions -38- in a year, the Portfolio would be subject to corporate income taxes and/or excise taxes in respect to the shortfall or, if the shortfall is large enough, the Portfolio could be disqualified as a regulated investment company. A 4% non-deductible excise tax is imposed on regulated investment companies that fail to distribute with respect to each calendar year at least 98% of their ordinary taxable income for the calendar year and capital gain net income (excess of capital gains over capital losses) for the one year period ending October 31 of such calendar year and 100% of any such amounts that were not distributed in the prior year. The Portfolio intends to make sufficient distributions or deemed distributions of its ordinary taxable income and any capital gain net income prior to the end of each calendar year to avoid liability for this excise tax. SHAREHOLDER APPROVALS As used in this SAI and in the Prospectus, "shareholder approval" and a "majority of the outstanding shares" of a class, series or Portfolio means, with respect to the approval of an investment advisory agreement, a distribution plan or a change in the Portfolio's investment objective or a fundamental investment limitation, the lesser of (1) 67% of the shares of the particular class, series or Portfolio represented at a meeting at which the holders of more than 50% of the outstanding shares of such class, series or Portfolio are present in person or by proxy, or (2) more than 50% of the outstanding shares of such class, series or Portfolio. MISCELLANEOUS COUNSEL The law firm of Drinker Biddle & Reath LLP, One Logan Square, 18th and Cherry Streets, Philadelphia, Pennsylvania 19103-6996, serves as independent counsel to the Company and the Disinterested Directors. INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ___________________, __________, serves as the Portfolio's independent registered public accounting firm. FINANCIAL STATEMENTS The audited financial statements and notes thereto in the Portfolio's Annual Report to Shareholders for the fiscal year ended _________ (the "Annual Report") ___________________ this SAI. No other parts of the Annual Report are incorporated by reference herein. The financial statements included in the Annual Report have been audited by the Portfolio's independent registered public accounting firm, _____________, whose report thereon also appears in the Annual Report and is incorporated herein by reference. Such financial statements have been incorporated herein in reliance upon such reports given upon their authority as experts in accounting and auditing. Copies of the Annual Report may be obtained at no charge by telephoning PFPC at the telephone number appearing on the front page of this SAI. -39- APPENDIX A ---------- DESCRIPTION OF SECURITIES RATINGS SHORT-TERM CREDIT RATINGS - ------------------------- A Standard & Poor's short-term issue credit rating is a current opinion of the creditworthiness of an obligor with respect to a specific financial obligation having an original maturity of no more than 365 days. The following summarizes the rating categories used by Standard & Poor's for short-term issues: "A-1" - Obligations are rated in the highest category and indicate that the obligor's capacity to meet its financial commitment on the obligation is strong. Within this category, certain obligations are designated with a plus sign (+). This indicates that the obligor's capacity to meet its financial commitment on these obligations is extremely strong. "A-2" - Obligations are somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher rating categories. However, the obligor's capacity to meet its financial commitment on the obligation is satisfactory. "A-3" - Obligations exhibit adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitment on the obligation. "B" - Obligations are regarded as having significant speculative characteristics. Ratings of "B-1," "B-2," and "B-3" may be assigned to indicate finer distinctions within the "B" category. The obligor currently has the capacity to meet its financial commitment on the obligation; however, it faces major ongoing uncertainties which could lead to the obligor's inadequate capacity to meet its financial commitment on the obligation. "B-1" - Obligations are regarded as having speculative characteristics, but the obligor has a relatively stronger capacity to meet its financial commitments over the short-term compared to other speculative - grade obligors. "B-2" - Obligations are regarded as having significant speculative characteristics, and the obligor has an average speculative - grade capacity to meet its financial commitments over the short-term compared to other speculative - - grade obligors. "B-3" - Obligations are regarded as having significant speculative characteristics, and the obligor has a relatively weak capacity to meet its financial commitments over the short-term compared to other speculative - grade obligations. A-1 "C" - Obligations are currently vulnerable to nonpayment and are dependent upon favorable business, financial and economic conditions for the obligor to meet its financial commitment on the obligation. "D" - Obligations are in payment default. The "D" rating category is used when payments on an obligation are not made on the date due even if the applicable grace period has not expired, unless Standard & Poor's believes that such payments will be made during such grace period. The "D" rating also will be used upon the filing of a bankruptcy petition or the taking of a similar action if payments on an obligation are jeopardized. Local Currency and Foreign Currency Risks - Country risk considerations are a standard part of Standard & Poor's analysis for credit ratings on any issuer or issue. Currency of repayment is a key factor in this analysis. An obligor's capacity to repay foreign currency obligations may be lower than its capacity to repay obligations in its local currency due to the sovereign government's own relatively lower capacity to repay external versus domestic debt. These sovereign risk considerations are incorporated in the debt ratings assigned to specific issues. Foreign Currency issuer ratings are also distinguished from local currency issuer ratings to identify those instances where sovereign risks make them different for the same issuer. Short-term ratings are opinions of the ability of issuers to honor short-term financial obligations. Ratings may be assigned to issuers, short-term programs or to individual short-term debt instruments. Such obligations generally have an original maturity not exceeding thirteen months, unless explicitly noted. Moody's employs the following: "P-1" - Issuers (or supporting institutions) rated Prime-1 have a superior ability to repay short-term debt obligations. "P-2" - Issuers (or supporting institutions) rated Prime-2 have a strong ability to repay short-term debt obligations. "P-3" - Issuers (or supporting institutions) rated Prime-3 have an acceptable ability to repay short-term debt obligations. "NP" - Issuers (or supporting institutions) rated Not Prime do not fall within any of the Prime rating categories. Fitch Ratings, Inc. ("Fitch") short-term ratings scale applies to foreign currency and local currency. A short-term rating has a time horizon of less than 13 months for most obligations, or up to three years for U.S. public finance in line with industry standards, to reflect unique risk characteristics of bond, tax, and revenue anticipation notes that are commonly issued with terms up to three years. Short-term ratings thus place greater emphasis on the liquidity necessary to meet financial commitments in a timely manner. The following summarizes the rating categories used by Fitch for short-term obligations: A-2 "F1" - Securities possess the highest credit quality. This designation indicates the strongest capacity for timely payment of financial commitments; may have an added "+" to denote any exceptionally strong credit feature. "F2" - Securities possess good credit quality. This designation indicates a satisfactory capacity for timely payment of financial commitments, but the margin of safety is not as great as in the case of the higher ratings. "F3" - Securities possess fair credit quality. This designation indicates that the capacity for timely payment of financial commitments is adequate; however, near term adverse changes could result in a reduction to non investment grade. "B" - Securities possess speculative credit quality. This designation indicates minimal capacity for timely payment of financial commitments, plus vulnerability to near-term adverse changes in financial and economic conditions. "C" - Securities possess high default risk. Default is a real possibility. This designation indicates a capacity for meeting financial commitments which is solely reliant upon a sustained, favorable business and economic environment. "RD" - Indicates an entity that has defaulted on one or more of its financial commitments, although it continues to meet other obligations. "D" - Indicates an entity or sovereign that has defaulted on all of its financial obligations. "NR" - This designation indicates that Fitch does not publicly rate the issuer or issue in question. "Withdrawn" - A rating is withdrawn when Fitch deems the amount of information available to be inadequate for rating purposes, or when an obligation matures, is called, or refinanced, or for any other reason Fitch deems sufficient. The following summarizes the ratings used by Dominion Bond Rating Service Limited ("DBRS") for commercial paper and short-term debt: "R-1 (high)" - Short-term debt rated "R-1 (high)" is of the highest credit quality, and indicates an entity possessing an unquestioned ability to repay current liabilities as they fall due. Entities rated in this category normally maintain strong liquidity positions, conservative debt levels, and profitability that is both stable and above average. Companies achieving an "R-1 (high)" rating are normally leaders in structurally sound industry segments with proven track records, sustainable positive future results and no substantial qualifying negative factors. Given the extremely tough definition DBRS has established for an "R-1 (high)", few entities are strong enough to achieve this rating. A-3 "R-1 (middle)" - Short-term debt rated "R-1 (middle)" is of superior credit quality and, in most cases, ratings in this category differ from "R-1 (high)" credits by only a small degree. Given the extremely tough definition DBRS has established for the "R-1 (high)" category, entities rated "R-1 (middle)" are also considered strong credits, and typically exemplify above average strength in key areas of consideration for the timely repayment of short-term liabilities. "R-1 (low)" - Short-term debt rated "R-1 (low)" is of satisfactory credit quality. The overall strength and outlook for key liquidity, debt and profitability ratios are not normally as favorable as with higher rating categories, but these considerations are still respectable. Any qualifying negative factors that exist are considered manageable, and the entity is normally of sufficient size to have some influence in its industry. "R-2 (high)" - Short-term debt rated "R-2 (high)" is considered to be at the upper end of adequate credit quality. The ability to repay obligations as they mature remains acceptable, although the overall strength and outlook for key liquidity, debt, and profitability ratios is not as strong as credits rated in the "R-1 (low)" category. Relative to the latter category, other shortcomings often include areas such as stability, financial flexibility, and the relative size and market position of the entity within its industry. "R-2 (middle)" - Short-term debt rated "R-2 (middle)" is considered to be of adequate credit quality. Relative to the "R-2 (high)" category, entities rated "R-2 (middle)" typically have some combination of higher volatility, weaker debt or liquidity positions, lower future cash flow capabilities, or hold a weaker industry position. Ratings in this category would also be more vulnerable to adverse changes in financial and economic conditions. "R-2 (low)" - Short-term debt rated "R-2 (low)" is considered to be of only just adequate credit quality, one step up from being speculative. While not yet defined as speculative, the "R-2 (low)" category signifies that although, repayment is still expected, the certainty of repayment could be impacted by a variety of possible adverse developments, many of which would be outside of the issuer's control. Entities in this area often have limited access to capital markets and may also have limitations in securing alternative sources of liquidity, particularly during periods of weak economic conditions. "R-3 (high)," "R-3 (middle)," "R-3 (low)" - Short-term debt rated "R-3" is speculative, and within the three sub-set grades, the capacity for timely repayment ranges from mildly speculative to doubtful. "R-3" credits tend to have weak liquidity and debt ratios, and the future trend of these ratios is also unclear. Due to its speculative nature, companies with "R-3" ratings would normally have very limited access to alternative sources of liquidity. Earnings and cash flow would typically be very unstable, and the level of overall profitability of the entity is also likely to be low. The industry environment may be weak, and strong negative qualifying factors are also likely to be present. "D" - A security rated "D" implies the issuer has either not met a scheduled payment or the issuer has made it clear that it will be missing such a payment in the near future. In some cases, DBRS may not assign a "D" rating under a bankruptcy announcement scenario, as A-4 allowances for grace periods may exist in the underlying legal documentation. Once assigned, the "D" rating will continue as long as the missed payment continues to be in arrears, and until such time as the rating is suspended, discontinued, or reinstated by DBRS. LONG-TERM CREDIT RATINGS - ------------------------ The following summarizes the ratings used by Standard & Poor's for long-term issues: "AAA" - An obligation rated "AAA" has the highest rating assigned by Standard & Poor's. The obligor's capacity to meet its financial commitment on the obligation is extremely strong. "AA" - An obligation rated "AA" differs from the highest-rated obligations only to a small degree. The obligor's capacity to meet its financial commitment on the obligation is very strong. "A" - An obligation rated "A" is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than obligations in higher-rated categories. However, the obligor's capacity to meet its financial commitment on the obligation is still strong. "BBB" - An obligation rated "BBB" exhibits adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity of the obligor to meet its financial commitment on the obligation. Obligations rated "BB," "B," "CCC," "CC," and "C" are regarded as having significant speculative characteristics. "BB" indicates the least degree of speculation and "C" the highest. While such obligations will likely have some quality and protective characteristics, these may be outweighed by large uncertainties or major exposures to adverse conditions. "BB" - An obligation rated "BB" is less vulnerable to nonpayment than other speculative issues. However, it faces major ongoing uncertainties or exposure to adverse business, financial or economic conditions which could lead to the obligor's inadequate capacity to meet its financial commitment on the obligation. "B" - An obligation rated "B" is more vulnerable to nonpayment than obligations rated "BB," but the obligor currently has the capacity to meet its financial commitment on the obligation. Adverse business, financial or economic conditions will likely impair the obligor's capacity or willingness to meet its financial commitment on the obligation. "CCC" - An obligation rated "CCC" is currently vulnerable to nonpayment, and is dependent upon favorable business, financial and economic conditions for the obligor to meet its financial commitment on the obligation. In the event of adverse business, financial, or economic conditions, the obligor is not likely to have the capacity to meet its financial commitment on the obligation. A-5 "CC" - An obligation rated "CC" is currently highly vulnerable to nonpayment. "C" - A subordinated debt or preferred stock obligation rated "C" is currently highly vulnerable to nonpayment. The "C" rating may be used to cover a situation where a bankruptcy petition has been filed or similar action taken, but payments on this obligation are being continued. A "C" rating also be assigned to a preferred stock issue in arrears on dividends or sinking fund payments, but that is currently paying. "D" - An obligation rated "D" is in payment default. The "D" rating category is used when payments on an obligation are not made on the date due even if the applicable grace period has not expired, unless Standard & Poor's believes that such payment will be made during such grace period. The "D" rating also will be used upon the filing of a bankruptcy petition or the taking of a similar action if payments on an obligation are jeopardized. Plus (+) or minus (-) - The ratings from "AA" to "CCC" may be modified by the addition of a plus (+) or minus (-) sign to show relative standing within the major rating categories. "N.R." - This indicates that no rating has been requested, that there is insufficient information on which to base a rating or that Standard & Poor's does not rate a particular obligation as a matter of policy Local Currency and Foreign Currency Risks - Country risk considerations are a standard part of Standard & Poor's analysis for credit ratings on any issuer or issue. Currency of repayment is a key factor in this analysis. An obligor's capacity to repay Foreign Currency obligations may be lower than its capacity to repay obligations in its local currency due to the sovereign government's own relatively lower capacity to repay external versus domestic debt. These sovereign risk considerations are incorporated in the debt ratings assigned to specific issues. Foreign Currency issuer ratings are also distinguished from local currency issuer ratings to identify those instances where sovereign risks make them different for the same issuer. The following summarizes the ratings used by Moody's for long-term debt: "Aaa" - Obligations rated "Aaa" are judged to be of the highest quality, with minimal credit risk. "Aa" - Obligations rated "Aa" are judged to be of high quality and are subject to very low credit risk. "A" - Obligations rated "A" are considered upper-medium grade and are subject to low credit risk. "Baa" - Obligations rated "Baa" are subject to moderate credit risk. They are considered medium-grade and as such may possess certain speculative characteristics. A-6 "Ba" - Obligations rated "Ba" are judged to have speculative elements and are subject to substantial credit risk. "B" - Obligations rated "B" are considered speculative and are subject to high credit risk. "Caa" - Obligations rated "Caa" are judged to be of poor standing and are subject to very high credit risk. "Ca" - Obligations rated "Ca" are highly speculative and are likely in, or very near, default, with some prospect of recovery of principal and interest. "C" - Obligations rated "C" are the lowest rated class of bonds and are typically in default, with little prospect for recovery of principal or interest. Note: Moody's appends numerical modifiers 1, 2, and 3 to each generic rating classification from "Aa" through "Caa." The modifier 1 indicates that the obligation ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates a ranking in the lower end of that generic rating category. The following summarizes long-term ratings used by Fitch: "AAA" - Securities considered to be investment grade and of the highest credit quality. "AAA" ratings denote the lowest expectation of credit risk. They are assigned only in case of exceptionally strong capacity for payment of financial commitments. This capacity is highly unlikely to be adversely affected by foreseeable events. "AA" - Securities considered to be of very high credit quality. "AA" ratings denote expectations of low credit risk. They indicate very strong capacity for timely payment of financial commitments. This capacity is not significantly vulnerable to foreseeable events. "A" - Securities considered to be investment grade and of high credit quality. "A" ratings denote expectations of low credit risk. The capacity for payment of financial commitments is considered strong. This capacity may, nevertheless, be more vulnerable to changes in circumstances or in economic conditions than is the case for higher ratings. "BBB" - Securities considered to be investment grade and of good credit quality. "BBB" ratings indicate that there are currently expectations of low credit risk. The capacity for payment of financial commitments is considered adequate but adverse changes in circumstances and economic conditions are more likely to impair this capacity. This is the lowest investment grade category. "BB" - Securities considered to be speculative. "BB" ratings indicate that there is a possibility of credit risk developing, particularly as the result of adverse economic change over time; however, business or financial alternatives may be available to allow financial commitments to be met. Securities rated in this category are not investment grade. A-7 "B" - Securities considered to be highly speculative. "B" ratings indicate that significant credit risk is present, but a limited margin of safety remains. Financial commitments are currently being met; however, capacity for continued payment is contingent upon a sustained, favorable business and economic environment. "CCC," "CC" and "C" - Securities have high default risk. Default is a real possibility, and capacity for meeting financial commitments is solely reliant upon sustained, favorable business or economic developments. A "CC" rating indicates that default of some kind appears probable. "C" ratings signal imminent default. "DDD," "DD" and "D" - Securities are in default. The ratings of obligations in these categories are based on their prospects for achieving partial or full recovery in a reorganization or liquidation of the obligor. While expected recovery values are highly speculative and cannot be estimated with any precision, the following serve as general guidelines. "DDD" obligations have the highest potential for recovery, around 90%-100% of outstanding amounts and accrued interest. "DD" indicates potential recoveries in the range of 50%-90% and "D" the lowest recovery potential, i.e., below 50%. Entities rated in this category have defaulted on some or all of their obligations. Entities rated "DDD" have the highest prospect for resumption of performance or continued operation with or without a formal reorganization process. Entities rated "DD" and "D" are generally undergoing a formal reorganization or liquidation process; those rated "DD" are likely to satisfy a higher portion of their outstanding obligations, while entities rated "D" have a poor prospect of repaying all obligations. Plus (+) or minus (-) may be appended to a rating to denote relative status within major rating categories. Such suffixes are not added to the "AAA" category or to categories below "CCC". "NR" indicates that Fitch does not publicly rate the issuer or issue in question. The following summarizes the ratings used by DBRS for long-term debt: "AAA" - Long-term debt rated "AAA" is of the highest credit quality, with exceptionally strong protection for the timely repayment of principal and interest. Earnings are considered stable, the structure of the industry in which the entity operates is strong, and the outlook for future profitability is favorable. There are few qualifying factors present which would detract from the performance of the entity. The strength of liquidity and coverage ratios is unquestioned and the entity has established a creditable track record of superior performance. Given the extremely high standard which DBRS has set for this category, few entities are able to achieve a "AAA" rating. "AA" - Long-term debt rated "AA" is of superior credit quality, and protection of interest and principal is considered high. In many cases they differ from long-term debt rated "AAA" only to a small degree. Given the extremely restrictive definition DBRS has for the "AAA" A-8 category, entities rated "AA" are also considered to be strong credits, typically exemplifying above average strength in key areas of consideration and unlikely to be significantly affected by reasonably foreseeable events. "A" - Long-term debt rated "A" is of satisfactory credit quality. Protection of interest and principal is still substantial, but the degree of strength is less than that of "AA" rated entities. While "A" is a respectable rating, entities in this category are considered to be more susceptible to adverse economic conditions and have greater cyclical tendencies than higher-rated securities. "BBB" - Long-term debt rated "BBB" is of adequate credit quality. Protection of interest and principal is considered acceptable, but the entity is fairly susceptible to adverse changes in financial and economic conditions, or there may be other adverse conditions present which reduce the strength of the entity and its rated securities. "BB" - Long-term debt rated "BB" is defined to be speculative and non investment-grade, where the degree of protection afforded interest and principal is uncertain, particularly during periods of economic recession. Entities in the "BB" range typically have limited access to capital markets and additional liquidity support. In many cases, deficiencies in critical mass, diversification, and competitive strength are additional negative considerations. "B" - Long-term debt rated "B" is highly speculative and there is a reasonably high level of uncertainty as to the ability of the entity to pay interest and principal on a continuing basis in the future, especially in periods of economic recession or industry adversity. "CCC", CC" and "C" -Long-term debt rated in any of these categories is very highly speculative and is in danger of default of interest and principal. The degree of adverse elements present is more severe than long-term debt rated "B." Long-term debt rated below "B" often has characteristics which, if not remedied, may lead to default. In practice, there is little difference between these categories, with "CC" and "C" normally used for lower ranking debt of companies for which the senior debt is rated in the "CCC" to "B" range. "D" - A security rated "D" implies the issuer has either not met a scheduled payment of interest or principal or that the issuer has made it clear that it will miss such a payment in the near future. In some cases, DBRS may not assign a "D" rating under a bankruptcy announcement scenario, as allowances for grace periods may exist in the underlying legal documentation. Once assigned, the "D" rating will continue as long as the missed payment continues to be in arrears, and until such time as the rating is suspended, discontinued or reinstated by DBRS. ("high", "low") - Each rating category is denoted by the subcategories "high" and "low". The absence of either a "high" or "low" designation indicates the rating is in the "middle" of the category. The "AAA" and "D" categories do not utilize "high", "middle", and "low" as differential grades. A-9 NOTES TO SHORT-TERM AND LONG-TERM CREDIT RATINGS - ------------------------------------------------ STANDARD & POOR'S CREDITWATCH: CreditWatch highlights the potential direction of a short- or long-term rating. It focuses on identifiable events and short-term trends that cause ratings to be placed under special surveillance by Standard & Poor's analytical staff. These may include mergers, recapitalizations, voter referendums, regulatory action or anticipated operating developments. Ratings appear on CreditWatch when such an event or a deviation from an expected trend occurs and additional information is necessary to evaluate the current rating. A listing, however, does not mean a rating change is inevitable, and whenever possible, a range of alternative ratings will be shown. CreditWatch is not intended to include all ratings under review, and rating changes may occur without the ratings having first appeared on CreditWatch. The "positive" designation means that a rating may be raised; "negative" means a rating may be lowered; and "developing" means that a rating may be raised, lowered or affirmed. RATING OUTLOOK: A Standard & Poor's rating outlook assesses the potential direction of a long-term credit rating over the intermediate term (typically six months to two years). In determining a rating outlook, consideration is given to any changes in the economic and/or fundamental business conditions. An outlook is not necessarily a precursor of a rating change or future CreditWatch action. o "Positive" means that a rating may be raised. o "Negative" means that a rating may be lowered. o "Stable" means that a rating is not likely to change. o "Developing" means a rating may be raised or lowered. MOODY'S WATCHLIST: Moody's uses the Watchlist to indicate that a rating is under review for possible change in the short-term. A rating can be placed on review for possible upgrade ("UPG"), on review for possible downgrade ("DNG"), or more rarely with direction uncertain ("UNC"). A credit is removed from the Watchlist when the rating is upgraded, downgraded or confirmed. RATING OUTLOOKS: A Moody's rating outlook is an opinion regarding the likely direction of a rating over the medium term. Where assigned, rating outlooks fall into the following four categories: Positive ("POS"), Negative ("NEG"), Stable ("STA") and Developing ("DEV" -- contingent upon an event). In the few instances where an issuer has multiple outlooks of differing directions, an "(m)" modifier (indicating multiple, differing outlooks) will be displayed, and Moody's written research will describe any differences and provide the rationale for these differences. A "RUR" (Rating(s) Under Review) designation indicates that the issuer has one or more ratings under review for possible change, and thus overrides the outlook designation. When an outlook has not been assigned to an eligible entity, "NOO" (No Outlook) may be displayed. A-10 FITCH WITHDRAWN: A rating is withdrawn when Fitch deems the amount of information available to be inadequate for rating purposes, or when an obligation matures, is called, or refinanced. RATING WATCH: Ratings are placed on Rating Watch to notify investors that there is a reasonable probability of a rating change and the likely direction of such change. These are designated as "Positive", indicating a potential upgrade, "Negative", for a potential downgrade, or "Evolving", if ratings may be raised, lowered or maintained. Rating Watch is typically resolved over a relatively short period. RATING OUTLOOK: A Rating Outlook indicates the direction a rating is likely to move over a one-to two-year period. Outlooks may be "positive", "stable" or "negative". A positive" or "negative" Rating Outlook does not imply a rating change is inevitable. Similarly, ratings for which outlooks are "stable" could be upgraded or downgraded before an outlook moves to "positive" or "negative" if circumstances warrant such an action. Occasionally, Fitch may be unable to identify the fundamental trend. In these cases, the Rating Outlook may be described as "evolving". DBRS RATING TRENDS: Each DBRS rating category is appended with one of three rating trends - "Positive", "Stable", or "Negative". The rating trend helps to give the investor an understanding of DBRS's opinion regarding the outlook for the rating in question. However, the investor must not assume that a positive or negative trend necessarily indicates that a rating change is imminent. RATING ACTIONS: In addition to confirming or changing ratings, other rating actions include: (1) SUSPENDED RATINGS. Rating opinions are forward looking. While a rating will consider the historical performance of an issuer, a rating is an assessment of the issuer's future ability and willingness to meet outstanding obligations. As such, for a complete credit quality assessment, DBRS normally requires the cooperation of the issuer so that management strategies and projections may be evaluated and qualified. Since the availability of such information is critical to the rating assessment, any reluctance in management's willingness to supply such information (either perceived or actual) may cause a rating to be changed or even suspended. The eventual action will depend upon DBRS's assessment of the degree of accuracy of a rating, possibly without the cooperation of management. Suspended ratings indicate that an issuer still has outstanding debt, but DBRS no longer provides a current rating opinion on the credit quality of that outstanding debt. A-11 (2) DISCONTINUED RATINGS. When an entity retires all, or virtually all, of its outstanding debt within a particular category and has no plans to re-issue in the near future (e.g. commercial paper, long-term debt or preferred shares), DBRS may discontinue its rating. Other less common circumstances where DBRS may also discontinue ratings include situations where the rated debt is no longer in the public market, where a defeasance structure removes the credit risk of the issuer as a consideration or where the debt comes to be held by a few large institutions that do not require ongoing DBRS ratings. (3) RATINGS "Under Review." In practice, DBRS maintains continuous surveillance of the entities that it rates and therefore all ratings are always under review. Accordingly, when a significant event occurs that directly impacts the credit quality of a particular entity or group of entities, DBRS will attempt to provide an immediate rating opinion. However, if there is high uncertainty regarding the outcome of the event, and DBRS is unable to provide an objective, forward-looking opinion in a timely fashion, then the rating(s) of the issuer(s) will be placed "Under Review" since they may no longer be appropriate and can no longer be relied upon. Ratings which are "Under Review" are qualified with one of the following three provisional statements: "negative implications", "positive implications", or "developing implications". These qualifications indicate DBRS's preliminary evaluation of the impact on the credit quality of the security/issuer. Although the three provisional statements may provide some guidance to subscribers, situations and potential rating implications may vary widely and DBRS's final rating conclusion may depart from its preliminary assessment. For each of these three provisional statements, further due diligence has to be completed in order to determine the applicable rating. In this respect, and while the previous rating may no longer be appropriate and can no longer be relied upon to gauge credit quality, the three provisional statements are an attempt to provide initial guidance as to possible rating outcomes after the due diligence process has been completed and DBRS has finalized its view. MUNICIPAL NOTE RATINGS - ---------------------- A Standard & Poor's U.S. municipal note rating reflects the liquidity factors and market access risks unique to notes due in three years or less. Notes maturing beyond three years will most likely receive a long-term debt rating. The following summarizes the ratings used by Standard & Poor's for municipal notes: "SP-1" - The issuers of these municipal notes exhibit a strong capacity to pay principal and interest. Those issues determined to possess a very strong capacity to pay debt service are given a plus (+) designation. "SP-2" - The issuers of these municipal notes exhibit a satisfactory capacity to pay principal and interest, with some vulnerability to adverse financial and economic changes over the term of the notes. "SP-3" - The issuers of these municipal notes exhibit speculative capacity to pay principal and interest. A-12 Moody's uses three rating categories for short-term municipal obligations that are considered investment grade. These ratings are designated as Municipal Investment Grade ("MIG") and are divided into three levels - "MIG-1" through "MIG-3". In addition, those short-term obligations that are of speculative quality are designated "SG", or speculative grade. MIG ratings expire at the maturity of the obligation. The following summarizes the ratings used by Moody's for these short-term obligations: "MIG-1" - This designation denotes superior credit quality. Excellent protection is afforded by established cash flows, highly reliable liquidity support or demonstrated broad-based access to the market for refinancing. "MIG-2" - This designation denotes strong credit quality. Margins of protection are ample, although not as large as in the preceding group. "MIG-3" - This designation denotes acceptable credit quality. Liquidity and cash-flow protection may be narrow, and market access for refinancing is likely to be less well-established. "SG" - This designation denotes speculative-grade credit quality. Debt instruments in this category may lack sufficient margins of protection. In the case of variable rate demand obligations ("VRDOs"), a two-component rating is assigned; a long- or short-term debt rating and a demand obligation rating. The first element represents Moody's evaluation of the degree of risk associated with scheduled principal and interest payments. The second element represents Moody's evaluation of the degree of risk associated with the ability to receive purchase price upon demand ("demand feature"), using a variation of the MIG rating scale, the Variable Municipal Investment