-----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, S6mPRvVwEGPs3o0oZXmL7mT65kKFUekr4R9Ohp68i4ZCewmO4oU+agQ9rKZBW76T IJgAM1LJytxEAQobMHCvDg== 0000935069-99-000227.txt : 19991103 0000935069-99-000227.hdr.sgml : 19991103 ACCESSION NUMBER: 0000935069-99-000227 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990831 FILED AS OF DATE: 19991102 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RBB FUND INC CENTRAL INDEX KEY: 0000831114 STANDARD INDUSTRIAL CLASSIFICATION: [] FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-05518 FILM NUMBER: 99739448 BUSINESS ADDRESS: STREET 1: 400 BELLEVUE PKWY STE 100 CITY: WILMINGTON STATE: DE ZIP: 19809 BUSINESS PHONE: 3027911791 MAIL ADDRESS: STREET 1: 103 BELLEVUE PKWY STREET 2: SUITE 152 CITY: WILMINGTON STATE: DE ZIP: 19809 FORMER COMPANY: FORMER CONFORMED NAME: FUND INC /DE/ DATE OF NAME CHANGE: 19600201 N-30D 1 SCHNEIDER ANNUAL REPORT THE SCHNEIDER SMALL CAP VALUE FUND ANNUAL REPORT August 31, 1999 [GRAPHIC OMITTED] SCHNEIDER CAPITAL MANAGEMENT SCHNEIDER SMALL CAP VALUE FUND ANNUAL INVESTMENT ADVISER'S REPORT AUGUST 31, 1999 Dear Fellow Shareholder: We are pleased to provide you with the report of the Schneider Small Cap Value Fund for the fiscal year ended August 31, 1999. The Schneider Small Cap Value Fund earned a spectacular 82.5% total return during its inaugural period of operation. The table below compares our fund's total return (capital appreciation plus reinvested dividends) for the fiscal year with those of the Russell 2000 Value Index and the average Small Cap Value mutual fund. The Fund's return is based on an increase in net asset value from $10.00 per share on September 2, 1999 to $18.04 per share on August 31, 1999, adjusted for dividends totaling $0.13 per share paid on December 20, 1998. Schneider Small Cap Value Fund 82.5% Russell 2000 Value Index 11.9% The significant improvement in the global economy provided a favorable environment for our fund. Investors confident that the international financial crisis was all but behind us, began to shift their attention from large-cap stocks to small cap stocks during the spring, especially commodity stocks, reversing a trend that has prevailed for almost six years. Energy and technology were the leading sectors for the Russell 2000 Value Index during the Fund's fiscal year. Our 11% weighting in the energy sector added meaningfully to overall fund returns. We emphasized natural gas stocks where U.S. productive capacity is declining almost 5% per year while demand is growing over 2% per year. Increased product prices brought on by this cyclical upturn pushed stock prices markedly higher as seen in two of our larger holdings - -- Western Gas Resources and Newpark Resources. An overweighting in the technology sector also boosted Fund performance. Holdings of commodity semiconductor companies such as Integrated Device Technology and Integrated Silicon Solutions returned higher profits driven by improved product pricing and stronger demand. The Fund benefited from good stock selection in other sectors as well. InterTan Inc. -- a retailer that operates stores under the trade name of Radio Shack and Tandy -- and Westcorp -- an automobile finance company -- more than doubled in price during the period. Our caution about the finance sector, which is about 30% of the Russell 2000 Value Index, paid off as banks continue to lose market share to other financial intermediaries and were one of the worst performing groups in the index. SCHNEIDER SMALL CAP VALUE FUND ANNUAL INVESTMENT ADVISER'S REPORT AUGUST 31, 1999 OUTLOOK With the national savings rate below zero, meaning households are spending all of their after-tax income and tapping into savings or borrowing in order to spend more, and a tightening Federal Reserve, we do not foresee a period of strong domestic growth. However, most countries outside of the U.S. which did not participate in the economic boom during these past few years should experience accelerating growth which will benefit commodity producers, especially those with little new capacity coming on line such as paper and chemicals. Valuations remain extraordinarily compelling in small cap value stocks relative to the broad market. It is our goal to invest in the most promising of these stocks and realign the portfolio as needed to provide optimal returns. YEAR 2000 The Fund, like any business, could be affected if the computer systems on which it relies do not properly process information beginning on January 1, 2000,. While Year 2000 issues could have a negative effect on the Fund, we are currently working to avoid such problems. We are also working with other systems providers and vendors servicing the Portfolios to determine their systems' ability to handle Year 2000 problems. There is no guarantee, however, that systems will work properly on or after January 1, 2000. Year 2000 problems may also hurt issuers whose securities the Fund holds or securities markets generally. Thank you for your investment in the