<PAGE>
Registration No. 33-20827
Inv. Co. Act No. 811-5518
As filed with the Securities and Exchange Commission on May 16, 1996
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
POST-EFFECTIVE AMENDMENT NO. 34 [X]
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
AMENDMENT NO. 36 [X]
__________________________________
THE RBB FUND, INC.
(Warburg Pincus Growth & Income Fund: Warburg Pincus Class and Warburg
Pincus Series 2 Class; Warburg Pincus Balanced Portfolio: Warburg Pincus
Class and Warburg Pincus Series 2 Class; Warburg Pincus Tax Free Portfolio:
Warburg Pincus Class; Government Securities Portfolio: RBB Family Class; BEA
International Equity Portfolio: BEA Class; BEA Strategic Fixed Income
Portfolio: BEA Class; BEA Emerging Markets Equity Portfolio: BEA Class; BEA
U.S. Core Equity Portfolio: BEA Class; BEA U.S. Core Fixed Income Portfolio;
BEA Class; BEA Global Fixed Income Portfolio: BEA Class; BEA Municipal Bond
Fund Portfolio; BEA Class; BEA Balanced Fund Portfolio; BEA Class; BEA Short
Duration Portfolio: BEA Class; Numeric Micro Cap Fund; Numeric Class;
Numeric Growth Fund; Numeric Class; Numeric Growth & Value Fund; Numeric
Class; Money Market Portfolio: RBB Family Class, Cash Preservation Class,
Sansom Street Class, Bedford Class, Janney Class, Beta Class, Gamma Class,
Delta Class, Epsilon Class, Zeta Class, Eta Class and Theta Class;
Municipal Money Market Portfolio: RBB Family Class, Cash Preservation Class,
Sansom Street Class, Bedford Class, Bradford Class, Janney Class, Beta
Class, Gamma Class, Delta Class, Epsilon Class, Zeta Class, Eta Class and
Theta Class; Government Obligations Money Market Portfolio: Sansom Street
Class, Bedford Class, Bradford Class, Janney Class, Beta Class, Gamma Class,
Delta Class, Epsilon Class, Zeta Class, Eta Class and Theta Class; New York
Municipal Money Market Portfolio: Bedford Class, Janney Class, Beta Class,
Gamma Class, Delta Class, Epsilon Class, Zeta Class, Eta Class and Theta
Class)
__________________________________________________________________________
(Exact Name of Registrant as Specified in Charter)
Bellevue Park Corporate Center
400 Bellevue Parkway
Suite 100
Wilmington, DE 19809
(Address of Principal Executive Offices)
________________________________________
Registrant's Telephone Number: (302) 792-2555
Copies to:
GARY M. GARDNER, ESQUIRE JOHN N. AKE, ESQUIRE
PNC Bank, National Association Ballard Spahr Andrews & Ingersoll
Broad and Chestnut Streets 1735 Market Street, 51st Floor
Philadelphia, PA 19101 Philadelphia, PA 19101
(Name and Address of
Agent for Service)
Approximate Date of Proposed Public Offering: as soon as possible after
effective date of registration statement.
It is proposed that this filing will become effective (check appropriate
box)
______ immediately upon filing pursuant to paragraph (b)
X on May 20, 1996 pursuant to paragraph (b)
------
______ 60 days after filing pursuant to paragraph (a)(1)
______ on ______________ pursuant to paragraph (a)(1)
______ 75 days after filing pursuant to paragraph (a)(2)
______ on _______________ pursuant to paragraph (a)(2) of rule 485
If appropriate, check following box:
_______ this post-effective amendment designates a new effective
date for a previously filed post-effective amendment.
______________________________
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, Registrant
has elected to register an indefinite number of shares of common stock of each
of the sixty-six classes registered hereby under the Securities Act of 1933.
Registrant filed its notice pursuant to Rule 24f-2 for the fiscal year ended
August 31, 1995 on October 26, 1995.
<PAGE>
THE RBB FUND, INC.
(Numeric Micro Cap Fund, Numeric Growth
Fund and Numeric Growth & Value Fund)
Cross Reference Sheet
Form N-1A Item Location
-------------- --------
PART A PROSPECTUS
1. Cover Page............................ Cover Page
2. Synopsis.............................. Cover Page;
Introduction
3. Condensed Financial Information....... Not Applicable
4. General Description of Registrant..... Cover Page; Introduction;
Investment Objectives and
Policies; Investment Limitations
5. Management of the Fund................ Management
6. Capital Stock and Other Securities.... Cover Page; Dividends and
Distributions; Description of
Shares
7. Purchase of Securities Being Offered.. How to Purchase Shares; Net Asset
Value
8. Redemption or Repurchase.............. How to Redeem Shares; Net Asset
Value
9. Legal Proceedings..................... Not Applicable
<PAGE>
PART B STATEMENT OF
ADDITIONAL
INFORMATION
10. Cover Page............................ Cover Page
11. Table of Contents..................... Contents
12. General Information and History....... General; See Prospectus - "The
Fund"
13. Investment Objectives and Policies.... Investment Objectives and Policies
14. Management of the Fund................ Directors and Officers; Investment
Advisory Distribution and
Servicing Arrangements
15. Control Persons and Principal Holders
of Securities......................... Miscellaneous
16. Investment Advisory and Other
Services.............................. Investment Advisory Distribution
and Servicing Arrangements; See
Prospectus -"Management"
17. Brokerage Allocation and Other
Practices............................. Fund Transactions
18. Capital Stock and Other Securities.... Description of Shares; Additional
Information Concerning Fund
Shares; See Prospectus -"Dividends
and Distributions" and
"Description of Shares"
19. Purchase, Redemption and Pricing of
Securities Being Offered.............. Purchase and Redemption
Information; Valuation of Shares;
See Prospectus - "How to Purchase
Shares," "How to Redeem Shares"
and "Distribution of Shares"
20. Tax Status............................ Taxes; See Prospectus -"Taxes"
21. Underwriters.......................... Not Applicable
22. Calculation of Performance Data....... Performance and Yield Information;
See Prospectus -- "Other
Information"
23. Financial Statements Not Applicable
PART C Other Information
Information required to be included in Part C is set forth under the
appropriate item, so numbered in Part C of this Registration Statement.
<PAGE>
numeric investors
family of mutual funds
Numeric Micro Cap Fund
Numeric Growth Fund
Numeric Growth & Value Fund
Prospectus
May 20, 1996
<PAGE>
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.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INTRODUCTION............................................................... 2
FINANCIAL HIGHLIGHTS....................................................... 4
INVESTMENT OBJECTIVES AND POLICIES......................................... 4
INVESTMENT LIMITATIONS..................................................... 8
MANAGEMENT................................................................. 8
HOW TO PURCHASE SHARES..................................................... 10
HOW TO REDEEM SHARES....................................................... 12
NET ASSET VALUE............................................................ 13
DIVIDENDS AND DISTRIBUTIONS................................................ 14
TAXES...................................................................... 14
DESCRIPTION OF SHARES...................................................... 15
OTHER INFORMATION.......................................................... 15
</TABLE>
APPENDIX A--Performance Benchmarks
INVESTMENT ADVISER
Numeric Investors L.P.
Cambridge, Massachusetts
CUSTODIAN
Custodial Trust Company
Princeton, New Jersey
CO-ADMINISTRATOR AND TRANSFER AGENT
PFPC Inc.
Wilmington, Delaware
CO-ADMINISTRATOR
Bear Stearns Funds Management Inc.
New York, New York
DISTRIBUTOR
Counsellors Securities Inc.
New York, New York
COUNSEL
Ballard Spahr Andrews & Ingersoll
Philadelphia, Pennsylvania
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
Philadelphia, Pennsylvania
<PAGE>
NUMERIC INVESTORS FAMILY OF MUTUAL FUNDS
of
The RBB Fund, Inc.
The Numeric Investors Family of Mutual Funds consists of three classes of
common stock of The RBB Fund, Inc. ("RBB"), an open-end management investment
company. The shares of each such class (collectively, the "Numeric Investors
Family of Mutual Funds Shares" or "Shares") offered by this Prospectus
represent interests in one of three investment portfolios of RBB and are
designed to offer a variety of investment opportunities (each such investment
portfolio referred to as a "Fund," collectively, the "Funds"). The investment
objectives of each investment portfolio described in this Prospectus are as
follows:
NUMERIC MICRO CAP FUND--to provide long-term capital appreciation. The
Fund invests generally in common stock of companies with market
capitalization of $500 million or less, although the Fund may invest in
companies with higher market capitalization.
NUMERIC GROWTH FUND--to provide long-term capital appreciation. The Fund
invests generally in common stock of companies with smaller ($1 billion or
less) market capitalization or companies with substantial equity capital
and higher than average earnings growth rates.
NUMERIC GROWTH & VALUE FUND--to provide long-term capital appreciation.
The Fund invests generally in common stock of companies where earnings per
share are improving more rapidly than the earnings per share of the average
company, as well as companies whose securities have market valuations which
are lower than the average market valuations of securities, as measured by
such characteristics as price to earnings ratios and price to book ratios.
NUMERIC INVESTORS L.P. ("NUMERIC"), THE FUNDS' INVESTMENT ADVISER, WILL
MONITOR THE FUNDS' TOTAL ASSETS AND MAY CLOSE ANY OF THE FUNDS AT ANY TIME TO
NEW INVESTMENT DUE TO CONCERNS THAT AN INCREASE IN THE SIZE OF A FUND MAY
ADVERSELY AFFECT THE IMPLEMENTATION OF NUMERIC'S INVESTMENT STRATEGY. NUMERIC
MAY ALSO CHOOSE TO REOPEN A CLOSED FUND TO NEW INVESTMENT AT ANY TIME, AND MAY
SUBSEQUENTLY CLOSE SUCH FUND AGAIN SHOULD CONCERNS REGARDING FUND SIZE RECUR.
SHARES OF THE NUMERIC INVESTORS FAMILY OF MUTUAL FUNDS ARE NOT DEPOSITS OR
OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, PNC BANK, NATIONAL ASSOCIATION
OR ANY OTHER BANK AND SHARES ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY.
INVESTMENTS IN NUMERIC INVESTORS FAMILY OF MUTUAL FUNDS SHARES 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 May 20, 1996, 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 Numeric by calling (800) NUMERIC [(800)
686-3742].
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
PROSPECTUS____________________________________________________May 20, 1996
<PAGE>
INTRODUCTION
RBB is registered under the Investment Company Act of 1940 (the "1940 Act") as
an open-end management investment company and is currently operating or
proposing to operate seventeen separate investment portfolios. Each of the
three classes of Shares offered by this Prospectus represents interests in one
of the following three investment portfolios (each a "Fund." collectively the
"Funds"): Numeric Micro Cap Fund; Numeric Growth Fund; and Numeric Growth &
Value Fund. RBB was incorporated under the laws of the State of Maryland on
February 29, 1988.
WHO SHOULD INVEST: LONG-TERM INVESTORS SEEKING CAPITAL APPRECIATION
The Funds are intended for investors who are seeking long-term capital
appreciation, and who do not need to earn current income from their investment
in the Funds. The net asset values per share of Shares representing interests
in the Funds will fluctuate as the values of the portfolio securities change
in response to changing market prices and other factors. Because of the risks
associated with common stock investments, the Funds are intended to be a long-
term investment vehicle and are not designed to provide investors with a means
of speculating on short-term stock market movements. Investors should be able
to tolerate sudden, sometimes substantial fluctuations in the value of their
investment. Investors who engage in excessive account activity generate
additional costs which are borne by all a Fund's shareholders. In order to
minimize such costs, the Funds reserve the right to reject any purchase
request (including exchange purchases from other Numeric Funds) that is
reasonably deemed to be disruptive to efficient portfolio management, either
because of the timing of the investment or previous excessive trading by the
investor. Additionally, the Funds have adopted exchange privilege limitations
permitting three exchanges per year as described in the section "Exchange
Privilege Limitations." Finally, the Funds reserve the right to suspend the
offering of its shares.
Because of these risks, the Funds should not be considered a complete
investment program. Most investors should maintain diversified holdings of
securities with different risk characteristics--including common stocks, bonds
and money market instruments. Investors may wish to purchase shares on a
regular, periodic basis (Automatic Investing), rather than investing in one
lump sum, in order to reduce the risk of investing all their monies in common
stocks at a particularly unfavorable time. Investors may also wish to
complement an investment in the Fund with other types of common stock
investments.
FUND MANAGEMENT
Numeric serves as the investment adviser to the Funds. Numeric specializes in
the active management of U.S. equity portfolios using internally developed
quantitative stock selection and portfolio risk-control techniques, and
currently has over $2 billion in assets under management for individual,
limited partnership, mutual fund, pension plan and endowment accounts.
THE FUNDS
The investment objectives and policies of each of the Funds are summarized in
the table below. There is no assurance that a Fund will achieve its investment
objective.
<TABLE>
<CAPTION>
NUMERIC INVESTMENT PERFORMANCE
FUND OBJECTIVE/POLICY BENCHMARK*
- -------------------------------------------------------------------------------
<C> <S> <C>
Micro Cap Objective is to provide long-term capital Wilshire Small
appreciation. Invests primarily in common stock of Company Growth
companies with market capitalizations of $500 Index
million or less.
- -------------------------------------------------------------------------------
Growth Objective is long-term capital appreciation. Russell 2500
Invests primarily in common stock of companies with Growth Index
smaller ($1 billion or less)
market capitalization or companies with substantial
equity capital and higher than average earnings
growth rates.
- -------------------------------------------------------------------------------
Growth & Objective is long-term capital appreciation. S&P MidCap
Value Invests primarily in common stocks of companies 400 Index
where earnings per share are improving more rapidly
than the earnings per share of the average company,
as well as companies whose securities have market
valuations which are lower than the average market
valuations of securities, as measured by such
characteristics as price to earnings ratios and
price to book ratios.
</TABLE>
- --------
* For more information on a Fund's benchmark, see Appendix A at the back of
this prospectus.
FEE TABLE
The following tables illustrate all expenses and fees (after expected fee
waivers and expense reimbursements) that a shareholder would incur in each
Fund. The expenses and fees in the tables are based on expenses expected to be
incurred for the current fiscal year ending August 31, 1996.
2
<PAGE>
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<S> <C>
Maximum Sales Charge Imposed on Purchases (as percentage of offering
price) NONE
Sales Charge Imposed on Reinvested Dividends NONE
Redemption Fees NONE
Exchange Fees (1) NONE
</TABLE>
- --------
1 Exchanges are limited to three (3) per year. See "How to Purchase Shares--
Exchange Privilege Limitations."
Annual Fund Operating Expenses After Expense Reimbursements and Waivers (as a
percentage of average net assets)(1)
<TABLE>
<CAPTION>
NUMERIC NUMERIC
MICRO NUMERIC GROWTH
CAP GROWTH & VALUE
FUND FUND FUND
------- ------- -------
<S> <C> <C> <C>
Management Fees
(after waivers)(2)..................................... 0% .36% 0%
12b-1 Fees (after waivers).............................. None None None
Other Expenses
(after waivers and
reimbursements)........................................ 1.00% .64% 1.00%
---- ---- ----
Total Fund Operating Expenses
(after waivers and
reimbursements)........................................ 1.00% 1.00% 1.00%
==== ==== ====
</TABLE>
- --------
1. Before expense waivers and reimbursements, Management Fees would be 0.75%
for each of the three Funds, Other Expenses would be 1.07% for each of the
Micro Cap and Growth & Value Funds, and Total Fund Operating Expenses would
be 1.82% for each of the Micro Cap and Growth & Value Funds, and 1.39% for
the Growth Fund.
2. Management 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, nor does it
include taxes, interest or brokerage fees and expenses on the purchase and
sale of portfolio securities.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in each of
the Funds, assuming (1) a 5% annual return, and (2) redemption at the end of
each time period:
<TABLE>
<CAPTION>
ONE THREE
YEAR YEARS
---- -----
<S> <C> <C>
Micro Cap............................................................ $10 $32
Growth............................................................... $10 $32
Growth & Value....................................................... $10 $32
</TABLE>
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 in the years shown.
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
INVESTMENT RETURN OR OPERATING EXPENSES AND ACTUAL INVESTMENT RETURN OR
OPERATING EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
The Fee Table is designed to assist an investor in understanding the various
costs and expenses that an investor in any of the Numeric Investors Family of
Mutual Funds Classes of RBB will bear directly or indirectly. (For more
complete descriptions of the various costs and expenses, see "Management" and
"Distribution of Shares" below.) The Fee Table reflects a voluntary waiver of
management fees for each Fund through the current fiscal year. There can be no
assurance that any future waivers of management fees (if any) will not vary
from the figures reflected in the Fee Table. In addition, Numeric is currently
voluntarily assuming additional expenses of some of the Funds. There can be no
assurance that Numeric will continue to assume such expenses. Assumption of
additional expenses will have the effect of lowering a Fund's overall expense
ratio and increasing its yield or total return to investors. "Other Expenses"
for the Funds are based on estimated amounts for the current fiscal year.
OFFERING PRICES
Shares that represent interests in the Funds will be offered to the public at
the next determined net asset value after receipt of an order by PFPC Inc.
("PFPC"), the Funds' transfer agent. THE SHARES ARE OFFERED ON A NO-LOAD
BASIS: THERE IS NO SALES CHARGE IMPOSED ON PURCHASES OF SHARES, NOR ARE THE
SHARES SUBJECT TO A 12B-1 FEE.
MINIMUM INITIAL AND SUBSEQUENT INVESTMENTS
The minimum initial investment for each Fund is $3,000. Subsequent investments
must be $100 or more. The minimum initial investment for an Automatic
Investment Plan is $1,000 with minimum monthly payments of $100. The minimum
invested for Individual Retirement Accounts ("IRAs"), or pension, profit-
sharing or other employee benefit plans is $1,000 and minimum subsequent
investments are $100. See "How to Purchase Shares."
EXCHANGES
Shares of a Numeric Investors Family of Mutual Funds may be exchanged up to
three (3) times per year for Shares of any other Numeric Investors Family Fund
at their net
3
<PAGE>
asset value next determined after receipt by PFPC of an exchange request. In
addition, RBB reserves the right to impose an administrative charge for each
exchange or to reject any exchange request that is reasonably deemed to be
disruptive to efficient portfolio management. See "How to Purchase Shares--
Exchange Privilege" and "Exchange Privilege Limitation."
REDEMPTION PRICE
Shares may be redeemed at any time at their net asset value next determined
after receipt by PFPC of a redemption request. RBB reserves the right, upon 30
days' written notice, to redeem an account in any of the Funds if the net
asset value of the investor's Shares in that account falls below $500 and is
not increased to at least such amount within such 30-day period. See "How to
Redeem Shares."
RISK FACTORS TO CONSIDER
An investment in any of the Funds 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 any Fund will achieve its objective. Some or
all of the Funds, to the extent set forth under "Investment Objectives and
Policies," may engage in the following investment practices: short sales,
borrowings, the lending of portfolio securities, engaging in options and
futures transactions and investments in micro-cap and small cap issuers. All
of these transactions involve certain special risks, as set forth under
"Investment Objectives and Policies." In addition, the Funds may be subject to
high portfolio turnover rates. See "Investment Objectives and Policies--
Portfolio Turnover" and "Taxes."
SHAREHOLDER INQUIRIES
For Questions Regarding Shareholder Accounts: (800) 348-5031. Any questions
regarding (i) new or existing accounts or (ii) purchases or redemptions should
be directed to PFPC by writing them at:
Bellevue Park Corporate Center
400 Bellevue Parkway
Wilmington, Delaware 19809
For overnight deliveries:
Bellevue Park Corporate Center
400 Bellevue Parkway, Suite 108
Wilmington, Delaware 19809
or by calling PFPC toll-free at:
(800) 348-5031 (in Delaware call collect (302) 791-3486).
For any other questions, call Numeric at:
1-800-NUMERIC [1-800-686-3742].
To Request a Prospectus. A prospectus is available by calling:
1-800 NUMERIC [1-800-686-3742].
To reach Numeric on the Internet. Information is available on the Internet
through the World Wide Web. Shareholders and investment professionals may
obtain information on Numeric by accessing:
http://www.numeric.com.
FINANCIAL HIGHLIGHTS
No financial data is supplied for the Funds because, as of the date of this
Prospectus, the Funds had no performance history.
INVESTMENT OBJECTIVES AND POLICIES
To meet its investment objective, each Fund employs a specific investment
style, as described below. There is no assurance that a Fund will achieve its
investment objective.
The investment objective of the Numeric Micro Cap Fund is to provide long-term
capital appreciation. The Fund will invest primarily in common stocks,
although it may also invest in securities which are convertible into common
stock, fixed income securities and money market securities. Under normal
circumstances, the Fund will invest at least 65% of its total assets in common
stock of companies with market capitalization of $500 million or less,
although the Fund may invest in companies with higher market capitalization.
Numeric determines its stock selection decisions primarily on the basis of its
growth stock model, which seeks to identify companies whose earnings per share
are improving more rapidly than the earnings per share of the average company.
Considered, but of significantly less importance, is the value stock model
which seeks to identify companies whose securities have market valuations
which are lower than the average market valuations of securities, as measured
by characteristics including price to earnings ratios and price to book
ratios. The Fund will measure its performance against the Wilshire Small
Company Growth Index.
The investment objective of the Numeric Growth Fund is to provide long-term
capital appreciation. The Fund will invest primarily in common stocks,
although it may also
4
<PAGE>
invest in securities which are convertible into common stock, fixed income
securities and money market securities. Under normal circumstances, the Fund
will invest in common stock of companies with smaller ($1 billion or less)
market capitalization or companies with substantial equity capital and higher
than average earnings growth rates. Numeric determines its stock selection
decisions primarily on the basis of its growth stock model, which seeks to
identify companies whose earnings per share are improving more rapidly than
the earnings per share of the average company. Considered, but of
significantly less importance, is the value stock model which seeks to
identify companies whose securities have market valuations which are lower
than the average market valuations of securities, as measured by
characteristics including price to earnings ratios and price to book ratios.
The Fund will measure its performance against the Russell 2500 Growth Index.
The investment objective of the Numeric Growth & Value Fund is to provide
long-term capital appreciation. The Fund will invest primarily in common
stocks, although it may also invest in securities which are convertible into
common stock, fixed income securities and money market securities. Numeric
determines its stock selection decisions primarily on the basis of its growth
stock model and its value stock model. The growth stock model seeks to
identify companies whose earnings per share are improving more rapidly than
the earnings per share of the average company. The value stock model seeks to
identify companies whose securities have market valuations which are lower
than the average market valuation of securities, as measured by
characteristics including price to earnings ratios and price to book ratios.
The Fund anticipates that it will invest a large portion of its total assets
in common stock of "mid cap" companies, which the Fund defines as the 151st to
the 1000th largest companies (excluding ADRs) as ranked by market
capitalization. This currently represents a market capitalization range of
approximately $800 million to $8 billion. The Fund will measure its
performance against the S&P MidCap 400 Index.
NUMERIC'S INVESTMENT STYLE. Numeric employs a quantitative approach to
investment management. Numeric relies on proprietary quantitative computer
models utilizing internally developed computer technology and financial
databases to assist in the stock selection process. Numeric's proprietary
models are capable of ranking a large universe of eligible investments using a
wide array of financial data such as market price, book value, earnings, cash
flow and earnings growth rates. The models also evaluate the degree to which
independent research analysts are changing their earnings forecasts for the
companies they follow. The models are broadly classified into two types:
Numeric's value stock model seeks to identify companies whose securities have
market valuations which are lower than the average market valuation of
securities, as measured by characteristics including price to earnings ratios
and price to book ratios; Numeric's growth stock model seeks to identify
companies whose earnings per share are improving more rapidly than the
earnings per share of the average company. Stocks are ranked according to
their relative attractiveness as determined by these models. These rankings
assist Numeric in constructing a portfolio it believes is invested in the most
attractive securities consistent with a Fund's investment objectives. The same
investment strategy used to manage a particular Fund also may be used for
institutional accounts managed by Numeric. These models may be changed
periodically to capture the insights of Numeric's ongoing research efforts.
In pursuing the investment objectives of each of the Funds, Numeric will use
the investment instruments and techniques discussed below:
EQUITY MARKETS. The Funds will be invested primarily in equity markets at all
times. Equity markets can be highly volatile, so that investing in the Funds
involves substantial risk. In addition, the Funds can and will typically
invest in stocks which are riskier and more volatile than the average stock.
As a result, investing in these Funds involves risk of substantial loss of
capital.
OPTIONS AND FUTURES. The Funds 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 Funds may also
invest in futures contracts and options on futures contracts (index futures
contracts or interest rate futures contracts, as applicable) for hedging
purposes, including equitizing cash.
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.
5
<PAGE>
The Funds will engage in unlisted over-the-counter options only with broker-
dealers deemed creditworthy by Numeric. Closing transactions in certain
options are usually effected directly with the same broker-dealer that
effected the original option transaction. The Funds bear the risk that the
broker-dealer will fail to meet its obligations. There is no assurance that
the Funds 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 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 Funds 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 Fund'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
Funds is subject to Numeric's ability to correctly predict movements in the
direction of the market. For example, if a 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 futures 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
Objectives and Policies" in the Statement of Additional Information.
SHORT SALES. Short sales are transactions in which a Fund sells a security it
does not own in anticipation of a decline in the market value of that
security. To complete such a transaction, the Fund must borrow the security to
make delivery to the buyer. The Fund then is obligated to replace the security
borrowed by purchasing it at the market price at the time of replacement. The
price at such time may be more or less than the price at which the security
was sold by the Fund. Until the security is replaced, the Fund is required to
pay to the lender amounts equal to any dividend which accrues during the
period of the loan. To borrow the security, the Fund also may be required to
pay a premium, which would increase the cost of the security sold. The
proceeds of the short sale will be retained by the broker, to the extent
necessary to meet margin requirements, until the short position is closed out.
Until a Fund replaces a borrowed security in connection with a short sale, the
Fund will: (a) maintain daily a segregated account, containing cash, cash
equivalents or U.S. Government securities, at such a level that (i) the amount
deposited in the account plus the amount deposited with the broker as
collateral will equal the current value of the security sold short and (ii)
the amount deposited in the segregated account plus the amount deposited with
the broker as collateral will not be less than the market value of the
security at the time it was sold short; or (b) otherwise cover its short
position in accordance with positions taken by the Staff of the Securities and
Exchange Commission.
A Fund will incur a loss as a result of the short sale if the price of the
security increases between the date of the short sale and the date on which
the fund replaces the borrowed security. The Fund will realize a gain if the
security declines in price between those dates. This result is the opposite of
what one would expect from a cash purchase of a long position in a security.
The amount of any gain will be decreased, and the amount of any loss
increased, by the amount of any premium or amounts in lieu of interest the
Fund may be required to pay in connection with a short sale. The Fund may
purchase call options to provide a hedge against an increase in the price of a
security sold short by the Fund. See "Options and Futures Contracts" above.
The Funds anticipate that the frequency of short sales will vary substantially
in different periods, and they do not intend that any specified portion of
their assets, as a matter of practice, will be invested in short sales.
However, no securities will be sold short if, after effect is given to any
such short sale, the total market value of all securities sold short would
exceed 25% of the value of a Fund's net assets. The value of the securities of
any single issuer sold short by a Fund may not exceed the lesser of 2% of the
value of a Fund's net assets or 2% of the outstanding securities of any class
of any issuer. Short sales may be made only in securities which are fully
listed on a national securities exchange.
In addition to the short sales discussed above, the Funds may make short sales
"against the box," a transaction in which a Fund enters into a short sale of a
security which the Fund owns. The proceeds of the short sale will be held
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by a broker until the settlement date at which time the Fund delivers the
security to close the short position. The Fund receives the net proceeds from
the short sale. It currently is anticipated that the Funds will make short
sales against the box for purposes of protecting the value of the Funds' net
assets.
LENDING OF FUND SECURITIES. The Funds may lend their portfolio securities to
financial institutions. Such loans would involve risks of delay in receiving
additional collateral in the event the value of the collateral decreases below
the value of the securities loaned or of delay in recovering the securities
loaned or even loss of rights in the collateral should the borrower of the
securities fail financially. However, loans will be made only to borrowers
which Numeric deems to be of good standing and only when, in Numeric's
judgment, the income to be earned from the loans justifies the attendant
risks.
PORTFOLIO TURNOVER. The Funds may be subject to a greater degree of turnover
and thus a higher incidence of short-term capital gains taxable as ordinary
income than might be expected from portfolios which invest substantially all
of their funds on a long-term basis, and correspondingly larger brokerage
charges can be expected to be borne by such Funds. Federal income tax law may
restrict the extent to which such Funds may engage in short-term trading
activities. See "Taxes" below and in the Statement of Additional Information
for a discussion of the impact of portfolio turnover. The Funds anticipate
that their annual turnover will range from 150% to 300% or more depending on
market conditions. Such turnover rates are greater than that of many other
investment companies.
MICRO CAP AND SMALL CAP STOCKS. Securities of companies with micro and small
capitalizations tend to be riskier than securities of companies with medium or
large capitalizations. This is because micro and 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. In
addition, growth prospects of micro and small cap companies tend to be less
certain than mid or large cap companies, and the dividends paid on micro and
small cap stocks are frequently negligible. Moreover, micro and small cap
stocks have, on occasion, fluctuated in the opposite direction of large cap
stocks or the general stock market. Consequently, securities of micro and
small cap companies tend to be more volatile than those of mid and large cap
companies.
BORROWING MONEY. As a fundamental policy, the Funds are permitted to borrow to
the extent permitted under the 1940 Act and to mortgage, pledge or hypothecate
their respective assets in connection with such borrowings in amounts not in
excess of 125% of the dollar amounts borrowed. The 1940 Act permits an
investment company to borrow in an amount up to 33 1/3% of the value of such
company's total assets. However, the Funds currently intend to borrow money
only for temporary or emergency (not leveraging) purposes, in an amount up to
15% of the value of their respective total assets (including the amount
borrowed) valued at the lesser of cost or market, less liabilities (not
including the amount borrowed) at the time the borrowing is made. While
borrowings exceed 5% of its total assets, the Funds will not make any
additional investments.
DEBT SECURITIES. The Funds may invest in debt securities rated no less than
investment grade by either Standard & Poor's or Moody's. Bonds in the lowest
investment grate debt category (e.g., bonds rated BBB by Standard & Poor's
Corporation or Baa by Moody's Investors Services, Inc.) have speculative
characteristics, and changes in economic conditions or other circumstances are
more likely to lead to a weakened capacity to make principal and interest
payments than is the case with higher grade bonds. The Funds will not retain a
bond which was rated as investment grade at the time of purchase but whose
rating is subsequently downgraded below investment grade. The value of debt
securities held by a Fund will tend to vary inversely in relation to changes
in prevailing interest rates. Thus, if interest rates have increased from the
time a debt security was purchased, such security, if sold, might be sold at a
price less than its cost. Conversely, if interest rates have declined from the
time a debt security was purchased, the debt security, if sold, might be sold
at a price greater than its cost.
MARKET FLUCTUATION. Because the investment alternatives available to each Fund
may be limited by specific objectives of that Fund, investors should be aware
that an investment in a particular Fund may be subject to greater market
fluctuation than an investment in a portfolio of securities representing a
broader range of investment alternatives. In view of the specialized nature of
the investment activities of each Fund, an investment in any single fund
should not be considered a complete investment program. There is no assurance
that any Fund will achieve its investment objectives.
SHORT-TERM DEBT OBLIGATIONS. The Funds may purchase money market instruments
to the extent consistent with their investment objectives and policies. Such
instruments include U.S. Government obligations, repurchase agreements,
certificates of deposit, bankers acceptances and commercial paper.
OTHER INVESTMENT INSTRUMENTS AND TECHNIQUES. In addition to the above
investment instruments and techniques, the Funds presently intend to invest
not more than 5% of a Fund's net assets in when-issued and forward
commitments, illiquid securities, depositary receipts, investment company
securities and convertible securities.
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These investment instruments and techniques and related risks are described in
greater detail in the Funds' Statement of Additional Information under
"Investment Objectives and Policies."
The Funds' investment objectives and policies described above may be changed
by RBB's Board of Directors without the affirmative vote of the holders of a
majority of outstanding Shares of RBB representing interests in the Funds.
Such changes may result in the Funds having investment objectives which differ
from those an investor may have considered at the time of investment.
Shareholders will be provided 30 days prior written notice of any change in a
Fund's investment objectives. There is no assurance that the investment
objective of the Funds will be achieved.
INVESTMENT LIMITATIONS
No Fund may change the following investment limitations (with certain
exceptions, as noted below) without the affirmative vote of the holders of a
majority of a 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 FUNDS 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 a 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. Borrow money, except to the extent permitted under the 1940 Act or
mortgage, pledge or hypothecate any of their respective assets in connection
with any such borrowing except in amounts not in excess of 125% of the dollar
amounts borrowed. For purposes of this Investment Restriction, the entry into
options, forward contracts, futures contracts, including those relating to
indexes, and options on futures contracts or indexes shall not constitute
borrowing.
3. Purchase any securities which would cause, at the time of purchase, 25% or
more of the value of the total assets of a 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.
4. Make loans, except that a Fund may purchase or hold debt obligations in
accordance with its investment objective, policies and limitations, may enter
into repurchase agreements for securities, and may lend portfolio securities
against collateral consisting of cash or securities which are consistent with
the Fund's permitted investments, which is equal at all times to at least 100%
of the value of the securities loaned. There is no investment restriction on
the amount of securities that may be loaned, except that payments received on
such loans, including amounts received during the loan on account of interest
on the securities loaned, may not (together with all non-qualifying income)
exceed 10% of a Fund's annual gross income (without offset for realized
capital gains) unless, in the opinion of counsel to RBB, such amounts are
qualifying income under Federal income tax provisions applicable to regulated
investment companies.