Grade or "VMIG" rating. When either the long- or short-term aspect of a VRDO is not rated, that piece is designated "NR", e.g., "Aaa/NR" or "NR/VMIG-1". VMIG rating expirations are a function of each issue's specific structural or credit features. "VMIG-1" - This designation denotes superior credit quality. Excellent protection is afforded by the superior short-term credit strength of the liquidity provider and structural and legal protections that ensure the timely payment of purchase price upon demand. "VMIG-2" - This designation denotes strong credit quality. Good protection is afforded by the strong short-term credit strength of the liquidity provider and structural and legal protections that ensure the timely payment of purchase price upon demand. "VMIG-3" - This designation denotes acceptable credit quality. Adequate protection is afforded by the satisfactory short-term credit strength of the liquidity provider and structural and legal protections that ensure the timely payment of purchase price upon demand. A-13 "SG" - This designation denotes speculative-grade credit quality. Demand features rated in this category may be supported by a liquidity provider that does not have an investment grade short-term rating or may lack the structural and/or legal protections necessary to ensure the timely payment of purchase price upon demand. Fitch uses the same ratings for municipal securities as described above for other short-term credit ratings. ABOUT CREDIT RATINGS - -------------------- A Standard & Poor's issue credit rating is a current opinion of the creditworthiness of an obligor with respect to a specific financial obligation, a specific class of financial obligations, or a specific financial program (including ratings on medium-term note programs and commercial paper programs). It takes into consideration the creditworthiness of guarantors, insurers or other forms of credit enhancement on the obligation and takes into account the currency in which the obligation is denominated. The issue credit rating is not a recommendation to purchase, sell or hold a financial obligation inasmuch as it does not comment as to market price or suitability for a particular investor. Moody's credit ratings must be construed solely as statements of opinion and not as statements of fact or recommendations to purchase, sell or hold any securities. Fitch credit ratings are an opinion on the relative ability of an entitiy's financial commitments, such as interest, preferred dividends, repayment of principal, insurance claims or counterparty obligations. Fitch credit ratings are used by investors as indications of the likelihood of receiving their money back in accordance with the terms on which they invested. Fitch's credit-ratings cover the global spectrum of corporate, sovereign (including supra-national and sub-national), financial, bank, insurance, municipal and other public finance entities and the securities or other obligations they issue, as well as structured finance securities backed by receivables or other financial assets. DBRS credit ratings are not buy, hold or sell recommendations, but rather the result of qualitative and quantitative analysis focusing solely on the credit quality of the issuer and its underlying obligations. A-14 APPENDIX B PROXY VOTING POLICY For BlackRock Advisors, Inc. and Its Affiliated Registered Investment Advisers Introduction This Proxy Voting Policy ("Policy") for BlackRock Advisors, Inc. and its affiliated registered investment advisers ("B1ackRock") reflects our duty as a fiduciary under the Investment Advisers Act of 1940 (the "Advisers Act") to vote proxies in the best interests of our clients. In addition, the Department of Labor views the fiduciary act of managing ERISA plan assets to include the voting of proxies. Proxy voting decisions must be made solely in the best interests of the pension plan's participants and beneficiaries. The Department of Labor has interpreted this requirement as prohibiting a fiduciary from subordinating the retirement income interests of participants and beneficiaries to unrelated objectives. The guidelines in this Policy have been formulated to ensure decision-making consistent with these fiduciary responsibilities. Any general or specific proxy voting guidelines provided by an advisory client or its designated agent in writing will supercede the specific guidelines in this Policy. BlackRock will disclose to our advisory clients information about this Policy as well as disclose to our clients how they may obtain information on how we voted their proxies. Additionally, BlackRock will maintain proxy voting records for our advisory clients consistent with the Advisers Act. For those of our clients that are registered investment companies, BlackRock will disclose this Policy to the shareholders of such funds and make filings with the Securities and Exchange Commission and make available to fund shareholders the specific proxy votes that we cast in shareholder meetings of issuers of portfolio securities in accordance with the rules and regulations under the Investment Company Act of 1940. Registered investment companies that are advised by BlackRock as well as certain of our advisory clients may participate in securities lending programs, which may reduce or eliminate the amount of shares eligible for voting by BlackRock in accordance with this Policy if such shares are out on loan and cannot be recalled in time for the vote. Implicit in the initial decision to retain or invest in the security of a corporation is approval of its existing corporate ownership structure, its management, and its operations. Accordingly, proxy proposals that would change the existing status of a corporation will be reviewed carefully and supported only when it seems clear that the proposed changes are likely to benefit the corporation and its shareholders. Notwithstanding this favorable predisposition, management will be assessed on an ongoing basis both in terms of its business capability and its dedication to the shareholders to ensure that our continued confidence remains warranted. If it is determined that management is acting on its own behalf instead of for the well being of the B-1 corporation, we will vote to support shareholder proposals, unless other mitigating circumstances are present. Additionally, situations may arise that involve an actual or perceived conflict of interest. For example, we may manage assets of a pension plan of a company whose management is soliciting proxies, or a BlackRock employee involved with managing an account may have a close relative who serves as a director or executive of a company that is soliciting proxies regarding securities held in such account. In all cases, the manner in which we vote proxies must be based on our clients' best interests and not the product of a conflict. This Policy and its attendant recommendations attempt to generalize a complex subject. It should be clearly understood that specific fact situations, including differing voting practices in jurisdictions outside the United States, might warrant departure from these guidelines. In such instances, the relevant facts will be considered, and if a vote contrary to these guidelines is indicated it will be cast and the reasons therefor recorded in writing. Section I of the Policy describes proxy proposals that may be characterized as routine and lists examples of the types of proposals we would typically support. Section II of the Policy describes various types of non-routine proposals and provides general voting guidelines. These non-routine proposals are categorized as those involving: A. Social Issues, B. Financial/Corporate Issues, and C. Shareholder Rights. Finally, Section III of the Policy describes the procedures to be followed in casting a vote pursuant to these guidelines. B-2 SECTION I ROUTINE MATTERS Routine proxy proposals, amendments, or resolutions are typically proposed by management and meet the following criteria: 1. They do not measurably change the structure, management control, or operation of the corporation. 2. They are consistent with industry standards as well as the corporate laws of the state of incorporation. Voting Recommendation BlackRock will normally support the following routine proposals: 1. To increase authorized common shares. 2. To increase authorized preferred shares as long as there are not disproportionate voting rights per preferred share. 3. To elect or re-elect directors. 4. To appoint or elect auditors. 5. To approve indemnification of directors and limitation of directors' liability. 6. To establish compensation levels. 7. To establish employee stock purchase or ownership plans. 8. To set time and location of annual meeting. B-3 SECTION II NON-ROUTINE PROPOSALS A. Social Issues Proposals in this category involve issues of social conscience. They are typically proposed by shareholders who believe that the corporation's internally adopted policies are ill-advised or misguided. Voting Recommendation If we have determined that management is generally socially responsible, we will generally vote against the following shareholder proposals: 1. To enforce restrictive energy policies. 2. To place arbitrary restrictions on military contracting. 3. To bar or place arbitrary restrictions on trade with other countries. 4. To restrict the marketing of controversial products. 5. To limit corporate political activities. 6. To bar or restrict charitable contributions. 7. To enforce a general policy regarding human rights based on arbitrary parameters. 8. To enforce a general policy regarding employment practices based on arbitrary parameters. 9. To enforce a general policy regarding animal rights based on arbitrary parameters. 10. To place arbitrary restrictions on environmental practices. B. Financial/Corporate Issues Proposals in this category are usually offered by management and seek to change a corporation's legal, business or financial structure. B-4 Voting Recommendation We will generally vote in favor of the following management proposals provided the position of current shareholders is preserved or enhanced: 1. To change the state of incorporation. 2. To approve mergers, acquisitions or dissolution. 3. To institute indenture changes. 4. To change capitalization. C. Shareholder Rights Proposals in this category are made regularly both by management and shareholders. They can be generalized as involving issues that transfer or realign board or shareholder voting power. We typically would oppose any proposal aimed solely at thwarting potential takeover offers by requiring, for example, super-majority approval. At the same time, we believe stability and continuity promote profitability. The guidelines in this area seek to find a middle road, and they are no more than guidelines. Individual proposals may have to be carefully assessed in the context of their particular circumstances. VOTING RECOMMENDATION We will generally vote for the following management proposals: 1. To require majority approval of shareholders in acquisitions of a controlling share in the corporation. 2. To institute staggered board of directors. 3. To require shareholder approval of not more than 66 2/3% for a proposed amendment to the corporation's by-laws. 4. To eliminate cumulative voting. 5. To adopt anti-greenmail charter or by-law amendments or to otherwise restrict a company's ability to make greenmail payments. B-5 6. To create a dividend reinvestment program. 7. To eliminate preemptive rights. 8. To eliminate any other plan or procedure designed primarily to discourage a takeover or other similar action (commonly known as a "poison pill"). We will generally vote against the following management proposals: 1. To require greater than 66 2/3% shareholder approval for a proposed amendment to the corporation's by-laws ("super-majority provisions"). 2. To require that an arbitrary fair price be offered to all shareholders that is derived from a fixed formula ("fair price amendments"). 3. To authorize a new class of common stock or preferred stock which may have more votes per share than the existing common stock. 4. To prohibit replacement of existing members of the board of directors. 5. To eliminate shareholder action by written consent without a shareholder meeting. 6. To allow only the board of directors to call a shareholder meeting Q' to propose amendments to the articles of incorporation. 7. To implement any other action or procedure designed primarily to discourage a takeover or other similar action (commonly known as a "poison pill"). 8. To limit the ability of shareholders to nominate directors. We will generally vote for the following shareholder proposals: 1. To rescind share purchases rights or require that they be submitted for shareholder approval, but only if the vote required for approval is not more than 66 2/3%. 2. To opt out of state anti takeover laws deemed to be detrimental to the shareholder. 3. To change the state of incorporation for companies operating under the umbrella of antishareholder state corporation laws if another state is chosen with favorable laws in this and other areas. B-6 4. To eliminate any other plan or procedure designed primarily to discourage a takeover or other similar action. 5. To permit shareholders to participate in formulating management's proxy and the opportunity to discuss and evaluate management's director nominees, and/or to nominate shareholder nominees to the board. 6. To require that the board's audit, compensation, and/or nominating committees be comprised exclusively of independent directors. 7. To adopt anti-greenmail charter or by-law amendments or otherwise restrict a company's ability to make greenmail payments. 8. To create a dividend reinvestment program. 9. To recommend that votes to "abstain' `not be considered votes "cast' `at an annual meeting or special meeting, unless required by state law. 10. To require that "golden parachutes" be submitted for shareholder ratification. We will generally vote against the following shareholder proposals: 1. To restore preemptive rights. 2. To restore cumulative voting. 3. To require annual election of directors or to specify tenure. 4. To eliminate a staggered board of directors. 5. To require confidential voting. 6. To require directors to own a minimum amount of company stock in order to qualify as a director or to remain on the board. 7. To dock director pay for failing to attend board meetings. B-7 SECTION III VOTING PROCESS BlackRock has engaged a third-party service provider to assist us in the voting of proxies. These guidelines have been provided to this service provider, who then analyzes all proxy solicitations we receive for our clients and makes recommendations to us as to how, based upon our guidelines, the relevant votes should be cast. These recommendations are set out in a report that is provided to the relevant Portfolio Management Group team, who must approve the proxy vote in writing and return such written approval to the Operations Group. If any authorized member of a Portfolio Management Group team desires to vote in a manner that differs from the recommendations, the reason for such differing vote shall be noted in the written approval form. A copy of the written approval form is attached as an exhibit. The head of each relevant Portfolio Management Group team is responsible for making sure that proxies are voted in a timely manner. The Brokerage Allocation Committee shall receive regular reports of all proxy votes cast to review how proxies have been voted, including reviewing votes that differ from recommendations made by our third-party service provider and votes that may have involved a potential conflict of interest. The Committee shall also review these guidelines from time to time to determine their continued appropriateness and whether any changes to the guidelines or the proxy voting process should be made. IF THERE IS ANY POSSIBILITY THAT THE VOTE MAY INVOLVE A MATERIAL CONFLICT OF INTEREST BECAUSE, FOR EXAMPLE, THE ISSUER SOLICITING THE VOTE IS A BLACKROCK CLIENT OR THE MATTER BEING VOTED ON INVOLVES BLACKROCK, PNC OR ANY AFFILIATE (INCLUDING A PORTFOLIO MANAGEMENT GROUP EMPLOYEE) OF EITHER OF THEM, PRIOR TO APPROVING SUCH VOTE, THE BROKERAGE ALLOCATION COMMITTEE MUST BE CONSULTED AND THE MATTER DISCUSSED. The Committee, in consultation with the Legal and Compliance Department, shall determine whether the potential conflict is material and if so, the appropriate method to resolve such conflict, based on the particular facts and circumstances, the importance of the proxy issue, whether the Portfolio Management Group team is proposing a vote that differs from recommendations made by our third-party service provider with respect to the issue and the nature of the conflict, so as to ensure that the voting of the proxy is not affected by the potential conflict. If the conflict is determined not to be material, the relevant Portfolio Management Group team shall vote the proxy in accordance with this Policy. Determinations of the Committee with respect to votes involving material conflicts of interest shall be documented in writing and maintained for a period of at least six years. With respect to votes in connection with securities held on a particular record date but sold from a client account prior to the holding of the related meeting, BlackRock may take no action on proposals to be voted on in such meeting. With respect to voting proxies of non-U.S. companies, a number of logistical problems may arise that may have a detrimental effect on BlackRock's ability to vote such proxies in the best interests of our clients. These problems include, but are not limited to, (i) untimely and/or B-8 inadequate notice of shareholder meetings, (ii) restrictions on the ability of holders outside the issuer's jurisdiction of organization to exercise votes, (iii) requirements to vote proxies in person, if not practicable, (iv) the imposition of restrictions on the sale of the securities for a period of time in proximity to the shareholder meeting, and (v) impracticable or inappropriate requirements to provide local agents with power of attorney to facilitate the voting instructions. Accordingly, BlackRock may determine not to vote proxies if it believes that the restrictions or other detriments associated with such vote outweigh the benefits that will be derived by voting on the company's proposal. * * * * Any questions regarding this Policy may be directed to the General Counsel of BlackRock. Approved: October 21, 1998 Revised: May 27, 2003 B-9 THE RBB FUND, INC. PEA 105 PART C: OTHER INFORMATION Item 23. EXHIBITS (a) Articles of Incorporation. (1)Articles of Incorporation of Registrant are incorporated herein by reference to Registrant's Registration Statement (No. 33-20827) filed on March 24, 1988, and refiled electronically with Post-Effective Amendment No. 61 to Registrant's Registration Statement filed on October 30, 1998. (2)Articles Supplementary of Registrant are incorporated herein by reference to Registrant's Registration Statement (No. 33-20827) filed on March 24, 1988, and refiled electronically with Post-Effective Amendment No. 61 to Registrant's Registration Statement filed on October 30, 1998. (3)Articles of Amendment to Articles of Incorporation of Registrant are incorporated herein by reference to Pre-Effective Amendment No. 2 to Registrant's Registration Statement (No. 33-20827) filed on July 12, 1988, and refiled electronically with Post-Effective Amendment No. 61 to Registrant's Registration Statement filed on October 30, 1998. (4)Articles Supplementary of Registrant are incorporated herein by reference to Pre-Effective Amendment No. 2 to Registrant's Registration Statement (No. 33-20827) filed on July 12, 1988, and refiled electronically with Post-Effective Amendment No. 61 to Registrant's Registration Statement filed on October 30, 1998. (5)Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 3 to the Registrant's Registration Statement (No. 33-20827) filed on April 27, 1990, and refiled electronically with Post-Effective Amendment No. 61 to Registrant's Registration Statement filed on October 30, 1998. (6)Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 4 to the Registrant's Registration Statement (No. 33-20827) filed on May 1, 1990, and refiled electronically with Post-Effective Amendment No. 61 to Registrant's Registration Statement filed on October 30, 1998. (7)Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 7 to the Registrant's Registration Statement (No. 33-20827) filed on July 15, 1992, and refiled electronically with Post-Effective Amendment No. 61 to Registrant's Registration Statement filed on October 30, 1998. (8)Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 8 to the Registrant's Registration Statement (No. 33-20827) filed on October 22, 1992, and refiled electronically with Post-Effective Amendment No. 61 to Registrant's Registration Statement filed on October 30, 1998. (9)Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 13 to the Registrant's Registration Statement (No. 33-20827) filed on October 29, 1993, and refiled electronically with Post-Effective Amendment No. 61 to Registrant's Registration Statement filed on October 30, 1998. (10)Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 13 to the Registrant's Registration Statement (No. 33-20827) filed on October 29, 1993, and refiled electronically with Post-Effective Amendment No. 61 to Registrant's Registration Statement filed on October 30, 1998. (11)Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 22 to the Registrant's Registration Statement (No. 33-20827) filed on December 19, 1994, and refiled electronically with Post-Effective Amendment No. 61 to Registrant's Registration Statement filed on October 30, 1998. (12)Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 22 to the Registrant's Registration Statement (No. 33-20827) filed on December 19, 1994, and refiled electronically with Post-Effective Amendment No. 61 to Registrant's Registration Statement filed on October 30, 1998. (13)Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 22 to the Registrant's Registration Statement (No. 33-20827) filed on December 19, 1994, and refiled electronically with Post-Effective Amendment No. 61 to Registrant's Registration Statement filed on October 30, 1998. (14)Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 22 to the Registrant's Registration Statement (No. 33-20827) filed on December 19, 1994, and refiled electronically with Post-Effective Amendment No. 61 to Registrant's Registration Statement filed on October 30, 1998. (15)Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 27 to the Registrant's Registration Statement (No. 33-20827) filed on March 31, 1995. (16)Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 34 to the Registrant's Registration Statement (No. 33-20827) filed on May 16, 1996. (17)Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 39 to the Registrant's Registration Statement (No. 33-20827) filed on October 11, 1996. (18)Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 45 to the Registrant's Registration Statement (No. 33-20827) filed on May 9, 1997. (19)Articles of Amendment to Charter of the Registrant are incorporated herein by reference to Post-Effective Amendment No. 46 to the Registrant's Registration Statement (No. 33-20827) filed on September 25, 1997. (20)Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 46 to the Registrant's Registration Statement (No. 33-20827) filed on September 25, 1997. (21)Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 60 to the Registrant's Registration Statement (No. 33-20827) filed on October 29, 1998. (22)Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 60 to the Registrant's Registration Statement (No. 33-20827) filed on October 29, 1998. (23)Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 63 to the Registrant's Registration Statement (No. 33-20827) filed on December 14, 1998. (24)Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 63 to the Registrant's Registration Statement (No. 33-20827) filed on December 14, 1998. (25)Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 67 to the Registrant's Registration Statement (No. 33-20827) filed on September 30, 1999. (26)Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 69 to the Registrant's Registration Statement (No. 33-20827) filed on November 29, 1999. (27)Articles of Amendment to Charter of the Registrant are incorporated herein by reference to Post-Effective Amendment No. 71 to the Registrant's Registration Statement (No. 33-20827) filed on December 29, 2000. (28)Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 71 to the Registrant's Registration Statement (No. 33-20827) filed on December 29, 2000. (29)Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 71 to the Registrant's Registration Statement (No. 33-20827) filed on December 29, 2000. (30)Articles of Amendment to Charter of the Registrant are incorporated herein by reference to Post-Effective Amendment No. 71 to the Registrant's Registration Statement (No. 33-20827) filed on December 29, 2000. (31)Articles Supplementary of Registrant are incorporated herein by reference to Post-Effective Amendment No. 73 to the Registrant's Registration Statement (No. 33-20827) filed on March 15, 2001. (32)Articles Supplementary of Registrant (Boston Partners Bond Fund - Institutional Class and Boston Partners Bond Fund - Investor Class) are incorporated herein by reference to Post-Effective Amendment No. 77 to the Registrant's Registration Statement (No. 33-20827) filed on May 15, 2002. (33)Articles of Amendment to Charter of the Registrant (Boston Partners All-Cap Value Fund - Institutional Class and Boston Partners Bond Fund - Institutional Class) are incorporated herein by reference to Post-Effective Amendment No. 77 to the Registrant's Registration Statement (No. 33-20827) filed on May 15, 2002. (34)Articles Supplementary of Registrant (Schneider Value Fund) are incorporated herein by reference to Post-Effective Amendment No. 78 to the Registrant's Registration Statement (No. 33-20827) filed on May 16, 2002. (35)Articles Supplementary of Registrant (Baker 500 Growth Fund - Institutional Class and Class S) are incorporated herein by reference to Post-Effective Amendment No. 79 to the Registrant's Registration Statement (No. 33-20827) filed on September 18, 2002. (36)Articles Supplementary of Registrant (Institutional Liquidity Fund for Credit Unions and Liquidity Fund for Credit Union Members) are incorporated herein by reference to Post-Effective Amendment No. 84 to the Registrant's Registration Statement (No. 33-20827) filed on December 29, 2003. (37)Articles of Amendment to Charter of the Registrant are incorporated herein by reference to Post-Effective Amendment No. 89 to the Registrant's Registration Statement (No. 33-20827) filed on December 30, 2004. (38)Articles Supplementary of Registrant ((Robeco WPG Core Bond Fund - Investor Class, Robeco WPG Core Bond Fund - Institutional Class, Robeco WPG Tudor Fund - Institutional Class, Robeco WPG Large Cap Growth Fund - Institutional Class) are incorporated herein by reference to Post-Effective Amendment No. 93 to the Registrant's Registration Statement (No. 33-20827) filed on March 4, 2005. (39)Certificate of Correction of Registrant is incorporated herein by reference to Post-Effective Amendment No. 95 to the Registrant's Registration Statement (No. 33-20827) filed on March 23, 2005. (40)Articles Supplementary of Registrant (Robeco WPG Core Bond Fund - Investor Class, Robeco WPG Core Bond Fund - Institutional Class, Robeco WPG Tudor Fund - Institutional Class, Robeco WPG Large Cap Growth Fund - Institutional Class) are incorporated herein by reference to Post-Effective Amendment No. 95 to the Registrant's Registration Statement (No. 33-20827) filed on March 23, 2005. (41)Articles Supplementary of Registrant (Senbanc Fund) are incorporated herein by reference to Post-Effective Amendment No. 96 to the Registrant's Registration Statement (No. 33-20827) filed on June 6, 2005. (42)Articles of Amendment of Registrant (Robeco WPG Core Bond Fund - Retirement Class) are incorporated herein by reference to Post-Effective Amendment No. 97 to the Registrant's Registration Statement (No. 33-20827) filed on August 19, 2005. (43)Articles Supplementary of Registrant (Robeco WPG Core Bond Fund - Investor Class) are incorporated herein by reference to Post-Effective Amendment No. 99 to the Registrant's Registration Statement (No. 33-20827) filed on September 27, 2005. (44)Articles Supplementary of Registrant (Bear Stearns CUFS MLP Mortgage Portfolio) are incorporated herein by reference to Post-Effective Amendment No. 104 to the Registrant's Registration Statement (No.33-20827) filed on July 18, 2006. (b) By-Laws. (1) By-Laws, as amended are incorporated herein by reference to Post-Effective Amendment No. 89 to the Registrant's Registration Statement (No. 33-20827) filed on December 30, 2004. (c) Instruments Defining Rights of Security Holders. (1)See Articles VI, VII, VIII, IX and XI of Registrant's Articles of 1 Incorporation dated February 17, 1988 which are incorporated herein by reference to Registrant's Registration Statement (No. 33-20827) filed on March 24, 1988, and refiled electronically with Post-Effective Amendment No. 61 to Registrant's Registration Statement filed on October 30, 1998. (2)See Articles II, III, VI, XIII, and XIV of Registrant's By-Laws as amended through August 25, 2004, which are incorporated herein by reference to Post-Effective Amendment No. 89 to the Registrant's Registration Statement (No. 33-20827) filed on December 30, 2004. (d) Investment Advisory Contracts. (1)Investment Advisory Agreement (Money Market) between Registrant and Provident Institutional Management Corporation, dated as of August 16, 1988 is incorporated herein by reference to Post-Effective Amendment No. 1 to Registrant's Registration Statement (No. 33-20827) filed on March 23, 1989, and refiled electronically with Post-Effective Amendment No. 61 to Registrant's Registration Statement filed on October 30, 1998. (2)Sub-Advisory Agreement (Money Market) between Provident Institutional Management Corporation and Provident National Bank, dated as of August 16, 1988 is incorporated herein by reference to Post-Effective Amendment No. 1 to Registrant's Registration Statement (No. 33-20827) filed on March 23, 1989, and refiled electronically with Post-Effective Amendment No. 61 to Registrant's Registration Statement filed on October 30, 1998. (3)Assumption Agreement (Money Market Fund) between PNC Bank, N.A. and BlackRock Institutional Management Corporation (formerly PNC Institutional Management Corporation) dated April 29, 1998 is incorporated herein by reference to Post-Effective Amendment No. 67 to the Registrant's Registration Statement (No. 33-20827) filed on September 30, 1999. (4) Amended and Restated Investment Advisory Agreement (Boston Partners Large Cap Value Fund) between Registrant and Boston Partners Asset Management, L.P. is filed herewith. (5) Investment Advisory Agreement (Boston Partners Mid Cap Value Fund) between Registrant and Boston Partners Asset Management, L.P. is incorporated herein by reference to Post-Effective Amendment No. 83 to the Registrant's Registration Statement (No. 33-20827) filed on April 8, 2003. (6) Investment Advisory Agreement (Schneider Small Cap Value Fund) between Registrant and Schneider Capital Management Company is incorporated herein by reference to Post-Effective Amendment No. 60 to the Registrant's Registration Statement (No. 33-20827) filed on October 29, 1998. (7) Investment Advisory Agreement (Boston Partners Small Cap Value Fund II (formerly Micro Cap Value)) between Registrant and Boston Partners Asset Management, L.P. is incorporated herein by reference to Post-Effective Amendment No. 83 to the Registrant's Registration Statement (No. 33-20827) filed on April 8, 2003. (8) Investment Advisory Agreement (Boston Partners Long/Short Equity Fund (formerly Market Neutral)) between Registrant and Boston Partners Asset Management, L.P. is incorporated herein by reference to Post-Effective Amendment No. 83 to the Registrant's Registration Statement (No. 33-20827) filed on April 8, 2003. (9) Investment Advisory Agreement (Bogle Small Cap Growth Fund) between Registrant and Bogle Investment Management, L.P. is incorporated herein by reference to Post-Effective Amendment No. 67 to the Registrant's Registration Statement (No. 33-20827) filed on September 30, 1999. (10)Amended and Restated Investment Advisory Agreement (Boston Partners All-Cap Value Fund) between Registrant and Boston Partners Asset Management, L.P. is filed herewith. (11)Investment Advisory Agreement (Schneider Value Fund) between Registrant and Schneider Capital Management Company is incorporated herein by reference to Post-Effective Amendment No. 80 to the Registrant's Registration Statement (No. 33-20827) filed on November 1, 2002. (12)Form of Investment Advisory Agreement (Institutional Liquidity Fund for Credit Unions) between Registrant and WesCorp Investment Services, LLC is incorporated herein by reference to Post-Effective Amendment No. 82 to the Registrant's Registration Statement (No. 33-20827) filed on March 5, 2003. (13)Form of Investment Advisory Agreement (Liquidity Fund for Credit Unions (formerly the CU Members' Liquidity Fund)) between Registrant and WesCorp Investment Services, LLC is incorporated herein by reference to Post-Effective Amendment No. 83 to the Registrant's Registration Statement (No. 33-20827) filed on April 8, 2003. (14)Investment Advisory Agreement (n/i Growth Fund) between Registrant and Numeric Investors LLC is incorporated herein by reference to Post-Effective Amendment No. 96 to the Registrant's Registration Statement (No. 33-20827) filed on June 6, 2005. (15)Investment Advisory Agreement (n/i Emerging Growth Fund) between Registrant and Numeric Investors LLC incorporated herein by reference to Post-Effective Amendment No. 96 to the Registrant's Registration Statement (No. 33-20827) filed on June 6, 2005. (16)Investment Advisory Agreement (n/i Small Cap Value Fund) between Registrant and Numeric Investors LLC is incorporated herein by reference to Post-Effective Amendment No. 96 to the Registrant's Registration Statement (No. 33-20827) filed on June 6, 2005. (17)Investment Advisory Agreement (n/i Mid Cap Fund) between Registrant and Numeric Investors LLC is incorporated herein by reference to Post-Effective Amendment No. 96 to the Registrant's Registration Statement (No. 33-20827) filed on June 6, 2005. (18)Amendment No. 1 to Investment Advisory Agreement (n/i Mid Cap Fund) between Registrant and Numeric Investors LLC is incorporated herein by reference to Post-Effective Amendment No. 96 to the Registrant's Registration Statement (No. 33-20827) filed on June 6, 2005. (19)Amendment No. 1 to Investment Advisory Agreement (n/i Growth Fund) between Registrant and Numeric Investors LLC is incorporated herein by reference to Post-Effective Amendment No. 97 to the Registrant's Registration Statement (No. 33-20827) filed on August 19, 2005. (20)Amendment No. 1 to Investment Advisory Agreement (n/i Small Cap Value Fund) between Registrant and Numeric Investors LLC is incorporated herein by reference to Post-Effective Amendment No. 97 to the Registrant's Registration Statement (No. 33-20827) filed on August 19, 2005. (21)Amendment No. 2 to Investment Advisory Agreement (n/i Mid Cap Fund) between Registrant and Numeric Investors LLC is incorporated herein by reference to Post-Effective Amendment No. 97 to the Registrant's Registration Statement (No. 33-20827) filed on August 19, 2005. (22)Contractual Fee Waiver Agreement dated December 12, 2003, between Registrant and Boston Partners Asset Management, L.P. is incorporated herein by reference to Post-Effective Amendment No. 89 to the Registrant's Registration Statement (No. 33-20827) filed on December 30, 2004. (23)Contractual Fee Waiver Agreement (Schneider Small Cap Value Fund) dated November 21, 2005, between Registrant and Schneider Capital Management Company is incorporated herein by reference to Post-Effective Amendment No. 101 to the Registrant's Registration Statement (No. 33-20827) filed on December 29, 2005. (24)Contractual Fee Waiver Agreement (Schneider Value Fund) dated November 21, 2005, between Registrant and Schneider Capital Management Company is incorporated herein by reference to Post-Effective Amendment No. 101 to the Registrant's Registration Statement (No. 33-20827) filed on December 29, 2005. (25)Contractual Fee Waiver Agreement (Bogle Small Cap Growth Fund) dated November 21, 2005, between Registrant and Bogle Investment Management, L.P. is incorporated herein by reference to Post-Effective Amendment No. 101 to the Registrant's Registration Statement (No. 33-20827) filed on December 29, 2005. (26)Investment Advisory Agreement (Robeco WPG Core Bond Fund) between Registrant and Weiss, Peck & Greer Investments is incorporated herein by reference to Post-Effective Amendment No. 98 to the Registrant's Registration Statement (No. 33-20827) filed on August 30, 2005. (27)Investment Advisory Agreement (Senbanc Fund) dated August 31, 2005 between Registrant and Hilliard Lyons Research Advisors is incorporated herein by reference to Post-Effective Amendment No. 99 to the Registrant's Registration Statement (No. 33-20827) filed on September 27, 2005. (28)Investment Advisory Agreement (Robeco WPG Large Cap Growth Fund) between Registrant and Weiss, Peck & Greer Investments is incorporated herein by reference to Post-Effective Amendment No. 100 to the Registrant's Registration Statement (No. 33-20827) filed on November 25, 2005. (29)Investment Advisory Agreement (Robeco WPG Tudor Fund) between Registrant and Weiss, Peck & Greer Investments is incorporated herein