Schneider Small Cap Value Fund. /S/SIGNATURE ARNOLD C. SCHNEIDER III, CFA Arnold C. Schneider III, CFA Portfolio Manager Schneider Capital Management 2 SCHNEIDER SMALL CAP VALUE FUND ANNUAL INVESTMENT ADVISER'S REPORT AUGUST 31, 1999 Comparison of Change in Value of $10,000 Investment in Schneider Small Cap Value Fund (1)(2) vs. Russell 2000 Value Index [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC Schneider Small Russell 2000 Cap Value Value Index 9/2/98 10,000 10,000 9/30/98 10,000 10,565 10/31/98 11,930 10,879 11/30/98 12,410 11,174 12/31/98 12,471 11,524 1/31/99 13,786 11,263 2/28/99 12,531 10,494 3/31/99 13,007 10,408 4/30/99 15,222 11,358 5/31/99 16,233 11,706 6/30/99 18,044 12,130 7/31/99 18,731 11,843 8/31/99 18,246 11,190 Total Returns VALUE ON SINCE AUGUST 31, 1999 INCEPTION(3) --------------- ------------ Schneider Small Cap Value $18,246 82.5% Russell 2000 Value Index $11,190 11.9% The Fund's return is based on an increase in net asset value from $10.00 per share on September 1, 1998 to $18.04 per share on August 31, 1999, adjusted for dividends totaling $.13 per share paid from net realized gains. - ------------ (1) The chart assumes a hypothetical $10,000 initial investment in the Fund and reflects all Fund expenses. Investors should note that the Fund is a professionally managed mutual fund while the indices are unmanaged, do not incur sales charges and/or expenses and are not available for investment. (2) Schneider Capital Management waived a portion of its advisory fee and voluntarily agreed to reimburse a portion of the Fund's operating expenses, as necessary, to maintain the expense limitation, as set forth in the notes to the financial statements. Total returns shown include fee waivers and expense reimbursements, if any; total returns would have been lower had there been no assumption of fees and expenses in excess of expense limitations. (3) Aggregate return for the period September 2, 1998 (commencement of operations) through August 31, 1999. The accompanying notes are an integral part of the financial statements. 3 SCHNEIDER SMALL CAP VALUE FUND PORTFOLIO OF INVESTMENTS AUGUST 31, 1999 SHARES VALUE ------ ------------ COMMON STOCKS -- 95.0% AEROSPACE/DEFENSE -- 2.2% BE Aerospace, Inc.* ............................ 6,000 $ 103,875 Orbital Sciences Corp.* ........................ 8,300 184,156 ------------ 288,031 ------------ AGRICULTURE -- 1.1% Corn Products International, Inc. .............. 4,200 136,763 ------------ ALUMINUM -- 1.1% Commonwealth Industries, Inc. .................. 10,000 143,750 ------------ CHEMICALS -- 1.6% Airgas, Inc.* .................................. 9,800 128,625 Arch Chemicals, Inc. ........................... 4,000 78,750 ------------ 207,375 ------------ CHEMICALS AND PLASTIC -- 1.0% Wellman, Inc. .................................. 8,000 134,500 ------------ CHEMICALS - SPECIALTY -- 2.5% M.A. Hanna Co. ................................. 10,000 136,875 NL Industries, Inc. ............................ 15,000 180,937 ------------ 317,812 ------------ COMMUNICATION SERVICES -- 2.5% + ICO Global Communications (Holdings) Limited ........................... 10,000 7,500 Metromedia International Group, Inc.* .......... 34,600 218,413 PageMart Wireless, Inc., Class A* .............. 15,000 95,625 ------------ 321,538 ------------ COMMUNICATIONS EQUIPMENT -- 1.5% Brightpoint, Inc.* ............................. 28,000 98,875 Clearnet Communications, Inc., Class A* ........ 6,200 98,425 ------------ 197,300 ------------ COMPUTER COMPONENTS -- 1.2% Komag, Inc.* ................................... 40,000 127,500 Read-Rite Corp.* ............................... 6,000 33,750 ------------ 161,250 ------------ SHARES VALUE ------ ------------ ELECTRICAL EQUIPMENT -- 4.2% CellStar Corp.* .................................. 12,000 $ 63,750 Exide Corp. ...................................... 11,000 121,687 Sensormatic Electronics Corp.* ................... 11,100 129,731 Vishay Intertechnology, Inc.* .................... 10,787 231,246 ------------ 546,414 ------------ ELECTRONIC COMPONENTS & ACCESSORIES -- 1.5% Arrow Electronics, Inc.* ......................... 10,000 198,750 ------------ ELECTRONICS - INSTRUMENTS -- 3.0% Credence Systems Corp.* .......................... 6,000 258,000 Integrated Measurement System* ................... 9,000 124,875 ------------ 382,875 ------------ FARM MACHINERY & EQUIPMENT -- 0.9% New Holland N.V.* ................................ 7,300 113,150 ------------ FINANCE -- 2.2% AmeriCredit Corp.* ............................... 11,000 140,937 Union Acceptance Corp., Class A* ................ 20,000 142,500 ------------ 283,437 ------------ FINANCIAL SERVICES -- 5.1% Arcadia Financial Corp.* ......................... 20,200 114,887 Billing Information Concepts Corp.* .............. 19,000 99,750 Delta Financial Corp.* ........................... 20,000 120,000 Westcorp, Inc. ................................... 