RBB FUND INC, 497, 1995-09-01

RBB FUND INC
497, 1995-09-01

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[Logo]

PROSPECTUS

DECEMBER 28, 1994
AS REVISED AUGUST 31, 1995
[ ] WARBURG PINCUS BALANCED FUND

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WARBURG PINCUS BALANCED FUND

PROSPECTUS December 28, 1994 as revised August 31, 1995

Warburg Pincus Advisor Funds are a family of open-end mutual funds that are
offered to financial institutions investing on behalf of their customers and to
retirement plans that elect to make one or more Advisor Funds an investment
option for participants in the plans. One Advisor Fund is described in this
Prospectus.

The WARBURG PINCUS BALANCED FUND (the 'Balanced Fund' or 'Fund') consists of
multiple classes of common stock of The RBB Fund, Inc. ('RBB'). RBB is an
open-end management investment company incorporated under the laws of the State
of Maryland on February 29, 1988 and currently operating or proposing to operate
nineteen separate investment portfolios. The Series 2 shares ('Shares') offered
by this Prospectus represent interests in the Fund.

The Fund currently offers two classes of shares, one of which, the Series 2
Shares, is offered pursuant to this Prospectus. The Series 2 Shares of the Fund,
as well as Series 2 Shares of certain other Warburg Pincus-advised funds, are
sold under the name 'Warburg Pincus Advisor Funds.' The Series 2 Shares may not
be purchased by individuals directly, but other financial institutions and
retirement plans ('Institutions') may purchase Series 2 Shares for individuals.
The Series 2 Shares impose a 12b-1 fee of up to .50% per annum, which is the
economic equivalent of a sales charge.

NO MINIMUM INVESTMENT.

There is no minimum amount of initial or subsequent purchases of shares imposed
on Institutions. See 'How to Purchase Shares.'

SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY ANY BANK AND SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
INVESTMENTS IN SHARES OF THE FUND INVOLVE INVESTMENT RISKS, INCLUDING THE
POSSIBLE LOSS OF PRINCIPAL.

This Prospectus contains information that a prospective investor needs to know
before investing. Please keep it for future reference. A Statement of Additional
Information, dated December 28, 1994, as revised August 31, 1995 has been filed
with the Securities and Exchange Commission and is incorporated by reference in
this Prospectus. It may be obtained free of charge from RBB's distributor by
calling (800) 888-6878.

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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
--------------------------------------------------------------------------------

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FEE TABLE
SHAREHOLDER TRANSACTION EXPENSES*
ANNUAL FUND OPERATING EXPENSES AFTER EXPENSE REIMBURSEMENTS AND WAIVERS

<TABLE>
<S> <C>
Management fees**................................................................................. .90%
12b-1 fees**...................................................................................... .50
Other Expenses (after waivers and reimbursements)................................................. .45
-----
Total Fund Operating Expenses (after waivers and reimbursements).................................. 1.85%
-----
-----
</TABLE>

EXAMPLE

An investor would pay the following expenses on a $1,000 investment in the
Fund, assuming (1) a 5% annual return, and (2) redemption at the end of each
time period:

<TABLE>
<CAPTION>
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
---- ----- ---- -----

<S> <C> <C> <C> <C>
Balanced Fund Series 2 Shares............................................ 19 58 100 217
---- ----- ---- -----
</TABLE>

------------

* No sales charge is imposed upon the purchase of Shares of the Fund. Thus, the
full amount of the purchase price of Fund shares will be invested at the time
of purchase or upon any other exchange of Shares of other Warburg Pincus
Advisor Funds without imposition of any sales charge.

** Management fees and 12b-1 fees are based on average daily net assets and are
calculated daily and paid monthly.

The caption 'Other Expenses' does not include extraordinary expenses as
determined by use of generally accepted accounting principles.

The Example in the Fee Table assumes that all dividends and distributions
are reinvested and that the amounts listed under 'Annual Fund Operating Expenses
After Expense Reimbursements and Waivers' remain the same as the years shown.
Certain broker-dealers and financial institutions also may charge their clients
fees in connection with investments in the Fund's shares, which fees are not
reflected in the table. THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF
PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE
SHOWN. Long-term Shareholders of the Shares of the Balanced Fund may pay more
than the economic equivalent of the maximum front-end sales charges permitted
by the National Association of Securities Dealers, Inc. (the 'NASD').

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The Fee Table is designed to assist an investor in understanding the
various costs and expenses that an investor in the Shares of the Fund will bear
directly or indirectly. (For more complete descriptions of the various costs and
expenses, see 'Management' and 'Distribution of Shares' below.) The expense
figures for the Series 2 Class of the Balanced Fund are based upon fees and
costs of a different class of Shares of the Fund which have been restated from
actual expenses paid by such Fund during the year ended August 31, 1994 to
reflect current expense levels. In addition, the Fee Table reflects a voluntary
assumption of some of the additional expenses of the Balanced Fund by the
investment adviser. Assumption of additional expenses will have the effect of
lowering the Balanced Fund's overall expense ratios and increasing its yield to
investors. There can be no assurance that the investment adviser will continue
to assume such expenses. Absent such expense reimbursements, under current
expense levels the actual expenses paid by the Balanced Fund for the year ended
August 31, 1994 would have been as follows:

ANNUAL FUND OPERATING EXPENSES BEFORE EXPENSE REIMBURSEMENTS AND WAIVERS

<TABLE>
<S> <C>
Management fees..................................................... .90%
12b-1 Fees.......................................................... .50
Other Expenses...................................................... 4.76
-----
Total Fund Operating Expenses....................................... 6.16%
-----
-----
</TABLE>

The caption 'Other Expenses' does not include extraordinary expenses as
determined by use of generally accepted accounting principles.

OFFERING PRICE

Series 2 Shares which represent interests in the Fund will be offered to
the public at the next determined net asset value after receipt of an order by
the Fund. See 'How to Purchase Shares.'

EXCHANGES

An institution may exchange Series 2 Shares of the Fund for Series 2 Shares
of other Warburg Pincus Advisor Funds at their net asset values next determined
after receipt by the relevant Fund of an exchange request. No exchange fee is
currently charged for exchanges. See 'How to Redeem and Exchange Shares.'

REDEMPTION PRICE

Series 2 Shares may be redeemed at any time at their net asset value next
determined after receipt by the Fund of a redemption request. See 'How to Redeem
and Exchange Shares -- Redemption of Shares.'

RISK FACTORS

An investment in the Balanced Fund is subject to certain risks, as set
forth in detail under 'Investment Objectives and Policies.' As with other mutual
funds, there can be no assurance that the Fund will achieve its objective. The
Fund, to the extent set forth under 'Investment Objectives and Policies,' may
engage in the following investment practices: the purchase of mortgage-related
securities, the lending of portfolio securities and engaging in options and
futures transactions, and engaging in secured borrowings. All of these
transactions involve certain special risks, as set forth under 'Investment
Objectives and Policies.'

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SHAREHOLDER INQUIRIES

Any questions or communications regarding an institution's account should
be directed to Warburg Pincus Advisor Funds at (800) 888-6878, and written
communications should be directed to P.O. Box 9030 Boston, Massachusetts
02205-9030.

Series 2 Shares of the Fund had not yet been offered to the public as of
August 31, 1994 and, accordingly, no financial information is provided with
respect to such shares.
INVESTMENT OBJECTIVES AND POLICIES

BALANCED FUND

The Balanced Fund's investment objective is to maximize total return
through a combination of long-term growth of capital and current income
consistent with preservation of capital. The Balanced Fund seeks to achieve this
objective through a policy of diversified investment in common stocks, preferred
stocks, debt securities, preferred stocks and debt securities which are
convertible into common stocks, and government corporate, bank and commercial
obligations. At all times, the Balanced Fund will have a minimum of 25% of its
assets in stocks and minimum of 25% in fixed income securities. Compliance with
such percentage requirement may limit the ability of the Balanced Fund to
maximize total return. With respect to convertible senior securities, only that
portion of the value of such securities attributable to their fixed income
characteristics will be used for purposes of determining the percentage of the
assets of the Balanced Fund that are invested in fixed-income senior securities.
The actual percentage of assets invested in equity and fixed-income securities
will vary from time to time, depending on the judgment of the sub-adviser as to
general market and economic conditions, trends and yields and interest rates and
changes in fiscal and monetary policies.

MULTI-MANAGER APPROACH. The Balanced Fund will be managed by a team of senior
managers of the investment adviser, Warburg, Pincus Counsellors, Inc. ('WPC').
Six of the managers will be dedicated to managing portions of the Balanced Fund
allocated to equities; one manager will select and manage the fixed income
securities which comprise the fixed income portion of the Balanced Fund. Dale C.
Christensen and Anthony G. Orphanos, Managing Directors of WPC, will be
designated overall portfolio strategists and will be responsible for determining
the portion of the Balanced Fund to be allocated between equity and fixed income
securities, and the allocation among the various equity sectors.

Equity Investment. Each of the equity portfolio managers will manage an
allocated portion of the equity holdings of the Balance Fund; each manager will
manage his/her portion with a different investment emphasis or approach, but
consistent with the overall objective of long-term growth of capital for the
Balanced Fund's common stock portion.

The four areas represented by the equity portfolio managers are: (1) U.S.
Value Sector, managed by Anthony G. Orphanos, will invest primarily in stocks
whose acquisition price represents low absolute or relative value, based on
historical and financial analysis, and compared to other stocks and sectors of
the Standard & Poor's 500 universe of common stocks and other indices. (2) U.S
Small Company Sector, managed by Elizabeth B. Dater and Stephen J. Lurito, will
invest primarily in common stocks and warrants of small capitalization (i.e.,
capitalization less than $660 million at the time of purchase) and emerging
growth U.S. companies that represent attractive opportunities for maximum
capital appreciation. Emerging growth companies are small and medium-sized
companies that have passed their start up phase and that show positive earnings
and prospects for achieving significant profit and gain in a relatively short
period of time. (3) U.S. Mid-Cap Sector, managed by George U. Wyper and Susan L.
Black,

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will invest primarily in a diversified portfolio of common stocks, warrants and
securities convertible into or exchangeable for common stock securities of
domestic companies which have market capitalizations in the $660 million to
$13.8 billion range, commonly referred to as middle capitalization or 'mid-cap,'
and includes a potential universe of companies in such indices as the Russell
Midcap Index and Standard & Poor's Midcap 400 Index. The portfolio manager will
attempt to identify sectors of the market and companies within market sectors
that he believes will outperform the overall market. And, (4) International
Equity Sector, managed by Richard H. King and Nicholas P.W. Horsley, will invest
primarily in a broadly diversified portfolio of equity securities of companies
that, wherever organized, have their principal business activities and interests
outside the United States. The international equity managers intend to invest
principally in the securities of financially strong companies with opportunities
for growth within growing international economies and markets through increased
earnings power and improved utilization or recognition of assets. Investments
may be made in equity securities of companies of any size, whether traded on or
off a national securities exchange. The Fund will not invest more than 10% of
its net assets in foreign securities. Investments in foreign securities involve
risks not otherwise associated with investments in domestic securities,
including risks of currency fluctuations, tax or excessive government
regulation, and political instability. See 'Foreign Securities' below for a
discussion of the various risks associated with investments in foreign
securities.

Fixed Income Investment. The fixed income portion, managed by Mr.
Christensen, will invest primarily in debt instruments such as corporate
obligations, U.S. Government obligations, municipal obligations and
mortgage-related debt securities.

CORPORATE OBLIGATIONS. The Balanced Fund may invest in debt obligations of
corporations, such as corporate bonds, debentures, debentures convertible into
common stocks, and notes, which, at the time of purchase for the Fund, are rated
'AAA,' 'AA' or 'A' by Standard & Poor's Corporation ('S&P') or 'Aaa,' 'Aa' or
'A,' by Moody's Investors Service, Inc. ('Moody's'). These ratings are described
in the Appendix to this Prospectus. The Balanced Fund may also purchase debt
obligations which are unrated at the time of purchase provided they are
determined by the Fund's adviser to be of comparable quality to rated
obligations pursuant to guidelines approved by RBB's Board of Directors. Such
obligations may include dollar-denominated debt obligations of foreign issuers.

In selecting debt securities for the Balanced Fund, the adviser will review
and monitor the creditworthiness of each issuer and issue, in addition to
relying on ratings assigned by S&P or Moody's as indicators of quality. Interest
rate trends and specific developments which may affect individual issuers will
also be analyzed.

U.S. GOVERNMENT OBLIGATIONS. The Balanced Fund may purchase obligations issued
or guaranteed by the U.S. Government or its agencies or instrumentalities.
Obligations which may be so purchased include obligations of agencies and
instrumentalities of the U.S. Government which are supported by the full faith
and credit of the U.S. or by U.S. Treasury guarantees, such as securities of the
Government National Mortgage Association and the Federal Housing Authority, or
obligations supported by the right of the issuer to borrow from the U.S.
Treasury, such as securities of the Federal Home Loan Mortgage Corporation, or
obligations supported only by the credit of the agency or instrumentality
issuing the obligation, such as securities of the Federal National Mortgage
Association and the Federal Loan Banks.

'WHEN-ISSUED' SECURITIES. The Balanced Fund may purchase securities on a
'when-issued' basis. When-issued securities are securities purchased for
delivery beyond the normal settle-

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ment date at a stated price and yield. The Balanced Fund 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 when 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. The Balanced Fund
expects that commitments to purchase when-issued securities will not exceed 25%
of the value of its total assets absent unusual market conditions. The Balanced
Fund does not intend to purchase when-issued securities for speculative purposes
but only in furtherance of its investment objective.

MUNICIPAL OBLIGATIONS. When conditions warrant, the Balanced Fund may also
invest without limitation in Municipal Obligations, whether or not the income
thereon is exempt from regular Federal income tax, provided that the Municipal
Obligations are determined by the Fund's adviser to present minimal credit risks
and at the time of purchase are rated 'A' or higher by S&P or by Moody's in the
case of bonds, 'SP-1' by S&P or 'MIG-2' or higher by Moody's in the case of
notes, or 'VMIG-2' or higher by Moody's in the case of variable rate demand
notes, or if unrated, are determined by the adviser to be of comparable quality
pursuant to guidelines adopted by RBB's Board of Directors. For a more complete
discussion of Municipal Obligations, see 'Investment Objectives and
Policies -- Municipal Obligations' in the Statement of Additional Information.

MORTGAGE-RELATED DEBT SECURITIES. The Balanced Fund may purchase without
limitation mortgage-related debt securities. Such securities represent interests
in pools of mortgage loans to residential home buyers made by lenders such as
savings and loan institutions, mortgage bankers, commercial banks and others.
Pools of mortgage loans are assembled for sale to investors (such as the
Balanced Fund) by various governmental, government-related and private
organizations. Mortgage-related securities may include asset-backed securities
which are backed by mortgages, installment sales contracts, credit card
receivables or other assets and collateralized mortgage obligations ('CMOs')
issued or guaranteed by U.S. Government agencies and instrumentalities or issued
by private companies. Purchasable mortgage-related 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 Balanced Fund since the remaining maturity of any
asset-backed security acquired will be 397 days or less.

Interests in pools of mortgage loans differ from other forms of debt
securities, which normally provide for periodic payment of interest in fixed
amounts with principal payments at maturity or specified call dates. Instead,
these securities will provide a monthly payment to the Balanced Fund which
consists of both interest and principal payments. In effect, these payments are
'pass-throughs' of the monthly payments made by the individual borrowers on
their residential mortgage loans, net of any fees paid to the issuer or
guarantor of such securities. Additional payments to the Fund may be derived
from repayments of principal resulting from the sale of the underlying
residential property, refinancing or foreclosure, net of fees or costs which may
be incurred. Some mortgage-related securities are described as 'modified
pass-throughs.' These securities entitle the holder to receive all interest and
principal payments owed on the mortgage pool, net of certain fees, regardless of
whether or not the mortgagor actually makes the payment.

The average life of mortgage-related securities varies with the maturities
of the underlying mortgage instruments. In addition, prepayments of the
mortgages included in the underlying

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mortgage pool will usually result in the return of the greatest part of
principal invested well before the maturity of the mortgages in the pool. The
volume of such prepayments of principal in a given pool will influence the
actual yield of mortgage-related securities, and principal returned to the
Balanced Fund as a holder of such securities may be reinvested in instruments
whose yield may be higher or lower than that which might have been obtained had
such prepayments not occurred. When interest rates are decreasing, such
prepayments usually increase, thereby reducing the average life of a pool. As a
result, the reinvestment of such principal prepayments will be at a lower rate
than that on the original mortgage-related security, and thus the Balanced
Fund's yield will be lower. In addition, when interest rates are decreasing, the
value of mortgage-related securities may not increase as much as the value of
other debt securities. In quoting yields for mortgage-related securities, the
standard practice is to assume that the securities will have a 12-year life. As
previously noted, however, the life of individual pools may differ widely and
the actual yield earned on mortgage-related securities may differ significantly
from the estimated yield based on the 12-year life assumption.

The principal governmental guarantor of mortgage-related securities is the
Government National Mortgage Association ('GNMA'). GNMA is a wholly owned U.S.
Government corporation within the U.S. Department of Housing and Urban
Development. Pass-through securities issued by GNMA are guaranteed by the full
faith and credit of the U.S. Government as to the timely payment of principal
and interest. The Federal National Mortgage Association ('FNMA') is a
government-sponsored corporation owned entirely by private stockholders.
Pass-through securities issued by FNMA are guaranteed as to timely payment of
principal and interest by FNMA but are not backed by the full faith and credit
of the U.S. Government. The Federal Home Loan Mortgage Corporation ('FHLMC') is
a government-sponsored corporation owned entirely by private stockholders. FHLMC
issues Participation Certificates ('Pcs') which represent interests in mortgages
from FHLMC's national portfolio. FHLMC guarantees the timely payment of interest
and ultimate collection of principal but Pcs are not backed by the full faith
and credit of the U.S. Government.

Commercial banks, savings and loan institutions, private mortgage insurance
companies, mortgage bankers and other secondary market issuers also create
pass-through pools of conventional residential mortgage loans. Such issuers may
in addition be the originators of the underlying mortgage loans as well as the
guarantors of the mortgage-related securities. Pools created by such
non-governmental issuers generally offer a higher rate of interest than
government and government-related pools because there are no direct or indirect
government guarantees of payments in the former pools. However, timely payment
of interest and principal of these pools is supported by various forms of
insurance or guarantees, including individual loan and pool insurance. The
insurance and guarantees are issued by government entities, private insurers and
the mortgage poolers. Such insurance and guarantees and the creditworthiness of
the issuers thereof will be considered in determining whether a mortgage-related
security meets the Balanced Fund's investment quality standards. Private
insurers provide less assurance than government or government-related insurers
that they will be able to meet their obligations. The Balanced Fund may buy
mortgage-related securities without insurance or guarantees if, through an
examination of the financial condition and business history of the pooler,
including among other things the pooler's loan experience, profitability,
capital adequacy, liquidity, foreign exposure, and management, the Balanced
Fund's adviser determines that the pooler is creditworthy. Although the market
for such securities is becoming increasingly liquid, securi-

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ties issued by certain private organizations may not be readily marketable.