by reference to Post-Effective Amendment No. 100 to the Registrant's Registration Statement (No. 33-20827) filed on November 25, 2005. (30)Contractual Fee Waiver Agreement (Robeco WPG Core Bond Fund, Robeco WPG Large Cap Growth Fund and Robeco WPG Tudor Fund) dated April 29, 2005 between Registrant and Weiss, Peck & Greer Investments is incorporated herein by reference to Post-Effective Amendment No. 100 to the Registrant's Registration Statement (No. 33-20827) filed on November 25, 2005. (31)Form of Investment Advisory Agreement (Bear Stearns CUFS MLP Mortgage Portfolio) between Registrant and Bear Stearns Asset Management Inc. is incorporated herein by reference to Post-Effective Amendment No. 103 to the Registrant's Registration Statement (No. 33-20827) filed on July 18, 2006. (32)Interim Investment Advisory and Administration Agreement (Money Market Portfolio) between Registrant and BlackRock Institutional Management Corp. is filed herewith. (33)Form of Investment Advisory and Administration Agreement (Money Market Portfolio) between Registrant and BlackRock Institutional Management Corp. is filed herewith. (e) Underwriting Contracts. (1) Distribution Agreement between Registrant and PFPC Distributors, Inc. dated as of January 2, 2001 is incorporated herein by reference to Post-Effective Amendment No. 73 to the Registrant's Registration Statement (No. 33-20827) filed on March 15, 2001. (2) Distribution Agreement Supplement (Boston Partners All-Cap Value Fund - Investor Class) between Registrant and PFPC Distributors, Inc. is incorporated herein by reference to Post-Effective Amendment No. 80 to the Registrant's Registration Statement (No. 33-20827) filed on November 1, 2002. (3) Distribution Agreement Supplement (Boston Partners All-Cap Value Fund - Institutional Class) between Registrant and PFPC Distributors, Inc. is incorporated herein by reference to Post-Effective Amendment No. 80 to the Registrant's Registration Statement (No. 33-20827) filed on November 1, 2002. (4) Distribution Agreement Supplement (Schneider Value Fund) between Registrant and PFPC Distributors, Inc. is incorporated herein by reference to Post-Effective Amendment No. 80 to the Registrant's Registration Statement (No. 33-20827) filed on November 1, 2002. (5) Form of Distribution Agreement Supplement (Institutional Liquidity Fund for Credit Unions) between Registrant and PFPC Distributors, Inc. is incorporated herein by reference to Post-Effective Amendment No. 82 to the Registrant's Registration Statement (No. 33-20827) filed on April 8, 2003. (6) Form of Distribution Agreement Supplement (Liquidity Fund for Credit Union Members (formerly CU Members' Liquidity Fund)) between Registrant and PFPC Distributors, Inc. is incorporated herein by reference to Post-Effective Amendment No. 83 to the Registrant's Registration Statement (No. 33-20827) filed on April 8, 2003. (7) Distribution Agreement Supplement (Senbanc Fund) between Registrant and PFPC Distributors, Inc. is incorporated herein by reference to Post-Effective Amendment No. 100 to the Registrant's Registration Statement (No. 33-20827) filed on November 25, 2005. (8) Distribution Agreement Supplement (Robeco WPG Core Bond Fund - Institutional Class) between Registrant and PFPC Distributors, Inc. is incorporated herein by reference to Post-Effective Amendment No. 101 to the Registrant's Registration Statement (No. 33-20827) filed on December 29, 2005. (9) Distribution Agreement Supplement (Robeco WPG Large Cap Growth Fund - Institutional Class) between Registrant and PFPC Distributors, Inc. is incorporated herein by reference to Post-Effective Amendment No. 101 to the Registrant's Registration Statement (No. 33-20827) filed on December 29, 2005. (10)Distribution Agreement Supplement (Robeco WPG Tudor Fund - Institutional Class) between Registrant and PFPC Distributors, Inc. is incorporated herein by reference to Post-Effective Amendment No. 101 to the Registrant's Registration Statement (No. 33-20827) filed on December 29, 2005. (11)Distribution Agreement Supplement (Robeco WPG Core Bond Fund - Retirement Class) between Registrant and PFPC Distributors, Inc. is incorporated herein by reference to Post-Effective Amendment No. 103 to the Registrant's Registration Statement (No. 33-20827) filed on July 18, 2006. (12)Distribution Agreement Supplement (Robeco WPG Core Bond Fund - Investor Class) between Registrant and PFPC Distributors, Inc. is incorporated herein by reference to Post-Effective Amendment No. 103 to the Registrant's Registration Statement (No. 33-20827) filed on July 18, 2006. (13)Form of Distribution Agreement Supplement (Bear Stearns CUFS MLP Mortgage Portfolio) between Registrant and PFPC Distributors, Inc. is incorporated herein by reference to Post-Effective Amendment No. 103 to the Registrant's Registration Statement (No. 33-20827) filed on July 18, 2006. (f) Bonus or Profit Sharing Contracts. (1) Fund Office Retirement Profit-Sharing and Trust Agreement, dated as of October 24, 1990, as amended is incorporated herein by reference to Post-Effective Amendment No. 49 to the Registrant's Registration Statement (No. 33-20827) filed on December 1, 1997. (2) Form of Amendment No. 1 to Fund Office Retirement Profit Sharing Plan and Trust Reflecting EGTRRA is incorporated herein by reference to Post-Effective Amendment No. 80 to the Registrant's Registration Statement (No. 33-20827) filed on November 1, 2002. (g) Custodian Agreements. (1) Custodian Agreement between Registrant and Provident National Bank dated as of August 16, 1988 is incorporated herein by reference to Post-Effective Amendment No. 1 to Registrant's Registration Statement (No. 33-20827) filed on March 23, 1989, and refiled electronically with Post-Effective Amendment No. 61 to Registrant's Registration Statement filed on October 30, 1998. (2) Sub-Custodian Agreement among Chase Manhattan Bank, N.A., the Registrant and Provident National Bank, dated as of July 13, 1992, relating to custody of Registrant's foreign securities is incorporated herein by reference to Post-Effective Amendment No. 8 to the Registrant's Registration Statement (No. 33-20827) filed on October 22, 1992, and refiled electronically with Post-Effective Amendment No. 61 to Registrant's Registration Statement filed on October 30, 1998. (3) Amendment No. 1 to Custodian Agreement dated August 16, 1988 is incorporated herein by reference to Post-Effective Amendment No. 7 to the Registrant's Registration Statement (No. 33-20827) filed on July 15, 1992, and refiled electronically with Post-Effective Amendment No. 61 to Registrant's Registration Statement filed on October 30, 1998. (4) Custodian Contract between Registrant and State Street Bank and Trust Company is incorporated herein by reference to Post-Effective Amendment No. 21 to the Registrant's Registration Statement (No. 33-20827) filed on October 28, 1994, and refiled electronically with Post-Effective Amendment No. 61 to Registrant's Registration Statement filed on October 30, 1998. (5) Custody Agreement (n/i Micro Cap Fund, n/i Growth Fund and n/i Mid Cap Fund (formerly Growth & Value) between Registrant and Custodial Trust Company is incorporated herein by reference to Post-Effective Amendment No. 34 to the Registrant's Registration Statement (No. 33-20827) filed on May 16, 1996. (6) Custodian Agreement Supplement between Registrant and PNC Bank, National Association dated October 16, 1996 is incorporated herein by reference to Post-Effective Amendment No. 41 to the Registrant's Registration Statement (No. 33-20827) filed on November 27, 1996. (7) Custodian Agreement Supplement (Boston Partners Mid Cap Value Fund) between Registrant and PNC Bank, National Association is incorporated herein by reference to Post-Effective Amendment No. 46 to the Registrant's Registration Statement (No. 33-20827) filed on September 25, 1997. (8) Custodian Agreement Supplement (Boston Partners Bond Fund) between Registrant and PNC Bank, N.A. is incorporated herein by reference to Post-Effective Amendment No. 51 to the Registrant's Registration Statement (No. 33-20827) filed on December 8, 1997. (9) Custodian Agreement Supplement (Schneider Small Cap Value Fund) between Registrant and PNC Bank, N.A. is incorporated herein by reference to Post-Effective Amendment No. 60 to the Registrant's Registration Statement (No. 33-20827) filed on October 29, 1998. (10)Custodian Agreement Supplement (Boston Partners Small Cap Value Fund II (formerly Micro Cap Value)) between Registrant and PNC Bank, N.A. is incorporated herein by reference to Post-Effective Amendment No. 60 to the Registrant's Registration Statement (No. 33-20827) filed on October 29, 1998. (11)Custodian Agreement Supplement (Boston Partners Long/Short Equity Fund (formerly Market Neutral)) between Registrant and PNC Bank, N.A. is incorporated herein by reference to Post-Effective Amendment No. 63 to the Registrant's Registration Statement (No. 33-20827) filed on December 14, 1998. (12)Custodian Agreement Supplement (n/i Small Cap Value Fund) between Registrant and Custodial Trust Company is incorporated herein by reference to Post-Effective Amendment No. 63 to the Registrant's Registration Statement (No. 33-20827) filed on December 14, 1998. (13)Form of Custodian Agreement Supplement (Boston Partners Fund - formerly Long Short Equity) between Registrant and PFPC Trust Company is incorporated herein by reference to Post-Effective Amendment No. 65 to the Registrant's Registration Statement (No. 33-20827) filed on May 19, 1999. (14)Custodian Agreement Supplement (Bogle Small Cap Growth Fund) between Registrant and PFPC Trust Company is incorporated herein by reference to Post-Effective Amendment No. 67 to the Registrant's Registration Statement (No. 33-20827) filed on September 30, 1999. (15)Letter Agreement among Registrant, The Chase Manhattan Bank and PFPC Trust Company, dated as of July 2, 2001, relating to custody of Registrant's foreign securities is incorporated herein by reference to Post-Effective Amendment No. 77 to the Registrant's Registration Statement (No. 33-20827) filed on May 15, 2002. (16) Custodian Agreement Supplement (Boston Partners All-Cap Value Fund) between Registrant and PFPC Trust Company is incorporated herein by reference to Post-Effective Amendment No. 80 to the Registrant's Registration Statement (No. 33-20827) filed on November 1, 2002. (17)Custodian Agreement Supplement (Schneider Value Fund) between Registrant and PFPC Trust Company is incorporated herein by reference to Post-Effective Amendment No. 80 to the Registrant's Registration Statement (No. 33-20827) filed on November 1, 2002. (18)Form of Custodian Agreement Supplement (Institutional Liquidity Fund for Credit Unions) between Registrant and PFPC Trust Company is incorporated herein by reference to Post-Effective Amendment No. 82 to the Registrant's Registration Statement (No. 33-20827) filed on March 5, 2003. (19)Form of Custodian Agreement Supplement (Liquidity Fund for Credit Union Members (formerly the CU Members' Liquidity Fund)) between Registrant and PFPC Trust Company is incorporated herein by reference to Post-Effective Amendment No. 83 to the Registrant's Registration Statement (No. 33-20827) filed on April 8, 2003. (20)Custodian Agreement (Robeco WPG Core Bond Fund, Robeco WPG Large Cap Growth Fund, and Robeco WPG Tudor Fund) between Registrant and Mellon Bank N.A. is incorporated herein by reference to Post-Effective Amendment No. 103 to the Registrant's Registration Statement (No. 33-20827) filed on July 18, 2006. (21)Custodian Agreement Supplement (Senbanc Fund) between Registrant and PFPC Trust Company is incorporated herein by reference to Post-Effective Amendment No. 100 to the Registrant's Registration Statement (No. 33-20827) filed on November 25, 2005. (22)Custodian Agreement among Registrant, PFPC Trust Company and Citibank, N.A., dated as of September 13, 2005, relating to custody of Registrant's foreign securities is incorporated herein by reference to Post-Effective Amendment No. 101 to the Registrant's Registration Statement (No. 33-20827) filed on December 29, 2005. (23)Form of Custodian Agreement Supplement (Bear Stearns CUFS MLP Mortgage Portfolio) between Registrant and PFPC Trust Company is incorporated herein by reference to Post-Effective Amendment No. 103 to the Registrant's Registration Statement (No. 33-20827) filed on July 18, 2006. (h) Other Material Contracts. (1)Transfer Agency Agreement (Sansom Street) between Registrant and Provident Financial Processing Corporation, dated as of August 16, 1988 is incorporated herein by reference to Post-Effective Amendment No. 1 to Registrant's Registration Statement (No. 33-20827) filed on March 23, 1989, and refiled electronically with Post-Effective Amendment No. 61 to Registrant's Registration Statement filed on October 30, 1998. (2)Shareholder Servicing Agreement (Sansom Street Money Market) is incorporated herein by reference to Post-Effective Amendment No. 1 to Registrant's Registration Statement (No. 33-20827) filed on March 23, 1989, and refiled electronically with Post-Effective Amendment No. 61 to Registrant's Registration Statement filed on October 30, 1998. (3)Shareholder Servicing Agreement (Sansom Street Government Obligations Money Market) is incorporated herein by reference to Post-Effective Amendment No. 1 to Registrant's Registration Statement (No. 33-20827) filed on March 23, 1989, and refiled electronically with Post-Effective Amendment No. 61 to Registrant's Registration Statement filed on October 30, 1998. (4)Shareholder Services Plan (Sansom Street Money Market) is incorporated herein by reference to Post-Effective Amendment No. 1 to Registrant's Registration Statement (No. 33-20827) filed on March 23, 1989, and refiled electronically with Post-Effective Amendment No. 61 to Registrant's Registration Statement filed on October 30, 1998. (5)Transfer Agency Agreement (Bedford Money Market) between Registrant and Provident Financial Processing Corporation, dated as of August 16, 1988 is incorporated herein by reference to Post-Effective Amendment No. 1 to Registrant's Registration Statement (No. 33-20827) filed on March 23, 1989, and refiled electronically with Post-Effective Amendment No. 61 to Registrant's Registration Statement filed on October 30, 1998. (6)Transfer Agency Agreement and Supplements (Bradford, Beta, Gamma, Delta, Epsilon, Zeta, Eta and Theta) between Registrant and Provident Financial Processing Corporation dated as of November 5, 1991 is incorporated herein by reference to Post-Effective Amendment No. 7 to the Registrant's Registration Statement (No. 33-20827) filed on July 15, 1992, and refiled electronically with Post-Effective Amendment No. 61 to Registrant's Registration Statement filed on October 30, 1998. (7) Transfer Agency and Service Agreement between Registrant and State Street Bank and Trust Company and PFPC Inc. dated February 1, 1995 is incorporated herein by reference to Post-Effective Amendment No. 28 to the Registrant's Registration Statement (No. 33-20827) filed on October 6, 1995. (8) Supplement to Transfer Agency and Service Agreement between Registrant, State Street Bank and Trust Company, Inc. and PFPC dated April 10, 1995 is incorporated herein by reference to Post-Effective Amendment No. 28 to the Registrant's Registration Statement (No. 33-20827) filed on October 6, 1995. (9) Amended and Restated Credit Agreement dated December 15, 1994 is incorporated herein by reference to Post-Effective Amendment No. 29 to the Registrant's Registration Statement (No. 33-20827) filed on October 25, 1995. (10)Transfer Agency Agreement Supplement (n/i Micro Cap Fund, n/i Growth Fund and n/i Mid Cap Fund (formerly Growth & Value)) between Registrant and PFPC Inc. dated April 14, 1996 is incorporated herein by reference to Post-Effective Amendment No.34 to the Registrant's Registration Statement (No. 33-20827) filed on May 16, 1996. (11)Administration and Accounting Services Agreement (n/i Micro Cap Fund) between Registrant and PFPC Inc. dated April 24, 1996 is incorporated herein by reference to Post-Effective Amendment No. 34 to the Registrant's Registration Statement (No. 33-20827) filed on May 16, 1996. (12)Administration and Accounting Services Agreement (n/i Growth Fund) between Registrant and PFPC Inc. dated April 24, 1996 is incorporated herein by reference to Post-Effective Amendment No. 34 to the Registrant's Registration Statement (No. 33-20827) filed on May 16, 1996. (13)Administration and Accounting Services Agreement (n/i Mid Cap Fund (formerly Growth & Value)) between Registrant and PFPC Inc. dated April 24, 1996 is incorporated herein by reference to Post-Effective Amendment No. 34 to the Registrant's Registration Statement (No. 33-20827) filed on May 16, 1996. (14)Transfer Agreement and Service Agreement between Registrant and State Street Bank and Trust Company is incorporated herein by reference to Post-Effective Amendment No. 37 to the Registrant's Registration Statement (No. 33-20827) filed on July 30, 1996. (15)Administration and Accounting Services Agreement (Boston Partners Large Cap Value Fund) between Registrant and PFPC Inc. dated October 16, 1996 is incorporated herein by reference to Post-Effective Amendment No. 45 to the Registrant's Registration Statement (No. 33-20827) filed on May 9, 1997. (16)Transfer Agency Agreement Supplement (Boston Partners Large Cap Value Fund, Institutional Class) between Registrant and PFPC Inc. is incorporated herein by reference to Post-Effective Amendment No. 41 to the Registrant's Registration Statement (No. 33-20827) filed on November 27, 1996. (17)Transfer Agency Agreement Supplement (Boston Partners Large Cap Value Fund - Investor Class) between Registrant and PFPC Inc. is incorporated herein by reference to Post-Effective Amendment No. 41 to the Registrant's Registration Statement (No. 33-20827) filed on November 27, 1996. (18)Transfer Agency Agreement Supplement (Boston Partners Mid Cap Value Fund - Institutional Class) between Registrant and PFPC Inc. is incorporated herein by reference to Post-Effective Amendment No. 46 to the Registrant's Registration Statement (No. 33-20827) filed on September 25, 1997. (19)Transfer Agency Agreement Supplement (Boston Partners Mid Cap Value Fund - Investor Class) between Registrant and PFPC Inc. is incorporated herein by reference to Post-Effective Amendment No. 46 to the Registrant's Registration Statement (No. 33-20827) filed on September 25, 1997. (20)Administration and Accounting Services Agreement (Boston Partners Mid Cap Value Fund) between Registrant and PFPC Inc. dated, May 30, 1997 is incorporated herein by reference to Post-Effective Amendment No. 46 to the Registrant's Registration Statement (No. 33-20827) filed on September 25, 1997. (21)Administration and Accounting Services Agreement (Schneider Small Cap Value Fund) between Registrant and PFPC Inc. is incorporated herein by reference to Post-Effective Amendment No. 60 to the Registrant's Registration Statement (No. 33-20827) filed on October 29, 1998. (22)Transfer Agency Agreement Supplement (Schneider Small Cap Value Fund) between Registrant and PFPC Inc. is incorporated herein by reference to Post-Effective Amendment No. 60 to the Registrant's Registration Statement (No. 33-20827) filed on October 29, 1998. (23)Transfer Agency Agreement Supplement (Boston Partners Small Cap Value Fund II (formerly Micro Cap Value) - Institutional Class) between Registrant and PFPC Inc. is incorporated herein by reference to Post-Effective Amendment No. 60 to the Registrant's Registration Statement (No. 33-20827) filed on October 29, 1998. (24)Transfer Agency Agreement Supplement (Boston Partners Small Cap Value Fund II (formerly Micro Cap Value) - Investor Class) between Registrant and PFPC Inc. is incorporated herein by reference to Post-Effective Amendment No. 60 to the Registrant's Registration Statement (No. 33-20827) filed on October 29, 1998. (25)Administration and Accounting Services Agreement (Boston Partners Micro Cap Value Fund) between Registrant and PFPC Inc. is incorporated herein by reference to Post-Effective Amendment No. 60 to the Registrant's Registration Statement (No. 33-20827) filed on October 29, 1998. (26)Administrative Services Agreement between Registrant and Provident Distributors, Inc. dated as of May 29, 1998 and relating to the n/i family of funds, Schneider Small Cap Value Fund and Institutional Shares of the Boston Partners Funds is incorporated herein by reference to Post-Effective Amendment No. 56 to the Registrant's Registration Statement (No. 33-20827) filed on June 25, 1998. (27)Administrative Services Agreement Supplement (Boston Partners Long/Short Equity Fund (formerly Market Neutral) - Institutional Class) between Registrant and Provident Distributors, Inc. is incorporated herein by reference to Post-Effective Amendment No. 63 to the Registrant's Registration Statement (No. 33-20827) filed on December 14, 1998. (28)Administrative and Accounting Services Agreement (Boston Partners Long/Short Equity Fund (formerly Market Neutral) - Institutional and Investor Classes) between Registrant and PFPC Inc. is incorporated herein by reference to Post-Effective Amendment No. 63 to the Registrant's Registration Statement (No. 33-20827) filed on December 14, 1998. (29)Transfer Agency Agreement Supplement (Boston Partners Long/Short Equity Fund (formerly Market Neutral) - Institutional and Investor Classes) between Registrant and PFPC Inc. is incorporated herein by reference to Post-Effective Amendment No. 63 to the Registrant's Registration Statement (No. 33-20827) filed on December 14, 1998. (30)Transfer Agency Agreement Supplement (n/i Small Cap Value Fund) between Registrant and PFPC Inc. is incorporated herein by reference to Post-Effective Amendment No. 63 to the Registrant's Registration Statement (No. 33-20827) filed on December 14, 1998. (31)Administration and Accounting Services Agreement (n/i Small Cap Value Fund) between Registrant and PFPC Inc. is incorporated herein by reference to Post-Effective Amendment No. 63 to the Registrant's Registration Statement (No. 33-20827) filed on December 14, 1998. (32)Co-Administration Agreement (n/i Small Cap Value Fund) between Registrant and Bear Stearns Funds Management, Inc. is incorporated herein by reference to Post-Effective Amendment No. 63 to the Registrant's Registration Statement (No. 33-20827) filed on December 14, 1998. (33)Administrative Services Agreement (n/i Small Cap Value Fund) between Registrant and Provident Distributors, Inc. is incorporated herein by reference to Post-Effective Amendment No. 63 to the Registrant's Registration Statement (No. 33-20827) filed on December 14, 1998. (34)Form of Transfer Agency Agreement Supplement (Boston Partners Fund (formerly Long-Short Equity)) between Registrant and PFPC Inc. is incorporated herein by reference to Post-Effective Amendment No. 65 to the Registrant's Registration Statement (No. 33-20827) filed on May 19, 1999. (35)Form of Administrative Services Agreement Supplement (Boston Partners Fund (formerly Long-Short Equity) - Institutional Shares) between Registrant and Provident Distributors, Inc. is incorporated herein by reference to Post-Effective Amendment No. 65 to the Registrant's Registration Statement (No. 33-20827) filed on May 19, 1999. (36)Form of Administration and Accounting Services Agreement (Boston Partners Fund (formerly Long-Short Equity)) between Registrant and PFPC Inc. is incorporated herein by reference to Post-Effective Amendment No. 65 to the Registrant's Registration Statement (No. 33-20827) filed on May 19, 1999. (37)Transfer Agency Agreement Supplement (Bogle Small Cap Growth Fund) between Registrant and PFPC Inc. is incorporated herein by reference to Post-Effective Amendment No. 67 to the Registrant's Registration Statement (No. 33-20827) filed on September 30, 1999. (38)Administrative Services Agreement (Bogle Small Cap Growth Fund) between Registrant and Provident Distributors, Inc. is incorporated herein by reference to Post-Effective Amendment No. 67 to the Registrant's Registration Statement (No. 33-20827) filed on September 30, 1999. (39)Non 12b-1 Shareholder Services Plan and Agreement (Bogle Small Cap Growth - Investor Shares) is incorporated herein by reference to Post-Effective Amendment No. 67 to the Registrant's Registration Statement (No. 33-20827) filed on September 30, 1999. (40)Agreement between E*TRADE Group, Inc., Registrant and Registrant's principal underwriter is incorporated herein by reference to Post-Effective Amendment No. 69 to the Registrant's Registration Statement (No. 33-20827) filed on December 1, 1999. (41)Fee Waiver Agreement for n/i numeric investors Funds is incorporated herein by reference to Post-Effective Amendment No. 69 to the Registrant's Registration Statement (No. 33-20827) filed on December 1, 1999. (42)Administration and Accounting Services Agreement (Bogle Small Cap Growth Fund) between Registrant and PFPC Inc. is incorporated herein by reference to Post-Effective Amendment No. 69 to the Registrant's Registration Statement (No. 33-20827) filed on December 1, 1999. (43)Solicitation Agreement between n/i numeric Investors and Shareholder Communications Corporation is incorporated herein by reference to Post-Effective Amendment No. 69 to the Registrant's Registration Statement (No. 33-20827) filed on December 1, 1999. (44)Administrative Services Assignment Agreement between Registrant and PFPC Distributors, Inc. dated January 2, 2001 is incorporated herein by reference to Post-Effective Amendment No. 73 to the Registrant's Registration Statement (No. 33-20827) filed on March 15, 2001. (45)Transfer Agency Supplement (Bear Stearns Money Market Family) between Registrant and PFPC Inc. is incorporated herein by reference to Post-Effective Amendment No. 75 to the Registrant's Registration Statement (No. 33-20827) filed on December 4, 2001. (46)Form of Transfer Agency Supplement (Boston Partners All-Cap Value Fund) between Registrant and PFPC Inc. is incorporated herein by reference to Post-Effective Amendment No. 80 to the Registrant's Registration Statement (No. 33-20827) filed on November 1, 2002. (47)Form of Administration and Accounting Services Agreement (Boston Partners All-Cap Value Fund) between Registrant and PFPC Inc. is incorporated herein by reference to Post-Effective Amendment No. 77 to the Registrant's Registration Statement (No. 33-20827) filed on May 15, 2002. (48)Administrative Services Agreement Supplement (Boston Partners All-Cap Value Fund) between Registrant and PFPC Distributors, Inc. is incorporated herein by reference to Post-Effective Amendment No. 80 to the Registrant's Registration Statement (No. 33-20827) filed on November 1, 2002. (49)Transfer Agency Supplement (Schneider Value Fund) between Registrant and PFPC Inc. is incorporated herein by reference to Post-Effective Amendment No. 80 to the Registrant's Registration Statement (No. 33-20827) filed on November 1, 2002. (50)Form of Administration and Accounting Services Agreement (Schneider Value Fund) between Registrant and PFPC Inc. is incorporated herein by reference to Post-Effective Amendment No. 78 to the Registrant's Registration Statement (No. 33-20827) filed on May 16, 2002. (51)Administrative Services Agreement Supplement (Schneider Value Fund) between Registrant and PFPC Distributors, Inc. is incorporated herein by reference to Post-Effective Amendment No. 80 to the Registrant's Registration Statement (No. 33-20827) filed on November 1, 2002. (52)Non-12b-1 Shareholder Services Plan and Related Form of Shareholder Servicing Agreement is incorporated herein by reference to Post-Effective Amendment No. 79 to the Registrant's Registration Statement (No. 33-20827) filed on September 18, 2002. (53)Shareholder Servicing Agreement (Bogle Small Cap Growth Fund) is incorporated herein by reference to Post-Effective Amendment No. 80 to the Registrant's Registration Statement (No. 33-20827) filed on November 1, 2002. (54)Administrative Services Agreement Supplement (Boston Partners Funds - Investor Shares) between Registrant and PFPC Distributors, Inc. is incorporated herein by reference to Post-Effective Amendment No. 80 to the Registrant's Registration Statement (No. 33-20827) filed on November 1, 2002. (55)Form of Administration and Accounting Services Agreement (Institutional Liquidity Fund for Credit Unions) between Registrant and PFPC Inc. is incorporated herein by reference to Post-Effective Amendment No. 82 to the Registrant's Registration Statement (No. 33-20827) filed on March 5, 2003. (56)Form of Administrative Services Agreement Supplement (Institutional Liquidity Fund for Credit Unions) between Registrant and PFPC Distributors, Inc. is incorporated herein by reference to Post-Effective Amendment No. 82 to the Registrant's Registration Statement (No. 33-20827) filed on March 5, 2003. (57)Form of Transfer Agency Agreement Supplement (Institutional Liquidity Fund for Credit Unions) between Registrant and PFPC Inc. is incorporated herein by reference to Post-Effective Amendment No. 82 to the Registrant's Registration Statement (No. 33-20827) filed on March 5, 2003. (58)Amended and Restated Non-12b-1 Shareholder Services Plan (Numeric Funds) is incorporated herein by reference to Post-Effective Amendment No. 82 to the Registrant's Registration Statement (No. 33-20827) filed on March 5, 2003. (59)Form of Administration and Accounting Services Agreement (Liquidity Fund for the Credit Union Members (formerly the CU Members' Liquidity Fund)) between Registrant and PFPC Inc. is incorporated herein by reference to Post-Effective Amendment No. 83 to the Registrant's Registration Statement (No. 33-20827) filed on April 8, 2003. (60)Form of Administrative Services Agreement Supplement (Liquidity Fund for the Credit Union Members (formerly the CU Members' Liquidity Fund)) between Registrant and PFPC Distributors, Inc. is incorporated herein by reference to Post-Effective Amendment No. 83 to the Registrant's Registration Statement (No. 33-20827) filed on April 8, 2003. (61)Form of Transfer Agency Agreement Supplement (Liquidity Fund for the Credit Union Members (formerly the CU Members' Liquidity Fund)) between Registrant and PFPC Inc. is incorporated herein by reference to Post-Effective Amendment No. 83 to the Registrant's Registration Statement (No. 33-20827) filed on April 8, 2003. (62)Amended and Restated Non-12b-1 Shareholder Services Plan (Liquidity Fund for the Credit Union Members (formerly the CU Members' Liquidity Fund)) is incorporated herein by reference to Post-Effective Amendment No. 83 to the Registrant's Registration Statement (No. 33-20827) filed on April 8, 2003. (63)Form of Transfer Agency Agreement Supplement (Customer Identification Program) between Registrant and PFPC Inc. is incorporated herein by reference to Post-Effective Amendment No. 84 to the Registrant's Registration Statement (No. 33-20827) filed on December 29, 2003. (64)Regulatory Administration Services Agreement between Registrant and PFPC Inc. is incorporated herein by reference to Post-Effective Amendment No. 84 to the Registrant's Registration Statement (No. 33-20827) filed on December 29, 2003. (65)Administration and Accounting Services Agreement (Robeco WPG Core Bond Fund, Robeco WPG Large Cap Growth Fund, and Robeco WPG Tudor Fund) between Registrant and PFPC Inc. is incorporated herein by reference to Post-Effective Amendment No. 100 to the Registrant's Registration Statement (No. 33-20827) filed on November 25, 2005. (66)Administrative Services Agreement Supplement (Robeco WPG Core Bond Fund) between Registrant and PFPC Distributors, Inc. is incorporated herein by reference to Post-Effective Amendment No. 100 to the Registrant's Registration Statement (No. 33-20827) filed on November 25, 2005. (67)Administrative Services Agreement Supplement (Robeco WPG Large Cap Growth Fund) between Registrant and PFPC Distributors, Inc. is incorporated herein by reference to Post-Effective Amendment No. 100 to the Registrant's Registration Statement (No. 33-20827) filed on November 25, 2005. (68)Administrative Services Agreement Supplement (Robeco WPG Tudor Fund) between Registrant and PFPC Distributors, Inc. is incorporated herein by reference to Post-Effective Amendment No. 100 to the Registrant's Registration Statement (No. 33-20827) filed on November 25, 2005. (69)Transfer Agency Agreement Supplement (Robeco WPG Core Bond Fund) between Registrant and PFPC Inc. is incorporated herein by reference to Post-Effective Amendment No. 100 to the Registrant's Registration Statement (No. 33-20827) filed on November 25, 2005. (70)Transfer Agency Agreement Supplement (Robeco WPG Large Cap Growth Fund) between Registrant and PFPC Inc. is incorporated herein by reference to Post-Effective Amendment No. 100 to the Registrant's Registration Statement (No. 33-20827) filed on November 25, 2005. (71)Transfer Agency Agreement Supplement (Robeco WPG Tudor Fund) between Registrant and PFPC Inc. is incorporated herein by reference to Post-Effective Amendment No. 100 to the Registrant's Registration Statement (No. 33-20827) filed on November 25, 2005. (72)Non-12b-1 Shareholder Services Plan and Related Form of Shareholder Servicing Agreement (Robeco WPG Core Bond Fund - Institutional Class) is incorporated herein by reference to Post-Effective Amendment No. 100 to the Registrant's Registration Statement (No. 33-20827) filed on November 25, 2005. (73)Non-12b-1 Shareholder Services Plan and Related Form of Shareholder Servicing Agreement (Robeco WPG Large Cap Growth Fund - Institutional Class) is incorporated herein by reference to Post-Effective Amendment No. 100 to the Registrant's Registration Statement (No. 33-20827) filed on November 25, 2005. (74)Non-12b-1 Shareholder Services Plan and Related Form of Shareholder Servicing Agreement (Robeco WPG Tudor Fund - Institutional Class) is incorporated herein by reference to Post-Effective Amendment No. 100 to the Registrant's Registration Statement (No. 33-20827) filed on November 25, 2005. (75)Non-12b-1 Shareholder Services Plan and Related Form of Shareholder Servicing Agreement (Robeco WPG Core Bond Fund - Retirement Class) is incorporated herein by reference to Post-Effective Amendment No. 97 to the Registrant's Registration Statement (No. 33-20827) filed on August 19, 2005. (76)Administration and Accounting Services Agreement (Senbanc Fund) between Registrant and PFPC Inc. is incorporated herein by reference to Post-Effective Amendment No. 100 to the Registrant's Registration Statement (No. 33-20827) filed on November 25, 2005. (77)Transfer Agency Agreement Supplement (Senbanc Fund) between Registrant and PFPC Inc. is incorporated herein by reference to Post-Effective Amendment No. 100 to the Registrant's Registration Statement (No. 33-20827) filed on November 25, 2005. (78)Administrative Services Agreement Supplement (Senbanc Fund) between Registrant and PFPC Distributors, Inc. is incorporated herein by reference to Post-Effective Amendment No. 100 to the Registrant's Registration Statement (No. 33-20827) filed on November 25, 2005. (79)Amended Schedule A to Regulatory Administration Services Agreement (Senbanc Fund) between Registrant and PFPC Inc. is incorporated herein by reference to Post-Effective Amendment No. 100 to the Registrant's Registration Statement (No. 33-20827) filed on November 25, 2005. (80)Form of Administration and Accounting Services Agreement (Bear Stearns CUFS MLP Mortgage Portfolio) between Registrant and PFPC Inc. is incorporated herein by reference to Post-Effective Amendment No. 103 to the Registrant's Registration Statement (No. 33-20827) filed on July 18, 2006. (81)Form of Transfer Agency Agreement Supplement (Bear Stearns CUFS MLP Mortgage Portfolio) between Registrant and PFPC Inc. is incorporated herein by reference to Post-Effective Amendment No. 103 to the Registrant's Registration Statement (No. 33-20827) filed on July 18, 2006. (82)Form of Administration Services Agreement Supplement (Bear Stearns CUFS MLP Mortgage Portfolio) between Registrant and PFPC Inc. is incorporated herein by reference to Post-Effective Amendment No. 103 to the Registrant's Registration Statement (No. 33-20827) filed on July 18, 2006. (83)Form of Amended Schedule A to Regulatory Administration Services Agreement (Bear Stearns CUFS MLP Mortgage Portfolio) between Registrant and PFPC Inc. is incorporated herein by reference to Post-Effective Amendment No. 103 to the Registrant's Registration Statement (No. 33-20827) filed on July 18, 2006. (84)Escrow Agreement (Money Market Portfolio) between Registrant, PFPC Trust Company, and BlackRock Institutional Management Corp. is filed herewith. (85)Interim Delegation Agreement (Money Market Portfolio) between Registrant, PFPC Inc., and BlackRock Institutional Management Corp. is filed herewith. (i) (1) Opinion and Consent of Counsel to be filed by amendment. (j) (1) Consent of Independent Registered Public Accounting Firm to be filed by amendment. (k) None. (l) Initial Capital Agreements. (1) Subscription Agreement, relating to Classes A through N, is incorporated herein by reference to Pre-Effective Amendment No. 2 to Registrant's Registration Statement (No. 33-20827) filed on July 12, 1988, and refiled electronically with Post-Effective Amendment No. 61 to Registrant's Registration Statement filed on October 30, 1998. (2) Subscription Agreement between Registrant and Planco Financial Services, Inc., relating to Classes O and P is incorporated herein by reference to Post-Effective Amendment No. 5 to the Registrant's Registration Statement (No. 33-20827) filed on December 14, 1990. (3) Subscription Agreement between Registrant and Planco Financial Services, Inc., relating to Class Q is incorporated herein by reference to Post-Effective Amendment No. 5 to the Registrant's Registration Statement (No. 33-20827) filed on December 