In determining whether the Funds have complied with limitation 3 above, the
Funds will not take into account the value of options and futures. These
investment limitations are applied at the time investment securities are
purchased (except that, with respect to borrowings, if asset coverage falls
below 300%, a Fund will reduce its borrowing to restore asset coverage to 300%
within three business days in accordance with the requirements of the 1940
Act). In order to permit the sale of its shares in certain states, the Funds
may make commitments more restrictive than the investment policies and
limitations described in this Prospectus. If the Funds determine that any
commitment is no longer in the best interests of the Funds, they will revoke
the commitment by terminating sale of shares of the Funds in the state
involved.
MANAGEMENT
BOARD OF DIRECTORS
The business and affairs of RBB and each investment portfolio are managed
under the direction of RBB's Board of Directors.
INVESTMENT ADVISER
Numeric serves as investment adviser to the Funds. Numeric was organized in
October, 1989 as a Delaware limited partnership and is located in Cambridge,
Massachusetts. The firm, which specializes in the active management of U.S.
equity portfolios using internally developed quantitative stock selection and
portfolio risk-control techniques, currently has over $2 billion in assets
under management for individual, limited partnership, mutual fund, pension
plan and endowment accounts. Langdon B. Wheeler, CFA is the founder of
Numeric. Mr. Wheeler received his MBA from Harvard University and an
undergraduate degree from Yale University. All Funds are managed by John C.
Bogle, Jr., CFA. Mr. Bogle joined Numeric in 1990 after serving as Vice
President and Portfolio Manager at State Street Global Advisors. Mr. Bogle
received his MBA and BS from Vanderbilt University. Messrs. Wheeler and Bogle
are active in the
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development and implementation of the firm's stock selection models. The
General Partner of Numeric is Langdon Wheeler & Associates, Inc., a
Massachusetts corporation. The principal officers of Langdon Wheeler &
Associates, Inc. are Messrs. Wheeler and Bogle.
For the services provided and the expenses assumed by it, Numeric is entitled
to receive a fee from each of the Funds at an annual rate of 0.75% of a Fund's
average daily net assets, computed daily and payable monthly. Numeric may from
time to time voluntarily agree to waive all or any portion of its advisory
fees. Numeric presently intends to waive its fees for the current fiscal year
and for the following fiscal year to the extent necessary to maintain an
annualized expense ratio for each Fund of 1.00%, although there is no
guarantee that Numeric will maintain such waivers indefinitely.
CO-ADMINISTRATORS
Bear Stearns Funds Management Inc. ("BSFM"), an affiliate of Bear, Stearns &
Co. Inc. ("Bear Stearns"), serves as co-administrator to the Funds. BSFM
generally assists each of the Funds in all aspects of their administration and
operations. The services provided and the fees payable by the Funds for these
services are described in the Statement of Additional Information under
"Investment Advisory, Distribution and Servicing Arrangements."
PFPC, an indirect wholly owned subsidiary of PNC Bank, N.A. ("PNC"), also
serves as co-administrator to the Funds. PFPC assists the Funds in matters
relating to the maintenance of financial records and accounting. The services
provided and the fees payable by the Funds for these services are described in
the Statement of Additional Information under "Investment Advisory,
Distribution and Servicing Arrangements."
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
PFPC serves as the Funds' transfer agent and dividend disbursing agent. PFPC's
principal business address is 400 Bellevue Parkway, Wilmington, DE 19809. The
services provided and the fees payable by the Funds for these services are
described in the Statement of Additional Information under "Investment
Advisory, Distribution and Servicing Arrangements."
CUSTODIAN
Custodial Trust Company ("CTC"), an affiliate of Bear Stearns, serves as
custodian for the Funds. The services provided and the fees payable by the
Funds for these services are described in the Statement of Additional
Information under "Investment Advisory, Distribution and Servicing
Arrangements."
OTHER ADMINISTRATIVE SERVICES
Counsellors Funds Service, Inc., a wholly owned subsidiary of the Distributor,
provides certain administrative services to the Funds not otherwise provided
by BSFM or PFPC. The services provided and fees payable by the Funds for these
services are described in the Statement of Additional Information under
"Investment Advisory, Distribution and Servicing Arrangements."
EXPENSES
The expenses of each Fund are deducted from their total income before
dividends are paid. These expenses include, but are not limited to, fees paid
to Numeric, fees and expenses of officers and directors who are not affiliated
with Numeric or the Funds' Distributor, taxes, interest, legal fees, custodian
fees, auditing fees, brokerage fees and commissions, certain of the fees and
expenses of registering and qualifying the Funds and their 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 a 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. 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.
Numeric has agreed to reimburse each Fund for the amount, if any, by which the
total operating and management expenses of such 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.
Numeric may assume additional expenses of the Funds from time to time. In
certain circumstances, Numeric may assume such expenses on the condition that
it is reimbursed by the Funds 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 a Fund's expense ratio and of decreasing the total return or yield
to investors.
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FUND TRANSACTIONS
Numeric may consider a number of factors in determining which brokers to use
in purchasing or selling a 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. A higher rate of turnover of a Fund's
securities may involve correspondingly higher transaction costs, which will be
borne directly by the Fund. A 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.
Numeric may allocate trades among any or all of its clients, including the
Funds. Numeric combines orders and allocates to each account its proportionate
or "pro rata" share of the trade. Accounts included in the trade allocation
may include limited partnerships for which Numeric serves as general partner
and in which employees and/or partners of Numeric may own a substantial
interest. Numeric may cause the Funds to pay brokerage commissions which may
be in excess of the lowest rates available to brokers who execute transactions
for the Funds or who otherwise provide brokerage and research services
utilized by Numeric, provided that Numeric determines in good faith that the
amount of each such commission paid to a broker is reasonable in relation to
the value of the brokerage viewed in terms of either the particular
transaction to which the commission relates or Numeric's overall
responsibilities with respect to the Funds.
DISTRIBUTION OF SHARES
Counsellors Securities Inc. (the "Distributor"), a wholly owned subsidiary of
Warburg, Pincus Counsellors, Inc., with offices at 466 Lexington Avenue, New
York, New York, acts as distributor for each of the Funds pursuant to separate
distribution contracts (collectively, the "Distribution Contracts") with RBB
on behalf of each of the Funds.
HOW TO PURCHASE SHARES
GENERAL
Shares representing interests in the Funds are offered continuously for sale
by the Distributor and may be purchased without imposition of a sales charge
through PFPC, the Funds' transfer agent. Shares may be purchased initially by
completing the application included in this Prospectus and forwarding the
application and payment to PFPC. Subsequent purchases of Shares may be
effected by mailing a check or Federal Reserve Draft payable to the order of
"The Numeric Investors Family of Mutual Funds" c/o PFPC, P.0. Box 8966,
Wilmington, Delaware 19899. The name of the Fund for which Shares are being
purchased must also appear on the check or Federal Reserve Draft. Federal
Reserve Drafts are available at national banks or any state bank which is a
member of the Federal Reserve System. Initial investments in any Fund must be
at least $3,000 and subsequent investments must be at least $100. The minimum
initial investment for an Automatic Investment Plan is $1,000 with minimum
monthly payments of $100. RBB reserves the right to reject any purchase order
or to waive the minimum initial or subsequent investment requirement.
Investors will be given notice of any increase in minimum investment
requirements.
Provided that the investment is at least $2,500, an investor may also purchase
Shares by having his bank or his broker wire Federal Funds to PFPC. An
investor's bank or broker may impose a charge for this service. In order to
ensure prompt receipt of an investor's Federal Funds wire, for an initial
investment, it is important that an investor follows these steps:
A. Telephone the Funds' transfer agent, PFPC, toll-free (800) 348-5031 (in
Delaware call collect (302) 791- 3486), and provide PFPC with your name,
address, telephone number, Social Security or Tax Identification Number, the
Fund selected, the amount being wired, and by which bank. PFPC will then
provide an investor with a Fund account number. Investors with existing
accounts should also notify PFPC prior to wiring funds.
B. Instruct your bank or broker to wire the specified amount, together with
your assigned account number, to PFPC's account with PNC:
PNC Bank, N.A.
ABA-0310-0005-3
CREDITING ACCOUNT NUMBER: 86-1108-2312
FROM: (name of investor)
ACCOUNT NUMBER: (Investor's account number with the Fund)
FOR PURCHASE OF: (name of the Fund)
AMOUNT: (amount to be invested)
C. Fully complete and sign the Application and mail it to the address shown
thereon. PFPC will not process redemptions until it receives a fully completed
and signed Application.
For subsequent investments, an investor should follow steps A and B above.
Shares of the Funds may be purchased on any Business Day. A "Business Day" is
any day that the New York
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Stock Exchange (the "NYSE") is open for business. Currently, the NYSE is
closed on weekends and New Year's Day, President's Day, Good Friday, Memorial
Day, Independence Day (observed), Labor Day, Thanksgiving Day and Christmas
Day (observed). Such Shares are offered at the next determined net asset value
per share.
The price paid for a Fund's Shares purchased initially or acquired through the
exercise of an exchange privilege is based on the net asset value next
computed after an order is received by PFPC. Such price will be the net asset
value next computed after an order is received by PFPC provided such order is
transmitted to and received by PFPC prior to its close of business on such
day. Orders received by PFPC after its close of business are priced at the net
asset value next determined on the following Business Day. In those cases
where an investor pays for Shares by check, the purchase will be effected at
the net asset value next determined after PFPC receives payment in good order.
Shareholders whose shares are held in a street name account and who desire to
transfer such shares to another street name account should contact the record
holder of their current street name account.
The Funds understand that some broker-dealers (other than the Distributor),
financial institutions, securities dealers, financial planners and other
industry professionals ("Service Agents") may impose certain conditions on
their clients that invest in the Funds, which are in addition to or different
from those described in this Prospectus, and, to the extent permitted by
applicable regulatory authority, may charge their clients direct fees. Certain
features of the Funds, such as the minimum initial or subsequent investments,
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 a Fund's shares and should read
this Prospectus in light of the terms governing his accounts with Service
Agents. Service Agents will be responsible for promptly transmitting client or
customer purchase and redemption orders to the Funds in accordance with their
agreements with clients or customers. If payment is not received by such time,
the Service Agent could be held liable for resulting fees or losses.
AUTOMATIC INVESTMENT PLAN
Additional investments in Shares of the Funds may be made automatically by
authorizing PFPC to withdraw funds from your bank account through an Automatic
Investment Plan. Investors desiring to participate in an Automatic Investment
Plan should call RBB's transfer agent, PFPC, at (800) 348-5031 (in Delaware
call collect (302) 791-3486) to obtain the appropriate forms, or complete the
appropriate section of the Application included with this Prospectus. The
minimum initial investment for an Automatic Investment Plan is $1,000 with
minimum monthly payments of $100.
EXCHANGE PRIVILEGE
The exchange privilege is available to shareholders residing in any state in
which the Shares being acquired may be legally sold. A shareholder may
exchange Shares of any one of the Numeric Investors Family Funds for Shares of
any other of the Numeric Investors Family of Mutual Funds up to three (3)
times per year. Such exchange will be effected at the net asset value of the
exchanged Fund and the net asset value of the Fund to be acquired next
determined after PFPC's receipt of a request for an exchange. In addition, RBB
reserves the right to impose a $5.00 administrative fee for each exchange. An
exchange of Shares will be treated as a sale for Federal income tax purposes.
See "Taxes."
A shareholder wishing to make an exchange may do so by sending a written
request to PFPC. Shareholders are automatically provided with telephone
exchange privileges when opening an account, unless they indicate on the
Application that they do not wish to use this privilege. To add a telephone
exchange feature to an existing account that previously did not provide for
this option, a Telephone Exchange Authorization Form must be filed with PFPC.
This form is available from PFPC. Once this election has been made, the
shareholder may simply contact PFPC by telephone to request the exchange by
calling (800) 348-5031 (in Delaware call collect (302) 791-3486). RBB will
employ reasonable procedures to confirm that instructions communicated by
telephone are genuine, and if RBB does not employ such procedures, it may be
liable for any losses due to unauthorized or fraudulent telephone
instructions. Neither RBB nor PFPC will be liable for any loss, liability,
cost or expense for following RBB's telephone transaction procedures described
below or for following instructions communicated by telephone that it
reasonably believes to be genuine.
RBB's telephone transaction procedures include the following measures: (1)
requiring the appropriate telephone transaction privilege forms; (2) requiring
the caller to provide the names of the account owners, the account social
security number and name of the Fund, all of which must match RBB's records;
(3) requiring RBB's service representative to complete a telephone transaction
form, listing all of the above caller identification information; (4)
permitting exchanges only if the two account registrations are identical; (5)
requiring that redemption proceeds be sent only by check to the account owners
of record at the address of record, or by wire only to the owners of record at
the bank account of record; (6) sending a written confirmation for each
telephone transaction to the owners
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of record at the address of record within five (5) business days of the call;
and (7) maintaining tapes of telephone transactions for six months, if the
fund elects to record shareholder telephone transactions.
For accounts held of record by Service Agents, additional documentation or
information regarding the scope of a caller's authority is required. Finally,
for telephone transactions in accounts held jointly, additional information
regarding other account holders is required. Telephone transactions will not
be permitted in connection with IRA or other retirement plan accounts or by an
attorney-in-fact under power of attorney.
If the exchanging shareholder does not currently own Shares of the Fund whose
Shares are being acquired, a new account will be established with the same
registration, dividend and capital gain options as the account from which
shares are exchanged, unless otherwise specified in writing by the shareholder
with all signatures guaranteed by an Eligible Guarantor Institution, as
defined by rules issued by the SEC, including banks, brokers, dealers, credit
unions, national securities exchanges and savings associations. The exchange
privilege may be modified or terminated at any time, or from time to time, by
RBB, upon 60 days' written notice to shareholders.
If an exchange is to a new Numeric Investors Family Fund, the dollar value of
Shares acquired must equal or exceed RBB's minimum for a new account; if to an
existing account, the dollar value must equal or exceed RBB's minimum for
subsequent investments. If any amount remains in the Numeric Fund from which
the exchange is being made, such amount must not drop below the minimum
account value required by RBB.
EXCHANGE PRIVILEGE LIMITATIONS
The Funds' exchange privilege is not intended to afford shareholders a way to
speculate on short-term movements in the market. Accordingly, in order to
prevent excessive use of the exchange privilege that may potentially disrupt
the management of the Funds and increase transactions costs, the Funds have
established a policy of limiting excessive exchange activity.
Shareholders are entitled to three (3) substantive exchange redemptions (at
least 30 days apart) from each Fund during any twelve-month period.
Notwithstanding these limitations, the Funds reserve the right to reject any
purchase request (including exchange purchases from other Numeric Funds) that
is reasonably deemed to be disruptive to efficient portfolio management.
RETIREMENT PLANS
Numeric Investors Family Shares may be purchased in conjunction with
individual retirement accounts ("IRAs"), rollover IRAs, or pension, profit-
sharing or other employer benefit plans. For further information as to
applications and annual fees, contact PFPC. To determine whether the benefits
of an IRA are available and/or appropriate, a shareholder should consult with
a tax adviser.
CLOSING OF THE FUND
Numeric will monitor the Funds' total assets and may close any of the Funds at
any time to new investment due to concerns that an increase in the size of a
Fund may adversely affect the implementation of Numeric's investment strategy.
Numeric may also choose to reopen a closed fund to new investment at any time,
and may subsequently close such Fund again should concerns regarding Fund size
recur. Numeric reserves the right while a Fund is closed to accept new
investments from any of its employees or their spouses or children.
HOW TO REDEEM SHARES
REDEMPTION IN WRITING
Shareholders may redeem for cash some or all of their Fund Shares at any time.
To do so, a written request in proper form must be sent directly to The
Numeric Investors Family of Mutual Funds c/o PFPC, P.O. Box 8966, Wilmington,
Delaware 19899-8966. Shareholders may also place redemption requests through a
Service Agent, but such Service Agent might charge a fee for this service.
A request for redemption must be signed by all persons in whose names the
Shares are registered. Signatures must conform exactly to the account
registration. If the proceeds of the redemption would exceed $10,000, or if
the proceeds are not to be paid to the record owner at the record address, or
if the shareholder is a corporation, partnership, trust or fiduciary,
signature(s) must be guaranteed by an Eligible Guarantor Institution. A
signature guarantee verifies the authenticity of your signature. You may call
PFPC at (800) 348-5031 (in Delaware call collect (302) 791-3486) to determine
whether the entity that will guarantee the signature is an Eligible Guarantor
Institution.
Generally, a properly signed written request with any required signature
guarantee is all that is required for a redemption. In some cases, however,
other documents may be necessary. Additional documentary evidence of authority
is also required by PFPC in the event redemption is requested by a
corporation, partnership, trust, fiduciary, executor or administrator.
REDEMPTION BY TELEPHONE
Investors may redeem shares without charge by telephone if they have checked
the appropriate box and supplied the
12
<PAGE>
necessary information on the Application, or have filed a Telephone
Authorization with PFPC. An investor may obtain a Telephone Authorization from
PFPC by calling (800) 348-5031 (in Delaware call collect (302) 791-3486). The
Fund will employ reasonable procedures to confirm that instructions
communicated by telephone are genuine, and if the fund does not employ such
procedures, it may be liable for any losses due to unauthorized or fraudulent
telephone instructions. The proceeds will be mailed by check to an investor's
registered address unless he has designated in his Application or Telephone
Authorization that such proceeds are to be sent by wire transfer to a
specified checking or savings account. If proceeds are to be sent by wire
transfer, a telephone redemption request received prior to 4:00 p.m. will
result in redemption proceeds being wired to the investor's bank account on
the next day that a wire transfer can be effected. The minimum redemption for
proceeds sent by wire transfer is $2,500. There is no maximum for proceeds
sent by wire transfer. The Funds may modify this redemption service at any
time or charge a service fee upon prior notice to shareholders. No service fee
is currently contemplated. RBB and PFPC reserve the right to refuse a
telephone redemption if they deem it advisable to do so. Neither the Funds,
their Administrators nor the Distributor will be liable for any loss,
liability, cost or expense for following these procedures or for following
instructions communicated by telephone that it reasonably believes to be
genuine. These procedures are set forth under "How to Purchase Shares--
Exchange Privilege" above.
OTHER INFORMATION ON REDEMPTIONS
The Funds are not responsible for the efficiency of the Federal Wire System or
a shareholder's investment adviser, broker-dealer or bank. The shareholder is
responsible for any charges imposed by the shareholder's bank. To change the
name of the single designated bank account to receive redemptions, it is
necessary to send a written request (with a signature guaranteed by an
Eligible Guarantor Institution) to the Numeric Investors Family, c/o PFPC
Inc., P. O. Box 8966, Wilmington, Delaware 19899-8966.
INVOLUNTARY REDEMPTION
RBB reserves the right to redeem a shareholder's account in any Fund at any
time the net asset value of the account in such Fund falls below $500 as the
result of a redemption or an exchange request. Shareholders will be notified
in writing that the value of their account in a Fund is less than $500 and
will be allowed 30 days to make additional investments before the redemption
is processed.
PAYMENT OF REDEMPTION PROCEEDS
In all cases, the redemption price is the net asset value per share next
determined after the request for redemption is received in proper form by
PFPC. Payment for Shares redeemed is made by check mailed within seven days
after acceptance by PFPC of the request and any other necessary documents in
proper order. Such payment may be postponed or the right of redemption
suspended as provided by the rules of the SEC. If the Shares to be redeemed
have been recently purchased by check, PFPC may delay mailing a redemption
check, which may be a period of up to 15 days, pending a determination that
the check has cleared.
REDEMPTION IN-KIND
The Funds reserve the right, if conditions exist which make cash payments
undesirable, to honor any request for redemption of a Fund's shares by making
payment in whole or in part in securities chosen by the Fund and valued in the
same way as they would be valued for purposes of computing a Fund's net asset
value. If payment is made in securities, a shareholder may incur transaction
costs in converting these securities into cash after they have redeemed their
shares. The Funds have elected, however, to be governed by Rule 18f-1 under
the 1940 Act, so that a 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 a Fund.
AUTOMATIC WITHDRAWAL
Automatic withdrawal permits investors to request withdrawal of a specified
dollar amount (minimum of $25) on either a monthly, quarterly or annual basis
if the investor has a $10,000 minimum account. An application for automatic
withdrawal can be obtained from PFPC. Automatic withdrawal may be ended at any
time by the investor, RBB or PFPC. Purchases of additional shares concurrently
with withdrawals generally are undesirable.
NET ASSET VALUE
The net asset value for each Fund is calculated by adding the value of all its
securities to cash and other assets, deducting its actual and accrued
liabilities and dividing by the total number of Shares outstanding. The net
asset value of the Funds is calculated as of 4:00 p.m. Eastern Time on each
Business Day.
Valuation of securities held by the Funds 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
13
<PAGE>
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, a Fund may use a pricing service,
bank or broker-dealer experienced in such matters to value a 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 Funds will distribute substantially all of their net investment income and
net realized capital gains, if any, to each Fund's shareholders. All
distributions are reinvested in the form of additional full and fractional
Shares of the relevant Fund unless a shareholder elects otherwise.
The Funds expect to declare and pay dividends from net investment income
annually, generally near the end of the year. 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 Funds and their shareholders and is not
intended as a substitute for careful tax planning. Accordingly, investors in
the Funds should consult their tax advisers with specific reference to their
own tax situation.
Each Fund will elect to be taxed as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended. So long as a
Fund qualifies for this tax treatment, such Fund will be relieved of Federal
income tax on amounts 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 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 any Fund will be
taxed to shareholders as long-term capital gain regardless of the length of
time a shareholder has held his Shares, whether such gain was reflected in the
price paid for the 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 39.6%
while the maximum rate imposed on long term capital gain of such taxpayers is
28%. Corporate taxpayers are taxed at the same rates on both ordinary income
and capital gains.
RBB will send written notices to shareholders annually regarding the tax
status of distributions made by each 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. Each 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 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.
Investment strategies which require periodic changes to portfolio holdings
with the expectation of outperforming equity indices are called "active"
strategies. These compare with "passive" or "Index" strategies which hold only
the stocks in the equity indices. Passive strategies trade infrequently--only
as the indices change. Most equity mutual funds pursue active strategies which
have higher turnover than passive strategies. The following describes the
impact of portfolio turnover on returns.
High turnover can adversely affect taxable investors, especially those in
higher marginal tax brackets, in two ways:
First, short term capital gains, which are a by-product of high turnover
investment strategies, are currently taxed at rates comparable to ordinary
income rates. Ordinary income tax rates are higher than long term capital gain
tax rates for middle and upper income taxpayers.
Second, the frequent realization of gains, which causes taxes to be paid
frequently, is less advantageous than infrequent realization of gains.
Infrequent realization of gains allows the payment of taxes to be deferred to
later years, allowing more of the gains to compound before taxes are paid.
Consequently, after-tax compound rates of return will generally be higher for
taxable investors using investment strategies with very low turnover, all else
being equal.
Although tax considerations should not typically drive an investment decision,
investors should consider their
14
<PAGE>
ability to allocate tax-deferred (such as IRAs and 401(k) plans) versus
taxable assets when considering where to invest. All else being equal,
investors will earn better returns investing tax-deferred assets in active
strategies, while using passive strategies for taxable investments.
Shareholders who exchange Shares representing interests in one Fund for 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 one Fund 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 one or
more Funds of RBB. Shareholders are also urged to consult their tax advisers
concerning the application of state and local income taxes to investments in
RBB which may differ from the Federal income tax consequences described above.
DESCRIPTION OF SHARES
RBB has authorized capital of thirty billion shares of Common Stock, $.001 par
value per share, of which 12.35 billion shares are currently classified into
66 different classes of Common Stock (see "Description of Shares" in the
Statement of Additional Information).
Exchanges between the Numeric Investors Family of Mutual Funds and other
Families of RBB are not permitted.
THIS PROSPECTUS AND THE STATEMENT OF ADDITIONAL INFORMATION INCORPORATED
HEREIN RELATE PRIMARILY TO THE NUMERIC INVESTORS FAMILY CLASSES AND DESCRIBE
ONLY THE INVESTMENT OBJECTIVE AND POLICIES, OPERATIONS, CONTRACTS AND OTHER
MATTERS RELATING TO THE NUMERIC INVESTORS FAMILY CLASSES.
Each share that represents an interest in a Fund has an equal proportionate
interest in the assets belonging to such Fund with each other share that
represents an interest in such Fund, even where a share has a different class
designation than another share representing an interest in that Fund. Shares
of RBB do not have preemptive or conversion rights. When issued for payment as
described in this Prospectus, shares of RBB 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.
Holders of shares of each of the Funds will vote in the aggregate and not by
class on all matters, except where otherwise required by law. Further,
shareholders of all investment portfolios 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 investment 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.
As of May 7, 1996, to RBB's knowledge, no person held of record or
beneficially 25% or more of the outstanding shares of all classes of RBB.
OTHER INFORMATION
REPORTS AND INQUIRIES
Shareholders will receive unaudited semi-annual reports describing the Funds'
investment operations and annual financial statements audited by independent
accountants. Shareholder inquiries should be addressed to PFPC, Bellevue Park
Corporate Center, 400 Bellevue Parkway, Wilmington, Delaware 19809, toll-free
(800) 348-5031 (in Delaware call collect (302) 791-3486).
HISTORICAL PRO-FORMA PERFORMANCE INFORMATION
Presented below are the pro forma performance histories of certain managed
accounts advised by John C. Bogle, Jr, the portfolio manager for each of the
Funds, for various periods ended March 31, 1996, assuming total expenses of
1.00%.
AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<CAPTION>
SINCE
INCEPTION
3 YEAR (10/1/91)
1 YEAR ANNUALIZED ANNUALIZED
RETURN RETURN RETURN
------ ---------- ----------
<S> <C> <C> <C>
Growth Account..................................... 36.45% 21.97% 25.94%
Russell 2500 Growth Index:......................... 31.73% 17.00% 14.79%
</TABLE>
15
<PAGE>
AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<CAPTION>
SINCE
INCEPTION
(7/1/94)
1 YEAR ANNUALIZED
RETURN RETURN
------ ----------
<S> <C> <C>
Growth & Value Account........................................ 37.87% 30.24%
S&P MidCap 400 Index.......................................... 28.50% 23.46%
</TABLE>
The performance returns shown above are size-weighted and are reduced by an
assumed fee of 1.00% per annum which is applied monthly. The composites
include all accounts managed in the respective strategy, except for periods
during which an account experienced abnormal cash flows which caused its
performance to be unrepresentative of its investment strategy. The accounts
described above have investment objectives, policies and strategies
substantially similar to those to be employed in managing the Funds. The
historical pro-forma performance information presented above for the managed
accounts includes reinvestment of dividends received on the underlying
securities. This information is deemed relevant with respect to each Fund
because these accounts were managed using substantially the same investment
objective, policies, restrictions and methodologies as those to be used by the
relevant Fund. The periods shown are the entire periods during which these
accounts were managed by Mr. Bogle in this manner. However, this performance
information is not necessarily indicative of the future performance of each
Fund. Because each Fund will be actively managed, its investments will vary
from time to time and will not be identical to the past portfolio investments
of the managed accounts. Each Fund's performance will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their
original costs.
FUTURE PERFORMANCE INFORMATION
From time to time, the Funds may advertise their 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 over one, five and ten year periods or, if such periods
have not yet elapsed, shorter periods corresponding to the life of such Funds.
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, net of fees,
according to a required standardized calculation. The standard calculation is
required by the SEC to provide consistency and comparability in investment
company advertising. The Funds 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 a Fund's performance with other measures of investment return. For
example, a Fund'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, as well as the benchmarks
described in the Appendix to this Prospectus. Performance information may also
include evaluation of the Funds by nationally recognized ranking services and
information as reported in financial publications such as Barron's, Business
Week, Forbes, Fortune, Money Magazine, Mutual Fund Magazine, The New York
Times, The Wall Street Journal, or other national, regional or local
publications. All advertisements containing performance data will include a
legend disclosing that such performance data represents past performance and
that the investment return and principal value of an investment will fluctuate
so that an investor's Shares, when redeemed, may be worth more or less than
their original cost.
From time to time, the Funds may also advertise their "30-day yield." The
yields of such Funds refer to the income generated by an investment in a Fund
over the 30-day period identified in the advertisement, and is computed by
dividing the net investment income per share earned by a Fund 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 Shares of any of the Funds will fluctuate and is 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 a Fund are not
reflected in the yields on a Fund's Shares, and such fees, if charged, will
reduce the actual return received by shareholders on their investments.
16
<PAGE>
APPENDIX A
PERFORMANCE BENCHMARKS
<TABLE>
<CAPTION>
NUMERIC PERFORMANCE
FUND BENCHMARK DESCRIPTION
- -------------------------------------------------------------------------------
<C> <C> <S>
Micro Cap Wilshire Small Wilshire Asset Management's indices are derived from
Company Growth the largest 2500 securities by market
Index capitalization, the Top 2500, of the Wilshire 5000
stock index. The Small Company Universe consists of
stocks 751 through 2500 (the largest 750 stocks
ranked by market capitalization are excluded).
The Small Company Index is segmented into growth and
value categories. Variables employed to identify
growth stocks include high sales growth, high return
on equity, and low dividend payout.
- -------------------------------------------------------------------------------
Growth Russell 2500 The Russell 2500 is an index of stock 501 through
Growth Index 3000 in the Russell 3000 Index, as ranked by total
market capitalization. This index is segmented into
growth and value categories. The Russell 2500 Growth
Index contains stocks from the Russell 2500 with
greater-than-average growth orientation. Companies
in this index generally have higher price-to-book
and price/earnings ratios.
- -------------------------------------------------------------------------------
Growth S&P MidCap 400 A broad-based index of 400 companies with market
& Value Index capitalizations from $50 million to $10 billion. The
Standard & Poor's MidCap 400 Index is a widely
accepted, unmanaged index of overall mid-cap stock
market performance.
- -------------------------------------------------------------------------------
</TABLE>
App. A-1
<PAGE>
NUMERIC INVESTORS
family of mutual funds
One Memorial Drive
Cambridge, MA 02142
1-800-NUMERIC
INVESTMENT ADVISER CUSTODIAN
Numeric Investors L.P. Custodial Trust Company
One Memorial Drive 101 Carnegie Center
Cambridge, MA 02142 Princeton, NJ 05840-6231
CO-ADMINISTRATORS TRANSFER AGENT
Bear Stearns Funds Management Inc. PFPC Inc.
245 Park Avenue, 15th floor Bellevue Corporate Center
New York, NY 10167 400 Bellevue Parkway
Wilmington, DE 19809
PFPC Inc.
Bellevue Corporate Center INDEPENDENT ACCOUNTANTS
400 Bellevue Parkway
Wilmington, DE 19809 Coopers & Lybrand, L.L.P.
2400 Eleven Penn Center
DISTRIBUTOR Philadelphia, PA 19103
Counsellors Funds Service, Inc.
466 Lexington Avenue COUNSEL
New York, NY 10017-3147
Ballard Spahr Andrews & Ingersoll
1735 Market Street
Philadelphia, PA 19103-7599
<PAGE>
NUMERIC MICRO CAP FUND
NUMERIC GROWTH FUND
NUMERIC GROWTH & VALUE FUND
--------------
(INVESTMENT PORTFOLIOS OF THE RBB FUND, INC.)
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information provides supplementary
information pertaining to shares of the classes (the "Shares") representing
interests in the Numeric Micro Cap Fund (the "Micro Cap Fund"), the Numeric
Growth Fund (the "Growth Fund") and the Numeric GROWTH & VALUE Fund (the "
GROWTH & VALUE Fund") (collectively, the "Funds") of The RBB Fund, Inc.
("RBB"). This Statement of Additional Information is not a prospectus, and
should be read only in conjunction with the Numeric INVESTORS Family Prospectus
dated May 20, 1996 (the "Prospectus"). A copy of the Prospectus may be
obtained from Numeric by calling toll-free (800) NUMERIC [(800) 686-3742]. This
Statement of Additional Information is dated May 20, 1996.
CONTENTS
<TABLE>
<CAPTION>
Prospectus
Page Page
------- ----------
<S> <C> <C>
General........................................................... 2 1
Investment Objectives and Policies................................ 2 6
Directors and Officers............................................ 11 N/A
Investment Advisory, Distribution and Servicing ARRANGEMENTS...... 13 12
Fund TRANSACTIONS................................................. 16 13
Purchase and Redemption INFORMATION............................... 17 14
Valuation of SHARES............................................... 18 19
Performance INFORMATION........................................... 18 22
TAXES............................................................. 21 19
Description of SHARES............................................. 24 20
Additional Information Concerning Fund Shares..................... 25 N/A
MISCELLANEOUS..................................................... 26 N/A
Financial Statements.............................................. N/A N/A
Appendix A........................................................ A-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 STATEMENT OF ADDITIONAL INFORMATION 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
RBB is an open-end management investment company currently operating
or proposing to operate seventeen separate investment portfolios. RBB is an
open-end investment company registered under the Investment Company Act of 1940
(the "1940 Act") and was organized as a Maryland corporation on February 29,
1988. This Statement of Additional Information pertains to Shares representing
interests in the Funds offered by the Prospectus dated May 20, 1996.
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 Funds. A description
of ratings of certain instruments the Funds may purchase is set forth in the
Appendix to this Statement of Additional Information.