Corporations that are government owned, government-related or are private
mortgage poolers may create mortgage loan pools offering pass-through
investments in addition to those described above. The mortgages underlying these
securities may be mortgage instruments whose principal or interest payments may
vary or whose terms to maturity may differ from customary long-term fixed rate
mortgages. As new types of mortgage-related securities are developed and offered
to investors, the Balanced Fund's adviser will consider making investments in
such new types of securities consistent with the Balanced Fund's investment
objectives and policies and with due regard to those quality and credit
standards, which, in the adviser's view, are applicable to such investments.

WARRANTS. The Balanced Fund may purchase warrants provided that they are
attached to securities that may otherwise be purchased by the Fund.

INTEREST RATES. As a general rule, the price of fixed income instruments tends
to move inversely to changes in market interest rates.

ILLIQUID SECURITIES. The Balanced Fund will not invest more than 15% of its net
assets in illiquid securities including securities that are illiquid by virtue
of the absence of a readily available market or legal or contractual
restrictions on resale. Securities that have legal or contractual restrictions
on resale but have a readily available market are not deemed illiquid for
purposes of this limitation. WPC will monitor the liquidity of such restricted
securities under the supervision of RBB's Board of Directors. See 'Investment
Objectives and Policies -- Illiquid Securities' in the Statement of Additional
Information.

PORTFOLIO TURNOVER. The Balanced Fund will effect portfolio transactions without
regard to holding period, if, in its judgment, such transactions are advisable
in light of general market, economic or financial conditions. As a result, the
Fund may engage in a substantial number of portfolio transactions. Moreover, due
to the reconfiguration of the Balanced Fund's portfolio occasioned by the change
in investment advisors in September 1994, the portfolio turnover rates for both
the debt and equity portions of the Balanced Fund are likely to exceed 150% in
the current fiscal year. In the absence of these unusual and isolated
circumstances, the Balanced Fund anticipates that, under normal conditions, its
annual portfolio turnover rate should not exceed 100% for the equity portion and
100% for the fixed income portion. However, it is impossible to predict
portfolio turnover rates.

The anticipated portfolio turnover rate for the debt and equity portions of
the Balanced Fund are greater than that of many other investment companies. A
higher than normal portfolio turnover rate may affect the degree to which the
Fund's net asset value fluctuates. Higher portfolio turnover rates are likely to
result in comparatively greater brokerage commissions. In addition, short-term
gains realized from portfolio transactions are taxable to shareholders as
ordinary income. The amount of portfolio activity will not be a limiting factor
when making portfolio decisions. See Statement of Additional Information 'Fund
Transactions' and 'Taxes.'

TEMPORARY DEFENSIVE MEASURES. The Balanced Fund also reserves the right, as a
temporary defensive measure, to purchase eligible U.S. dollar-denominated money
market instruments and securities subject to repurchase agreements. The Fund's
adviser will determine when market conditions warrant temporary defensive
measures.

SMALL CAP STOCKS. Securities of companies with small capitalizations ('small-cap
companies') tend to be riskier than securities of companies with medium or large
capitalizations. This is because small-cap companies typically have smaller
product lines and less access to liquidity than mid-cap or large-cap companies,
and are therefore more sensitive to economic downturns.

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In addition, growth prospects of small-cap companies tend to be less certain
than mid- or large-cap companies, and the dividends paid on small-cap stocks are
frequently negligible. Moreover, small cap stocks have, on occasion, fluctuated
in the opposite direction of large-cap stocks or the general stock market.
Consequently, securities of small-cap companies tend to be more volatile than
those of mid- and large-cap companies.

FOREIGN SECURITIES. The Balanced Fund will not invest more than 10% of its net
assets in foreign securities. Investing in securities of foreign issuers
involves considerations not typically associated with investing in securities of
companies organized and operated in the U.S. Foreign securities generally are
denominated and pay dividends or interest in foreign currencies. The Balanced
Fund may hold from time to time various foreign currencies pending their
investment in foreign securities or their conversion into U.S. dollars. The
value of the assets of the Balanced Fund as measured in U.S. dollars may
therefore be affected favorably or unfavorably by changes in exchange rates.
There may be less publicly available information concerning foreign issuers than
is available with respect to U.S. issuers. Foreign securities may not be
registered with the U.S. Securities and Exchange Commission, and generally,
foreign companies are not subject to uniform accounting, auditing and financial
reporting requirements comparable to those applicable to U.S. issuers. See
'Investment Objectives and Policies -- Foreign Securities' in the Statement of
Additional Information.

OPTIONS AND FUTURES CONTRACTS. The Balanced Fund may write covered call options,
buy put options, buy call options and write put options, without limitation
except as noted in this paragraph. Such options may relate to particular
securities or to various indexes and may or may not be listed on a national
securities exchange and issued by the Options Clearing Corporation. The Fund may
also invest in futures contracts and options on futures contracts (index futures
contracts or interest rate futures contracts, as applicable) for hedging
purposes. However, the Fund may not write put options or purchase or sell
futures contracts or options on futures contracts to hedge more than its total
assets unless immediately after any such transaction the aggregate amount of
premiums paid for put options and the amount of margin deposits on its existing
futures positions do not exceed 5% of its total assets.

Options trading is a highly specialized activity which entails greater than
ordinary investment risks. A call option for a particular security gives the
purchaser of the option the right to buy, and a writer the obligation to sell,
the underlying security at the stated exercise price at any time prior to the
expiration of the option, regardless of the market price of the security. The
premium paid to the writer is in consideration for undertaking the obligations
under the option contract. A put option for a particular security gives the
purchaser the right to sell the underlying security at the stated exercise price
at any time prior to the expiration date of the option, regardless of the market
price of the security. In contrast to an option on a particular security, an
option on an index provides the holder with the right to make or receive a cash
settlement upon exercise of the option. The amount of this settlement will be
equal to the difference between the closing price of the index at the time of
exercise and the exercise price of the option expressed in dollars, times a
specified multiple.

The Balanced Fund will engage in unlisted over-the-counter options only
with broker/dealers deemed creditworthy by its investment adviser. Closing
transactions in certain options are usually effected directly with the same
broker/dealer that effected the original option transaction. The Fund bears the
risk that the broker/dealer will fail to meet its obligations. There is no
assurance that the Fund will be able to close an unlisted option position.
Furthermore, unlisted options are not subject to the protections afforded
purchasers of listed options by the Options Clearing Corporation, which

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performs the obligations of its members who fail to do so in connection with the
purchase or sale of options.

To enter into a futures contract, the Balanced Fund must make a deposit of
an initial margin with its custodian in a segregated account in the name of its
futures broker. Subsequent payments to or from the broker, called variation
margin, will be made on a daily basis as the price of the underlying security or
index fluctuates, making the long and short positions in the futures contracts
more or less valuable.
The risks related to the use of options and futures contracts include: (i)
the correlation between movements in the market price of a portfolio's
investments (held or intended for purchase) being hedged and in the price of the
futures contract or option may be imperfect; (ii) possible lack of a liquid
secondary market for closing out options or futures positions; (iii) the need
for additional portfolio management skills and techniques; and (iv) losses due
to unanticipated market movements. Successful use of options and futures by the
Fund is subject to the Adviser's ability to correctly predict movements in the
direction of the market. For example, if the Fund uses future contracts as a
hedge against the possibility of a decline in the market adversely affecting
securities held by it and securities prices increase instead, the Fund will lose
part or all of the benefit of the increased value of its securities which it has
hedged because it will have approximately equal offsetting losses in its futures
positions. The risk of loss in trading futures contracts in some strategies can
be substantial, due both to the low margin deposits required, and the extremely
high degree of leverage involved in future pricing. As a result, a relatively
small price movement in a futures contract may result in immediate and
substantial loss or gain to the investor. Thus, a purchase or sale of a futures
contract may result in losses or gains in excess of the amount invested in the
contract. For a further discussion see 'Investment Policies' in the Statement of
Additional Information.

The investment objective and policies of the Balanced Fund described above
may be changed by RBB's Board of Directors without the approval of a majority of
the outstanding Shares representing interest in the Fund. Such changes may
result in the Fund having investment objectives which differ from those an
investor may have considered at the time of investment. There is no assurance
that the investment objective of the Balanced Fund will be achieved.

INVESTMENT LIMITATIONS

The Fund may not change the following investment limitations (with certain
exceptions, as noted below) without the affirmative vote of the holders of a
majority of the Fund's outstanding Shares. (A complete list of the investment
limitations that cannot be changed without such a vote of the shareholders is
contained in the Statement of Additional Information under 'Investment
Objectives and Policies.')

The Fund may not:

1. Purchase the 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 value of
the Fund'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 Fund, except that up to 25% of the value of the Fund's total assets may
be invested without regard to such limitations.

2. Purchase any securities which would cause, at the time of purchase, more
than 25% of the value of the total assets of the Fund to be invested in the
obligations of issuers in any industry, provided that there is no limitation
with respect to investments in U.S. Government obligations.

In addition, the Balanced Fund may not borrow money, except from banks or
by entering

<PAGE>
into reverse repurchase agreements for temporary purposes and then in amounts
not in excess of 30% of the value of the Fund'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 Fund; or mortgage, pledge or hypothecate any of
its assets except in connection with any such borrowing or reverse repurchase
agreement and in amounts not in excess of 125% of the dollar amounts borrowed;
or purchase portfolio securities while borrowings and reverse repurchase
agreements in excess of 5% of the Fund's net assets are outstanding. (This
borrowing provision is not for investment leverage, but solely to facilitate
management of the Balanced Fund's securities by enabling the Balanced Fund to
meet redemption requests where the liquidation of portfolio securities is deemed
to be disadvantageous or inconvenient.)
MANAGEMENT

BOARD OF DIRECTORS. The business and affairs of RBB and the Fund are managed
under the direction of RBB's Board of Directors.

INVESTMENT ADVISER. Warburg, Pincus Counsellors, Inc. ('WPC') serves as the
investment adviser to the Fund. WPC, organized in 1970, is a professional
investment counseling firm which provides investment services to investment
companies, employee benefit plans, endowment funds, foundations and other
institutions and individuals. WPC currently manages over $9.0 billion in assets,
of which approximately $4.0 billion are investment companies. WPC is a wholly
owned subsidiary of Warburg Pincus Counsellors G.P., which has no business other
than being a holding company of WPC and its subsidiaries. E.M. Warburg, Pincus &
Co., Inc. controls WPC through its ownership of voting preferred stock of WPC.
WPC's principal offices are located at 466 Lexington Avenue, New York, New York
10017-3147. As adviser to the Fund, WPC is responsible for overall management of
the Fund, and is responsible for all purchases and sales of portfolio securities
for the Fund.

WPC may, at its own expense, provide promotional incentives to qualified
recipients who support the sale of Series 2 Shares of the Fund. Qualified
recipients are securities dealers who have sold Series 2 Shares or others,
including banks and other financial institutions, under special arrangements. In
some instances, these incentives may be offered only to certain institutions
whose representatives provide services in connection with the sale or expected
sale of significant amounts of Series 2 Shares.

Dale C. Christensen, a Managing Director of WPC, has been with WPC since
1989, prior to which he was a Vice President in the International Private
Banking division and the domestic pension fund management division at Citibank,
N.A., a Fixed Income Portfolio Manager at CIC Asset Management and a Vice
President of Investments at First City Trust. Anthony G. Orphanos, a Managing
Director of WPC, has been with WPC for the last sixteen years. Mr. Christensen
and Mr. Orphanos are the overall portfolio strategists for the Balanced Fund and
are responsible for determining the portion of the Fund to be allocated among
the various fixed income and equity sectors. Mr. Christensen also manages the
fixed income portion of the Balanced Fund. Mr. Orphanos is responsible for the
U.S. Value Sector. Elizabeth B. Dater and Stephen J. Lurito are responsible for
the U.S. Small Company Sector. Ms. Dater is a Managing Director of WPC and has
been with WPC since 1978. Mr. Lurito is a Managing Director at WPC and has been
with WPC since 1987. George U. Wyper and Susan L. Black manage the U.S. Mid-
Capital Sector. Mr. Wyper is a Managing Director of WPC and joined WPC in August
1994, before which time he was chief investment officer of White River
Corporation and president of Hanover Advisers, Inc. (1993-August 1994), chief
investment officer of Fund American Enterprises, Inc. (1991-1993) and the fixed
income portfolio manager of Firemen's Fund

<PAGE>
Insurance Company (1987-1990). Ms. Black is a Managing Director of WPC and has
been with WPC since 1985. The International Equity Sector is managed by Richard
H. King and Nicholas P.W. Horsley. Mr. King has been a Managing Director of WPC
since 1989. Mr. Horsley is a Senior Vice President and associate portfolio
manager at WPC and has been with WPC since 1993, prior to which time he was a
Director, portfolio manager and analyst at Barclays deZoete Wedd in New York
City.

For the services provided and expenses assumed by it, WPC is entitled to
receive a fee from RBB, computed daily and payable monthly at an annual rate of
.90% of the Balanced Fund's average daily net assets. This fee is higher than
that paid by most investment companies.

DISTRIBUTOR. Counsellors Securities Inc. ('Counsellors Securities'), a wholly
owned subsidiary of WPC, serves as the Fund's distributor. Counsellors
Securities is located at 466 Lexington Avenue, New York, New York 10017-3147.
Counsellors Securities receives a fee at an annual rate equal to .50% of the
Fund's average daily net assets for distribution services, pursuant to a
distribution agreement between Counsellor's Securities and RBB in accordance
with a distribution plan (the '12b-1 Plan') adopted by the Fund pursuant to Rule
12b-1 under the 1940 Act. Amounts paid to Counsellors Securities under the
Fund's 12b-1 Plan may be used by Counsellors Securities to cover expenses that
are related to (i) the sale of Shares of the Fund, (ii) ongoing servicing and/or
maintenance of the accounts of shareholders of the Fund, and (iii) sub-transfer
agency services, subaccounting services or administrative services related to
the sale of the Shares of the Fund, all as set forth in the Fund's 12b-1 Plan.
Payments under the 12b-1 Plan are not tied exclusively to the distribution
expenses actually incurred by Counsellors Securities and payments may exceed
distribution expenses actually incurred. Counsellors Securities may delegate
some or all of these functions to a Service Organization. See 'Shareholder
Servicing.' RBB's Board of Directors will evaluate the appropriateness of the
12b-1 Plan on a continuing basis and in doing so will consider all relevant
factors, including expenses borne by Counsellors Securities and amounts received
under the 12b-1 Plan.

CO-ADMINISTRATORS. The Fund employs Counsellors Funds Service, Inc.
('Counsellors Service'), a wholly-owned subsidiary of WPC, as a
co-administrator. As co-administrator, Counsellors Service provides shareholder
liaison services to the Fund including responding to shareholder inquiries and
providing information on shareholder accounts. As compensation, the Balanced
Fund pays to Counsellors Service a fee calculated at an annual rate of .10% of
average daily net assets.

The Fund also employs PFPC Inc. ('PFPC'), an indirect, wholly owned
subsidiary of PNC Bank Corp., as a co-administrator. As a co-administrator, PFPC
calculates the Fund's net asset values, provides all accounting services for the
Fund and assists in related aspects of the Funds' operations. As compensation,
the Balanced Fund pays to PFPC a fee calculated at an annual rate of .15% of
average daily net assets with a minimum annual fee of $75,000. PFPC has its
principal offices at 400 Bellevue Parkway, Wilmington, Delaware 19809.

CUSTODIAN. PNC Bank, National Association ('PNC Bank') serves as RBB's
custodian. PNC is a subsidiary of PNC Bank Corp. Its principal business address
is Broad and Chestnut Streets, Philadelphia, Pennsylvania 19101. State Street
Bank and Trust Company ('State Street') serves as sub-custodian and as
co-custodian for the Fund's foreign securities. State Street's principal
business address is 225 Franklin Street, Boston, Massachusetts 02110.

TRANSFER AGENT AND SUB-TRANSFER AGENT. PFPC serves as RBB's transfer agent and
dividend disbursing agent. State Street acts as shareholder servicing agent,
sub-transfer agent and dividend disbursing agent for the Fund. It has delegated
to

<PAGE>
Boston Financial Data Services, Inc. ('BFDS'), a 50% owned subsidiary,
responsibility for most shareholder servicing functions. BFDS' principal
business address is 2 Heritage Drive, North Quincy, Massachusetts 02171.

EXPENSES. The expenses of the Fund are deducted from its total income before
dividends are paid. These expenses include, but are not limited to, fees paid to
the investment adviser, fees and expenses of officers and directors who are not
affiliated with the Fund's investment adviser or distributor, taxes, interest,
legal fees, custodian fees, auditing fees, brokerage fees and commissions,
certain of the fees and expenses of registering and qualifying the Fund and the
Series 2 Shares for distribution under Federal and state securities laws,
expenses of preparing prospectuses and statements of additional information and
of printing and distributing prospectuses and statements of additional
information annually to existing shareholders that are not attributable to a
particular class of shares of RBB, the expense of reports to shareholders,
shareholders' meetings and proxy solicitations that are not attributable to a
particular class of shares of RBB, fidelity bond and directors and officers
liability insurance premiums, the expense of using independent pricing services
and other expenses which are not expressly assumed by the adviser under its
investment advisory agreement with respect to the Fund. Any general expenses of
RBB that are not readily identifiable as belonging to a particular investment
portfolio of RBB will be allocated among all investment portfolios of RBB based
upon the relative net assets of the investment portfolios at the time such
expenses are cited. Distribution expenses, transfer agency expenses, expenses of
preparation, printing and distributing prospectuses, statements of additional
information, proxy statements and reports to shareholders, and registration
fees, identified as belonging to a particular class, are allocated to such
class.

The investment adviser has agreed to reimburse the Fund for the amount, if
any, by which the total operating and management expenses of the Fund for any
fiscal year exceed the most restrictive state blue sky expense limitation in
effect from time to time, to the extent required by such limitation.

The investment adviser may assume additional expenses of the Fund from time
to time. In certain circumstances, it may assume such expenses on the condition
that it is reimbursed by RBB for such amounts prior to the end of a fiscal year.
In such event, the reimbursement of such amounts will have the effect of
increasing the Fund's expense ratio and of decreasing yield to investors.

For the Fund's fiscal year ended August 31, 1994, the Balanced Fund's total
expenses were 5.46% of average net assets before expense waivers and
reimbursements. WPC has agreed to waive expenses and provide reimbursements to
limit the Balanced Fund's total expenses to 1.85% per annum of average net
assets for the first year that WPC serves as investment adviser to the Fund.
However, there can be no assurance that WPC will continue to assume such
expenses.

FUND TRANSACTIONS. The Fund's adviser may consider a number of factors in
determining which brokers to use in purchasing or selling the Fund's securities.
These factors, which are more fully discussed in the Statement of Additional
Information, include, but are not limited to, research services, the
reasonableness of commissions and quality of services and execution.
Transactions for the Fund may be effected through authorized dealers, subject to
the requirements of best execution. The higher rate of turnover of the Fund's
securities may involve correspondingly higher transaction costs, which will be
borne directly by the Fund. The Fund may enter into brokerage transactions with
and pay brokerage commissions to brokers that are affiliated persons (as such
term is defined in the 1940 Act) provided that the terms of the brokerage
transactions comply with the provisions of the 1940 Act.