14, 1990. (4) Subscription Agreement between Registrant and Counsellors Securities Inc. relating to Classes R, S, and Alpha 1 through Theta 4 is incorporated herein by reference to Post-Effective Amendment No. 7 to the Registrant's Registration Statement (No. 33-20827) filed on July 15, 1992, and refiled electronically with Post-Effective Amendment No. 61 to Registrant's Registration Statement filed on October 30, 1998. (5) Purchase Agreement between Registrant and Numeric Investors, L.P. relating to Class FF (n/i Micro Cap Fund) is incorporated herein by reference to Post-Effective Amendment No. 34 to the Registrant's Registration Statement (No. 33-20827) filed on May 16, 1996. (6) Purchase Agreement between Registrant and Numeric Investors, L.P. relating to Class GG (n/i Growth Fund) is incorporated herein by reference to Post-Effective Amendment No. 34 to the Registrant's Registration Statement (No. 33-20827) filed on May 16, 1996. (7) Purchase Agreement between Registrant and Numeric Investors, L.P. relating to Class HH (n/i Mid Cap Fund (formerly Growth & Value)) is incorporated herein by reference to Post-Effective Amendment No. 34 to the Registrant's Registration Statement (No. 33-20827) filed on May 16, 1996. (8) Purchase Agreement between Registrant and Boston Partners Asset Management, L.P. relating to Classes QQ, RR and SS (Boston Partners Large Cap Value Fund) is incorporated herein by reference to Post-Effective Amendment No. 45 to the Registrant's Registration Statement (No. 33-20827) filed on May 9, 1997. (9) Purchase Agreement between Registrant and Boston Partners Asset Management, L.P. relating to Classes TT and UU (Boston Partners Mid Cap Value Fund) is incorporated herein by reference to Post-Effective Amendment No. 46 to the Registrant's Registration Statement (No. 33-20827) filed on September 25, 1997. (10)Purchase Agreement between Registrant and Boston Partners Asset Management L.P. relating to Classes VV and WW (Boston Partners Bond Fund) is incorporated herein by reference to Post-Effective Amendment No. 51 to the Registrant's Registration Statement (No. 33-20827) filed on December 8, 1997. (11)Purchase Agreement between Registrant and Schneider Capital Management Company relating to Class YY (Schneider Small Cap Value Fund) is incorporated herein by reference to Post-Effective Amendment No. 60 to the Registrant's Registration Statement (No. 33-20827) filed on October 29, 1998. (12)Purchase Agreement between Registrant and Boston Partners Asset Management, L.P. relating to Classes DDD and EEE (Boston Partners Small Cap Value Fund II (formerly Micro Cap Value)) is incorporated herein by reference to Post-Effective Amendment No. 60 to the Registrant's Registration Statement (No. 33-20827) filed on October 29, 1998. (13)Purchase Agreement between Registrant and Boston Partners Asset Management relating to Classes III and JJJ (Boston Partners Long/Short Equity Fund (formerly Market Neutral)) is incorporated herein by reference to Post-Effective Amendment No. 63 to the Registrant's Registration Statement (No. 33-20827) filed on December 14, 1998. (14)Purchase Agreement between Registrant and Provident Distributors, Inc. relating to Class MMM (n/i Small Cap Value Fund) is incorporated herein by reference to Post-Effective Amendment No. 63 to the Registrant's Registration Statement (No. 33-20827) filed on December 14, 1998. (15)Form of Purchase Agreement between Registrant and Boston Partners Asset Management, L. P. relating to Classes KKK and LLL (Boston Partners Fund (formerly Long-Short Equity)) is incorporated herein by reference to Post-Effective Amendment No. 65 to the Registrant's Registration Statement (No. 33-20827) filed on May 19, 1999. (16)Purchase Agreement (Bogle Small Cap Growth Fund) between Registrant and Bogle Investment Management, L.P. is incorporated herein by reference to Post-Effective Amendment No. 67 to the Registrant's Registration Statement (No. 33-20827) filed on September 30, 1999. (17)Purchase Agreement (Boston Partners All-Cap Value Fund) between Registrant and Boston Partners Asset Management, L.P. is incorporated herein by reference to Post-Effective Amendment No. 80 to the Registrant's Registration Statement (No. 33-20827) filed on November 1, 2002. (18)Purchase Agreement (Schneider Value Fund) between Registrant and Schneider Capital Management Company is incorporated herein by reference to Post-Effective Amendment No. 80 to the Registrant's Registration Statement (No. 33-20827) filed on November 1, 2002. (19)Purchase Agreement (Baker 500 Growth Fund) between Registrant and Baker 500 Corporation is incorporated herein by reference to Post-Effective Amendment No. 82 to the Registrant's Registration Statement (No. 33-20827) filed on March 5, 2003. (20)Form of Purchase Agreement (Institutional Liquidity Fund for Credit Unions) between Registrant and WesCorp Investment Services, LLC is incorporated herein by reference to Post-Effective Amendment No. 82 to the Registrant's Registration Statement (No. 33-20827) filed on March 5, 2003. (21)Form of Purchase Agreement (Liquidity Fund for Credit Union Members (formerly the CU Members' Liquidity Fund)) between Registrant and WesCorp Investment Services, LLC is incorporated herein by reference to Post-Effective Amendment No. 83 to the Registrant's Registration Statement (No. 33-20827) filed on April 8, 2003. (22)Purchase Agreement (Robeco WPG Core Bond Fund ) between Registrant and Weiss, Peck & Greer Investments is incorporated herein by reference to Post-Effective Amendment No. 96 to the Registrant's Registration Statement (No. 33-20827) filed on June 6, 2005. (23)Purchase Agreement (Robeco WPG Large Cap Growth Fund) between Registrant and Weiss, Peck & Greer Investments is incorporated herein by reference to Post-Effective Amendment No. 96 to the Registrant's Registration Statement (No. 33-20827) filed on June 6, 2005. (24)Purchase Agreement (Robeco WPG Tudor Fund) between Registrant and Weiss, Peck & Greer Investments is incorporated herein by reference to Post-Effective Amendment No. 96 to the Registrant's Registration Statement (No. 33-20827) filed on June 6, 2005. (25)Purchase Agreement (Senbanc Fund) between Registrant and Hilliard Lyons Research Advisers is incorporated herein by reference to Post-Effective Amendment No. 100 to the Registrant's Registration Statement (No. 33-20827) filed on November 25, 2005. (26)Form of Purchase Agreement (Bear Stearns CUFS MLP Mortgage Portfolio) between Registrant and Bear Stearns Asset Management Inc. is incorporated herein by reference to Post-Effective Amendment No. 103 to the Registrant's Registration Statement (No. 33-20827) filed on July 18, 2006. (m) Rule 12b-1 Plan. (1) Plan of Distribution (Sansom Street Money Market) is incorporated herein by reference to Post-Effective Amendment No. 1 to Registrant's Registration Statement (No. 33-20827) filed on March 23, 1989, and refiled electronically with Post-Effective Amendment No. 61 to Registrant's Registration Statement filed on October 30, 1998. (2)Plan of Distribution (Bedford Money Market) is incorporated herein by reference to Post-Effective Amendment No. 1 to Registrant's Registration Statement (No. 33-20827) filed on March 23, 1989, and refiled electronically with Post-Effective Amendment No. 61 to Registrant's Registration Statement filed on October 30, 1998. (3)Amendment No. 1 to Plans of Distribution (Classes A through Q) is incorporated herein by reference to Post-Effective Amendment No. 6 to the Registrant's Registration Statement (No. 33-20827) filed on October 24, 1991, and refiled electronically with Post-Effective Amendment No. 61 to Registrant's Registration Statement filed on October 30, 1998. (4)Plan of Distribution (Zeta Money Market) is incorporated herein by reference to Post-Effective Amendment No. 7 to the Registrant's Registration Statement (No. 33-20827) filed on July 15, 1992, and refiled electronically with Post-Effective Amendment No. 61 to Registrant's Registration Statement filed on October 30, 1998. (5)Plan of Distribution (Eta Money Market) is incorporated herein by reference to Post-Effective Amendment No. 7 to the Registrant's Registration Statement (No. 33-20827) filed on July 15, 1992, and refiled electronically with Post-Effective Amendment No. 61 to Registrant's Registration Statement filed on October 30, 1998. (6)Plan of Distribution (Theta Money Market) is incorporated herein by reference to Post-Effective Amendment No. 7 to the Registrant's Registration Statement (No. 33-20827) filed on July 15, 1992, and refilled electronically with Post-Effective Amendment No. 61 to Registrant's Registration Statement filed on October 30, 1998. (7) Plan of Distribution (Boston Partners Large Cap Value Fund - Investor Class) is incorporated herein by reference to Post-Effective Amendment No. 45 to the Registrant's Registration Statement (No. 33-20827) filed on May 9, 1997. (8) Plan of Distribution (Boston Partners Mid Cap Value Fund - Investor Class) is incorporated herein by reference to Post-Effective Amendment No. 45 to the Registrant's Registration Statement (No. 33-20827) filed on May 9, 1997. (9) Plan of Distribution (Boston Partners Bond Fund - Investor Class) is incorporated herein by reference to Post-Effective Amendment No. 51 to the Registrant's Registration Statement (No. 33-20827) filed on December 8, 1997. (10)Plan of Distribution (Boston Partners Small Cap Value Fund II (formerly Micro Cap Value) - Investor Class) is incorporated herein by reference to Post-Effective Amendment No. 53 to the Registrant's Registration Statement (No. 33-20827) filed on April 10, 1998. (11)Amendment to Plans of Distribution pursuant to Rule 12b-1 is incorporated herein by reference to Post-Effective Amendment No. 63 to the Registrant's Registration Statement (No. 33-20827) filed on December 14, 1998. (12)Plan of Distribution (Boston Partners Long/Short Equity Fund (formerly Market Neutral) - Investor Class) is incorporated herein by reference to Post-Effective Amendment No. 62 to the Registrant's Registration Statement (No. 33-20827) filed on November 12, 1998. (13)Plan of Distribution (Principal Money Market) is incorporated herein by reference to Post-Effective Amendment No. 60 to the Registrant's Registration Statement (No. 33-20827) filed on October 29, 1998. (14)Plan of Distribution (Boston Partners Fund (formerly Long Short Equity) - Investor Class) is incorporated herein by reference to Post-Effective Amendment No. 65 to the Registrant's Registration Statement (No. 33-20827) filed on May 19, 1999. (15)Plan of Distribution pursuant to Rule 12b-1 (Boston Partners All-Cap Value Fund) is incorporated herein by reference to Post-Effective Amendment No. 80 to the Registrant's Registration Statement (No. 33-20827) filed on November 1, 2002. (16)Plan of Distribution pursuant to Rule 12b-1 (Liquidity Fund for Credit Union Members (formerly the CU Members' Liquidity Fund)) is incorporated herein by reference to Post-Effective Amendment No. 83 to the Registrant's Registration Statement (No. 33-20827) filed on April 8, 2003. (17)Plan of Distribution pursuant to Rule 12b-1 (Senbanc Fund) is incorporated herein by reference to Post-Effective Amendment No. 99 to the Registrant's Registration Statement (No. 33-20827) filed on September 27, 2005. (18)Plan of Distribution pursuant to Rule 12b-1 (Robeco Core Bond Fund - Investor Class) is incorporated herein by reference to Post-Effective Amendment No. 99 to the Registrant's Registration Statement (No. 33-20827) filed on September 27, 2005. (19)Agreement between Registrant, Bear, Stearns Securities Corp. and PFPC Distributors, Inc. dated as of November 17, 2005 is incorporated herein by reference to Post-Effective Amendment No. 101 to the Registrant's Registration Statement filed on December 29, 2005. (n) Rule 18f-3 Plan. (1) Amended Rule 18f-3 Plan is incorporated herein by reference to Post-Effective Amendment No. 99 to the Registrant's Registration Statement (No. 33-20827) filed on September 27, 2005. (p) Code of Ethics. (1) Code of Ethics of the Registrant is incorporated herein by reference to Post-Effective Amendment No. 103 to the Registrant's Registration Statement (No. 33-20827) filed on July 18, 2006. (2) Code of Ethics of Boston Partners Asset Management, LLC is incorporated herein by reference to Post-Effective Amendment No. 103 to the Registrant's Registration Statement (No. 33-20827) filed on July 18, 2006. (3) Code of Ethics of Numeric Investors LLC is incorporated herein by reference to Post-Effective Amendment No. 103 to the Registrant's Registration Statement (No. 33-20827) filed on July 18, 2006. (4) Code of Ethics of Schneider Capital Management Company is incorporated herein by reference to Post-Effective Amendment No. 103 to the Registrant's Registration Statement (No. 33-20827) filed on July 18, 2006. (5) Code of Ethics of Bogle Investment Management, L.P. incorporated herein by reference to Post-Effective Amendment No. 103 to the Registrant's Registration Statement (No. 33-20827) filed on July 18, 2006. (6) Code of Ethics of PFPC Distributors, Inc is incorporated herein by reference to Post-Effective Amendment No. 103 to the Registrant's Registration Statement (No. 33-20827) filed on July 18, 2006. (7) Code of Ethics of Weiss, Peck & Greer Investments is filed herewith. (8) Code of Ethics of J.J.B. Hilliard W.L. Lyons, Inc. is incorporated herein by reference to Post-Effective Amendment No. 100 to the Registrant's Registration Statement (No. 33-20827) filed on November 25, 2005. (9) Code of Ethics of Bear Stearns Asset Management Inc. is incorporated herein by reference to Post-Effective Amendment No. 103 to the Registrant's Registration Statement (No. 33-20827) filed on July 18, 2006. Item 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT None. Item 25. INDEMNIFICATION Sections 1, 2, 3 and 4 of Article VIII of Registrant's Articles of Incorporation, as amended, incorporated herein by reference as Exhibits (a)(1) and (a)(3), provide as follows: Section 1. To the fullest extent that limitations on the liability of directors and officers are permitted by the Maryland General Corporation Law, no director or officer of the Corporation shall have any liability to the Corporation or its shareholders for damages. This limitation on liability applies to events occurring at the time a person serves as a director or officer of the Corporation whether or not such person is a director or officer at the time of any proceeding in which liability is asserted. Section 2. The Corporation shall indemnify and advance expenses to its currently acting and its former directors to the fullest extent that indemnification of directors is permitted by the Maryland General Corporation Law. The Corporation shall indemnify and advance expenses to its officers to the same extent as its directors and to such further extent as is consistent with law. The Board of Directors may by law, resolution or agreement make further provision for indemnification of directors, officers, employees and agents to the fullest extent permitted by the Maryland General Corporation law. Section 3. No provision of this Article shall be effective to protect or purport to protect any director or officer of the Corporation against any liability to the Corporation or its security holders to which he would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office. Section 4. References to the Maryland General Corporation Law in this Article are to the law as from time to time amended. No further amendment to the Articles of Incorporation of the Corporation shall decrease, but may expand, any right of any person under this Article based on any event, omission or proceeding prior to such amendment. Insofar as indemnification for liability arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of Registrant pursuant to the foregoing provisions, or otherwise, Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by Registrant of expenses incurred or paid by a director, officer or controlling person of Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. Sections 2 and 3 of the Assumption Agreement between PNC Bank, N.A. ("PNC") and BlackRock Institutional Management Corporation ("BIMC"), dated April 29, 1998 and incorporated herein by reference to exhibit (d)(3), provide for the indemnification of BIMC and PNC against certain losses. Section 13 of the Investment Advisory Agreements between Registrant and Numeric Investors, LLC ("Numeric"), each dated November 12, 2004 and incorporated herein by reference to exhibits (d)(14), (d)(15), (d)(16) and (d)(17), provides for the indemnification of Numeric against certain losses. Section 12 of the Investment Advisory Agreements between Registrant and Boston Partners Asset Management, LLC ("Boston Partners"), each dated October 25, 2002 and incorporated herein by reference to exhibits (d)(4), (d)(5), (d)(7), (d)(8), and (d)(10), provides for the indemnification of Boston Partners against certain losses. Section 12 of the Investment Advisory Agreement between Registrant and Bogle Investment Management, L.P. ("Bogle"), dated September 15, 1999 and incorporated herein by reference to exhibit (d) (9) provides for the indemnification of Bogle against certain losses. Section 12 of the Investment Advisory Agreements between Registrant and WesCorp Investment Services, LLC is incorporated herein by reference as exhibits (d)(12) and (d)(13) provides for the indemnification of WesCorp Investment Services, LLC against certain losses. Section 12 of the Investment Advisory Agreements between the Registrant and Weiss, Peck & Greer Investments is incorporated herein by reference as exhibits (d)(26), (d)(28) and (d)(29) provides for the indemnification of Weiss, Peck & Greer Investments against certain losses. Section 9 of the Distribution Agreement between Registrant and PFPC Distributors, Inc. ("PFPC"), dated January 2, 2001 and incorporated herein by reference to exhibit (e)(1) provides for the indemnification of PFPC Distributors against certain losses. Section 12 of the Investment Advisory Agreement between the Registrant and Hilliard Lyons Research Advisors, a division of J. J. B. Hilliard, W. L. Lyons ("Hilliard") is incorporated herein by reference as exhibit (d)(27) provides for the indemnification of Hilliard against certain losses. Section 12 of the Investment Advisory Agreement between the Registrant and Bear Stearns Asset Management Inc., ("Bear Stearns") is incorporated herein by reference as exhibit (d)(31) provides for the indemnification of Bear Stearns against certain losses. Item 26. BUSINESS AND OTHER CONNECTIONS OF THE INVESTMENT ADVISERS. 1. BLACKROCK INSTITUTIONAL MANAGEMENT CORPORATION: ----------------------------------------------- BlackRock Institutional Management Corporation ("BIMC") is an indirect majority-owned subsidiary of The PNC Financial Services Group, Inc. BIMC's principal business address is 100 Bellevue Parkway, Wilmington, DE 19809. BIMC is registered under the Investment Advisers Act of 1940 and serves as an investment adviser for registered investment companies. Information as to the directors and officers of BIMC is as follows:
NAME AND POSITION WITH BIMC OTHER COMPANY POSITION WITH OTHER COMPANY --------------------------- ------------- --------------------------- Paul L. Audet BlackRock Provident Treasurer Managing Director and Director Institutional Funds Wilmington, DE BlackRock Funds Treasurer Wilmington, DE BlackRock Capital Director Management, Inc. Wilmington, DE BlackRock Advisors, Inc. Director Wilmington, DE BlackRock Financial Director Management, Inc. New York, NY BlackRock (Japan), Inc. Chief Financial Officer & New York, NY Managing Director BlackRock International, Chief Financial Officer & Ltd. Managing Director Edinburgh, Scotland BlackRock, Inc. Chief Financial Officer & Managing New York, NY Director
Steven E. Buller BlackRock, Inc. Chief Financial Officer & New York, NY Managing Director Chief Financial Officer and Managing Director Laurence J. Carolan BlackRock Capital Managing Director & Director Managing Director and Director Management, Inc. Wilmington, DE BlackRock, Inc. Managing Director New York, NY BlackRock Advisors, Inc. Managing Director & Director Wilmington, DE Robert P. Connolly BlackRock Capital Managing Director, General Managing Director, General Management, Inc. Counsel & Secretary Counsel and Secretary Wilmington, DE BlackRock, Inc. Managing Director, General New York, NY Counsel & Secretary BlackRock International, Managing Director, General Ltd. Counsel & Secretary Edinburgh, Scotland BlackRock (Japan), Inc. Managing Director, General New York, NY Counsel & Secretary BlackRock Advisors, Inc. Managing Director, General Wilmington, DE Counsel & Secretary BlackRock Financial Managing Director, General Management, Inc. Counsel & Secretary New York, NY BlackRock Investments, General Counsel & Secretary Inc. New York, NY Laurence D. Fink BlackRock Funds President & Trustee Chief Executive Officer Wilmington, DE BlackRock Capital Chief Executive Officer Management, Inc. Wilmington, DE BlackRock, Inc. Chairman & CEO New York, NY BlackRock International, Chairman & CEO Ltd. Edinburgh, Scotland BlackRock (Japan), Inc. Chairman & CEO New York, NY
BlackRock Investments, Chairman & CEO Inc. New York, NY BlackRock Advisors, Inc. Chief Executive Officer Wilmington, DE BlackRock Financial Chairman & CEO Management, Inc. New York, NY BlackRock HPB Management Director LLC New York, NY Charles S. Hallac BlackRock, Inc. Vice Chairman, BlackRock Vice Chairman New York, NY Solutions. Robert S. Kapito BlackRock Capital Vice Chairman & Director Vice Chairman and Director Management, Inc. Wilmington, DE BlackRock International, Vice Chairman & Director Ltd. Edinburgh, Scotland BlackRock, Inc. Vice Chairman New York, NY BlackRock Advisors, Inc. Vice Chairman & Director Wilmington, DE BlackRock (Japan), Inc. Vice Chairman & Director New York, NY BlackRock Investments, Director Inc. New York, NY BlackRock Financial Vice Chairman & Director Management, Inc. New York, NY Kevin M. Klingert BlackRock Capital Managing Director & Director Managing Director and Director Management, Inc. Wilmington, DE BlackRock, Inc. Managing Director New York, NY BlackRock Advisors, Inc. Managing Director & Director Wilmington, DE
BlackRock Financial Managing Director Management, Inc. New York, NY John P. Moran BlackRock Capital Managing Director & Director Managing Director, Treasurer Management, Inc. and Director Wilmington, DE BlackRock, Inc. Managing Director New York, NY BlackRock Advisors, Inc. Managing Director & Director Wilmington, DE BlackRock Investments, President Inc. New York, NY Barbara G. Novick BlackRock, Inc. Vice Charman, Account Management Vice Chairman New York, NY Group, BlackRock, Inc. Ralph L. Schlosstein BlackRock Provident Chairman & President President and Director Institutional Funds Wilmington, DE BlackRock Capital President & Director Management, Inc. Wilmington, DE BlackRock, Inc. President & Director New York, NY BlackRock International, President & Director Ltd. Edinburgh, Scotland BlackRock (Japan), Inc. President & Director New York, NY BlackRock Investments, Director Inc. New York, NY BlackRock Advisors, Inc. President & Director Wilmington, DE BlackRock Financial President & Director Management, Inc. New York, NY BlackRock HPB Management Director LLC New York, NY
Keith T. Anderson BlackRock Capital Managing Director Vice Chairman Management, Inc. Wilmington, DE BlackRock, Inc. Managing Director New York, NY BlackRock Advisors, Inc. Managing Director Wilmington, DE BlackRock Financial Managing Director Management, Inc. New York, NY BlackRock International, Managing Director Ltd. Edinburgh, Scotland BlackRock (Japan), Inc. Managing Director New York, NY Mark G. Steinberg None. None Managing Director and Director Susan L. Wagner BlackRock, Inc. Vice Chairman and Chief Operating Vice Chairman and Chief New York, NY Officer Operating Officer
2. NUMERIC INVESTORS LLC: ---------------------- The sole business activity of Numeric Investors LLC ("Numeric"), One Memorial Drive, 9th Floor, Cambridge, Massachusetts 02142, is to serve as an investment adviser. Numeric is registered under the Investment Advisers Act of 1940. Information as to the directors and officers of Numeric is as follows:
NAME AND POSITION WITH NUMERIC OTHER COMPANY POSITION WITH OTHER COMPANY ------------------------------ ------------- --------------------------- P. Andrews McLane TA Associates Senior Managing Director and Member of the Board of Boston, MA Member of the Executive Committee of Board Directors of Numeric Michael Wilson TA Associates Managing Director Member of the Board of Boston, MA Directors of Numeric Peter Carman Retired None Member of the Board of Directors of Numeric
Michael Even None None President and Chief Executive Officer Member of the Board of Directors of Numeric Langdon B. Wheeler None None Chief Investment Officer Chairman of the Board of Directors of Numeric Raymond J. Joumas None None Managing Director and Chief Financial Officer Member of the Board of Directors of Numeric Robert E. Furdak None None Managing Director Ed Goldfarb None None Managing Director Arup Datta None None Managing Director Shanta Puchtler None None Managing Director
3. BOGLE INVESTMENT MANAGEMENT, LP: -------------------------------- The sole business activity of Bogle Investment Management, LP ("Bogle"), 2310 Washington Street, Suite 310, Newton Lower Falls, MA 02462, is to serve as an investment adviser. Bogle is registered under the Investment Advisers Act of 1940. The directors and officers have not held any positions with other companies during the last two fiscal years. 4. BOSTON PARTNERS ASSET MANAGEMENT, LLC: -------------------------------------- The sole business activity of Boston Partners Asset Management, LLC ("BPAM"), 28 State Street, 21st Floor, Boston, Massachusetts 02109, is to serve as an investment adviser. BPAM is registered under the Investment Advisers Act of 1940. BPAM is registered under the Investment Advisers Act of 1940 and serves as an investment adviser for registered investment companies. Information as to the directors and officers of Boston is as follows:
NAME AND POSITION WITH BPAM OTHER COMPANY POSITION WITH OTHER COMPANY --------------------------- ------------- --------------------------- William J. Kelly Robeco USA, LLC Chief Executive Officer Chief Executive Officer Robeco USA, Inc. Chief Executive Officer Mary Ann Iudice Robeco USA, LLC Chief Compliance Officer Chief Compliance Officer Robeco USA, Inc. Chief Compliance Officer Robeco Investment Asset Chief Compliance Officer Management, US Robeco Sage Capital Chief Compliance Officer Management
5. SCHNEIDER CAPITAL MANAGEMENT COMPANY: ------------------------------------- The sole business activity of Schneider Capital Management Company ("Schneider"), 460 E. Swedesford Road, Suite 1080, Wayne, PA 19087, is to serve as an investment adviser. Schneider is registered under the Investment Advisers Act of 1940. Information as to the directors and officers of Schneider is as follows:
NAME AND POSITION WITH OTHER COMPANY POSITION WITH OTHER COMPANY ---------------------- ------------- --------------------------- SCHNEIDER --------- Arnold C. Schneider, III Turnbridge Management President President and Chief Investment Partners Corp. Officer Steven J. Fellin Turnbridge Management Vice President Sr. Vice President and Chief Partners Corp. Financial Officer
6. WESCORP INVESTMENT SERVICES, LLC: --------------------------------- The sole business activity of WesCorp Investment Services, LLC, 924 Overland Court, San Dimas, California 91773 ("WesCorp"), is to serve as an investment adviser. WesCorp is registered under the Investment Advisers Act of 1940. The directors and officers have not held any positions with other companies during the last two fiscal years. 7. WEISS, PECK & GREER INVESTMENTS: -------------------------------- The sole business activity of Weiss, Peck & Greer Investments ("WPG"), 909 Third Avenue, New York, NY 10022, is to serve as an investment adviser. WPG is registered under the Investment Advisers Act of 1940. Information as to the directors and officers of WPG is as follows:
NAME AND POSITION ----------------- WITH WPG OTHER COMPANY POSITION WITH OTHER COMPANY -------- ------------- --------------------------- William J. Kelly Robeco USA, Inc. Chief Executive Officer Chief Executive Officer Boston Partners Asset Chief Executive Officer Management, LLC Roland Toppen Robeco USA, LLC Treasurer and Chief Financial Officer Chief Financial Officer Robeco Investment Asset Director Management, US Michael Anthony Jones Robeco USA, Inc. President President Daniel Swigart Robeco USA, Inc. President and Chief Investment Officer Vandivort President and Chief Investment Officer William George Butterly Robeco USA, Inc. Secretary and General Counsel General Counsel Mary Ann Iudice Robeco USA, LLC Chief Compliance Officer Chief Compliance Officer Boston Partners Asset Chief Compliance Officer Management, LLC Robeco Investment Asset Chief Compliance Officer Management, US Robeco Sage Capital Management Chief Compliance Officer
8. HILLIARD LYONS RESEARCH ADVISORS: --------------------------------- Hilliard Lyons Research Advisors is located at 501 South Fourth Street, Louisville, Kentucky 40202. Hilliard Lyons Research Advisors is a division of J.J.B. Hilliard, W.L. Lyons, Inc. ("Hilliard"). Hilliard is registered under the Investment Advisers Act of 1940 and is also a registered broker-dealer. Hilliard is wholly-owned by The PNC Financial Services Group, Inc. Information as to the directors and officers of Hilliard is as follows:
NAME AND POSITION WITH OTHER COMPANY POSITION WITH OTHER COMPANY HILLIARD James M. Rogers None None Executive Vice President, Chief Operating Officer and Director James R. Allen None None President, Chief Executive Officer and Director Paul J. Moretti None None Executive Vice President and Chief Financial Officer William S. Demchak PNC Financial Services Vice Chairman Director Group, Inc. Blue Mountain Credit Director Alternatives, Ltd Blackrock, Inc. Director Joseph C. Guyaux PNC Financial Services President Director Group, Inc. Duquesne Light Holdings, Director Inc. Private Export Funding Director Corp. Highmark, Inc. Director Joan L. Gulley PNC Financial Services Executive Vice President Director Group, Inc. John R. Bugh None None Executive Vice President
Carmella Miller None None Executive Vice President, Chief Administrative Officer and Director
9. BEAR STEARNS ASSET MANAGEMENT INC. ---------------------------------- Bear Stearns Asset Management Inc. ("BSAM") serves as the investment adviser to the Bear Stearns CUFS MLP Mortgage Portfolio. BSAM is located at 383 Madison Avenue, New York, New York 10179. BSAM is a registered investment adviser under the Investment Advisers Act of 1940, as amended. BSAM's Form ADV is available on the SEC's website. Information as to the directors and officers of BSAM is as follows:
NAME AND POSITION WITH BSAM OTHER COMPANY POSITION WITH OTHER COMPANY --------------------------- ------------- --------------------------- Richard A. Marin, Beehive Ventures, LLC Director/Manager/General Partner Director/Chairman of the Big Red Venture Fund Director Board/Chief Executive Cayuga MBA Fund Director/Investor Officer/President/Senior eMarketer, Inc. Director Managing Director Network Storage Solutions Director Restricted Stock Director Solutions, Inc. Touch Pak, Inc. Director John W. Geissinger, None None Director/Chief Investment Officer/Senior Managing Director Rajan Govindan, Director/Chief None None Operating Officer/Senior Managing Director Barbara A. Keller, Compliance Science, Inc. Director Secretary/Chief Compliance Officer Mary Kay Scucci, Chief None None Financial Officer Laurence S. Godin, Executive None None Vice President/General Counsel/Senior Managing Director
ITEM 27. PRINCIPAL UNDERWRITER --------------------- (a) PFPC Distributors, Inc. ("the Distributor") is registered with the Securities and Exchange Commission as a broker-dealer and is a member of the National Association of Securities Dealers. As of October 9, 2006, the Distributor acted as principal underwriter for the following investment companies: AFBA 5 Star Funds, Inc. Atlantic Whitehall Funds Trust CRM Mutual Fund Trust E.I.I. International Property Fund E.I.I. Realty Securities GuideStone Funds Highland Floating Rate Fund Highland Floating Rate Advantage Fund Kalmar Pooled Investment Trust Matthews Asian Funds Metropolitan West Funds New Alternatives Fund Old Westbury Funds The RBB Fund, Inc. Stratton Growth Fund, Inc. Stratton Monthly Dividend REIT Shares, Inc. The Stratton Funds, Inc. Van Wagoner Funds Wilshire Mutual Funds, Inc. Wilshire Variable Insurance Trust Distributed by ABN AMRO Distribution Services (USA), Inc., a wholly-owned subsidiary of PFPC Distributors, Inc.: ABN AMRO Funds Distributed by BlackRock Distributors, Inc., a wholly-owned subsidiary of PFPC Distributors, Inc.: BlackRock Funds BlackRock Bond Allocation Target Shares BlackRock Liquidity Funds International Dollar Reserve Fund I, Ltd. Distributed by MGI Funds Distributors, Inc., a wholly-owned subsidiary of PFPC Distributors, Inc.: MGI Funds Distributed by Northern Funds Distributors, LLC, a wholly-owned subsidiary of PFPC Distributors, Inc.: Northern Funds Northern Institutional Funds (b) The Distributor is a Massachusetts corporation located at 301 Bellevue Parkway, Wilmington, DE 19809. The Distributor is a wholly-owned subsidiary of PFPC, Inc. and an indirect wholly-owned subsidiary of The PNC Financial Services Group, Inc., a publicly traded company. The following is a list of the directors and executive officers of the Distributor: NAME POSITION(S) WITH DISTRIBUTOR ---- ---------------------------- Brian Burns Chairman; Director; President; Chief Executive Officer Michael Denofrio Director Nicholas Marsini Director Rita G. Adler Chief Compliance Officer John Munera Anti-Money Laundering Officer Christine P. Ritch Chief Legal Officer; Assistant Secretary; Assistant Clerk Bradley A. Stearns Secretary; Clerk Julie Bartos Assistant Secretary; Assistant Clerk Amy Brennan Assistant Secretary; Assistant Clerk Craig Stokarski Treasurer; Chief Financial Officer; Financial & Operations Principal Maria Schaffer Assistant Treasurer; Controller Bruno Di Stefano Vice President Susan K. Moscaritolo Vice President Item 28. LOCATION OF ACCOUNTS AND RECORDS (1) PFPC Trust Company (assignee under custodian agreement), 8800 Tinicum Boulevard, Suite 200, Philadelphia, Pennsylvania 19153 (records relating to its functions as sub-adviser and custodian). (2) PFPC Distributors, Inc., 760 Moore Road, Valley Forge, Pennsylvania 19406. (records relating to its functions as distributor). (3) BlackRock Institutional Management Corporation, Bellevue Corporate Center, 100 Bellevue Parkway, Wilmington, Delaware 19809 (records relating to its functions as investment adviser, sub-adviser and administrator). (4) PFPC Inc., Bellevue Corporate Center, 103 Bellevue Parkway, Wilmington, Delaware 19809 (records relating to its functions as transfer agent and dividend disbursing agent). (5) Drinker Biddle & Reath LLP, One Logan Square, 18th and Cherry Streets, Philadelphia, Pennsylvania 19103 (Registrant's Articles of Incorporation, By-Laws and Minute Books). (6) Numeric Investors LLC, 1 Memorial Drive, Cambridge, Massachusetts 02142 (records relating to its function as investment adviser). (7) Boston Partners Asset Management, L.L.C., 28 State Street, Boston, Massachusetts 02111 (records relating to its function as investment adviser). (8) Schneider Capital Management Co., 460 East Swedesford Road, Suite 1080, Wayne, Pennsylvania 19087 (records relating to its function as investment adviser). (9) Bogle Investment Management, L.P., 57 River Street, Suite 206, Wellesley, Massachusetts 02481 (records relating to its function as investment adviser). (10) Bear Stearns & Co. Inc., Funds Management Department, 383 Madison Avenue, New York, New York 10179 (records relating to its function as co-administrator for investment portfolios advised by Numeric Investors, LLC) (11) WesCorp Investment Services, LLC, 924 Overland Court, San Dimas, California 91773 (records relating to its function as investment adviser). (12) Weiss, Peck & Greer Investments, 909 Third Avenue, New York, New York 10022 (records relating to its function as investment adviser). (13) Hilliard Lyons Research Advisors, a division of J. J. B. Hilliard, W. L. Lyons, Inc., 501 South 4th Street, Louisville, Kentucky 40202 (records relating to its function as investment adviser). (14) Bear Stearns & Co. Inc., 383 Madison Avenue, New York, New York 10179 (records relating to its function as investment adviser). Item 29. MANAGEMENT SERVICES None. Item 30. UNDERTAKINGS (a) Registrant hereby undertakes to hold a meeting of shareholders for the purpose of considering the removal of directors in the event the requisite number of shareholders so request. (b) Registrant hereby undertakes to furnish each person to whom a prospectus is delivered a copy of Registrant's latest annual report to shareholders upon request and without charge. SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended (the "1933 Act"), and the Investment Company Act of 1940, as amended, the Registrant has duly caused this Post-Effective Amendment No. 105 to its Registration Statement to be signed on its behalf by the undersigned, thereto duly authorized, in the City of Wilmington, and State of Delaware on the 30th day of October, 2006. THE RBB FUND, INC. BY: /s/ EDWARD J. ROACH ------------------- Edward J. Roach President and Treasurer Pursuant to the requirements of the 1933 Act, this Post-Effective Amendment to Registrant's Registration Statement has been signed below by the following persons in the capacities and on the date indicated.