23,000 322,000 ------------ 656,637 ------------ FOODS -- 1.2% Chiquita Brands International, Inc. .............. 7,000 46,375 Imperial Sugar Co. ............................... 18,000 110,250 ------------ 156,625 ------------ FOOTWEAR -- 0.6% Barry (R.G.) Corp.* .............................. 13,000 82,875 ------------ HEALTHCARE -- 3.2% Coventry Health Care, Inc.* ...................... 18,800 189,175 Foundation Health Systems, Inc.* ................. 10,500 133,875 United Wisconsin Services, Inc. .................. 13,100 92,519 ------------ 415,569 ------------ The accompanying notes are an integral part of the financial statements. 4 SCHNEIDER SMALL CAP VALUE FUND PORTFOLIO OF INVESTMENTS (CONTINUED) AUGUST 31, 1999 SHARES VALUE ------ ------------ INSURANCE - PROPERTY & CASUALTY-- 0.9% Professionals Group, Inc. ........................ 4,500 $ 117,000 ------------ LEASING - TRUCK -- 1.0% AMERCO* .......................................... 5,000 125,625 ------------ MANUFACTURING - SPECIALTY -- 1.0% Albany International Corp.* ...................... 8,000 132,500 ------------ METAL MINING -- 1.1% Brush Wellman, Inc. .............................. 8,000 136,000 ------------ NATURAL GAS - DISTRIBUTION -- 1.6% Star Gas Partners, L.P.* ......................... 3,821 32,956 Western Gas Resources, Inc. ...................... 10,000 170,625 ------------ 203,581 ------------ OFFICE AND BUSINESS EQUIPMENT -- 0.8% Danka Business Systems, PLC (ADR)* ............... 10,000 98,125 ------------ OIL AND GAS - EQUIPMENT -- 2.0% Grey Wolf, Inc.* ................................. 90,800 261,050 ------------ OIL & GAS - EXPLORATION -- 3.1% Gulf Canada Resources, LTD.* ..................... 10,000 40,000 Swift Energy Co.* ................................ 20,000 252,500 Titan Exploration, Inc.* ......................... 19,600 107,800 ------------ 400,300 ------------ OIL AND GAS - REFINING -- 1.9% Tesoro Petroleum Corp.* .......................... 6,400 115,600 Valero Energy Corp. .............................. 6,000 127,500 ------------ 243,100 ------------ OIL AND GAS - SERVICES -- 1.9% Newpark Resources, Inc.* ......................... 27,700 249,300 ------------ PACKAGING / CONTAINERS -- 1.9% Gaylord Containers Corp., Class A* ............... 30,900 249,131 ------------ PAPER -- 3.1% Longview Fibre Co. ............................... 14,000 181,125 Mercer International, Inc. ....................... 51,000 219,938 ------------ 401,063 ------------ SHARES VALUE ------ ------------ PAPER & FOREST PRODUCTS -- 2.7% Pope & Talbot, Inc. .............................. 15,000 $ 182,813 Rayonier, Inc. ................................... 4,000 166,000 ------------ 348,813 ------------ PLASTIC PRODUCTS -- 1.1% Tupperware Corp. ................................. 6,300 142,144 ------------ REAL ESTATE -- 3.4% American Real Estate Partners, L.P.* ............. 15,000 119,063 Newhall Land & Farming Co. ....................... 5,900 133,856 Prison Realty Corp. .............................. 14,000 182,875 ------------ 435,794 ------------ RESTAURANTS -- 0.6% Avado Brands, Inc. ............................... 12,000 82,500 ------------ RETAIL - GROCERY STORES -- 1.1% The Great Atlantic & Pacific Tea Co., Inc. ....... 4,000 140,500 ------------ RETAIL - SPECIALTY -- 4.3% Intertan, Inc.* .................................. 17,000 314,500 J. Baker, Inc. ................................... 20,600 154,500 The Sports Authority, Inc.* ...................... 25,000 90,625 ------------ 559,625 ------------ SAVINGS & LOAN ASSOCIATIONS -- 1.9% Bank Plus Corp.* ................................. 17,000 77,563 Hudson City Bancorp* ............................. 12,800 168,000 ------------ 245,563 ------------ SEMICONDUCTORS - EQUIPMENT -- 5.0% Ultratech Stepper, Inc.* ......................... 12,800 171,200 Varian Semiconductor Equipment Associates, Inc.* ............................. 21,000 477,750 ------------ 648,950 ------------ SEMICONDUCTORS - TECHNOLOGY -- 9.8% General Semiconductor, Inc.* ..................... 35,000 343,438 Integrated Device Technology, Inc.* .............. 28,300 551,850 Integrated Silicon Solution, Inc.* ............... 34,500 373,031 ------------ 1,268,319 ------------ The accompanying notes are an integral part of the financial statements. 5 SCHNEIDER SMALL CAP VALUE FUND PORTFOLIO OF INVESTMENTS (CONCLUDED) AUGUST 31, 1999 SHIPPING -- 0.8% Overseas Shipholding Group Inc. .................. 7,100 $ 98,956 ------------ STEEL -- 2.1% Birmingham Steel Corp. ........................... 20,000 146,250 Schnitzer Steel Industries, Inc., Class A ........ 7,000 124,250 ------------ 270,500 ------------ STEEL - SPECIALTY -- 3.1% NS Group, Inc.* .................................. 23,000 273,125 UCAR International, Inc.* ........................ 5,000 121,875 ------------ 395,000 ------------ TELECOMMUNICATION -- 0.3% STAR Telecommunications, Inc.* ................... 7,000 40,250 ------------ TIRES & INNER TUBES -- 0.9% Titan International, Inc. ........................ 10,000 111,250 ------------ UTILITIES -- 1.0% Unisource Energy Corp.