<PAGE>
HOW TO PURCHASE SHARES

Warburg Pincus Advisor Funds shares are only available for investment by
financial institutions on behalf of their customers and through retirement plans
that elect to make one or more Advisor Funds an option for participants in the
plans. Individuals, including participants in retirement plans, cannot invest
directly in Series 2 Shares of the Fund, but may do so only through a
participating Institution. The Fund reserves the right to make Series 2 Shares
available to other investors in the future. References in this Prospectus to
shareholders or investors are generally to Institutions as the record holders of
the Series 2 Shares.

Each Institution separately determines the rules applicable to its
customers investing in the Fund, including minimum initial and subsequent
investment requirements and the procedures to be followed to effect purchases,
redemptions and exchanges of Series 2 Shares. There is no minimum amount of
initial or subsequent purchases of Series 2 Shares imposed on Institutions,
although the Fund reserves the right to impose minimums in the future.

Orders for the purchase of Fund shares are placed with an Institution by
its customers. The Institution is responsible for the prompt transmission of the
order to the Fund.

Institutions may purchase Series 2 Shares by telephoning Warburg Pincus
Advisor Funds and sending payment by wire. After telephoning (800) 888-6878 for
instructions, an Institution should then wire federal funds to Counsellors
Securities Inc. using the following wire address:

State Street Bank and Trust Co.
225 Franklin St.
Boston, MA 02101
ABA# 0110 000 28
Attn: Mutual Funds/Custody Dept.
Warburg Pincus Advisor Funds
DDA# 9904-649-2
[Shareowner name]
[Shareowner account number]

Orders by wire will not be accepted until a completed account application
has been received in proper form, and an account number has been established. If
a telephone order is received by the close of regular trading on the New York
Stock Exchange (the 'NYSE') (currently 4:00 p.m., Eastern time) and payment by
wire is received on the same day in proper form in accordance with instructions
set forth above, the shares will be priced according to the net asset value of
the Fund on that day and are entitled to dividends and distributions beginning
on that day. If payment by wire is received in proper form by the close of the
NYSE without a prior telephone order, the purchase will be priced according to
the net asset value of the Fund on that day and is entitled to dividends and
distributions beginning on that day. However, if a wire received in proper form
is not preceded by a telephone order and is received after the close of regular
trading on the NYSE, the payment will be held uninvested until the order is
effected at the close of business on the next day that the Fund calculates its
net asset value (a 'business day'). Payment for orders that are not accepted
will be returned to the institution after prompt inquiry. Certain organizations
that have entered into agreements with the Fund or its agent may enter confirmed
purchase orders on behalf of customers, with payment to follow no later than the
Fund's pricing on the following business day. If payment is not received by such
time, the organization could be held liable for resulting losses or fees
incurred.

After an investor has made his initial investment, additional shares may be
purchased at any time in the manner outlined above. Payments for initial and
subsequent investment should be preceded by an order placed with the Fund or its
agent and should clearly indicate the investor's account number. In the interest
of economy and convenience, physical certificates representing shares in the
Fund are not normally issued.

The Fund understands that some broker-dealers (other than Counsellors
Securities), financial institutions, securities dealers and other industry
professionals may impose certain condi-

<PAGE>
tions on their clients that invest in the Fund, which are in addition to or
different than those described in this Prospectus, and, to the extent permitted
by applicable regulatory authority, may charge their clients direct fees.
Certain features of the Fund may be modified in these programs, and
administrative charges may be imposed for the services rendered. Therefore, a
client or customer should contact the organization acting on his behalf
concerning the fees (if any) charged in connection with a purchase or redemption
of Fund shares and should read this Prospectus in light of the terms governing
his accounts with the organization.
HOW TO REDEEM AND EXCHANGE
SHARES

REDEMPTION OF SHARES. An investor may redeem (sell) shares on any day that the
Fund's net asset value is calculated (see 'Net Asset Value' below). Requests for
the redemption (or exchange) of Series 2 Shares are placed with an Institution
by its customers. The institution is responsible for the prompt transmission of
its customers' requests to the Fund or its agent.

Institutions may redeem Series 2 Shares by calling Warburg Pincus Advisor
Funds at (800) 888-6878 between 9:00 a.m. and 4:00 p.m. (Eastern time) on any
day on which the Fund's net asset value is calculated. An investor making a
telephone withdrawal should state (i) the name of the Fund, (ii) the account
number of the Fund, (iii) the name of the investor appearing on the Fund's
records, (iv) the amount to be withdrawn and (v) the name of the person
requesting the redemption.

After receipt of the redemption request, the redemption proceeds will be
wired to the investor's bank as indicated in the account application previously
filled out by the investor. The Fund does not currently impose a service charge
for effecting wire transfers but the Fund reserves the right to do so in the
future. During periods of significant economic or market change, telephone
redemptions may be difficult to implement. If an investor is unable to contact
Warburg Pincus Advisor Funds by telephone, an investor may deliver the
redemption request to Warburg Pincus Advisor Funds by mail at Warburg Pincus
Advisor Funds, P.O. Box 9030, Boston, Massachusetts 02205-9030.

If a redemption order is received prior to the close of regular trading on
the NYSE, the redemption order will be effected at the net asset value per share
as determined on that day. If a redemption order is received after the close of
regular trading on the NYSE, the redemption order will be effected at the net
asset value as next determined. Redemption proceeds will normally be wired to an
investor on the next business day following the date a redemption order is
effected. If, however, in the judgment of WPC, immediate payment would adversely
affect the Fund, the Fund reserves the right to pay the redemption proceeds
within seven days after the redemption order is effected. Furthermore, the Fund
may suspend the right of redemption or postpone the date of payment upon
redemption (as well as suspend or postpone the recordation of an exchange of
shares) for such periods as are permitted under the 1940 Act.

The proceeds paid upon redemption may be more or less than the amount
invested depending upon a share's net asset value at the time of redemption. If
an investor redeems all the shares in his account, all dividends and
distributions declared up to and including the date of redemption are paid along
with the proceeds of the redemption.

EXCHANGE OF SHARES. An Institution may exchange Series 2 Shares of the Fund for
Series 2 Shares of the other Warburg Pincus Advisor Funds at their respective
net asset values. Exchanges may be effected in the manner described under
'Redemption of Shares' above. If an exchange request is received by Warburg
Pincus Advisor Funds prior to 4:00 p.m. (Eastern time), the exchange will be
made at each fund's net asset value determined on the same business

<PAGE>
day. Exchanges may be effected without a sales charge. The exchange privilege
may be modified or terminated at any time upon 60 days' notice to shareholders.

The exchange privilege is available to shareholders residing in any state
in which the Series 2 Shares being acquired may legally be sold. When an
investor effects an exchange of shares, the exchange is treated for federal
income tax purposes as a redemption. Therefore, the investor may realize a
taxable gain or loss in connection with the exchange. Investors wishing to
exchange Series 2 Shares of the Fund for Series 2 Shares in another Warburg
Pincus Advisor Fund should review the prospectus of the other fund prior to
making an exchange. For further information regarding the exchange privilege or
to obtain a current prospectus for another Warburg Pincus Advisor Fund, an
investor should contact Warburg Pincus Advisor Funds at (800) 888-6878.
NET ASSET VALUE

The net asset value per class of the Fund is calculated as of 4:00 p.m.
Eastern Time on each day the NYSE is open. The net asset value of the Series 2
Shares of the Fund is calculated by adding the Series 2 Shares' pro rata share
of the value of the Fund's securities, cash and other assets, deducting the
Series 2 Shares' pro rata share of the actual and accrued liabilities and the
liabilities specifically allocated to the Series 2 Shares, and dividing by the
total number of Series 2 Shares outstanding.

Valuation of securities held by the Fund is as follows: securities traded
on a national securities exchange or on the NASDAQ National Market System are
valued at the last reported sale price that day; securities traded on a national
securities exchange or on the NASDAQ National Market System for which there were
no sales on that day and securities traded on other over-the-counter markets for
which market quotations are readily available are valued at the mean of the bid
and asked prices; and 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. The amortized cost method of
valuation may also be used with respect to debt obligations with sixty days or
less remaining to maturity.

With the approval of the Board of Directors, the Fund may use a pricing
service, bank or broker-dealer experienced in such matters to value the Fund's
securities. A more detailed discussion of net asset value and security valuation
is contained in the Statement of Additional Information.

DIVIDENDS AND DISTRIBUTIONS

The Fund will distribute substantially all of the net investment income and
net realized capital gains, if any, of the Fund to the Fund's shareholders. All
distributions are reinvested in the form of additional full and fractional
Series 2 Shares unless a shareholder elects otherwise.

The Fund will declare and pay dividends, if any, from net investment income
quarterly, near the end of each quarter. Net realized capital gains (including
net short-term capital gains), if any, will be distributed at least annually.

TAXES

The following discussion is only a brief summary of some of the important
tax considerations generally affecting the Fund and its shareholders and is not
intended as a substitute for careful tax planning. Accordingly, investors in the
Fund should consult their tax advisers with specific reference to their own tax
situation.

The Fund has elected to be taxed as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended. So long as the
Fund continues to qualify for this tax treatment, the Fund will be relieved of
Federal income tax on amounts

<PAGE>
distributed to shareholders, but shareholders, unless otherwise exempt, will pay
income or capital gains taxes on amounts so distributed (except distributions
that constitute 'exempt interest dividends' or that are treated as a return of
capital) regardless of whether such distributions are paid in cash or reinvested
in additional Series 2 Shares.

Distributions out of the 'net capital gain' (the excess of net long-term
capital gain over net short-term capital loss), if any, of the Funds will be
taxed to shareholders as long-term capital gain regardless of the length of time
a shareholder has held his Series 2 Shares, whether such gain was reflected in
the price paid for the Series 2 Shares, or whether such gain was attributable to
bonds bearing tax-exempt interest. All other distributions, to the extent they
are taxable, are taxed to shareholders as ordinary income. The maximum marginal
rate on ordinary income for individuals, trusts and estates is generally 31%
while the maximum rate imposed on net capital gain of such taxpayers is 28%.
Corporate taxpayers are taxed at the same rates on both ordinary income and
capital gains.

The Fund anticipates that dividends paid by the Fund will be eligible for
the 70% dividends received deduction allowed to certain corporations to the
extent of the gross amount of qualified dividends received by the Fund for the
year. However, corporate shareholders will have to take into account the entire
amount of any dividend received in determining their adjusted current earnings
adjustment for alternative minimum tax purposes. The dividends received
deduction is not available for capital gain dividends.

The Fund will send written notices to shareholders annually regarding the
tax status of distributions made by the Fund. Dividends declared in October,
November or December of any year payable to shareholders of record on a
specified date in such a month will be deemed to have been received by the
shareholders on December 31, provided such dividends are paid during January of
the following year. The Fund intends to make sufficient actual or deemed
distributions prior to the end of each calendar year to avoid liability for
Federal excise tax.

Investors should be careful to consider the tax implications of buying
Series Shares just prior to a distribution. The price of shares purchased at
that time will reflect the amount of the forthcoming distribution. Those
investors purchasing just prior to a distribution will nevertheless be taxed on
the entire amount of the distribution received.

Shareholders who exchange Series 2 Shares representing interests in the
Fund for Series 2 Shares representing interests in another fund will generally
recognize capital gain or loss for Federal income tax purposes.

Shareholders who are nonresident alien individuals, foreign trusts or
estates, foreign corporations or foreign partnerships may be subject to
different U.S. Federal income tax treatment.

An investment in any RBB portfolio is not intended to constitute a balanced
investment program.

Future legislative or administrative changes or court decisions may
materially affect the tax consequences of investing in the Fund. Shareholders
are also urged to consult their tax advisers concerning the application of state
and local income taxes to investments in the Fund which may differ from the
Federal income tax consequences described above.

SHAREHOLDER SERVICING

The Fund is authorized to offer Series 2 Shares exclusively to Institutions
whose clients or customers (or participants in the case of retirement plans)
('Customers') are beneficial owners of Series 2 Shares. Either those
Institutions or companies providing certain services to them (together, 'Service
Organizations') will enter into service agreements ('Agreements') related

<PAGE>

to the sale of the Series 2 Shares with Counsellors Securities pursuant to a
Distribution Plan as described below. Pursuant to the terms of an Agreement, the
Service Organization agrees to perform certain distribution, shareholder
servicing, administrative and accounting services for its Customers.
Distribution services would be marketing or other services in connection with
the promotion and sale of Series 2 Shares. Shareholder services that may be
provided include responding to Customer inquiries, providing information on
Customer investments and providing other shareholder liaison services.
Administrative and accounting services related to the sale of the Series 2
Shares may include (i) aggregating and processing purchase and redemption
requests from Customers and placing net purchase and redemption orders with the
Fund's transfer agent, (ii) processing dividend payments from the Fund on behalf
of Customers and (iii) providing sub-accounting relating to the sale of Series 2
Shares beneficially owned by Customers or the information to RBB necessary for
sub-accounting. Service Organizations may be subject to various state laws
regarding the services described above, and may be required to register as
dealers pursuant to state law. The Board of Directors of RBB has approved a
Distribution Plan (the 'Plan') pursuant to Rule 12b-1 under the 1940 Act under
which Counsellors Securities may pay each participating Service Organization a
negotiated fee on an annual basis not to exceed .75% of the value of the average
daily net assets of its Customers invested in the Series 2 Shares. However,
under the current Distribution Agreement between Counsellors Securities and RBB
on behalf of the Fund, this fee shall not exceed .50% of average daily net
assets of Customers. The Fund may, in the future, enter into additional
Agreements with Service Organizations. The Board of Directors of RBB will
evaluate the appropriateness of the Plan on a continuing basis.

DESCRIPTION OF SHARES

RBB has authorized capital of thirty billion shares of Common Stock, $.001
par value per share, of which 10.7 billion shares are currently classified as
follows: 100 million shares are classified as Class A Common Stock (Growth &
Income), 100 million shares are classified as Class B Common Stock, 100 million
shares are classified as Class C Common Stock (Balanced), 100 million shares are
classified as Class D Common Stock (Tax-Free), 500 million shares are classified
as Class E Common Stock (Money), 500 million shares are classified as Class F
Common Stock (Municipal Money), 500 million shares are classified as Class G
Common Stock (Money), 500 million shares are classified as Class H Common Stock
(Municipal Money), 1 billion shares are classified as Class I Common Stock
(Money), 500 million shares are classified as Class J Common Stock (Municipal
Money), 500 million shares are classified as Class K Common Stock (U.S.
Government Money), 1,500 million shares are classified as Class L Common Stock
(Money), 500 million shares are classified as Class M Common Stock (Municipal
Money), 500 million shares are classified as Class N Common Stock (U.S.
Government Money), 500 million shares are classified as Class O Common Stock
(N.Y. Money), 100 million shares are classified as Class P Common Stock
(Government), 100 million shares are classified as Class Q Common Stock, 500
million shares are classified as Class R Common Stock (Municipal Money), 500
million shares are classified as Class S Common Stock (U.S. Government Money),
500 million shares are classified as Class T Common Stock (International), 500
million shares are classified as Class U Common Stock (Strategic), 500 million
shares are classified as Class V Common Stock (Emerging), 100 million shares are
classified as Class W Common Stock (Laffer/Canto Equity), 50 million shares are
classified as Class X Common Stock (U.S. Core Equity), 50 million shares are
classified as Class Y Common Stock (U.S. Core Fixed-Income), 50 million shares
are classified as Class Z Common Stock (International Fixed Income), 50 million
shares are classified as Class AA Common Stock (Municipal Bond), 50

<PAGE>
million shares are classified as Class BB Common Stock (BEA Balanced), 50
million shares are classified as Class CC Common Stock (Short Duration), 100
million shares are classified as Class DD Common Stock (Growth & Income Series
2), 100 million shares are classified as Class EE Common Stock (Balanced Series
2), 700 million shares are classified as Class Alpha 1 Common Stock (Money), 200
million shares are classified as Class Alpha 2 Common Stock (Municipal Money),
500 million shares are classified as Class Alpha 3 Common Stock (U.S. Government
Money), 100 million shares are classified as Class Alpha 4 Common Stock (N.Y.
Money), 1 million shares are classified as Class Beta 1 Common Stock (Money), 1
million shares are classified as Class Beta 2 Common Stock (Municipal Money), 1
million shares are classified as Class Beta 3 Common Stock (U.S. Government
Money), 1 million shares are classified as Class Beta 4 Common Stock (N.Y.
Money), 1 million shares are classified as Gamma 1 Common Stock (Money), 1
million shares are classified as Gamma 2 Common Stock (Municipal Money), 1
million shares are classified as Gamma 3 Common Stock (U.S. Government Money), 1
million shares are classified as Gamma 4 Common Stock (N.Y. Money), 1 million
shares are classified as Delta 1 Common Stock (Money), 1 million shares are
classified as Delta 2 Common Stock (Municipal Money), 1 million shares are
classified as Delta 3 Common Stock (U.S. Government Money), 1 million shares are
classified as Delta 4 Common Stock (N.Y. Money), 1 million shares are classified
as Epsilon 1 Common Stock (Money), 1 million shares are classified as Epsilon 2
Common Stock (Municipal Money), 1 million shares are classified as Epsilon 3
Common Stock (U.S. Government Money), 1 million shares are classified as Epsilon
4 Common Stock (N.Y. Money), 1 million shares are classified as Zeta 1 Common
Stock (Money), 1 million shares are classified as Zeta 2 Common Stock (Municipal
Money), 1 million shares are classified as Zeta 3 Common Stock (U.S. Government
Money), 1 million shares are classified as Zeta 4 Common Stock (N.Y. Money), 1
million shares are classified as Eta 1 Common Stock (Money), 1 million shares
are classified as Eta 2 Common Stock (Municipal Money), 1 million shares are
classified as Eta 3 Common Stock (U.S. Government Money), 1 million shares are
classified as Eta 4 Common Stock (N.Y. Money), 1 million shares are classified
as Theta 1 Common Stock (Money), 1 million shares are classified as Theta 2
Common Stock (Municipal Money), 1 million shares are classified as Theta 3
Common Stock (U.S. Government Money), and 1 million shares are classified as
Theta 4 Common Stock (N.Y. Money). Shares of Class EE Common Stock constitutes
the RBB Class offered by this Prospectus. Under RBB's charter, the Board of
Directors has the power to classify or reclassify any unissued shares of Common
Stock from time to time.

The classes of Common Stock have been grouped into sixteen separate
'families': the RBB Family, the Warburg Pincus Family, the Cash Preservation
Family, the Sansom Street Family, the Bedford Family, the Bradford Family, the
BEA Family, the Laffer/Canto Equity, the Janney Montgomery Scott Family, the
Beta Family, the Gamma Family, the Delta Family, the Epsilon Family, the Zeta
Family, the Eta Family and the Theta Family. The RBB Family represents interests
in two non-money market portfolios as well as the Money Market and Municipal
Money Market Portfolios. The Cash Preservation Family represents interests in
the Money Market and Municipal Money Market Funds; the Sansom Street Family
represents interests in the Money Market, Municipal Money Market and Government
Obligations Money Market Funds; the Bedford Family represents interests in the
Money Market, Municipal Money Market, Government Obligations Money Market and
New York Municipal Money Market Funds; the Bradford Family represents interests
in the Municipal Money Market and Government Obligations Money Market Funds; the
BEA Family represents interests in nine non-money market portfo-

<PAGE>
lios; the Laffer/Canto Equity represents interests in the Laffer/Canto Equity
Fund Portfolio; the Janney Montgomery Scott Family represents interests in the
Money Market, Municipal Money Market, Government Obligations Money Market and
New York Municipal Money Market Portfolios; and the Beta, Gamma, Delta, Epsilon,
Zeta, Eta and Theta Families (collectively, the 'Additional Families') represent
interests in the Money Market, Municipal Money Market, Government Obligations
Money Market and New York Municipal Money Market Portfolios.