FUTURES CONTRACTS. When a Fund purchases a futures contract, it
agrees to purchase a specified underlying instrument at a specified future date.
When a Fund sells a futures contract, it agrees to sell the underlying
instrument at a specified future date. The price at which the purchase and sale
will take place is fixed when a 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 a 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.
A Fund may purchase futures contracts as an alternative to purchasing
actual securities. For example, if a 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, a 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 a 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 Funds would hold cash and liquid debt securities in a segregated
account with a value sufficient to cover their open futures obligations, the
segregated assets would be available to the Funds immediately upon closing out
the futures position, while settlement of securities transactions can take
several days. However, because a 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.
2
<PAGE>
The Funds may sell futures contracts to hedge their 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 a 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, a 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.
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 a 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 a 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 a 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 a 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 a 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 a 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 Funds may purchase or
sell futures contracts with a greater or lesser value than the securities they
wish to hedge or intend 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 a 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 the price fluctuation
limit is reached, it may be impossible for a 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
3
<PAGE>
potentially could require a Fund to continue to hold a futures position until
the delivery date regardless of changes in its value. As a result, a Fund's
access to other assets held to cover its futures positions could also be
impaired.
PURCHASING PUT OPTIONS. By purchasing a put option, a Fund obtains
the right (but not the obligation) to sell the option's underlying instrument at
a fixed strike price. The option may give a 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, a 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.
A 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 a 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 a 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 a 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 securities 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 a Fund has at
risk is the cost of the option, purchasing put options does not eliminate the
potential for a 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, a
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 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 Funds will purchase call options only in connection with "closing
purchase transactions." A 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 a Fund. If a 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 a 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, a 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 a Fund will be
required to make margin payments to an FCM as described above for futures
contracts. A Fund may seek to terminate its position in a put option it writes
before
4
<PAGE>
exercise by closing out the option in the secondary market at its current price.
If the secondary market is not liquid for an option a 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.
A 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, a Fund's return from writing put options generally will
involve a smaller amount of interest income than purchasing longer-term
securities directly, because a Fund's cash will be invested in shorter-term
securities which usually offer lower yields.
WRITING CALL OPTIONS. Writing a call option obligates a 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, a Fund would seek to
mitigate the effects of a price decline. At the same time, because a 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.
COMBINED OPTION POSITIONS. A Fund may purchase and write options in
combination with each other to adjust the risk and return characteristics of the
overall position. For example, a 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. A Fund will hold securities or
other options or futures positions whose values are expected to offset its
obligations under the hedge strategies. A 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
5
<PAGE>
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 a 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 Funds, 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 Funds will not enter into any commodity futures
contract or option on a commodity futures contract for non-hedging purposes 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 Funds have purchased would exceed 5% of a Fund's NET assets
after taking into account unrealized profits and losses on such contracts.
The Funds' limitations on investments in futures contracts and their
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 Funds 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 Funds'
shareholders.
SHORT SALES "AGAINST THE BOX." In a short sale, a Fund sells a
borrowed security and has a corresponding obligation to the lender to return the
identical security. A 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 a Fund engages in a short 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 a Fund's long position. The
Funds will not engage in short sales against the box for speculative purposes.
A 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 a
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 a Fund
owns. There will be certain additional transaction costs associated with short
sales against the box, but the Funds 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 Funds 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)
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<PAGE>
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.
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 a 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 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. THE INVESTMENT IN WARRANTS,
VALUED AT THE LOWER OF COST OR MARKET, MAY NOT EXCEED 5.0% OF THE VALUE OF A
FUND'S NET ASSETS. INCLUDED WITHIN THAT AMOUNT, BUT NOT TO EXCEED 2.0% OF THE
VALUE OF A FUND'S NET ASSETS, MAY BE WARRANTS WHICH ARE NOT LISTED ON THE NEW
YORK OR AMERICAN STOCK EXCHANGE. WARRANTS ACQUIRED BY A FUND IN UNITS OR
ATTACHED TO SECURITIES MAY BE DEEMED TO BE WITHOUT VALUE.
ILLIQUID SECURITIES. A Fund may not invest more than 15% of its net
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 Funds' 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 Funds 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
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<PAGE>
automated systems for the 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
Funds 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).
DEPOSITARY RECEIPTS. The Funds' assets may be invested in the
securities of foreign issues in the form of American Depositary Receipts
("ADRs"), European Depositary Receipts ("EDRs") or Global Depositary Receipts
("GDRs"). These securities may not necessarily be denominated in the same
currency as the securities into which they may be converted. ADRs and EDRs are
receipts typically issued by a United States or European bank or trust company
which evidence ownership of underlying securities issued by a foreign
corporation. GDRs are depositary receipts structured like global debt issues to
facilitate international trading. The Funds may invest in ADRs. EDRs and GDRs
through "sponsored" or "unsponsored" facilities. A sponsored facility is
established jointly by the issuer of the underlying security and a depositary,
whereas a depositary may establish an unsponsored facility without participating
by the issuer of the deposited security. Holders of unsponsored depositary
receipts generally bear all the costs of such facilities and the depositary of
an unsponsored facility frequently is under no obligation to distribute
shareholder communications received from the issuer of the deposited security or
to pass through voting rights to the holders of such receipts in respect of the
deposited securities.
INVESTMENT COMPANY SECURITIES. The Funds may invest in securities
issued by other investment companies. Under the 1940 Act, the Funds'
investments in such securities currently are limited to, subject to certain
exceptions, (i) 3% of the total voting stock of any one investment company, (ii)
5% of a Fund's net assets with respect to any one investment company and (iii)
10% of a Fund's net assets in the aggregate. Investments in the securities of
other investment companies will involve duplication of advisory fees and certain
other expenses. The Funds presently intend to invest in other investment
companies only as investment vehicles for short-term cash. THE FUNDS WILL ONLY
INVEST IN SECURITIES OF OTHER INVESTMENT COMPANIES WHICH ARE PURCHASED ON THE
OPEN MARKET WITH NO COMMISSION OR PROFIT TO A SPONSOR OR DEALER, OTHER THAN THE
CUSTOMARY BROKERS COMMISSION, OR WHEN THE PURCHASE IS PART OF A PLAN OF MERGER,
CONSOLIDATION, REORGANIZATION OR ACQUISITION.
CONVERTIBLE SECURITIES. The Funds may invest in convertible
securities, such as convertible debentures, bonds and preferred stock, primarily
for their equity characteristics. Convertible securities may be converted into
common stock at a specified share price or ratio. Because the price of the
common stock may fluctuate above or below the specified price or ratio, a Fund
may have the opportunity to purchase the common stock at below market price. On
the other hand, fluctuations in the price of the common stock could render the
right of conversion worthless.
REPURCHASE AGREEMENTS. The repurchase price under repurchase
agreements 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 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.
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<PAGE>
REVERSE REPURCHASE AGREEMENTS. Reverse repurchase agreements involve
the sale of securities held by a 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 its 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 a Fund may decline below
the price of the securities the Fund is obligated to Repurchase.
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, Federal Home
Loan Mortgage Corporation, Federal Intermediate Credit Banks, AND THE Maritime
Administration.
WHEN-ISSUED SECURITIES AND FORWARD COMMITMENTS. Each Fund may
purchase securities on a "when-issued" basis and may purchase or sell securities
on a "forward commitment" basis. These transactions involve a commitment by a
Fund to purchase or sell particular securities with payment and delivery taking
place at a future date (perhaps one or two months later), and permit a Fund to
lock-in a price or yield on a security it owns or intends to purchase,
regardless of future changes in interest rates. When-issued and forward
commitment transactions involve the risk, however, that the price or yield
obtained in a transaction may be less favorable that the price or yield
available in the market when the securities delivery takes place. A Fund's
when-issued purchases and forward commitments are not expected to exceed 25% of
the value of its total assets absent unusual market conditions. Each Fund does
not intend to engage in when-issued purchases and forward commitments for
speculative purposes but only in furtherance of their investment objectives.
INVESTMENT LIMITATIONS
The Funds have adopted the following fundamental investment
limitations which may not be changed without the affirmative vote of the holders
of a majority of the Funds' outstanding shares (as defined in Section 2(a)(42)
of the Investment Company Act). The Funds may not:
1. Purchase securities of any one issuer, other than securities
issued or guaranteed by the U.S. Government or its agencies or
instrumentalities, if immediately after and as a result of such purchase more
than 5% of a 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 a Fund, except that up to 25% of the value of a Fund's assets
may be invested without regard to such limitation.
2. Borrow money, except to the extent permitted under the 1940 Act or
mortgage, pledge or hypothecate any of their respective assets in connection
with any such borrowing except in amounts not in excess of 125% of the dollar
amounts borrowed. The 1940 Act permits an investment company to borrow in an
amount up to 33% of the value of such company's total assets. For purposes of
this Investment Restriction, the entry into options, forward contracts, futures
contracts, including those relating to indexes, and options on futures contracts
or indexes shall not constitute borrowing.
9
<PAGE>
3. Purchase any securities which would cause, at the time of
purchase, 25% or more of the value of the total assets of a 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.
4. Make loans, except that a Fund may purchase or hold debt
obligations in accordance with its investment objective, policies and
limitations, may enter into repurchase agreements for securities, and may lend
portfolio securities against collateral consisting of cash or securities which
are consistent with the Fund's permitted investments, which is equal at all
times to at least 100% of the value of the securities loaned. There is no
investment restriction on the amount of securities that may be loaned, except
that payments received on such loans, including amounts received during the loan
on account of interest on the securities loaned, may not (together with all non-
qualifying income) exceed 10% of a Fund's annual gross income (without offset
for realized capital gains) unless, in the opinion of counsel to RBB, such
amounts are qualifying income under Federal income tax provisions applicable to
regulated investment companies.
5. Purchase securities on margin, except for short-term credit
necessary for clearance of portfolio transactions, and except that the Fund may
establish margin accounts in connection with its use of options, forward
contracts, futures contracts, including those relating to indexes, and options
on futures contracts or indexes.
6. Underwrite securities of other issuers, except to the extent that,
in connection with the disposition of portfolio securities, a Fund may be deemed
an underwriter under Federal securities laws.
7. Purchase or sell real estate or real estate limited partnership
interests, provided that a Fund may invest in securities secured by real estate
or interests therein or issued by companies which invest in real estate or
interests therein or in real estate investment trusts.
8. Purchase or sell commodities or commodity contracts, except that a
Fund may purchase and sell options, forward contracts, futures contracts,
including those relating to indexes, and options on futures contracts or
indexes.
9. Invest in oil, gas or mineral-related exploration or development
programs or leases.
10. Purchase any securities issued by any other investment company,
except to the extent permitted by the 1940 Act and except in connection with the
merger, consolidation or acquisition of all the securities or assets of such an
issuer.
11. Make investments for the purpose of exercising control or
management, but each Fund will vote those securities it owns in its portfolio as
a shareholder in accordance with its views.
12. Issue any senior security, as defined in section 18(f) of the
1940 Act, except to the extent permitted by the 1940 Act.
13. Pledge, mortgage or hypothecate its assets, except to the extent
necessary to secure permitted borrowings as described in Limitation 1 above and
to the extent related to the purchase of securities on a when-issued or forward
commitment basis and the deposit of assets in escrow in connection with writing
covered put and call options and collateral and initial or variation margin
arrangements with respect to options, forward contracts, futures contracts,
including those relating to indexes, and options on futures contracts or
indexes.
If a percentage restriction is adhered to at the time of investment, a
later change in percentage resulting from a change in values or assets will not
constitute a violation of such restriction (except that, with
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<PAGE>
respect to borrowings, if asset coverage falls below 300%, a Fund will reduce
its borrowings to restore asset coverage to 300% within three business days, in
accordance with the requirements of the 1940 Act).
The Funds may make commitments more restrictive than the restrictions
listed above so as to permit the sale of Fund Shares in certain states. Should
the Funds determine that a commitment is no longer in the best interest of the
Funds and their shareholders, the Funds reserve the right to revoke the
commitment by terminating the sale of Fund Shares in the state involved.
THE FOLLOWING INVESTMENT LIMITATIONS ARE INCLUDED IN RESPONSE TO
VARIOUS STATE BLUE SKY REGULATIONS. THESE LIMITATIONS ARE NOT FUNDAMENTAL AND
MAY BE CHANGED BY RBB'S BOARD OF DIRECTORS WITHOUT SHAREHOLDER APPROVAL.
1. THE FUNDS WILL NOT PURCHASE OR RETAIN THE SECURITIES OF ANY ISSUER
IF NUMERIC OR THE OFFICERS OR DIRECTORS OF RBB WHO BENEFICIALLY OWN MORE THAN
ONE-HALF OF ONE PER CENT OF THE SECURITIES OF SUCH ISSUER TOGETHER OWN
BENEFICIALLY MORE THAN FIVE PER CENT OF THE SECURITIES OF THAT ISSUER.
DIRECTORS AND OFFICERS
The directors and executive officers of RBB, their business addresses,
ages and principal occupations during the past five years are:
<TABLE>
<CAPTION>
Principal Occupation
Name and Address Position with RBB During Past Five Years
- ---------------- ----------------- ----------------------
<S> <C> <C>
Arnold M. Reichman* Director Since 1984, Managing Director and
466 Lexington Avenue Assistant Secretary, E. M. Warburg,
New York, NY 10017 Pincus & Co., Inc.; Since 1984
Age: 47 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 President
14 Wall Street of Gruntal & Co., Inc., Director,
New York, NY 10005 Gruntal & Co., Inc. and Gruntal Financial
Age: 57 Corp.
Francis J. McKay Director Since 1963, Executive Vice President,
7701 Burholme Avenue Fox Chase Cancer Center (Biomedical
Philadelphia, PA 19111 research and medical care.)
Age: 60
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Principal Occupation
Name and Address Position with RBB During Past Five Years
- ---------------- ----------------- ----------------------
<S> <C> <C>
Marvin E. Sternberg Director Since 1974, Chairman, Director and
937 Mt. Pleasant Road President, Moyco Industries, Inc.
Bryn Mawr, PA 19010 (manufacturer of dental supplies and
Age: 61 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).
Julian A. Brodsky Director Director, and Vice Chairman, Comcast
1234 Market Street Corporation; Director, Comcast
16th Floor Cablevision of Philadelphia (cable
Philadelphia, PA 19107-3723 television and communications) and Nextel
Age: 62 (wireless communications).
Donald van Roden Director Self-employed businessman.
1200 Old Mill Lane From February 1980 to March 1987,
Wyomissing, PA 19610 Vice Chairman, SmithKline Beckman
Age: 71 Corporation (pharmaceuticals); Director,
AAA Mid-Atlantic (auto service);
Director, Keystone Insurance Co.
Edward J. Roach President and Certified Public Accountant;
Bellevue Park Treasurer Vice Chairman of the Board, Fox Chase
Corporate Center Cancer Center; Vice President and
400 Bellevue Parkway Trustee, Pennsylvania School for the
Wilmington, DE 19809 Deaf; Trustee, Immaculata College;
Age: 71 Vice President and Treasurer of various
investment companies advised by PNC
Institutional Management Corporation.
Morgan R. Jones Secretary Chairman of the law firm of Drinker
1100 PNB Bank Building Biddle & Reath, Philadelphia,
Broad and Chestnut Streets Pennsylvania; Director, Rocking Horse
Philadelphia, PA 19107 Child Care Centers of America, Inc.
Age: 56
</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.
12
<PAGE>
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
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 RBB $9,500 annually and $700 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. The Chairman (currently Donald van Roden) receives an
additional $5,000 for his services. For the year ended August 31, 1995, each of
the following members of the Board of Directors received compensation from the
Fund in the following amounts: Julian A. Brodsky in the aggregate amount of
$9,425; Francis J. McKay in the aggregate amount of $12,025; Marvin E. Sternberg
in the aggregate amount of $12,675; Donald van Roden in the aggregate amount of
$14,675. 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 RBB's investment advisers,
administrators and the Distributor, RBB itself requires only one part-time
employee. No officer, partner or employee of Numeric currently receives any
compensation from RBB.
INVESTMENT ADVISORY, DISTRIBUTION AND SERVICING ARRANGEMENTS
ADVISORY AGREEMENTS
Numeric renders advisory services to the Funds pursuant to Investment
Advisory Contracts. The Advisory Contracts relating to each of the Funds are
dated April 24, 1996. Under the Advisory Contracts, Numeric is entitled to
receive a fee from each Fund calculated at an annual rate of 0.75% of a Fund's
average daily net assets. For the fiscal year ended August 31, 1996 AND FOR THE
FOLLOWING FISCAL YEAR, Numeric intends to waive its fees to the extent necessary
to maintain an annualized expense ratio for each Fund of 1.00%. There can be no
assurance that Numeric will continue such waivers indefinitely.
As required by various state regulations, Numeric will reimburse RBB
or the Funds affected (as applicable) if and to the extent that the aggregate
operating expenses of RBB or the Funds affected exceed applicable state limits
for the fiscal year, to the extent required by such state regulations.
Currently, the most restrictive of such applicable limits is believed to be
2-1/2% of the first $30 million of average annual net assets, 2% of the next $70
million of average annual net 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 Funds on an individual
basis depends upon the particular regulations of such states.
The Funds bear all of their own expenses not specifically assumed by
Numeric. General expenses of RBB not readily identifiable as belonging to a
portfolio of RBB are allocated among all investment
13
<PAGE>
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 a Fund
include, but are not limited to, the following (or a Fund's share of the
following): (a) the cost (including brokerage commissions) of securities
purchased or sold by a Fund and any losses incurred in connection therewith; (b)
fees payable to and expenses incurred on behalf of a Fund by Numeric; (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 a 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
Fund 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 Contracts, Numeric will not be liable for any error
of judgment or mistake of law or for any loss suffered by RBB or the Funds in
connection with the performance of an Advisory Contract, except a loss resulting
from willful misfeasance, bad faith or gross negligence on the part of Numeric
in the performance of its duties or from reckless disregard of its duties and
obligations thereunder.
The Advisory Contracts were approved on April 24, 1996 by vote of
RBB's Board of Directors, including a majority of those directors who are not
parties to the Advisory Contracts or interested persons (as defined in the 1940
Act) of such parties. The Advisory Contracts are terminable by vote of RBB's
Board of Directors or by the holders of a majority of the outstanding voting
securities of the Funds, at any time without penalty, on 60 days' written notice
to Numeric. The Advisory Contracts became effective on May 20, 1996 and
were approved by written consent of the sole shareholder of each of the Funds on
May 15, 1996. The Advisory Contracts terminate automatically in the event
of assignment thereof.
THE ADVISORY CONTRACTS PROVIDE THAT NUMERIC SHALL AT ALL TIMES HAVE
ALL RIGHTS IN AND TO EACH FUND'S NAME AND ALL INVESTMENT MODELS USED BY OR ON
BEHALF OF THE FUNDS. NUMERIC MAY USE EACH FUND'S NAME OR ANY PORTION THEREOF IN
CONNECTION WITH ANY OTHER MUTUAL FUND OR BUSINESS ACTIVITY WITHOUT THE CONSENT
OF ANY SHAREHOLDER, AND RBB HAS AGREED TO EXECUTE AND DELIVER ANY AND ALL
DOCUMENTS REQUIRED TO INDICATE ITS CONSENT TO SUCH USE.
THE ADVISORY CONTRACTS FURTHER PROVIDE THAT NO PUBLIC REFERENCE TO, OR
DESCRIPTION OF, NUMERIC OR ITS METHODOLOGY OR WORK SHALL BE MADE BY RBB, WHETHER
IN THE PROSPECTUS, STATEMENT OF ADDITIONAL INFORMATION OR OTHERWISE, WITHOUT THE
PRIOR WRITTEN CONSENT OF NUMERIC, WHICH CONSENT SHALL NOT BE UNREASONABLY
WITHHELD. IN EACH CASE, RBB HAS AGREED TO PROVIDE NUMERIC A REASONABLE
OPPORTUNITY TO REVIEW ANY SUCH REFERENCE OR DESCRIPTION BEFORE BEING ASKED FOR
SUCH CONSENT.
14
<PAGE>
CUSTODIAN AGREEMENTS
Custodian Trust Company ("CTC") is custodian of the Funds' assets
pursuant to custodian agreements dated AS OF APRIL 24, 1996, (the "Custodian
Agreements"). Under the Custodian Agreements, CTC (a) maintains a separate
account or accounts in the name of each of the Funds, (b) holds and transfers
portfolio securities on account of each of the Funds, (c) accepts receipts and
makes disbursements of money on behalf of each of the Funds, (d) collects and
receives all income and other payments and distributions on account of each of
the Funds' portfolio securities and (e) makes periodic reports to the RBB's
Board of Directors concerning the Funds' operations. CTC is authorized to
select one or more banks or trust companies to serve as sub-custodian on behalf
of the Funds, provided that CTC remains responsible for the performance of all
its duties under the Custodian Agreements and holds RBB harmless from the acts
and omissions of any sub-custodian. For its services to the Funds under the
Custodian Agreements, CTC receives a fee calculated as .015% of each Fund's
average daily gross assets, with a minimum monthly fee of $417 per Fund,
exclusive of transaction charges and out-of-pocket expenses, which are also
charged to the Funds.
TRANSFER AGENCY AGREEMENTS
PFPC, Inc. ("PFPC"), an affiliate of PNC Bank, serves as the transfer
and dividend disbursing agent for the Funds pursuant to a Transfer Agency
Agreement dated August 16, 1988 as suppplemented (collectively, the "Transfer
Agency Agreement"). Under the Transfer Agency Agreement, PFPC (a) issues and
redeems Shares of the Classes, (b) addresses and mails all communications by the
Funds to record owners of shares of the Classes, 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 Classes. For its services to the Fund under the
Transfer Agency Agreement, PFPC receives a fee at the annual rate of $12 per
account for the Funds, exclusive of out-of-pocket expenses, and also receives
reimbursement of its out-of-pocket expenses.
CO-ADMINISTRATION AGREEMENTS
Bear Stearns Funds Management Inc. ("BSFM") serves as co-administrator
to the Funds pursuant to Co-Administration Agreements dated AS OF APRIL 24,
1996 for each of the Funds (the "BSFM Co-Administration Agreements"). BSFM has
agreed to assist each of the Funds in all significant aspects of their
administration and operations. The BSFM Co-Administration Agreements provide
that BSFM shall not be liable for any error of judgment or mistake of law or any
loss suffered by RBB or the Funds 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 BSFM Co-Administration
Agreements, BSFM receives a fee with respect to each of the Funds calculated at
an annual rate of .05% of each Fund's average daily net assets.
PFPC also serves as co-administrator to Funds pursuant to Co-
Administration Agreements dated AS OF APRIL 24, 1996 (the "PFPC Co-
Administration Agreements"). PFPC has agreed to calculate the Funds' net asset
values, provide all accounting services for the Funds, and assist in related
aspects of the Funds' operations. The PFPC Co-Administration Agreements provide
that PFPC shall not be liable for any error of judgment or mistake of law or any
loss suffered by RBB or the Funds 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
Agreements, PFPC receives a fee with respect to each of the Funds calculated at
an annual rate of .115% of each Fund's average daily net assets, exclusive of
out-of-pocket expenses and pricing charges.
15
<PAGE>
ADMINISTRATIVE SERVICES AGENT
Counsellors Funds Service, Inc. ("Counsellors Service"), a wholly-
owned subsidiary of Counsellors Securities Inc. ("Counsellors" or the
"Distributor"), provides certain administrative services to each of the
Portfolios that are not provided by BSFM or PFPC, subject to the supervision and
direction of the Board of Directors of RBB. These services include furnishing
certain internal quasi-legal, executive and administrative services, acting as
liaison between the Funds and the Funds' various service providers, furnishing
corporate secretarial services, which include assisting in the preparation of
materials for meetings of RBB's Board of Directors, coordinating the preparation
of proxy statements and annual, semi-annual and quarterly reports and generally
assisting in monitoring and developing compliance procedures for the Funds. As
compensation for such administrative services, RBB will pay to Counsellors
Service each month a fee for the previous month calculated at the annual rate of
.15% of each Fund's average daily net assets.
DISTRIBUTOR
Counsellors serves as distributor of the Shares. Counsellors is a
wholly-owned subsidiary of Warburg, Pincus Counsellors, Inc. ("WPC") and is
located at 466 Lexington Avenue, New York 10017-3147. WPC is a wholly-owned
subsidiary of Warburg, Pincus Counsellors, G.P. No compensation is payable by
RBB to Counsellors for distribution services with respect to the Funds.
FUND TRANSACTIONS
Subject to policies established by the Board of Directors, Numeric is
responsible for the execution of portfolio transactions and the allocation of
brokerage transactions for the Funds. In executing portfolio transactions,
Numeric seeks to obtain the best net results for the Funds, 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 Numeric generally seeks reasonably
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. Numeric may, consistent with the
interests of the Funds 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 Funds and other clients of Numeric. Information and
research received from such brokers will be in addition to, and not in lieu of,
the services required to be performed by Numeric 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 Numeric, as applicable, determines in good faith that such commission is
reasonable in terms either of the transaction or the overall responsibility of
Numeric, 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 and many micro- and
small-cap stocks 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, micro- or
small-cap 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.
16
<PAGE>
Numeric 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 Funds 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 Funds' anticipated need for liquidity makes such action
desirable. Any such repurchase prior to maturity reduces the possibility that
the Funds 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 Funds and for other investment accounts
managed by Numeric 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 Funds. The Funds will not purchase securities
during the existence of any underwriting or selling group relating to such
security of which Numeric or any affiliated person (as defined in the 1940 Act)
thereof is a member except pursuant to procedures adopted by RBB's Board of
Directors pursuant to Rule 10f-3 under the 1940 Act. Among other things, these
procedures, which will be reviewed by 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 Numeric not participate in or benefit from the
sale to a Fund.
In no instance will portfolio securities be purchased from or sold to
Counsellors Securities, PNC Bank or Numeric or any affiliated person of the
foregoing entities except as permitted by SEC exemptive order or by applicable
law.
A high rate of portfolio turnover involves correspondingly greater
brokerage commission expenses and other transaction costs, which must be borne
directly by a Fund. Federal income tax laws may restrict the extent to which a
Fund may engage in short term trading of securities. See "Taxes." The Funds
anticipate that their annual portfolio turnover rates will vary from year to
year, but will generally range between 150% and 300%. The portfolio turnover
rate is calculated by dividing the lesser of a 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 Funds reserve the right, if conditions exist which make cash
payments undesirable, to honor any request for redemption or repurchase of a
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 a
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 a 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 a
Fund.
Under the 1940 Act, a 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 the NYSE is restricted, or during
which (as determined by the SEC by rule or regulation) an emergency exists as a
result of which
17
<PAGE>
disposal or valuation of portfolio securities is not reasonably practicable, or
for such other periods as the SEC may permit. (A Fund may also suspend or
postpone the recordation of the transfer of its shares upon the occurrence of
any of the foregoing conditions.)
VALUATION OF SHARES
The net asset value per share of each 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 Funds may employ outside organizations, which may use a matrix or formula
method that takes into consideration market indices, matrices, yield curves and
other specific adjustments. 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 Funds' books at their face value. Other assets, if any, are
valued at fair value as determined in good faith by or under the direction of
RBB's Board of Directors.
PERFORMANCE INFORMATION
TOTAL RETURN. For purposes of quoting and comparing the performance
of the Funds to that of other mutual funds and to stock or other relevant
indices in advertisements or in reports to shareholders, performance may be
stated in terms of total return. Under the rules of the Securities and Exchange
Commission, funds advertising performance must include total return quotes
calculated according to the following formula:
P(1 + T)/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.
18
<PAGE>
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 Funds' 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 Funds 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
Funds.
PERFORMANCE. From time to time, the Funds may advertise their average
annual total return over various periods of time. These total return figures
show the average percentage change in value of an investment in a Fund from the
beginning of the measuring period to the end of the measuring period. The
figures reflect changes in the price of a Fund's shares assuming that any income
dividends and/or capital gain distributions made by a 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 a Fund's operations or on a year-by-year,
quarterly or current year-to-date basis).
When considering average total return figures for periods longer than
one year, it is important to note that a 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 Funds seek long-term appreciation
and that such return may not be representative of a Fund's return over a longer
market cycle. The Funds may also advertise aggregate total return figures for
various periods, representing the cumulative change in value of an investment in
a Fund for the specific period (again reflecting changes in a 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 a 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 Funds may describe general economic and market conditions
affecting the Funds 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 their benchmark
indices, as well as the S&P 500 or (3) other appropriate indices of investment
securities or with data developed by Numeric derived from such indices.
Performance information may also include evaluation of the Funds by nationally
recognized ranking services and information as reported in financial
publications such as Business Week, Fortune, Institutional Investor, Money
Magazine, Forbes, Barron's, The Wall Street Journal, The New York Times, or
other national, regional or local publications.
In reports or other communications to investors or in advertising, the
Funds may also describe the general biography or work experience of the
portfolio managers of the Funds and may include quotations attributable to the
portfolio managers describing approaches taken in managing the Funds'
investments, research methodology, underlying stock selection or the Funds'
investment objective. The Funds 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 Funds may from time to time compare
19
<PAGE>
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 Funds may also advertise their yield. Under the rules of
the SEC, a Fund advertising yield must calculate yield using the following
formula:
YIELD = 2 [(a-b+1)/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 a 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.
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 a 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.
From time to time, in advertisements or in reports to shareholders
with respect to the Funds, the yields of the Funds may be quoted and compared to
those of other mutual funds with similar investment objectives and to stock or
other relevant indices. For example, the yield of a Fund may be compared to
data prepared by Lipper Analytical Services, Inc., a widely-recognized
independent service that monitors the performance of mutual funds.
20
<PAGE>
TAXES
The following is only a summary of certain additional tax
considerations generally affecting the Funds 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 Funds or their shareholders, and the
discussion here and in the Funds' 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 Funds intend to elect to be taxed as and meet the requirements of
regulated investment companies under Part I of Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"). As regulated investment
companies, the Funds are exempt from Federal income tax on their net investment
income and realized capital gains which they distribute to shareholders,
provided that they distribute an amount equal to the sum of (a) at least 90% of
their 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 their net tax-exempt interest income, if
any, for the year (the "Distribution Requirement") and satisfy 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 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 a 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 a 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 a 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 a
Fund has not invested more than 5% of the value of its total assets in
securities of such issuer and as to which a Fund does
21
<PAGE>
not hold more than 10% of the outstanding voting securities of such issuer), and
no more than 25% of the value of a 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 the Funds 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 Funds intend to distribute to shareholders their 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 of the
length of time the shareholder has held his shares, whether such gain was
recognized by a 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 a 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 a Fund 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 qualifies for
the 70% dividends received deduction to the extent of the gross amount of
"qualifying dividends" received by a 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 a Fund that qualifies
for the dividends received deduction in a written notice mailed by a Fund 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 39.6%, 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 1986, provisions
phasing out personal exemptions and limiting itemized deductions may cause the
actual maximum marginal rate to exceed 39.6%. The maximum rate on the
LONG TERM capital gain of individuals, trusts
22
<PAGE>
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 Funds 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.
If for any taxable year any Fund does not qualify as a regulated
investment company, all of its taxable income will be subject to tax at regular
corporate rates without any deduction for distributions to shareholders, and all
distributions will be taxable as ordinary dividends to the extent of such Fund's
current and accumulated earning and profits. Such distributions will be
eligible for the dividends received deduction in the case of corporate
shareholders. Investors should be aware that any loss realized on a sale of
shares of a Fund will be disallowed to the extent an investor repurchases shares
of the same Fund within a period of 61 days (beginning 30 days before and ending
30 days after the day of disposition of the shares). Dividends paid by a Fund
in the form of shares within the 61-day period would be treated as a purchase
for this purpose.
A shareholder will recognize gain or loss upon an exchange of shares
of a Fund for shares of another Fund 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 Fund 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 one-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 Funds intend to distribute all of
their taxable income currently, no Fund anticipates incurring any liability for
this excise tax. However, investors should note that the Funds may in certain
circumstances be required to liquidate investments in order to make sufficient
distributions to avoid excise tax liability.
A Fund 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 Funds expect to qualify as a "regulated investment
company" and to be relieved of all or substantially all Federal income taxes,
depending upon the extent of their activities in states and localities in which
their offices are maintained, in which their agents or independent contractors
are located or
23
<PAGE>
in which they are otherwise deemed to be conducting business, the Funds may be
subject to the tax laws of such states or localities.
DESCRIPTION OF SHARES
RBB has authorized capital of thirty billion shares of Common Stock,
$.001 par value per share, of which 12.35 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 (High Yield), 500 million
shares are classified as Class V Common Stock (Emerging), 100 million shares are
classified as Class W Common Stock, 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 (Global Fixed Income), 50 million shares are classified as Class
AA Common Stock (Municipal Bond), 50 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), 50 million shares are classified as Class FF
Common Stock (Numeric Micro Cap), 50 million shares are classified as Class GG
Common Stock (Numeric Growth), 50 million shares are classified as Class HH
Common Stock (Numeric GROWTH & VALUE) , 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),
24
<PAGE>
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 the Class FF, GG
and HH Common Stock constitute the Classes of the Micro Cap, Growth and GROWTH &
VALUE Funds, respectively. 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 FIFTEEN
separate "families": the RBB Family, the Cash Preservation Family, the
Sansom Street Family, the Bedford Family, the Bradford Family, the BEA Family,
the Janney Montgomery Scott Money Family, the Numeric INVESTORS 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 one
non-money market portfolio 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 Portfolios; the Sansom Street Family
represents interests in the Money Market, Municipal Money Market and Government
Obligations Money Market Portfolios; Bedford Family represents interests in the
Money Market, Municipal Money Market, Government Obligations Money Market and
New York Municipal Money Market Portfolios; the Bradford Family represents
interests in the Municipal Money Market and Government Obligations Money Market
Portfolios; the BEA Family represents interests in nine non-money market
portfolios; the Numeric INVESTORS Family represents interests in the Micro Cap,
Growth and GROWTH & VALUE Funds; the Janney Montgomery Scott Family and the
Beta, Gamma, Delta, Epsilon, Zeta, Eta and Theta Families represent interests in
the Money Market, Municipal Money Market, Government Obligations Money Market
and New York Municipal Money Market Portfolios.