* .......................... 10,600 126,538 ------------ TOTAL COMMON STOCKS (Cost $9,998,787) .......................... 12,276,128 ------------ CANADIAN COMMON STOCK -- 1.9% Boardwalk Equities, Inc.* ........................ 10,000 91,813 Canadian Hotel, Inc. ............................. 25,000 153,301 ------------ TOTAL CANADIAN COMMON STOCK (Cost $242,364) ............................ 245,114 ------------ UNITED KINGDOM COMMON STOCK -- 0.4% PIC International Group PLC* ..................... 60,000 44,863 ------------ TOTAL UNITED KINGDOM COMMON STOCK (Cost $76,324) ....................... 44,863 ------------ PAR (000) VALUE ------ ------------ CONVERTIBLE BONDS -- 1.5% Asia Pulp & Paper Convertible (CAA1, CCC+) 3.500%, 04/30/03 .............................. $ 320 $ 199,603 ----------- TOTAL CONVERTIBLE BONDS (Cost $168,762) ............................ 199,603 ----------- SHORT-TERM INVESTMENT -- 2.3% Rodney Square Cash Reserve 4.82% 09/01/99 ................................ 303 303,452 ----------- TOTAL SHORT-TERM INVESTMENT (Cost $303,452) ............................ 303,452 ----------- TOTAL INVESTMENTS -- 101.1% (Cost $10,789,689) ............................ 13,069,160 ----------- LIABILITIES IN EXCESS OF ASSETS-- 1.2% .............................. (145,434) ----------- NET ASSETS-- 100.0% .............................. $12,923,726 =========== - ------------ * Non-income producing. + Security is fair valued under the direction of the Board of Directors. The Moody's Investor Service, Inc. and Standard and Poor's Ratings Group's ratings indicated are the most recent ratings available at August 31, 1999. (Unaudited) The accompanying notes are an integral part of the financial statements. 6 SCHNEIDER SMALL CAP VALUE FUND STATEMENT OF ASSETS AND LIABILITIES AUGUST 31, 1999 ASSETS Investments, at value (cost -- $10,789,689) ............. $13,069,160 Receivable for investments sold ......................... 42,917 Dividends and interest receivable ....................... 10,143 Receivable from investment advisor ...................... 27,097 Receivable for Fund shares sold ......................... 50,000 ----------- Total Assets .......................................... 13,199,317 ----------- LIABILITIES Payable for investments purchased ....................... 251,966 Accrued expenses payable and other liabilities .......... 23,625 ----------- Total Liabilities ..................................... 275,591 ----------- NET ASSETS Capital stock, $0.001 par value ......................... 716 Additional Paid-in capital .............................. 8,892,867 Accumulated net realized gain from investments and foreign exchange transactions, if any ............. 1,750,672 Net unrealized appreciation on investments and foreign currency, if any .............................. 2,279,471 ----------- Net assets applicable to shares outstanding ............. $12,923,726 =========== Shares outstanding ......................................... 716,341 =========== Net asset value, offering and redemption price per share ... $18.04 =========== The accompanying notes are an integral part of the financial statements. 7 SCHNEIDER SMALL CAP VALUE FUND STATEMENT OF OPERATIONS FOR THE PERIOD SEPTEMBER 2, 1998* THROUGH AUGUST 31, 1999 ------------------------ Investment Income Dividends ............................................... $ 54,080** Interest ................................................ 12,564 ---------- 66,644 ---------- Expenses Administration fees ..................................... 101,588 Advisory fees ........................................... 71,634 Transfer agent fees and expenses ........................ 28,615 Printing ................................................ 17,757 Custodian fees and expenses ............................. 17,506 Audit and legal fees .................................... 16,499 Federal and state registration fees ..................... 13,926 Administrative service fees ............................. 10,745 Directors fees .......................................... 477 Insurance ............................................... 95 Other ................................................... 801 ---------- Total expenses before waivers and reimbursements ...... 279,643 Less: waivers and reimbursements ........................ (200,844) ---------- Total expenses after waivers and reimbursements ....... 78,799 ---------- Net investment (loss) ...................................... (12,155) ---------- Net realized and unrealized gain on investments and foreign exchange transactions: Net realized gain from: Investments ........................................... 1,814,987 Foreign exchange transactions ......................... 123 Net change in unrealized appreciation on: Investments ........................................... 2,279,470 Foreign exchange transactions ......................... 1 ---------- Net realized and unrealized gain on investments and foreign currency .................................. 