THIS PROSPECTUS AND THE STATEMENT OF ADDITIONAL INFORMATION INCORPORATED
HEREIN RELATE PRIMARILY TO THE THE WARBURG PINCUS BALANCED FUND SERIES 2 CLASS
AND DESCRIBE ONLY THE INVESTMENT OBJECTIVE AND POLICIES, OPERATIONS, CONTRACTS
AND OTHER MATTERS RELATING TO THE WARBURG PINCUS BALANCED FUND SERIES 2 CLASS.

MULTI-CLASS STRUCTURE. The Fund offers a separate class of shares (the 'Common
Shares') pursuant to a separate prospectus. Shares of each class represent equal
pro rata interests in the Fund and accrue dividends in the same manner. The net
asset value and performance quotations of the Common Shares are calculated in
the same manner as the net asset value and performance of the Series 2 Shares
(described elsewhere in this Prospectus). The Fund quotes performance of Common
Shares separately from Series 2 Shares. Because of different fees paid by the
Series 2 Shares, the total return and yield on such shares can be expected, at
any time, to be different from the total return and yield on Common Shares.
Investors may obtain information concerning the Common Shares by calling
Counsellors Securities at (800) 888-6878.

VOTING RIGHTS. Each share that represents an interest in a 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
the Fund. Shares of RBB do not have preemptive or conversion rights. When issued
for payment as described in this Prospectus, Series 2 Shares will be fully paid
and non-assessable.

RBB currently does not intend to hold annual meetings of shareholders
except as required by the 1940 Act or other applicable law. The law under
certain circumstances provides shareholders with the right to call for a meeting
of shareholders to consider the removal of one or more directors. To the extent
required by law, RBB will assist in shareholder communication in such matters.

Shareholders of all investment portfolios of RBB (including the Fund) 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 investment
portfolio or class within a portfolio. (See the Statement of Additional
Information under 'Additional Information Concerning Fund Shares' for examples
when the 1940 Act requires voting by investment portfolio or by class.)
Shareholders of RBB are entitled to one vote for each full share held
(irrespective of class or portfolio) and fractional votes for fractional shares
held. Voting rights are not cumulative and, accordingly, the holders of more
than 50% of the aggregate shares of Common Stock of RBB may elect all of the
directors.

RECORD OWNERSHIP. As of March 1, 1995, to RBB's knowledge, no person held of
record 25% or more of the outstanding shares of all classes of RBB, although as
of such date BFDS was record owner of more than 25% of the Growth & Income Fund;
Warburg Pincus was record owner of more than 25% of the Balanced Fund; Eric,
Linda and Howard Levine were record owners of more than 25% of the RBB Money
Market Portfolio; Seymour Fein was record owner of more than 25% of the RBB
Municipal Money Market; the Jewish Family and Children's Agency of Philadelphia
Capital Campaign was

<PAGE>
record owner of more than 25% of the Cash Preservation Class Money Market
Portfolio; the Crowe Trust was record owner of more than 25% of the Cash
Preservation Municipal Money Market Portfolio; Wasner & Co for account of Paine
Webber Managed Assets -- Sundry Holding was record owner of more than 25% of the
Sansom Street Money Market Portfolio; Home Insurance Company was record owner of
more than 25% of the RBB Government Securities Portfolio; the State of Oregon,
Treasury Department, was record owner of more than 25% of the BEA Strategic
Fixed Income Portfolio; The John Hancock Clearing Corporation was record owner
of more than 25% of the Laffer/Canto Equity Portfolio; the Bank of New York was
record owner of more than 25% of the BEA U.S. Core Equity Portfolio; the New
England UFCW and Employers' Pension Fund Board of Trustees was record owner of
more than 25% of the BEA U.S. Core Fixed Income Portfolio; Bankers Trust on
behalf of the Pechiney Corporation Pension Master Trust was record owner of more
than 25% of the BEA U.S. Core Fixed Income Portfolio; the Bank of New York as
trustee for the Eastern Enterprises Retirement Plan Trust was record owner of
more than 25% of the BEA Global Fixed Income Portfolio, and the Southwest Master
Trust was record owner of more than 25% of the BEA Global Fixed Income
Portfolio.
OTHER INFORMATION

REPORTS AND INQUIRIES. Shareholders will receive unaudited semi-annual reports
describing RBB's investment operations and annual financial statements audited
by independent accountants. Shareholder inquiries can be made by contacting
Warburg Pincus Advisor Funds at (800) 888-6878, or by writing to Warburg Pincus
Advisor Funds, P.O. Box 9030, Boston, Massachusetts 02205-9030.

SHARE CERTIFICATES. Share certificates are not available for Shares purchased
through Warburg Pincus Advisor Funds.

PERFORMANCE INFORMATION. From time to time, the Fund may advertise its
performance, including comparisons to other mutual funds with similar investment
objectives and to stock or other relevant indices. All such advertisements will
show the average annual total return, net of the Fund's maximum sales charge,
over one, five and ten year periods or, if such periods have not yet elapsed,
shorter periods corresponding to the life of the Fund. Such total return
quotations will be computed by finding the compounded average annual total
return for each time period that would equate the assumed initial investment of
$1,000 to the ending redeemable value, according to a required standardized
calculation. The standard calculation is required by the Securities and Exchange
Commission to provide consistency and comparability in investment company
advertising. The Fund may also from time to time include in such advertising an
aggregate total return figure or a total return figure that is not calculated
according to the standardized formula in order to compare more accurately the
Fund's performance with other measures of investment return. For example, a
portfolio's total return may be compared with data published by Lipper
Analytical Services, Inc., CDA Investment Technologies, Inc. or Weisenberger
Investment Company Service, or with the performance of the Standard & Poor's 500
Stock Index or the Dow Jones Industrial Average. All advertisements containing
performance data will include a legend disclosing that such performance data
represent past performance and that the investment return and principal value of
an investment will fluctuate so that an investor's Series 2 Shares, when
redeemed, may be worth more or less than their original cost. Warburg Pincus
Advisor Funds currently anticipate establishing a listing for the Series 2
Shares in The Wall Street Journal so that the net asset value of the Series 2
Shares will be listed separately there each business day.

From time to time, the Fund may also advertise its '30-day yield.' The
yield refers to the income generated by an investment in a Fund over the 30-day
period identified in the

<PAGE>
advertisement, and is computed by dividing the net investment income per share
during the period by the maximum public offering price per share of the last day
of the period. This income is 'annualized' by assuming that the amount of income
is generated each month over a one-year period and is compounded semi-annually.
The annualized income is then shown as a percentage of the net asset value.

The yield on Series 2 Shares of the Fund will fluctuate and are not
necessarily representative of future results. Shareholders should remember that
yield is generally a function of portfolio quality and maturity, type of
instrument, operating expenses and market conditions. Any fees charged by
broker/dealers directly to their customers in connection with investments in the
Fund are not reflected in the yields on the Fund's Series 2 Shares, and such
fees, if charged, will reduce the actual return received by shareholders on
their investments.

In reports or other communications to investors or in advertising, the Fund
may also describe the general biography or work experience of the portfolio
managers of the Fund and may include quotations attributable to the portfolio
managers describing approaches taken in managing the Fund's investments,
research methodology underlying stock selection or the Fund's investment
objective. The Fund may also discuss the continuum of risk and return relating
to different investments and the potential impact of foreign stocks on a
portfolio otherwise composed of domestic securities. In addition, the Fund may
from time to time compare its expense ratio to that of investment companies with
similar objectives and policies, based on data generated by Lipper Analytical
Services, Inc. or similar investment services that monitor mutual funds.

------------------------------------

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS OR IN RBB'S STATEMENT OF
ADDITIONAL INFORMATION INCORPORATED HEREIN BY REFERENCE IN CONNECTION WITH THE
OFFERING MADE BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY RBB OR ITS DISTRIBUTOR.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY RBB OR BY THE DISTRIBUTOR IN
ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE.

<PAGE>
APPENDIX A

RATINGS OF DEBT SECURITIES
STANDARD & POOR'S CORPORATION

<TABLE>
<S> <C>
AAA Debt rated 'AAA' has the highest rating assigned by Standard & Poor's. Capacity to pay interest
and repay principal is extremely strong.

AA Debt rated 'AA' has a very strong capacity to pay interest and repay principal and differs from
the highest rated issues only in a small degree.

A Debt rated 'A' has a strong capacity to pay interest and repay principal although it is somewhat
more susceptible to the adverse effects of changes in circumstances and economic conditions than
debt in higher rated categories.

BBB Debt rated 'BBB' is regarded as having an adequate capacity to pay interest and repay principal.
Whereas it normally exhibits adequate protection parameters, adverse economic conditions or
changing circumstances are more likely to lead to a weakened capacity to pay interest and repay
principal for debt in this category than in higher rated categories.

BB Debt rated 'BB', 'B', 'CCC', or 'CC' is regarded, on balance, as predominantly speculative with
B respect to capacity to pay interest and repay principal in accordance with the terms of the
CCC obligation. 'BB' indicates the lowest degree of speculation and 'CC' the highest degree of
CC speculation. While such debt will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse conditions.

C This rating is reserved for income bonds on which no interest is being paid.

D Debt rated 'D' is in default, and payment of interest and/or repayment of principal is in
arrears.

(+) OR (-) The ratings from 'AAA' or 'CCC' may be modified by the addition of a plus or minus sign to show
relative standing or within the major rating categories.

* Continuance of the rating is contingent upon S&P's receipt of an executed copy of the escrow
agreement or closing documentation confirming investments and cash flows.

NR Indicates no rating has been requested, that there is insufficient information on which to base
a rating, or that S&P does not rate a particular type of obligation as a matter of policy.

DEBT OBLIGATIONS OF ISSUERS OUTSIDE THE UNITED STATES AND ITS TERRITORIES are rated on the same
basis as domestic corporate and municipal issues. The ratings measure the creditworthiness of
the obligor but do not take into account currency exchange and related uncertainties.
</TABLE>

A-1

<PAGE>
<TABLE>
<S> <C>
P PROVISIONAL RATINGS: The letter 'p' indicates that the rating is provisional. A provisional
rating assumes the successful completion of the project being financed by the debt being rated
and indicates that payment of debt service requirements is largely or entirely dependent upon
the successful and timely completion of the project. This rating, however, while addressing
credit quality subsequent to completion of the project, makes no comment on the likelihood of.
or the risk of default upon failure of, such completion. The investor should exercise judgment
with respect to such likelihood and risk.
</TABLE>

NOTES

Note rating symbols are as follows:

<TABLE>
<S> <C>
SP-1 Very strong or strong capacity to pay principal and interest. Those issues determined to possess
overwhelming safety characteristics will be given a plus (+) designation.
SP-2 Satisfactory capacity to pay principal and interest.
SP-3 Speculative capacity to pay principal and interest.
</TABLE>

COMMERCIAL PAPER

A Standard & Poor's commercial paper rating is a current assessment of the
likelihood of timely payment of debt having an original maturity of no more than
365 days.

Ratings are graded into four categories, ranging from 'A' for the highest
quality obligations to 'D' for the lowest. The four categories are as follows:

<TABLE>
<S> <C>
A Issues assigned this highest rating are regarded as having the greatest capacity for timely
payment. Issues in this category are delineated with the numbers 1, 2, and 3 to indicate the
relative degree of safety.
A-1 This designation indicates that the degree of safety regarding timely payment is either
overwhelming or very strong. Those issues determined to possess overwhelming safety
characteristics are denoted with a plus (+) sign designation.
A-2 Capacity for timely payment on issues with this designation is strong. However, the relative
degree of safety is not as high as for issues designated 'A-1'.
A-3 Issues carrying this designation have a satisfactory capacity for timely payment. They are,
however, somewhat more vulnerable to the adverse effects of changes in circumstances than
obligations carrying the higher designations.
B Issues rated 'B' are regarded as having only an adequate capacity for timely payment. However,
such capacity may be damaged by changing conditions or short-term adversities.
C This rating is assigned to short-term debt obligations with a doubtful capacity for payment.
D This rating indicates that the issue is either in default or is expected to be in default upon
maturity.
</TABLE>

A-2

<PAGE>
VARIABLE RATE DEMAND BONDS

Standard & Poor's assigns 'dual' ratings to all long-term debt issues that
have as part of their provisions a long-term rating and a variable rate demand
rating. The first rating addresses the likelihood of repayment of principal and
interest due and the second rating addresses only the demand feature. The
long-term debt rating symbols are used for bonds to denote the long-term
maturity and the commercial paper rating symbols are used to denote the put
option (for example, 'AAA/A-1 +'). If the nominal maturity is short (three years
or less), a note rating is assigned.

MOODY'S INVESTORS SERVICE, INC. RATINGS

CORPORATE BONDS

Aaa

Bonds which are rated Aaa are judged to be the best quality. They carry the
smallest degree of investment risk and are generally referred to as 'gilt edge.'
Interest payments are protected by a large or by an exceptionally stable margin
and principal is secure. While the various protective elements are likely to
change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.

Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present which make
the long term risks appear somewhat larger than in Aaa securities.

Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving security
to principal and interest are considered adequate but elements may be present
which suggest a susceptibility to impairment sometime in the future.

Baa

Bonds which are rated Baa are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly scecured. Interest payment and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very

A-3

<PAGE>
moderate and thereby not well safeguarded during both good and bad times over
the future. Uncertainty of position characterizes bonds in this class.

Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.

Caa

Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.

Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.

Bonds which are rated C are the lowest rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.

Moody's bond ratings, where specified, are also applied to senior bank
obligations with an original maturity in excess of one year. Among the bank
obligations covered are bank deposits, bankers acceptance and obligations to
deliver foreign exchange. Obligations relying upon support mechanisms such as
letters-of-credit are excluded unless explicitly rated.

NOTE: Moody's applies numerical modifiers, 1, 2 and 3 in each generic
rating classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.

SHORT-TERM NOTES AND VARIABLE RATE DEMAND OBLIGATIONS

The following summarizes the ratings used by Moody's for short-term notes
and variable rate demand obligations:

MIG-1/VMIG-1. Obligations bearing these designations are of the best
quality, enjoying strong protection by established cash flows, superior
liquidity support or demonstrated broad-based access to the market for
refinancing.

MIG-2/VMIG-2. Obligations bearing these designations are of high
quality with margins of protection ample although not as large as in the
preceding group.

MIG-3/VMIG-3. Obligations bearing these designations are of favorable
quality. All security elements are accounted for but there is a lacking the
undeniable strength of the preceding grades. Liquidity and cash flow
protection may be narrow and market access for refinancing is hereby to be
less well established.

A-4

<PAGE>
COMMERCIAL PAPER RATINGS

The rating PRIME-1 is the highest commercial paper rating assigned by
Moody's. Issuers rated PRIME-1 (or related supporting institutions) are
considered to have a superior capacity for repayment of senior short-term debt
obligations. Issuers rated PRIME-2 (or related supporting institutions) are
considered to have strong capacity for repayment of senior short-term debt
obligations. This will normally be evidenced by many of the characteristics of
issuers rated PRIME-1 but to a lesser degree. Earnings trends and coverage
ratios, while sound, will be more subject to variation. Capitalization
characteristics, while still appropriate, may be more affected by external
conditions. Ample alternate liquidity is maintained. Issuers PRIME-3 (or
supporting institutions) have an acceptable capacity rated for repayment of
senior short-term debt obligations. The effect of industry characteristics and
market composition may be more pronounced. Variability in earnings and
profitability may result in changes in the level of debt protection measurements
and may require relatively high financial leverage. Adequate alternate liquidity
is maintained. Issuers rated NOT PRIME do not fall within any of the Prime
rating categories.

A-5

<PAGE>
TABLE OF CONTENTS

INVESTMENT OBJECTIVES AND POLICIES ....................................... 4
INVESTMENT LIMITATIONS .................................................. 10
MANAGEMENT .............................................................. 11
HOW TO PURCHASE SHARES .................................................. 14
HOW TO REDEEM AND EXCHANGE SHARES . 15
NET ASSET VALUE ......................................................... 16
DIVIDENDS AND DISTRIBUTIONS ............................................. 16
TAXES ................................................................... 16
SHAREHOLDER SERVICING ................................................... 17
DESCRIPTION OF SHARES ................................................... 18
OTHER INFORMATION ....................................................... 21

WPGBF-1-1294

<PAGE>
[LOGO]

[ ] WARBURG PINCUS
BALANCED FUND

PROSPECTUS

DECEMBER 28, 1994
AS REVISED AUGUST 31, 1995
<PAGE>

WARBURG PINCUS BALANCED FUND

(Investment Portfolio of The RBB Fund, Inc.)

STATEMENT OF ADDITIONAL INFORMATION

This Statement of Additional Information provides
supplementary information pertaining to shares of the Series 2 Class (the
"Shares") representing interests in the Warburg Pincus Balanced Fund (the
"Balanced Fund" or "Fund") of The RBB Fund, Inc. ("RBB"). This Statement of
Additional Information is not a prospectus, and should be read only in
conjunction with the Warburg Pincus Advisor Funds Prospectus dated December 28,
1994, as revised August 31, 1995 (the "Prospectus"). A copy of the Prospectus
may be obtained from the Funds' distributor by calling toll-free (800) 888-9723.
This Statement of Additional Information is dated December 28, 1994, as revised
August 31, 1995.

CONTENTS
<TABLE>
<CAPTION>
Prospectus
Page Page
---- ----------
<S> <C> <C>
General ...................................................... 2 2
Investment Objectives and Policies ........................... 2 7
Directors and Officers ....................................... 15 N/A
Investment Advisory, Distribution
and Servicing Arrangements .................................. 18 15
Fund Transactions ............................................ 23 17
Purchase and Redemption Information .......................... 25 17
Valuation of Shares .......................................... 25 23
Performance Information ...................................... 26 28
Taxes ........................................................ 29 23
Additional Information Concerning Fund Shares ................ 33 25
Miscellaneous ................................................ 34 N/A
Financial Statements ......................................... F-1 N/A
</TABLE>

No person has been authorized to give any information or to make any
representations not contained in this Statement of Additional Information in
connection with the offering made by the Prospectus and, if given or made, such
information or representations must not be relied upon as having been authorized
by RBB or its distributor. The Prospectus does not constitute an offering by RBB
or by the distributor in any jurisdiction in which such offering may not
lawfully be made.

<PAGE>

GENERAL

The RBB Fund, Inc. ("RBB") is an open-end management
investment company currently operating or proposing to operate nineteen separate
investment portfolios. This Statement of Additional Information pertains to the
Series 2 Class of shares ("Shares") representing interests in the Warburg Pincus
Balanced Fund (the "Balanced Fund" or "Fund") of RBB. The Shares are offered by
the Prospectus dated December 28, 1994, as revised August 31, 1995. RBB was
organized as a Maryland corporation on February 29, 1988.