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 collectively owning at least ten percent of the
outstanding shares of all classes of Common Stock of RBB have the right to call
for a meeting of shareholders to consider the removal of one or more directors.
To the extent required by law, RBB will assist in shareholder communication in
such matters.
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.
25
<PAGE>
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 Charter, 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.
CONTROL PERSONS. As of MAY 6, 1996, 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. See "Description of Shares" above. RBB does not know whether
such persons also beneficially own such shares.
26
<PAGE>
<TABLE>
<CAPTION>
PORTFOLIO NAME AND ADDRESS PERCENT OWNED
- ------------------------------- --------------------------------------------- -------------
<S> <C> <C>
RBB Money Market Luanne M. Garvey and Robert J. Garvey 13.9
Portfolio 2729 Woodland Avenue
(Class E) Trooper, PA 19403
HAROLD T. Erfer 12.9
414 Charles Lane
Wynnewood, PA 19096
KAREN M. McElhinny and Contribution Account 16.7
4943 King Arthur Drive
Erie, PA 16506
JOHN Robert Estrada and 16.1
Shirley Ann Estrada
1700 Raton Drive
Arlington, TX 76018
ERIC Levine and Linda & Howard Levine 29.3
67 Lanes Pond Road
Howell, NJ 07731
RBB Municipal Money Market William B. Pettus Trust 9.6
Portfolio Augustine W. Pettus Trust
(Class F) 827 Winding Path Lane
St. Louis, MO 63021-6635
SEYMOUR Fein 90.4
P.O. Box 486
Tremont Post Office
Bronx, NY 10457-0486
CASH Preservation Money Jewish Family and Children's 53.6
Market Portfolio Agency of Philadelphia
(Class G) Capital Campaign
Attn: S. Ramm
1610 Spruce Street
Philadelphia, PA 19103
LYNDA R. Succ Trustee for in Trust under 11.0
The Lynda R. Campbell Caring Trust
935 Rutger Street
St. Louis, MO 63104
RAYMOND E. CURRIE AND KATHRYN CURRIE 5.1
JT TEN WROS
1023 PLEASANT AVENUE
WYNDMOOR, PA 19118
HELEN M. ELLENBY 5.5
503 FALCON LANE
WEST CHESTER, PA 19382-5716
</TABLE>
27
<PAGE>
<TABLE>
<CAPTION>
PORTFOLIO NAME AND ADDRESS PERCENT OWNED
- ------------------------------- --------------------------------------------- -------------
<S> <C> <C>
CASH Preservation Municipal Kenneth Farwell and Valerie 10.7
Money Market Portfolio Farwell Jt. Ten
(Class H) 3854 Sullivan
St. Louis, MO 63107
LARNIE Johnson and Mary Alice Johnson 17.4
4927 Lee Avenue
St. Louis, MO 63115-1726
ANDREW Diederich and Doris Diederich 5.9
1003 Lindeman
Des Peres, MO 63131
Marcella L. Haugh Caring Tr 9.9
Dtd 8/12/91
40 Plaza Square
Apt. 202
St. Louis, MO 63101
Gwendolyn Haynes 5.1
2757 Geyer
St. Louis, MO 63104
RALPH R. SUCCESSOR TRUSTEE FOR IN TR 5.2
UNDER THE RALPH R. MORENO CARING TRUST
DTD 5/13/92
418 N. CONCORD STREET
LOS ANGELES, CA 90063
Sansom Street Money Market Wasner & Co. 26.3
Portfolio FAO Paine Webber and Managed Assets
(Class I) Sundry Holdings
Attn: Joe Domizio
200 Stevens Drive
Lester, PA 19113
SAXON and Co. 69.6
FBO Paine Webber
P.O. Box 7780 1888
Philadelphia, PA 19182
BEDFORD Municipal Joel E. Smilow 5.65
Money Market 100 Beachside Avenue
(Class M) Greenfarm, CT 06436
BEA INTERNATIONAL EQUITY NORTHWESTERN MEMORIAL CORPORATION 5.0
(Class T) AND AFFILIATES
259 EAST ERIE STREET, 7TH FLOOR
CHICAGO, IL 60611
</TABLE>
28
<PAGE>
<TABLE>
<CAPTION>
PORTFOLIO NAME AND ADDRESS PERCENT OWNED
- ------------------------------- --------------------------------------------- -------------
<S> <C> <C>
BEA High Yield Portfolio Chase Manhattan Bankers Trustee for 13.0
(Class U) Kendale Company Master Pension Plan
Attn: Mark Tesoriero
3 Metrotech Center, 6th Floor
Brooklyn, NY 11245
TEMPLE Inland Master Retirement Trust 9.8
303 South Temple Drive
Diboll, TX 75941
GUENTER Full Trst Michelin North America Inc. 16.0
Master Trust
P. O. Box 19001
Greenville, SC 29602-9001
GEORGETOWN University Retirement Trust Plan 6.3
Trust
Suite G-05 Maguire Hall
Georgetown University
Washington, DC 20057-1019
C S FIRST BOSTON PENSION FUND 9.5
PARK AVENUE PLAZA, 34TH FLOOR
55 E. 52ND STREET
NEW YORK, NY 10055
ATTN: STEVE MEDICI
SC JOHNSON & SON, INC. RETIREMENT PLAN 12.9
1525 HOWE STREET
RACINE, WI 53403
BEA Emerging Markets Equity Wachovia Bank North Carolina Trust for 13.8
Portfolio Carolina Power & Light Co. Supplemental
(Class V) Retirement Trust
301 N. Main Street
Winston-Salem, NC 27101
NORTHERN Trust Company Trustee for Texas 19.0
Instruments Employee Plan
P.O. Box 92956
Chicago, IL 60675-2956
HALL Family Foundation 19.1
P.O. Box 419580
Kansas City, MO 64208
ARKANSAS Public Emploees Retirement System 9.6
124 W. Capitol Avenue
Little Rock, AR 72201
</TABLE>
29
<PAGE>
<TABLE>
<CAPTION>
PORTFOLIO NAME AND ADDRESS PERCENT OWNED
- ------------------------------- --------------------------------------------- -------------
<S> <C> <C>
NORTHERN Trust 11.4
Trustee for Pillsbury
P.O. Box 92956
Chicago, IL 60675
AMHERST H. Wilder Foundation 5.4
919 Lafond Avenue
St. Paul, MN 55104
BEA US Core Equity Portfolio Bank of New York 52.3
(Class X) Trust APU Buckeye Pipeline
One Wall Street
New York, NY 10286
WERNER & Pfleiderer Pension 8.9
Plan Employees
663 E. Crescent Avenue
Ramsey, NJ 07446
BEA US Core Fixed New England UFCW & Employers' Pension 21.1
Income Portfolio Fund Board of Trustees
(Class Y) 161 Forbes Road, Suite 201
Braintree, MA 02184
BANKERS Trust 16.7
Trust Pechniney Corp. Pension Master Trust
34 Exchange Place, 4th Floor
Jersey City, NJ 07302
PATTERSON & Co. 7.5
P.O. Box 7829
Philadelphia, PA 19102
MAC & Co 5.9
FAO 176-655
ROBF1766552
Mutual Funds Operations
P. O. Box 3198
Pittsburgh, PA 15230-3198
Bank of New York 7.7
Trst Fenway Partners Master Trust
One Wall Street, 12th floor
New York, NY 10286
CITIBANK NA 12.0
Trst CS First Boston Corp Emp S/P
Attn: Sheila Adams
111 Wall Street, 20th floor Z 1
New York, NY 10043
</TABLE>
30
<PAGE>
<TABLE>
<CAPTION>
PORTFOLIO NAME AND ADDRESS PERCENT OWNED
- ------------------------------- --------------------------------------------- -------------
<S> <C> <C>
BEA Global Fixed Income Sunkist Master Trust 36.0
Portfolio (Class Z) 14130 Riverside Drive
Sherman Oaks, CA 91423
PATTERSON & Co. 25.8
P. O. Box 7829
Philadelphia, PA 19101
KEY Trust Co. of Ohio 20.8
FBO Eastern Enterp. Collective Inv. Trust
P.O. Box 901536
Cleveland, OH 44202-1559
MARY E. MORTEN 6.2
C/O CREDIT SUISSE NEW YORK
12 E. 49TH STREET, 40TH FLOOR
NEW YORK, NY 1017
ATTN: PORTFOLIO MANAGEMENT
BEA Municipal Bond Fund William A. Marquard 37.7
Portfolio 2199 Maysville Rd.
(Class AA) Carlisle, KY 40311
ARNOLD Leon 12.6
c/o Fiduciary Trust Company
P.O. Box 3199
Church Street Station
New York, NY 10008
IRWIN Bard 8.8
1750 North East 183rd St. North
Miami Beach, FL 33160
MATTHEW M. SLOVES AND DIANE DECKER SLOVES 5.8
TENANTS IN COMMON
1304 STAGECOACH ROAD, S.E.
ALBUQUERQUE, NM 87123
S. FINKELSTEIN FAMILY Fund 5.1
27 SHELDRAKE ROAD
SCARSDALE, NY 10583
JANNEY Montgomery Scott Janney Montgomery Scott 100
Money Market Portfolio 1801 Market Street
(Class Alpha 1) Philadelphia, PA 19103-1675
Janney Montgomery Scott Janney Montgomery Scott 100
Municipal Money Market 1801 Market Street
Portfolio Philadelphia, PA 19103-1675
(Class Alpha 2)
</TABLE>
31
<PAGE>
<TABLE>
<CAPTION>
PORTFOLIO NAME AND ADDRESS PERCENT OWNED
- ------------------------------- --------------------------------------------- -------------
<S> <C> <C>
Janney Montgomery Scott Janney Montgomery Scott 100
Government Obligations Money 1801 Market Street
Market Portfolio Philadelphia, PA 19103-1675
(Class Alpha 3)
Janney Montgomery Scott Janney Montgomery Scott 100
New York Municipal Money 1801 Market Street
Market Portfolio Philadelphia, PA 19103-1675
(Class Alpha 4)
</TABLE>
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.
FINANCIAL STATEMENTS. No financial statements are supplied because,
as of the date of the Prospectus and this Statement of Additional Information,
the Funds had no operating history.
32
<PAGE>
APPENDIX A
RATINGS OF DEBT SECURITIES
STANDARD & POOR'S CORPORATION
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
B predominantly speculative with respect to capacity to pay interest
CCC and repay principal in accordance with the terms of the obligation.
CC 'BB' indicates the lowest degree of speculation and 'CC' the
highest degree of 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.
(+) 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.
A-1
<PAGE>
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.
NOTES
Note rating symbols are as follows:
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.
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:
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.
A-2
<PAGE>
D This rating indicates that the issue is either in default or is
expected to be in default upon maturity.
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.
AA
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.
A
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 secured. 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.
A-3
<PAGE>
BA
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 moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B
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.
CA
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.
C
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.
A-4
<PAGE>
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.
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>
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
---------------------------------
(a) Financial Statements:
(1) Included in Part A of the Registration Statement:
None.
Included in Part B of the Registration Statement:
None.
Notes to Financial Statements
<TABLE>
<CAPTION>
(b) Exhibits: See Note #
----------
<C> <S> <C>
(1) (a) Articles of Incorporation of
Registrant 1
(b) Articles Supplementary of Registrant. 1
(c) Articles of Amendment to Articles of
Incorporation of Registrant. 2
(d) Articles Supplementary of Registrant. 2
(e) Articles Supplementary of Registrant. 5
(f) Articles Supplementary of Registrant. 6
(g) Articles Supplementary of Registrant. 9
(h) Articles Supplementary of Registrant. 10
(i) Articles Supplementary of Registrant. 14
(j) Articles Supplementary of Registrant. 14
(k) Articles Supplementary of Registrant. 19
(l) Articles Supplementary of Registrant. 19
(m) Articles Supplementary of Registrant. 19
(n) Articles Supplementary of Registrant. 19
(o) Articles Supplementary of Registrant. 20
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
See Note #
----------
<C> <S> <C>
(p) Articles Supplementary of Registrant.
(2) Amended By-Laws adopted August 16, 1988. 3
(a) Amendment to By-Laws adopted July 25, 1989. 4
(b) By-Laws amended through October 24, 1989. 5
(c) BY-LAWS AMENDED THROUGH APRIL 24, 1996.
(3) None.
(4) Specimen Certificates
a) SafeGuard Equity Growth and Income Shares 3
b) SafeGuard Fixed Income Shares 3
c) SafeGuard Balanced Shares 3
d) SafeGuard Tax-Free Shares 3
e) SafeGuard Money Market Shares 3
f) SafeGuard Tax-Free Money Market Shares 3
g) Cash Preservation Money Market Shares 3
h) Cash Preservation Tax-Free Money
Market Shares 3
i) Sansom Street Money Market Shares 3
j) Sansom Street Tax-Free Money Market Shares 3
k) Sansom Street Government Obligations Money 3
Market Shares
l) Bedford Money Market Shares 3
m) Bedford Tax-Free Money Market Shares 3
n) Bedford Government Obligations Money Market 3
Shares
o) Bedford New York Municipal Money
Market Shares 5
p) SafeGuard Government Securities Shares 5
q) Income Opportunities High Yield Bond
Shares 6
r) Bradford Tax-Free Money Market Shares 8
s) Bradford Government Obligations Money
Market Shares 8
t) Alpha 1 Money Market Shares 8
u) Alpha 2 Tax-Free Money Market Shares 8
v) Alpha 3 Government Obligations Money Market
Shares 8
w) Alpha 4 New York Municipal Money Market
Shares 8
x) Beta 1 Money Market Shares 8
y) Beta 2 Tax-Free Money Market Shares 8
z) Beta 3 Government Obligations Money Market
Shares 8
aa) Beta 4 New York Municipal Money Market
Shares 8
bb) Gamma 1 Money Market Shares 8
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
See Note #
----------
<C> <S> <C>
cc) Gamma 2 Tax-Free Money Market Shares 8
dd) Gamma 3 Government Obligations Money
Market Shares 8
ee) Gamma 4 New York Municipal Money
Market Shares 8
ff) Delta 1 Money Market Shares 8
gg) Delta 2 Tax-Free Money Market Shares 8
hh) Delta 3 Government Obligations Money
Market Shares 8
ii) Delta 4 New York Municipal Money
Market Shares 8
jj) Epsilon 1 Money Market Shares 8
kk) Epsilon 2 Tax-Free Money Market Shares 8
ll) Epsilon 3 Government Obligations Money
Market Shares 8
mm) Epsilon 4 New York Municipal Money
Market Shares 8
nn) Zeta 1 Money Market Shares 8
oo) Zeta 2 Tax-Free Money Market Shares 8
pp) Zeta 3 Government Obligations Money
Market Shares 8
qq) Zeta 4 New York Municipal Money Market
Shares
rr) Eta 1 Money Market Shares 8
ss) Eta 2 Tax-Free Money Market Shares 8
tt) Eta 3 Government Obligations Money Market
Shares 8
uu) Eta 4 New York Municipal Money Market
Shares 8
vv) Theta 1 Money Market Shares 8
ww) Theta 2 Tax-Free Money Market Shares 8
xx) Theta 3 Government Obligations Money
Market Shares 8
yy) Theta 4 New York Municipal Money Market
Shares 8
zz) BEA International Equity Shares 9
a1) BEA Strategic Fixed Income Shares 9
a2) BEA Emerging Markets Equity Shares 9
a3) Laffer/Canto Equity Shares 12
a4) BEA U.S. Core Equity Shares 13
a5) BEA U.S. Core Fixed Income Shares 13
a6) BEA Global Fixed Income Shares 13
a7) BEA Municipal Bond Shares 13
a8) BEA Balanced Shares 16
a9) BEA Short Duration Shares 16
a10) Warburg Growth & Income Shares 18
a11) Warburg Balanced Shares 18
(5) (a) Investment Advisory Agreement (Money) 3
between Registrant and Provident
Institutional Management Corporation,
dated as of August 16, 1988.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
See Note #
----------
<C> <S> <C>
(b) Sub-Advisory Agreement (Money) 3
between Provident Institutional
Management Corporation and Provident
National Bank, dated as of
August 16, 1988.
(c) Investment Advisory Agreement 3
(Tax -Free Money) between Registrant and
Provident Institutional Management
Corporation, dated as of August 16, 1988.
(d) Sub-Advisory Agreement (Tax-Free Money) 3
between Provident Institutional Management
Corporation and Provident National Bank,
dated as of August 16, 1988.
(e) Investment Advisory Agreement 3
(Government Money) between Registrant and
Provident Institutional Management
Corporation, dated as of August 16, 1988.
(f) Sub-Advisory Agreement (Government Money) 3
between Provident Institutional Management
Corporation and Provident National Bank,
dated as of August 16, 1988.
(k) Investment Advisory Agreement (Balanced) 3
between Registrant and Provident
Institutional Management Corporation,
dated as of August 16, 1988.
(l) Sub-Advisory Agreement (Balanced) between 4
Provident Institutional Management
Corporation and Provident National Bank,
dated as of August 16, 1988.
(m) Investment Advisory Agreement (Tax-Free) 3
between Registrant and Provident
Institutional Management Corporation,
dated as of August 16, 1988.
(n) Sub-Advisory Agreement (Tax-Free) between 3
Provident Institutional Management
Corporation and Provident National Bank,
dated as of August 16, 1988.
(s) Investment Advisory Agreement 8
(Government Securities) between Registrant
and Provident Institutional Management
Corporation dated as of April 8, 1991.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
See Note #
----------
<C> <S> <C>
(t) Investment Advisory Agreement 8
(High Yield Bond) between Registrant
and Provident Institutional Management
Corporation dated as of April 8, 1991.
(u) Sub-Advisory Agreement (High Yield Bond) 8
between Registrant and Warburg,
Pincus Counsellors, Inc.
dated as of April 8, 1991.
(v) Investment Advisory Agreement 9
(New York Municipal Money Market) between
Registrant and Provident Institutional
Management Corporation dated
November 5, 1991.
(w) Investment Advisory Agreement (Equity) 10
between Registrant and Provident
Institutional Management Corporation
dated November 5, 1991.
(x) Sub-Advisory Agreement (Equity) between 10
Registrant, Provident Institutional
Management Corporation and Warburg,
Pincus Counsellors, Inc. dated
November 5, 1991.
(y) Investment Advisory Agreement 10
(Tax-Free Money Market) between
Registrant and Provident Institutional
Management Corporation dated
April 21, 1992.
(z) Investment Advisory Agreement 11
(BEA International Equity Portfolio)
between Registrant and BEA Associates.
(aa) Investment Advisory Agreement 11
(BEA Strategic Fixed Income Portfolio)
between Registrant and BEA Associates.
(bb) Investment Advisory Agreement 11
(BEA Emerging Markets Equity Portfolio)
between Registrant and BEA Associates.
(cc) Investment Advisory Agreement 14
(Laffer/Canto Equity Portfolio)
between Registrant and Laffer Advisors
Incorporated, dated as of July 21, 1993.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
See Note #
----------
<C> <S> <C>
(dd) Sub-Advisory Agreement 12
(Laffer/Canto Sector Equity Portfolio)
between PNC Institutional Management
Corporation and Laffer Advisors
Incorporated, dated as of July 21, 1993.
(ee) Investment Advisory Agreement 15
(BEA U.S. Core Equity Portfolio) between
Registrant and BEA Associates, dated as
of October 27, 1993.
(ff) Investment Advisory Agreement 15
(BEA U.S. Core Fixed Income Portfolio)
between Registrant and BEA Associates,
dated as of October 27, 1993.
(gg) Investment Advisory Agreement 15
(BEA Global Fixed Income Portfolio)
between Registrant and BEA Associates,
dated as of October 27, 1993.
(hh) Investment Advisory Agreement 15
(BEA Municipal Bond Fund Portfolio)
between Registrant and BEA Associates,
dated as of October 27, 1993.
(ii) Investment Advisory Agreement 14
(Warburg Pincus Growth and Income Fund)
between Registrant and Warburg,
Pincus Counsellors, Inc.
(jj) Investment Advisory Agreement 16
(Warburg Pincus Balanced Fund) between
Registrant and Warburg, Pincus Counsellors,
Inc.
(kk) Form of Investment Advisory Agreement 16
(BEA Balanced) between Registrant and
BEA Associates.
(ll) Form of Investment Advisory Agreement 16
(BEA Short Duration Portfolio) between
Registrant and BEA Associates.
(mm) Investment Advisory Agreement (Warburg 21
Pincus Tax Free Fund) between Registrant
and Warburg, Pincus Counsellors, Inc.
(NN) INVESTMENT ADVISORY AGREEMENT (NUMERIC
MICRO CAP FUND) BETWEEN REGISTRANT AND
NUMERIC INVESTORS, L.P.
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
See Note #
----------
<C> <S> <C>
(OO) INVESTMENT ADVISORY AGREEMENT (NUMERIC
GROWTH FUND) BETWEEN REGISTRANT AND
NUMERIC INVESTORS, L.P.
(PP) INVESTMENT ADVISORY AGREEMENT (NUMERIC
GROWTH & VALUE FUND) BETWEEN REGISTRANT
AND NUMERIC INVESTORS, L.P.
(6) (r) Distribution Agreement and Supplements 8
(Classes A through Q) between the
Registrant and Counsellors Securities Inc.
dated as of April 10, 1991.
(s) Distribution Agreement Supplement 9
(Classes L, M, N and O) between the
Registrant and Counsellors Securities
Inc. dated as of November 5, 1991.
(t) Distribution Agreement Supplements 9
(Classes R, S, and Alpha 1 through Theta 4)
between the Registrant and Counsellors
Securities Inc. dated as of November
5, 1991.
(u) Distribution Agreement Supplement 10
(Classes T, U and V) between the Registrant
and Counsellors Securities Inc.
dated as of September 18, 1992.
(v) Distribution Agreement Supplement 14
(Class W) between the Registrant and
Counsellors Securities Inc. dated as of
July 21, 1993.
(w) Distribution Agreement Supplement 14
(Classes X, Y, Z and AA) between the
Registrant and Counselors Securities Inc.
(x) Distribution Agreement Supplement 18
(Classes BB and CC) between Registrant
and Counsellor's Securities Inc. dated
as of October 26, 1994.
(y) Distribution Agreement Supplement 18
(Classes DD and EE) between Registrant and
Counsellor's Securities Inc. dated as of
October 26, 1994.
(z) Form of Distribution Agreement Supplement 19
(Classes L, M, N and O) between the
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
See Note #
----------
<C> <S> <C>
Registrant and Counsellor's Securities
Inc.
(aa) Form of Distribution Agreement Supplement 19
(Classes R, S) between the Registrant and
Counsellor's Securities Inc.
(bb) Distribution Agreement Supplements 19
(Classes Alpha 1 through Theta 4) between
the Registrant and Counsellor's Securities
Inc.
(cc) Distribution Agreement Supplement Janney 20
Classes (Alpha 1, Alpha 2, Alpha 3 and
Alpha 4 between the Registrant and
Counsellor's Securities, Inc.
(DD) DISTRIBUTION AGREEMENT SUPPLEMENT NUMERIC
CLASSES (CLASSES FF, GG AND HH)
(7) Fund Office Retirement Profit-Sharing and 7
Trust Agreement, dated as of October 24,
1990.
(8) (a) Custodian Agreement between Registrant and 3
Provident National Bank dated as of
August 16, 1988.
(b) Sub-Custodian Agreement among 10
The Chase Manhattan Bank, N.A., the
Registrant and Provident National Bank,
dated as of July 13, 1992, relating to
custody of Registrant's foreign securities.
(e) Amendment No. 1 to Custodian Agreement 9
dated August 16, 1988.
(f) Agreement between Brown Brothers Harriman 10
& Co. and Registrant on behalf of
BEA International Equity Portfolio,
dated September 18, 1992.
(g) Agreement between Brown Brothers Harriman 10
& Co. and Registrant on behalf of BEA
Strategic Fixed Income Portfolio, dated
September 18, 1992.
(h) Agreement between Brown Brothers Harriman 10
& Co. and Registrant on behalf of
BEA Emerging Markets Equity Portfolio,
dated September 18, 1992.
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
See Note #
----------
<C> <S> <C>
(i) Agreement between Brown Brothers Harriman 15
& Co. and Registrant on behalf of BEA
Emerging Markets Equity, BEA International
Equity, BEA Strategic Fixed Income and BEA
Global Fixed Income Portfolios,
dated as of November 29, 1993.
(j) Agreement between Brown Brothers Harriman 15
& Co. and Registrant on behalf of
BEA U.S. Core Equity and BEA U.S. Core
Fixed Income Portfolio dated as of
November 29, 1993.
(k) Custodian Contract between 18
Registrant and State Street Bank and
Trust Company.
(L) FORM OF CUSTODY AGREEMENT BETWEEN THE
REGISTRANT AND CUSTODIAL TRUST COMPANY
ON BEHALF OF NUMERIC MICRO CAP FUND,
NUMERIC GROWTH FUND AND NUMERIC GROWTH
& VALUE FUND, PORTFOLIOS OF THE REGISTRANT.
(9) (a) Transfer Agency Agreement (Sansom Street) 3
between Registrant and Provident
Financial Processing Corporation,
dated as of August 16, 1988.
(b) Transfer Agency Agreement (Cash 3
Preservation) between Registrant and
Provident Financial
Processing Corporation, dated as of
August 16, 1988.
(c) Shareholder Servicing Agreement 3
(Sansom Street Money).
(d) Shareholder Servicing Agreement 3
(Sansom Street Tax-Free Money).
(e) Shareholder Servicing Agreement 3
(Sansom Street Government Money).
(f) Shareholder Services Plan 3
(Sansom Street Money).
(g) Shareholder Services Plan 3
(Sansom Street Tax-Free Money).
(h) Shareholder Services Plan 3
(Sansom Street Government Money).
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
See Note #
----------
<C> <S> <C>
(i) Transfer Agency Agreement (SafeGuard) 3
between Registrant and Provident Financial
Processing Corporation, dated as of
August 16, 1988.
(j) Transfer Agency Agreement (Bedford) 3
between Registrant and Provident
Financial Processing Corporation,
dated as of August 16, 1988.
(k) Transfer Agency Agreement 7
(Income Opportunities) between Registrant
and Provident Financial Processing
Corporation dated June 25, 1990.
(l) Administration and Accounting Services 8
Agreement between Registrant and
Provident Financial Processing
Corporation, relating to Government
Securities Portfolio, dated as of
April 10, 1991.
(m) Administration and Accounting Services 9
Agreement between Registrant and
Provident Financial Processing
Corporation, relating to
New York Municipal Money Market
Portfolio dated as of November 5, 1991.
(n) Administration and Accounting Services 9
Agreement between Registrant and Provident
Financial Processing Corporation, relating
to Equity Portfolio dated as of
November 5, 1991.
(o) Administration and Accounting Services 9
Agreement between Registrant and Provident
Financial Processing Corporation, relating
to High Yield Bond Portfolio,
dated as of April 10, 1991.
(p) Administration and Accounting Services 10
Agreement between Registrant and Provident
Financial Processing Corporation
(International) dated September 18, 1992.
(q) Administration and Accounting Services 10
Agreement between Registrant and Provident
Financial Processing Corporation (Strategic)
dated September 18, 1992;
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
See Note #
----------
<C> <S> <C>
(r) Administration and Accounting Services 10
Agreement between Registrant and Provident
Financial Processing Corporation (Emerging)
dated September 18, 1992.
(s) Transfer Agency Agreement and Supplements 9
(Bradford, Alpha, Beta, Gamma, Delta,
Epsilon, Zeta, Eta and Theta) between
Registrant and Provident Financial
Processing Corporation dated as of
November 5, 1991.
(t) Transfer Agency Agreement Supplement 10
(BEA) between Registrant and Provident
Financial Processing Corporation
dated as of September 18, 1992.
(u) Administrative Services Agreement between 10
Registrant and Counsellor's Fund
Services, Inc. (BEA Portfolios)
dated September 18, 1992.
(v) Administration and Accounting Services 10
Agreement between Registrant and Provident
Financial Processing Corporation, relating
to Tax-Free Money Market Portfolio, dated
as of April 21, 1992.
(w) Transfer Agency Agreement Supplement 12
(Laffer) between Registrant and PFPC Inc.
dated as of July 21, 1993.
(x) Administration and Accounting Services 12
Agreement between Registrant and PFPC Inc.,
relating to Laffer/Canto Equity Fund,
dated July 21, 1993.
(y) Transfer Agency Agreement Supplement 15
(BEA U.S. Core Equity, BEA U.S.
Core Fixed Income, BEA Global Fixed Income
and BEA Municipal Bond Fund) between
Registrant and PFPC Inc. dated as of
October 27, 1993.
(z) Administration and Accounting Services 15
Agreement between Registrant and PFPC Inc.
relating to (Core Equity) dated as of
October 27, 1993.
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
See Note #
----------
<C> <S> <C>
(aa) Administration and Accounting Services 15
Agreement between Registrant and PFPC Inc.
(Core Fixed Income) dated
October 27, 1993.
(bb) Administration and Accounting Services 15
Agreement between Registrant and
PFPC Inc. (International Fixed Income)
dated October 27, 1993
(cc) Administration and Accounting Services 15
Agreement between Registrant and PFPC Inc.
(Municipal Bond) dated October 27, 1993.
(dd) Transfer Agency Agreement Supplement 18
(BEA Balanced and Short Duration) between
Registrant and PFPC Inc. dated
October 26, 1994.
(ee) Administration and Accounting Services 18
Agreement between Registrant and PFPC Inc.
(BEA Balanced) dated October 26, 1994.
(ff) Administration and Accounting Services 18
Agreement between Registrant and PFPC Inc.
(BEA Short Duration) dated
October 26, 1994.
(gg) Co-Administration Agreement between 18
Registrant and PFPC Inc. (Warburg Pincus
Growth & Income Fund) dated
August 4, 1994.
(hh) Co-Administration Agreement between 18
Registrant and PFPC Inc. (Warburg Pincus
Balanced Fund) dated August 4, 1994.
(ii) Co-Administration Agreement between 18
Registrant and Counsellors Funds Services,
Inc. (Warburg Pincus Growth & Income Fund)
dated August 4, 1994.
(jj) Co-Administration Agreement between 18
Registrant and Counsellors Funds Services,
Inc. (Warburg Pincus Balanced Fund) dated
August 4, 1994.
(kk) Administrative Services Agreement Supplement 18
between Registrant and Counsellor's Fund
Services, Inc. (BEA Classes) dated
October 26, 1994.
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
See Note #
----------
<C> <S> <C>
(ll) Co-Administration Agreement between 21
Registrant and PFPC Inc. (Warburg Pincus
Tax Free Fund) dated March 31, 1995.
(mm) Co-Administration Agreement between 21
Registrant and Counsellors Funds
Services, Inc. (Warburg Pincus Tax Free
Fund) dated March 31, 1995.
(nn) Transfer Agency and Service Agreement 21
between Registrant and State Street
Bank and Trust Company and PFPC, Inc.
dated February 1, 1995.
(oo) Supplement to Transfer Agency and Service 21
Agreement between Registrant, State Street
Bank and Trust Company, Inc. and PFPC
dated April 10, 1995.
(pp) Amended and Restated Credit Agreement dated 22
December 15, 1994.
(QQ) TRANSFER AGENCY AGREEMENT SUPPLEMENT (NUMERIC
MICRO CAP FUND, NUMERIC GROWTH FUND AND
NUMERIC GROWTH & VALUE FUND) BETWEEN
REGISTRANT AND PFPC, INC. DATED APRIL 24, 1996.
(RR) ADMINISTRATION AND ACCOUNTING SERVICES
AGREEMENT BETWEEN REGISTRANT AND PFPC, INC.
(NUMERIC MICRO CAP FUND) DATED APRIL 24, 1996.
(SS) ADMINISTRATION AND ACCOUNTING SERVICES
AGREEMENT BETWEEN REGISTRANT AND PFPC, INC.
(NUMERIC GROWTH FUND) DATED APRIL 24, 1996.
(TT) ADMINISTRATION AND ACCOUNTING SERVICES
AGREEMENT BETWEEN REGISTRANT AND PFPC, INC.
(NUMERIC GROWTH & VALUE FUND) DATED APRIL 24,
1996.
(UU) ADMINISTRATIVE SERVICES AGREEMENT BETWEEN
REGISTRANT AND COUNSELLORS FUND SERVICES,
INC. (NUMERIC MICRO CAP FUND, NUMERIC
GROWTH FUND AND NUMERIC GROWTH &
VALUE FUND) DATED APRIL 24, 1996.
(10)(a) Opinion AND Consent of Counsel.
(11) Consent of Independent Accountants.
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
See Note #
----------
<C> <C> <S> <C>
(12) None.
(13)(a) Subscription Agreement (relating to 2
Classes A through N).
(b) Subscription Agreement between Registrant 7
and Planco Financial Services, Inc.,
relating to Classes O and P.