SIGNATURE TITLE DATE - --------- ----- ---- President (Principal Executive Officer) and /s/ EDWARD J. ROACH Treasurer (Principal Financial and Accounting - ------------------- Officer) October 30, 2006 Edward J. Roach *J. RICHARD CARNALL Director October 30, 2006 - ------------------ J. Richard Carnall *FRANCIS J. MCKAY Director October 30, 2006 - ----------------- Francis J. McKay *MARVIN E. STERNBERG Director October 30, 2006 - -------------------- Marvin E. Sternberg *JULIAN A. BRODSKY Director October 30, 2006 - ------------------ Julian A. Brodsky *ARNOLD M. REICHMAN Director October 30, 2006 - ------------------- Arnold M. Reichman *ROBERT SABLOWSKY Director October 30, 2006 - ----------------- Robert Sablowsky *ROBERT STRANIERE Director October 30, 2006 - ----------------- Robert Straniere *NICHOLAS A. GIORDANO Director October 30, 2006 - --------------------- Nicholas A. Giordano *MARK A. SARGENT Director October 30, 2006 - ---------------- Mark A. Sargent *BY: /s/ EDWARD J. ROACH October 30, 2006 - ------------------------- Edward J. Roach Attorney-in-Fact
THE RBB FUND, INC. (the "Company") POWER OF ATTORNEY Know All Men by These Presents, that the undersigned, Francis J. McKay, hereby constitutes and appoints Edward J. Roach and Michael P. Malloy, his true and lawful attorneys, to execute in his name, place, and stead, in his capacity as Director or officer, or both, of the Company, the Registration Statement and any amendments thereto and all instruments necessary or incidental in connection therewith, and to file the same with the Securities and Exchange Commission; and said attorneys shall have full power and authority to do and perform in his name and on his behalf, in any and all capacities, every act whatsoever requisite or necessary to be done in the premises, as fully and to all intents and purposes as he might or could do in person, said acts of said attorneys being hereby ratified and approved. DATED: November 9, 2000 /s/ Francis J. Mckay -------------------- Francis J. McKay THE RBB FUND, INC. (the "Company") POWER OF ATTORNEY Know All Men by These Presents, that the undersigned, Marvin E. Sternberg, hereby constitutes and appoints Edward J. Roach and Michael P. Malloy, his true and lawful attorneys, to execute in his name, place, and stead, in his capacity as Director or officer, or both, of the Company, the Registration Statement and any amendments thereto and all instruments necessary or incidental in connection therewith, and to file the same with the Securities and Exchange Commission; and said attorneys shall have full power and authority to do and perform in his name and on his behalf, in any and all capacities, every act whatsoever requisite or necessary to be done in the premises, as fully and to all intents and purposes as he might or could do in person, said acts of said attorneys being hereby ratified and approved. DATED: November 9, 2000 /s/ Marvin E. Sternberg ----------------------- Marvin E. Sternberg THE RBB FUND, INC. (the "Company") POWER OF ATTORNEY Know All Men by These Presents, that the undersigned, Julian Brodsky, hereby constitutes and appoints Edward J. Roach and Michael P. Malloy, his true and lawful attorneys, to execute in his name, place, and stead, in his capacity as Director or officer, or both, of the Company, the Registration Statement and any amendments thereto and all instruments necessary or incidental in connection therewith, and to file the same with the Securities and Exchange Commission; and said attorneys shall have full power and authority to do and perform in his name and on his behalf, in any and all capacities, every act whatsoever requisite or necessary to be done in the premises, as fully and to all intents and purposes as he might or could do in person, said acts of said attorneys being hereby ratified and approved. DATED: November 9, 2000 /s/ Julian Brodsky ------------------ Julian Brodsky THE RBB FUND, INC. (the "Company") POWER OF ATTORNEY Know All Men by These Presents, that the undersigned, Arnold Reichman, hereby constitutes and appoints Edward J. Roach and Michael P. Malloy, his true and lawful attorneys, to execute in his name, place, and stead, in his capacity as Director or officer, or both, of the Company, the Registration Statement and any amendments thereto and all instruments necessary or incidental in connection therewith, and to file the same with the Securities and Exchange Commission; and said attorneys shall have full power and authority to do and perform in his name and on his behalf, in any and all capacities, every act whatsoever requisite or necessary to be done in the premises, as fully and to all intents and purposes as he might or could do in person, said acts of said attorneys being hereby ratified and approved. DATED: November 9, 2000 /s/ Arnold Reichman ------------------- Arnold Reichman THE RBB FUND, INC. (the "Company") POWER OF ATTORNEY Know All Men by These Presents, that the undersigned, Robert Sablowsky, hereby constitutes and appoints Edward J. Roach and Michael P. Malloy, his true and lawful attorneys, to execute in his name, place, and stead, in his capacity as Director or officer, or both, of the Company, the Registration Statement and any amendments thereto and all instruments necessary or incidental in connection therewith, and to file the same with the Securities and Exchange Commission; and said attorneys shall have full power and authority to do and perform in his name and on his behalf, in any and all capacities, every act whatsoever requisite or necessary to be done in the premises, as fully and to all intents and purposes as he might or could do in person, said acts of said attorneys being hereby ratified and approved. DATED: November 9, 2000 /s/ Robert Sablowsky -------------------- Robert Sablowsky THE RBB FUND, INC. (the "Company") POWER OF ATTORNEY Know All Men by These Presents, that the undersigned, J. Richard Carnall, hereby constitutes and appoints Edward J. Roach and Michael P. Malloy, his true and lawful attorneys, to execute in his name, place, and stead, in his capacity as Director or officer, or both, of the Company, the Registration Statement and any amendments thereto and all instruments necessary or incidental in connection therewith, and to file the same with the Securities and Exchange Commission; and said attorneys shall have full power and authority to do and perform in his name and on his behalf, in any and all capacities, every act whatsoever requisite or necessary to be done in the premises, as fully and to all intents and purposes as he might or could do in person, said acts of said attorneys being hereby ratified and approved. DATED: September 10, 2002 /s/ J. Richard Carnall ---------------------- J. Richard Carnall THE RBB FUND, INC. (the "Company") POWER OF ATTORNEY Know All Men by These Presents, that the undersigned, Robert Straniere, hereby constitutes and appoints Edward J. Roach and Michael P. Malloy, his true and lawful attorneys, to execute in his name, place, and stead, in his capacity as Director or officer, or both, of the Company, the Registration Statement and any amendments thereto and all instruments necessary or incidental in connection therewith, and to file the same with the Securities and Exchange Commission; and said attorneys shall have full power and authority to do and perform in his name and on his behalf, in any and all capacities, every act whatsoever requisite or necessary to be done in the premises, as fully and to all intents and purposes as he might or could do in person, said acts of said attorneys being hereby ratified and approved. DATED: June 8, 2006 /s/ Robert Straniere -------------------- Robert Straniere THE RBB FUND, INC. (the "Company") POWER OF ATTORNEY Know All Men by These Presents, that the undersigned, Mark A. Sargent, hereby constitutes and appoints Edward J. Roach and Michael P. Malloy, his true and lawful attorneys, to execute in his name, place, and stead, in his capacity as Director or officer, or both, of the Company, the Registration Statement and any amendments thereto and all instruments necessary or incidental in connection therewith, and to file the same with the Securities and Exchange Commission; and said attorneys shall have full power and authority to do and perform in his name and on his behalf, in any and all capacities, every act whatsoever requisite or necessary to be done in the premises, as fully and to all intents and purposes as he might or could do in person, said acts of said attorneys being hereby ratified and approved. DATED: September 21, 2006 /s/ Mark A. Sargent ------------------- Mark A. Sargent THE RBB FUND, INC. (the "Company") POWER OF ATTORNEY Know All Men by These Presents, that the undersigned, Nicholas A. Giordano, hereby constitutes and appoints Edward J. Roach and Michael P. Malloy, his true and lawful attorneys, to execute in his name, place, and stead, in his capacity as Director or officer, or both, of the Company, the Registration Statement and any amendments thereto and all instruments necessary or incidental in connection therewith, and to file the same with the Securities and Exchange Commission; and said attorneys shall have full power and authority to do and perform in his name and on his behalf, in any and all capacities, every act whatsoever requisite or necessary to be done in the premises, as fully and to all intents and purposes as he might or could do in person, said acts of said attorneys being hereby ratified and approved. DATED: September 21, 2006 /s/ Nicholas A. Giordano ------------------------ Nicholas A. Giordano EXHIBIT INDEX - ------------- The following Exhibits are filed as part of this Registration Statement. EXHIBIT DESCRIPTION (d)(4) Investment Advisory Agreement (Boston Partners Large Cap Value Fund) (d)(10) Investment Advisory Agreement (Boston Partners All-Cap Value Fund) (d)(32) Interim Investment Advisory and Administration Agreement (Money Market Portfolio) (d)(33) Form of Investment Advisory and Administration Agreement (Money Market Portfolio) (h)(84) Escrow Agreement (Money Market Portfolio) (h)(85) Interim Delegation Agreement (Money Market Portfolio) (p)(7) Code of Ethics of Weiss, Peck & Greer Investments EX-99.D(4) 2 g36369_largecapamendadv.txt INVESTMENT ADVISORY AGREEMENT (BP LG CAP VALUE) Exhibit d(4) AMENDED AND RESTATED -------------------- INVESTMENT ADVISORY AGREEMENT ----------------------------- Boston Partners Large Cap Value Fund AGREEMENT made as of December 29, 2003 and amended and restated as of March 1, 2006, between THE RBB FUND, INC., a Maryland corporation (herein called the "Fund"), and BOSTON PARTNERS ASSET MANAGEMENT, L.L.C. (herein called the "Investment Adviser"). WHEREAS, the Fund is registered as an open-end management investment company under the Investment Company Act of 1940 (the "1940 Act"), and currently offers or proposes to offer shares representing interests in separate investment portfolios; WHEREAS, the Fund desires to retain the Investment Adviser to render certain investment advisory services to the Fund with respect to the Fund's BOSTON PARTNERS LARGE CAP VALUE FUND (the "Portfolio"), and the Investment Adviser is willing to so render such services; and WHEREAS, the Board of Directors of the Fund and the shareholders of the Portfolio have approved this Agreement, and the Adviser is willing to furnish such services upon the terms and conditions herein set forth; NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, and intending to be legally bound hereby, it is agreed between the parties hereto as follows: SECTION 1. APPOINTMENT. The Fund hereby appoints the Investment Adviser to act as investment adviser for the Portfolio for the period and on the terms set forth in this Agreement. The Investment Adviser accepts such appointment and agrees to render the services herein set forth for the compensation herein provided. SECTION 2. DELIVERY OF DOCUMENTS. The Fund has furnished the Investment Adviser with copies properly certified or authenticated of each of the following: (a) Resolutions of the Board of Directors of the Fund authorizing the appointment of the Investment Adviser and the execution and delivery of this Agreement; (b) Each prospectus and statement of additional information relating to any class of Shares representing interests in the Portfolio of the Fund in effect under the Securities Act of 1933 (such prospectus and statement of additional information, as presently in effect and as they shall from time to time be amended and supplemented, are herein collectively called the "Prospectus" and "Statement of Additional Information," respectively). -1- The Fund will promptly furnish the Investment Adviser from time to time with copies, properly certified or authenticated, of all amendments of or supplements to the foregoing, if any. In addition to the foregoing, the Fund will also provide the Investment Adviser with copies of the Fund's Charter and By-laws, and any registration statement or service contracts related to the Portfolio, and will promptly furnish the Investment Adviser with any amendments of or supplements to such documents. SECTION 3. MANAGEMENT. Subject to the supervision of the Board of Directors of the Fund, the Investment Adviser will provide for the overall management of the Portfolio including (i) the provision of a continuous investment program for the Portfolio, including investment research and management with respect to all securities, investments, cash and cash equivalents in the Portfolio, (ii) the determination from time to time of what securities and other investments will be purchased, retained, or sold by the Fund for the Portfolio, and (iii) the placement from time to time of orders for all purchases and sales made for the Portfolio. The Investment Adviser will provide the services rendered by it hereunder in accordance with the Portfolio's investment objectives, restrictions and policies as stated in the applicable Prospectus and Statement of Additional Information, provided that the Investment Adviser has actual notice or knowledge of any changes by the Board of Directors to such investment objectives, restrictions or policies. The Investment Adviser further agrees that it will render to the Fund's Board of Directors such periodic and special reports regarding the performance of its duties under this Agreement as the Board may reasonably request. The Investment Adviser agrees to provide to the Fund (or its agents and service providers) prompt and accurate data with respect to the Portfolio's transactions and, where not otherwise available, the daily valuation of securities in the Portfolio. SECTION 4. BROKERAGE. Subject to the Investment Adviser's obligation to obtain best price and execution, the Investment Adviser shall have full discretion to select brokers or dealers to effect the purchase and sale of securities. When the Investment Adviser places orders for the purchase or sale of securities for the Portfolio, in selecting brokers or dealers to execute such orders, the Investment Adviser is expressly authorized to consider the fact that a broker or dealer has furnished statistical, research or other information or services for the benefit of the Portfolio directly or indirectly. Without limiting the generality of the foregoing, the Investment Adviser is authorized to cause the Portfolio to pay brokerage commissions which may be in excess of the lowest rates available to brokers who execute transactions for the Portfolio or who otherwise provide brokerage and research services utilized by the Investment Adviser, provided that the Investment Adviser determines in good faith that the amount of each such commission paid to a broker is reasonable in relation to the value of the brokerage and research services provided by such broker viewed in terms of either the particular transaction to which the commission relates or the Investment Adviser's overall responsibilities with respect to accounts as to which the Investment Adviser exercises investment discretion. The Investment Adviser may aggregate securities orders so long as the Investment Adviser adheres to a policy of allocating investment opportunities to the Portfolio over a period of time on a fair and equitable basis relative to other clients. In no instance will the Portfolio's securities be purchased from or sold to the Fund's principal underwriter, the Investment Adviser, or any -2- affiliated person thereof, except to the extent permitted by SEC exemptive order or by applicable law. The Investment Adviser shall report to the Board of Directors of the Fund at least quarterly with respect to brokerage transactions that were entered into by the Investment Adviser, pursuant to the foregoing paragraph, and shall certify to the Board that the commissions paid were reasonable in terms either of that transaction or the overall responsibilities of the Investment Adviser to the Fund and the Investment Adviser's other clients, that the total commissions paid by the Fund were reasonable in relation to the benefits to the Fund over the long term, and that such commissions were paid in compliance with Section 28(e) of the Securities Exchange Act of 1934. SECTION 5. CONFORMITY WITH LAW; CONFIDENTIALITY. The Investment Adviser further agrees that it will comply with all applicable rules and regulations of all federal regulatory agencies having jurisdiction over the Investment Adviser in the performance of its duties hereunder. The Investment Adviser will treat confidentially and as proprietary information of the Fund all records and other information relating to the Fund and will not use such records and information for any purpose other than performance of its responsibilities and duties hereunder, except after prior notification to and approval in writing by the Fund, which approval shall not be unreasonably withheld and may not be withheld where the Investment Adviser may be exposed to civil or criminal contempt proceedings for failure to comply, when requested to divulge such information by duly constituted authorities, or when so requested by the Fund. SECTION 6. SERVICES NOT EXCLUSIVE. The Investment Adviser and its officers may act and continue to act as investment managers for others, and nothing in this Agreement shall in any way be deemed to restrict the right of the Investment Adviser to perform investment management or other services for any other person or entity, and the performance of such services for others shall not be deemed to violate or give rise to any duty or obligation to the Portfolio or the Fund. Nothing in this Agreement shall limit or restrict the Investment Adviser or any of its partners, officers, affiliates or employees from buying, selling or trading in any securities for its or their own account. The Fund acknowledges that the Investment Adviser and its partners, officers, affiliates, employees and other clients may, at any time, have, acquire, increase, decrease, or dispose of positions in investments which are at the same time being acquired or disposed of for the Portfolio. The Investment Adviser shall have no obligation to acquire for the Portfolio a position in any investment which the Investment Adviser, its partners, officers, affiliates or employees may acquire for its or their own accounts or for the account of another client, so long as it continues to be the policy and practice of the Investment Adviser not to favor or disfavor consistently or consciously any client or class of clients in the allocation of investment opportunities so that, to the extent practical, such opportunities will be allocated among clients over a period of time on a fair and equitable basis. The Investment Adviser agrees that this Section 6 does not constitute a waiver by the Fund of the obligations imposed upon the Investment Adviser to comply with Sections 17(d) and 17(j) of the 1940 Act, and the rules thereunder, nor constitute a waiver by the Fund of the -3- obligations imposed upon the Investment Adviser under Section 206 of the Investment Advisers Act of 1940 and the rules thereunder. Further, the Investment Adviser agrees that this Section 6 does not constitute a waiver by the Fund of the fiduciary obligation of the Investment Adviser arising under federal or state law, including Section 36 of the 1940 Act. The Investment Adviser agrees that this Section 6 shall be interpreted consistent with the provisions of Section 17(i) of the 1940 Act. SECTION 7. BOOKS AND RECORDS. In compliance with the requirements of Rule 3la-3 under the 1940 Act, the Investment Adviser hereby agrees that all records which it maintains for the Portfolio are the property of the Fund and further agrees to surrender promptly to the Fund any of such records upon the Fund's request. The Investment Adviser further agrees to preserve for the periods prescribed by Rule 3la-2 under the 1940 Act the records required to be maintained by Rule 3la-1 under the 1940 Act. SECTION 8. EXPENSES. During the term of this Agreement, the Investment Adviser will pay all expenses incurred by it in connection with its activities under this Agreement. The Portfolio shall bear all of its own expenses not specifically assumed by the Investment Adviser. General expenses of the Fund not readily identifiable as belonging to a Portfolio of the Fund shall be allocated among all investment portfolios by or under the direction of the Fund's Board of Directors in such manner as the Board determines to be fair and equitable. Expenses borne by the Portfolio shall include, but are not limited to, the following (or the Portfolio's share of the following): (a) the cost (including brokerage commissions) of securities purchased or sold by the Portfolio and any losses incurred in connection therewith; (b) fees payable to and expenses incurred on behalf of the Portfolio by the Investment Adviser; (c) filing fees and expenses relating to the registration and qualification of the Fund and the Portfolio's shares under federal and/or state securities laws and maintaining such registrations and qualifications; (d) fees and salaries payable to the Fund's directors and officers; (e) taxes (including any income or franchise taxes) and governmental fees; (f) costs of any liability and other insurance or fidelity bonds; (g) any costs, expenses or losses arising out a liability of or claim for damages or other relief asserted against the Fund or the Portfolio for violation of any law; (h) legal, accounting and auditing expenses, including legal fees of special counsel for the independent directors; (i) charges of custodians and other agents; (j) expenses of setting in type and printing prospectuses, statements of additional information and supplements thereto for existing shareholders, reports, statements, and confirmations to shareholders and proxy material that are not attributable to a class; (k) costs of mailing prospectuses, statements of additional information and supplements thereto to existing shareholders, as well as reports to shareholders and proxy material that are not attributable to a class; (1) any extraordinary expenses; (m) fees, voluntary assessments and other expenses incurred in connection with membership in investment company organizations; (n) costs of mailing and tabulating proxies and costs of shareholders' and directors' meetings; (o) costs of independent pricing services to value a portfolio's securities; and (p) the costs of investment company literature and other publications provided by the Fund to its directors and officers. Distribution expenses, transfer agency expenses, expenses of preparation, printing and mailing, prospectuses, statements of additional information, proxy statements and reports to shareholders, and organizational expenses and registration fees, identified as belonging to a particular class of the Fund are allocated to such class. -4- SECTION 9. VOTING. The Investment Adviser shall have the authority to vote as agent for the Fund, either in person or by proxy, tender and take all actions incident to the ownership of all securities in which the Portfolio's assets may be invested from time to time, subject to such policies and procedures as the Board of Directors of the Fund may adopt from time to time. SECTION 10. RESERVATION OF NAME. The Investment Adviser shall at all times have all rights in and to the Portfolio's name and all investment models used by or on behalf of the Portfolio. The Investment Adviser may use the Portfolio's name or any portion thereof in connection with any other mutual fund or business activity without the consent of any shareholder and the Fund shall execute and deliver any and all documents required to indicate the consent of the Fund to such use. SECTION 11. COMPENSATION. (a) For the services provided and the expenses assumed pursuant to this Agreement with respect to the Portfolio, the Fund will pay the Investment Adviser from the assets of the Portfolio and the Investment Adviser will accept as full compensation therefor a fee, computed daily and payable monthly, at the annual rate of 0.60% of the Portfolio's average daily net assets. (b) The fee attributable to the Portfolio shall be satisfied only against assets of the Portfolio and not against the assets of any other investment portfolio of the Fund. SECTION 12. LIMITATION OF LIABILITY. The Investment Adviser shall not be liable for any error of judgment or mistake of law or for any loss suffered by the Fund in connection with the matters to which this Agreement relates, except a loss resulting from a breach of fiduciary duty with respect to the receipt of compensation for services or a loss resulting from willful misfeasance, bad faith or gross negligence on the part of the Investment Adviser in the performance of its duties or from reckless disregard by it of its obligations and duties under this Agreement ("disabling conduct"). The Portfolio will indemnify the Investment Adviser against and hold it harmless from any and all losses, claims, damages, liabilities or expenses (including reasonable counsel fees and expenses) resulting from any claim, demand, action or suit not resulting from disabling conduct by the Investment Adviser. Indemnification shall be made only following: (i) a final decision on the merits by a court or other body before whom the proceeding was brought that the Investment Adviser was not liable by reason of disabling conduct or (ii) in the absence of such a decision, a reasonable determination, based upon a review of the facts, that the Investment Adviser was not liable by reason of disabling conduct by (a) the vote of a majority of a quorum of directors of the Fund who are neither "interested persons" of the Fund nor parties to the proceeding ("disinterested non-party directors") or (b) an independent legal counsel in a written opinion. The Investment Adviser shall be entitled to advances from the Portfolio for payment of the reasonable expenses incurred by it in connection with the matter as to which it is seeking indemnification in the manner and to the fullest extent permissible under the Maryland General Corporation Law. The Investment Adviser shall provide to the Portfolio a written affirmation of its good faith belief that the standard of conduct necessary for indemnification by the Portfolio has been met and a written undertaking to repay any such advance if it should ultimately be determined that the standard of conduct has not been met. In addition, at least one of the following additional conditions shall be met: (a) the Investment Adviser shall provide a security in form and amount acceptable to the Portfolio for its undertaking; (b) the Portfolio is insured against losses arising by reason of the -5- advance; or (c) a majority of a quorum of disinterested non-party directors, or independent legal counsel, in a written opinion, shall have determined, based upon a review of facts readily available to the Portfolio at the time the advance is proposed to be made, that there is reason to believe that the Investment Adviser will ultimately be found to be entitled to indemnification. Any amounts payable by the Portfolio under this Section shall be satisfied only against the assets of the Portfolio and not against the assets of any other investment portfolio of the Fund. The limitations on liability and indemnification provisions of this Section 12 shall not be applicable to any losses, claims, damages, liabilities or expenses arising from the Investment Adviser's rights to the Portfolio's name. The Investment Adviser shall indemnify and hold harmless the Fund and the Portfolio for any claims arising from the use of the term "Boston Partners" in the name of the Portfolio. SECTION 13. DURATION AND TERMINATION. This Agreement shall become effective with respect to the Portfolio upon approval of this Agreement by vote of a majority of the outstanding voting securities of the Portfolio and, unless sooner terminated as provided herein, shall continue with respect to the Portfolio until August 16, 2006. Thereafter, if not terminated, this Agreement shall continue with respect to the Portfolio for successive annual periods ending on August 16 PROVIDED such continuance is specifically approved at least annually (a) by the vote of a majority of those members of the Board of Directors of the Fund who are not parties to this Agreement or interested persons of any such party, cast in person at a meeting called for the purpose of voting on such approval, and (b) by the Board of Directors of the Fund or by vote of a majority of the outstanding voting securities of the Portfolio; PROVIDED, HOWEVER, that this Agreement may be terminated with respect to the Portfolio by the Fund at any time, without the payment of any penalty, by the Board of Directors of the Fund or by vote of a majority of the outstanding voting securities of the Portfolio, on 60 days' prior written notice to the Investment Adviser, or by the Investment Adviser at any time, without payment of any penalty, on 60 days' prior written notice to the Fund. This Agreement will immediately terminate in the event of its assignment. (As used in this Agreement, the terms "majority of the outstanding voting securities," "interested person" and "assignment" shall have the same meaning as such terms have in the 1940 Act). SECTION 14. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may be changed, discharged or terminated orally, except by an instrument in writing signed by the party against which enforcement of the change, discharge or termination is sought, and no amendment of this Agreement affecting the Portfolio shall be effective until approved by vote of the holders of a majority of the outstanding voting securities of the Portfolio. SECTION 15. MISCELLANEOUS. The captions in this Agreement are included for convenience of reference only and in no way define or delimit any of the provisions hereof or otherwise affect their construction or effect. If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and shall be governed by Delaware law. -6- SECTION 16. CHANGE IN MEMBERSHIP. The Investment Adviser shall notify the Fund of any change in its membership within a reasonable time after such change. SECTION 17. GOVERNING LAW. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Delaware without giving effect to the conflicts of laws principles thereof. SECTION 18. COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed by their officers designated below as of the day and year first above written. THE RBB FUND, INC. By: /s/ Edward J. Roach ----------------------- Name: Edward J. Roach Title: President and Treasurer BOSTON PARTNERS ASSET MANAGEMENT, L.L.C. by: /s/ William J. Kelly ------------------------ Name: William J. Kelly Title: CEO -7- EX-99.D(10) 3 g36369_allcapamendadvisory.txt INVESTMENT ADVISORY AGREEMENT (BP ALL-CAP VALUE) Exhbit d(10) AMENDED AND RESTATED -------------------- INVESTMENT ADVISORY AGREEMENT ----------------------------- Boston Partners All-Cap Value Fund AGREEMENT made as of December 29, 2003 and amended and restated as of March 1, 2006, between THE RBB FUND, INC., a Maryland corporation (herein called the "Fund"), and BOSTON PARTNERS ASSET MANAGEMENT, L.L.C. (herein called the "Investment Adviser"). WHEREAS, the Fund is registered as an open-end management investment company under the Investment Company Act of 1940 (the "1940 Act"), and currently offers or proposes to offer shares representing interests in separate investment portfolios; WHEREAS, the Fund desires to retain the Investment Adviser to render certain investment advisory services to the Fund with respect to the Fund's BOSTON PARTNERS ALL-CAP VALUE FUND (the "Portfolio"), and the Investment Adviser is willing to so render such services; and WHEREAS, the Board of Directors of the Fund and the shareholders of the Portfolio have approved this Agreement, and the Adviser is willing to furnish such services upon the terms and conditions herein set forth; NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, and intending to be legally bound hereby, it is agreed between the parties hereto as follows: SECTION 1. APPOINTMENT. The Fund hereby appoints the Investment Adviser to act as investment adviser for the Portfolio for the period and on the terms set forth in this Agreement. The Investment Adviser accepts such appointment and agrees to render the services herein set forth for the compensation herein provided. SECTION 2. DELIVERY OF DOCUMENTS. The Fund has furnished the Investment Adviser with copies properly certified or authenticated of each of the following: (a) Resolutions of the Board of Directors of the Fund authorizing the appointment of the Investment Adviser and the execution and delivery of this Agreement; (b) Each prospectus and statement of additional information relating to any class of Shares representing interests in the Portfolio of the Fund in effect under the Securities Act of 1933 (such prospectus and statement of additional information, as presently in effect and as they shall from time to time be amended and supplemented, are herein collectively called the "Prospectus" and "Statement of Additional Information," respectively). The Fund will promptly furnish the Investment Adviser from time to time with copies, properly certified or authenticated, of all amendments of or supplements to the foregoing, if any. In addition to the foregoing, the Fund will also provide the Investment Adviser with copies of the Fund's Charter and By-laws, and any registration statement or service contracts related to the Portfolio, and will promptly furnish the Investment Adviser with any amendments of or supplements to such documents. SECTION 3. MANAGEMENT. Subject to the supervision of the Board of Directors of the Fund, the Investment Adviser will provide for the overall management of the Portfolio including (i) the provision of a continuous investment program for the Portfolio, including investment research and management with respect to all securities, investments, cash and cash equivalents in the Portfolio, (ii) the determination from time to time of what securities and other investments will be purchased, retained, or sold by the Fund for the Portfolio, and (iii) the placement from time to time of orders for all purchases and sales made for the Portfolio. The Investment Adviser will provide the services rendered by it hereunder in accordance with the Portfolio's investment objectives, restrictions and policies as stated in the applicable Prospectus and Statement of Additional Information, provided that the Investment Adviser has actual notice or knowledge of any changes by the Board of Directors to such investment objectives, restrictions or policies. The Investment Adviser further agrees that it will render to the Fund's Board of Directors such periodic and special reports regarding the performance of its duties under this Agreement as the Board may reasonably request. The Investment Adviser agrees to provide to the Fund (or its agents and service providers) prompt and accurate data with respect to the Portfolio's transactions and, where not otherwise available, the daily valuation of securities in the Portfolio. SECTION 4. BROKERAGE. Subject to the Investment Adviser's obligation to obtain best price and execution, the Investment Adviser shall have full discretion to select brokers or dealers to effect the purchase and sale of securities. When the Investment Adviser places orders for the purchase or sale of securities for the Portfolio, in selecting brokers or dealers to execute such orders, the Investment Adviser is expressly authorized to consider the fact that a broker or dealer has furnished statistical, research or other information or services for the benefit of the Portfolio directly or indirectly. Without limiting the generality of the foregoing, the Investment Adviser is authorized to cause the Portfolio to pay brokerage commissions which may be in excess of the lowest rates available to brokers who execute transactions for the Portfolio or who otherwise provide brokerage and research services utilized by the Investment Adviser, provided that the Investment Adviser determines in good faith that the amount of each such commission paid to a broker is reasonable in relation to the value of the brokerage and research services provided by such broker viewed in terms of either the particular transaction to which the commission relates or the Investment Adviser's overall responsibilities with respect to accounts as to which the Investment Adviser exercises investment discretion. The Investment Adviser may aggregate securities orders so long as the Investment Adviser adheres to a policy of allocating investment opportunities to the Portfolio over a period of time on a fair and equitable basis relative to other clients. In no instance will the Portfolio's securities be purchased from or sold to the Fund's principal underwriter, the Investment Adviser, or any -2- affiliated person thereof, except to the extent permitted by SEC exemptive order or by applicable law. The Investment Adviser shall report to the Board of Directors of the Fund at least quarterly with respect to brokerage transactions that were entered into by the Investment Adviser, pursuant to the foregoing paragraph, and shall certify to the Board that the commissions paid were reasonable in terms either of that transaction or the overall responsibilities of the Investment Adviser to the Fund and the Investment Adviser's other clients, that the total commissions paid by the Fund were reasonable in relation to the benefits to the Fund over the long term, and that such commissions were paid in compliance with Section 28(e) of the Securities Exchange Act of 1934. SECTION 5. CONFORMITY WITH LAW; CONFIDENTIALITY. The Investment Adviser further agrees that it will comply with all applicable rules and regulations of all federal regulatory agencies having jurisdiction over the Investment Adviser in the performance of its duties hereunder. The Investment Adviser will treat confidentially and as proprietary information of the Fund all records and other information relating to the Fund and will not use such records and information for any purpose other than performance of its responsibilities and duties hereunder, except after prior notification to and approval in writing by the Fund, which approval shall not be unreasonably withheld and may not be withheld where the Investment Adviser may be exposed to civil or criminal contempt proceedings for failure to comply, when requested to divulge such information by duly constituted authorities, or when so requested by the Fund. SECTION 6. SERVICES NOT EXCLUSIVE. The Investment Adviser and its officers may act and continue to act as investment managers for others, and nothing in this Agreement shall in any way be deemed to restrict the right of the Investment Adviser to perform investment management or other services for any other person or entity, and the performance of such services for others shall not be deemed to violate or give rise to any duty or obligation to the Portfolio or the Fund. Nothing in this Agreement shall limit or restrict the Investment Adviser or any of its partners, officers, affiliates or employees from buying, selling or trading in any securities for its or their own account. The Fund acknowledges that the Investment Adviser and its partners, officers, affiliates, employees and other clients may, at any time, have, acquire, increase, decrease, or dispose of positions in investments which are at the same time being acquired or disposed of for the Portfolio. The Investment Adviser shall have no obligation to acquire for the Portfolio a position in any investment which the Investment Adviser, its partners, officers, affiliates or employees may acquire for its or their own accounts or for the account of another client, so long as it continues to be the policy and practice of the Investment Adviser not to favor or disfavor consistently or consciously any client or class of clients in the allocation of investment opportunities so that, to the extent practical, such opportunities will be allocated among clients over a period of time on a fair and equitable basis. The Investment Adviser agrees that this Section 6 does not constitute a waiver by the Fund of the -3- obligations imposed upon the Investment Adviser to comply with Sections 17(d) and 17(j) of the 1940 Act, and the rules thereunder, nor constitute a waiver by the Fund of the obligations imposed upon the Investment Adviser under Section 206 of the Investment Advisers Act of 1940 and the rules thereunder. Further, the Investment Adviser agrees that this Section 6 does not constitute a waiver by the Fund of the fiduciary obligation of the Investment Adviser arising under federal or state law, including Section 36 of the 1940 Act. The Investment Adviser agrees that this Section 6 shall be interpreted consistent with the provisions of Section 17(i) of the 1940 Act. SECTION 7. BOOKS AND RECORDS. In compliance with the requirements of Rule 3la-3 under the 1940 Act, the Investment Adviser hereby agrees that all records which it maintains for the Portfolio are the property of the Fund and further agrees to surrender promptly to the Fund any of such records upon the Fund's request. The Investment Adviser further agrees to preserve for the periods prescribed by Rule 3la-2 under the 1940 Act the records required to be maintained by Rule 3la-1 under the 1940 Act. SECTION 8. EXPENSES. During the term of this Agreement, the Investment Adviser will pay all expenses incurred by it in connection with its activities under this Agreement. The Portfolio shall bear all of its own expenses not specifically assumed by the Investment Adviser. General expenses of the Fund not readily identifiable as belonging to a Portfolio of the Fund shall be allocated among all investment portfolios by or under the direction of the Fund's Board of Directors in such manner as the Board determines to be fair and equitable. Expenses borne by the Portfolio shall include, but are not limited to, the following (or the Portfolio's share of the following): (a) the cost (including brokerage commissions) of securities purchased or sold by the Portfolio and any losses incurred in connection therewith; (b) fees payable to and expenses incurred on behalf of the Portfolio by the Investment Adviser; (c) filing fees and expenses relating to the registration and qualification of the Fund and the Portfolio's shares under federal and/or state securities laws and maintaining such registrations and qualifications; (d) fees and salaries payable to the Fund's directors and officers; (e) taxes (including any income or franchise taxes) and governmental fees; (f) costs of any liability and other insurance or fidelity bonds; (g) any costs, expenses or losses arising out a liability of or claim for damages or other relief asserted against the Fund or the Portfolio for violation of any law; (h) legal, accounting and auditing expenses, including legal fees of special counsel for the independent directors; (i) charges of custodians and other agents; (j) expenses of setting in type and printing prospectuses, statements of additional information and supplements thereto for existing shareholders, reports, statements, and confirmations