4,094,581 ---------- Net increase in net assets resulting from operations ....... $4,082,426 ========== - ------------------ * Commencement of operations. ** Net of foreign withholding taxes of $2,503. The accompanying notes are an integral part of the financial statements. 8 SCHNEIDER SMALL CAP VALUE FUND STATEMENT OF CHANGES IN NET ASSETS FOR THE PERIOD SEPTEMBER 2, 1998* THROUGH AUGUST 31, 1999 ------------------------ INCREASE IN NET ASSETS FROM OPERATIONS Net investment loss ..................................... $ (12,155) Net realized gain from investments and foreign currency transactions, if any ............. 1,815,110 Net change in unrealized appreciation on investments and foreign currency transactions, if any .................................. 2,279,471 ----------- Net increase in net assets resulting from operations ... 4,082,426 DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM: Net realized capital gains .............................. (52,283) ----------- Total dividends and distributions to shareholders ..... (52,283) ----------- INCREASE IN NET ASSETS DERIVED FROM CAPITAL SHARE TRANSACTIONS .................................... 8,893,583 ----------- Total increase in net assets .......................... 12,923,726 NET ASSETS Beginning of period ..................................... -- ----------- End of period (includes undistributed net investment income of $0) .......................... $12,923,726 =========== - ------------------ * Commencement of operations. The accompanying notes are an integral part of the financial statements. 9 SCHNEIDER SMALL CAP VALUE FUND FINANCIAL HIGHLIGHTS - -------------------------------------------------------------------------------- Contained below is per share operating performance data for each share outstanding, total investment return, ratios to average net assets and other supplemental data for the period. This information has been derived from information provided in the financial statements. - -------------------------------------------------------------------------------- FOR THE PERIOD SEPTEMBER 2, 1998* THROUGH AUGUST 31, 1999 ------------------------ PER SHARE OPERATING PERFORMANCE** Net asset value, beginning of period ....................... $ 10.00 Net investment (loss) ...................................... (0.02) Net realized and unrealized gain/(loss) on investments and foreign exchange transactions, if any(2) ................ 8.19 ------- Net increase/(decrease) in net assets resulting from operations ............................... 8.17 ------- Dividends and distributions to shareholders from: Net investment income ...................................... -- Net realized capital gains ................................. (0.13) ------- Total dividends and distributions to shareholders .......... (0.13) ------- Net asset value, end of period ............................. $ 18.04 ======= Total investment return(3) ................................. 82.46% ======= RATIO/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) .................. $12,924 Ratio of expenses to average net assets(1)(4) .............. 1.10% Ratio of net investment income to average net assets(1)(4) . (0.17)% Portfolio turnover rate .................................... 145.99% - ------------------ * Commencement of operations. ** Calculated based on shares outstanding on the first and last day of the period, except for dividends and distributions, if any, which are based on actual shares outstanding on the dates of distributions. (1) Reflects waivers and reimbursements. (2) The amounts shown for each share outstanding throughout the period are not in accord with the changes in the aggregate gains and losses on investments during the period because of the timing of sales and repurchases of Fund shares in relation to fluctuating net asset value during the period. (3) Not annualized. (4) Without the waiver of advisory, administration and transfer agent fees and without the reimbursement of certain operating expenses, the ratio of expenses to average net assets annualized for the period September 2, 1998 through August 31, 1999 would have been 3.90%, and the ratio of net investment loss to average net assets would have been (2.97%). The accompanying notes are an integral part of the financial statements. 