(c) Subscription Agreement between Registrant and 7
Planco Financial Services, Inc., relating to
Class Q.
(d) Subscription Agreement between Registrant 9
and Counsellors Securities Inc. relating to
Classes R, S, and Alpha 1 through Theta 4.
(e) Subscription Agreement between Registrant 10
and Counsellors Securities Inc. relating to
Classes T, U and V.
(f) Subscription Agreement between Registrant 18
and Counsellor's Securities Inc. relating to
Classes BB and CC.
(g) Purchase Agreement between Registrant and 21
Counsellors Securities Inc. relating to
Class DD (Warburg Pincus Growth & Income
Fund Series 2).
(h) Purchase Agreement between Registrant and 21
Counsellors Securities Inc. relating to
Class EE (Warburg Pincus Balanced Fund
Series 2).
(I) PURCHASE AGREEMENT BETWEEN REGISTRANT AND
NUMERIC INVESTORS, L.P. RELATING TO
CLASS FF (NUMERIC MICRO CAP FUND).
(J) PURCHASE AGREEMENT BETWEEN REGISTRANT AND
NUMERIC INVESTORS, L.P. RELATING TO
CLASS GG (NUMERIC GROWTH FUND).
(K) PURCHASE AGREEMENT BETWEEN REGISTRANT AND
NUMERIC INVESTORS, L.P. RELATING TO
CLASS HH (NUMERIC GROWTH & VALUE FUND).
(14) None.
(15)(a) Plan of Distribution (Sansom Street Money). 3
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
See Note #
----------
<C> <S> <C> <C>
(b) Plan of Distribution (Sansom Street Tax-Free 3
Money).
(c) Plan of Distribution (Sansom Street 3
Government Money).
(d) Plan of Distribution (Cash Preservation 3
Money).
(e) Plan of Distribution (Cash Preservation 3
Tax-Free Money).
(f) Plan of Distribution (SafeGuard Equity). 3
(g) Plan of Distribution 3
(SafeGuard Fixed Income).
(h) Plan of Distribution (SafeGuard Balanced). 3
(i) Plan of Distribution (SafeGuard Tax-Free). 3
(j) Plan of Distribution (SafeGuard Money). 3
(k) Plan of Distribution (SafeGuard Tax-Free
Money). 3
(l) Plan of Distribution (Bedford Money). 3
(m) Plan of Distribution (Bedford Tax-Free 3
Money).
(n) Plan of Distribution (Bedford Government 3
Money).
(o) Plan of Distribution (Bedford New York 7
Municipal Money).
(p) Plan of Distribution (SafeGuard Government 7
Securities).
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
See Note #
----------
<C> <C> <S> <C>
(q) Plan of Distribution (Income Opportunities 7
High Yield).
(r) Amendment No. 1 to Plans of Distribution 8
(Classes A through Q).
(s) Plan of Distribution (Bradford Tax-Free 9
Money).
(t) Plan of Distribution (Bradford Government 9
Money).
(u) Plan of Distribution (Alpha Money). 9
(v) Plan of Distribution (Alpha Tax-Free 9
Money).
(w) Plan of Distribution (Alpha Government 9
Money).
(x) Plan of Distribution (Alpha New York 9
Money).
(y) Plan of Distribution (Beta Money). 9
(z) Plan of Distribution (Beta Tax-Free 9
Money).
(aa) Plan of Distribution (Beta Government 9
Money).
(bb) Plan of Distribution (Beta New York 9
Money).
(cc) Plan of Distribution (Gamma Money). 9
(dd) Plan of Distribution (Gamma Tax-Free 9
Money).
(ee) Plan of Distribution (Gamma Government 9
Money).
(ff) Plan of Distribution (Gamma New York 9
Money).
(gg) Plan of Distribution (Delta Money). 9
(hh) Plan of Distribution (Delta Tax-Free 9
Money).
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
See Note #
----------
<C> <C> <S> <C>
(ii) Plan of Distribution (Delta Government 9
Money).
(jj) Plan of Distribution (Delta New York 9
Money).
(kk) Plan of Distribution (Epsilon Money). 9
(ll) Plan of Distribution (Epsilon Tax-Free 9
Money).
(mm) Plan of Distribution (Epsilon Government 9
Money).
(nn) Plan of Distribution (Epsilon New York 9
Money).
(oo) Plan of Distribution (Zeta Money). 9
(pp) Plan of Distribution (Zeta Tax-Free 9
Money).
(qq) Plan of Distribution (Zeta Government 9
Money).
(rr) Plan of Distribution (Zeta New York 9
Money).
(ss) Plan of Distribution (Eta Money). 9
(tt) Plan of Distribution (Eta Tax-Free Money). 9
(uu) Plan of Distribution (Eta Government 9
Money).
(vv) Plan of Distribution (Eta New York 9
Money).
(ww) Plan of Distribution (Theta Money). 9
(xx) Plan of Distribution (Theta Tax-Free 9
Money).
(yy) Plan of Distribution (Theta Government 9
Money).
(zz) Plan of Distribution (Theta New York 9
Money).
(aaa) Plan of Distribution (Laffer Equity). 12
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
See Note #
----------
<C> <C> <S> <C>
(bbb) Plan Distribution (Warburg Pincus Growth 18
& Income Series 2).
(ccc) Plan of Distribution (Warburg Pincus 18
Balanced Series 2).
(16) Schedule of Computation of Performance 3
Quotations.
(17) None.
(18) Rule 18f-3 Plan. 21
(19) Representation of Ballard Spahr Andrews & Ingersoll
pursuant to Rule 485(b) under the Securities Act of
1933.
</TABLE>
_________________
Note #
- ------
1 Incorporated herein by reference to the same exhibit number of Registrant's
Registration Statement (No. 33-20827) filed on March 24, 1988.
2 Incorporated herein by reference to the same exhibit number of Pre-
Effective Amendment No. 2 to Registrant's Registration Statement (No. 33-
20827) filed on July 12, 1988.
3 Incorporated herein by reference to the same exhibit number of Post-
Effective Amendment No. 1 to Registrant's Registration Statement (No. 33-
20827) filed on March 23, 1989.
4 Incorporated herein by reference to the same exhibit number of Post-
Effective Amendment No. 2 to Registrant's Registration Statement (No. 33-
20827) filed on October 25, 1989.
5 Incorporated herein by reference to the same exhibit number of Post-
Effective Amendment No. 3 to the Registrant's Registration Statement (No.
33-20827) filed on April 27, 1990.
6 Incorporated herein by reference to the same exhibit number of Post-
Effective Amendment No. 4 to the Registrant's Registration Statement (No.
33-20827) filed on May 1, 1990.
7 Incorporated herein by reference to the same exhibit number of Post-
Effective Amendment No. 5 to the Registrant's Registration Statement (No.
33-20827) filed on December 14, 1990.
18
<PAGE>
Note #
- ------
8 Incorporated herein by reference to the same exhibit number of Post-
Effective Amendment No. 6 to the Registrant's Registration Statement (No.
33-20827) filed on October 24, 1991.
9 Incorporated herein by reference to the same exhibit number of Post-
Effective Amendment No. 7 to the Registrant's Registration Statement (No.
33-20827) filed on July 15, 1992.
10 Incorporated herein by reference to the same exhibit number of Post-
Effective Amendment No. 8 to the Registrant's Registration Statement (No.
33-20827) filed on October 22, 1992.
11 Incorporated herein by reference to the same exhibit number of Post-
Effective Amendment No. 9 to the Registrant's Registration Statement (No.
33-20827) filed on December 16, 1992.
12 Incorporated herein by reference to the same exhibit number of Post-
Effective Amendment No. 11 to the Registrant's Registrant Statement (No.
33-20827) filed on June 21, 1993.
13 Incorporated herein by reference to the same exhibit number Post-Effective
Amendment No. 12 to the Registrant's Registration Statement (No. 33-20827)
filed on July 27, 1993.
14 Incorporated herein by reference to the same exhibit number of Post-
Effective Amendment No. 13 to the Registrant's Registration Statement (No.
33-20827) filed on October 29, 1993.
15 Incorporated herein by reference to the same exhibit number of Post-
Effective Amendment No. 14 to the Registrant's Registration Statement (No.
33-20827) filed on December 21, 1993.
16 Incorporated herein by reference to the same exhibit number of Post-
Effective Amendment No. 19 to the Registrant's Registration Statement (No.
33-20827) filed on October 14, 1994.
17 Incorporated herein by reference to the same exhibit number of Post-
Effective Amendment No. 20 to the Registrant's Registration Statement (No.
33-20827) filed on October 21, 1994.
18 Incorporated herein by reference to the same exhibit number of Post-
Effective Amendment No. 21 to the Registrant's Registration Statement (No.
33-20827) filed on October 28, 1994.
19 Incorporated herein by reference to the same exhibit number of Post-
Effective Amendment No. 22 to the Registrant's Registration Statement (No.
33-20827) filed on December 19, 1994.
19
<PAGE>
20 Incorporated herein by reference to the same exhibit number of Post-
Effective Amendment No. 27 to the Registrant's Registration Statement (No.
33-20827) filed on March 31, 1995.
21 Incorporated herein by reference to the same exhibit number of Post-
Effective Amendment No. 28 to the Registrant's Registration Statement (No.
33-20827) filed on October 6, 1995.
22 Incorporated herein by reference to the same exhibit number of Post-
Effective Amendment No. 29 to the Registrant's Registration Statement (No.
33-20827) filed on October 25, 1995.
<TABLE>
<C> <C> <S>
Item 25. Persons Controlled by or under Common Control with
Registrant
None.
Item 26. Number of Holders of Securities
</TABLE>
The following information is given as of MAY 7, 1996.
<TABLE>
<CAPTION>
Title of Class of Common Stock Number of Record Holders
------------------------------ ------------------------
<C> <S>
a) RBB Money Market 11
B) RBB Municipal Money Market 2
C) Cash Preservation Money MARKET 35
D) Cash Preservation Municipal Money MARKET 68
E) Sansom Street Money Market 3
F) Sansom Street Municipal Money Market 0
G) Sansom Street Government Obligations Money Market 0
H) Bedford Money MARKET 97,056
I) Bedford Municipal Money MARKET 4,759
J) Bedford Government Obligations MONEY Market 3,665
K) Bedford New York Municipal Money MARKET 2,880
L) RBB Government SECURITIES 564
M) Bradford Municipal Money Market 1
N) Bradford Government Obligations Money Market 1
O) BEA International EQUITY 197
P) BEA High YIELD 45
Q) BEA Emerging Markets EQUITY 37
R) BEA U.S. Core EQUITY 68
S) BEA U.S. Core Fixed INCOME 49
T) BEA U.S. Global Fixed Income 11
U) BEA Municipal Bond FUND 34
V) BEA Short Duration 0
W) BEA Balanced 0
X) Janney Montgomery Scott Money Market 1
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
Title of Class of Common Stock Number of Record Holders
------------------------------ ------------------------
<C> <S>
Y) Janney Montgomery Scott Municipal Money Market 1
Z) Janney Montgomery Scott Government Obligations Money Market 1
AA) Janney Montgomery Scott New York Municipal Money Market 1
</TABLE>
Item 27. Indemnification
---------------
Sections 1, 2, 3 and 4 of Article VIII of Registrant's Articles of
Incorporation, as amended, incorporated herein by reference as Exhibits 1(a) and
1(c), provide as follows:
Section 1. To the fullest extent that limitations on the
liability of directors and officers are permitted by the Maryland
General Corporation Law, no director or officer of the Corporation
shall have any liability to the Corporation or its shareholders for
damages. This limitation on liability applies to events occurring at
the time a person serves as a director or officer of the Corporation
whether or not such person is a director or officer at the time of any
proceeding in which liability is asserted.
Section 2. The Corporation shall indemnify and advance expenses
to its currently acting and its former directors to the fullest extent
that indemnification of directors is permitted by the Maryland General
Corporation Law. The Corporation shall indemnify and advance expenses
to its officers to the same extent as its directors and to such
further extent as is consistent with law. The Board of Directors may
by By-law, resolution or agreement make further provision for
indemnification of directors, officers, employees and agents to the
fullest extent permitted by the Maryland General Corporation Law.
Section 3. No provision of this Article shall be effective to
protect or purport to protect any director or officer of the
Corporation against any liability to the Corporation or its security
holders to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office.
Section 4. References to the Maryland General Corporation Law in
this Article are to the law as from time to time amended. No further
amendment to the Articles of Incorporation of the Corporation shall
decrease, but may expand, any right of any person under this Article
based on any event, omission or proceeding prior to such amendment.
21
<PAGE>
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
Registrant pursuant to the foregoing provisions, or otherwise, Registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by Registrant of expenses incurred or
paid by a director, officer or controlling person of Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, Registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
Item 28. Business and Other Connections of Investment Adviser
----------------------------------------------------
Information as to any other business, profession, vocation or
employment of a substantial nature in which any directors and officers of PIMC,
BEA, and Warburg are, or at any time during the past two (2) years have been,
engaged for their own accounts or in the capacity of director, officer,
employee, partner or trustee is incorporated herein by reference to Schedules A
and D of PIMC's Form ADV (File No. 801-13304) filed on March 28, 1993, Schedules
B and D of BEA's Form ADV (File No. 801-37170) filed on March 30, 1993, and
Schedules A and D of Warburg's Form ADV (File No. 801-07321) filed on August 28,
1992, respectively.
There is set forth below information as to any other business,
profession, vocation or employment of a substantial nature in which each
director or officer of PNC Bank, National Association (successor by merger to
Provident National Bank) ("PNC Bank"), is, or at any time during the past two
years has been, engaged for his own account or in the capacity of director,
officer, employee, partner or trustee.
PNC BANK, NATIONAL ASSOCIATION
Directors and Officers
To the knowledge of Registrant, none of the directors or officers of
PNC except those set forth below, is or has been, at any time during the past
two years, engaged in any other business, profession, vocation or employment of
a substantial nature, except that certain directors and officers of PNC Bank
also hold various positions with, and engage in business for, PNC Bank Corp.
(formerly PNC Financial Corp), which owns all the outstanding stock of PNC Bank,
or other subsidiaries of PNC Bank Corp. Set forth below are the names and
principal businesses of the directors and certain of the senior
22
<PAGE>
executive officers of PNC Bank who are engaged in any other business,
profession, vocation or employment of substantial nature.
23
<PAGE>
PNC BANK, NATIONAL ASSOCIATION
<TABLE>
<CAPTION>
Position with
PNC Bank,
National Other Business Type of
Association Name Connections Business
- ------------------ ---------------------- ------------------------------ -------------
<C> <C> <S> <C>
Director B.R. Brown President and C.E.O. of Coal
Consol, Inc.
Pittsburgh, PA (22)
Director Constance E. Clayton Superintendent of Schools Educator
The School District of
Philadelphia
Philadelphia, PA (23)
Director F. Eugene Dixon, Jr. Private Trustee Trustee
Lafayette Hill, PA (24)
Director A. James Freeman Vice Chairman and C.E.O. Manufacturing
Lord Corporation
Erie, PA (25)
Director Banking
Marine Bank
Erie, PA (26)
Director Dr. Stuart Heydt President and C.E.O. Medical
Geisinger Foundation
Danville, PA (27)
Director Edward P. Junker, III Chairman and C.E.O. Banking
Marine Bank
Erie, PA (26)
Director Thomas A. McConomy President, C.E.O. and Manufacturing
Chairman, Calgon Carbon
Corporation
Pittsburgh, PA (28)
Director Robert C. Milsom Retired
Pittsburgh, PA*
Director Thomas H. O'Brien Chairman and C.E.O. Bank Holding
PNC Bank Corp. (14)
Director Dr. J. Dennis O'Connor Chancellor Education
University of Pittsburgh
Pittsburgh, PA (29)
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
Position with
PNC Bank,
National Other Business Type of
Association Name Connections Business
- ------------------ ---------------------- ------------------------------ -------------
<C> <C> <S> <C>
Director Rocco A. Ortenzio Chairman and C.E.O. Medical
Continental Medical Systems,
Inc.
Mechanicsburg, PA (30)
Director Robert C. Robb, Jr. Partner Financial and
Lewis, Eckert, Robb & Management
Company Consultants
Plymouth Meeting, PA (31)
Director Daniel M. Rooney President, Pittsburgh Football
Steelers Football Club
of the National Football
League
Pittsburgh, PA (32)
Director Seth E. Schofield Chairman, President and Airline
C.E.O.
USAir Group, Inc. and
USAir, Inc.
Arlington, VA (33)
Director Robert M. Valentini President and C.E.O. Bell of Communica-
Pennsylvania and Chairman tions
Network Policy Council of Bell
Atlantic Corporation
Philadelphia, PA (34)
President and James E. Rohr President Bank
Chief Executive PNC Bank Corp. Holding
Officer (14) Company
President and Bruce E. Robbins None.
Chief Executive
Officer of PNC
Bank, National
Association,
Pittsburgh
Senior Executive Edward V. Randall, Jr. None.
Vice President
Executive J. Richard Carnall Director Banking
Vice President PNC National Bank (2)
Chairman and Director Financial-
PFPC Inc. (3) Related
Services
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
Position with
PNC Bank,
National Other Business Type of
Association Name Connections Business
- ------------------ ---------------------- ------------------------------ -------------
<C> <C> <S> <C>
Director
PNC Trust Company Fiduciary
of New York (11) Activities
Director Equipment
Hayden Bolts, Inc.* Leasing
Director, Real Estate
Parkway Real Estate
Company*
Director Investment
Provident Capital Advisory
Management, Inc. (5)
Director Investment
Advanced Investment Advisory
Management, Inc. (15)
Executive Richard C. Caldwell Director Banking
Vice President PNC National Bank (2)
Director Investment
Provident Capital Advisory
Management, Inc. (5)
Director Fiduciary
PNC Trust Company Activities
of New York (11)
Executive Vice President Bank Holding
PNC Bank Corp. (14) Company
Director Investment
Advanced Investment Advisory
Management, Inc. (15)
Director Banking
PNC Bank, New Jersey,
New Jersey, National
Association (16)
Director Financial-
PFPC Inc. (3) Related
Services
Executive Vice Herbert G. None.
President Summerfield, Jr.
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
Position with
PNC Bank,
National Other Business Type of
Association Name Connections Business
- ------------------ ---------------------- ------------------------------ -------------
<C> <C> <S> <C>
Executive Vice Joe R. Irwin None.
President
President and Richard L. Smoot Senior Vice President Banking
Chief Executive Operations
Officer of PNC PNC Bank Corp. (20)
Bank, National
Association, Director Fiduciary
Philadelphia PNC Trust Company of Activities
New York (11)
Director Investment
PNC Institutional Advisory
Management Corporation (28)
Director Financial
PFPC Inc. (3) Related
Services
Executive Vice W. Herbert Crowder, III None.
President
Executive Vice Walter L. West None.
President
Senior Vice George Lula None.
President
Secretary William F. Strome Director International
PNC Bank International (35) Banking
Services
Managing General Counsel Bank Holding
and Senior Vice President Company
PNC Bank Corp.
Senior Vice James P. Conley None.
President/
Credit Policy
</TABLE>
____________________
* For more information, contact William F. Strome, PNC Bank, National
Association, Broad and Chestnut Streets, Philadelphia, PA 19101.
(1) PNC Bank, National Association, 120 S. 17th Street, Philadelphia, PA 19103.
(2) PNC National Bank, 103 Bellevue Parkway, Wilmington, DE 19809.
(3) PFPC Inc., 400 Bellevue Parkway, Wilmington, DE 19809.
27
<PAGE>
(4) PNC Service Corp, 103 Bellevue Parkway, Wilmington, DE 19809.
(5) Provident Capital Management, Inc., 30 S. 17th Street, Site 1500,
Philadelphia, PA 19103.
(6) PNC National Investment Corporation, Broad and Chestnut Streets,
Philadelphia, PA 19101.
(7) Provident Realty Management, Inc., Broad and Chestnut Streets, Philadelphia,
PA 19101.
(8) Provident Realty, Inc., Broad and Chestnut Streets, Philadelphia, PA 19101.
(9) PNC Bancorp, Inc. 3411 Silverside Park, Wilmington, DE 19810
(10) PNC New Jersey Credit Corp, 1415 Route 70 East, Suite 604, Cherry Hill, NJ
08034.
(11) PNC Trust Company of New York, 40 Broad Street, New York, NY 10084.
(12) Provcor Properties, Inc., Broad and Chestnut Streets, Philadelphia, PA
19101.
(13) PNC Credit Corp, 103 Bellevue Parkway, Wilmington, DE 19809.
(14) PNC Bank Corp., 5th Avenue and Wood Streets, Pittsburgh, PA 15265.
(15) Advanced Investment Management, Inc., 27th Floor, One Oliver Plaza,
Pittsburgh, PA 15265.
(16) PNC Bank of New Jersey, National Association, Woodland Falls Corporate
Park, 210 Lake Drive East, Cherry Hill, NJ 08002.
(17) PNC Institutional Management Corporation, 400 Bellevue Parkway, Wilmington,
DE 19809.
(18) Provident National Leasing Corporation, Broad and Chestnut Streets,
Philadelphia, PA 19101
(19) Provident National Bank Corp. New Jersey, 1 Centennial Square, Haddonfield,
NJ 08033
(20) The Clayton Bank and Trust Company, Clayton, DE 19938
(21) Keystone Life Insurance Company, 1207 Chestnut Street, Philadelphia, PA
19107-4101
(22) Consol, Inc., Consol Plaza, Pittsburgh, PA 15241
(23) School District of Philadelphia, 21 Street and The Parkway, Philadelphia,
PA 19103-1099
(24) F. Eugene Dixon, Jr., Private Trustee, 665 Thomas Road, Lafayette Hill, PA
19444-0178
(25) Lord Corporation, 2000 W. Grandview Boulevard, Erie, PA 16514
(26) Marine Bank, Ninth and State Streets, Erie, PA 16553
(27) Geisinger Foundation, 100 N. Academy Avenue, Danville, PA 17822
(28) Calgon Carbon Corporation, P.O. Box 717, Pittsburgh, PA 15230-0717
(29) University of Pittsburgh, 107 Cathedral of Learning, Pittsburgh, PA 15260
(30) Continental Medical Systems, Inc., P.O. Box 715, Mechanicsburg, PA 17055
(31) Lewis, Eckert, Robb & Company, 425 One Plymouth Meeting, Plymouth Meeting,
PA 19462
(32) Football Club of the National Football League, 300 Stadium Circle,
Pittsburgh, PA 15212
(33) USAir Group, Inc. and USAir, Inc., 2345 Crystal Drive, Arlington, VA 22227
(34) Bell of Pennsylvania, One Parkway, Philadelphia, PA 19102
(35) PNC Bank International, 5th and Wood Streets, Pittsburgh, PA 15222
28
<PAGE>
Item 29. Principal Underwriter
---------------------
(a) Counsellors Securities Inc. (the "Distributor") acts as
distributor for the following investment companies:
Warburg, Pincus Cash Reserve Fund
Warburg, Pincus New York Tax Exempt Fund
Warburg, Pincus New York Municipal Bond Fund
Warburg, Pincus Intermediate Maturity Government Fund
Warburg, Pincus Fixed Income Fund
Warburg, Pincus Global Fixed Income Fund
Warburg, Pincus Capital Appreciation Fund
Warburg, Pincus Emerging Growth Fund
Warburg, Pincus International Equity Fund
Warburg, Pincus Japan OTC Fund
Counsellors Tandem Securities Fund
Warburg Pincus Growth & Income Fund
Warburg Pincus Balanced Fund
Warburg Pincus Tax Free Fund
The Distributor acts as a principal underwriter, depositor or investment adviser
for the following investment companies: None other than Registrant and
companies listed above.
(b) Information for each director or officer of the Distributor is set
forth below:
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Positions and Offices
Business Address with the Distributor with Registrant
- ------------------ --------------------- ------------------
<S> <C> <C>
John L. Vogelstein Director
466 Lexington Avenue
New York, New York 10017
Lionel I. Pincus Director
466 Lexington Avenue
New York, New York 10017
Reuben S. Leibowitz Director,
466 Lexington Avenue President and Chief
New York, New York 10017 Financial Officer
John L. Furth Director
466 Lexington Avenue
New York, New York 10017
Arnold M. Reichman Vice President, Director
466 Lexington Avenue Secretary and
New York, New York 10017 Chief Operating Officer
</TABLE>
29
<PAGE>
<TABLE>
<S> <C>
Roger Reinlieb Vice President
466 Lexington Avenue
New York, New York 10017
Karen Amato Assistant Secretary
466 Lexington Avenue
New York, New York 10017
Stephen Distler Treasurer
466 Lexington Avenue
New York, New York 10017
</TABLE>
(c) Information as to commissions and other compensation received by
the principal underwriter is set forth below.
<TABLE>
<CAPTION>
Net
Name of Underwriting Compensation
Principal Discounts and on Redemption Brokerage Other
Underwriter Commissions and Repurchase Commissions Compensation
- ------------- ------------- -------------- ----------- ------------
<S> <C> <C> <C> <C>
Counsellors $0 $0 $0 $0
Securities
Inc.
</TABLE>
Item 30. Location of Accounts and Records
--------------------------------
(1) PNC Bank, National Association (successor by merger to Provident
National Bank), Broad and Chestnut Street, Philadelphia, PA 19101
(records relating to its functions as sub-adviser and custodian).
(2) Counsellors Securities Inc., 466 Lexington Avenue, New York, New York
10017 (records relating to its functions as distributor).
(3) PNC Institutional Management Corporation (formerly Provident
Institutional Management Corporation), Bellevue Corporate Center, 103
Bellevue Parkway, Wilmington, Delaware 19809 (records relating to its
functions as investment adviser, sub-adviser and administrator).
(4) PFPC Inc. (formerly Provident Financial Processing Corporation),
Bellevue Corporate Center, 400 Bellevue Parkway, Wilmington, Delaware
19809 (records relating to its functions as transfer agent and dividend
disbursing agent).
(5) Ballard Spahr Andrews & Ingersoll, 1735 Market Street - 51st Floor,
Philadelphia, Pennsylvania 19103 (Registrant's Articles of
Incorporation, By-Laws and Minute Books).
30
<PAGE>
(6) BEA Associates, One Citicorp Center, 153 East 53rd Street, New York,
New York 10022 (records relating to its function as investment
adviser).
(7) Warburg, Pincus Counsellors, Inc., 466 Lexington Avenue, New York, New
York 10017-3147 (records relating to its functions as investment
adviser).
Item 31. Management Services
-------------------
None.
Item 32. Undertakings
------------
(a) Registrant hereby undertakes to hold a meeting of shareholders for
the purpose of considering the removal of directors in the event
the requisite number of shareholders so request.
(B) REGISTRANT HEREBY UNDERTAKES TO FILE A POST-EFFECTIVE AMENDMENT,
-- ----------------------------------------------------------------
USING UNAUDITED FINANCIAL STATEMENTS FOR EACH OF THE NUMERIC MICRO
------------------------------------------------------------------
CAP FUND, NUMERIC GROWTH FUND AND NUMERIC GROWTH & VALUE FUND
-------------------------------------------------------------
WHICH NEED NOT BE CERTIFIED, WITHIN FOUR TO SIX MONTHS FROM
-----------------------------------------------------------
EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
----------------------------------------------
31
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant certifies that it meets all of the
requirements for effectiveness of this Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this Post-Effective
Amendment to its Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Wilmington, and State of
Delaware, on May 10, 1996.
THE RBB FUND, INC.
By: /s/ Edward J. Roach
---------------------
Edward J. Roach
President and
Treasurer
Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment to Registrant's Registration Statement has been signed below
by the following persons in the capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
- ------------------------- ------------------------- ----------------
<S> <C> <C>
/s/ Edward J. Roach President (Principal MAY 10, 1995
- ------------------------- Executive Officer) and
Edward J. Roach Treasurer (Principal
Financial and Accounting
Officer)
/s/ Donald van Roden Director MAY 10, 1995
- -------------------------
Donald van Roden
/s/ Francis J. McKay Director MAY 10, 1995
- -------------------------
Francis J. McKay
/s/ Marvin E. Sternberg Director MAY 10, 1995
- -------------------------
Marvin E. Sternberg
/s/ Julian A. Brodsky Director MAY 10, 1995
- -------------------------
Julian A. Brodsky
/s/ Arnold M. Reichman Director MAY 10, 1995
- -------------------------
Arnold M. Reichman
/s/ Robert Sablowsky Director MAY 10, 1995
- -------------------------
Robert Sablowsky
</TABLE>
33
<PAGE>
THE RBB FUND, INC.
RBB CLASSES
WARBURG PINCUS CLASSES
WARBURG PINCUS SERIES 2 CLASSES
CASH PRESERVATION CLASSES
SANSOM STREET CLASSES
BEDFORD CLASSES
BRADFORD CLASSES
BEA CLASSES
JANNEY (ALPHA) CLASSES
NUMERIC CLASSES
BETA CLASSES
GAMMA CLASSES
DELTA CLASSES
EPSILON CLASSES
ZETA CLASSES
ETA CLASSES
THETA CLASSES
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
Exhibit Page See Note #
- --------- ---- ----------
<C> <S> <C> <C>
(1)(p) Form of Articles of Supplementary of
Registrant
(2)(C) BY-LAWS AMENDED THROUGH APRIL 24, 1996
- ----------------------------------------------------
(5)(NN) INVESTMENT ADVISORY AGREEMENT (NUMERIC
- ----------------------------------------------------
MICRO CAP FUND) BETWEEN REGISTRANT AND
--------------------------------------
NUMERIC INVESTORS, L.P.
-----------------------
(OO) INVESTMENT ADVISORY AGREEMENT (NUMERIC
--------------------------------------------------
GROWTH FUND) BETWEEN REGISTRANT AND
-----------------------------------
NUMERIC INVESTORS, L.P.
-----------------------
(PP) INVESTMENT ADVISORY AGREEMENT (NUMERIC
-------------------------------------------------
GROWTH & VALUE FUND) BETWEEN REGISTRANT
---------------------------------------
AND NUMERIC INVESTORS, L.P.
---------------------------
(6)(DD) DISTRIBUTION AGREEMENT SUPPLEMENT NUMERIC
- -------------------------------------------------------
CLASSES (CLASSES FF, GG AND HH).
--------------------------------
(8)(L) FORM OF CUSTODY AGREEMENT BETWEEN THE REGISTRANT AND
- ------------------------------------------------------------------
CUSTODIAL TRUST COMPANY AND ON BEHALF OF NUMERIC MICRO
------------------------------------------------------
CAP FUND, NUMERIC GROWTH FUND AND NUMERIC GROWTH &
--------------------------------------------------
VALUE FUND, PORTFOLIOS OF THE REGISTRANT.
-----------------------------------------
(9)(QQ) TRANSFER AGENCY AGREEMENT SUPPLEMENT (NUMERIC
- -----------------------------------------------------------
GROWTH FUND AND NUMERIC GROWTH & VALUE FUND)
--------------------------------------------
BETWEEN REGISTRANT AND PFPC, INC. DATED
---------------------------------------
APRIL 24, 1996.
---------------
(RR) ADMINISTRATION AND ACCOUNTING SERVICES AGREEMENT
-----------------------------------------------------------
BETWEEN REGISTRANT AND PFPC, INC. (NUMERIC MICRO
------------------------------------------------
CAP FUND) DATED APRIL 24, 1996.
-------------------------------
(SS) ADMINISTRATION AND ACCOUNTING SERVICES AGREEMENT
-----------------------------------------------------------
BETWEEN REGISTRANT AND PFPC, INC. (NUMERIC GROWTH
-------------------------------------------------
FUND) DATED APRIL 24, 1996.
---------------------------
</TABLE>
34
<PAGE>
<TABLE>
<C> <S>
(TT) ADMINISTRATION AND ACCOUNTING SERVICES AGREEMENT
-----------------------------------------------------------
BETWEEN REGISTRANT AND PFPC, INC. (NUMERIC GROWTH
-------------------------------------------------
& VALUE FUND) DATED APRIL 24, 1996.
-----------------------------------
(UU) ADMINISTRATION AND ACCOUNTING SERVICES AGREEMENT
------------------------------------------------------------
BETWEEN REGISTRANT AND COUNSELLORS FUND SERVICES,
-------------------------------------------------
INC. (NUMERIC MICRO CAP FUND, NUMERIC GROWTH FUND
-------------------------------------------------
AND NUMERIC GROWTH & VALUE FUND) DATED APRIL 24, 1996.
------------------------------------------------------
(10)(A) OPINION AND Consent of Counsel
- -------------------------
(11) Consent of Independent Accountants
(13(I) PURCHASE AGREEMENT BETWEEN REGISTRANT AND NUMERIC
- ---------------------------------------------------------------
INVESTORS, L.P. RELATING TO CLASS FF (NUMERIC
---------------------------------------------
MICRO CAP FUND)
---------------
(J) PURCHASE AGREEMENT BETWEEN REGISTRANT AND NUMERIC
-------------------------------------------------------------
INVESTORS, L.P. RELATING TO CLASS GG (NUMERIC
---------------------------------------------
GROWTH FUND)
------------
(K) PURCHASE AGREEMENT BETWEEN REGISTRANT AND NUMERIC
-------------------------------------------------------------
INVESTORS, L.P. RELATING TO CLASS HH (NUMERIC
---------------------------------------------
GROWTH & VALUE FUND)
--------------------
(19) Representation of Ballard Spahr Andrews & Ingersoll
pursuant to Rule 485(b) under the Securities Act of 1933.
</TABLE>
35
<PAGE>
Exhibit (1)(p)
THE RBB FUND, INC.