Capitalized terms used herein and not otherwise defined have
the same meanings as are given to them in the Prospectus.

INVESTMENT OBJECTIVES AND POLICIES

The following supplements the information contained in the
Prospectus concerning the investment objectives and policies of the Fund.

Additional Information on Fund Investments

Reverse Repurchase Agreements. Reverse repurchase agreements
involve the sale of securities held by the Fund pursuant to the Fund's agreement
to repurchase the securities at an agreed upon price, date and rate of interest.
Such agreements are considered to be borrowings under the Investment Company Act
of 1940, as amended (the "1940 Act"), and may be entered into only for temporary
or emergency purposes. While reverse repurchase transactions are outstanding, a
Fund will maintain in a segregated account with the RBB's custodian or a
qualified sub-custodian, cash, U.S. Government securities or other liquid,
high-grade debt securities of an amount at least equal to the market value of
the securities, plus accrued interest, subject to the agreement and will monitor
the account to ensure that such value is maintained. Reverse repurchase
agreements involve the risk that the market value of the securities sold by the
Fund may decline below the price of the securities the Fund is obligated to
Repurchase.

Foreign Securities. Although the Fund generally intends to
invest in securities of companies and governments of developed, stable nations,
the value of the Fund's investments may be adversely affected by changes in
political or social conditions, diplomatic relations, confiscatory taxation,
expropriation, limitation on the removal of funds or assets, imposition of (or
change in) exchange control regulations in those foreign nations and difficulty
in enforcing judgments. In addition, changes in government administrations,
economies or monetary policies in the U.S. or abroad could result in
appreciation or depreciation of those portfolio securities. Furthermore, the
economies of individual foreign nations may differ from the U.S. economy,
whether favorably or unfavorably, in areas such as growth of gross national
product, rate of inflation, capital reinvestment, resource self-sufficiency and
balance of payments position. Any foreign investments made by the Fund must be
made in compliance with U.S. and foreign currency restrictions and tax laws
restricting the amounts and types of foreign investments.

<PAGE>

In addition, while the volume of transactions effected on
foreign stock exchanges has increased in recent years, it remains appreciably
below that of the New York Stock Exchange. Accordingly, the Fund's foreign
investments may be less liquid and their prices may be more volatile than
comparable investments in securities of U.S. companies. In buying and selling
securities on foreign exchanges, the Fund will normally pay fixed commissions
that are generally higher than the negotiated commissions charged in the U.S.
Moreover, the Fund's expenses may be higher due to the additional cost of
custody of foreign securities. In addition, there is generally less government
supervision and regulation of securities exchanges, brokers and issuers in
foreign countries than in the U.S.

Dollar-Denominated Debt Obligations of Foreign Issuers. U.S.
dollar-denominated debt securities issued by foreign corporations held by a Fund
may not be registered with the Securities and Exchange Commission ("SEC"), and
the issuers thereof may not be subject to its reporting requirements.
Accordingly, there may be less publicly available information concerning foreign
issuers of debt securities held by the Fund than is available concerning U.S.
issuers. Foreign companies are not generally subject to uniform accounting,
auditing and financial reporting standards or to other regulatory requirements
comparable to those applicable to U.S. companies. Securities of many foreign
companies may be less liquid and their prices more volatile than those of
securities of comparable U.S. companies. In addition, with respect to certain
foreign countries, there is the possibility of expropriation, confiscatory
taxation, limitations on the use or removal of funds or the assets of the Fund,
and political or social instability or diplomatic developments which could
affect investments in those countries. Moreover, individual foreign economies
may differ favorably or unfavorably from the U.S. economy in such respects as
growth of gross national product, rate of inflation, capital reinvestment,
resource self-sufficiency and balance of payments position.

Mortgage-Related Debt Securities. Mortgage-related debt
securities represent ownership interests in individual pools of residential
mortgage loans. These securities are designed to provide monthly payments of
interest and principal to the investor. Each mortgagor's monthly payment to his
lending institution on his residential mortgage is "passed-through" to
investors. Mortgage pools consist of whole mortgage loans or participations in
loans. The terms and characteristics of the mortgage instruments are generally
uniform within a pool but may vary among pools. Lending institutions which
originate mortgages for the pools are subject to certain standards, including
credit and underwriting criteria for individual mortgages included in the pools.

Since the inception of the mortgage-related pass-through
security in 1970, the market for these securities has expanded considerably. The
size of the primary issuance market, and active participation in the secondary
market by securities dealers and many types of investors, historically have made
interests in government and government-related pass-through pools highly liquid,
although no guarantee regarding future market conditions can be made. The
average life of pass-through pools varies with the maturities of the underlying
mortgage instruments. In addition, a pool's term may be shortened by unscheduled
or early payments of principal and interest on the underlying

<PAGE>

mortgages. The occurrence of mortgage prepayments is affected by factors
including the level of interest rates, general economic conditions, the location
and age of the mortgages and various social and demographic conditions. Because
prepayment rates of individual pools vary widely, it is not possible to predict
accurately the average life of a particular pool. For pools of fixed rate 30
year mortgages, common industry practice is to assume that prepayments will
result in a 12 year average life. Pools of mortgages with other maturities or
different characteristics will have varying assumptions concerning average life.
The assumed average life of pools of mortgages having terms of less than 30
years is less than 12 years, but typically not less than 5 years. Yields on
pass-through securities are typically quoted by investment dealers and vendors
based on the maturity of the underlying instruments and the associated average
life assumption. In periods of falling interest rates, the rate of prepayment
tends to increase, thereby shortening the actual average life of a pool of
underlying mortgage-related securities. Conversely, in periods of rising rates
the rate of prepayment tends to decrease, thereby lengthening the actual average
life of the pool. Historically, actual average life has been consistent with the
12-year assumption referred to above. Actual prepayment experience may cause the
yield of mortgage-related securities to differ from the assumed average life
yield. In addition, as noted in the Prospectus, reinvestment of prepayments may
occur at higher or lower interest rates than the original investment, thus
affecting the yield of the Fund.

The coupon rate of interest on mortgage-related securities is
lower than the interest rates paid on the mortgages included in the underlying
pool, but only by the amount of the fees paid to the mortgage pooler, issuer,
and/or guarantor of payment of the securities for the guarantee of the services
of passing through monthly payments to investors. Actual yield may vary from the
coupon rate, however, if mortgage-related securities are purchased at a premium
or discount, traded in the secondary market at a premium or discount, or to the
extent that mortgages in the underlying pool are prepaid as noted above. In
addition, interest on mortgage-related securities is earned monthly, rather than
semi-annually as is the case for traditional bonds, and monthly compounding may
tend to raise the effective yield earned on such securities.

U.S. Government Obligations. 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, Student Loan Marketing
Association, Central Bank for Cooperatives, Federal Home Loan Mortgage
Corporation, Federal Intermediate Credit Banks, Maritime Administration,
International Bank for Reconstruction and Development (the "World Bank"), the
Asian-American Development Bank and the Inter-American Development Bank.

Futures Contracts. When the Fund purchases a futures
contract, it agrees to purchase a specified underlying instrument at a specified
future date. When the Fund sells a futures contract, it agrees to sell the
underlying instrument at a specified future date. The price at which the

<PAGE>

purchase and sale will take place is fixed when the Fund enters into the
contract. The underlying instrument may be a specified type of security, such as
U.S. Treasury bonds or notes.

The majority of futures contracts are closed out by entering
into an offsetting purchase or sale transaction in the same contract on the
exchange where they are traded, rather than being held for the life of the
contract. Futures contracts are closed out at their current prices, which may
result in a gain or loss.

If the Fund holds a futures contract until the delivery date,
it will be required to complete the purchase and sale contemplated by the
contract. In the case of futures contracts on securities, the purchaser
generally must deliver the agreed-upon purchase price in cash, and the seller
must deliver securities that meet the specified characteristics of the contract.

The Fund may purchase futures contracts as an alternative to
purchasing actual securities. For example, if the Fund intended to purchase
bonds but had not yet done so, it could purchase a futures contract in order to
lock in current bond prices while deciding on particular investments. This
strategy is sometimes known as an anticipatory hedge. Alternatively, the Fund
could purchase a futures contract if it had cash and short-term securities on
hand that it wished to invest in longer-term securities, but at the same time
that Fund wished to maintain a highly liquid position in order to be prepared to
meet redemption requests or other obligations. In these strategies the Fund
would use futures contracts to attempt to achieve an overall return --whether
positive or negative -- similar to the return from longer-term securities, while
taking advantage of potentially greater liquidity that futures contracts may
offer. Although the Fund would hold cash and liquid debt securities in a
segregated account with a value sufficient to cover its open futures
obligations, the segregated assets would be available to the Fund immediately
upon closing out the futures position, while settlement of securities
transactions can take several days. However, because the Fund's cash that would
otherwise have been invested in higher-yielding bonds would be held uninvested
or invested in short-term securities so long as the futures position remains
open, the Fund's return would involve a smaller amount of interest income and
potentially a greater amount of capital gain or loss.

The Fund may sell futures contracts to hedge its other
investments against changes in value, or as an alternative to sales of
securities. For example, if the investment adviser anticipated a decline in bond
prices, but did not wish to sell bonds owned by the Fund, it could sell a
futures contract in order to lock in a current sale price. If prices
subsequently fell, the future contract's value would be expected to rise and
offset all or a portion of the loss in the bonds that the Fund had hedged. Of
course, if prices subsequently rose, the futures contract's value could be
expected to fall and offset all or a portion of the benefit of the Fund. In this
type of strategy, the Fund's return will tend to involve a larger component of
interest income, because the Fund will remain invested in longer-term securities
rather than selling them and investing the proceeds in short-term securities
which generally provide lower yields.

<PAGE>

Futures margin payments. The purchaser or seller of a futures
contract is not required to deliver or pay for the underlying instrument unless
the contract is held until the delivery date. However, both the purchaser and
seller are required to deposit "initial margin" with a futures broker (known as
a futures commission merchant, or FCM), when the contract is entered into.
Initial margin deposits are equal to a percentage of the contract's value, as
set by the exchange where the contract is traded, and may be maintained in cash
or high quality liquid securities. If the value of either party's position
declines, that party will be required to make additional "variation margin"
payments to settle the change in value on a daily basis. The party that has a
gain may be entitled to receive all or a portion of this amount. Initial and
variation margin payments are similar to good faith deposits or performance
bonds, unlike margin extended by a securities broker, and initial and variation
margin payments do not constitute purchasing securities on margin for purposes
of the Fund's investment limitations. In the event of the bankruptcy of an FCM
that holds margin on behalf of a Fund, that Fund may be entitled to return of
margin owed to it only in proportion to the amount received by the FCM's other
customers. The investment adviser will attempt to minimize this risk by careful
monitoring of the creditworthiness of the FCMs with which the Fund does
business.

Correlation of price changes. The prices of futures contracts
depend primarily on the value of their underlying instruments. Because there are
a limited number of types of futures contracts, it is likely that the
standardized futures contracts available to the Fund will not match that Fund's
current or anticipated investments. Futures prices can also diverge from the
prices of their underlying instruments, even if the underlying instruments match
the Fund's investments well. Futures prices are affected by such factors as
current and anticipated short-term interest rates, changes in volatility of the
underlying instrument, and the time remaining until expiration of the contract,
which may not affect security prices the same way. Imperfect correlation between
the Fund's investments and its futures positions may also result from differing
levels of demand in the futures markets and the securities markets, from
structural differences in how futures and securities are traded, or from
imposition of daily price fluctuation limits for futures contracts. The Fund may
purchase or sell futures contracts with a greater or lesser value than the
securities it wishes to hedge or intends to purchase in order to attempt to
compensate for differences in historical volatility between the futures contract
and the securities, although this may not be successful in all cases. If price
changes in the Fund's futures positions are poorly correlated with its other
investments, its futures positions may fail to produce anticipated gains or
result in losses that are not offset by the gains in the Fund's other
investments.

Liquidity of futures contracts. Because futures contracts are
generally settled within a day from the date they are closed out, compared with
a settlement period of seven days for some types of securities, the futures
markets can provide liquidity superior to the securities markets in many cases.
Nevertheless, there is no assurance a liquid secondary market will exist for any
particular futures contract at any particular time. In addition, futures
exchanges may establish daily price fluctuation limits for futures contracts,
and may halt trading if a contract's price moves upward or downward more than
the limit in a given day. On volatile trading days when

<PAGE>

the price fluctuation limit is reached, it may be impossible for the Fund to
enter into new positions or close out existing positions. If the secondary
market for a futures contract is not liquid because of price fluctuation limits
or otherwise, it would prevent prompt liquidation of unfavorable futures
positions, and potentially could require the Fund to continue to hold a futures
position until the delivery date regardless of changes in its value. As a
result, the Fund's access to other assets held to cover its futures positions
could also be impaired.

Purchasing Put Options. By purchasing a put option, the Fund
obtains the right (but not the obligation) to sell the option's underlying
instrument at a fixed strike price. The option may give the Fund the right to
sell only on the option's expiration date, or may be exercisable at any time up
to and including that date. In return for this right, the Fund pays the current
market price for the option (known as the option premium). The option's
underlying instrument may be a security, or a futures contract.

The Fund may terminate its position in a put option it has
purchased by allowing it to expire or by exercising the option. If the option is
allowed to expire, the Fund will lose the entire premium it paid. If the Fund
exercises the option, it completes the sale of the underlying instrument at the
strike price. If the Fund exercises a put option on a futures contract, it
assumes a seller's position in the underlying futures contract. Purchasing an
option on a futures contract does not require the Fund to make futures margin
payments unless it exercises the option. A Fund may also terminate a put option
position by closing it out in the secondary market at its current price, if a
liquid secondary market exists.

Put options may be used by the Fund to hedge securities it
owns, in a manner similar to selling futures contracts, by locking in a minimum
price at which the Fund can sell. If security prices fall, the value of the put
option would be expected to rise and offset all or a portion of the Fund's
resulting losses. The put thus acts as a hedge against a fall in the price of
such securities. However, all other things being equal (including security
prices), option premiums tend to decrease over time as the expiration date
nears. Therefore, because of the cost of the option in the form of the premium
(and transaction costs), a Fund would expect to suffer a loss in the put option
if prices do not decline sufficiently to offset the deterioration in the value
of the option premium. This potential loss represents the cost of the hedge
against a fall in prices. At the same time, because the maximum the Fund has at
risk is the cost of the option, purchasing put options does not eliminate the
potential for the Fund to profit from an increase in the value of the securities
hedged to the same extent as selling a futures contract.

Purchasing Call Options. The features of call options are
essentially the same as those of put options, except that the purchaser of a
call option obtains the right to purchase, rather than sell, the underlying
instrument at the option's strike price (call options on futures contracts are
settled by purchasing the underlying futures contract). By purchasing a call
option, the Fund would attempt to participate in potential price increases of
the underlying instrument, with results similar to those obtainable from
purchasing a futures contract, but with risk limited to the cost of the option

<PAGE>

if security prices fell. At the same time, a Fund can expect to suffer a loss if
security prices do not rise sufficiently to offset the cost of the option.

The Fund will purchase call options only in connection with
"closing purchase transactions." The Fund may terminate its position in a call
option by entering into a closing purchase transaction. A closing purchase
transaction is the purchase of a call option on the same security with the same
exercise price and call period as the option previously written by the Fund. If
the Fund is unable to enter into a closing purchase transaction, the Fund may be
required to hold a security that it might otherwise have sold to protect against
depreciation.

Writing Put Options. When the Fund writes a put option, it
takes the opposite side of the transaction from the option's purchaser. In
return for receipt of the premium, the Fund assumes the obligation to pay the
strike price for the option's underlying instrument if the other party to the
option chooses to exercise it. When writing an option on a futures contract the
Fund will be required to make margin payments to an FCM as described above for
futures contracts. The Fund may seek to terminate its position in a put option
it writes before exercise by closing out the option in the secondary market at
its current price. If the secondary market is not liquid for an option the Fund
has written, however, the Fund must continue to be prepared to pay the strike
price while the option is outstanding, regardless of price changes, and must
continue to set aside assets to cover its position.

The Fund may write put options as an alternative to purchasing
actual securities. If security prices rise, the Fund would expect to profit from
a written put option, although its gain would be limited to the amount of the
premium it received. If security prices remain the same over time, it is likely
that the Fund will also profit, because it should be able to close out the
option at a lower price. If security prices fall, the Fund would expect to
suffer a loss. This loss should be less than the loss the Fund would have
experienced from purchasing the underlying instrument directly, however, because
the premium received for writing the option should mitigate the effects of the
decline. As with other futures and options strategies used as alternatives for
purchasing securities, the Fund's return from writing put options generally will
involve a smaller amount of interest income than purchasing longer-term
securities directly, because the Fund's cash will be invested in shorter-term
securities which usually offer lower yields.

Writing Call Options. Writing a call option obligates the Fund
to sell or deliver the option's underlying instrument, in return for the strike
price, upon exercise of the option. The characteristics of writing call options
are similar to those of writing put options, as described above, except that
writing covered call options generally is a profitable strategy if prices remain
the same or fall. Through receipt of the option premium, the Fund would seek to
mitigate the effects of a price decline. At the same time, because the Fund
would have to be prepared to deliver the underlying instrument in return for the
strike price, even if its current value is greater, the Fund would give up some
ability to participate in security price increases when writing call options.

<PAGE>

Combined Option Positions. The Fund may purchase and write
options in combination with each other to adjust the risk and return
characteristics of the overall position. For example, the Fund may purchase a
put option and write a call option on the same underlying instrument, in order
to construct a combined position whose risk and return characteristics are
similar to selling a futures contract. Another possible combined position would
involve writing a call option at one strike price and buying a call option at a
lower price, in order to reduce the risk of the written call option in the event
of a substantial price increase. Because combined options positions involve
multiple trades, they result in higher transaction costs and may be more
difficult to open and close out.

Risks of Options Transactions. Options are subject to risks
similar to those described above with respect to futures contracts, including
the risk of imperfect correlation between the option and a Fund's other
investments and the risk that there might not be a liquid secondary market for
the option. In the case of options on futures contracts, there is also a risk of
imperfect correlation between the option and the underlying futures contract.
Options are also subject to the risks of an illiquid secondary market,
particularly in strategies involving writing options, which a Fund cannot
terminate by exercise. In general, options whose strike prices are close to
their underlying instruments' current value will have the highest trading
volume, while options whose strike prices are further away may be less liquid.
The liquidity of options may also be affected if options exchanges impose
trading halts, particularly when markets are volatile.

Asset Coverage for Futures and Options Positions. A Fund will
not use leverage in its options and futures strategies. Such investments will be
made for hedging purposes only. The Fund will hold securities or other options
or futures positions whose values are expected to offset its obligations under
the hedge strategies. The Fund will not enter into an option or futures position
that exposes the Fund to an obligation to another party unless it owns either
(i) an offsetting position in securities or other options or futures contracts
or (ii) cash, receivables and short-term debt securities with a value sufficient
to cover its potential obligations. A Fund will comply with guidelines
established by the SEC with respect to coverage of options and futures
strategies by mutual funds, and if the guidelines so require will set aside cash
and high grade liquid debt securities in a segregated account with its custodian
bank in the amount prescribed. Securities held in a segregated account cannot be
sold while the futures or option strategy is outstanding, unless they are
replaced with similar securities. As a result, there is a possibility that
segregation of a large percentage of the Fund's assets could impede portfolio
management or the Fund's ability to meet redemption requests or other current
obligations.