to shareholders and proxy material that are not attributable to a class; (k) costs of mailing prospectuses, statements of additional information and supplements thereto to existing shareholders, as well as reports to shareholders and proxy material that are not attributable to a class; (1) any extraordinary expenses; (m) fees, voluntary assessments and other expenses incurred in connection with membership in investment company organizations; (n) costs of mailing and tabulating proxies and costs of shareholders' and directors' meetings; (o) costs of independent pricing services to value a portfolio's securities; and (p) the costs of investment company literature and other publications provided by the Fund to its directors and officers. Distribution expenses, transfer agency expenses, expenses of preparation, printing and mailing, prospectuses, statements of additional information, proxy statements and reports to shareholders, and organizational expenses and registration fees, identified as belonging to a particular class of the Fund are allocated to such class. -4- SECTION 9. VOTING. The Investment Adviser shall have the authority to vote as agent for the Fund, either in person or by proxy, tender and take all actions incident to the ownership of all securities in which the Portfolio's assets may be invested from time to time, subject to such policies and procedures as the Board of Directors of the Fund may adopt from time to time. SECTION 10. RESERVATION OF NAME. The Investment Adviser shall at all times have all rights in and to the Portfolio's name and all investment models used by or on behalf of the Portfolio. The Investment Adviser may use the Portfolio's name or any portion thereof in connection with any other mutual fund or business activity without the consent of any shareholder and the Fund shall execute and deliver any and all documents required to indicate the consent of the Fund to such use. SECTION 11. COMPENSATION. (a) For the services provided and the expenses assumed pursuant to this Agreement with respect to the Portfolio, the Fund will pay the Investment Adviser from the assets of the Portfolio and the Investment Adviser will accept as full compensation therefor a fee, computed daily and payable monthly, at the annual rate of 0.80% of the Portfolio's average daily net assets. (b) The fee attributable to the Portfolio shall be satisfied only against assets of the Portfolio and not against the assets of any other investment portfolio of the Fund. SECTION 12. LIMITATION OF LIABILITY. The Investment Adviser shall not be liable for any error of judgment or mistake of law or for any loss suffered by the Fund in connection with the matters to which this Agreement relates, except a loss resulting from a breach of fiduciary duty with respect to the receipt of compensation for services or a loss resulting from willful misfeasance, bad faith or gross negligence on the part of the Investment Adviser in the performance of its duties or from reckless disregard by it of its obligations and duties under this Agreement ("disabling conduct"). The Portfolio will indemnify the Investment Adviser against and hold it harmless from any and all losses, claims, damages, liabilities or expenses (including reasonable counsel fees and expenses) resulting from any claim, demand, action or suit not resulting from disabling conduct by the Investment Adviser. Indemnification shall be made only following: (i) a final decision on the merits by a court or other body before whom the proceeding was brought that the Investment Adviser was not liable by reason of disabling conduct or (ii) in the absence of such a decision, a reasonable determination, based upon a review of the facts, that the Investment Adviser was not liable by reason of disabling conduct by (a) the vote of a majority of a quorum of directors of the Fund who are neither "interested persons" of the Fund nor parties to the proceeding ("disinterested non-party directors") or (b) an independent legal counsel in a written opinion. The Investment Adviser shall be entitled to advances from the Portfolio for payment of the reasonable expenses incurred by it in connection with the matter as to which it is seeking indemnification in the manner and to the fullest extent permissible under the Maryland General Corporation Law. The Investment Adviser shall provide to the Portfolio a written affirmation of its good faith belief that the standard of conduct necessary for indemnification by the Portfolio has been met and a written undertaking to repay any such advance if it should ultimately be determined that the standard of conduct has not been met. In addition, at least one of the following additional conditions shall be met: (a) the Investment Adviser shall provide a security in form and amount acceptable to the Portfolio for its undertaking; (b) the Portfolio is insured against losses arising by reason of the -5- advance; or (c) a majority of a quorum of disinterested non-party directors, or independent legal counsel, in a written opinion, shall have determined, based upon a review of facts readily available to the Portfolio at the time the advance is proposed to be made, that there is reason to believe that the Investment Adviser will ultimately be found to be entitled to indemnification. Any amounts payable by the Portfolio under this Section shall be satisfied only against the assets of the Portfolio and not against the assets of any other investment portfolio of the Fund. The limitations on liability and indemnification provisions of this Section 12 shall not be applicable to any losses, claims, damages, liabilities or expenses arising from the Investment Adviser's rights to the Portfolio's name. The Investment Adviser shall indemnify and hold harmless the Fund and the Portfolio for any claims arising from the use of the term "Boston Partners" in the name of the Portfolio. SECTION 13. DURATION AND TERMINATION. This Agreement shall become effective with respect to the Portfolio upon approval of this Agreement by vote of a majority of the outstanding voting securities of the Portfolio and, unless sooner terminated as provided herein, shall continue with respect to the Portfolio until August 16, 2006. Thereafter, if not terminated, this Agreement shall continue with respect to the Portfolio for successive annual periods ending on August 16, PROVIDED such continuance is specifically approved at least annually (a) by the vote of a majority of those members of the Board of Directors of the Fund who are not parties to this Agreement or interested persons of any such party, cast in person at a meeting called for the purpose of voting on such approval, and (b) by the Board of Directors of the Fund or by vote of a majority of the outstanding voting securities of the Portfolio; PROVIDED, HOWEVER, that this Agreement may be terminated with respect to the Portfolio by the Fund at any time, without the payment of any penalty, by the Board of Directors of the Fund or by vote of a majority of the outstanding voting securities of the Portfolio, on 60 days' prior written notice to the Investment Adviser, or by the Investment Adviser at any time, without payment of any penalty, on 60 days' prior written notice to the Fund. This Agreement will immediately terminate in the event of its assignment. (As used in this Agreement, the terms "majority of the outstanding voting securities," "interested person" and "assignment" shall have the same meaning as such terms have in the 1940 Act). SECTION 14. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may be changed, discharged or terminated orally, except by an instrument in writing signed by the party against which enforcement of the change, discharge or termination is sought, and no amendment of this Agreement affecting the Portfolio shall be effective until approved by vote of the holders of a majority of the outstanding voting securities of the Portfolio. SECTION 15. MISCELLANEOUS. The captions in this Agreement are included for convenience of reference only and in no way define or delimit any of the provisions hereof or otherwise affect their construction or effect. If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and shall be governed by Delaware law. -6- SECTION 16. CHANGE IN MEMBERSHIP. The Investment Adviser shall notify the Fund of any change in its membership within a reasonable time after such change. SECTION 17. GOVERNING LAW. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Delaware without giving effect to the conflicts of laws principles thereof. SECTION 18. COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed by their officers designated below as of the day and year first above written. THE RBB FUND, INC. By: /s/ Edward J. Roach ----------------------- Name: Edward J. Roach Title: President and Treasurer BOSTON PARTNERS ASSET MANAGEMENT, L.L.C. by: /s/ William J. Kelly ------------------------ Name: William J. Kelly Title: CEO -7- EX-99.D(32) 4 g36369_interiminvest.txt INTERIM INVESTMENT ADV & ADMIN AGREE (MON MKT) Exhibit (d)(32) INTERIM INVESTMENT ADVISORY AND ADMINISTRATION AGREEMENT (Money Market Portfolio) AGREEMENT made as of September 29, 2006 between THE RBB FUND, INC., a Maryland corporation (herein called the "Company"), and BLACKROCK INSTITUTIONAL MANAGEMENT CORPORATION, a Delaware corporation (herein called the "Investment Advisor"). WHEREAS, the Company is registered as an open-end, diversified, management investment company under the Investment Company Act of 1940 (the "1940 Act") and currently offers shares representing interests in separate investment portfolios; and WHEREAS, the Investment Advisor has been providing investment advisory and administration services to the Company's Money Market Portfolio (the "Portfolio") under an Investment Advisory and Administration Agreement dated August 16, 1988, which may have terminated as of the date hereof in connection with a possible change in control involving the Investment Advisor as regards the transaction defined below, and the Investment Advisor will continue as investment adviser to the Portfolio provided the conditions of Rule 15a-4 under the 1940 Act are met; and WHEREAS, this day BlackRock, Inc. ("BRI") and Merrill Lynch & Co., Inc. ("Merrill Lynch") are merging Merrill Lynch's investment management business with a subsidiary of BRI (the "Transaction"); and WHEREAS, the Company desires to continue to retain the Investment Advisor to provide investment advisory and administration services to the Portfolio following the Transaction; and WHEREAS, the Board of Directors of the Company has approved this Agreement, and the Investment Advisor is willing to furnish such services upon the terms and conditions herein set forth; NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, and intending to be legally bound hereby, it is agreed between the parties hereto as follows: 1. APPOINTMENT. The Company hereby appoints the Investment Advisor to act as investment advisor to the Company for the Portfolio for the period and on the terms set forth in this Agreement. The Investment Advisor accepts such appointment and agrees to render the services herein set forth, for the compensation herein provided. The Company's Common Stock, $.001 par value (the "Shares") has been classified into different classes of Common Stock. The Portfolio contains two classes of Shares: the Class I Shares and the Class L Shares. 2. DELIVERY OF DOCUMENTS. The Company has furnished the Investment Advisor with copies properly certified or authenticated of each of the following: (a) Articles of Incorporation of the Company, filed with the Secretary of State of Maryland on February 29, 1988, as amended (such Articles of Incorporation, as presently in effect and as they shall from time to time be amended, herein called the "Articles of Incorporation"); (b) Articles Supplementary of the Company, filed with the Secretary of State of the State of Maryland on March 24, 1988 and all further Articles Supplementary filed with the State of Maryland ("Articles Supplementary"); (c) By-Laws of the Company, as amended (such By-Laws, as presently in effect and as they shall from time to time be amended, herein called the "By-Laws"); (d) Resolutions of the Board of Directors of the Company authorizing the appointment of the Investment Advisor and the execution and delivery of this Agreement; (e) A copy of each Distribution Agreement between the Company and the Company's principal underwriter (the "Distributor") relating to any class of Shares representing interests in the Portfolio and the form of each related Dealer Agreement, if any, for broker-dealers participating in the distribution of any class of Shares representing interests in the Portfolio ("Participating Dealers"); (f) Each Plan of Distribution pursuant to Rule 12b-1 under the 1940 Act, if any, relating to any class of Shares representing interests in the Portfolio; (g) Each Shareholder Servicing Agreement, if any, relating to any class of Shares representing interests in the Portfolio; (h) Each Non-12b-1 Shareholder Services Plan, if any, relating to any class of Shares representing interests in the Portfolio; (i) Notification of Registration of the Company under the 1940 Act on Form N-8A as filed with the Securities and Exchange Commission ("SEC") on March 24, 1988 and all amendments thereto; (j) The initial Registration Statement of the Company on Form N-lA under the Securities Act of 1933 (the "1933 Act") (File No. 33-20827) and under the 1940 Act filed with the SEC on March 24, 1988 relating to the Shares, and all amendments thereto (the "Registration Statement"); and (k) Each Prospectus relating to any class of Shares representing interests in the Portfolio in effect under the 1933 Act (such prospectuses, as presently in effect and as they shall from time to time be amended and supplemented, are herein collectively called the "Prospectuses"). 2 The Company will furnish the Investment Advisor from time to time with copies, properly certified or authenticated, of all amendments of or supplements to the foregoing, if any. 3. MANAGEMENT OF THE PORTFOLIO. Subject to the supervision of the Board of Directors of the Company, the Investment Advisor will provide for the overall management of the Portfolio, including (i) the provision of a continuous investment program for the Portfolio, including investment research and management with respect to all securities, investments, cash and cash equivalents in the Portfolio, (ii) the determination from time to time of what securities and other investments will be purchased, retained or sold by the Company for the Portfolio, (iii) the placement of orders for all purchases and sales made for the Portfolio, and (iv) coordination of contractual relationships and communications between the Company and its contractual service providers. The Investment Advisor will provide the services rendered by it hereunder in accordance with the investment objectives, restrictions and policies of the Portfolio as stated in the applicable Prospectus and the applicable statement of additional information contained in the Registration Statement. The Investment Advisor further agrees that it will maintain all books and records with respect to the securities transactions of the Portfolio, keep its respective books of account and will render to the Company's Board of Directors such periodic and special reports as the Board may request. 4. BROKERAGE. The Investment Advisor may place orders either directly with the issuer or with any broker or dealer. In placing orders with brokers and dealers, the Investment Advisor will attempt to obtain the best net price and the most favorable execution of its orders. In placing orders with such broker or dealer, the Investment Advisor will consider the experience and skill of the firm's securities traders as well as the firm's financial responsibility and administrative efficiency. Consistent with this obligation, when the execution and price offered by two or more brokers or dealers are comparable, the Investment Advisor may, in its discretion, purchase and sell the Portfolio's securities to and from brokers and dealers who provide the Company with research advice and other services. In no instance will the Portfolio's securities be purchased from or sold to the Distributor, the Investment Advisor or any affiliated person thereof, except to the extent permitted by SEC exemptive order or by applicable law. 5. ADMINISTRATION SERVICES. (a) The Investment Advisor will perform the following administration and accounting functions on a daily basis: (1) Journalize the Portfolio's investment, capital share and income and expense activities; (2) Verify investment buy/sell trade tickets and transmit trades to the Company's custodian for proper settlement; (3) Maintain individual ledgers for investment securities; (4) Maintain historical tax lots for each security; 3 (5) Reconcile cash and investment balances of the Portfolio with the custodian, and prepare the beginning cash balance available for investment purposes; (6) Update the cash availability throughout the day as required; (7) Post to and prepare the Portfolio's Statement of Assets and Liabilities and the Statement of Operations; (8) Calculate various contractual expenses (E.G., advisory/administration and custody fees); (9) Monitor the expense accruals and notify management of the Company of any proposed adjustments; (10) Control all disbursements from the Portfolio and authorize such disbursements upon Written Instructions; (11) Calculate capital gains and losses; (12) Determine the Portfolio's net income; (13) Obtain security market quotes from services approved by management of the Company, or if such quotes are unavailable, then obtain such prices from management of the Company, and in either case calculate the market value of the Portfolio's investments; (14) Compute the net asset value of the Portfolio; and (15) Compute the Portfolio's yields, total return, expense ratios, Portfolio turnover rate, and, Portfolio average dollar-weighted maturity. (b) In addition to the accounting services described in the foregoing Paragraph 5(a), the Investment Advisor will: (1) Prepare monthly financial statements, which will include the following items: Schedule of Investments Statement of Assets and Liabilities Statement of Operations Statement of Changes in Net Assets Cash Settlement Schedule of Capital Gains and Losses; (2) Prepare quarterly broker security transactions summaries; 4 (3) Supply various normal and customary Portfolio and Company statistical data as requested on an ongoing basis; (4) Prepare for execution and file the Portfolio's and Company's Federal and state tax returns; (5) Prepare and file the Company's Semi-Annual Reports with the SEC on Form N-SAR and prepare and file the Company's Rule 24f-2 Notice and Form N-PX with the SEC; (6) Prepare and file with the SEC the Portfolio's and Company's annual, semi-annual and quarterly Shareholder reports on Form N-CSR and Form N-Q; (7) Assist with the preparation of registration statements on Form N-lA and other filings relating to the registration of Shares; (8) Monitor the Company's status as a regulated investment company under Sub-chapter M of the Internal Revenue Code of 1986, as amended; (9) Qualify the Class I Shares and the Class L Shares for sale in each state in which the Company's Board of Directors determines to sell the Class I Shares or the Class L Shares and make all filings and take all appropriate actions necessary to maintain and renew such registrations of the Class I Shares and the Class L Shares; (10) Monitor the Company's compliance with the amounts and conditions of each such state qualification; and (11) Maintain the Company's fidelity bond as required by the 1940 Act and obtain a directors and officers liability policy. (c) The Investment Advisor shall act as liaison with the Company's independent registered public accounting firm and shall provide account analyses, fiscal year summaries, and other audit related schedules. The Investment Advisor shall take all reasonable action in the performance of its obligations under this Agreement to assure that the necessary information is made available to such accountants for the expression of their opinion, as such may be required by the Company from time to time. 6. CONFORMITY WITH LAW; CONFIDENTIALITY. The Investment Advisor further agrees that it will comply with all applicable Rules and Regulations of all Federal regulatory agencies having jurisdiction over the Investment Advisor in the performance of its duties hereunder (herein called the "Rules"). The Investment Advisor will treat confidentially and as proprietary information of the Company all records and other information relative to the Company and prior, present or potential shareholders, and will not use such records and information for any purpose other than performance of its responsibilities and duties hereunder, except after prior notification to and approval in writing by the Company, which approval shall not be 5 unreasonably withheld and may not be withheld where the Investment Advisor may be exposed to civil or criminal contempt proceedings for failure to comply, when requested to divulge such information by duly constituted authorities, or when so requested by the Company. 7. SERVICES NOT EXCLUSIVE. The investment management and administration services rendered by the Investment Advisor hereunder are not to be deemed exclusive, and the Investment Advisor shall be free to render similar services to others so long as its services under this Agreement are not impaired thereby. 8. BOOKS AND RECORDS. In compliance with the requirements of Rule 31a-3 of the Rules, the Investment Advisor hereby agrees that all records which it maintains for the Portfolio are the property of the Company and further agrees to surrender promptly to the Company any of such records upon the Company's request. The Investment Advisor further agrees to preserve for the periods prescribed by Rule 31a-2 the records required to be maintained by Rule 31a-1 of the Rules. 9. EXPENSES. During the term of this Agreement, the Investment Advisor will pay all expenses incurred by it in connection with its activities under this Agreement other than the cost of (including brokerage commissions, if any) securities purchased for the Portfolio, the cost of any independent pricing service used in valuing the Portfolio's securities and fees and expenses of registering and qualifying shares for distribution under state securities laws. In addition, if the expenses borne by the Portfolio in any fiscal year exceed the most restrictive applicable expense limitations imposed by the securities regulations of any state in which the Shares are registered or qualified for sale to the public, the Investment Advisor shall reimburse the Portfolio for any excess up to the amount of the fees payable by the Portfolio to it during such fiscal year pursuant to Paragraph 10 hereof; PROVIDED, HOWEVER, that notwithstanding the foregoing, the Investment Advisor shall reimburse the Portfolio for such excess expenses regardless of the amount of such fees payable to it during such fiscal year to the extent that the securities regulations of any state in which the Shares are registered or qualified for sale so require. 10. COMPENSATION. (a) For the services provided and the expenses assumed pursuant to this Agreement with respect to the Portfolio, the Company will pay the Investment Advisor from the assets of the Portfolio and the Investment Advisor will accept as full compensation therefor a fee, computed daily and payable monthly, at the following annual rate: 0.45% of-the first $250 million of the Portfolio's average daily net assets, 0.40% of the next $250 million of the Portfolio's average daily net assets, and 0.35% of the Portfolio's average daily net assets in excess of $500 million. (b) The fee attributable to the Portfolio shall be satisfied only against the assets of the Portfolio and not against the assets of any other investment portfolio of the Company. 6 11. LIMITATION OF LIABILITY OF THE INVESTMENT ADVISOR. The Investment Advisor shall not be liable for any error of judgment or mistake of law or for any loss suffered by the Company in connection with the matters to which this Agreement relates, except a loss resulting from a breach of fiduciary duty with respect to the receipt of compensation for services or a loss resulting from willful misfeasance, bad faith or gross negligence on the part of the Investment Advisor in the performance of its duties or from reckless disregard by it of its obligations and duties under this Agreement. 12. DURATION AND TERMINATION. The term of this Agreement shall begin on the date first above written and shall terminate without penalty upon the earlier of (i) 150 days from the date hereof, (ii) 10 calendar days' written notice by the Company to the Investment Advisor, provided that the Company's Board of Directors or a Majority (as defined below) of the outstanding voting securities of the Portfolio have voted to terminate the Agreement; (iii) an event of assignment (as defined in the 1940 Act); and (iv) upon the effective date of an Investment Advisory and Administration Agreement between the Investment Advisor and the Company that has received the approval of the vote of a Majority of the Portfolio's outstanding voting securities. For purposes of the foregoing, "Majority" is defined as the lesser of (a) 67% of the shares of the Portfolio represented at a meeting if holders of more than 50% of the outstanding shares of the Portfolio are present in person or by proxy or (b) more than 50% of the outstanding shares of the Portfolio. Subject to Section 13, termination of this Agreement shall not affect the right of the Investment Advisor to receive payments on any unpaid balance of the compensation to which it is entitled under this Agreement earned prior to such termination. 13. ESCROW PROVISIONS. a) Notwithstanding any other provision of this Agreement, in no event shall compensation paid to the Investment Advisor hereunder exceed the amount permitted by Rule 15a-4 under the 1940 Act. All compensation paid to the Investment Advisor hereunder shall be held in an interest-bearing escrow account with the Portfolio's custodian (the "Escrow Account"). Funds held in the Escrow Account, including interest earned ("Escrow Money"), shall be paid to the Investment Advisor promptly after approval of an Investment Advisory and Administration Agreement between the Investment Advisor and the Company by the vote of a Majority of the Portfolio's outstanding voting securities in accordance with the 1940 Act, provided that such approval is obtained no later than 150 days after the date of this Agreement. (b) Notwithstanding any other provision of this Agreement, if an Investment Advisory and Administration Agreement between the Investment Advisor and the Company is not approved by a vote of a Majority of the Portfolio's outstanding voting securities within the time period stated above, the Investment Advisor shall receive from the Escrow Account as full compensation for its services hereunder the lesser of: (x) any costs incurred by the Investment Advisor in performing this Agreement plus any interest earned on that amount while in escrow, or (y) the total amount in the Escrow Account plus interest if earned. 14. DELEGATION. On thirty (30) days prior written notice to the Portfolio, the Investment Advisor may delegate those of its duties set forth in Paragraph 5 hereof to any wholly-owned direct or indirect subsidiary of The PNC Financial Services Group, Inc. provided 7 that (i) the delegate agrees with the Investment Advisor to comply with all relevant provisions of the 1940 Act; and (ii) the Investment Advisor and such delegate shall promptly provide such information as the Portfolio may request, and respond to such questions as the Portfolio may ask, relative to the delegation, including (without limitation) the capabilities of the delegate. Any delegation under this paragraph shall not be deemed an assignment for purposes of paragraph 12 hereof. Notwithstanding any such delegation, the Investment Advisor shall remain responsible for the performance of its duties set forth in Paragraph 5 hereof and shall hold the Portfolio harmless from the acts and omissions, under the standards of care provided for herein, of any delegate chosen pursuant to this Paragraph 14. 15. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may be changed, discharged or terminated orally, except by an instrument in writing signed by the party against which enforcement of the change, discharge or termination is sought, and no amendment of this Agreement affecting the Portfolio shall be effective until approved by vote of the holders of a majority of the outstanding voting securities of the Portfolio. 16. MISCELLANEOUS. The captions in this Agreement are included for convenience of reference only and in no way define or delimit any of the provisions hereof or otherwise affect their construction or effect. If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and shall be governed by Delaware law. IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed by their officers designated below as of the day and year first above written. THE RBB FUND, INC. By: /s/ Edward J. Roach Title: President BLACKROCK INSTITUTIONAL MANAGEMENT CORPORATION By: /s/ Paul Audet Title: 8 EX-99.D(33) 5 g36369_investadvandadmin.txt FORM OF INVEST ADV & ADMIN AGREE (MON MKT) Exhibit (d)(33) INVESTMENT ADVISORY AND ADMINISTRATION AGREEMENT (Money Market Portfolio) AGREEMENT made as of ___________ , 2006 between THE RBB FUND, INC., a Maryland corporation (herein called the "Company"), and BLACKROCK INSTITUTIONAL MANAGEMENT CORPORATION, a Delaware corporation (herein called the "Investment Advisor"). WHEREAS, the Company is registered as an open-end, diversified, management investment company under the Investment Company Act of 1940 (the "1940 Act") and currently offers shares representing interests in seventeen separate investment portfolios; and WHEREAS, the Company desires to retain the Investment Advisor to render investment advisory and administration services with respect to the Company's Money Market Portfolio (the "Portfolio"), and the Investment Advisor is willing to so render such services, NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, and intending to be legally bound hereby, it is agreed between the parties hereto as follows: 1. APPOINTMENT. The Company hereby appoints the Investment Advisor to act as investment advisor to the Company for the Portfolio for the period and on the terms set forth in this Agreement. The Investment Advisor accepts such appointment and agrees to render the services herein set forth, for the compensation herein provided. The Company's Common Stock, $.001 par value (the "Shares") has been classified into one hundred and four different classes of Common Stock. The Portfolio contains two classes of Shares: the Class I Shares and the Class L Shares. 2. DELIVERY OF DOCUMENTS. The Company has furnished the Investment Advisor with copies properly certified or authenticated of each of the following: (a) Articles of Incorporation of the Company, filed with the Secretary of State of Maryland on February 29, 1988, as amended (such Articles of Incorporation, as presently in effect and as they shall from time to time be amended, herein called the "Articles of Incorporation"); (b) Articles Supplementary of the Company, filed with the Secretary of State of the State of Maryland on March 24, 1988 and all further Articles of Supplementary filed with the State of Maryland ("Articles Supplementary"); (c) By-Laws of the Company, as amended (such By-Laws, as presently in effect 1 Exhibit (d)(33) and as they shall from time to time be amended, herein called the "By-Laws"); (d) Resolutions of the Board of Directors of the Company authorizing the appointment of the Investment Advisor and the execution and delivery of this Agreement; (e) A copy of each Distribution Agreement between the Company and the Company's principal underwriter (the "Distributor") relating to any class of Shares representing interests in the Portfolio and the form of each related Dealer Agreement, if any, for broker-dealers participating in the distribution of any class of Shares representing interests in the Portfolio ("Participating Dealers"); (f) Each Plan of Distribution pursuant to Rule 12b-1 under the 1940 Act, if any, relating to any class of Shares representing interests in the Portfolio; (g) Each Shareholder Servicing Agreement, if any, relating to any class of Shares representing interests in the Portfolio; (h) Each Non-12b-1 Shareholder Services Plan, if any, relating to any class of Shares representing interests in the Portfolio; (i) Notification of Registration of the Company under the 1940 Act on Form N-8A as filed with the Securities and Exchange Commission ("SEC") on March 24, 1988 and all amendments thereto; (j) The initial Registration Statement of the Company on Form N-lA under the Securities Act of 1933 (the "1933 Act") (File No. 33-20827) and under the 1940 Act filed with the SEC on March 24, 1988 relating to the Shares, and all amendments thereto (the "Registration Statement"); and (k) Each Prospectus relating to any class of Shares representing interests in the Portfolio in effect under the 1933 Act (such prospectuses, as presently in effect and as they shall from time to time be amended and supplemented, are herein collectively called the "Prospectuses"). The Company will furnish the Investment Advisor from time to time with copies, properly certified or authenticated, of all amendments of or supplements to the foregoing, if any. 3. MANAGEMENT OF THE PORTFOLIO. Subject to the supervision of the Board of Directors of the Company, the Investment Advisor will provide for the overall management of the Portfolio, including (i) the provision of a continuous investment program for the Portfolio, including investment research and management with respect to all securities, investments, cash and cash equivalents in the Portfolio, (ii) the determination from time to time of what securities and other investments will be purchased, retained or sold by the Company for the Portfolio, (iii) the placement of orders for all purchases and sales made for the Portfolio, and (iv) coordination 2 Exhibit (d)(33) of contractual relationships and communications between the Company and its contractual service providers. The Investment Advisor will provide the services rendered by it hereunder in accordance with the investment objectives, restrictions and policies of the Portfolio as stated in the applicable Prospectus and the applicable statement of additional information contained in the Registration Statement. The Investment Advisor further agrees that it will maintain all books and records with respect to the securities transactions of the Portfolio, keep its respective books of account and will render to the Company's Board of Directors such periodic and special reports as the Board may request. To the extent permitted by applicable law and subject to approval by the Company's Board of Directors but not the approval by a vote of the outstanding voting securities of the Portfolio, the Investment Advisor may from time to time, enter into contracts with one or more sub-advisors, including without limitation, affiliates of the Investment Advisor, to perform investment sub-advisory services with respect to the Portfolio. In addition, to the extent permitted by applicable law, the Investment Advisor may reallocate all or a portion of its investment advisory responsibilities under this Agreement to any of its affiliates. The Investment Advisor shall supervise and oversee the activities of each sub-advisor under its sub-advisory contract on behalf of the Portfolio. Subject to approval by the Company's Board of Directors, the Investment Advisor may terminate any or all sub-advisors in its sole discretion at any time to the extent permitted by applicable law. 4. BROKERAGE. The Investment Advisor may place orders either directly with the issuer or with any broker or dealer. In placing orders with brokers and dealers, the Investment Advisor will attempt to obtain the best net price and the most favorable execution of its orders. In placing orders with such broker or dealer, the Investment Advisor will consider the experience and skill of the firm's securities traders as well as the firm's financial responsibility and administrative efficiency. Consistent with this obligation, when the execution and price offered by two or more brokers or dealers are comparable, the Investment Advisor may, in its discretion, purchase and sell the Portfolio's securities to and from brokers and dealers who provide the Company with research advice and other services. In no instance will the Portfolio's securities be purchased from or sold to the Distributor, the Investment Advisor or any affiliated person thereof, except to the extent permitted by SEC exemptive order or by applicable law. 5. ADMINISTRATION SERVICES. (a) The Investment Advisor will perform the following administration and accounting functions on a daily basis: (1) Journalize the Portfolio's investment, capital share and income and expense activities; (2) Verify investment buy/sell trade tickets and transmit trades to the Company's custodian for proper settlement; (3) Maintain individual ledgers for investment securities; 3 Exhibit (d)(33) (4) Maintain historical tax lots for each security; (5) Reconcile cash and investment balances of the Portfolio with the custodian, and prepare the beginning cash balance available for investment purposes; (6) Update the cash availability throughout the day as required; (7) Post to and prepare the Portfolio's Statement of Assets and Liabilities and the Statement of Operations; (8) Calculate various contractual expenses (E.G., advisory/administration and custody fees); (9) Monitor the expense accruals and notify management of the Company of any proposed adjustments; (10) Control all disbursements from the Portfolio and authorize such disbursements upon Written Instructions; (11) Calculate capital gains and losses; (12) Determine net income; (13) Obtain security market quotes from independent pricing services approved by management of the Company, or if such quotes are unavailable, then obtain such prices from management of the Company, and in either case calculate the market value of the Portfolio's investments; (14) Compute the net asset value of the Portfolio; and (15) Compute the Portfolio's yields, total return, expense ratios, Portfolio turnover rate, and, Portfolio average dollar-weighted maturity. (b) In addition to the accounting services described in the foregoing Paragraph 5(a), the Investment Advisor will: (1) Provide general ledger and Portfolio holdings upon request; (2) Prepare quarterly broker security transactions summaries; (3) Supply various normal and customary Portfolio and Company statistical data as requested on an ongoing basis; (4) Prepare for execution and file the Portfolio's and Company's Federal 4 Exhibit (d)(33) and state tax returns; (5) Prepare and file the Company's Semi-Annual Reports with the SEC on Form N-SAR and prepare and file the Company's Rule 24f-2 Notice and Form N-PX with the SEC; (6) Prepare and file with the SEC the Portfolio's and Company's annual, semi-annual and quarterly Shareholder reports on Form N-CSR and Form N-Q; (7) Assist with the preparation of registration statements on Form N-lA and other filings relating to the registration of Shares; (8) Monitor the Company's status as a regulated investment company under Sub-chapter M of the Internal Revenue Code of 1986, as amended; (9) Qualify the Class I Shares and the Class L Shares for sale in each state in which the Company's Board of Directors determines to sell the Class I Shares or the Class L Shares and make all filings and take all appropriate actions necessary to maintain and renew such registrations of the Class I Shares and the Class L Shares; (10) Monitor the Company's compliance with the amounts and conditions of each such state qualification; and (11) Maintain the Company's fidelity bond as required by the 1940 Act and obtain a directors and officers liability policy. (c) The Investment Advisor shall act as liaison with the Company's independent registered public accounting firm and shall provide account analyses, fiscal year summaries, and other audit related schedules. The Investment Advisor shall take all reasonable action in the performance of its obligations under this Agreement to assure that the necessary information is made available to such firm for the expression of its opinion, as such may be required by the Company from time to time. 6. CONFORMITY WITH LAW; CONFIDENTIALITY. The Investment Advisor further agrees that it will comply with all applicable Rules and Regulations of all Federal regulatory agencies having jurisdiction over the Investment Advisor in the performance of its duties hereunder (herein called the "Rules"). The Investment Advisor will treat confidentially and as proprietary information of the Company all records and other information relative to the Company and prior, present or potential shareholders, and will not use such records and information for any purpose other than performance of its responsibilities and duties hereunder, except after prior notification to and approval in writing by the Company, which approval shall not be unreasonably withheld and may not be withheld where the Investment Advisor may be exposed to civil or criminal contempt proceedings for failure to comply, when requested to divulge such 5 Exhibit (d)(33) information by duly constituted authorities, or when so requested by the Company. 7. SERVICES NOT EXCLUSIVE. The investment management and administration services rendered by the Investment Advisor hereunder are not to be deemed exclusive, and the Investment Advisor shall be free to render similar services to others so long as its services under this Agreement are not impaired thereby. 8. BOOKS AND RECORDS. In compliance with the requirements of Rule 31a-3 of the 1940 Act, the Investment Advisor hereby agrees that all records which it maintains for the Portfolio are the property of the Company and further agrees to surrender promptly to the Company any of such records upon the Company's request. The Investment Advisor further agrees to preserve for the periods prescribed by Rule 31a-2 the records required to be maintained by Rule 31a-1 of the Rules. 9. EXPENSES. During the term of this Agreement, the Investment Advisor will pay all expenses incurred by it in connection with its activities under this Agreement other than the cost of (including brokerage commissions, if any) securities purchased for the Portfolio, the cost of any independent pricing service used in valuing the Portfolio's securities and fees and expenses of registering and qualifying shares for distribution under state securities laws. In addition, if the expenses borne by the Portfolio in any fiscal year exceed the most restrictive applicable expense limitations imposed by the securities regulations of any state in which the Shares are registered or qualified for sale to the public, the Investment Advisor shall reimburse the Portfolio for any excess up to the amount of the fees payable by the Portfolio to it during such fiscal year pursuant to Paragraph 10 hereof; PROVIDED, HOWEVER, that notwithstanding the foregoing, the Investment Advisor shall reimburse the Portfolio for such excess expenses regardless of the amount of such fees payable to it during such fiscal year to the extent that the securities regulations of any state in which the Shares are registered or qualified for sale so require. 10. COMPENSATION. (a) For the services provided and the expenses assumed pursuant to this Agreement with respect to the Portfolio, the Company will pay the Investment Advisor from the assets of the Portfolio and the Investment Advisor will accept as full compensation therefor a fee, computed daily and payable monthly, at the following annual rate: 0.45% of-the first $250 million of the Portfolio's average daily net assets, 0.40% of the next $250 million of the Portfolio's average daily net assets, and 0.35% of the Portfolio's average daily net assets in excess of $500 million. (b) The fee attributable to the Portfolio shall be satisfied only against the assets of the Portfolio and not against the assets of any other investment portfolio of the Company. 