ARTICLES SUPPLEMENTARY TO THE
CHARTER
THE RBB FUND, INC., a Maryland corporation having its principal office in
Baltimore, Maryland (hereinafter called the "Corporation"), hereby certifies to
the State Department of Assessments and Taxation of Maryland that:
FIRST: The Board of Directors of the Corporation, an open-end investment
company registered under the Investment Company Act of 1940, as amended, and
having authorized capital of thirty billion (30,000,000,000) shares of common
stock, par value $.001 per share, has adopted a unanimous resolution increasing
the number of shares of common stock that are classified (but not increasing the
aggregate number of authorized shares) into separate classes by:
classifying an additional fifty million (50,000,000) of the previously
authorized, unissued and unclassified shares of the common stock, par value
$.001 per share, with an aggregate par value of fifty thousand dollars
($50,000), as Class FF Common Stock (Numeric Micro Cap Fund);
classifying an additional fifty million (50,000,000) of the previously
authorized, unissued and unclassified shares of the common stock, par value
<PAGE>
$.001 per share, with an aggregate par value of fifty thousand dollars
($50,000), as Class GG Common Stock (Numeric Growth Fund);
classifying an additional fifty million (50,000,000) of the previously
authorized, unissued and unclassified shares of the common stock, par value
$.001 per share, with an aggregate par value of fifty thousand dollars
($50,000), as Class HH Common Stock (Numeric Growth & Value Fund);
SECOND: A description of the shares so classified with the
preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications and terms and conditions of
redemption as set or changed by the Board of Directors of the Corporation is as
follows:
A description of the preferences, conversion and other rights, voting
powers, restrictions, limitations as to dividends, qualifications and terms and
conditions or redemption of each class of common stock of the Corporation is set
forth in Article VI, Section (6) of the Corporation's Charter, and has not been
changed by the Board of Directors of the Corporation.
THIRD: The shares aforesaid have been duly classified by the Board of
Directors of the Corporation pursuant to authority and power contained in the
charter of the Corporation.
2
<PAGE>
FOURTH: Immediately before the increase in the number of shares of
common stock that have been classified into separate classes:
(a) the Corporation had authority to issue thirty billion
(30,000,000,000) shares of its common stock and the aggregate par value of all
the shares of all classes was thirty million dollars ($30,000,000);
(b) the number of shares of each authorized class of common stock
was as follows:
Class A - one hundred million (100,000,000), par value $.001 per share;
Class B - one hundred million (100,000,000), par value $.001 per share;
Class C - one hundred million (100,000,000), par value $.001 per share;
Class D - one hundred million (100,000,000), par value $.001 per share;
Class E - five hundred million (500,000,000), par value $.001 per share;
Class F - five hundred million (500,000,000), par value $.001 per share;
Class G - five hundred million (500,000,000), par value $.001 per share;
Class H - five hundred million (500,000,000), par value $.001 per share;
Class I - one billion (1,000,000,000), par value $.001 per share;
Class J - five hundred million (500,000,000), par value $.001 per share;
Class K - five hundred million (500,000,000), par value $.001 per share;
Class L - one billion five hundred million (1,500,000,000), par value $.001 per
share;
Class M - five hundred million (500,000,000), par value $.001 per share;
Class N - five hundred million (500,000,000), par value $.001 per share;
3
<PAGE>
Class O - five hundred million (500,000,000), par value $.001 per share;
Class P - one hundred million (100,000,000), par value $.001 per share;
Class Q - one hundred million (100,000,000), par value $.001 per share;
Class R - five hundred million (500,000,000), par value $.001 per share;
Class S - five hundred million (500,000,000), par value $.001 per share;
Class T - five hundred million (500,000,000), par value $.001 per share;
Class U - five hundred million (500,000,000), par value $.001 per share;
Class V - five hundred million (500,000,000), par value $.01 per share;
Class W - one hundred million (100,000,000), par value $.001 per share;
Class X - fifty million (50,000,000), par value $.001 per share;
Class Y - fifty million (50,000,000), par value $.001 per share;
Class Z - fifty million (50,000,000), par value $.001 per share;
Class AA - fifty million (50,000,000), par value $.001 per share;
Class BB - fifty million (50,000,000), par value $.001 per share;
Class CC - fifty million (50,000,000), par value $.001 per share;
Class DD - one hundred million (100,000,000), par value $.001 per share;
Class EE - one hundred million (100,000,000), par value $.001 per share;
Class Alpha 1 - seven hundred million (700,000,000), par value $.001 per share;
Class Alpha 2 - two hundred million (200,000,000), par value $.001 per share;
Class Alpha 3 - five hundred million (500,000,000), par value $.001 per share;
Class Alpha 4 - one hundred million (100,000,000), par value $.001 per share;
4
<PAGE>
Class Beta 1 - one million (1,000,000), par value $.001 per share;
Class Beta 2 - one million (1,000,000), par value $.001 per share;
Class Beta 3 - one million (1,000,000), par value $.001 per share;
Class Beta 4 - one million (1,000,000), par value $.001 per share;
Class Gamma 1 - one million (1,000,000), par value $.001 per share;
Class Gamma 2 - one million (1,000,000), par value $.001 per share;
Class Gamma 3 - one million (1,000,000), par value $.001 per share;
Class Gamma 4 - one million (1,000,000), par value $.001 per share;
Class Delta 1 - one million (1,000,000), par value $.001 per share;
Class Delta 2 - one million (1,000,000), par value $.001 per share;
Class Delta 3 - one million (1,000,000), par value $.001 per share;
Class Delta 4 - one million (1,000,000), par value $.001 per share;
Class Epsilon 1 - five hundred million (1,000,000), par value $.001 per share;
Class Epsilon 2 - one million (1,000,000), par value $.001 per share;
Class Epsilon 3 - one million (1,000,000), par value $.001 per share;
Class Epsilon 4 - one million (1,000,000), par value $.001 per share;
Class Zeta 1 - one million (1,000,000), par value $.001 per share;
Class Zeta 2 - one million (1,000,000), par value $.001 per share;
Class Zeta 3 - one million (1,000,000), par value $.001 per share;
Class Zeta 4 - one hundred million (1,000,000), par value $.001 per share;
Class Eta 1 - one million (1,000,000), par value $.001 per share;
5
<PAGE>
Class Eta 2 - one million (1,000,000) par value $.001 per share;
Class Eta 3 - one million (1,000,000), par value $.001 per share;
Class Eta 4 - one million (1,000,000), par value $.001 per share;
Class Theta 1 - one million (1,000,000), par value $.001 per share;
Class Theta 2 - one million (1,000,000), par value $.001 per share;
Class Theta 3 - one million (1,000,000), par value $.001 per share; and
Class Theta 4 - one million (1,000,000), par value $.001 per share,
for a total of twelve billion two hundred twenty-eight million (12,228,000,000)
shares classified into separate classes of common stock.
After the increase in the number of shares of common stock that have
been classified into separate classes:
(c) the Corporation has the authority to issue thirty billion
(30,000,000,000) shares of its common stock and the aggregate par value of all
the shares of all classes is now thirty million dollars ($30,000,000); and
(d) the number of authorized shares of each class is now as
follows: Class A - one hundred million (100,000,000), par value $.001 per share;
Class B - one hundred million (100,000,000), par value $.001 per share;
Class C - one hundred million (100,000,000), par value $.001 per share;
Class D - one hundred million (100,000,000), par value $.001 per share;
Class E - five hundred million (500,000,000), par value $.001 per share;
Class F - five hundred million (500,000,000), par value $.001 per share;
6
<PAGE>
Class G - five hundred million (500,000,000), par value $.001 per share;
Class H - five hundred million (500,000,000), par value $.001 per share;
Class I - one billion (1,000,000,000), par value $.001 per share;
Class J - five hundred million (500,000,000), par value $.001 per share;
Class K - five hundred million (500,000,000), par value $.001 per share;
Class L - one billion five hundred million (1,500,000,000), par value $.001 per
share;
Class M - five hundred million (500,000,000), par value $.001 per share;
Class N - five hundred million (500,000,000), par value $.001 per share;
Class O - five hundred million (500,000,000), par value $.001 per share;
Class P - one hundred million (100,000,000), par value $.001 per share;
Class Q - one hundred million (100,000,000), par value $.001 per share;
Class R - five hundred million (500,000,000), par value $.001 per share;
Class S - five hundred million (500,000,000), par value $.001 per share;
Class T - five hundred million (500,000,000), par value $.001 per share;
Class U - five hundred million (500,000,000), par value $.001 per share;
Class V - five hundred million (500,000,000), par value $.001 per share;
Class W - one hundred million (100,000,000), par value $.001 per share;
Class X - fifty million (50,000,000), par value $.001 per share;
Class Y - fifty million (50,000,000), par value $.001 per share;
Class Z - fifty million (50,000,000), par value $.001 per share;
Class AA - fifty million (50,000,000), par value $.001 per share;
7
<PAGE>
Class BB - fifty million (50,000,000), par value $.001 per share;
Class CC - fifty million (50,000,000), par value $.001 per share;
Class DD - one hundred million (100,000,000), par value $.001 per share;
Class EE - one hundred million (100,000,000), par value $.001 per share;
Class FF - fifty million (50,000,000), par value $.001 per share;
Class GG - fifty million (50,000,000), par value $.001 per share;
Class HH - fifty million (50,000,000), par value $.001 per share;
Class Alpha 1 - seven hundred million (700,000,000), par value $.001 per share;
Class Alpha 2 - two hundred million (200,000,000), par value $.001 per share;
Class Alpha 3 - five hundred million (500,000,000), par value $.001 per share;
Class Alpha 4 - one hundred million (100,000,000), par value $.001 per share;
Class Beta 1 - one million (1,000,000), par value $.001 per share;
Class Beta 2 - one million (1,000,000), par value $.001 per share;
Class Beta 3 - one million (1,000,000), par value $.001 per share;
Class Beta 4 - one million (1,000,000), par value $.001 per share;
Class Gamma 1 - one million (1,000,000), par value $.001 per share;
Class Gamma 2 - one million (1,000,000), par value $.001 per share;
Class Gamma 3 - one million (1,000,000), par value $.001 per share;
Class Gamma 4 - one million (1,000,000), par value $.001 per share;
Class Delta 1 - one million (1,000,000), par value $.001 per share;
Class Delta 2 - one million (1,000,000), par value $.001 per share;
8
<PAGE>
Class Delta 3 - one million (1,000,000), par value $.001 per share;
Class Delta 4 - one million (1,000,000), par value $.001 per share;
Class Epsilon 1 - one million (1,000,000), par value $.001 per share;
Class Epsilon 2 - one million (1,000,000), par value $.001 per share;
Class Epsilon 3 - one million (1,000,000), par value $.001 per share;
Class Epsilon 4 - one million (1,000,000), par value $.001 per share;
Class Zeta 1 - one million (1,000,000), par value $.001 per share;
Class Zeta 2 - one million (1,000,000), par value $.001 per share;
Class Zeta 3 - one million (1,000,000), par value $.001 per share;
Class Zeta 4 - one million (1,000,000), par value $.001 per share;
Class Eta 1 - one million (1,000,000), par value $.001 per share;
Class Eta 2 - one million (1,000,000) par value $.001 per share;
Class Eta 3 - one million (1,000,000), par value $.001 per share;
Class Eta 4 - one million (1,000,000), par value $.001 per share;
Class Theta 1 - one million (1,000,000), par value $.001 per share;
Class Theta 2 - one million (1,000,000), par value $.001 per share;
Class Theta 3 - one million (1,000,000), par value $.001 per share;
Class Theta 4 - one million (1,000,000), par value $.001 per share;
for a total of twelve billion three hundred seventy-eight million
(12,378,000,000) shares classified into separate classes of common stock.
9
<PAGE>
IN WITNESS WHEREOF, The RBB Fund, Inc. has caused these presents to be
signed and attested in its name and on its behalf by its President and Secretary
on __________, 1996.
THE RBB FUND, INC.
ATTEST:
By:
- ------------------------ ---------------------------
Morgan R. Jones Edward J. Roach
Secretary President
10
<PAGE>
THE UNDERSIGNED, President of The RBB Fund, Inc., who executed on
behalf of said corporation the foregoing Articles Supplementary to the Charter,
of which this certificate is made a part, hereby acknowledges, in the name and
on behalf of said Corporation, and further certifies that, to the best of his
knowledge, information and belief, the matters and facts set forth therein with
respect to the approval thereof are true in all material respects, under the
penalties of perjury.
--------------------------------
Edward J. Roach
President
11
<PAGE>
Exhibit 2(c)
BY-LAWS
OF
THE RBB FUND, INC.
Adopted August 16, 1988
ARTICLE I
Offices
-------
Section 1. Principal Office. The principal office of the Corporation
----------------
shall be in the City of Baltimore, State of Maryland.
Section 2. Principal Executive Office. The principal executive office of
--------------------------
the Corporation shall be in the City of Paoli, Commonwealth of Pennsylvania.
Section 3. Other Offices. The Corporation may have such other offices in
-------------
such places as the Board of Directors may from time to time determine.
ARTICLE II
Meetings of Shareholders
------------------------
Section 1. No Annual Meeting Required. No Annual Meeting of shareholders
--------------------------
of the Corporation shall be held unless required by applicable law or otherwise
determined by the Board of Directors. Any Annual Meeting shall be held on such
date and at such time and place as the Board of Directors may designate. [As
Amended July 25, 1989]
Section 2. Special Meetings. Special meetings of the shareholders, unless
----------------
otherwise provided by law or by the Articles of Incorporation may be called for
any purpose or purposes by a majority of the Board of Directors or the
President, and shall be called by the President or Secretary on the written
request of the shareholders (i) as provided by the Maryland General Corporation
Law and (ii) to remove a director upon written request of shareholders owning at
least 10% of all the outstanding shares of the Corporation. Such request shall
state the purpose or purposes of the proposed meeting and the matters proposed
to be acted on at it; provided, however, that with respect to clause (i) of this
-------- -------
<PAGE>
Section's first sentence, unless requested by shareholders entitled to cast a
majority of all the votes entitled to be cast at the meeting, a special meeting
need not be called to consider any matter which is substantially the same as a
matter voted on at any special meeting of the shareholders held during the
preceding 12 months. [As Amended October 24, 1989]
Section 3. Place of Meetings. The regular meeting, if any, and any
-----------------
special meeting of the shareholders shall be held at such place within the
United States as the Board of Directors may from time to time determine.
Section 4. Notice of Meetings; Waiver of Notice; Shareholder List. (a)
------------------------------------------------------
Notice of the place, date and time of the holding of each regular and special
meeting of the shareholders and the purpose or purposes of the meeting shall be
given personally or by mail, not less than ten nor more than ninety days before
the date of such meeting, to each shareholder entitled to vote at such meeting
and to each other shareholder entitled to notice of the meeting. Notice by mail
shall be deemed to be duly given when deposited in the United States mail
addressed to the shareholder at his address as it appears on the records of the
Corporation, with postage thereon prepaid. The notice of every meeting of
shareholders may be accompanied by a form of proxy approved by the Board of
Directors in favor of such actions or persons as the Board of Directors may
select.
(b) Notice of any meeting of shareholders shall be deemed waived
by any shareholder who shall attend such meeting in person or by proxy, or who
shall, either before or after the meeting, submit a signed waiver of notice
which is filed with the records of the meeting. A meeting of shareholders
convened on the date for which it was called may be adjourned from time to time
without further notice to a date not more than 120 days after the original
record date.
(c) At least five (5) days prior to each meeting of shareholders,
the officer or agent having charge of the share transfer books of the
Corporation shall make a complete list of shareholders entitled to vote at such
meeting, in alphabetical order with the address of and the number of shares held
by each shareholder.
Section 5. Organization. At each meeting of the shareholders, the
------------
Chairman of the Board (if one has been designated by the Board), or in his
absence or inability to act, the President, or in the absence or inability to
act of the Chairman of the Board and the President, a Vice President, or in the
absence or the inability to act of the Chairman of the Board, the President and
all the Vice Presidents, a chairman chosen by the shareholders shall act as
chairman of the meeting. The Secretary, or in his
2
<PAGE>
absence or inability to act, any person appointed by the chairman of the
meeting, shall act as secretary of the meeting and keep the minutes thereof.
Section 6. Voting. (a) Except as otherwise provided by statute or the
------
Articles of Incorporation, each holder of record of shares of the Corporation
having voting power shall be entitled at each meeting of the shareholders to one
vote for every share standing in his name on the record of shareholders of the
Corporation as of the record date determined pursuant to Section 5 of Article VI
hereof or if such record date shall not have been so fixed, then at the later of
(i) the close of business on the day on which notice of the meeting is mailed or
(ii) the thirtieth (30) day before the meeting. In all elections for Directors,
each share of share may be voted for as many individuals as there are Directors
to be elected and for whose election the share is entitled to be voted.
(b) Each shareholder entitled to vote at any meeting of shareholders
may authorize another person or persons to act for him or her by a proxy signed
by such shareholder or his or her authorized agent, as provided by Maryland law.
No proxy shall be valid after the expiration of eleven months from the date
thereof, unless otherwise provided in the proxy. Every proxy shall be revocable
at the pleasure of the shareholder executing it, except in those cases where
such proxy states that it is irrevocable and where an irrevocable proxy is
permitted by law. Except as otherwise provided by statute, the Articles of
Incorporation or these By-Laws, any corporate action to be taken by vote of the
shareholders shall be authorized by a majority of the total votes cast at a
meeting of shareholders at which a quorum is present by the holders of shares
present in person or represented by proxy and entitled to vote on such action,
except that a plurality of all the votes cast at a meeting at which a quorum is
present is sufficient to elect a Director. [As Amended April 24, 1996]
(c) If a vote shall be taken on any question other than the election
of Directors which shall be by written ballot, then unless required by statute
or these By-Laws or determined by the chairman of the meeting to be advisable,
any such vote need not be by ballot. On a vote by ballot, each ballot shall be
signed by the shareholder voting, or by his proxy, if there be such proxy, and
shall state the number of shares voted.
Section 7. Inspectors. The Board may, in advance of any meeting of
----------
shareholders, appoint one or more inspectors to act at such meeting or any
adjournment thereof. If the inspectors shall not be so appointed or if any of
them shall fail to appear or act, the chairman of the meeting may, and on the
request of any shareholder entitled to vote at the meeting shall, appoint
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inspectors. Each inspector, before entering upon the discharge of his duties,
shall take and sign an oath to execute faithfully the duties of inspector at
such meeting with strict impartiality and according to the best of his ability.
The inspectors shall determine the number of shares outstanding and the voting
power of each, the number of shares represented at the meeting, the existence of
a quorum, the validity and effect of proxies, and shall receive votes, ballots
or consents, hear and determine all challenges and questions arising in
connection with the right to vote, count and tabulate all votes, ballots or
consents, determine the result, and do such acts as are proper to conduct the
election or vote with fairness to all shareholders. On request of the chairman
of the meeting or any shareholder entitled to vote at it, the inspectors shall
make a report in writing of any challenge, request or matter determined by them
and shall execute a certificate of any fact found by them. No Director or
candidate for the office of Director shall act as inspector of an election of
Directors. Inspectors need not be shareholders.
Section 8. Consent of Shareholders in Lieu of Meeting. Except as
------------------------------------------
otherwise provided by statute, any action required to be taken at any regular or
special meeting of shareholders or any action which may be taken at any annual
or special meeting of shareholders, may be taken without a meeting, without
prior notice and without a vote, if the following are filed with the records of
shareholders' meetings: (i) a unanimous written consent which sets forth the
action and is signed by each shareholder entitled to vote on the matter and (ii)
a written waiver of any right to dissent signed by each shareholder entitled to
notice of the meeting but not entitled to vote at it.
ARTICLE III
Board of Directors
------------------
Section 1. General Powers. Except as otherwise provided in the Articles
--------------
of Incorporation, the business and affairs of the Corporation shall be managed
under the direction of the Board of Directors. All powers of the Corporation
may be exercised by or under authority of the Board of Directors except as
conferred on or reserved to the shareholders by law or by the Articles of
Incorporation or these By-Laws.
Section 2. Number of Directors. The number of Directors shall be fixed
-------------------
from time to time by resolution of the Board of Directors adopted by a majority
of the Directors then in office; provided, however, that the number of Directors
shall in no event be less than three (except for any period during which shares
of the Corporation are held by fewer than three shareholders) nor
4
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more than fifteen. Any vacancy created by an increase in Directors may be
filled in accordance with Section 6 of this Article III. No reduction in the
number of Directors shall have the effect of removing any Director from office
prior to the expiration of his term unless such Director is specifically removed
pursuant to Section 5 of this Article III at the time of such decrease.
Directors need not be shareholders.
Section 3. Election and Term of Directors. Directors shall be elected by
------------------------------
majority vote of a quorum cast by written ballot at the regular meeting of
shareholders, if any, or at a special meeting held for that purpose. The term
of office of each Director shall be from the time of his election and
qualification and until his successor shall have been elected and shall have
qualified, or until his death, or until he shall have resigned, or have been
removed as hereinafter provided in these By-Laws, or as otherwise provided by
statute or the Articles of Incorporation.
Section 4. Resignation. A Director of the Corporation may resign at any
-----------
time by giving written notice of his resignation to the Board or the Chairman of
the Board or the President or the Secretary. Any such resignation shall take
effect at the time specified therein or, if the time when it shall become
effective shall not be specified therein, immediately upon its receipt; and,
unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective.
Section 5. Removal of Directors. Any Director of the Corporation may be
--------------------
removed by the shareholders by a vote of a majority of the votes entitled to be
cast for the election of Directors.
Section 6. Vacancies. The shareholders may elect a successor to fill a
---------
vacancy on the Board of Directors which results from the removal of a Director.
A majority of the remaining Directors, whether or not sufficient to constitute a
quorum, may fill a vacancy on the Board of Directors which results from any
cause except an increase in the number of Directors, and a majority of the
entire Board of Directors may fill a vacancy which results from an increase in
the number of Directors. A Director elected by the Board of Directors to fill a
vacancy serves until the next annual meeting of shareholders and until his
successor is elected and qualifies. A Director elected by the shareholders to
fill a vacancy which results from the removal of a Director serves for the
balance of the term of the removed Director.
Section 7. Regular Meetings. Regular meetings of the Board may be held
----------------
with notice at such times and places as may be determined by the Board of
Directors.
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Section 8. Special Meetings. Special meetings of the Board may be called
----------------
by the Chairman of the Board, the President, or by a majority of the Directors
either in writing or by vote at a meeting, and may be held at any place in or
out of the State of Maryland as the Board may from time to time determine.
Section 9. Notice of Special Meetings. Notice of each special meeting of
--------------------------
the Board shall be given by the Secretary as hereinafter provided, in which
notice shall be stated the time and place of the meeting. Notice of each such
meeting shall be delivered to each Director, either personally or by telephone,
telegraph, cable or wireless, at least twenty-four hours before the time at
which such meeting is to be held, or by first-class mail, postage prepaid, or by
commercial delivery services addressed to him at his residence or usual place of
business, at least three days before the day on which such meeting is to be
held.
Section 10. Waiver of Notice of Special Meetings. Notice of any special
------------------------------------
meeting need not be given to any Director who shall, either before or after the
meeting, sign a written waiver of notice which is filed with the records of the
meeting or who shall attend such meeting. Except as otherwise specifically
required by these By-Laws, a notice or waiver of notice of any meeting need not
state the purposes of such meeting.
Section 11. Quorum and Voting. A majority of the members of the entire
-----------------
Board shall be present in person at any meeting of the Board in order to
constitute a quorum for the transaction of business at such meeting, and except
as otherwise expressly required by statute, the Articles of Incorporation,
these By-Laws, the 1940 Act or other applicable statute, the act of a majority
of the Directors present at any meeting at which a quorum is present shall be
the act of the Board; provided, however, that the approval of any contract with
an investment adviser or principal underwriter, as such terms are defined in the
1940 Act, which the Corporation enters into or any renewal or amendment thereof,
the approval of the fidelity bond required by the 1940 Act, and the selection of
the Corporation's independent public accountants shall each require the
affirmative vote of a majority of the Directors who are not interested persons,
as defined in the 1940 Act, of the Corporation. In the absence of a quorum at
any meeting of the Board, a majority of the Directors present thereat may
adjourn the meeting from time to time, but not for a period greater than thirty
(30) days at any one time, to another time and place until a quorum shall
attend. Notice of the time and place of any adjourned meeting shall be given to
the Directors who were not present at the time of the adjournment and, unless
such time and place were announced at the meeting at which the adjournment was
taken, to the other Directors. At any adjourned meeting at which
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a quorum is present, any business may be transacted which might have been
transacted at the meeting as originally called.
Section 12. Chairman. The Board of Directors may at any time appoint one
--------
of its members as Chairman of the Board, who shall serve at the pleasure of the
Board and who shall perform and execute such duties and powers as may be
conferred upon or assigned to him by the Board or these By-Laws, but who shall
not by reason of performing and executing these duties and powers be deemed an
officer or employee of the Corporation.
Section 13. Organization. The Chairman of the Board, if one has been
------------
selected and is present, shall preside at every meeting of the Board of
Directors. In the absence or inability of the Chairman of the Board to preside
at a meeting, the President, or, in his absence or inability to act, another
Director chosen by a majority of the Directors present, shall act as chairman of
the meeting and preside at it. The Secretary (or, in his absence or inability
to act, any person appointed by the Chairman) shall act as secretary of the
meeting and keep the minutes thereof.
Section 14. Written Consent of Directors in Lieu of a Meeting. Any action
-------------------------------------------------
required or permitted to be taken at any meeting of the Board of Directors or of
any committee thereof, except actions with respect to which a vote in person is
required by law, may be taken without a meeting if all members of the Board or
committee, as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes of the proceedings of the Board or
committee.
Section 15. Meeting by Conference Telephone. Members of the Board of
-------------------------------
Directors may participate in a meeting by means of a conference telephone or
similar communications equipment if all persons participating in the meeting can
hear each other at the same time, except that in such a meeting the Board cannot
perform any action with respect to which a vote in person is required by law.
Section 16. Compensation. Any Director, whether or not he is a salaried
------------
officer, employee or agent of the Corporation, may be compensated for his
services as Director or as a member of a committee, or as Chairman of the Board
or chairman of a committee, and in addition may be reimbursed for transportation
and other expenses, all in such manner and amounts as the Directors may from
time to time determine.
Section 17. Investment Policies. It shall be the duty of the Board of
-------------------
Directors to ensure that the purchase, sale, retention and disposal of
portfolio securities and the other investment practices of the Corporation are
at all times consistent with the investment policies and restrictions with
respect to
7
<PAGE>
securities investments and otherwise of the Corporation, as recited in the
current Prospectus of the Corporation filed from time to time with the
Securities and Exchange Commission and as required by the 1940 Act. The Board,
however, may delegate the duty of management of the assets and the
administration of its day-to-day operations to an individual or corporate
management company or investment adviser pursuant to a written contract or
contracts which have obtained the requisite approvals, including the requisite
approvals of renewals thereof, of the Board of Directors or the shareholders of
the Corporation in accordance with the provisions of the 1940 Act.
ARTICLE IV
Committees
----------
Section 1. Committees of the Board. The Board may, by resolution adopted
-----------------------
by a majority of the entire Board, designate an Executive Committee,
Compensation Committee, Audit Committee and Nomination Committee, each of which
shall consist of two or more of the Directors of the Corporation, which
committee shall have and may exercise all the powers and authority of the Board
with respect to all matters other than as set forth in Section 3 of this
Article.
Section 2. Other Committees of the Board. The Board of Directors may from
-----------------------------
time to time, by resolution adopted by a majority of the whole Board, designate
one or more other committees of the Board, each such committee to consist of two
or more Directors and to have such powers and duties as the Board of Directors
may, by resolution, prescribe.
Section 3. Limitation of Committee Powers. No committee of the Board
------------------------------
shall have power or authority to:
(a) recommend to shareholders any action requiring authorization of
shareholders pursuant to statute or the Articles of Incorporation;
(b) approve or terminate any contract with an investment adviser or
principal underwriter, as such terms are defined in the 1940 Act, or take any
other action required to be taken by the Board of Directors by the 1940 Act;
(c) amend or repeal these By-Laws or adopt new By-Laws;
(d) declare dividends or other distributions or issue capital share of
the Corporation; and
8
<PAGE>
(e) approve any merger or share exchange which does not require
shareholder approval.
Section 4. General. One-third, but not less than two members, of the
-------
members of any committee shall be present in person at any meeting of such
committee in order to constitute a quorum for the transaction of business at
such meeting, and the act of a majority present shall be the act of such
committee. The Board may designate a chairman of any committee and such
chairman or any two members of any committee may fix the time and place of its
meetings unless the Board shall otherwise provide. In the absence of
disqualification of any member or any committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in the place of any such absent or disqualified
member. The Board shall have the power at any time to change the membership of
any committee, to fill all vacancies, to designate alternate members, to replace
any absent or disqualified member, or to dissolve any such committee.
All committees shall keep written minutes of their proceedings and shall
report such minutes to the Board. All such proceedings shall be subject to
revision or alteration by the Board; provided, however, that third parties shall
not be prejudiced by such revision or alteration.
ARTICLE V
Officers, Agents and Employees
Section 1. Number and Qualifications. The officers of the Corporation
-------------------------
shall be a President, a Secretary and a Treasurer, each of whom shall be elected
by the Board of Directors. The Board of Directors may elect or appoint one or
more Vice Presidents and may also appoint such other officers. agents and
employees as it may deem necessary or proper. Any two or more offices may be
held by the same person, except the offices of President and Vice President, but
no officer shall execute, acknowledge or verify any instrument in more than one
capacity. The Board may from time to time elect or appoint, or delegate to the
President the power to appoint, such other officers (including one or more
Assistant Vice Presidents, one or more Assistant Treasurers and one or more
Assistant Secretaries) and such agents, as may be necessary or desirable for the
business of the Corporation. Such other officers and agents shall have such
duties and shall hold their offices for such terms as may be prescribed by the
Board or by the appointing authority.
9
<PAGE>
Section 2. Resignations. Any officer of the Corporation may resign at any
------------
time by giving written notice of his resignation to the Board, the Chairman of
the Board, the President or the Secretary. Any such resignation shall take
effect at the time specified therein or, if the time when it shall become
effective shall not be specified therein, immediately upon its receipt; and,
unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective.
Section 3. Removal of Officer, Agent or Employee. Any officer, agent or
-------------------------------------
employee of the Corporation may be removed by the Board of Directors with or
without cause at any time, and the Board may delegate such power of removal as
to agents and employees not elected or appointed by the Board of Directors.
Such removal shall be without prejudice to such person's contract rights, if
any, but the appointment of any person as an officer, agent or employee of the
Corporation shall not of itself create contract rights.
Section 4. Vacancies. A vacancy in any office, whether arising from
---------
death, resignation, removal or any other cause, may be filled for the unexpired
portion of the term of the office which shall be vacant, in the manner
prescribed in these By-Laws for the regular election or appointment to such
office.
Section 5. Compensation. The compensation of the officers of the
------------
Corporation shall be fixed by the Board of Directors, but this power may be
delegated to any committee or to any officer in respect of other officers under
his control. No officer shall be precluded from receiving such compensation by
reason of the fact that he is also a Director of the Corporation.
Section 6. Bonds or other Security. If required by the Board, any
-----------------------
officer, agent or employee of the Corporation shall give a bond or other
security for the faithful performance of his duties, in such amount and with
such surety or sureties as the Board may require.
Section 7. President. The President shall be the chief executive officer
---------
of the Corporation. In the absence of the Chairman of the Board (or if there be
none), the President shall preside at all meetings of the shareholders and of
the Board of Directors. He shall have, subject to the control of the Board of
Directors, general charge of the business and affairs of the Corporation. He
may employ and discharge employees and agents of the Corporation, except such as
shall be appointed by the Board, and he may delegate these powers.
Section 8. The Vice Presidents. In the absence or disability of the
-------------------
President, or when so directed by the President,
10
<PAGE>
any Vice President designated by the Board of Directors may perform any or all
of the duties of the President, and, when so acting, shall have all the powers
of, and be subject to all the restrictions upon, the President; provided,
however, that no Vice President shall act as a member of or as chairman of any
committee of which the President is a member or chairman by designation of ex-
officio, except when designated by the Board. Each Vice President shall perform
such other duties as from time to time may be conferred upon or assigned to him
by the Board or the President.
Section 9. Treasurer. The Treasurer shall:
---------
(a) have charge and custody of, and be responsible for, all the funds
and securities of the Corporation, except those which the Corporation has placed
in the custody of a bank or trust company or member of a national securities
exchange (as that term is defined in the Securities Exchange Act of 1934)
pursuant to a written agreement designating such bank or trust company or member
of a national securities exchange as custodian of the property of the
Corporation;
(b) keep full and accurate accounts of receipts and disbursements in
books belonging to the Corporation;
(c) cause all moneys and other valuables to be deposited to the credit
of the Corporation;
(d) receive, and give receipts for, moneys due and payable to the
Corporation from any source whatsoever;
(e) disburse the funds of the Corporation and supervise the investment
of its funds as ordered or authorized by the Board, taking proper vouchers
therefor; and
(f) in general, perform all the duties incident to the office of
Treasurer and such other duties as from time to time may be assigned to him by
the Board or the President.
Section 10. Assistant Treasurers. In the absence or disability of the
--------------------
Treasurer, or when so directed by the Treasurer, any Assistant Treasurer may
perform any or all of the duties of the Treasurer, and, when so acting, shall
have all the powers of, and be subject to all the restrictions upon, the
Treasurer. Each Assistant Treasurer shall perform all such other duties as from
time to time may be conferred upon or assigned to him by the Board of Directors,
the President or the Treasurer.