Limitations on Futures and Options Transactions. RBB on behalf
of the Fund has filed a notice of eligibility for exclusion from the definition
of the term "commodity pool operator" with the Commodity Futures Trading
Commission ("CFTC") and the National Futures Association, which regulate trading
in the futures markets. Pursuant to Section 4.5 of the regulations under the
Commodity Exchange Act, the notice of eligibility includes the following
representations:

<PAGE>

(a) The Fund will use commodity futures contracts and related
commodity options solely for bona fide hedging purposes within the meaning of
CFTC regulations; provided that the Fund may hold long positions in commodity
futures contracts and related commodity options that do not fall within the
definition of bona fide hedging transactions if the positions are used as part
of a portfolio management strategy and are incidental to the Fund's activities
in the underlying cash market, and the underlying commodity value of the
positions at all times will not exceed the sum of (i) cash or United States
dollar-denominated high quality short-term money market instruments set aside in
an identifiable manner, plus margin deposits, (ii) cash proceeds from existing
investments due in 30 days, and (iii) accrued profits on the positions held by a
futures commission merchant; and

(b) The Fund will not enter into any commodity futures
contract or option on a commodity futures contract if, as a result, the sum of
initial margin deposits on commodity futures contracts and related commodity
options and premiums paid for options on commodity futures contracts the Fund
has purchased, after taking into account unrealized profits and losses on such
contracts, would exceed 5% of the Fund's total assets.

In addition, the Fund will not enter into any futures contract
into any option if, as a result, the sum of (i) the current value of assets
hedged in the case of strategies involving the sale of securities, and (ii) the
current value of securities or other instruments underlying the respective
Fund's other futures or options positions, would exceed 50% of the Fund's net
assets.

The Fund's limitations on investments in futures contracts and
its policies regarding futures contracts and the limitations on investments in
options and its policies regarding options discussed above in this Statement of
Additional Information, are not fundamental policies and may be changed as
regulatory agencies permit. The Fund will not modify the above limitations to
increase its permissible futures and options activities without supplying
additional information in a current Prospectus or Statement of Additional
Information that has been distributed or made available to the Fund's
shareholders.

Various exchanges and regulatory authorities have recently
undertaken reviews of options and futures trading in light of market volatility.
Among the possible actions that have been presented are proposals to adopt new
or more stringent daily price fluctuation limits for futures or options
transactions, and proposals to increase the margin requirements for various
types of strategies. It is impossible to predict what actions, if any, will
result from these reviews at this time.

Short Sales "Against the Box." In a short sale, the Fund sells
a borrowed security and has a corresponding obligation to the lender to return
the identical security. The Fund may engage in short sales if at the time of the
short sale it owns or has the right to obtain, at no additional cost, an equal
amount of the security being sold short. This investment technique is known as a
short sale "against the box." In a short sale, a seller does not immediately
deliver the securities sold and is said to have a short position in those
securities until delivery occurs. If the Fund engages in a short

<PAGE>

sale, the collateral for the short position will be maintained by the Fund's
custodian or a qualified sub-custodian. While the short sale is open, the Fund
will maintain in a segregated account an amount of securities equal in kind and
amount to the securities sold short or securities convertible into or
exchangeable for such equivalent securities. These securities constitute the
Fund's long position. The Fund will not engage in short sales against the box
for speculative purposes. The Fund may, however, make a short sale as a hedge,
when it believes that the price of a security may decline, causing a decline in
the value of a security owned by the Fund (or a security convertible or
exchangeable for such security), or when the Fund wants to sell the security at
an attractive current price, but also wishes to defer recognition of gain or
loss for federal income tax purposes and for purposes of satisfying certain
tests applicable to regulated investment companies under the Internal Revenue
Code. In such case, any future losses in the Fund's long position should be
reduced by a gain in the short position. Conversely, any gain in the long
position should be reduced by a loss in the short position. The extent to which
such gains or losses are reduced will depend upon the amount of the security
sold short relative to the amount the Fund owns. There will be certain
additional transaction costs associated with short sales against the box, but
the Fund will endeavor to offset these costs with the income from the investment
of the cash proceeds of short sales.

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.
Section 4(2) paper is restricted as to disposition under the Federal securities
laws and is generally sold to institutional investors such as the RBB 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.

Repurchase Agreements. The repurchase price under the
repurchase agreements described in the Prospectus generally equals the price
paid by the Fund involved 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). Securities subject to repurchase
agreements will be held by the RBB'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 Fund involved under the 1940 Act.

Rights Offerings and Purchase Warrants. Rights offerings and
purchase warrants are privileges issued by a corporation which enable the owner
to subscribe to and purchase a specified number of shares of the corporation at
a specified price during a specified period of time. Subscription rights
normally have a short lifespan to expiration. The purchase of rights or warrants
involves the risk that the Fund could lose the purchase value of a right or
warrant if the right to subscribe to additional shares is not executed prior to
the rights and warrants expiration. Also, the purchase of rights and/or warrants
involves the risk that the effective price paid for the right and/or warrant
added to the subscription price of the

<PAGE>

related security may exceed the value of the subscribed security's market price
such as when there is no movement in the level of the underlying security.

Illiquid Securities. The Fund may not invest more than 15% of
its total assets in illiquid securities, including repurchase agreements which
have a maturity of longer than seven days and securities that are illiquid by
virtue of the absence of a readily available market or legal or contractual
restrictions on resale. 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 Fund's investment adviser will monitor the
liquidity of such restricted securities under the supervision of the Board of
Directors. Repurchase agreements subject to demand are deemed to have a maturity
equal to the notice period.

Historically, illiquid securities have included securities
subject to contractual or legal restrictions on resale because they have not
been registered under the Securities Act of 1933, as amended (the "Securities
Act"), 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. The Board has adopted a policy that the Fund will
not purchase private placements (i.e. restricted securities other than Rule 144A
Securities). Mutual funds do not typically hold a significant amount of these
restricted or other 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 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 conditions could impede such a public offering of
securities.

In recent years, however, a large institutional market has
developed for certain securities that are not registered under the Securities
Act including repurchase agreements, commercial paper, foreign securities,
municipal securities and corporate bonds and notes. Institutional investors
depend on an efficient institutional market in which the unregistered security
can be readily resold or on an issuer's ability to honor a demand for repayment.
The fact that there are contractual or legal restrictions on resale to the
general public or to certain institutions may not be indicative of the liquidity
of such investments.

The SEC adopted Rule 144A which allows for a broader
institutional trading market for securities otherwise subject to restriction on
resale to the general public. Rule 144A establishes a "safe harbor" from the
registration requirements of the Securities Act for resales of certain
securities to qualified institutional buyers. The investment adviser anticipates
that the market for certain restricted securities such as institutional
commercial paper will expand further as a result of this relatively new
regulation and the development of automated systems for the

<PAGE>

trading, clearance and settlement of unregistered securities of domestic and
foreign issuers, such as the PORTAL System sponsored by the NASD.

The Adviser will monitor the liquidity of restricted
securities in the Fund under the supervision of the Board of Directors. In
reaching liquidity decisions, the Adviser may consider, inter alia, 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).

Additional Investment Considerations

Normally, RBB will issue shares representing an interest in
the Balanced Fund only for cash or cash equivalents. Transactions involving the
issuance of shares representing an interest in the Balanced Fund for securities
or assets other than cash will be limited to bona fide reorganizations,
statutory mergers and to other acquisitions of portfolio securities (except for
municipal debt securities issued by state political subdivisions or their
agencies or instrumentalities) which (a) meet the Balanced Fund's investment
objectives and policies; (b) are acquired for investment and not for resale; (c)
are liquid securities which are not restricted as to transfer either by law or
liquidity of market; and (d) have a readily ascertainable value as evidenced by
a listing on the American Stock Exchange, the NYSE or NASDAQ.

Investment Limitations

The Fund has adopted the following fundamental investment
limitations which may not be changed without the affirmative vote of the holders
of a majority of the Fund's outstanding shares (as defined in Section 2(a)(42)
of the Investment Company Act). The Fund may not:

1. Borrow money, except from banks or by entering into reverse
repurchase agreements for temporary purposes and then in amounts not in excess
of 30% of the value of the Fund'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 Fund; or mortgage, pledge or hypothecate any of its assets
except in connection with any such borrowing or reverse repurchase agreement and
in amounts not in excess of 125% of the dollar amounts borrowed; or purchase
portfolio securities while borrowings and reverse repurchase agreements in
excess of 5% of the Balanced Fund's net assets are outstanding. (This borrowing
provision is not for investment leverage, but solely to facilitate management of
the Balanced Fund's securities by enabling the Balanced Fund to meet redemption
requests where the liquidation of portfolio securities is deemed to be
disadvantageous or inconvenient.)

2. 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

<PAGE>

than 5% of the Fund'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 Fund, except that up to 25% of the value of the Fund's
assets may be invested without regard to this 5% limitation;

3. Purchase securities on margin, except for short-term credit
necessary for clearance of portfolio transactions, except that the Fund may
establish margin accounts in connection with its use of options, futures
contracts and options on futures contracts;

4. Underwrite securities of other issuers, except to the
extent that, in connection with the disposition of portfolio securities, the
Fund 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 Fund's investment objective, policies and
limitations may be deemed to be an underwriting;

5. Make short sales of securities or maintain a short position
or write or sell puts, calls, straddles, spreads or combinations thereof, except
that the Fund may purchase and sell puts and call options on securities, stock
indices and currencies and may purchase and sell options on futures contracts;

6. Purchase or sell real estate (including interests in real
estate limited partnerships), provided that the Fund may invest in readily
marketable interests in real estate investment trusts or in securities secured
by real estate or interests therein or issued by companies which invest in real
estate or interests therein;

7. Purchase or sell commodities or commodity contracts,
except that the Fund may purchase and sell futures contracts and related
options;

8. Invest in oil, gas or mineral-related programs or
leases;
9. Make loans except that the Fund may purchase or hold
debt obligations in accordance with its investment objective, policies and
limitations and except that the Fund may enter into repurchase agreements;

10. Purchase any securities issued by any other
investment company except in connection with the merger, consolidation or
acquisition of all the securities or assets of such an issuer; or

11. Make investments for the purpose of exercising
control or management.

In addition to the foregoing enumerated investment
limitations, the Fund may not (a) 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, (b) invest more than 5% of
its total assets (taken at the time of purchase) in equity securities that are
not readily marketable, and (c) purchase any securities which would cause, at
the time of purchase, more than 25% of the value of the total assets of the Fund

<PAGE>

to be invested in the obligations of issuers in any industry (exclusive of the
U.S. Government and its agencies and instrumentalities).

DIRECTORS AND OFFICERS

The directors and executive officers of RBB, their business
addresses and principal occupations during the past five years are:

<TABLE>
<CAPTION>
=====================================================================================================
Name and Address Position with Principal Occupation
RBB During Past
Five Years
-----------------------------------------------------------------------------------------------------
<S> <C> <C>
Arnold M. Reichman* Director Since 1984, Managing Director
466 Lexington Avenue and Assistant Secretary, E.M.
New York, NY 10017 Warburg, Pincus & Co., Inc.;
Since 1984 Managing Director,
Warburg Pincus Counsellors,
Inc.; Since 1985, Vice
President and Secretary,
Counsellors Securities Inc;
Officer of various investment
companies advised by Warburg,
Pincus Counsellors, Inc.
--------------------------------------------------------------------------------------------------------------------------
Robert Sablowsky** Director Since 1985, Executive Vice
14 Wall Street President of Gruntal & Co.,
New York, NY 10005 Inc., Director, Gruntal & Co.,
Inc. and Gruntal Financial
Corp.
--------------------------------------------------------------------------------------------------------------------------
Francis J. McKay Director Since 1963, Executive Vice
7701 Burholme Avenue President, Fox Chase Cancer
Philadelphia, PA 19111 Center (Biomedical research and
medical care.)
--------------------------------------------------------------------------------------------------------------------------
Marvin E. Sternberg Director Since 1974, Chairman, Director
937 Mt. Pleasant Road and President, Moyco
Bryn Mawr, PA 19010 Industries, Inc. (manufacturer
of dental supplies and
precision coated abrasives);
Since 1968, Director and
President, Mart MMM, Inc.
(formerly Montgomeryville
Merchandise Mart Inc.) and Mart
PMM, Inc. (formerly Pennsauken
Merchandise Mart, Inc.)
(Shopping Centers); and Since
1975, Director and Executive
Vice President, Cellucap Mfg.
Co., Inc. (manufacturer of
disposable headwear)

<PAGE>

Name and Address Position with Principal Occupation
RBB During Past
Five Years
-----------------------------------------------------------------------------------------------------
<S> <C> <C>
Julian A. Brodsky Director Director, and Vice Chairman
1234 Market Street Comcast Corporation; Director,
16th Floor Comcast Cablevision of
Philadelphia, PA Philadelphia (cable television
19107-3723 and communications) and Nextel
(wireless communications).
--------------------------------------------------------------------------------------------------------------------------
Donald van Roden Director Self-employed businessman.
1200 Old Mill Lane From February 1980 to march
Wyomissing, PA 19610 1987, Vice Chairman, SmithKline
Beckman Corporation
(pharmaceuticals); Director,
AAA Mid-Atlantic (auto
service); Director, Keystone
Insurance Co.
--------------------------------------------------------------------------------------------------------------------------
Edward J. Roach President and Certified Public Accountant;
Suite 152 Treasurer Vice Chairman of the Board, Fox
Bellevue Park Corporate Chase Cancer Center; Vice
Center President and Trustee,
103 Bellevue Parkway Pennsylvania School for the
Wilmington, DE 19809 Deaf; Trustee, Immaculata
College; Vice President and
Treasurer of various investment
companies advised by PNC
Institutional Management
Corporation.
--------------------------------------------------------------------------------------------------------------------------
Morgan R. Jones Secretary Chairman of the law firm of
1100 PNB Bank Building Drinker Biddle & Reath,
Broad and Chestnut Philadelphia, Pennsylvania;
Streets Director, Rocking Horse Child
Philadelphia, PA 19107 Care Centers of America, Inc.
==========================================================================================================================
</TABLE>

------------------------

* Mr. Reichman is an "interested person" of RBB as that term is defined
in the 1940 Act by virtue of his position with Counsellors Securities
Inc., RBB's distributor.

** Mr. Sablowsky is an "interested person" of RBB as that term is defined
in the 1940 Act by virtue of his position with Gruntal & Co., Inc., a
broker-dealer which sells RBB's shares.

Messrs. McKay, Sternberg and Brodsky are members of the Audit
Committee of the Board of Directors. The Audit Committee, among other things,
reviews results of the annual audit and recommends to RBB the firm to be
selected as independent auditors.

Messrs. Reichman, McKay and van Roden are members of the
Executive Committee of the Board of Directors. The Executive Committee may
generally

<PAGE>

carry on and manage the business of RBB when the Board of Directors is not in
session.

Messrs. McKay, Sternberg, Brodsky and van Roden are members of
the Nominating Committee of the Board of Directors. The Nominating Committee
recommends to the Board annually all persons to be nominated as directors of
RBB.

RBB pays directors who are not "affiliated persons" (as that
term is defined in the 1940 Act) of the Fund $5,000 annually and $650 per
meeting of the Board or any committee thereof that is not held in conjunction
with a Board meeting. Directors who are not affiliated persons of RBB are
reimbursed for any expenses incurred in attending meetings of the Board of
Directors or any committee thereof. For the year ended August 31, 1994,
Directors and officers of RBB received compensation and reimbursement of
expenses in the aggregate amount of $35,999. On October 24, 1990, RBB adopted,
as a participating employer, RBB Office Retirement Profit-Sharing Plan and Trust
Agreement, a retirement plan for employees (currently Edward J. Roach) pursuant
to which RBB will contribute on a monthly basis amounts equal to 10% of the
monthly compensation of each eligible employee. By virtue of the services
performed by Warburg, the Fund's adviser, and the Distributor, RBB itself
requires only one part-time employee. No officer, director or employee of
Warburg currently receives any compensation from RBB.

For the year ended August 31, 1994, each of the following
members of the Board of Directors received compensation from the Fund for fees
and expenses incurred in attending meetings of the Board of Directors or any
other committee thereof; Julian A. Brodsky in the aggregate amount of $6,950;
Francis J. McKay in the aggregate amount of $7,600; Marvin E. Sternberg in the
aggregate amount of $7,600; Donald van Roden in the aggregate amount of $8,600.

INVESTMENT ADVISORY, DISTRIBUTION AND SERVICING ARRANGEMENTS

Advisory Agreements

Warburg renders advisory services to the Fund pursuant to an
Investment Advisory Agreement. The Advisory Agreement relating to the Balanced
Fund is dated September 30, 1994 ("Advisory Contract"). Prior to August 31,
1994, PIMC and Warburg rendered advisory and sub-advisory services,
respectively, to the Balanced Fund pursuant to Advisory and Sub-Advisory
Agreements dated August 16, 1988. For the year ended August 31, 1994, PIMC
waived advisory fees with respect to the Balanced Fund in the amount of $4,251
under the Advisory Contract. During the same period, PIMC received advisory fees
(after waivers) in the amount of $0.

As required by various state regulations, Warburg will
reimburse RBB or the Fund (as applicable) if and to the extent that the
aggregate operating expenses of RBB or the Fund exceeds applicable state limits
for the fiscal year, to the extent required by such state regulations.
Currently, the most restrictive of such applicable limits is 2 1/2% of the first
$30 million of average annual net assets, 2% of the next $70 million of average
annual net

<PAGE>

assets and 1 1/2% of the remaining average annual net assets. Certain expenses,
such as brokerage commissions, taxes, interest and extraordinary items, are
excluded from this limitation. Whether such expense limitations apply to RBB as
a whole or to the Fund depends upon the particular regulations of such states.

The Fund bears all of its own expenses not specifically
assumed by Warburg. General expenses of RBB not readily identifiable as
belonging to a portfolio of RBB are allocated among all investment portfolios by
or under the direction of RBB's Board of Directors in such manner as the Board
determines to be fair and equitable. Expenses borne by the Fund include, but are
not limited to, the following (or the Fund's share of the following): (a) the
cost (including brokerage commissions) of securities purchased or sold by the
Fund and any losses incurred in connection therewith; (b) fees payable to and
expenses incurred on behalf of the Fund by Warburg; (c) expenses of organizing
RBB that are not attributable to a class of RBB; (d) certain of the filing fees
and expenses relating to the registration and qualification of RBB and the
Fund's shares under Federal and/or state securities laws and maintaining such
registrations and qualifications; (e) fees and salaries payable to RBB's
directors and officers; (f) taxes (including any income or franchise taxes) and
governmental fees; (g) costs of any liability and other insurance or fidelity
bonds; (h) any costs, expenses or losses arising out of a liability of or claim
for damages or other relief asserted against RBB or a portfolio for violation of
any law; (i) legal, accounting and auditing expenses, including legal fees of
special counsel for the independent directors; (j) charges of custodians and
other agents; (k) 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; (l) 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; (m) any extraordinary expenses; (n) fees,
voluntary assessments and other expenses incurred in connection with membership
in investment company organizations; (o) costs of mailing and tabulating proxies
and costs of shareholders' and directors' meetings; (p) costs of PFPC's use of
independent pricing services to value a portfolio's securities; and (q) the cost
of investment company literature and other publications provided by RBB 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 RBB, are allocated to such class.