11. LIMITATION OF LIABILITY OF THE INVESTMENT ADVISOR. The Investment Advisor shall 6 Exhibit (d)(33) not be liable for any error of judgment or mistake of law or for any loss suffered by the Company in connection with the matters to which this Agreement relates, except a loss resulting from a breach of fiduciary duty with respect to the receipt of compensation for services or a loss resulting from willful misfeasance, bad faith or gross negligence on the part of the Investment Advisor in the performance of its duties or from reckless disregard by it of its obligations and duties under this Agreement. Notwithstanding the foregoing, the Investment Advisor shall be liable to the Company for the acts and omissions of the Sub-Advisor to the extent that the Sub-Advisor is liable to the Investment Advisor for such acts or omissions under the Sub-Advisory Agreement between the Investment Advisor and the Sub-Advisor. 12. DURATION AND TERMINATION. This Agreement shall become effective with respect to the Portfolio upon approval of this Agreement by vote of a majority of the outstanding voting securities of the Portfolio and, unless sooner terminated as provided herein, shall continue with respect to the Portfolio until August 16, 2007. Thereafter, if not terminated, this Agreement shall continue with respect to the Portfolio for successive annual periods ending on August 16th, PROVIDED such continuance is specifically approved at least annually (a) by the vote of a majority of those members of the Board of Directors of the Company who are not parties to this Agreement or interested persons of any such party, cast in person at a meeting called for the purpose of voting on such approval, and (b) by the Board of Directors of the Company or by vote of a majority of the outstanding voting securities of the Portfolio; PROVIDED, HOWEVER, that this Agreement may be terminated with respect to the Portfolio by the Company at any time, without the payment of any penalty, by the Board of Directors of the Company or by vote of a majority of the outstanding voting securities of the Portfolio, on 60 days' written notice to the Investment Advisor, or by the Investment Advisor at any time, without payment of any penalty, on 90 days' written notice to the Company. This Agreement will immediately terminate in the event of its assignment. (As used in this Agreement, the terms "majority of the outstanding voting securities," "interested person" and "assignment" shall have the same meaning as such terms have in the 1940 Act.) 13. DELEGATION. On thirty (30) days prior written notice to the Portfolio, the Investment Advisor may delegate those of its duties set forth in Paragraph 5 hereof to any wholly-owned direct or indirect subsidiary of The PNC Financial Services Group, Inc. provided that (i) the delegate agrees with the Investment Advisor to comply with all relevant provisions of the 1940 Act; and (ii) the Investment Advisor and such delegate shall promptly provide such information as the Portfolio may request, and respond to such questions as the Portfolio may ask, relative to the delegation, including (without limitation) the capabilities of the delegate. Any delegation under this Paragraph shall not be deemed an assignment for purposes of paragraph 12 hereof. Notwithstanding any such delegation, the Investment Advisor shall remain responsible for the performance of its duties set forth in Paragraph 5 hereof and shall hold the Portfolio harmless from the acts and omissions, under the standards of care provided for herein, of any delegate chosen pursuant to this Paragraph 13. 14. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may be changed, discharged or terminated orally, except by an instrument in writing signed by the party against which enforcement of the change, discharge or termination is sought, and no amendment of this Agreement affecting the Portfolio shall be effective until approved by vote of the holders of a 7 Exhibit (d)(33) majority of the outstanding voting securities of the Portfolio. 15. MISCELLANEOUS. The captions in this Agreement are included for convenience of reference only and in no way define or delimit any of the provisions hereof or otherwise affect their construction or effect. If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and shall be governed by Delaware law. IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed by their officers designated below as of the day and year first above written. THE RBB FUND, INC. By: ____________________________________ President BLACKROCK INSTITUTIONAL MANAGEMENT CORPORATION By: ____________________________________ President 8 EX-99.H(84) 6 g36369_escrowagree.txt ESCROW AGREEMENT (MONEY MARKET) Exhibit (h)(84) ESCROW AGREEMENT This ESCROW AGREEMENT (the "Agreement"), is effective as of September 29, 2006, by and among The RBB Fund, Inc. (the "Company"), with respect to the Company's Money Market Portfolio (the "Portfolio"); BlackRock Institutional Management Corporation ("BIMC"); and PFPC Trust Company ("Escrow Agent"). BACKGROUND Pursuant to an Interim Investment Advisory and Administration Agreement, dated as of September 29, 2006, by and between the Company and BIMC (the "Interim Agreement"), BIMC has agreed to provide certain investment advisory services to the Company with respect to the Portfolio. Pursuant to Section 13 of the Interim Agreement, the compensation payable to BIMC by the Company is required to be deposited into escrow. The Company, BIMC and Escrow Agent now wish to enter into this Agreement providing for the appointment by the Company and BIMC of Escrow Agent to hold such escrowed funds and to set forth the terms and conditions under which such funds held in escrow shall be disbursed. NOW THEREFORE, in consideration of the premises and mutual covenants herein contained, and intending to be legally bound, the parties hereto agree as follows: 1. APPOINTMENT OF ESCROW AGENT. The Company and BIMC hereby appoint Escrow Agent as the escrow agent under this Agreement and Escrow Agent hereby accepts such appointment and agrees to hold all of the funds deposited into escrow with it and investments purchased with such funds, together with all interest and income thereon and other proceeds thereof, including proceeds of the sale or maturity of investments constituting any of the assets held by Escrow Agent hereunder (collectively, the "Escrow Money"), and to perform its other duties hereunder in accordance with the terms hereof. 2. ESTABLISHMENT OF ESCROW. The Company shall deposit with Escrow Agent as Escrow Money the monthly advisory fees payable to BIMC by the Company for services provided and expenses assumed pursuant to the Interim Agreement. The Company shall deposit such advisory fees with the Escrow Agent by wire transfer. Escrow Agent shall have no obligation to require any Escrow Money to be deposited with it. Escrow Agent shall hold the Escrow Money in a segregated account on behalf of the Portfolio as agent pursuant to this Agreement, and shall disburse the Escrow Money pursuant to the terms of this Agreement. 3. INVESTMENT OF ESCROW MONEY. Until all of the Escrow Money shall have been disbursed as provided in this Agreement, the same shall be invested in a money market mutual fund or interest bearing time deposits as from time to time the Company directs in writing. The Escrow Agent and/or its affiliates may receive fees from such investment. All income earned on and other proceeds of the Escrow Money Exhibit (h)(84) shall be added to the amount thereof and distributed in accordance with the terms hereof. Such income shall be treated as income of BIMC for income tax purposes; Escrow Agent shall have no filing, reporting or other obligations with respect thereto. If so directed in writing by the Company, Escrow Agent shall settle the sale of such specific investments comprising all or a portion of the Escrow Money as the Company shall direct in writing. Escrow Agent shall promptly provide the Company and BIMC with a monthly statement of the assets comprising the Escrow Money at the end of such month and of all debits and credits relating to the Escrow Money during such month. 4. DISPOSITION OF ESCROW MONEY. Escrow Agent shall disburse the Escrow Money only pursuant to the mutual written directions of the Company and BIMC. 5. RESIGNATION OR REMOVAL OF ESCROW AGENT. Escrow Agent may resign at any time upon 30 days' prior written notice to the Company and BIMC, and may be removed by the mutual consent of the Company and BIMC upon 30 days' prior written notice to Escrow Agent. Prior to the effective date of the resignation or removal of Escrow Agent or any successor escrow agent, the Company shall appoint a successor escrow agent to hold the Escrow Money, and any such successor escrow agent shall execute and deliver to the predecessor escrow agent an instrument accepting such appointment, upon which delivery such successor agent shall, without further act, become vested with all of the rights, powers and duties of the predecessor escrow agent as if originally named herein. 6. LIABILITY OF ESCROW AGENT. (a) The duties of Escrow Agent hereunder are only as specifically set forth herein and are entirely administrative and not discretionary. Escrow Agent is obligated to act only in accordance with written instructions received by it as provided in this Agreement, is authorized hereby to comply with any orders, judgments or decrees of any court or arbitration panel and shall not incur any liability as a result of its compliance with such instructions, orders, judgments or decrees. Escrow Agent may assume the due execution, validity and effectiveness of, and the truth and accuracy of any information contained in, any instruction or any instrument or other document presented to it which Escrow Agent shall in good faith believe to be genuine, and to have been signed or presented by the persons or parties purporting to sign or present the same. (b) Escrow Agent shall have no liability under, or duty to inquire into, the terms or provisions of any other agreement or arrangement between or requirement applicable to any of the other parties hereto. In the event that any of the terms or provisions of any other agreement, arrangement or requirement conflict or are inconsistent with any of the terms and provisions of this Agreement, the terms and provisions of this Agreement in respect of Escrow Agent's rights and duties shall govern and control in all respects. (c) If Escrow Agent shall be uncertain as to its duties or rights hereunder, it shall be entitled to refrain from taking any action other than to keep safely all property held in escrow pursuant hereto until it shall be directed otherwise in a writing signed by the Company and BIMC, or by an order of a court of competent jurisdiction. Escrow Agent may consult with counsel of its choice, including in-house counsel, and 2 Exhibit (h)(84) shall not be liable for any action taken, suffered, or omitted by it in accordance with the written advice of such counsel. Escrow Agent (i) shall not be required to institute legal proceedings of any kind and (ii) shall not be required to defend any legal proceedings which may be instituted in respect of the subject matter of this Agreement unless requested to do so by another party hereto and indemnified to its reasonable satisfaction against the costs and expenses of such defense. (d) The Company and BIMC hereby waive any suit, claim, demand or cause of action of any kind which either one or both may have to assert against Escrow Agent arising out of or relating to the execution or performance by Escrow Agent of this Agreement, unless such suit, claim, demand or cause of action is the result of the willful misconduct, gross negligence or bad faith of Escrow Agent in performing an express obligation hereunder. In no event shall Escrow Agent have any responsibility with respect to any investment losses relating to the Escrow Money. Escrow Agent shall be indemnified and held harmless against any and all liabilities, including judgments, costs and reasonable counsel fees, for anything done or omitted by Escrow Agent in the performance of this Agreement except as a result of the willful misconduct, gross negligence or bad faith of Escrow Agent in performing an express obligation hereunder. All such reimbursements and indemnifications shall be paid by BIMC. Escrow Agent's right to such reimbursements and indemnifications shall survive its resignation or removal and/or termination of this Agreement. (e) Notwithstanding anything in this Agreement to the contrary, the Escrow Agent shall not have any liability for any indirect, special or consequential damages, regardless of whether the Escrow Agent was aware of the possibility thereof. Notwithstanding anything in this Agreement to the contrary, Escrow Agent shall not have any liability for any failure, delays or damages occurring by reason of circumstances beyond its reasonable control. 7. FEES AND OUT-OF-POCKET EXPENSES OF ESCROW AGENT. Escrow Agent's fees and out-of-pocket expenses shall be paid by BIMC and shall be paid promptly upon receipt of an invoice from Escrow Agent. Escrow Agent's fees shall be as set forth on Schedule A hereto. 8. NOTICES. All notices or other communications permitted or required under this Agreement shall be in writing and shall be sufficiently given if and when hand delivered to the persons set forth below or if sent by documented overnight delivery service or registered or certified mail, postage prepaid, return receipt requested, or by telecopy, receipt acknowledged, addressed as set forth below or to such other person or persons and/or at such other address or addresses as shall be furnished in writing by any party hereto to the others. Any such notice or communication shall be deemed to have been given as of the date received, in the case of personal delivery, or on the date shown on the receipt or confirmation therefor in all other cases. 3 Exhibit (h)(84) TO COMPANY: ----------- The RBB Fund, Inc. 400 Bellevue Parkway Wilmington, DE 19809 Attn: Edward J. Roach Fax: (302) 791-2240 With copies to: Michael P. Malloy, Esq. Drinker Biddle & Reath, LLP One Logan Square 18th & Cherry Streets Philadelphia, PA 19103 Fax: (215) 988-2757 TO BIMC: -------- BlackRock Institutional Management Corporation 100 Bellevue Parkway Wilmington, DE 19809 Attn: Neal Andrews Fax: (302) 797-2455 TO ESCROW AGENT: ---------------- PFPC Trust Company 8800 Tinicum Boulevard Philadelphia, PA 19153 Attn: Edward Smith Fax: (215) 749-3946 9. ENTIRE AGREEMENT AND MODIFICATION. This Agreement constitutes the entire agreement among the parties hereto with respect to the matters contemplated herein and supersedes all prior agreements and understandings with respect thereto. Any amendment, modification or waiver of this Agreement shall not be effective unless agreed among the parties hereto in writing. Neither the failure nor any delay on the part of any party to exercise any right, remedy, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege preclude any other or further exercise of the same nor shall the exercise of any right, remedy, power or privilege with respect to any occurrence be construed as a waiver of any right, remedy, power or privilege with respect to any other occurrence. This Agreement shall automatically terminate upon disbursement of all the Escrow Money maintained hereunder. 4 Exhibit (h)(84) 10. GOVERNING LAW. This Agreement is made pursuant to, and shall be construed and enforced in accordance with, the internal laws of the State of Delaware, without giving effect to otherwise applicable principles of conflicts of law. 11. COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original and all of which, when taken together, shall be deemed to constitute but one and the same Agreement. 12. BINDING EFFECT. Except as contemplated by Section 5 hereof, no party may assign its rights or delegate its obligations under this Agreement without the prior written consent of the other parties hereto (provided that Escrow Agent may utilize a sub-custodian in connection with its services under this Agreement and provided further that Escrow Agent shall be responsible for the acts and omissions of such sub-custodian to the same extent that Escrow Agent is responsible for its own acts and omissions under this Agreement). Subject to the foregoing, this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective permitted successors, assigns, heirs, executors and administrators. If any provision of this Agreement shall be or become illegal or unenforceable in whole or in part for any reason whatsoever, the remaining provisions shall nevertheless be deemed valid, binding and subsisting. IN WITNESS WHEREOF, this Agreement has been executed as of the date and year first-above written. THE RBB FUND, INC. By: /s/ Edward J. Roach ---------------------------------- Name: Edward J. Roach Title: President BLACKROCK INSTITUTIONAL MANAGEMENT CORPORATION By: /s/ Paul Audet ---------------------------------- Name: Paul Audet Title: PFPC TRUST COMPANY By: /s/ Edward A. Smith ---------------------------------- Name: Edward A. Smith Title: Vice President and Director 5 Exhibit (h)(84) SCHEDULE A Fees of Escrow Agent Fee for each segregated account upon $100 per month; first two its establishment in accordance with monthly payments are waived Section 2 of the Agreement (each, a "segregated account") Out of pocket expenses As incurred by Escrow Agent 6 EX-99.H(85) 7 g36369_interimdelegation.txt INTERIM DELEGATION AGREEMENT (MONEY MARKET) Exhibit (h)(85) INTERIM DELEGATION AGREEMENT ---------------------------- (Administration and Accounting Services - Money Market Portfolio) This AGREEMENT is made as of September 29, 2006 between and among THE RBB FUND, INC. (the "Company"), a Maryland corporation, and PFPC INC. ("PFPC"), a Massachusetts corporation which is an indirect wholly-owned subsidiary of THE PNC FINANCIAL SERVICES GROUP, INC., and BLACKROCK INSTITUTIONAL MANAGEMENT CORPORATION ("BIMC"), a Delaware corporation. W I T N E S S E T H: WHEREAS, the Company is registered as an open-end investment company under the Investment Company Act of 1940, as amended (the "1940 Act"); and WHEREAS, BIMC and the Company have entered into an Interim Investment Advisory and Administration Agreement (the "Advisory Agreement") with respect to the Company's Money Market Portfolio (the "Portfolio"); WHEREAS, pursuant to Section 14 of the Advisory Agreement, BIMC is permitted to delegate certain administrative duties set forth in Section 5 of the Advisory Agreement to any wholly-owned direct or indirect subsidiary of The PNC Financial Services Group, Inc.; and WHEREAS, BIMC and the Company desire that PFPC perform the administrative duties set forth in this Agreement with respect to the Portfolio and PFPC wishes to furnish such services. NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, and intending to be legally bound hereby, the parties agree as follows: 1. DEFINITIONS. ------------ (a) "AUTHORIZED PERSON." The term "Authorized Person" shall mean any officer of the Company and any other person, who is duly authorized by the Company's Governing Board, to give Oral or Written Instructions on behalf of the Company. Such persons are listed in the Certificate attached hereto as the Authorized Persons Appendix or such other document or Board resolution as approved by the Company's Governing Board from time to time. If PFPC provides more than one service hereunder, the Company's designation of Authorized Persons may vary by service. (b) "BOOK-ENTRY SYSTEM." The term "Book-Entry System" means Federal Reserve Treasury book-entry system for United States and federal agency securities, its successor or successors, and its nominee or nominees and any book-entry system maintained by an exchange registered with the SEC under the 1934 Act. (c) "GOVERNING BOARD." The term "Governing Board" shall mean the Company's Board of Directors if the Company is a corporation or the Company's Board of Trustees if the Company is a trust, or, where duly authorized, a competent committee thereof. (d) "ORAL INSTRUCTIONS." The term "Oral Instructions" shall mean oral instructions received by PFPC from an Authorized Person or from a person reasonably believed by PFPC to be an Authorized Person. (e) "SEC." The term "SEC" shall mean the Securities and Exchange Commission. (f) "SECURITIES AND COMMODITIES LAWS." The terms the "1933 Act" shall mean the Securities Act of 1933, as amended, the "1934 Act" shall mean the Securities Exchange Act of 1934, as amended, and the "CEA" shall mean the Commodities Exchange Act, as amended. (g) "SERVICES." The term "Services" shall mean the services required to be and provided to the Portfolio by PFPC. (h) "SHARES." The terms "Shares" shall mean the shares of stock of the Portfolio, or, where appropriate, units of beneficial interest in the Portfolio. (i) "WRITTEN INSTRUCTIONS." The term "Written Instructions" shall mean (i) written instructions signed by two Authorized Persons and received by PFPC or (ii) trade instructions transmitted (and received by PFPC) by means of an electronic transaction reporting system access to which requires use of a password or other authorized identifier. The instructions may be delivered electronically (with respect to sub-item (ii) above) or by hand, mail, tested telegram, cable, telex or facsimile sending device. -2- 2. APPOINTMENT. ------------ The Company and BIMC hereby appoint PFPC to provide administration and accounting services to the Portfolio, in accordance with the terms set forth in this Agreement. PFPC accepts such appointment and agrees to furnish such services. 3. COMPLIANCE WITH GOVERNMENT RULES AND REGULATIONS. ------------------------------------------------- PFPC undertakes to comply with all applicable requirements of the 1933 Act, the 1934 Act, the 1940 Act, and the CEA, and any laws, rules and regulations of governmental authorities having jurisdiction with respect to all duties to be performed by PFPC hereunder. Except as specifically set forth herein, PFPC assumes no responsibility for such compliance by the Company or any other entity. 4. INSTRUCTIONS. ------------- Unless otherwise provided in this Agreement, PFPC shall act only upon Oral or Written Instructions. PFPC shall be entitled to rely upon any Oral or Written Instructions it receives from an Authorized Person (or from a person reasonably believed by PFPC to be an Authorized Person) pursuant to this Agreement. PFPC may assume that any Oral or Written Instruction received hereunder is not in any way inconsistent with the provisions of organizational documents or this Agreement or of any vote, resolution or proceeding of the Company's Governing Board or of the Company's shareholders. The Company agrees to forward to PFPC Written Instructions confirming Oral Instructions (except where such Oral Instructions are given by PFPC or its affiliates) so that PFPC receives the Written Instructions by the close of business on the same day that such Oral Instructions are received. The fact that such confirming Written Instructions are not received by PFPC shall in no way invalidate the transactions or enforceability of the transactions authorized by the Oral Instructions. The Company further agrees that PFPC shall incur no liability to the -3- Company in acting upon Oral or Written Instructions provided such instructions reasonably appear to have been received from an Authorized Person. 5. RIGHT TO RECEIVE ADVICE. ------------------------ (a) ADVICE OF THE COMPANY. If PFPC is in doubt as to any action it should or should not take, PFPC may request directions or advice, including Oral or Written Instructions, from the Company. (b) ADVICE OF COUNSEL. If PFPC shall be in doubt as to any questions of law pertaining to any action it should or should not take, PFPC may request advice at its own cost from such counsel of its own choosing (who may be counsel for the Company, the Company's advisor or PFPC, at the option of PFPC). (c) CONFLICTING ADVICE. In the event of a conflict between directions, advice or Oral or Written Instructions PFPC receives from the Company, and the advice it receives from counsel, PFPC shall be entitled to rely upon and follow the advice of counsel. (d) PROTECTION OF PFPC. PFPC shall be protected in any action it takes or does not take in reliance upon directions, advice or Oral or Written Instructions it receives from the Company or from counsel and which PFPC believes, in good faith, to be consistent with those directions, advice and Oral or Written Instructions. Nothing in this paragraph shall excuse PFPC when an action or inaction on its part constitutes willful misfeasance, bad faith, gross negligence or reckless disregard of its duties and obligations under this Agreement. Nothing in this paragraph shall be construed so as to impose an obligation upon PFPC (i) to seek such directions, advice or Oral or Written Instructions, or (ii) to act in accordance with such directions, advice or Oral or Written Instructions unless, under the terms of other provisions of this Agreement, the same is a condition of PFPC's properly taking or not taking such action. 6. RECORDS. -------- The books and records pertaining to the Portfolio, which are in the possession of PFPC, shall be the property of the Company. Such books and records shall be prepared and maintained as required by the 1940 Act and other applicable securities laws, rules and regulations. The Company, or Authorized Persons, shall have access to such books and records at all times during PFPC's normal business hours. Upon the reasonable request of the Company, copies of -4- any such books and records shall be provided by PFPC to the Company or to an Authorized Person at the Portfolio's expense. PFPC shall keep the following records: (a) all books and records with respect to the Portfolio's books of account; (b) records of the Portfolio's securities transactions; (c) all other books and records required to be maintained by PFPC pursuant to Rule 31a-1 of the 1940 Act in connection with the Services. 7. CONFIDENTIALITY. ---------------- PFPC agrees to keep confidential all records of the Portfolio and information relative to the Portfolio and its shareholders (past, present and potential), unless the release of such records or information is otherwise consented to, in writing, by the Company. The Company agrees that such consent shall not be unreasonably withheld. The Company further agrees that, should PFPC be required to provide such information or records to duly constituted authorities (who may institute civil or criminal contempt proceedings for failure to comply) , PFPC shall not be required to seek the Company's consent prior to disclosing such information. 8. LIAISON WITH ACCOUNTANTS. ------------------------- \ PFPC shall act as liaison with the Company's independent registered public accounting firm and shall provide account analyses, fiscal year summaries, and other audit-related schedules. PFPC shall take all reasonable action in the performance of its obligations under this Agreement to assure that the necessary information is made available to such firm for the expression of its opinion, as such may be required by the Company from time to time. -5- 9. DISASTER RECOVERY. ------------------ PFPC shall enter into and shall maintain in effect with appropriate parties one or more agreements making reasonable provision of emergency use of electronic data processing equipment to the extent appropriate equipment is available. In the event of equipment failures, PFPC shall, at no additional expense to the Company, take reasonable steps to minimize service interruptions but shall have no liability with respect thereto unless such failures result from PFPC's own willful misfeasance, bad faith, gross negligence or reckless disregard of its duties and obligations under this Agreement. 10. COMPENSATION. ------------- a) As compensation for services rendered by PFPC during the term of this Agreement, BIMC will pay to PFPC a fee or fees as may be agreed to in writing by the Company, BIMC and PFPC. Notwithstanding any other provision of this Agreement, in no event shall compensation paid by BIMC to PFPC hereunder exceed the amount permitted by Rule 15a-4 under the 1940 Act. All fees to be paid to PFPC hereunder shall be paid to PFPC when BIMC is paid its fee under the Advisory Agreement. The Company, on behalf of the Portfolio, shall reimburse PFPC for all out-of-pocket expenses incurred on behalf of the Portfolio by PFPC. b) Notwithstanding any other provision of this Agreement, if an Investment Advisory and Administration Agreement between BIMC and the Company is not approved by a vote of a majority of the Portfolio's outstanding voting securities (as defined in the 1940 Act) within 150 days of the date of this Agreement, PFPC shall receive from BIMC the lesser of (i) all costs incurred by PFPC in performing this Agreement plus interest thereon at a rate equal to the rate of investment return on the assets placed -6- in escrow pursuant to the Advisory Agreement, or (ii) the total amount of PFPC's fees referenced in Section 10(a) above plus interest thereon at a rate equal to the rate of investment return on the assets placed in escrow pursuant to the Advisory Agreement. c) The Company hereby represents and warrants that this Agreement shall be provided to its Governing Board and that, if required by applicable law, such Governing Board has approved or will approve the terms of this Agreement. 11. INDEMNIFICATION. ---------------- The Company, on behalf of the Portfolio, agrees to indemnify and hold harmless PFPC and its nominees from all taxes, charges, expenses, assessments, claims and liabilities (including, without limitation, liabilities arising under the 1933 Act, the 1934 Act, the 1940 Act, the CEA, and any state and foreign securities and blue sky laws, and amendments thereto, and including (without limitation) attorneys' fees and disbursements), arising directly or indirectly from any action which PFPC takes or does not take (i) at the request or on the direction of or in reliance on the advice of the Company or (ii) upon Oral or Written Instructions. Neither PFPC, nor any of its nominees, shall be indemnified against any liability (or any expenses incident to such liability) arising out of PFPC's own willful misfeasance, bad faith, gross negligence or reckless disregard of its duties and obligations under this Agreement. Any amounts payable by the Company hereunder shall be satisfied only against the Portfolio's assets and not against the assets of any other investment portfolio of the Company. 12. RESPONSIBILITY OF PFPC. ----------------------- PFPC shall be under no duty to take any action on behalf of the Company or BIMC except as specifically set forth herein or as may be specifically agreed to by PFPC, in writing. PFPC shall be obligated to exercise care and diligence in the performance of its duties hereunder, -7- to act in good faith and to use its best efforts within reasonable limits in performing services provided for under this Agreement. PFPC shall be responsible for failure to perform its duties under this Agreement arising out of PFPC's willful misfeasance, bad faith, gross negligence or reckless disregard of its duties and obligations under this Agreement. Notwithstanding the foregoing, PFPC shall not be responsible for losses beyond its control, provided that PFPC has acted in accordance with the standard of care set forth above; and PFPC shall only be responsible for that portion of losses or damages suffered by BIMC or the Company that are attributable to PFPC's failure to act in accordance with the standard of care stated in the preceding sentence. Without limiting the generality of the foregoing or of any other provision of this Agreement, PFPC, in connection with its duties under this Agreement, shall not be liable for (a) the validity or invalidity or authority or lack thereof of any Oral or Written Instruction, notice or other instrument which conforms to the applicable requirements of this Agreement, and which PFPC reasonably believes to be genuine; or (b) delays or errors or loss of data occurring by reason of circumstances beyond PFPC's control, including acts of civil or military authority, national emergencies, labor difficulties, fire, flood or catastrophe, acts of God, insurrection, war, riots or failure of the mails, transportation, communication or power supply. Notwithstanding anything in this Agreement to the contrary, PFPC shall have no liability to BIMC or the Company for any consequential, special or indirect losses or damages which BIMC or the Company may incur or suffer by or as a consequence of PFPC's performance of the services provided hereunder, whether or not the likelihood of such losses or damages was known by PFPC. 13. DESCRIPTION OF ADMINISTRATION AND ACCOUNTING SERVICES. ------------------------------------------------------ (a) Services on a Continuing Basis. PFPC will perform the following accounting functions with respect to the Portfolio: (i) Journalize the Portfolio's investment, capital share and income and expense activities; -8- (ii) Verify investment buy/sell trade tickets and transmit trades to the Company's custodian for proper settlement; (iii) Maintain individual ledgers for investment securities; (iv) Maintain historical tax lots for each security; (v) Reconcile cash and investment balances of the Portfolio with the custodian, and prepare the beginning cash balance available for investment purposes; (vi) Update the cash availability throughout the day as required; (vii) Post to and prepare the Portfolio's Statement of Assets and Liabilities and the Statement of Operations; (viii) Calculate various contractual expenses (E.G., advisory/administration and custody fees); (ix) Monitor the expense accruals and notify management of the Company of any proposed adjustments; (x) Control all disbursements from the Portfolio and authorize such disbursements upon Written Instructions; (xi) Calculate capital gains and losses; (xii) Determine net income; (xiii) Obtain security market quotes from independent pricing sources approved by the management of the Company, or if such quotes are unavailable, then obtain such prices from the management of the Company, and in either case calculate the market value of the Portfolio's investments; (xiv) Transmit or mail a copy of the daily portfolio valuation to the advisor; (xv) Compute the net asset value of the Portfolio; (xvi) As appropriate, compute the yields, total return, expense ratios, portfolio turnover rate, and, if required, portfolio average dollar-weighted maturity; and (xvii) Provide general ledger information and Portfolio holdings to BIMC upon request. (b) Services on a Continuing Basis. PFPC will provide the following administration functions with respect to the Portfolio: (i) Prepare quarterly broker security transactions summaries; -9- (ii) Supply various normal and customary Portfolio statistical data as requested on an ongoing basis; (iii) Prepare monthly security transaction listings; (iv) Prepare for execution and file the Portfolio's Federal and state tax returns; (v) Prepare and file the Company's Semi-Annual Reports with the SEC on Form N-SAR (to the extent the same relates to the Portfolio) and prepare and file the Company's Rule 24F-2 Notice and Form N-PX with the SEC (to the extent the same relates to the Portfolio); (vi) Prepare and file with the SEC the Company's annual, semi-annual and quarterly Shareholder reports on Form N-CSR and Form N-Q (to the extent the same relates to the Portfolio); (vii) Assist with the preparation of registration statements on Form N-1A and other filings relating to the federal registration of Shares; (viii) Monitor the Portfolio's status as a regulated investment company under Sub-chapter M of the Internal Revenue Code of 1986, as amended; (ix) Coordinate contractual relationships and communications between the Portfolio and its contractual service providers; (x) Qualify the Portfolio's Shares for sale in each state in which the Company's Governing Board determines to sell the Portfolio's Shares and make all blue sky filings and take all appropriate actions necessary to maintain and renew the blue sky registration of the Portfolio's Shares in such states (in connection with blue sky filings, the Company hereby grants PFPC a limited power of attorney on behalf of the Company to sign all blue sky filings and other related documents in order to effect such filings); (xi) Monitor the Portfolio's compliance with the amounts and conditions of each state blue sky qualification for states referenced in the preceding sub-section (x); and (xii) Maintain the Company's fidelity bond (to the extent the same relates to the Portfolio) as required by the 1940 Act and obtain a directors and officers liability policy. 14. DURATION AND TERMINATION. ------------------------- Subject to the next succeeding sentence, this Agreement shall continue until terminated by the Company, on behalf of the Portfolio, on sixty (60) days' prior written notice to PFPC; or -10- by PFPC on ninety (90) days' prior written notice to the Company. This Agreement shall automatically terminate upon termination of the Advisory Agreement. 15. NOTICES. -------- If notice is sent by confirming telegram, cable, telex or facsimile sending device, it shall be deemed to have been given immediately. If notice is sent by first-class mail, it shall be deemed to have been given three days after it has been mailed. If notice is sent by messenger, it shall be deemed to have been given on the day it is delivered. Notices shall be addressed (a) if to PFPC at PFPC's address, 301 Bellevue Parkway, Wilmington, Delaware 19809; (b) if to the Company, at the address of the Company; (c) if to BIMC to 40 East 52nd Street, New York,New York 10022,Attn: Robert Connolly, or (d) if to none of the foregoing, at such other address as shall have been notified to the sender of any such notice or other communication. 16. AMENDMENTS. ----------- This Agreement, or any term thereof, may be changed or waived only by written amendment, signed by the party against whom enforcement of such change or waiver is sought. 17. DELEGATION. ----------- PFPC may delegate its duties hereunder to any wholly-owned direct or indirect subsidiary of The PNC Financial Services Group, Inc., provided that (i) PFPC gives the Company and BIMC thirty (30) days prior written notice; (ii) the delegate agrees with PFPC, the Company and BIMC to comply with all relevant provisions of the 1940 Act; and (iii) PFPC and such delegate promptly provide such information as the Company and BIMC may request, and respond to such questions as the Company and BIMC may ask, relative to the delegation, including (without limitation) the capabilities of the delegate. Notwithstanding a delegation under this Section, PFPC shall remain responsible for the performance of its duties set forth herein and shall hold the Portfolio harmless from the acts and -11- omissions, under the standards of care provided for herein, of any delegate chosen pursuant to this Section. 18. COUNTERPARTS. ------------- This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 19. FURTHER ACTIONS. ---------------- Each party agrees to perform such further acts and execute such further documents as are necessary to effectuate the purposes hereof. 20. MISCELLANEOUS. -------------- This Agreement embodies the entire agreement and understanding among the parties and supersedes all prior agreements and understandings relating to the subject matter hereof, provided that the parties may embody in one or more separate documents their agreement, if any, with respect to delegated duties and/or Oral Instructions. The captions in this Agreement are included for convenience of reference only and in no way define or delimit any of the provisions hereof or otherwise affect their construction or effect. This Agreement shall be deemed to be a contract made in Delaware and governed by Delaware law. If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby. This Agreement shall be binding and shall inure to the benefit of the parties hereto and their respective successors. The services of PFPC are not, nor shall they be construed as constituting, legal advice or the provision of legal services for or on behalf of the Company or any other person. -12- IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their officers designated below on the day and year first above written. PFPC INC. By: ---------------------------------------------- Title: ------------------------------------------- THE RBB FUND, INC. By: ---------------------------------------------- Title: ------------------------------------------- BLACKROCK INSTITUTIONAL MANAGEMENT CORPORATION By: ---------------------------------------------- Title: ------------------------------------------- -13- September 29, 2006 The RBB Fund, Inc. Re: INTERIM DELEGATION AGREEMENT - ADMINISTRATION AND ACCOUNTING SERVICES FEES - MONEY MARKET PORTFOLIO ------------------------------------------------- Madam/Sir: This letter constitutes our agreement with respect to compensation to be paid to PFPC Inc. ("PFPC") under the terms of an Interim Delegation Agreement dated as of September 29, 2006 (the "Delegation Agreement") among PFPC, The RBB Fund, Inc. (the "Company") and BlackRock Institutional Management Corporation ("BIMC"), with respect to the Company's Money Market Portfolio (the "Portfolio"). In consideration of the services to be provided by PFPC, BIMC will pay directly to PFPC from its advisory and administration fee an annual administration and accounting fee as set forth below, to be calculated daily. The Company on behalf of the Portfolio will reimburse PFPC for all out-of-pocket expenses incurred by PFPC on behalf of the Portfolio, including, but not limited to, postage and handling, telephone, telex, Federal Express and outside pricing service charges. The compensation to be paid to PFPC with respect to the Delegation Agreement shall be paid by BIMC to PFPC when BIMC is paid its fee under the Interim Investment Advisory and Administration Agreement between the Company and BIMC dated September 29, 2006 (the "Advisory Agreement"). The annual administration and accounting fee shall be 0.10% of the Portfolio's average daily net assets, exclusive of out-of-pocket expenses. BIMC, the Company and PFPC agree that the compensation paid by BIMC to PFPC shall not exceed the amount permitted by Rule 15a-4 under the 1940 Act. The fee for the period from the date hereof until the end of that calendar year shall be pro-rated according to the proportion which such period bears to the full annual period commencing on the date hereof. -14- If the foregoing accurately sets forth our agreement, and you intend to be legally bound thereby, please execute a copy of this letter and return it to us. Very truly yours, PFPC INC. By: ---------------------------------------- Title: Accepted: THE RBB FUND, INC. By: ----------------------------------------- Title: Accepted: BLACKROCK INSTITUTIONAL MANAGEMENT CORPORATION By: ----------------------------------------- Title: -15- EX-99.P(7) 8 g36369_codeofethics.txt CODE OF ETHICS Exhibit p(7) ROBECO USA, INC. ---------------- WEISS PECK & GREER INVESTMENTS ------------------------------ ROBECO SECURITIES, LLC ---------------------- CODE OF ETHICS -------------- Robeco USA Inc., Weiss Peck & Greer Investments, a division of Robeco USA, LLC ("WPG"), and Robeco Securities, LLC, (together "RUSA"), has built a reputation for integrity and professionalism among its clients. We value the confidence and trust those clients have placed in us and strive to protect that trust. This Code of Ethics (the "Code") is our commitment to protecting our clients' trust by establishing formal standards for general personal and professional conduct. A. APPLICABILITY AND DEFINITIONS ----------------------------- This Code applies to all Supervised Persons. "SUPERVISED PERSONS" for purposes of this Code means: 1) Directors, and officers of RUSA (or other persons occupying a similar status or performing similar functions); 2) Employees of RUSA; 3) Any other person who provides investment advisory advice on behalf of RUSA and is subject to RUSA's supervision and control; and 4) Certain other persons designated by the Legal & Compliance Department, such as temporary/contract workers who support our businesses. "ACCESS PERSON" for purposes of this Code means any Supervised Person: 1) Who has access to non-public information regarding any client's purchases or sales of securities, or 2) Who has non-public information regarding the portfolio holdings of any mutual fund, managed account, or hedge fund managed by WPG, Boston Partners, or Robeco-Sage; or 3) Who is involved in making securities recommendations to clients or who has access to such recommendations that are nonpublic; or 4) Who is a director or officer of RUSA, by virtue of the fact that RUSA's primary business is providing investment advice. Excepted from this requirement are WPG Mutual Fund directors who are not employees of RUSA nor have access to confidential information regarding client securities transactions or recommendations. 