11
<PAGE>
Section 11. Secretary. The Secretary shall:
---------
(a) keep or cause to be kept in one or more books provided for the
purpose, the minutes of all meetings of the Board, the committees of the Board
and the shareholders;
(b) see that all notices are duly given in accordance with the
provisions of these By-Laws and as required by law;
(c) be custodian of the records and the seal of the Corporation and
affix and attest the seal to all share certificates of the Corporation (unless
the seal of the Corporation on such certificates shall be a facsimile, as
hereinafter provided) and affix and attest the seal to all other documents to be
executed on behalf of the Corporation under its seal;
(d) see that the books, reports, statements, certificates and other
documents and records required by law to be kept and filed are properly kept and
filed; and
(e) in general, perform all the duties incident to the office of
Secretary and such other duties as from time to time may be assigned to him by
the Board or the President.
Section 12. Assistant Secretaries. In the absence or disability of the
---------------------
Secretary, or when so directed by the Secretary, any Assistant Secretary may
perform any or all of the duties of the Secretary, and, when so acting, shall
have all the powers of, and be subject to all restrictions upon, the Secretary.
Each Assistant Secretary shall perform such other duties as from time to time
may be conferred upon or assigned to him by the Board of Directors, the
President or the Secretary.
Section 13. Delegation of Duties. In case of the absence of any officer
--------------------
of the Corporation, or for any other reason that the Board may deem sufficient,
the Board may confer for the time being the powers or duties, or any of them, of
such officer upon any other officer or upon any Director.
ARTICLE VI
Capital Stock
-------------
Section 1. Stock Certificates. The Board may authorize the issuance of
------------------
some or all of the shares of any or all classes or series of the common stock of
the Corporation with or without certificates. The rights of holders of each
class or series of common stock of the Corporation to receive or not to
12
<PAGE>
receive certificates shall be set forth in articles supplementary. With respect
to shares whose issuance the Board has authorized with certificates, the Board
shall determine the conditions under which a holder of such shares shall be
entitled to have a certificate or certificates. A shareholder's certificate or
certificates shall be in such form as shall be approved by the Board, and shall
represent the number of such shares of the Corporation owned by him, provided,
however, that certificates for fractional shares will not be delivered in any
case. The certificates representing shares of share shall be signed by the
President, a Vice President, or the Chairman of the Board, and countersigned by
the Secretary or an Assistant Secretary or the Treasurer or an Assistant
Treasurer and sealed with the seal of the Corporation. Any or all of the
signatures or the seal on the certificate may be a facsimile. In case any
officer, transfer agent or registrar who has signed or whose facsimile signature
has been placed upon a certificate shall have ceased to be such officer,
transfer agent or registrar before such certificate shall be issued, it may be
issued by the Corporation with the same effect as if such officer, transfer
agent or registrar were still in office at the date of issue.
Section 2. Rights of Inspection. There shall be kept at the principal
--------------------
executive office, which shall be available for inspection during usual business
hours in accordance with the General Laws of the State of Maryland, the
following corporate documents: (a) By-Laws, (b) minutes of proceedings of the
shareholders, (c) annual statements of affairs, and (d) voting trust agreements,
if any. One or more persons who together are and for at least six months have
been shareholders of record of at least five percent of the outstanding shares
of any class may inspect and copy during usual business hours the Corporation's
books of account and share ledger in accordance with the General Laws of the
State of Maryland.
Section 3. Transfer of Shares. Transfers of shares of the Corporation
------------------
shall be made on the share records of the Corporation at the direction of the
person named on the Corporation's books or named in the certificate or
certificates for such shares (if issued) only by the registered holder thereof,
or by his attorney authorized by power of attorney duly executed and filed with
the Secretary or with a transfer agent or transfer clerk, and on surrender of
the certificate or certificates, if issued, for such shares properly endorsed or
accompanied by a duly executed share transfer power and the payment of all taxes
thereon. Except as otherwise provided by law, the Corporation shall be entitled
to recognize the exclusive right of a person in whose name any share or shares
stand on the record of shareholders as the owner of such share or shares for all
purposes, including, without limitation, the rights to receive dividends or
other distributions, and to vote as such owner, and the Corporation shall not be
bound
13
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to recognize any equitable or legal claim to or interest in any such share or
shares on the part of any other person.
Section 4. Transfer Agents and Registrars. The Corporation may have one
------------------------------
or more Transfer Agents and one or more Registrars of its shares, whose
respective duties the Board of Directors may, from time to time, define. No
certificate of share shall be valid until countersigned by a Transfer Agent, if
the Corporation shall have a Transfer Agent or until registered by a Registrar,
if the Corporation shall have a Registrar. The duties of Transfer Agent and
Registrar may be combined.
Section 5. Record Date and Closing of Transfer Books. The Board of
-----------------------------------------
Directors may set a record date for the purpose of making any proper
determination with respect to shareholders, including which shareholders are
entitled to notice of a meeting, vote at a meeting (or any adjournment thereof),
receive a dividend, or be allotted or exercise other rights. The record date
may not be more than ninety (90) days before the date on which the action
requiring the determination will be taken; and, in the case of a meeting of
shareholders, the record date shall be at least ten (10) days before the date of
the meeting. The Board of Directors shall not close the books of the
Corporation against transfers of shares during the whole or any part of such
period.
Section 6. Regulations. The Board may make such additional rules and
-----------
regulations, not inconsistent with these By-Laws, as it may deem expedient
concerning the issue, transfer and registration of certificates for shares of
share of the Corporation.
Section 7. Lost, Stolen, Destroyed or Mutilated Certificates. The holder
-------------------------------------------------
of any certificate representing shares of share of the Corporation shall
immediately notify the Corporation of any loss, theft, destruction or mutilation
of such certificate, and the Corporation may issue a new certificate of share in
the place of any certificate theretofore issued by it which the owner thereof
shall allege to have been lost, stolen or destroyed or which shall have been
mutilated, and the Board may, in its discretion, require such owner or his legal
representatives to give to the Corporation a bond in such sum, limited or
unlimited, and in such form and with such surety or sureties, as the Board in
its absolute discretion shall determine, to indemnify the Corporation against
any claim that may be made against it on account of the alleged loss or
destruction of any such certificate, or issuance of a new certificate. Anything
herein to the contrary notwithstanding, the Board, in its absolute discretion,
may refuse to issue any such new certificate, except pursuant to legal
proceedings under the laws of the State of Maryland.
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Section 8. Stock Ledgers. The Corporation shall not be required to keep
-------------
original or duplicate share ledgers at its principal office in the City of
Baltimore, Maryland, but share ledgers shall be kept at the respective offices
of the Transfer Agents of the Corporation's capital shares.
ARTICLE VII
Seal
----
The Board of Directors shall provide a suitable seal, bearing the name of
the Corporation, which shall be in the charge of the secretary. The Board of
Directors may authorize one or more duplicate seals and provide for the custody
thereof. If the Corporation is required to place its corporate seal on a
document, it is sufficient to meet any requirement of any law, rule, or
regulation relating to a corporate seal to place the word "Seal" adjacent to the
signature of the person authorized to sign the document on behalf of the
Corporation.
ARTICLE VIII
Fiscal Year
-----------
Unless otherwise determined by the Board, the fiscal year of the
Corporation shall end on the last day of December in each year.
ARTICLE IX
Depositories and Custodians
---------------------------
Section 1. Depositories. The funds of the Corporation shall be deposited
------------
with such banks or other depositories as the Board of Directors of the
Corporation may from time to time determine.
Section 2. Custodians. All securities and other investments shall be
----------
deposited in the safekeeping of such banks or other companies as the Board of
Directors of the Corporation may from time to time determine. Every arrangement
entered into with any bank or other company for the safekeeping of the
securities and investments of the Corporation shall contain provisions complying
with the 1940 Act, and the general rules and regulations thereunder.
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ARTICLE X
Execution of Instruments
------------------------
Section 1. Checks, Notes, Drafts, etc. Checks, notes, drafts,
---------------------------
acceptances, bills of exchange and other orders or obligations for the payment
of money shall be signed by such officer or officers or person or persons as the
Board of Directors by resolution shall from time to time designate.
Section 2. Sale or Transfer of Securities. Money market instruments,
------------------------------
bonds or other securities at any time owned by the Corporation may be held on
behalf of the Corporation or sold, transferred or otherwise disposed of subject
to any limits imposed by these By-Laws, and pursuant to authorization by the
Board and, when so authorized to be held on behalf of the Corporation or sold,
transferred or otherwise disposed of, may be transferred from the name of the
Corporation by the signature of the President or a Vice President or the
Treasurer or pursuant to any procedure approved by the Board of Directors,
subject to applicable law.
ARTICLE XI
Independent Public Accountants
------------------------------
The firm of independent public accountants which shall sign or certify the
financial statements of the Corporation which are filed with the Securities and
Exchange Commission shall be selected annually by the Board of Directors and
ratified by the Board of Directors or the shareholders in accordance with the
provisions of the 1940 Act.
ARTICLE XII
Annual Statements
-----------------
The books of account of the Corporation shall be examined by an independent
firm of public accountants at the close of each annual period of the Corporation
and at such other times as may be directed by the Board. A report to the
shareholders based upon each such examination shall be mailed to each
shareholder of the Corporation of record on such date with respect to each
report as may be determined by the Board, at his address as the same appears on
the books of the Corporation. Such annual statement shall also be placed on
file at the Corporation's principal office in the State of Maryland. Each such
report shall show the assets and
16
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liabilities of the Corporation as of the close of the annual or semiannual
period covered by the report and the securities in which the funds of the
Corporation were then invested. Such report shall also show the Corporation's
income and expenses for the period from the end of the Corporation's preceding
fiscal year to the close of the annual or semiannual period covered by the
report and any other information required by the 1940 Act, and shall set forth
such other matters as the Board or such firm of independent public accountants
shall determine.
ARTICLE XIII
Indemnification of Directors and Officers
-----------------------------------------
Section 1. Indemnification. The Corporation shall indemnify its directors
---------------
to the fullest extent that indemnification of directors is permitted by the
Maryland General Corporation Law. The Corporation shall indemnify its officers
to the same extent as its directors and to such further extent as is consistent
with law. The Corporation shall indemnify its directors and officers who while
serving as directors or officers also serve at the request of the Corporation as
a director, officer, partner, trustee, employee, agent or fiduciary of another
corporation, partnership, joint venture, trust, other enterprise or employee
benefit plan to the fullest extent consistent with law. This Section shall not
protect any such person against any liability to the Corporation or any
shareholder thereof to which such person would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office.
Section 2. Advances. Any current or former director or officer of the
--------
Corporation claiming indemnification within the scope of this Article XIII shall
be entitled to advances from the Corporation for payment of the reasonable
expenses incurred by him in connection with proceedings to which he is a party
in the manner and to the full extent permissible under the Maryland General
Corporation Law, the Securities Act of 1938 (the "1933 Act") and the 1940 Act,
as such statutes are now or hereafter in force.
Section 3. Procedure. On the request of any current or former director or
---------
officer requesting indemnification or an advance under this Article XIII, the
Board of Directors shall determine, or cause to be determined, in a manner
consistent with the Maryland General Corporation Law, the 1933 Act and the 1940
Act, as such statutes are now or hereafter in force, whether the standards
required by this Article XIII have been met.
17
<PAGE>
Section 4. Other Rights. The indemnification provided by this
------------
Article XIII shall not be deemed exclusive of any other right, in respect of
indemnification or otherwise, to which those seeking such indemnification may be
entitled under any insurance or other agreement, vote of shareholders or
disinterested directors or otherwise, both as to action by a director or officer
of the Corporation in his official capacity and as to action by such person in
another capacity while holding such office or position, and shall continue as to
a person who has ceased to be a director or officer and shall inure to the
benefit of the heirs, executors and administrators of such a person.
ARTICLE XIV
Amendments
----------
These By-Laws or any of them may be amended, altered or repealed at
any annual meeting of the shareholders or at any special meeting of the
shareholders at which a quorum is present or represented, provided that notice
of the proposed amendment, alteration or repeal be contained in the notice of
such special meeting. These By-Laws may also be amended, altered or repealed by
the affirmative vote of a majority of the Board of Directors at any regular or
special meeting of the Board of Directors or by unanimous written consent. [As
Amended April 24, 1996]
18
<PAGE>
Exhibit (5)(nn)
INVESTMENT ADVISORY AGREEMENT
-----------------------------
Numeric Micro Cap Fund
AGREEMENT made as of April 24, 1996 between THE RBB FUND, INC., a
Maryland corporation (herein called the "Fund"), and Numeric Investors L.P.
(herein called the "Investment Advisor").
WHEREAS, the Fund is registered as an open-end, management investment
company under the Investment Company Act of 1940 (the "1940 Act") and currently
offers or proposes to offer shares representing interests in twenty separate
investment portfolios; and
WHEREAS, the Fund desires to retain the Investment Advisor to render
certain investment advisory services to the Fund with respect to the Fund's
Numeric Micro Cap Fund (the "Portfolio"), and the Investment Advisor is willing
to so render such services.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, and intending to be legally bound hereby, it is agreed between
the parties hereto as follows:
1. Appointment. The Fund hereby appoints the Investment Advisor to
-----------
act as investment advisor for the Portfolio for the period and on the terms set
forth in this Agreement. The Investment Advisor accepts such appointment and
agrees to render the services herein set forth, for the compensation herein
provided.
2. Delivery of Documents. The Fund has furnished the Investment
---------------------
Advisor with copies properly certified or authenticated of each of the
following:
(a) Resolutions of the Board of Directors of the Fund authorizing
the appointment of the Investment Advisor and the execution and delivery of this
Agreement;
(b) Each prospectus and statement of additional information
relating to any class of Shares representing interests in the Portfolio of the
Fund in effect under the 1933 Act (such prospectus and statement of additional
information, as presently in effect and as they shall from time to time be
amended and supplemented, are herein collectively called the "Prospectus" and
"Statement of Additional Information," respectively).
<PAGE>
The Fund will promptly furnish the Investment Advisor from time to
time with copies, properly certified or authenticated, of all amendments of or
supplements to the foregoing, if any.
In addition to the foregoing, the Fund will also provide the
Investment Advisor with copies of the Fund's Charter and By-laws, and any
registration statement or service contracts related to the Portfolio, and will
promptly furnish the Investment Advisor with any amendments of or supplements to
such documents.
3. Management of the Portfolio. Subject to the supervision of the
---------------------------
Board of Directors of the Fund, the Investment Advisor will provide for the
overall management of the Portfolio including (i) the provision of a continuous
investment program for the Portfolio, including investment research and
management with respect to all securities, investments, cash and cash
equivalents in the Portfolio, (ii) the determination from time to time of what
securities and other investments will be purchased, retained, or sold by the
Fund for the Portfolio, and (iii) the placement from time to time of orders for
all purchases and sales made for the Portfolio. The Investment Advisor will
provide the services rendered by it hereunder in accordance with the Portfolio's
investment objectives, restrictions and policies as stated in the applicable
Prospectus and the Statement of Additional Information, provided that the
Investment Adviser has actual or constructive notice or knowledge of any changes
by the Board of Directors to such investment objectives, restrictions or
policies. The Investment Advisor further agrees that it will render to the
Fund's Board of Directors such periodic and special reports regarding the
performance of its duties under this Agreement as the Board may reasonably
request. The Investment Advisor agrees to provide to the Fund (or its agents
and service providers) prompt and accurate data with respect to the Portfolio's
transactions and, where not otherwise
available, the daily valuation of securities in the Portfolio.
4. Brokerage. Subject to the Investment Advisor's obligation to
---------
obtain best price and execution, the Investment Advisor shall have full
discretion to select brokers or dealers to effect the purchase and sale of
securities. When the Investment Advisor places orders for the purchase or sale
of securities for the Portfolio, in selecting brokers or dealers to execute such
orders, the Investment Advisor is expressly authorized to consider the fact that
a broker or dealer has furnished statistical, research or other information or
services for the benefit of the Portfolio directly or indirectly. Without
limiting the generality of the foregoing, the Investment Advisor is authorized
to cause the Portfolio to pay brokerage commissions
2
<PAGE>
which may be in excess of the lowest rates available to brokers who execute
transactions for the Portfolio or who otherwise provide brokerage and research
services utilized by the Investment Advisor, provided that the Investment
Advisor determines in good faith that the amount of each such commission paid to
a broker is reasonable in relation to the value of the brokerage and research
services provided by such broker viewed in terms of either the particular
transaction to which the commission relates or the Investment Advisor's overall
responsibilities with respect to accounts as to which the Investment Advisor
exercises investment discretion. The Investment Advisor may aggregate
securities orders so long as the Investment Advisor adheres to a policy of
allocating investment opportunities to the Portfolio over a period of time on a
fair and equitable basis relative to other clients. In no instance will the
Portfolio's securities be purchased from or sold to the Fund's principal
underwriter, the Investment Advisor, or any affiliated person thereof, except to
the extent permitted by SEC exemptive order or by applicable law.
The Investment Advisor shall report to the Board of Directors of the
Fund at least quarterly with respect to brokerage transactions that were entered
into by the Investment Advisor, pursuant to the foregoing paragraph, and shall
certify to the Board that the commissions paid were reasonable in terms either
of that transaction or the overall responsibilities of the Advisor to the Fund
and the Investment Advisor's other clients, that the total commissions paid by
the Fund were reasonable in relation to the benefits to the Fund over the long
term, and that such commissions were paid in compliance with Section 28(e) of
the Securities Exchange Act of 1934.
5. Conformity with Law; Confidentiality. The Investment Advisor
------------------------------------
further agrees that it will comply with all applicable rules and regulations of
all federal regulatory agencies having jurisdiction over the Investment Advisor
in the performance of its duties hereunder. The Investment Advisor will treat
confidentially and as proprietary information of the Fund all records and other
information relating to the Fund and prior, present or potential shareholders
(except clients of the Investment Advisor and its affiliates), and will not use
such records and information for any purpose other than performance of its
responsibilities and duties hereunder, except after prior notification to and
approval in writing by the Fund, which approval shall not be unreasonably
withheld and may not be withheld where the Investment Advisor may be exposed to
civil or criminal contempt proceedings for failure to comply, when requested to
divulge such information by duly constituted authorities, or when so requested
by the Fund.
3
<PAGE>
6. Services Not Exclusive. The Investment Advisor and its officers
----------------------
may act and continue to act as investment managers for others, and nothing in
this Agreement shall in any way be deemed to restrict the right of the
Investment Advisor to perform investment management or other services for any
other person or entity, and the performance of such services for others shall
not be deemed to violate or give rise to any duty or obligation to the Portfolio
or the Fund.
Nothing in this Agreement shall limit or restrict the Investment
Advisor or any of its partners, officers, affiliates or employees from buying,
selling or trading in any securities for its or their own account. The Fund
acknowledges that the Investment Advisor and its partners, officers, affiliates,
employees and other clients may, at any time, have, acquire, increase, decrease,
or dispose of positions in investments which are at the same time being acquired
or disposed of for the Portfolio. The Investment Advisor shall have no
obligation to acquire for the Portfolio a position in any investment which the
Investment Advisor, its partners, officers, affiliates or employees may acquire
for its or their own accounts or for the account of another client, so long as
it continues to be the policy and practice of the Investment Advisor not to
favor or disfavor consistently or consciously any client or class of clients in
the allocation of investment opportunities so that, to the extent practical,
such opportunities will be allocated among clients over a period of time on a
fair and equitable basis.
The Investment Advisor agrees that this Paragraph 6 does not
constitute a waiver by the Fund of the obligations imposed upon the Investment
Advisor to comply with Sections 17(d) and 17(j) of the 1940 Act, and the rules
thereunder, nor constitute a waiver by the Fund of the obligations imposed upon
the Investment Advisor under Section 206 of the Investment Advisers Act of 1940
and the rules thereunder. Further, the Investment Advisor agrees that this
Paragraph 6 does not constitute a waiver by the Fund of the fiduciary obligation
of the Investment Advisor arising under federal or state law, including Section
36 of the 1940 Act. The Investment Advisor agrees that this Paragraph 6 shall
be interpreted consistent with the provisions of Section 17(i) of the 1940 Act.
7. Books and Records. In compliance with the requirements of Rule
-----------------
31a-3 under the 1940 Act, the Investment Advisor hereby agrees that all records
which it maintains for the Portfolio are the property of the Fund and further
agrees to surrender promptly to the Fund any of such records upon the Fund's
request. The Investment Advisor further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940
4
<PAGE>
Act the records required to be maintained by Rule 31a-1 under the 1940 Act.
8. Expenses. During the term of this Agreement, the Investment
--------
Advisor will pay all expenses incurred by it in connection with its activities
under this Agreement. The Portfolio shall bear all of its own expenses not
specifically assumed by the Investment Advisor. General expenses of the Fund
not readily identifiable as belonging to a portfolio of the Fund shall be
allocated among all investment portfolios by or under the direction of the
Fund's Board of Directors in such manner as the Board determines to be fair and
equitable. Expenses borne by the Portfolio shall include, but are not limited
to, the following (or the portfolio's share of the following): (a) the cost
(including brokerage commissions) of securities purchased or sold by the
Portfolio and any losses incurred in connection therewith; (b) fees payable to
and expenses incurred on behalf of the Portfolio by the Investment Advisor;
(c) filing fees and expenses relating to the registration and qualification of
the Fund and the Portfolio's shares under Federal and/or state securities laws
and maintaining such registrations and qualifications; (d) fees and salaries
payable to the Fund's directors and officers; (e) taxes (including any income or
franchise taxes) and governmental fees; (f) costs of any liability and other
insurance or fidelity bonds; (g) any costs, expenses or losses arising out a
liability of or claim for damages or other relief asserted against the Fund or
the Portfolio for violation of any law; (h) legal, accounting and auditing
expenses, including legal fees of special counsel for the independent directors;
(i) charges of custodians and other agents; (j) expenses of setting in type and
printing prospectuses, statements of additional information and supplements
thereto for existing shareholders, reports, statements, and confirmations to
shareholders and proxy material that are not attributable to a class; (k) costs
of mailing prospectuses, statements of additional information and supplements
thereto to existing shareholders, as well as reports to shareholders and proxy
material that are not attributable to a class; (l) any extraordinary expenses;
(m) fees, voluntary assessments and other expenses incurred in connection with
membership in investment company organizations; (n) costs of mailing and
tabulating proxies and costs of shareholders' and directors' meetings; (o) costs
of independent pricing services to value a portfolio's securities; and (p) the
costs of investment company literature and other publications provided by the
Fund to its directors and officers. Distribution expenses, transfer agency
expenses, expenses of preparation, printing and mailing, prospectuses,
statements of additional information, proxy statements and reports to
shareholders, and organizational
5
<PAGE>
expenses and registration fees, identified as belonging to a particular class of
the Fund are allocated to such class.
If the expenses borne by the Portfolio in any fiscal year exceed the
most restrictive applicable expense limitations imposed by the securities
regulations of any state in which the Shares of the Portfolio are registered or
qualified for sale to the public, the Investment Advisor shall reimburse the
Portfolio for any excess up to the amount of the fees payable by the Portfolio
to it during such fiscal year pursuant to Paragraph 9 hereof in the same
proportion that its fees bear to the total fees paid by the Fund for investment
advisory services in respect of the Portfolio; provided, however, that
-------- -------
notwithstanding the foregoing, the Investment Advisor shall reimburse the
Portfolio for such excess expenses regardless of the amount of such fees payable
to it during such fiscal year to the extent that the securities regulations of
any state in which the Shares are registered or qualified for sale so require.
9. Voting. The Investment Advisor shall have the authority to vote
------
as agent for the Fund, either in person or by proxy, tender and take all actions
incident to the ownership of all securities in which Portfolio's assets may be
invested from time to time, subject to such policies and procedures as the Board
of Directors of the Fund may adopt from time to time.
10. Reservation of Name. The Investment Advisor shall at all times
-------------------
have all rights in and to the Portfolio's name and all investment models used by
or on behalf of the Portfolio. The Investment Advisor may use the Portfolio's
name or any portion thereof in connection with any other mutual fund or business
activity without the consent of any shareholder and the Fund shall execute and
deliver any and all documents required to indicate the consent of the Fund to
such use.
No public reference to, or description of, the Investment Advisor or
its methodology or work shall be made by the Fund, whether in the Prospectus,
Statement of Additional Information or otherwise, without the prior written
consent of the Investment Advisor, which consent shall not be unreasonably
withheld. In each case, the Fund shall provide the Investment Advisor a
reasonable opportunity to review any such reference or description before being
asked for such consent.
11. Discontinuation of Public Offering. Subject to the prior
----------------------------------
approval of the Fund's Board of Directors, the Investment Advisor may instruct
the Fund's distributor to cease sales of shares of the Portfolio to new
investors due to concerns that an increase in the size of the Portfolio may
adversely effect the implementation of the Portfolio's investment strategy.
6
<PAGE>
Subject to prior Board approval, the Investment Advisor may subsequently
instruct the Fund's distributor to recommence the sale of shares of the
Portfolio.
12. Compensation.
------------
(a) For the services provided and the expenses assumed pursuant
to this Agreement with respect to the Portfolio, the Fund will pay the
Investment Advisor from the assets of the Portfolio and the Investment Advisor
will accept as full compensation therefor a fee, computed daily and payable
monthly, at the annual rate of .75% of the Portfolio's average daily net assets.
(b) The fee attributable to the Portfolio shall be satisfied
only against assets of the Portfolio and not against the assets of any other
investment portfolio of the Fund.
13. Limitation of Liability of the Investment Advisor. The
-------------------------------------------------
Investment Advisor shall not be liable for any error of judgment or mistake of
law or for any loss suffered by the Fund in connection with the matters to which
this Agreement relates, except a loss resulting from a breach of fiduciary duty
with respect to the receipt of compensation for services or a loss resulting
from willful misfeasance, bad faith or gross negligence on the part of the
Investment Advisor in the performance of its duties or from reckless disregard
by it of its obligations and duties under this Agreement ("disabling conduct").
The Portfolio will indemnify the Investment Advisor against and hold it harmless
from any and all losses, claims, damages, liabilities or expenses (including
reasonable counsel fees and expenses) resulting from any claim, demand, action
or suit not resulting from disabling conduct by the Investment Advisor.
Indemnification shall be made only following: (i) a final decision on the merits
by a court or other body before whom the proceeding was brought that the
Investment Advisor was not liable by reason of disabling conduct or (ii) in the
absence of such a decision, a reasonable determination, based upon a review of
the facts, that the Investment Advisor was not liable by reason of disabling
conduct by (a) the vote of a majority of a quorum of directors of the Portfolio
who are neither "interested persons" of the Portfolio nor parties to the
proceeding ("disinterested non-party directors") or (b) an independent legal
counsel in a written opinion. The Investment Advisor shall be entitled to
advances from the Portfolio for payment of the reasonable expenses incurred by
it in connection with the matter as to which it is seeking indemnification in
the manner and to the fullest extent permissible under the Maryland General
Corporation Law. The Investment Advisor shall provide to the Portfolio a
written affirmation of its good faith belief that the standard of conduct
7
<PAGE>
necessary for indemnification by the Portfolio has been met and a written
undertaking to repay any such advance if it should ultimately be determined that
the standard of conduct has not been met. In addition, at least one of the
following additional conditions shall be met: (a) the Investment Advisor shall
provide a security in form and amount acceptable to the Portfolio for its
undertaking; (b) the Portfolio is insured against losses arising by reason of
the advance; or (c) a majority of a quorum of disinterested non-party directors,
or independent legal counsel, in a written opinion, shall have determined, based
upon a review of facts readily available to the Portfolio at the time the
advance is proposed to be made, that there is reason to believe that the
Investment Advisor will ultimately be found to be entitled to indemnification.
Any amounts payable by the Portfolio under this Section shall be satisfied only
against the assets of the Portfolio and not against the assets of any other
investment portfolio of the Fund.
14. Duration and Termination. This Agreement shall become effective
------------------------
with respect to the Portfolio upon approval of this Agreement by vote of a
majority of the outstanding voting securities of the Portfolio and, unless
sooner terminated as provided herein, shall continue with respect to the
Portfolio until August 16, 1996. Thereafter, if not terminated, this Agreement
shall continue with respect to the Portfolio for successive annual periods
ending on August 16, provided such continuance is specifically approved at least
--------
annually (a) by the vote of a majority of those members of the Board of
Directors of the Fund who are not parties to this Agreement or interested
persons of any such party, cast in person at a meeting called for the purpose of
voting on such approval, and (b) by the Board of Directors of the Fund or by
vote of a majority of the outstanding voting securities of the Portfolio;
provided, however, that this Agreement may be terminated with respect to the
- -------- -------
Portfolio by the Fund at any time, without the payment of any penalty, by the
Board of Directors of the Fund or by vote of a majority of the outstanding
voting securities of the Portfolio, on 60 days' prior written notice to the
Investment Advisor, or by the Investment Advisor at any time, without payment of
any penalty, on 60 days' prior written notice to the Fund. This Agreement will
immediately terminate in the event of its assignment. (As used in this
Agreement, the terms "majority of the outstanding voting securities,"
"interested person" and "assignment" shall have the same meaning as such terms
have in the 1940 Act).
15. Amendment of this Agreement. No provision of this Agreement may
---------------------------
be changed, discharged or terminated orally, except by an instrument in writing
signed by the party against which enforcement of the change, discharge or
termination is sought, and no amendment of this Agreement affecting the
Portfolio shall
8
<PAGE>
be effective until approved by vote of the holders of a majority of the
outstanding voting securities of the Portfolio.
16. Miscellaneous. The captions in this Agreement are included for
-------------
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and shall be
governed by Delaware law.
17. Change in Membership. The Investment Advisor shall notify the
--------------------
Fund of any change in its membership within a reasonable time after such change.
18. Governing Law. This Agreement shall be governed by and construed
-------------
and enforced in accordance with the laws of the state of Delaware without giving
effect to the conflicts of laws principles thereof.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.
THE RBB FUND, INC.
By:
-----------------------
President
NUMERIC INVESTORS L.P.
By:
-----------------------
9
<PAGE>
Exhibit (5)(oo)
INVESTMENT ADVISORY AGREEMENT
-----------------------------
Numeric Growth Fund
AGREEMENT made as of April 24, 1996 between THE RBB FUND, INC., a
Maryland corporation (herein called the "Fund"), and Numeric Investors L.P.
(herein called the "Investment Advisor").
WHEREAS, the Fund is registered as an open-end, management investment
company under the Investment Company Act of 1940 (the "1940 Act") and currently
offers or proposes to offer shares representing interests in twenty separate
investment portfolios; and
WHEREAS, the Fund desires to retain the Investment Advisor to render
certain investment advisory services to the Fund with respect to the Fund's
Numeric Growth Fund (the "Portfolio"), and the Investment Advisor is willing to
so render such services.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, and intending to be legally bound hereby, it is agreed between
the parties hereto as follows:
1. Appointment. The Fund hereby appoints the Investment Advisor to
-----------
act as investment advisor for the Portfolio for the period and on the terms set
forth in this Agreement. The Investment Advisor accepts such appointment and
agrees to render the services herein set forth, for the compensation herein
provided.
2. Delivery of Documents. The Fund has furnished the Investment
---------------------
Advisor with copies properly certified or authenticated of each of the
following:
(a) Resolutions of the Board of Directors of the Fund authorizing
the appointment of the Investment Advisor and the execution and delivery of this
Agreement;
(b) Each prospectus and statement of additional information
relating to any class of Shares representing interests in the Portfolio of the
Fund in effect under the 1933 Act (such prospectus and statement of additional
information, as presently in effect and as they shall from time to time be
amended and supplemented, are herein collectively called the "Prospectus" and
"Statement of Additional Information," respectively).
<PAGE>
The Fund will promptly furnish the Investment Advisor from time to
time with copies, properly certified or authenticated, of all amendments of or
supplements to the foregoing, if any.
In addition to the foregoing, the Fund will also provide the
Investment Advisor with copies of the Fund's Charter and By-laws, and any
registration statement or service contracts related to the Portfolio, and will
promptly furnish the Investment Advisor with any amendments of or supplements to
such documents.
3. Management of the Portfolio. Subject to the supervision of the
---------------------------
Board of Directors of the Fund, the Investment Advisor will provide for the
overall management of the Portfolio including (i) the provision of a continuous
investment program for the Portfolio, including investment research and
management with respect to all securities, investments, cash and cash
equivalents in the Portfolio, (ii) the determination from time to time of what
securities and other investments will be purchased, retained, or sold by the
Fund for the Portfolio, and (iii) the placement from time to time of orders for
all purchases and sales made for the Portfolio. The Investment Advisor will
provide the services rendered by it hereunder in accordance with the Portfolio's
investment objectives, restrictions and policies as stated in the applicable
Prospectus and the Statement of Additional Information, provided that the
Investment Adviser has actual or constructive notice or knowledge of any changes
by the Board of Directors to such investment objectives, restrictions or
policies. The Investment Advisor further agrees that it will render to the
Fund's Board of Directors such periodic and special reports regarding the
performance of its duties under this Agreement as the Board may reasonably
request. The Investment Advisor agrees to provide to the Fund (or its agents
and service providers) prompt and accurate data with respect to the Portfolio's
transactions and, where not otherwise available, the daily valuation of
securities in the Portfolio.