Under the Advisory Contract, Warburg will not be liable for
any error of judgment or mistake of law or for any loss suffered by RBB or the
Fund in connection with the performance of the Advisory Contract, except a loss
resulting from willful misfeasance, bad faith or gross negligence on the part of
Warburg in the performance of its duties or from reckless disregard of its
duties and obligations thereunder.

The Advisory Contract was approved on August 3, 1994 by vote
of RBB's Board of Directors, including a majority of those directors who are not

<PAGE>

parties to the Advisory Contract or interested persons (as defined in the 1940
Act) of such parties. The Advisory Contract is terminable by vote of RBB's Board
of Directors or by the holders of a majority of the outstanding voting
securities of the Fund, at any time without penalty, on 60 days' written notice
to Warburg. The Balanced Fund Advisory Contract became effective on September
30, 1994 and was approved by shareholders at a special meeting held September
30, 1994. The Advisory Contract terminates automatically in the event of
assignment thereof.

Custodian Agreements

PNC Bank is custodian of RBB's assets pursuant to a custodian
agreement dated August 16, 1988, as amended (the "Custodian Agreement"). Under
the Custodian Agreement, PNC Bank (a) maintains a separate account or accounts
in the name of the Fund (b) holds and transfers portfolio securities on account
of the Fund, (c) accepts receipts and makes disbursements of money on behalf of
the Fund, (d) collects and receives all income and other payments and
distributions on account of the Fund's portfolio securities and (e) makes
periodic reports to the RBB's Board of Directors concerning the Fund's
operations. PNC Bank is authorized to select one or more banks or trust
companies to serve as sub-custodian on behalf of RBB, provided that PNC Bank
remains responsible for the performance of all its duties under the Custodian
Agreement and holds RBB harmless from the acts and omissions of any
sub-custodian. For its services to RBB under the Custodian Agreement, PNC Bank
receives a fee which is calculated based upon the Fund's average daily gross
assets as follows: $.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 $.15 per $1,000 on average daily gross assets over $100 million,
with a minimum monthly fee of $1,000 per Fund, exclusive of transaction charges
and out-of-pocket expenses, which are also charged to RBB.

State Street Bank and Trust Company ("State Street") is
co-custodian of the Fund's foreign securities pursuant to a sub-custodian
agreement dated October 26, 1994 (the "Foreign Custodian Agreement"). Under the
Foreign Custodian Agreement, State Street performs custodial functions with
respect to the Fund's non-U.S. portfolio holdings, including appointment of
non-U.S. custodians and agents.

Transfer Agency and Sub-Transfer Agency Agreements

PFPC, Inc. ("PFPC"), an affiliate of PNC Bank, serves as the
transfer and dividend disbursing agent for the Shares pursuant to a Transfer
Agency Agreement dated August 16, 1988 (the "Transfer Agency Agreement"). State
Street Bank and Trust Company ("State Street") acts as shareholder servicing
agent, sub-transfer agent and dividend disbursing agent for the Fund, under
which it (a) issues and redeems Shares, (b) addresses and mails all
communications by the Fund to record owners of Shares, 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 RBB's Board of Directors
concerning the operations of the class. For its services to the Fund under the
Sub-Transfer Agency Agreement, State Street receives a fee at the annual rate of
$8.00 per account for the Funds, plus $5.00 per new account

<PAGE>

establishment, exclusive of out-of-pocket expenses, and also receives
reimbursement of its out-of-pocket expenses.

Co-Administration Agreements

Counsellors Funds Service, Inc. ("Counsellors Service") serves
as co-administrator to the Fund pursuant to a Co-Administration Agreement dated
August 4, 1994 (the "Counsellors Service Co-Administration Agreement").
Counsellors Service has agreed to provide shareholder liaison services to the
Fund including responding to shareholder inquiries and providing information on
shareholder accounts. The Counsellors Service Co-Administration Agreement
provides that Counsellors Service shall not be liable for any error of judgment
or mistake of law or any loss suffered by RBB or the Fund in connection with the
performance of the agreement, except a loss resulting from willful misfeasance,
bad faith or negligence, or reckless disregard of its duties and obligations
thereunder. In consideration for providing services pursuant to the Counsellors
Service Co-Administration Agreement, Counsellors Services receives a fee with
respect to the Balanced Fund calculated at an annual rate of .10% of average
daily net assets.

PFPC also serves as co-administrator to the Fund pursuant to a
Co-Administration Agreements dated August 4, 1994 (the "PFPC Co-Administration
Agreement"). PFPC has agreed to calculate the Fund's net asset values, provide
all accounting services for the Fund, and assist in related aspects of the
Fund's operations. The PFPC Co-Administration Agreement provides that PFPC shall
not be liable for any error of judgment or mistake of law or any loss suffered
by RBB or the Fund in connection with the performance of the agreement, except a
loss resulting from willful misfeasance, bad faith or negligence, or reckless
disregard of its duties and obligations thereunder. In consideration for
providing services pursuant to the PFPC Co-Administration Agreement, PFPC
receives a fee with respect to the Balanced Fund calculated at an annual rate of
.15% of average daily net assets, with a minimum annual fee of $75,000.

Distribution and Shareholder Servicing

Counsellors Securities has entered into a Servicing Agreement
with Service Organizations with respect to the Balanced Fund pursuant to which
support services are provided to the holders of Series 2 Shares in consideration
of the Funds' payment of up to .50%, on an annualized basis of the average daily
net assets of the Series 2 Shares held of record of each Fund. See Prospectus,
"Shareholder Servicing." Counsellors Securities may, in the future, enter into
additional Servicing Agreements with Service Organizations to perform certain
distribution, shareholder servicing, administrative and accounting services for
their Customers who are beneficial owners of the Fund's shares.

A Service Organization with which Counsellors Securities has
entered into Servicing Agreements on behalf of the Fund may charge a Customer
one or more of the following types of fees, as agreed upon by the Service
Organization and the Customer, with respect to the cash management or other
services provided by the Service Organization: (a) account fees (a fixed amount
per month or per year); (b) transaction fees (a fixed amount per

<PAGE>

transaction processed); (c) compensation balance requirements (a minimum dollar
amount a Customer must maintain in order to obtain the services offered); or (d)
account maintenance fees (a periodic charge based upon the percentage of assets
in the account or of the dividend paid on those assets). Services provided by a
Service Organization to Customers are in addition to, and not duplicative of,
the services to be provided under Servicing Agreements. A Customer of a Service
Organization should read the Fund's Prospectus and Statement of Additional
Information in conjunction with the Servicing Agreement and other literature
describing the services and related fees that would be provided by the Service
Organization to its Customers prior to any purchase of shares of the Fund.
Service Organizations and other interested investors may obtain Prospectuses
from the Fund's distributor upon request. No preference will be shown in the
selection of the Fund's portfolio investments for the instruments of Service
Organizations.

There are currently unresolved issues with respect to existing
laws and regulations relating to the permissible activities of banks and trust
companies, including the extent to which certain Service Organizations may
perform shareholder and administrative services. A judicial or administrative
decision or interpretation with respect to those laws and regulations, as well
as future changes in such laws and regulations, could prevent certain Service
Organizations from performing these services or from receiving payments for
performing such services. If a Service Organization was prohibited from
performing these services, it is expected that all arrangements between
Counsellors Securities or behalf of the Fund and the Service Organization would
be terminated and that Customers of the Service Organization who seek to invest
in the Fund would have to purchase and redeem shares directly through the Fund's
distributor or transfer agent.

Counsellors Securities' agreements with Service Organizations
is governed by a Distribution Plan (the "Plan"). The Plan requires PFPC and
Counsellors Service, the Fund's co-administrators, to provide the Board of
Directors, at least quarterly, with written reports of amounts expended under
the Plan and the purpose for which such expenditures were made. The Plan will
continue in effect for so long as their continuance is specifically approved at
least annually by the Board of Directors, including a majority of the Directors
who are not interested persons of RBB and who have no direct or indirect
financial interest in the operation of the Plan ("Independent Directors"). Any
material amendment of the Plan would require the approval of the Board of
Directors in the manner described above. The Plan may be terminated at any time,
without penalty, by vote of a majority of the Independent Directors or by a vote
of a majority of the outstanding voting securities of the relevant class of
shares of the Fund.

FUND TRANSACTIONS

Subject to policies established by the Board of Directors,
Warburg is responsible for the execution of portfolio transactions and the
allocation of brokerage transactions for the Fund. In executing portfolio
transactions, Warburg seeks to obtain the best net results for the Fund, taking
into account such factors as the price (including the applicable brokerage
commission or dealer spread), size of the order, difficulty of execution and
operational facilities of the firm involved. While Warburg generally seeks
reasonably

<PAGE>

competitive commission rates, payment of the lowest commission or spread is not
necessarily consistent with obtaining the best results in particular
transactions.

No Fund has any obligation to deal with any broker or group of
brokers in the execution of portfolio transactions. Warburg may, consistent with
the interests of the Fund and subject to the approval of the Board of Directors,
select brokers on the basis of the research, statistical and pricing services
they provide to the Fund and other clients of Warburg. Information and research
received from such brokers will be in addition to, and not in lieu of, the
services required to be performed by Warburg under its respective contracts. A
commission paid to such brokers may be higher than that which another qualified
broker would have charged for effecting the same transaction, provided that
Warburg, as applicable, determines in good faith that such commission is
reasonable in terms either of the transaction or the overall responsibility of
or Warburg, as applicable, to a Fund and its other clients and that the total
commissions paid by a Fund will be reasonable in relation to the benefits to a
Fund over the long-term.

Corporate debt and U.S. Government securities are generally
traded on the over-the-counter market on a "net" basis without a stated
commission, through dealers acting for their own account and not as brokers. The
Funds will primarily engage in transactions with these dealers or deal directly
with the issuer unless a better price or execution could be obtained by using a
broker. Prices paid to a dealer in debt securities will generally include a
"spread," which is the difference between the prices at which the dealer is
willing to purchase and sell the specific security at the time, and includes the
dealer's normal profit.

Warburg 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 Fund 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 Fund's anticipated need for liquidity makes
such action desirable. Any such repurchase prior to maturity reduces the
possibility that the Fund 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 Fund and for other investment
accounts managed by Warburg are made independently of each other in the light of
differing conditions. However, the same investment decision may occasionally 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 a Fund is concerned, in other cases it is
believed to be beneficial to the Fund. The Fund will not purchase securities
during the existence of any underwriting or selling group relating to such
security of which Warburg or any affiliated person (as defined in the 1940 Act)
thereof is a member except pursuant to procedures adopted by the RBB's Board of
Directors pursuant to Rule 10f-3

<PAGE>

under the 1940 Act. Among other things, these procedures, which will be reviewed
by the RBB's directors as deemed necessary from time to time, 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 Warburg not
participate in or benefit from the sale to the Fund.

In no instance will portfolio securities be purchased from or
sold to the Distributor, PNC Bank or Warburg or any affiliated person of the
foregoing entities except as permitted by SEC exemptive order or by applicable
law.

During the year ended August 31, 1994, the Balanced Fund paid
$506 of brokerage commissions.

A high rate of portfolio turnover involves correspondingly
greater brokerage commission expenses and other transaction costs, which must be
borne directly by the Fund. Federal income tax laws may restrict the extent to
which the Fund may engage in short term trading of securities. See "Taxes". For
the year or period ended August 31, 1994, the Balanced Fund had a portfolio
turnover rate of 32%. The Fund anticipates that its annual portfolio turnover
rate will vary from year to year. The portfolio turnover rate is calculated by
dividing the lesser of the Fund's annual sales or purchases of portfolio
securities (exclusive of purchases or sales of securities whose maturities at
the time of acquisition were one year or less) by the monthly average value of
the securities in the portfolio during the year.

PURCHASE AND REDEMPTION INFORMATION

The Fund reserves the right, if conditions exist which make
cash payments undesirable, to honor any request for redemption or repurchase of
the Fund's shares by making payment in whole or in part in securities chosen by
RBB and valued in the same way as they would be valued for purposes of computing
the Fund's net asset value. If payment is made in securities, a shareholder may
incur transaction costs in converting these securities into cash. RBB has
elected, however, to be governed by Rule 18f-1 under the 1940 Act so that the
Fund is obligated to redeem its shares solely in cash up to the lesser of
$250,000 or 1% of its net asset value during any 90-day period for any one
shareholder of the Fund.

Under the 1940 Act, the Fund may suspend the right to
redemption or postpone the date of payment upon redemption for any period during
which the New York Stock Exchange (the "NYSE") is closed (other than customary
weekend and holiday closings), or during which trading on said Exchange 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 Fund may also suspend or postpone the recordation of the
transfer of its shares upon the occurrence of any of the foregoing conditions.)

<PAGE>

VALUATION OF SHARES

The net asset value per share of the Fund is calculated as of
4:00 p.m. Eastern Time on each Business Day. "Business Day" means each weekday
when the NYSE is open. Currently, the NYSE is closed on New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day (observed), Labor
Day, Thanksgiving Day and Christmas Day (observed). Securities which are listed
on stock exchanges are valued at the last sale price on the day the securities
are valued or, lacking any sales on such day, at the mean of the bid and asked
prices available prior to the evaluation. In cases where securities are traded
on more than one exchange, the securities are generally valued on the exchange
designated by the Board of Directors as the primary market. Securities traded in
the over-the-counter market and listed on the National Association of Securities
Dealers Automatic Quotation System ("NASDAQ") are valued at the last trade price
listed on the NASDAQ at 4:00 p.m.; securities listed on NASDAQ for which there
were no sales on that day and other over-the-counter securities are valued at
the mean of the bid and asked prices available prior to valuation. Securities
for which market quotations are not readily available are valued at fair value
as determined in good faith by or under the direction of RBB's Board of
Directors. The amortized cost method of valuation may also be used with respect
to debt obligations with sixty days or less remaining to maturity.

In determining the approximate market value of portfolio
investments, the Fund 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 different 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 Fund's books at their face value. Other assets, if
any, are valued at fair value as determined in good faith by RBB's Board of
Directors.

PERFORMANCE INFORMATION

Total Return. For purposes of quoting and comparing the
performance of the Fund to that of other mutual funds and to stock or other
relevant indices in advertisements or in reports to shareholders, performance

<PAGE>

may be stated in terms of total return. Under the rules of the Securities and
Exchange Commission, the Fund's advertising performance must include total
return quotes calculated according to the following formula:

P(1 + T)'pp'n = ERV

Where: P = a hypothetical initial payment of $1,000

T = average annual total return

n = number of years (1, 5 or 10)

ERV = ending redeemable value at the end of the 1, 5 or 10
year periods (or fractional portion thereof) of a hypothetical $1,000 payment
made at the beginning of the 1, 5 or 10 year periods.

Under the foregoing formula, the time periods used in
advertising will be based on rolling calendar quarters, updated to the last day
of the most recent quarter prior to submission of the advertisement for
publication, and will cover one, five and ten year periods or a shorter period
dating from the effectiveness of the Fund's registration statement. In
calculating the ending redeemable value, the maximum sales load is deducted from
the initial $1,000 payment and all dividends and distributions by the Fund are
assumed to have been reinvested at net asset value, as described in the
Prospectus, on the reinvestment dates during the period. Total return, or "T" in
the formula above, is computed by finding the average annual compounded rates of
return over the 1, 5 and 10 year periods (or fractional portion thereof) that
would equate the initial amount invested to the ending redeemable value. Any
sales loads that might in the future be made applicable at the time to
reinvestments would be included as would any recurring account charges that
might be imposed by the Fund.

Calculated according to the SEC rules, for the year ended
August 31, 1994, both the average annual total return and the aggregate total
return was 6.86% for the Balanced Fund. Calculated according to the SEC rules,
for the period beginning on the commencement of the Fund's operations and ending
August 31, 1994, the average annual total return (commencing October 6, 1988)
was 11.56% for the Balanced Fund. For the same periods, the aggregate total
return (commencing October 6, 1988) was 90.84% for the Balanced Fund.

Performance. From time to time, the Fund may advertise its
average annual total return over various periods of time. These total return
figures show the average percentage change in value of an investment in the Fund
from the beginning of the measuring period to the end of the measuring period.
The figures reflect changes in the price of the Fund's shares assuming that any
income dividends and/or capital gain distributions made by the Fund during the
period were reinvested in shares of the Fund. Total return will be shown for
recent one-, five- and ten-year periods, and may be shown for other periods as
well (such as from commencement of the Fund's operations or on a year-by-year,
quarterly or current year-to-date basis).

<PAGE>

When considering average total return figures for periods
longer than one year, it is important to note that the Fund's annual total
return for one year in the period might have been grater or less than the
average for the entire period. When considering total return figures for periods
shorter than one year, investors should bear in mind that the Fund seeks
long-term appreciation and that such return may not be representative of the
Fund's return over a longer market cycle. The Fund may also advertise aggregate
total return figures for various periods, representing the cumulative change in
value of an investment in the Fund for the specific period (again reflecting
changes in the Fund's share prices and assuming reinvestment of dividends and
distributions). Aggregate and average total returns may be shown by means of
schedules, charts or graphs, may indicate various components of total return
(i.e., change in value of initial investment, income dividends and capital gain
distributions) and would be quoted separately for each class of the Fund's
shares.

Investors should note that total return figures are based on
historical earnings and are not intended to indicate future performance.

In reports or other communications to investors or in
advertising material, the Fund may describe general economic and market
conditions affecting the Fund and may compare their performance with (1) that of
other mutual funds as listed in the rankings prepared by Lipper Analytical
Services, Inc. or similar investment services that monitor the performance of
mutual funds or as set forth in the publications listed below; (2) with the S&P
500, which is an unmanaged indexes of common stocks prepared by Standard &
Poor's Corporation or (3) other appropriate indices of investment securities or
with data developed by Counsellors derived from such indices. The Fund may also
include evaluations published by nationally recognized ranking services and by
financial publications that are nationally recognized, such as The Wall Street
Journal, Investor's Daily, Money, Inc., Institutional Investor, Barron's,
Fortune, Forbes Business Week, Morningstar, Inc. and Financial Times.

In reports or other communications to investors or in
advertising, the Fund may also describe the general biography or work experience
of the portfolio managers of the Fund and may include quotations attributable to
the portfolio managers describing approaches taken in managing the Fund's
investments, research methodology, underlying stock selection or the Fund's
investment objective. The Fund may also discuss the continuum of risk and return
relating to different investments, and the potential impact of foreign stock on
a portfolio otherwise composed of domestic securities. In addition, the Fund may
from time to time compare their expense ratios to those of investment companies
with similar objective and policies, as advertised by Lipper Analytical
Services, Inc. or similar investment services that monitor mutual funds.

Yield. The Fund may also advertise its yield. Under the rules
of the SEC, the Fund advertising yield must calculate yield using the following
formula:

<PAGE>

YIELD = 2 [(a-b+1)'pp'6 - 1]
---
cd

Where: a = dividends and interest earned during the period.

b = expenses accrued for the period (net of
reimbursement).

c = the average daily number of shares
outstanding during the period that were
entitled to receive dividends.

d = the maximum offering price per share on the last
day of the period.