10 SCHNEIDER SMALL CAP VALUE FUND NOTES TO FINANCIAL STATEMENTS AUGUST 31, 1999 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES The RBB Fund, Inc. ("RBB") was incorporated under the laws of the State of Maryland on February 29, 1988 and is registered under the Investment Company Act of 1940, as amended, (the "Investment Company Act") as an open-end management investment company. RBB is a "series fund", which is a mutual fund divided into separate portfolios. Each portfolio is treated as a separate entity for certain matters under the Investment Company Act, and for other purposes, and a shareholder of one portfolio is not deemed to be a shareholder of any other portfolio. Currently RBB has sixteen investment portfolios, including the Schneider Small Cap Value Fund (the "Fund") which commenced investment operations on September 2, 1998. As of the date hereof, the Fund offers one class, the Institutional Class. RBB has authorized capital of thirty billion shares of common stock of which 20.03 billion are currently classified into ninety-seven classes. Each class represents an interest in one of fifteen investment portfolios of RBB. The classes have been grouped into sixteen separate "families", nine of which have begun investment operations, including the Schneider Small Cap Value Fund. PORTFOLIO VALUATION -- The net asset value of the Fund is determined as of 4:00 p.m. Eastern Standard Time on each business day. The Fund's securities are valued at the last reported sales price on the national securities exchange or national securities market on which such shares are primarily traded. If no sales are reported, as in the case of some securities traded over-the-counter, portfolio securities are valued at the mean between the last reported bid and asked prices. Securities for which market quotations are not readily available are valued at fair market value as determined in good faith by or under the direction of RBB's Board of Directors. With the approval of RBB's Board of Directors, the Fund may use a pricing service, bank or broker-dealer experienced in such matters to value its securities. Short-term obligations with maturities of 60 days or less are valued at amortized cost, which approximates market value. Expenses and fees, including investment advisory and administration fees are accrued daily and taken into account for the purpose of determining the net asset value of the Fund. USE OF ESTIMATES -- The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates. REPURCHASE AGREEMENTS -- The Fund has agreed to purchase securities from financial institutions subject to the seller's agreement to repurchase them at an agreed-upon time and price ("repurchase agreements"). The financial institutions with whom the Fund enters into repurchase agreements are banks and broker/dealers which Schneider Capital Management, LP (the Fund's investment adviser or "SCM") considers creditworthy pursuant to criteria approved by RBB's Board of Directors. The seller under a repurchase agreement will be required to maintain the value of the securities as collateral, subject to the agreement at not less than the repurchase price plus accrued interest. SCM marks to market daily the value of the collateral, and, if necessary, requires the seller to maintain additional securities, to ensure that the value is not less than the repurchase price. Default by or bankruptcy of the seller would, however, expose the Fund to possible loss because of adverse market action or delays in connection with the disposition of the underlying securities. 11 SCHNEIDER SMALL CAP VALUE FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) AUGUST 31, 1999 INVESTMENT TRANSACTIONS AND INVESTMENT INCOME -- Transactions are accounted for on the trade date. The cost of investments sold is determined by use of the specific identification method for both financial reporting and income tax purposes in determining realized gains and losses on investments. Interest income is accrued as earned. Dividend income is recorded on the ex-dividend date. FOREIGN CURRENCY TRANSLATION -- Foreign securities, other assets and liabilities are valued using the foreign currency exchange rate effective at the end of the reporting period. Cost of investments is translated at the currency exchange rate effective at the trade date. The gain or loss resulting from a change in currency exchange rates between the trade and settlement dates of a portfolio transaction is treated as a gain or loss on foreign currency. Likewise, the gain or loss resulting from a change in currency exchange rates, between the date income is accrued and paid, is treated as a gain or loss on foreign currency. The Fund does not separate that portion of the results of operations arising from changes in exchange rates and that portion arising from changes in the market prices of securities. DIVIDENDS AND DISTRIBUTIONS -- Dividends from net investment income, if any, are declared and paid at least annually to shareholders. Distributions from net realized capital gains, if any, are distributed at least annually. Income and capital gain distributions are determined in accordance with U.S. federal income tax regulations, which may differ from generally accepted accounting principles. These differences include the treatment of non-taxable dividends, expiring capital loss carryforwards, foreign currency gain/loss, partnerships, and losses deferred due to wash sales and excise tax regulations. Permanent book and tax basis differences relating to shareholder distributions will result in reclassifications to paid in capital. U.S. FEDERAL TAX STATUS -- No provision is made for U.S. federal income taxes as it is the Fund's intention to qualify for and elect the tax treatment applicable to regulated investment companies under Subchapter M of the Internal Revenue Code of 1986, as amended, and make the requisite distributions to its shareholders which will be sufficient to relieve it from U.S. federal income and excise taxes. 