5) Certain other persons designated by the Legal & Compliance Department, such as temporary/contract workers who support our businesses. 1 "BENEFICIAL INTEREST" for purposes of this Code means any Covered Security (as that term is defined in Section F.I. below) in which a Supervised Person has an opportunity directly or indirectly to provide or share in any profit derived from a transaction in a Covered Security, including accounts held by members of the Supervised Person's household, or any person or organization (such as an investment club) with whom a Supervised Person has a direct or indirect pecuniary interest, or any trusts of which a Supervised Person is trustee. The Legal & Compliance Department will notify all individuals of their status as either a Supervised Person or an Access Person on an annual basis as well as at the time of any job status change. B. STANDARDS OF BUSINESS CONDUCT ----------------------------- The following principles are intended to guide in the applicability of this Code of Ethics: 1. RUSA is a fiduciary and its Supervised Persons have a duty to act for the benefit of its clients and shall at all times place the financial interests of the client ahead of itself; 2. RUSA holds all Supervised Persons responsible to high standards of integrity, professionalism, and ethical conduct; and 3. RUSA fosters a spirit of cohesiveness and teamwork while ensuring the fair treatment of all Supervised Persons. C. COMPLIANCE WITH FEDERAL SECURITIES LAWS --------------------------------------- All Supervised Persons must comply with applicable federal securities laws. The applicable laws are designed to prevent the following practices, which should not be viewed as all encompassing and are not intended to be exclusive of others. Supervised Persons must never: o Defraud any client in any manner; o Mislead any client, including by making a statement that omits material facts; o Engage in any act, practice or course of conduct which operates or would operate as a fraud or deceit upon any client, including misappropriation of an investment opportunity; o Engage in any manipulative practice with respect to any client or security, including price manipulation. 2 D. CONFLICTS OF INTEREST --------------------- As a fiduciary, RUSA has an affirmative duty of care, loyalty, honesty to its clients and a duty of utmost good faith to act in the best interests of the client. Compliance with this fiduciary responsibility can be accomplished by avoiding conflicts of interest and by fully, adequately, and fairly disclosing all material facts concerning any conflict which arises with respect to any client. Supervised Persons are to actively avoid any existing or potential conflicts or situations that have the appearance of conflict or impropriety. The following specific guidelines should not be viewed as all encompassing and are not intended to be exclusive of others: 1. No Supervised Person shall take inappropriate advantage of their position with respect to a client, advancing their position for self-gain. 2. No Supervised Person shall use knowledge about pending or currently considered securities transactions for clients to profit personally, directly or indirectly, as a result of such transactions. 3. All securities transactions affected for the benefit of a client account shall avoid inappropriate favoritism of one client over another client. 4. All securities transactions affected for the benefit of a Supervised Person shall be conducted in such a manner as to avoid any actual or potential conflict of interest or abuse of that individual's position of trust and responsibility. E. CONFIDENTIALITY --------------- All information obtained by any Supervised Person regarding any aspect of a client relationship shall be kept in strict confidence. The Supervised Person commits an unethical business practice by disclosing the identity, affairs, or investments of any client unless required by any regulatory or self-regulating agency, or to the extent required by law or regulation, or unless disclosure is consented to by the client. F. EMPLOYEE PERSONAL SECURITIES MONITORING --------------------------------------- I. DEFINITIONS ----------- "COVERED SECURITY" shall include any type of equity or debt instrument, including any rights, warrants, derivatives, convertibles, options, puts, calls, straddles, shares of closed-end mutual funds, shares of open end mutual funds that are advised or subadvised by RUSA, Boston 3 Partners, or Robeco-Sage, holdings in foreign funds, or, in general, any interest or investment commonly known as a security. "NON-COVERED SECURITY" shall include shares of open-ended mutual funds that are not advised or subadvised by RUSA, Boston Partners, or Robeco-Sage, direct obligations of the US government, bankers' acceptances, bank certificates of deposit, commercial paper, high quality short-term debt instruments, including repurchase agreements which have a maturity at issuance of less than 366 days and that is rated in one of the two highest rating categories by a Nationally Recognized Statistical Rating Organization ("NRSRO"). "MANAGED PORTFOLIOS" shall include any WPG equity strategy, WPG Mutual Funds, and WPG Hedge Funds. "OUTSIDE ACCOUNT" shall include any Supervised Person's Covered Securities account not held at Charles Schwab. II. BROKERAGE/ADVISORY ACCOUNTS TO BE MAINTAINED AT SCHWAB ------------------------------------------------------ Supervised Persons are required to maintain all discretionary or non-discretionary securities or commodities accounts with Charles Schwab, unless prior written permission to maintain account(s) outside of Charles Schwab has been granted by the Legal & Compliance Department. This includes any account over which the Supervised Person has the power to exercise investment control, including but not limited to accounts in which the Supervised Person has a direct or indirect Beneficial Interest. Outside Accounts are permitted subject to the prior written consent of RUSA's Legal & Compliance Department. If an Outside Account is approved, the Supervised Person must instruct their broker to send duplicate statements and confirmations to RUSA's Legal & Compliance Department. Upon joining the firm, a Supervised Person shall within 30 days from the date of employment: 1. close any Outside Accounts for which written approval has not been granted; 2. transfer existing accounts, or to open a new account, under RUSA's agreement with Charles Schwab: a. contact a Schwab representative at: designated.brokerage@schwab.com ------------------------------- 877-602-7419 Fax: 1-602-355-4270 b. instruct them to open your account under the Robeco Master Account. 4 3. provide copies of all brokerage transaction statements for their first month of employment with RUSA to the Legal & Compliance Department. III. TRANSACTION PRECLEARANCE ------------------------ All Supervised Person's securities transactions in Covered Securities are subject to preclearance. 1. If a Supervised Person has access to Lotus Notes, they are required to utilize the electronic Personal Investment Preclearance System (the "Preclearance System"). The Preclearance System will facilitate the automatic routing of Supervised Person's trades to the Legal & Compliance Department. The Preclearance System will also enable the Supervised Person to identify the holding period requirements for the particular security. 2. In the event that the Preclearance System cannot be utilized, a hardcopy preclearance form may be delivered to the Legal & Compliance Department by hand or facsimile. A copy of the preclearance form can be obtained from RUSA's Legal & Compliance Department. Pre-clearance is valid only for the day of approval. If the trade is not executed on the approved date, the pre-clearance process must be repeated prior to execution on the day the transaction is to be effected. IV. INITIAL PUBLIC OFFERINGS ("IPO") -------------------------------- Supervised Persons are prohibited from purchasing any security sold in an initial public offering, with the exception of Government Bonds and Municipal Securities. Government Bond or Municipal Securities IPOs may only be made with the prior consent of the Legal & Compliance Department. V. PRIVATE INVESTMENTS (HEDGE FUNDS, PRIVATE PLACEMENTS, ETC.) ----------------------------------------------------------- Private investments by Supervised Persons may only be made with the prior consent of the Legal & Compliance Department. VI. SHORT SALES/COVER SHORTS ------------------------ Short sales by Supervised Persons of securities held long in Managed Portfolios are strictly prohibited. This prohibition includes writing naked call options or buying naked put options on Managed Portfolio securities. Transactions are subject to all blackout policies including the short term profit prohibition. 5 VII. OPTIONS ------- The purchase of options by Supervised Persons may only be made with the prior consent of the Legal & Compliance Department. Approval is determined based on the underlying security. Transactions are subject to all blackout policies including the holding period restrictions. VIII. HOLDING PERIODS --------------- The following summarizes minimum holding periods:
SECURITY OR OPTION HELD SECURITY/OPTION NOT HELD IN MANAGED PORTFOLIOS IN MANAGED PORTFOLIOS ALL INDEX OPTIONS - ----------------------- ------------------------ ----------------- Gains: 60 days Gains: 1 day Gains: 1 day Losses: 1 day Losses: 1 day Losses: 1 day
It is the Supervised Person's responsibility to determine the holding period applicable to a security purchased. The Preclearance System has been designed to notify the Supervised Person if their proposed trade will be subject to the 60-day holding period. A notification will be sent to the Supervised Person informing them that the security is currently held in a Managed Portfolio and is therefore subject to a 60-day holding period. Supervised Person's violating the holding period requirement will have their profits disgorged. Hardship exemptions from the holding period requirement may be granted by the Legal & Compliance Department on a case-by-case basis. The Supervised Person seeking relief must establish a bona fide financial hardship (i.e., medical or educational expenses, purchasing a home, etc.) and demonstrate that they possess no other assets to meet the financial need. IX. BLACKOUT PERIODS ---------------- 1. CLIENT PRIORITY --------------- Supervised Persons personal transactions in Covered Securities will not be approved if an open order exists on the trading desk. Supervised Persons are required to resubmit any order that was originally denied. 2. 7 DAY BEFORE AND AFTER ---------------------- All equity portfolio managers, analysts, and traders are precluded from purchasing or selling in their personal accounts any security they purchased or sold for a Managed 6 Portfolio advised/traded by them for a period of 7-calendar days before or after the Managed Portfolio transaction. In calculating the 7-calendar day period, the trade date of the Managed Portfolio's transaction is not counted. Violations will result in the unwinding of the transaction and disgorgement of any profit. X. EXEMPTIONS ---------- The following transactions are exempt from all preclearance, holding periods, and black-out periods. NOTE THAT WHILE THESE EXEMPTIONS APPLY, IF THEY FALL UNDER THE DEFINITION OF COVERED SECURITY, THEY ARE REPORTABLE. 1. Purchases and sales of shares of mutual funds advised or sub-advised by RUSA, Boston Partners, or Robeco-Sage (transaction/annual reportable); 2. Gifts of securities; (potential transaction/annual reportable) 3. Exchange Traded Funds ("ETFs") based on a broad-based securities index (transaction/annual reportable); 4. Covered Security transactions executed on a fully discretionary basis by an investment adviser or broker dealer (other than RUSA) on behalf of a Supervised Person (transaction/annual reportable); 5. Transactions by a Supervised Person acting as a portfolio manager for, or who has a beneficial interest in, an investment limited partnership or investment company where RUSA is the contractual investment adviser or for or any account in which the RUSA has a proprietary interest (i.e. certain hedge funds) (not reportable - RUSA maintains records); 6. Covered Security transactions for which a Supervised Person has requested and received preclearance from the Compliance Department and for which the Supervised Person is not the Portfolio Manager directly responsible for initiating the client transaction; (not reportable - RUSA maintains records); 7. Purchases or sales that are non-volitional such as margin calls; stock splits; stock dividends; bond maturities; systematic investment plans, including dividend reinvestment plans; mergers; consolidations; spin-offs; or other similar corporate reorganizations or distributions generally applicable to all holders of the same class of securities; (potentially reportable); and 8. Any acquisition of a Covered Security through the exercise of rights issued pro rata to all holders of the class, to the extent such rights were acquired in the issue and not through the acquisition of transferable rights (transaction/annual reportable). 7 XI. RESTRICTED SECURITY LIST ------------------------ The Legal & Compliance Department maintains a Restricted Security List (the "Restricted List") which includes all securities where a Supervised Person has, or is in a position to receive, material non-public information about a company, such as information about a company's earnings or dividends, as a result of a special relationship between RUSA or a Supervised Person and the company. If a Supervised Person knows or believes they have material, non-public information, they must immediately notify the Legal & Compliance Department. The decision whether to place a security on the Restricted List and the amount of time a security will remain on the Restricted List is made by the Legal & Compliance Department. If it is determined that the Supervised Person is in possession of material, non-public information, the Legal & Compliance Department will establish a "Protective Wall" around the Supervised Person. In order to avoid inadvertently imposing greater restrictions on trading than are necessary, a Supervised Person may not discuss this information with anyone without the approval of RUSA's Legal & Compliance Department. In addition, Supervised Persons having access to the Restricted List are to be reminded that the securities on the list are confidential and proprietary and should not be disclosed to anyone without the prior approval of the Legal and Compliance Department. When an order is received from a Supervised Persons in a security on the Restricted List, the Preclearance System will automatically flag the transaction, and the transaction may not be executed until the Legal & Compliance Department has approved the trade. The Legal & Compliance Department will check with the department or staff member with the relationship to the company to determine whether trading in the security should be permitted. When a security is added to or deleted from the Restricted List, the Legal & Compliance Department will update the Preclearance System. XII. ACTIVITY REVIEW --------------- The firm has adopted an approach requiring the Legal & Compliance Department to monitor employee trading activity with particular focus on trading which may be unusual for a particular Supervised Person either because of the size of the position bought or sold, the frequency of the activity, or the nature of the Covered Security being traded. Employees are expected to devote their full time and attention to their work responsibilities. RUSA may take steps to curtail an individual's trading activity if, in the judgment of the appropriate department manager or the Legal & Compliance Department, the Supervised Person's trading activity is having an adverse impact on their job performance. 8 XIII. REPORTING REQUIREMENTS ---------------------- 1. TRANSACTION REPORTING --------------------- All Supervised Persons must submit brokerage statements to the Compliance Department which reports every gift, IPO, private placement, and Covered Security transaction in which they participated during the calendar quarter no later than 30 days after the end of that quarter. Supervised Person's reporting obligations may be satisfied in the following ways: a. For accounts maintained at Charles Schwab, Supervised Person's reporting obligations are automatically satisfied. b. For accounts not maintained at Charles Schwab, Supervised Person's may satisfy their reporting obligations by having their brokers deliver to the Legal & Compliance Department copies of brokerage statements which contain: i. The name of the security, the date of the transaction, the interest rate and maturity (if applicable), the number of shares, and the principal amount of each Covered Security involved; ii. The nature of the transaction (i.e., purchase, sale or other type of acquisition or disposition); iii. The price at which the transaction was effected; iv. The name of the broker, dealer, or bank through which the transaction was effected; c. Private Placements transactions effected during the quarter must be reported manually. The Compliance Department will review conduct periodic reviews of Supervised Persons' personal securities transactions in an effort to ensure the compliance with this Code. 2. INITIAL HOLDINGS REPORT ----------------------- All Access Persons shall disclose to the Legal & Compliance Department a listing of all Covered Securities beneficially owned no later than 10 days after becoming a Supervised Person. The information must be current as of a date no more than 45 days prior to the date the Supervised Person becomes an Access Person. The report shall include the following: a. The title and type of security, the ticker or CUSIP, the number of shares, and the principal amount of all securities in which the Supervised Person has any direct or indirect beneficial ownership; 9 b. The name of any broker, dealer, or bank with whom the Access Person maintains an account in which any securities are held for the direct or indirect benefit of the Access Person; and c. The date the report is submitted. The Compliance Department will review all Initial Holdings Reports in an effort to monitor potential conflicts of interest. 3. ANNUAL HOLDINGS REPORT ---------------------- No later than January 31st, annually, Access Persons shall deliver to The Legal & Compliance Department a listing of all Covered Securities beneficially owned that are current as of a date no more than 45 days prior to the date the report is submitted. The report shall include the following: a. The title and type of security, the ticker or CUSIP, the number of shares, and the principal amount of all securities in which the Supervised Person has any direct or indirect beneficial ownership; b. The name of any broker, dealer, or bank with whom the Supervised Person maintains an account in which any securities are held for the direct or indirect benefit of the Supervised Person; and c. The date the report is submitted. The Compliance Department will review all Annual Holdings Reports in an effort to monitor potential conflicts of interest and to assess the Supervised Person's fulfillment of their quarterly reporting obligations. G. INSIDER TRADING/MATERIAL NON-PUBLIC INFORMATION ----------------------------------------------- RUSA aspires to the highest standard of business ethics. The purpose of RUSA's policies on insider trading is to reduce the risk of violation of federal insider trading laws and reporting requirements. Accordingly, RUSA has developed the following policies to monitor, restrict if necessary, and educate Supervised Persons with respect to acquiring and investing when in possession of proprietary and/or confidential information. I. USE OF CONFIDENTIAL OR PROPRIETARY INFORMATION ---------------------------------------------- Supervised Persons may receive or have access to material, non-public information in the course of their work at RUSA. Company policy, industry practice and federal and state law 10 establish strict guidelines for the use of material, non-public information. To ensure that Supervised Persons adhere to the applicable laws, RUSA has adopted the following policies: Supervised Persons: o may not use confidential or proprietary information for investment purposes, for personal gain, or share such information with others for their personal benefit; or o may not pass material, non-public information about an issuer on to others or recommend that they trade the issuer's securities; or o must treat as confidential all information not generally made public concerning RUSA's investment activities or plans, or the financial condition and business activity of any enterprise with which RUSA is conducting business; or o must preserve the confidentiality of proprietary information and disclose it only to other Supervised Persons who have a legitimate business need for the information. Prior to disclosing this information to others, Supervised Persons must consult with the Legal & Compliance Department. Under federal securities law, it is illegal to buy or sell a security while in possession of material, non-public information relating to the security. In some circumstances, additional elements may be required for there to be a violation of law, including breach of a duty or the misappropriation of information. It is also illegal to "tip" others about inside information. Tipping involves passing material, non-public information about an issuer on to others or recommending that they trade the issuer's securities. Insider trading is an extremely complex area of the law principally regulated by the Securities and Exchange Commission ("SEC"). Questions concerning the law or a particular situation should be addressed with the Legal & Compliance Department prior to taking any action. If the Supervised Person believes that they may have material, non-public information gained within or outside the scope of their employment, regardless of the source, they must notify the Legal & Compliance Department so that securities can be monitored and/or placed on the RUSA Restricted List as appropriate. II. RUSA'S INSIDER TRADING RULES ---------------------------- Set forth below are three rules concerning insider trading. Failure to comply with these rules could result in violations of the federal securities laws and subject the Supervised Person to severe penalties under these laws. Violations of these rules also may result in discipline by RUSA, up to and including termination of employment. o Supervised Persons who possess, or have reason to believe they possess, material, non-public information relating to any security, may not buy or sell that publicly traded security for themselves, members of their family, RUSA or any other persons. In addition, Supervised Persons may not recommend to others that they buy or sell that security. 11 o If a Supervised Person is aware that RUSA is considering or actually trading any publicly traded security for any account it manages, the Supervised Person must regard that as material, non-public information. o Supervised Persons must contact the Legal & Compliance Department and disclose that they are in possession of this information and may not communicate material, non-public information to anyone without the advance approval of the Legal & Compliance Department. III. WHAT IS NON-PUBLIC INFORMATION? ------------------------------- Non-public information is information that is not generally available to the investing public. Information is public if it is generally available through the media or disclosed in public documents such as corporate filings with the SEC. If it is disclosed in a national business or financial wire service (such as Dow Jones or Bloomberg), in a national news service (such as AP or Reuters), in a newspaper, magazine, on the television, on the radio or in a publicly disseminated disclosure document (such as a proxy statement, quarterly or annual report, or prospectus), consider the information to be public. If the information is not available in the general media or in a public filing, consider the information to be non-public. If you are uncertain as to whether material information is non-public, you must consult the Legal & Compliance Department. While Supervised Persons must be especially alert to sensitive information, you may consider information directly from a company representative to be public information unless you know or have reason to believe that such information is not generally available to the investing public. In addition, information you receive from company representatives during a conference call that is open to the investment community is public. The disclosure of this type of information is covered by SEC Regulation FD. Please contact the Legal & Compliance Department if you have any questions with regard to this Regulation. A RUSA Supervised Persons working on a venture capital, private equity or private securities transaction who receives information from a company representative regarding the transaction should treat the information as non-public. The termination or conclusion of the negotiations in many instances will not change the status of that information. IV. WHAT IS MATERIAL INFORMATION? ----------------------------- There is no statutory definition of material information. Information an investor would find useful in deciding whether or when to buy or sell a security is generally material. In most instances, any non-public information that, if announced, could affect the price of the security should be considered to be material information. If you are not sure whether non-public information is material, you must consult the Legal & Compliance Department. 12 V. MATERIAL INFORMATION EXAMPLES ----------------------------- 1. MATERIAL INFORMATION MAY BE ABOUT THE ISSUER ITSELF: FOR EXAMPLE: o information about a company's earnings or dividends, (such as whether they will be increasing or decreasing); o any merger, acquisition, tender offer, joint venture or similar transaction involving the company; o information about a company's physical assets (e.g., an oil discovery, or an environmental problem); o information about a company's Personnel (such as a valuable employee leaving or becoming seriously ill); or o information about a company's financial status (e.g., any plans or other developments concerning financial restructuring or the issuance or redemption of, or any payments on, any securities). 2. INFORMATION MAY BE MATERIAL THAT IS NOT DIRECTLY ABOUT A COMPANY, IF THE INFORMATION IS RELEVANT TO THAT COMPANY OR ITS PRODUCTS, BUSINESS, OR ASSETS. FOR EXAMPLE: o Information that a company's primary supplier is going to increase dramatically the prices it charges; or o information that a competitor has just developed a product that may cause sales of a company's products to decrease. 3. MATERIAL INFORMATION MAY INCLUDE INFORMATION ABOUT RUSA'S PORTFOLIO MANAGEMENT ACTIVITIES. You should treat as material, any information that RUSA is considering whether to buy or sell a publicly traded security of a company or is going to make a trade or has just made a trade of that security. VI. "FRONT-RUNNING" AND "SCALPING" ------------------------------ Trading while in possession of information concerning RUSA's trades is called front-running or scalping, and is prohibited by RUSA's insider trading rules, and may also violate federal law. The terms "front-running" and "scalping" are sometimes used interchangeably in industry literature and by the SEC. Front-running is making a trade in the same direction as RUSA just before RUSA makes its trade, for example, buying a security just before RUSA buys that security, or selling just before RUSA sells that security. Scalping is making a trade in the opposite direction just after RUSA's trade, for example, selling just after RUSA stops buying such security or buying a security just after RUSA stops 13 selling such security. Scalping allows Supervised Persons the opportunity to profit from temporary artificially inflated/deflated prices caused by RUSA's transactions. VII. "CHINESE WALL" -------------- One of the primary methods of protection against the misuse of material non-public information is the restriction of communications between private and public business units. 1. RUSA's private business units are defined as: a. the Venture Capital Division ("VCD"), b. the Private Equity Division ("PED") and; c. the WPG Hedge Funds engaged in private equity transactions ("HF"). 2. RUSA's public business units are defined as the WPG's equity unit, WPG's fixed income unit, WPG Mutual Funds, and WPG Hedge Funds operating in the public market. The communication of material non-public information among these groups is prohibited. VIII. PENALTIES FOR INSIDER TRADING ----------------------------- RUSA and/or RUSA Supervised Persons could be subject severe civil penalties as well as criminal prosecution for illegally trading while in possession of material, non-public information. IX. SPECIFIC PROCEDURES ------------------- In application of the policy, the following procedures shall be followed: 1. SEGMENT AFFILIATIONS -------------------- Each RUSA investment unit will be designated by the General Counsel or the Chief Compliance Officer as being associated with either the "Public" or the "Private" Segment. 2. FIRM COMMUNICATIONS AND REPORTING --------------------------------- Supervised Persons who have business relationships with senior management of companies which can result in the receipt of material, non-public information about the company, including, without limitation, (i) the election or appointment of the Supervised Persons as a director, officer, executive employee or confidential consultant, or (ii) the acquisition of securities or the right to receive securities having sufficient voting power to influence the management policies of the Company, should be aware that, in such circumstances, they must contact a lawyer in the Legal and Compliance Department prior to acting in the marketplace. 14 a. All Supervised Persons shall promptly report to the General Counsel or Chief Compliance Officer their awareness of any information which they believe may constitute material non-public information concerning a company. b. No Supervised Person from the private business units shall attend any meeting with Supervised Persons associated with public business units in which a company is discussed, unless (i) the attending private personnel shall have obtained General Counsel's or the Chief Compliance Officer's prior clearance that private business unit is not in possession of material non-public information regarding the company, or (ii) such discussion is isolated to a portion of the meeting during which private business unit Supervised Persons are not in attendance. c. All Supervised Persons of the public business unit are prohibited from soliciting non-public information from any Supervised Person of the private business unit as to any company. d. The Legal & Compliance Department will maintain the Restricted Security List. e. Any Supervised Persons who has reason to believe that any violation of this Statement of Policy has occurred shall immediately report all material facts concerning such matter to the Legal & Compliance Department. H. GIFTS AND ENTERTAINMENT POLICY ------------------------------ Supervised Persons should not offer gifts, favors, entertainment or other things of value that could be viewed as overly generous or aimed at influencing decision-making or making a client feel beholden to the firm or the Supervised Person. The following guidelines will further clarify this general principal. DEFINITIONS: GIFT - anything of value, including, but not limited to gratuities, tokens, objects, clothing, or certificates for anything of value. The definition also includes any meal, tickets or admission to events where the person supplying the meal or event is not present. ENTERTAINMENT - business meals and events such as sporting events, shows, concerts where the person supplying the meal or event is present. GIFTS POLICY a. No Supervised Person shall accept any gift of more than $100 value from any person or entity that does business with or on behalf of a client (or any of its portfolios), or any entity that provides a service to Adviser. Gifts of greater than $100 value are to be declined or returned in order not to compromise the reputation of Adviser or the 15 individual. Gifts valued at less than $100 and considered customary in the industry, are considered appropriate. b. No Supervised Person shall provide gifts of more than $100 value, per person, per year, to existing clients, prospective clients, or any entity that does business with or on behalf of a client (or any of its portfolios), or any entity that provides a service to Adviser. Gifts valued at less than $100 and considered customary in the industry, are considered appropriate. c. Under no circumstances may an employee accept or provide a gift of cash or cash equivalent, (such as a gift card, gift certificate or gift check.). d. Supervised Persons are expressly prohibited from soliciting anything of value from a client, or other entity with which the firm does business. e. Similarly, Supervised Persons should not agree to provide anything of value that is requested by a client, or other entity with which the firm does business, (such as concert, sporting event or theater tickets,), except that assisting a client or other entity in acquiring tickets for which they intend to pay full value, is permitted under the policy. ENTERTAINMENT POLICY a. Supervised Persons may engage in normal and customary business entertainment. Entertainment that is extraordinary or extravagant, or that does not pertain to business, is not permitted. b. Certain rules and regulations enacted by the client or a regulator of the client may exist which prevent any form of gift or entertainment. It is important to be cognizant of what each client allows, especially pertaining to public funds, where rules may be very stringent and specific. c. Prior to providing entertainment to a representative of a public entity, contact the Legal and Compliance Department in order to verify interpretation understanding of state or municipal regulations. STANDARD OF REASONABLENESS The terms "extraordinary" or "extravagant," "customary in the industry," and "normal and customary" may be subjective. Reasonableness is a standard that may vary depending on the facts and circumstances. If you have questions regarding a gift or entertainment, contact your supervisor, or the Legal/Compliance Department. RECORDS RIM must retain records of all gifts and gratuities given or received for a period of three years. These records must be made available upon request for inspection by your Supervisor, the Legal/Compliance department or a regulator. Marketing/administration must send a copy of the gift log to Legal/Compliance monthly. 16 I. CHARITABLE CONTRIBUTIONS ------------------------ If a contribution is requested by a client, RUSA may agree to charitable contributions subject to the following terms. a. The check must be made in RUSA's name (not the client or the supervised person) b. Any tax benefit is taken by RUSA c. The contribution does not directly benefit the client d. The contribution is not made to satisfy a pledge made by the client e. The contribution must be made payable to the 501 c 3 Charitable organization (otherwise, the contribution may be subject to LM-10 filing with the DOL) Charitable contributions must be pre-approved by your supervisor. J. POLITICAL CONTRIBUTIONS ----------------------- From time to time, RIM or its employees may be asked by a client to make political contributions. In addition, employees, by their own volition, may seek to make individual political contributions. As an investment manager, RIM is often eligible to manage money on behalf of a state or municipality. To avoid any real or perceived conflict of interests, Robeco requires that all personal political contributions be subject to a preclearance policy. For the purposes of this policy, political contribution include a direct payment of money to a campaign organization, volunteer work, or fund raising work done on behalf of, or to benefit, a political campaign organization or candidate. FIRM CONTRIBUTIONS - ------------------ RIM does not to make political contributions. INDIVIDUAL CONTRIBUTIONS - ------------------------ FOR ALL EMPLOYEES - ----------------- - - RIM will not reimburse any employee for individual political contributions. In addition, the RIM corporate credit card cannot be used to make contributions. - - Preclearance is required for any political contribution made by any employee to a state or local candidate outside of the contributor's jurisdiction for whom the contributor is not eligible to vote. 17 - - Preclearance is not required prior to individual personal contributions to national election campaigns, national political parties, or political action committees or candidates for national office such as president of the US or members of the US Senate or House of Representatives. - - Certain contributions, even within your voting jurisdiction, may restrict or prohibit RIM from transacting business with a related public entity. If there is a chance that an individual contribution may cause a conflict of interest with RIM's business, please consult with the Head of Sales or the RIM Legal & Compliance Department prior to making an individual contribution. FOR EMPLOYEES IN SALES, MARKETING AND PORTFOLIO MANAGEMENT - ---------------------------------------------------------- - - In addition to the above restrictions, preclearance is required for all individual contributions to state, municipal and local candidates and campaigns, whether inside or outside your voting jurisdiction. K. OUTSIDE BUSINESS ACTIVITIES --------------------------- A potential conflict of interest exists with respect to a Supervised Person's duties to RUSA and its clients when individuals are permitted to engage in outside business activities. Written requests must be submitted to the Supervised Person's supervisor with a copy to the Legal & Compliance Department prior to a Supervised Person seeking to: o engage in any outside business activity, or o accept any position as an officer or director of any publically-traded corporation or mutual fund. The written request must contain all of the information necessary to review the activity. The request should contain the name of the company, the nature of the business, the capacity in which the employee will serve, an identification of any possible conflicts, the term of the contemplated relationships and any compensation to be received. RUSA fully supports Supervised Persons accepting positions as officers or directors for non-profit or charitable organizations and does not require Supervised Persons to seek approval or report these laudable activities. However, Supervised Persons are cautioned to be mindful that, from time-to-time, certain conflicts of interest may arise by virtue of their position within RUSA and their position within a non-profit or charitable organization, such as when the organization is a client of RUSA's. If such a conflict of interest arises, Supervised Persons must contact the Legal & Compliance Department. The Legal & Compliance Department, in conjunction with the Supervised Person's supervisor and the Director of Human Resources, will review and/or identify any potential conflicts. 18 If approved, the Legal & Compliance Department will provide the Supervised Person with written approval. In addition, if applicable, the Legal & Compliance Department will ensure that a registered representative's Form U-4 is updated with the NASD. In the event that a resolution to the conflict cannot be reached, the Supervised Person may be asked to terminate either his outside employment or his position with RUSA. Finally, upon employment and annually thereafter, Supervised Persons are required to fill out the New Employee/Annual Compliance Acknowledgement Form and accompanying Conflicts Questionnaire ("Questionnaire"). The Questionnaire requests information regarding a Supervised Person's outside business activities. The Legal & Compliance Department will verify items reported on the Questionnaire against written requests received throughout the year. L. REPORTING VIOLATIONS -------------------- All Supervised Persons must report violations of this Code promptly to both the Chief Compliance Officer and an attorney in the Legal & Compliance Department. RUSA is committed to treating all Supervised Persons in a fair and equitable manner. Individuals are encouraged to voice concerns regarding any personal or professional issue that may impact their ability or the firm's ability to provide a quality product to its clients while operating under the highest standards of integrity. 1. Any such reports will be treated confidentially to the extent permitted by law and investigated promptly and appropriately. 2. Retaliation against any individual making such a report is prohibited and constitutes a violation of the Code. M. ANNUAL REVIEWS AND CERTIFICATIONS --------------------------------- The Legal & Compliance Department will review the Code annually and update any provisions and/or attachments which RUSA deems require revision. Upon employment, all Supervised Persons are required to certify that they have: 1. Received a copy of the Code; 2. Read and understand all provisions of the Code; and 3. Agreed to comply with all provisions of the Code. At the time of any amendments to this Code, all Supervised Persons are required to: 1. Certify they have received, read and understood the amendments to the Code; and 2. Agree to comply with the amendment and all other provisions of the Code. 19 Annually, all Supervised Persons are required to: 1. Certify they have read and understand all provisions of the Code; and 2. Agree to comply with all provisions of the Code. N. SANCTIONS --------- Regardless of whether a government inquiry occurs, RUSA views seriously any violation of its Code of Ethics. Disciplinary sanctions may be imposed on any Supervised Persons committing a violation, including, but not necessarily limited to, censure, suspension, monetary penalties, or termination of employment. O. FURTHER INFORMATION ------------------- If any Supervised Persons has any questions with regard to the applicability of the provisions of this Code, generally or with regard to any attachment referenced herein, they should consult the Legal & Compliance Department. Updates: January 2005 March 2005 May 2005 August 2005 20 -----END PRIVACY-ENHANCED MESSAGE-----