Under the foregoing formula, yield is computed by compounding
semi-annually, the net investment income per share earned during a 30 day period
divided by the maximum offering price per share on the last day of the period.
For the purpose of determining the interest earned (variable "a" in the formula)
on debt obligations that were purchased by the Fund at a discount or premium,
the formula generally calls for amortization of the discount or premium; the
amortization schedule will be adjusted monthly to reflect changes in the market
values of the debt obligations.

The yield for the 30 day period ended August 31, 1994 was
3.81% for the Balanced Fund.

Yield may fluctuate daily and does not provide a basis for
determining future yields. Because the yields will fluctuate, they cannot be
compared with yields on savings account or other investment alternatives that
provide an agreed to or guaranteed fixed yield for a stated period of time.
However, yield information may be useful to an investor considering temporary
investments in money market instruments. In comparing the yield of one fund to
another, consideration should be given to each fund's investment policies,
including the types of investments made, lengths of maturities of the portfolio
securities, the method used by each fund to compute the yield (methods may
differ) and whether there are any special account charges which may reduce the
effective yield.

The yields on certain obligations are dependent on a variety
of factors, including general market conditions, conditions in the particular
market for the obligation, the financial condition of the issuer, the size of
the offering, the maturity of the obligation and the rates on the issue. The
ratings of Moody's Investors Service, Inc. and Standard & Poor's Corporation
represent their respective opinions as to the quality of the obligations they
undertake to rate. Ratings, however, are general and are not absolute standards
of quality. Consequently, obligations with the same rating, maturity and
interest rate may have different market prices. In addition, subsequent to its
purchase by the Fund, an issue may cease to be rated or may have its rating
reduced below the minimum required for purchase. In such an event, the Fund's
investment adviser or sub-adviser will consider whether the Fund should continue
to hold the obligation.

<PAGE>

From time to time, in advertisements or in reports to
shareholders with respect to the Fund, the yields of the Fund may be quoted and
compared to those o other mutual funds with similar investment objectives and to
stock or other relevant indices. For example, the yield of the Fund may be
compared to the Donoghue's Money RRB Report(R) of Holliston, MA, 10746, a widely
recognized independent publication that monitors the performance of money market
funds, or to the data prepared by Lipper Analytical Services, Inc., a
widely-recognized independent service that monitors the performance of mutual
funds.

TAXES

The following is only a summary of certain additional tax
considerations generally affecting the Fund and their shareholders that are not
described in the Prospectus. No attempt is made to present a detailed
explanation of the tax treatment of the Fund or their shareholders, and the
discussion here and in the RBB's Prospectus is not intended as a substitute for
careful tax planning. Investors are urged to consult their tax advisers with
specific reference to their own tax situation.

The Fund has elected to be taxed as a regulated investment
company under Part I of Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"). As a regulated investment company, the Fund is exempt from
Federal income tax on its net investment income and realized capital gains which
it distributes to shareholders, provided that it distributes an amount equal to
the sum of (a) at least 90% of its investment company taxable income (net
taxable investment income and the excess of net short-term capital gain over net
long-term capital loss), if any, for the year and (b) at least 90% of its net
tax-exempt interest income, if any, for the year (the "Distribution
Requirement") and satisfies certain other requirements of the Code that are
described below. Distributions of investment company taxable income and net
tax-exempt interest income made during the taxable year or, under specified
circumstances, within twelve months after the close of the taxable year will
satisfy the Distribution Requirement. The Distribution Requirement for any year
may be waived if a regulated investment company establishes to the satisfaction
of the Internal Revenue Service that it is unable to satisfy the Distribution
Requirement by reason of distributions previously made for the purpose of
avoiding liability for Federal excise tax (discussed below).

In addition to satisfaction of the Distribution Requirement
each Fund must derive at least 90% of its gross income from dividends, interest,
certain payments with respect to securities loans and gains from the sale or
other disposition of stock or securities or foreign currencies, or from other
income derived with respect to its business of investing in such stock,
securities, or currencies (the "Income Requirement") and derive less than 30% of
its gross income from the sale or other disposition of any of the following
investments, if such investments were held for less than three months: (a) stock
or securities (as defined in Section 2(a)(36) of the 1940 Act); (b) options,
futures, or forward contracts (other than options, futures or forward contracts
on foreign currencies); and (c) foreign currencies (or options, futures or
forward contracts on foreign currencies) but only if such currencies (or
options, futures or forward contracts) are not directly related to the regulated
investment company's principal business of investing in stock

<PAGE>

or securities (or options and futures with respect to stocks or securities) (the
"Short-Short Gain Test"). Interest (including accrued original issue discount
and, in the case of debt securities bearing taxable interest income, "accrued
market discount") received by the Fund at maturity or on disposition of a
security held for less than three months will not be treated as gross income
derived from the sale or other disposition of such security for purposes of the
Short-Short Gain Test. However, any other income which is attributable to
realized market appreciation will be treated as gross income from the sale or
other disposition of securities for this purpose.

Future Treasury regulations may provide that currency gains
that are not "directly related" to the Fund's principal business of investing in
stock or securities (or in options or futures with respect to stock or
securities) will not satisfy the Income Requirements. Income derived by a
regulated investment company from a partnership or trust will satisfy the Income
Requirement only to the extent such income is attributable to items of income of
the partnership or trust that would satisfy the Income Requirement if they were
realized by a regulated investment company in the same manner as realized by the
partnership or trust.

In addition to the foregoing requirements, at the close of
each quarter of its taxable year, at least 50% of the value of the Fund's assets
must consist of cash and cash items, U.S. Government securities, securities of
other regulated investment companies, and securities of other issuers (as to
which the Fund has not invested more than 5% of the value of its total assets in
securities of such issuer and as to which the Fund does not hold more than 10%
of the outstanding voting securities of such issuer), and no more than 25% of
the value of the Fund's total assets may be invested in the securities of any
one issuer (other than U.S. Government securities and securities of other
regulated investment companies), or in two or more issuers which such Fund
controls and which the engaged in the same or similar trades or businesses (the
"Asset Diversification Requirement").

The Internal Revenue Service has taken the position, in
informal rulings issued to other taxpayers, that the issuer of a repurchase
agreement is the bank or dealer from which securities are purchased. A Fund will
not enter into repurchase agreements with any one bank or dealer if entering
into such agreements would, under the informal position expressed by the
Internal Revenue Service, cause it to fail to satisfy the Asset Diversification
Requirement.

Distributions of investment company taxable income will be
taxable (subject to the possible allowance of the dividend received deduction
described below) to shareholders as ordinary income, regardless of whether such
distributions are paid in cash or are reinvested in shares. Shareholders
receiving any distribution from RBB in the form of additional shares will be
treated as receiving a taxable distribution in an amount equal to the fair
market value of the shares received, determined as of the reinvestment date.

The Fund intends to distribute to shareholders its excess of
net long-term capital gain over net short-term capital loss ("net capital
gain"), if any, for each taxable year. Such gain is distributed as a capital
gain dividend and is taxable to shareholders as long-term capital gain,
regardless

<PAGE>

of the length of time the shareholder has held his shares, whether such gain was
recognized by the Fund prior to the date on which a shareholder acquired shares
of the Fund and whether the distribution was paid in cash or reinvested in
shares. The aggregate amount of distributions designated by any Fund as capital
gain dividends may not exceed the net capital gain of the Fund for any taxable
year, determined by excluding any net capital loss or net long-term capital loss
attributable to transactions occurring after October 31 of such year and by
treating any such loss as if it arose on the first day of the following taxable
year. Such distributions will be designated as capital gain dividends in a
written notice mailed by RBB to shareholders not later than 60 days after the
close of each Fund's respective taxable year.

In the case of corporate shareholders, distributions (other
than capital gain dividends) of a Fund for any taxable year generally qualify
for the 70% dividends received deduction to the extent of the gross amount of
"qualifying dividends" received by the Fund for the year. Generally, a dividend
will be treated as a "qualifying dividend" if it has been received from a
domestic corporation. However, a dividend received by a taxpayer will not be
treated as a "qualifying dividend" if (1) it has been received with respect to
any share of stock that the taxpayer has held for 45 days (90 days in the case
of certain preferred stock) or less (excluding any day more than 45 days (or 90
days in the case of certain preferred stock) after the date on which the stock
becomes ex-dividend), or (2) to the extent that the taxpayer is under an
obligation (pursuant to a short sale or otherwise) to make related payments with
respect to positions in substantially similar or related property. RBB will
designate the portion, if any, of the distribution made by the Fund that
qualifies for the dividends received deduction in a written notice mailed by RBB
to shareholders not later than 60 days after the close of the Fund's taxable
year.

Investors should note that changes made to the Code by the Tax
Reform Act of 1986 and subsequent legislation have not entirely eliminated
distinctions in the tax treatment of capital gain and ordinary income
distributions. The nominal maximum marginal rate on ordinary income for
individuals, trusts and estates is currently 31%, but for individual taxpayers
whose adjusted gross income exceeds certain threshold amounts (that differ
depending on the taxpayer's filing status) in taxable years beginning before
1996, provisions phasing out personal exemptions and limiting itemized
deductions may cause the actual maximum marginal rate to exceed 31%. The maximum
rate on the net capital gain of individuals, trusts and estates, however, is in
all cases 28%. Capital gains and ordinary income of corporate taxpayers are
taxed at a nominal maximum rate of 34% (an effective marginal rate of 39%
applies in the case of corporations having taxable income between $100,000 and
$335,000). Investors should be aware that any loss realized upon the sale,
exchange or redemption of shares held for six months or less will be treated as
a long-term capital loss to the extent any capital gain dividends have been paid
with respect to such shares.

Distributions of net investment income received by the Fund
from investments in debt securities will be taxable to shareholders as ordinary
income and will not be treated as "qualifying dividends" for purposes of the
dividends received deduction.

<PAGE>

A shareholder will recognize gain or loss upon an exchange of
shares of the Fund for shares of another portfolio upon exercise of an exchange
privilege. Shareholders may not include the initial sales charge in the tax
basis of the Shares exchanged for shares of another Fund for the purpose of
determining gain or loss on the exchange, where the Shares exchanged have been
held 90 days or less. The sales charge will increase the basis of the shares
acquired through exercise of the exchange privilege (unless the shares acquired
are also exchanged for shares of another portfolio within 90 days after the
first exchange).

The Code imposes a non-deductible 4% excise tax on regulated
investment companies that do not distribute with respect to each calendar year
an amount equal to 98% of their ordinary income for the calendar year plus 98%
of their capital gain net income for the 1-year period ending on October 31 of
such calendar year. The balance of such income must be distributed during the
next calendar year. For the foregoing purposes, a company is treated as having
distributed any amount on which it is subject to income tax for any taxable year
ending in such calendar year. Because the Fund intends to distribute all of its
taxable income currently, no Fund anticipates incurring any liability for this
excise tax. However, investors should note that the Fund may in certain
circumstances be required to liquidate investments in order to make sufficient
distributions to avoid excise tax liability.

RBB will be required in certain cases to withhold and remit to
the United States Treasury 31% of dividends paid to any shareholder (1) who has
provided either an incorrect tax identification number or no number at all, (2)
who is subject to backup withholding by the Internal Revenue Service for failure
to report the receipt of interest or dividend income properly, or (3) who has
failed to certify to RBB that he is not subject to backup withholding or that he
is an "exempt recipient."

The foregoing general discussion of Federal income tax
consequences is based on the Code and the regulations issued thereunder as in
effect on the date of this Statement of Additional Information. Future
legislative or administrative changes or court decisions may significantly
change the conclusions expressed herein, and any such changes or decisions may
have a retroactive effect with respect to the transactions contemplated herein.

Although the Fund expects to qualify as a "regulated
investment company" and to be relieved of all or substantially all Federal
income taxes, depending upon the extent of its activities in states and
localities in which its offices are maintained, in which its agents or
independent contractors are located or in which it is otherwise deemed to be
conducting business, the Fund may be subject to the tax laws of such states or
localities.

ADDITIONAL INFORMATION CONCERNING FUND SHARES

RBB does not currently intend to hold annual meetings of
shareholders except as required by the 1940 Act or other applicable law. RBB's
amended By-Laws provide that shareholders owning at least ten percent of the
outstanding shares of all classes of Common Stock of RBB have the right to

<PAGE>

call for a meeting of shareholders to consider the removal of one or more
directors. To the extent required by law, RBB will assist in shareholder
communication in such matters.

As stated in the Prospectus, holders of shares of each class
of RBB will vote in the aggregate and not by class on all matters, except where
otherwise required by law. Further, shareholders of RBB 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 securities of an investment company such as RBB shall not be deemed
to have been effectively acted upon unless approved by the holders of a majority
of the outstanding shares 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 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 of such portfolio. However, the Rule also provides that the
ratification of the selection of independent public accountants, the approval of
principal 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.

Notwithstanding any provision of Maryland law requiring a
greater vote of shares of RBB'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 RBB's Articles of Incorporation,
RBB 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).

MISCELLANEOUS

Counsel. The law firm of Ballard Spahr Andrews & Ingersoll,
1735 Market Street, 51st Floor, Philadelphia, Pennsylvania 19103 serves as
counsel to RBB, PIMC, PNC Bank and PFPC. The law firm of Drinker Biddle & Reath,
1100 Philadelphia National Bank Building, Broad and Chestnut Streets,
Philadelphia, Pennsylvania 19107, serves as counsel to RBB's independent
directors.

Independent Accountants. Coopers & Lybrand L.L.P., 2400 Eleven
Penn Center, Philadelphia, Pennsylvania 19103, serves as RBB's independent
accountants. RBB's financial statements which appear in this Statement of
Additional Information have been audited by Coopers & Lybrand L.L.P., as set
forth in their report, which also appears in this Statement of Additional
Information, and have been included herein in reliance upon the report of such
firm given upon their authority as experts in accounting and auditing.

<PAGE>

Control Persons. As of September 30, 1994, to RBB's knowledge,
the following named persons at the addresses shown below owned of record
approximately 5% or more of the total outstanding shares of the class of RBB
indicated below. Such classes are described in the Prospectus. RBB does not know
whether such persons also beneficially own such shares.
<TABLE>
<CAPTION>

Class of Common Stock Names and Addresses Percent of
of Record Owners Outstanding
Shares of
Class Owned
<S> <C> <C>
Class A Boston Financial Data Services 99%
(Growth & Income) Omnibus Account
Attn: Warburg Pincus, 3rd Fl.
2 Heritage Drive
Quincy, MA 02171

Class C Warburg, Pincus Counsellors, 44%
(Balanced) Inc.
466 Lexington Avenue
New York, NY 10017

Class C Planco Inc. 30%
(Balanced) Profit Sharing Plan Trust
16 Industrial Blvd.
Paoli, PA 19301

Class C Jane T. Bell 9%
(Balanced) 15 Schooner Drive
Mystic, CT 06335

Class D Gruntal Co. 8%
(Tax Free) FBO 995-16852-14
14 Wall Street
New York, NY 10005

Class D Gruntal Co. 8%
(Tax Free) FBO 995-10773-13
14 Wall Street
New York, NY 10005

Class D Gruntal Co. 8%
(Tax Free) FBO 995-10702-19
14 Wall Street
New York, NY 10005

Class F William B. Pettus & 9%
(Municipal) Augustine W. Pettus Trust
827 Winding Path Lane
St. Louis, MO

33
</TABLE>
<PAGE>

Class of Common Stock Names and Addresses Percent of
of Record Owners Outstanding
Shares of
Class Owned
<S> <C> <C>
Class F Seymour Fein 91%
(Municipal) P.O. Box 486
Tremont Post Office
Bronx, NY 10457-0486

Class G Saver's Marketing Inc. 20%
(Money) c/o Planco
16 Industrial Blvd.
Paoli, PA 19301

Class G Jewish Family and Childrens 36%
(Money) Agency of Philadelphia Capital
Campaign
1610 Spruce Street
Philadelphia, PA 19103

Class G Lynda R. Campbell Caring Trust 6%
(Money) 935 Rutger Street
St. Louis, MO 63104

Class G Dominic & Barbara Pisciotta 6%
(Money) Caring Trust
424 Quiet Drive
St. Charels, MO 63303

Class H Kelly H. Vandelicht 5%
(Municipal) Crystal C. Vandelicht
P.O. Box 296
Belle, MO 65013

Class H Emil R. Hunter 12%
(Muncipal) Mary J. Hunter
4518 Shenandoah
St. Louis, MO 63110

Class H Deborah C. Brown, Trustee 26%
(Municipal) Barbara J.C. Custis, Trustee
The Crowe Trust
9921 West 128th Ter.
Overland Park, KS 66213

Class H Larnie Johnson 6%
(Municipal) Mary Alice Johnson
4927 Lee Avenue
St. Louis, MO 63115-1726

Class H Gary L. Lange 5%
(Municipal) Susan D. Lange
13 Muirfield Court North
St. Charles, MO 63304

34
</TABLE>
<PAGE>
<TABLE>
<CAPTION>

Class of Common Stock Names and Addresses Percent of
of Record Owners Outstanding
Shares of
Class Owned
<S> <C> <C>
Class H David L. Ferguson 9%
(Municipal) Jill A. Ferguson
873 D Foxsprings Drive
Chesterfield, MO 63017

Class I WASNER & Co. 83%
(Money) For Account of Paine Webber
Managed Assts - Sundry Holdings
Attn: Judy Guille 01-04-04
1632 Chestnut Street
Philadelphia, PA 19103

Class P Home Insurance Company 72%
(Government) Att. Edward F. Linekin
59 Maiden Lane
21st Floor
New York, NY 10038

Class P Home Indemnity Company 6%
(Government) Att. Edward F. Linekin
59 Maiden Lane
21st Floor
New York, NY 10038

Class Q* Gruntal & Co. Inc. 10%
(High Yield) FBO 535-92269-19
14 Wall Street
New York, NY 10005

Class Q* PJM & Sons Inc. 14%
(High Yield) Pension Plan & Trust
8 Linnea Place
Ringwood, NJ 07456

Class Q* Gruntal & Co. Inc. 12%
(High Yield) FBO 215-31152-13
14 Wall Street
New York, NY 10005

Class Q* Chin Fook Dune & Moy 10%
(High Yield) Bow Song JT/WROS
51-42 Codwise Place
Elmhurt, NY 11373

Class Q* Gruntal & Co. Inc. 11%
(High Yield) 14 Wall Street
New York, NY 10005

</TABLE>

<PAGE>

Class of Common Stock Names and Addresses Percent of
of Record Owners Outstanding
Shares of
Class Owned
<S> <C> <C>
Class T EG&C Inc. 5%
(International) EG&G Master Trust
45 William Street
Wellesley, MA 02181-4078

Class U State of Oregon 43%
(Strategic) Treasury Department
159 State Capital Building
Salem, OR 07310
</TABLE>

------------------------
* The High Yield Fund ceased operations as of November 30, 1994.

As of such date, no person owned of record or, to RBB's
knowledge, beneficially, more than 25% of the outstanding shares of all classes
of RBB.

As of the above date, directors and officers as a group owned
less than one percent of the shares of RBB.

Litigation. There is currently no material litigation
affecting RBB.

STATEMENT OF DIFFERENCES

Mathematical powers, normally expressed as superscript, shall be
preceeded by 'pp'