2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES SCM serves as the Fund's investment adviser. For its advisory services, SCM is entitled to receive 1.00% of the Fund's average daily net assets, computed daily and payable monthly. The adviser has voluntarily agreed to limit the Fund's total operating expenses for the current fiscal year and contractually agree to limit the Funds total operating expenses for the following fiscal year to the extent that such expenses exceeded 1.10% of the Fund's average daily net assets. As necessary, this limitation is effected in waivers of advisory fees and reimbursements of expenses exceeding the advisory fee. For the period September 2, 1998* through August 31, 1999, investment advisory fees, waivers and reimbursements of expenses were as follows: GROSS NET ADVISORY ADVISORY FEES WAIVERS FEES REIMBURSEMENTS -------- --------- -------- -------------- Schneider Small Cap Value Fund $71,634 $(71,634) $ -- $(58,799) - ------------------ * Commencement of operations. The Fund will not pay SCM at a later time for any amounts it may waive or any amounts that SCM has assumed. 12 SCHNEIDER SMALL CAP VALUE FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) AUGUST 31, 1999 PFPC Trust Company serves as custodian of the Fund. PFPC Inc. ("PFPC"), an indirect wholly-owned subsidiary of PNC Bank, National Association, serves as administrator for the Fund. For providing administrative services, PFPC is entitled to receive a monthly fee equal to an annual rate of 0.125% of the Fund's average daily net assets, subject to a minimum monthly fee of $8,333 per Fund. For the period September 2, 1998* through August 31, 1999, PFPC, at their discretion, voluntarily agreed to waive a portion of their administration fees for the Fund. During this period, PFPC's administration fees and related waivers were as follows: GROSS NET ADMINISTRATION ADMINISTRATION FEES WAIVERS FEES -------------- --------- -------------- Schneider Small Cap Value Fund $101,588 $(49,863) $51,725 - ------------------ * Commencement of operations. In addition, PFPC serves as the Fund's transfer and disbursing agent. PFPC, at their discretion, voluntarily agreed to waive a portion of their transfer agency fees for the Fund. During the period September 2, 1998* through August 31, 1999, transfer agency fees and waivers were as follows: GROSS TRANSFER NET TRANSFER AGENCY FEES WAIVERS AGENCY FEES -------------- --------- -------------- Schneider Small Cap Value Fund $28,615 $(11,953) $16,662 - ------------------ * Commencement of operations. Provident Distributors (PDI) provides certain administrative services to the Fund. As compensation for such administrative services, PDI is entitled to receive a monthly fee equal to an annual rate of 0.15% of the Fund's average daily net assets. For the period September 2, 1998* through August 31, 1999, PDI has, at its discretion, voluntarily agreed to waive a portion of its administrative services fees for the Fund. During this period, administrative services fees and waivers were as follows: GROSS NET ADMINISTRATIVE ADMINISTRATIVE SERVICES FEES WAIVERS SERVICES FEES -------------- --------- -------------- Schneider Small Cap Value Fund $10,745 $(8,595) $2,150 - ------------------ * Commencement of operations. These fees are accrued daily and paid monthly. 13 SCHNEIDER SMALL CAP VALUE FUND NOTES TO FINANCIAL STATEMENTS (CONCLUDED) AUGUST 31, 1999 3. INVESTMENT IN SECURITIES For U.S. federal income tax purposes, the costs of securities owned through August 31, 1999 was $10,791,261. Accordingly, the net unrealized appreciation/(depreciation) of investments was as follows: GROSS GROSS NET APPRECIATION/ APPRECIATION DEPRECIATION (DEPRECIATION) ------------ ------------ ----------------- Schneider Small Cap Value Fund $2,951,440 $(673,541) $2,277,899 For the period September 2, 1998* through August 31, 1999, aggregate purchases and sales of investment securities (excluding short-term investments) were as follows: PURCHASES SALES ----------- ----------- Schneider Small Cap Value Fund $21,615,146 $11,073,270 - ------------------ * Commencement of operations. 4. CAPITAL SHARE TRANSACTIONS As of August 31, 1999 the Fund has 100,000,000 shares of $0.001 par value common stock authorized. Transactions in capital shares for the period September 2, 1998 (commencement of operations) through August 31, 1999 were as follows: SHARES AMOUNT ------- ---------- Sales ........................ 780,646 $9,748,827 Reinvestments ................ 4,306 49,685 Repurchases .................. (68,611) (904,929) ------- ---------- Net increase ................. 716,341 $8,893,583 ======= ========== On August 31, 1999, two shareholders held approximately 27% of the outstanding shares of the Schneider Small Cap Value fund. One of the shareholders, an officer of the adviser, owns approximately 14% of the outstanding shares. 5. RECLASS OF CAPITAL ACCOUNTS In accordance with accounting pronouncements, the Fund has recorded reclassifications in the capital accounts. These reclassifications have no impact on the net asset value of the Fund and are designed generally to present undistributed income and realized gains on a tax basis which is considered to be more informative to the shareholder. As of August 31, 1999, the Fund recorded the following reclassification to increase (decrease) the accounts listed below: ACCUMULATED UNDISTRIBUTED NET REALIZED ADDITIONAL NET INVESTMENT GAIN/(LOSS) PAID-IN INCOME (LOSS) ON INVESTMENTS CAPITAL -------------- -------------- ----------- Schneider Small Cap Value $12,155 $(12,155) -- 14 SCHNEIDER SMALL CAP VALUE FUND SHAREHOLDER TAX INFORMATION (UNAUDITED) Each Fund is required by Subchapter M of the Internal Revenue Code of 1986, as amended, to advise its shareholders within 60 days of each Fund's fiscal year end (August 31, 1999) as to the U.S. federal tax status of distributions received by each Fund's shareholders in respect of such fiscal year. During the fiscal year ended August 31, 1999, the following dividends and distributions per share were paid by each of the Funds: ORDINARY INCOME SHORT-TERM GAINS --------------- ---------------- Schneider Small Cap Value Fund $-- $.13 These amounts were reported to shareholders as income in 1998. Because each Fund's fiscal year is not the calendar year, another notification will be sent with respect to calendar year 1999. The second notification, which will reflect the amount, if any, to be used by calendar year taxpayers on their U.S. federal income tax returns, will be made in conjunction with Form 1099-DIV and will be mailed in January 2000. Foreign shareholders will generally be subject to U.S. withholding tax on the amount of their dividend. They will generally not be entitled to a foreign tax credit or deduction for the withholding taxes paid by the Funds, if any. In general, dividends received by tax-exempt recipients (e.g., IRAs and Keoghs) need not be reported as taxable income for U.S. federal income tax purposes. However, some retirement trusts (e.g., corporate, Keogh and 403(b)(7) plans) may need this information for their annual information reporting. Shareholders are advised to consult their own tax advisers with respect to the tax consequences of their investment in the Funds. 15 SCHNEIDER SMALL CAP VALUE FUND REPORT OF INDEPENDENT ACCOUNTANTS TO THE SHAREHOLDERS AND BOARD OF DIRECTORS OF THE RBB FUND, INC.: In our opinion, the accompanying statement of assets and liabilities, including the portfolio of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Schneider Small Cap Value Fund, a separately managed portfolio of The RBB Fund, Inc. (the "Fund"), at August 31, 1999, and the results of its operations, the changes in its net assets and the financial highlights for the period September 2, 1998 (commencement of operations) through August 31, 1999, in conformity with generally accepted accounting principles. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of these financial statements in accordance with generally accepted auditing standards, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit, which included confirmation of securities at August 31, 1999 by correspondence with the custodian and brokers, provides a reasonable basis for the opinion expressed above. /S/ SIGNATURE PRICEWATERHOUSECOOPERS LLP PricewaterhouseCoopers LLP 2400 Eleven Penn Center Philadelphia, Pennsylvania October 15, 1999 16 [THIS PAGE INTENTIONALLY LEFT BLANK.] [THIS PAGE INTENTIONALLY LEFT BLANK.] INVESTMENT ADVISER Schneider Capital Management 460 E. Swedesford Road Wayne, PA 19087 ADMINISTRATOR PFPC Inc. 400 Bellevue Parkway Wilmington, DE 19809 DISTRIBUTOR Provident Distributors, Inc. Four Falls Corporate Center, 6th Floor West Conshohocken, PA 19428-2961 CUSTODIAN PFPC Trust Company 400 Bellevue Parkway Wilmington, DE 19809 TRANSFER AGENT PFPC Inc. 400 Bellevue Parkway Wilmington, DE 19809 INDEPENDENT ACCOUNTANTS PricewaterhouseCoopers LLP 2400 Eleven Penn Center Philadelphia, PA 19103 COUNSEL Drinker Biddle & Reath One Logan Square 18th and Cherry Streets Philadelphia, PA 19103-6996 This report is submitted for the general information of the shareholders of the Fund. It is not authorized for the distribution to prospective investors in the Fund unless it is preceded or accompanied by a current prospectus which includes details regarding the Fund's objectives, policies and other information. Total investment return is based on historical results and is not intended to indicate future performance. The investment return and principal value of an investment in the Fund will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than original cost. -----END PRIVACY-ENHANCED MESSAGE-----