4. Brokerage. Subject to the Investment Advisor's obligation to
---------
obtain best price and execution, the Investment Advisor shall have full
discretion to select brokers or dealers to effect the purchase and sale of
securities. When the Investment Advisor places orders for the purchase or sale
of securities for the Portfolio, in selecting brokers or dealers to execute such
orders, the Investment Advisor is expressly authorized to consider the fact that
a broker or dealer has furnished statistical, research or other information or
services for the benefit of the Portfolio directly or indirectly. Without
limiting the generality of the foregoing, the Investment Advisor is authorized
to cause the Portfolio to pay brokerage commissions
2
<PAGE>
which may be in excess of the lowest rates available to brokers who execute
transactions for the Portfolio or who otherwise provide brokerage and research
services utilized by the Investment Advisor, provided that the Investment
Advisor determines in good faith that the amount of each such commission paid to
a broker is reasonable in relation to the value of the brokerage and research
services provided by such broker viewed in terms of either the particular
transaction to which the commission relates or the Investment Advisor's overall
responsibilities with respect to accounts as to which the Investment Advisor
exercises investment discretion. The Investment Advisor may aggregate
securities orders so long as the Investment Advisor adheres to a policy of
allocating investment opportunities to the Portfolio over a period of time on a
fair and equitable basis relative to other clients. In no instance will the
Portfolio's securities be purchased from or sold to the Fund's principal
underwriter, the Investment Advisor, or any affiliated person thereof, except to
the extent permitted by SEC exemptive order or by applicable law.
The Investment Advisor shall report to the Board of Directors of the
Fund at least quarterly with respect to brokerage transactions that were entered
into by the Investment Advisor, pursuant to the foregoing paragraph, and shall
certify to the Board that the commissions paid were reasonable in terms either
of that transaction or the overall responsibilities of the Advisor to the Fund
and the Investment Advisor's other clients, that the total commissions paid by
the Fund were reasonable in relation to the benefits to the Fund over the long
term, and that such commissions were paid in compliance with Section 28(e) of
the Securities Exchange Act of 1934.
5. Conformity with Law; Confidentiality. The Investment Advisor
------------------------------------
further agrees that it will comply with all applicable rules and regulations of
all federal regulatory agencies having jurisdiction over the Investment Advisor
in the performance of its duties hereunder. The Investment Advisor will treat
confidentially and as proprietary information of the Fund all records and other
information relating to the Fund and prior, present or potential shareholders
(except clients of the Investment Advisor and its affiliates), and will not use
such records and information for any purpose other than performance of its
responsibilities and duties hereunder, except after prior notification to and
approval in writing by the Fund, which approval shall not be unreasonably
withheld and may not be withheld where the Investment Advisor may be exposed to
civil or criminal contempt proceedings for failure to comply, when requested to
divulge such information by duly constituted authorities, or when so requested
by the Fund.
3
<PAGE>
6. Services Not Exclusive. The Investment Advisor and its officers
----------------------
may act and continue to act as investment managers for others, and nothing in
this Agreement shall in any way be deemed to restrict the right of the
Investment Advisor to perform investment management or other services for any
other person or entity, and the performance of such services for others shall
not be deemed to violate or give rise to any duty or obligation to the Portfolio
or the Fund.
Nothing in this Agreement shall limit or restrict the Investment
Advisor or any of its partners, officers, affiliates or employees from buying,
selling or trading in any securities for its or their own account. The Fund
acknowledges that the Investment Advisor and its partners, officers, affiliates,
employees and other clients may, at any time, have, acquire, increase, decrease,
or dispose of positions in investments which are at the same time being acquired
or disposed of for the Portfolio. The Investment Advisor shall have no
obligation to acquire for the Portfolio a position in any investment which the
Investment Advisor, its partners, officers, affiliates or employees may acquire
for its or their own accounts or for the account of another client, so long as
it continues to be the policy and practice of the Investment Advisor not to
favor or disfavor consistently or consciously any client or class of clients in
the allocation of investment opportunities so that, to the extent practical,
such opportunities will be allocated among clients over a period of time on a
fair and equitable basis.
The Investment Advisor agrees that this Paragraph 6 does not
constitute a waiver by the Fund of the obligations imposed upon the Investment
Advisor to comply with Sections 17(d) and 17(j) of the 1940 Act, and the rules
thereunder, nor constitute a waiver by the Fund of the obligations imposed upon
the Investment Advisor under Section 206 of the Investment Advisers Act of 1940
and the rules thereunder. Further, the Investment Advisor agrees that this
Paragraph 6 does not constitute a waiver by the Fund of the fiduciary obligation
of the Investment Advisor arising under federal or state law, including Section
36 of the 1940 Act. The Investment Advisor agrees that this Paragraph 6 shall
be interpreted consistent with the provisions of Section 17(i) of the 1940 Act.
7. Books and Records. In compliance with the requirements of Rule
-----------------
31a-3 under the 1940 Act, the Investment Advisor hereby agrees that all records
which it maintains for the Portfolio are the property of the Fund and further
agrees to surrender promptly to the Fund any of such records upon the Fund's
request. The Investment Advisor further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940
4
<PAGE>
Act the records required to be maintained by Rule 31a-1 under the 1940 Act.
8. Expenses. During the term of this Agreement, the Investment
--------
Advisor will pay all expenses incurred by it in connection with its activities
under this Agreement. The Portfolio shall bear all of its own expenses not
specifically assumed by the Investment Advisor. General expenses of the Fund
not readily identifiable as belonging to a portfolio of the Fund shall be
allocated among all investment portfolios by or under the direction of the
Fund's Board of Directors in such manner as the Board determines to be fair and
equitable. Expenses borne by the Portfolio shall include, but are not limited
to, the following (or the portfolio's share of the following): (a) the cost
(including brokerage commissions) of securities purchased or sold by the
Portfolio and any losses incurred in connection therewith; (b) fees payable to
and expenses incurred on behalf of the Portfolio by the Investment Advisor; (c)
filing fees and expenses relating to the registration and qualification of the
Fund and the Portfolio's shares under Federal and/or state securities laws and
maintaining such registrations and qualifications; (d) fees and salaries payable
to the Fund's directors and officers; (e) taxes (including nay income or
franchise taxes) and governmental fees; (f) costs of any liability and other
insurance or fidelity bonds; (g) any costs, expenses or losses arising out a
liability of or claim for damages or other relief asserted against the Fund or
the Portfolio for violation of any law; (h) legal, accounting and auditing
expenses, including legal fees of special counsel for the independent directors;
(i) charges of custodians and other agents; (j) expenses of setting in type and
printing prospectuses, statements of additional information and supplements
thereto for existing shareholders, reports, statements, and confirmations to
shareholders and proxy material that are not attributable to a class; (k) costs
of mailing prospectuses, statements of additional information and supplements
thereto to existing shareholders, as well as reports to shareholders and proxy
material that are not attributable to a class; (l) any extraordinary expenses;
(m) fees, voluntary assessments and other expenses incurred in connection with
membership in investment company organizations; (n) costs of mailing and
tabulating proxies and costs of shareholders' and directors' meetings; (o) costs
of independent pricing services to value a portfolio's securities; and (p) the
costs of investment company literature and other publications provided by the
Fund to its directors and officers. Distribution expenses, transfer agency
expenses, expenses of preparation, printing and mailing, prospectuses,
statements of additional information, proxy statements and reports to
shareholders, and organizational
5
<PAGE>
expenses and registration fees, identified as belonging to a particular class of
the Fund are allocated to such class.
If the expenses borne by the Portfolio in any fiscal year exceed the
most restrictive applicable expense limitations imposed by the securities
regulations of any state in which the Shares of the Portfolio are registered or
qualified for sale to the public, the Investment Advisor shall reimburse the
Portfolio for any excess up to the amount of the fees payable by the Portfolio
to it during such fiscal year pursuant to Paragraph 9 hereof in the same
proportion that its fees bear to the total fees paid by the Fund for investment
advisory services in respect of the Portfolio; provided, however, that
-------- -------
notwithstanding the foregoing, the Investment Advisor shall reimburse the
Portfolio for such excess expenses regardless of the amount of such fees payable
to it during such fiscal year to the extent that the securities regulations of
any state in which the Shares are registered or qualified for sale so require.
9. Voting. The Investment Advisor shall have the authority to vote
------
as agent for the Fund, either in person or by proxy, tender and take all actions
incident to the ownership of all securities in which Portfolio's assets may be
invested from time to time, subject to such policies and procedures as the Board
of Directors of the Fund may adopt from time to time.
10. Reservation of Name. The Investment Advisor shall at all times
-------------------
have all rights in and to the Portfolio's name and all investment models used by
or on behalf of the Portfolio. The Investment Advisor may use the Portfolio's
name or any portion thereof in connection with any other mutual fund or business
activity without the consent of any shareholder and the Fund shall execute and
deliver any and all documents required to indicate the consent of the Fund to
such use.
No public reference to, or description of, the Investment Advisor or
its methodology or work shall be made by the Fund, whether in the Prospectus,
Statement of Additional Information or otherwise, without the prior written
consent of the Investment Advisor, which consent shall not be unreasonably
withheld. In each case, the Fund shall provide the Investment Advisor a
reasonable opportunity to review any such reference or description before being
asked for such consent.
11. Discontinuation of Public Offering. Subject to the prior
----------------------------------
approval of the Fund's Board of Directors, the Investment Advisor may instruct
the Fund's distributor to cease sales of shares of the Portfolio to new
investors due to concerns that an increase in the size of the Portfolio may
adversely effect the implementation of the Portfolio's investment strategy.
6
<PAGE>
Subject to prior Board approval, the Investment Advisor may subsequently
instruct the Fund's distributor to recommence the sale of shares of the
Portfolio.
12. Compensation.
------------
(a) For the services provided and the expenses assumed pursuant
to this Agreement with respect to the Portfolio, the Fund will pay the
Investment Advisor from the assets of the Portfolio and the Investment Advisor
will accept as full compensation therefor a fee, computed daily and payable
monthly, at the annual rate of .75% of the Portfolio's average daily net assets.
(b) The fee attributable to the Portfolio shall be satisfied
only against assets of the Portfolio and not against the assets of any other
investment portfolio of the Fund.
13. Limitation of Liability of the Investment Advisor. The
-------------------------------------------------
Investment Advisor shall not be liable for any error of judgment or mistake of
law or for any loss suffered by the Fund in connection with the matters to which
this Agreement relates, except a loss resulting from a breach of fiduciary duty
with respect to the receipt of compensation for services or a loss resulting
from willful misfeasance, bad faith or gross negligence on the part of the
Investment Advisor in the performance of its duties or from reckless disregard
by it of its obligations and duties under this Agreement ("disabling conduct").
The Portfolio will indemnify the Investment Advisor against and hold it harmless
from any and all losses, claims, damages, liabilities or expenses (including
reasonable counsel fees and expenses) resulting from any claim, demand, action
or suit not resulting from disabling conduct by the Investment Advisor.
Indemnification shall be made only following: (i) a final decision on the merits
by a court or other body before whom the proceeding was brought that the
Investment Advisor was not liable by reason of disabling conduct or (ii) in the
absence of such a decision, a reasonable determination, based upon a review of
the facts, that the Investment Advisor was not liable by reason of disabling
conduct by (a) the vote of a majority of a quorum of directors of the Portfolio
who are neither "interested persons" of the Portfolio nor parties to the
proceeding ("disinterested non-party directors") or (b) an independent legal
counsel in a written opinion. The Investment Advisor shall be entitled to
advances from the Portfolio for payment of the reasonable expenses incurred by
it in connection with the matter as to which it is seeking indemnification in
the manner and to the fullest extent permissible under the Maryland General
Corporation Law. The Investment Advisor shall provide to the Portfolio a
written affirmation of its good faith belief that the standard of conduct
7
<PAGE>
necessary for indemnification by the Portfolio has been met and a written
undertaking to repay any such advance if it should ultimately be determined that
the standard of conduct has not been met. In addition, at least one of the
following additional conditions shall be met: (a) the Investment Advisor shall
provide a security in form and amount acceptable to the Portfolio for its
undertaking; (b) the Portfolio is insured against losses arising by reason of
the advance; or (c) a majority of a quorum of disinterested non-party directors,
or independent legal counsel, in a written opinion, shall have determined, based
upon a review of facts readily available to the Portfolio at the time the
advance is proposed to be made, that there is reason to believe that the
Investment Advisor will ultimately be found to be entitled to indemnification.
Any amounts payable by the Portfolio under this Section shall be satisfied only
against the assets of the Portfolio and not against the assets of any other
investment portfolio of the Fund.
14. Duration and Termination. This Agreement shall become effective
------------------------
with respect to the Portfolio upon approval of this Agreement by vote of a
majority of the outstanding voting securities of the Portfolio and, unless
sooner terminated as provided herein, shall continue with respect to the
Portfolio until August 16, 1996. Thereafter, if not terminated, this Agreement
shall continue with respect to the Portfolio for successive annual periods
ending on August 16, provided such continuance is specifically approved at least
--------
annually (a) by the vote of a majority of those members of the Board of
Directors of the Fund who are not parties to this Agreement or interested
persons of any such party, cast in person at a meeting called for the purpose of
voting on such approval, and (b) by the Board of Directors of the Fund or by
vote of a majority of the outstanding voting securities of the Portfolio;
provided, however, that this Agreement may be terminated with respect to the
- -------- -------
Portfolio by the Fund at any time, without the payment of any penalty, by the
Board of Directors of the Fund or by vote of a majority of the outstanding
voting securities of the Portfolio, on 60 days' prior written notice to the
Investment Advisor, or by the Investment Advisor at any time, without payment of
any penalty, on 60 days' prior written notice to the Fund. This Agreement will
immediately terminate in the event of its assignment. (As used in this
Agreement, the terms "majority of the outstanding voting securities,"
"interested person" and "assignment" shall have the same meaning as such terms
have in the 1940 Act).
15. Amendment of this Agreement. No provision of this Agreement may
---------------------------
be changed, discharged or terminated orally, except by an instrument in writing
signed by the party against which enforcement of the change, discharge or
termination is sought, and no amendment of this Agreement affecting the
Portfolio shall
8
<PAGE>
be effective until approved by vote of the holders of a majority of the
outstanding voting securities of the Portfolio.
16. Miscellaneous. The captions in this Agreement are included for
-------------
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and shall be
governed by Delaware law.
17. Change in Membership. The Investment Advisor shall notify the
--------------------
Fund of any change in its membership within a reasonable time after such change.
18. Governing Law. This Agreement shall be governed by and construed
-------------
and enforced in accordance with the laws of the state of Delaware without giving
effect to the conflicts of laws principles thereof.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.
THE RBB FUND, INC.
By:
----------------------
President
NUMERIC INVESTORS L.P.
By:
-----------------------
9
<PAGE>
Exhibit (5)(pp)
INVESTMENT ADVISORY AGREEMENT
-----------------------------
Numeric Growth & Value Fund
AGREEMENT made as of April 24, 1996 between THE RBB FUND, INC., a
Maryland corporation (herein called the "Fund"), and Numeric Investors L.P.
(herein called the "Investment Advisor").
WHEREAS, the Fund is registered as an open-end, management investment
company under the Investment Company Act of 1940 (the "1940 Act") and currently
offers or proposes to offer shares representing interests in twenty separate
investment portfolios; and
WHEREAS, the Fund desires to retain the Investment Advisor to render
certain investment advisory services to the Fund with respect to the Fund's
Numeric Growth & Value Fund (the "Portfolio"), and the Investment Advisor is
willing to so render such services.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, and intending to be legally bound hereby, it is agreed between
the parties hereto as follows:
1. Appointment. The Fund hereby appoints the Investment Advisor to
-----------
act as investment advisor for the Portfolio for the period and on the terms set
forth in this Agreement. The Investment Advisor accepts such appointment and
agrees to render the services herein set forth, for the compensation herein
provided.
2. Delivery of Documents. The Fund has furnished the Investment
---------------------
Advisor with copies properly certified or authenticated of each of the
following:
(a) Resolutions of the Board of Directors of the Fund authorizing
the appointment of the Investment Advisor and the execution and delivery of this
Agreement;
(b) Each prospectus and statement of additional information
relating to any class of Shares representing interests in the Portfolio of the
Fund in effect under the 1933 Act (such prospectus and statement of additional
information, as presently in effect and as they shall from time to time be
amended and supplemented, are herein collectively called the "Prospectus" and
"Statement of Additional Information," respectively).
<PAGE>
The Fund will promptly furnish the Investment Advisor from time to
time with copies, properly certified or authenticated, of all amendments of or
supplements to the foregoing, if any.
In addition to the foregoing, the Fund will also provide the
Investment Advisor with copies of the Fund's Charter and By-laws, and any
registration statement or service contracts related to the Portfolio, and will
promptly furnish the Investment Advisor with any amendments of or supplements to
such documents.
3. Management of the Portfolio. Subject to the supervision of the
---------------------------
Board of Directors of the Fund, the Investment Advisor will provide for the
overall management of the Portfolio including (i) the provision of a continuous
investment program for the Portfolio, including investment research and
management with respect to all securities, investments, cash and cash
equivalents in the Portfolio, (ii) the determination from time to time of what
securities and other investments will be purchased, retained, or sold by the
Fund for the Portfolio, and (iii) the placement from time to time of orders for
all purchases and sales made for the Portfolio. The Investment Advisor will
provide the services rendered by it hereunder in accordance with the Portfolio's
investment objectives, restrictions and policies as stated in the applicable
Prospectus and the Statement of Additional Information, provided that the
Investment Adviser has actual or constructive notice or knowledge of any changes
by the Board of Directors to such investment objectives, restrictions or
policies. The Investment Advisor further agrees that it will render to the
Fund's Board of Directors such periodic and special reports regarding the
performance of its duties under this Agreement as the Board may reasonably
request. The Investment Advisor agrees to provide to the Fund (or its agents
and service providers) prompt and accurate data with respect to the Portfolio's
transactions and, where not otherwise available, the daily valuation of
securities in the Portfolio.
4. Brokerage. Subject to the Investment Advisor's obligation to
---------
obtain best price and execution, the Investment Advisor shall have full
discretion to select brokers or dealers to effect the purchase and sale of
securities. When the Investment Advisor places orders for the purchase or sale
of securities for the Portfolio, in selecting brokers or dealers to execute such
orders, the Investment Advisor is expressly authorized to consider the fact that
a broker or dealer has furnished statistical, research or other information or
services for the benefit of the Portfolio directly or indirectly. Without
limiting the generality of the foregoing, the Investment Advisor is authorized
to cause the Portfolio to pay brokerage commissions
2
<PAGE>
which may be in excess of the lowest rates available to brokers who execute
transactions for the Portfolio or who otherwise provide brokerage and research
services utilized by the Investment Advisor, provided that the Investment
Advisor determines in good faith that the amount of each such commission paid to
a broker is reasonable in relation to the value of the brokerage and research
services provided by such broker viewed in terms of either the particular
transaction to which the commission relates or the Investment Advisor's overall
responsibilities with respect to accounts as to which the Investment Advisor
exercises investment discretion. The Investment Advisor may aggregate
securities orders so long as the Investment Advisor adheres to a policy of
allocating investment opportunities to the Portfolio over a period of time on a
fair and equitable basis relative to other clients. In no instance will the
Portfolio's securities be purchased from or sold to the Fund's principal
underwriter, the Investment Advisor, or any affiliated person thereof, except to
the extent permitted by SEC exemptive order or by applicable law.
The Investment Advisor shall report to the Board of Directors of the
Fund at least quarterly with respect to brokerage transactions that were entered
into by the Investment Advisor, pursuant to the foregoing paragraph, and shall
certify to the Board that the commissions paid were reasonable in terms either
of that transaction or the overall responsibilities of the Advisor to the Fund
and the Investment Advisor's other clients, that the total commissions paid by
the Fund were reasonable in relation to the benefits to the Fund over the long
term, and that such commissions were paid in compliance with Section 28(e) of
the Securities Exchange Act of 1934.
5. Conformity with Law; Confidentiality. The Investment Advisor
------------------------------------
further agrees that it will comply with all applicable rules and regulations of
all federal regulatory agencies having jurisdiction over the Investment Advisor
in the performance of its duties hereunder. The Investment Advisor will treat
confidentially and as proprietary information of the Fund all records and other
information relating to the Fund and prior, present or potential shareholders
(except clients of the Investment Advisor and its affiliates), and will not use
such records and information for any purpose other than performance of its
responsibilities and duties hereunder, except after prior notification to and
approval in writing by the Fund, which approval shall not be unreasonably
withheld and may not be withheld where the Investment Advisor may be exposed to
civil or criminal contempt proceedings for failure to comply, when requested to
divulge such information by duly constituted authorities, or when so requested
by the Fund.
3
<PAGE>
6. Services Not Exclusive. The Investment Advisor and its officers
----------------------
may act and continue to act as investment managers for others, and nothing in
this Agreement shall in any way be deemed to restrict the right of the
Investment Advisor to perform investment management or other services for any
other person or entity, and the performance of such services for others shall
not be deemed to violate or give rise to any duty or obligation to the Portfolio
or the Fund.
Nothing in this Agreement shall limit or restrict the Investment
Advisor or any of its partners, officers, affiliates or employees from buying,
selling or trading in any securities for its or their own account. The Fund
acknowledges that the Investment Advisor and its partners, officers, affiliates,
employees and other clients may, at any time, have, acquire, increase, decrease,
or dispose of positions in investments which are at the same time being acquired
or disposed of for the Portfolio. The Investment Advisor shall have no
obligation to acquire for the Portfolio a position in any investment which the
Investment Advisor, its partners, officers, affiliates or employees may acquire
for its or their own accounts or for the account of another client, so long as
it continues to be the policy and practice of the Investment Advisor not to
favor or disfavor consistently or consciously any client or class of clients in
the allocation of investment opportunities so that, to the extent practical,
such opportunities will be allocated among clients over a period of time on a
fair and equitable basis.
The Investment Advisor agrees that this Paragraph 6 does not
constitute a waiver by the Fund of the obligations imposed upon the Investment
Advisor to comply with Sections 17(d) and 17(j) of the 1940 Act, and the rules
thereunder, nor constitute a waiver by the Fund of the obligations imposed upon
the Investment Advisor under Section 206 of the Investment Advisers Act of 1940
and the rules thereunder. Further, the Investment Advisor agrees that this
Paragraph 6 does not constitute a waiver by the Fund of the fiduciary obligation
of the Investment Advisor arising under federal or state law, including
Section 36 of the 1940 Act. The Investment Advisor agrees that this Paragraph 6
shall be interpreted consistent with the provisions of Section 17(i) of the 1940
Act.
7. Books and Records. In compliance with the requirements of
-----------------
Rule 31a-3 under the 1940 Act, the Investment Advisor hereby agrees that all
records which it maintains for the Portfolio are the property of the Fund and
further agrees to surrender promptly to the Fund any of such records upon the
Fund's request. The Investment Advisor further agrees to preserve for the
periods prescribed by Rule 31a-2 under the 1940
4
<PAGE>
Act the records required to be maintained by Rule 31a-1 under the 1940 Act.
8. Expenses. During the term of this Agreement, the Investment
--------
Advisor will pay all expenses incurred by it in connection with its activities
under this Agreement. The Portfolio shall bear all of its own expenses not
specifically assumed by the Investment Advisor. General expenses of the Fund
not readily identifiable as belonging to a portfolio of the Fund shall be
allocated among all investment portfolios by or under the direction of the
Fund's Board of Directors in such manner as the Board determines to be fair and
equitable. Expenses borne by the Portfolio shall include, but are not limited
to, the following (or the portfolio's share of the following): (a) the cost
(including brokerage commissions) of securities purchased or sold by the
Portfolio and any losses incurred in connection therewith; (b) fees payable to
and expenses incurred on behalf of the Portfolio by the Investment Advisor;
(c) filing fees and expenses relating to the registration and qualification of
the Fund and the Portfolio's shares under Federal and/or state securities laws
and maintaining such registrations and qualifications; (d) fees and salaries
payable to the Fund's directors and officers; (e) taxes (including nay income or
franchise taxes) and governmental fees; (f) costs of any liability and other
insurance or fidelity bonds; (g) any costs, expenses or losses arising out a
liability of or claim for damages or other relief asserted against the Fund or
the Portfolio for violation of any law; (h) legal, accounting and auditing
expenses, including legal fees of special counsel for the independent directors;
(i) charges of custodians and other agents; (j) expenses of setting in type and
printing prospectuses, statements of additional information and supplements
thereto for existing shareholders, reports, statements, and confirmations to
shareholders and proxy material that are not attributable to a class; (k) costs
of mailing prospectuses, statements of additional information and supplements
thereto to existing shareholders, as well as reports to shareholders and proxy
material that are not attributable to a class; (l) any extraordinary expenses;
(m) fees, voluntary assessments and other expenses incurred in connection with
membership in investment company organizations; (n) costs of mailing and
tabulating proxies and costs of shareholders' and directors' meetings; (o) costs
of independent pricing services to value a portfolio's securities; and (p) the
costs of investment company literature and other publications provided by the
Fund to its directors and officers. Distribution expenses, transfer agency
expenses, expenses of preparation, printing and mailing, prospectuses,
statements of additional information, proxy statements and reports to
shareholders, and organizational
5
<PAGE>
expenses and registration fees, identified as belonging to a particular class of
the Fund are allocated to such class.
If the expenses borne by the Portfolio in any fiscal year exceed the
most restrictive applicable expense limitations imposed by the securities
regulations of any state in which the Shares of the Portfolio are registered or
qualified for sale to the public, the Investment Advisor shall reimburse the
Portfolio for any excess up to the amount of the fees payable by the Portfolio
to it during such fiscal year pursuant to Paragraph 9 hereof in the same
proportion that its fees bear to the total fees paid by the Fund for investment
advisory services in respect of the Portfolio; provided, however, that
-------- -------
notwithstanding the foregoing, the Investment Advisor shall reimburse the
Portfolio for such excess expenses regardless of the amount of such fees payable
to it during such fiscal year to the extent that the securities regulations of
any state in which the Shares are registered or qualified for sale so require.
9. Voting. The Investment Advisor shall have the authority to vote
------
as agent for the Fund, either in person or by proxy, tender and take all actions
incident to the ownership of all securities in which Portfolio's assets may be
invested from time to time, subject to such policies and procedures as the Board
of Directors of the Fund may adopt from time to time.
10. Reservation of Name. The Investment Advisor shall at all times
-------------------
have all rights in and to the Portfolio's name and all investment models used by
or on behalf of the Portfolio. The Investment Advisor may use the Portfolio's
name or any portion thereof in connection with any other mutual fund or business
activity without the consent of any shareholder and the Fund shall execute and
deliver any and all documents required to indicate the consent of the Fund to
such use.
No public reference to, or description of, the Investment Advisor or
its methodology or work shall be made by the Fund, whether in the Prospectus,
Statement of Additional Information or otherwise, without the prior written
consent of the Investment Advisor, which consent shall not be unreasonably
withheld. In each case, the Fund shall provide the Investment Advisor a
reasonable opportunity to review any such reference or description before being
asked for such consent.
11. Discontinuation of Public Offering. Subject to the prior
----------------------------------
approval of the Fund's Board of Directors, the Investment Advisor may instruct
the Fund's distributor to cease sales of shares of the Portfolio to new
investors due to concerns that an increase in the size of the Portfolio may
adversely effect the implementation of the Portfolio's investment strategy.
6
<PAGE>
Subject to prior Board approval, the Investment Advisor may subsequently
instruct the Fund's distributor to recommence the sale of shares of the
Portfolio.
12. Compensation.
------------
(a) For the services provided and the expenses assumed pursuant to
this Agreement with respect to the Portfolio, the Fund will pay the Investment
Advisor from the assets of the Portfolio and the Investment Advisor will accept
as full compensation therefor a fee, computed daily and payable monthly, at the
annual rate of .75% of the Portfolio's average daily net assets.
(b) The fee attributable to the Portfolio shall be satisfied only
against assets of the Portfolio and not against the assets of any other
investment portfolio of the Fund.
13. Limitation of Liability of the Investment Advisor. The
-------------------------------------------------
Investment Advisor shall not be liable for any error of judgment or mistake of
law or for any loss suffered by the Fund in connection with the matters to which
this Agreement relates, except a loss resulting from a breach of fiduciary duty
with respect to the receipt of compensation for services or a loss resulting
from willful misfeasance, bad faith or gross negligence on the part of the
Investment Advisor in the performance of its duties or from reckless disregard
by it of its obligations and duties under this Agreement ("disabling conduct").
The Portfolio will indemnify the Investment Advisor against and hold it harmless
from any and all losses, claims, damages, liabilities or expenses (including
reasonable counsel fees and expenses) resulting from any claim, demand, action
or suit not resulting from disabling conduct by the Investment Advisor.
Indemnification shall be made only following: (i) a final decision on the merits
by a court or other body before whom the proceeding was brought that the
Investment Advisor was not liable by reason of disabling conduct or (ii) in the
absence of such a decision, a reasonable determination, based upon a review of
the facts, that the Investment Advisor was not liable by reason of disabling
conduct by (a) the vote of a majority of a quorum of directors of the Portfolio
who are neither "interested persons" of the Portfolio nor parties to the
proceeding ("disinterested non-party directors") or (b) an independent legal
counsel in a written opinion. The Investment Advisor shall be entitled to
advances from the Portfolio for payment of the reasonable expenses incurred by
it in connection with the matter as to which it is seeking indemnification in
the manner and to the fullest extent permissible under the Maryland General
Corporation Law. The Investment Advisor shall provide to the Portfolio a
written affirmation of its good faith belief that the standard of conduct
7
<PAGE>
necessary for indemnification by the Portfolio has been met and a written
undertaking to repay any such advance if it should ultimately be determined that
the standard of conduct has not been met. In addition, at least one of the
following additional conditions shall be met: (a) the Investment Advisor shall
provide a security in form and amount acceptable to the Portfolio for its
undertaking; (b) the Portfolio is insured against losses arising by reason of
the advance; or (c) a majority of a quorum of disinterested non-party directors,
or independent legal counsel, in a written opinion, shall have determined, based
upon a review of facts readily available to the Portfolio at the time the
advance is proposed to be made, that there is reason to believe that the
Investment Advisor will ultimately be found to be entitled to indemnification.
Any amounts payable by the Portfolio under this Section shall be satisfied only
against the assets of the Portfolio and not against the assets of any other
investment portfolio of the Fund.
14. Duration and Termination. This Agreement shall become effective
------------------------
with respect to the Portfolio upon approval of this Agreement by vote of a
majority of the outstanding voting securities of the Portfolio and, unless
sooner terminated as provided herein, shall continue with respect to the
Portfolio until August 16, 1996. Thereafter, if not terminated, this Agreement
shall continue with respect to the Portfolio for successive annual periods
ending on August 16, provided such continuance is specifically approved at least
--------
annually (a) by the vote of a majority of those members of the Board of
Directors of the Fund who are not parties to this Agreement or interested
persons of any such party, cast in person at a meeting called for the purpose of
voting on such approval, and (b) by the Board of Directors of the Fund or by
vote of a majority of the outstanding voting securities of the Portfolio;
provided, however, that this Agreement may be terminated with respect to the
- -------- -------
Portfolio by the Fund at any time, without the payment of any penalty, by the
Board of Directors of the Fund or by vote of a majority of the outstanding
voting securities of the Portfolio, on 60 days' prior written notice to the
Investment Advisor, or by the Investment Advisor at any time, without payment of
any penalty, on 60 days' prior written notice to the Fund. This Agreement will
immediately terminate in the event of its assignment. (As used in this
Agreement, the terms "majority of the outstanding voting securities,"
"interested person" and "assignment" shall have the same meaning as such terms
have in the 1940 Act).
15. Amendment of this Agreement. No provision of this Agreement may
---------------------------
be changed, discharged or terminated orally, except by an instrument in writing
signed by the party against which enforcement of the change, discharge or
termination is sought, and no amendment of this Agreement affecting the
Portfolio shall
8
<PAGE>
be effective until approved by vote of the holders of a majority of the
outstanding voting securities of the Portfolio.
16. Miscellaneous. The captions in this Agreement are included for
-------------
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and shall be
governed by Delaware law.
17. Change in Membership. The Investment Advisor shall notify the
--------------------
Fund of any change in its membership within a reasonable time after such change.
18. Governing Law. This Agreement shall be governed by and construed
-------------
and enforced in accordance with the laws of the state of Delaware without giving
effect to the conflicts of laws principles thereof.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.
THE RBB FUND, INC.
By:
--------------------
President
NUMERIC INVESTORS L.P.
By:
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9
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Exhibit (6)(dd)
DISTRIBUTION AGREEMENT SUPPLEMENT
(Numeric Investors Family of Funds)
This supplemental agreement is entered into this ___ day of
__________, 1996, by and between THE RBB FUND, INC. (the "Fund") and COUNSELLORS
SECURITIES INC. (the "Distributor").
The Fund is a corporation organized under the laws of the State of
Maryland and is an open-end management investment company. The Fund and the
Distributor have entered into a Distribution Agreement, dated as of April 10,
1991 (as from time to time amended and supplemented, the "Distribution
Agreement"), pursuant to which the Distributor has undertaken to act as
distributor for the Fund, as more fully set forth therein. Certain capitalized
terms used without definition in this Distribution Agreement Supplement have the
meaning specified in the Distribution Agreement.
The Fund agrees with the Distributor as follows:
1. Adoption of Distribution Agreement. The Distribution Agreement is
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hereby adopted for the Numeric Classes of Common Stock (Classes FF, GG and HH)
of the Fund. Each such Numeric Class shall constitute a "Class" as referred to
in the Distribution Agreement and its shares shall be "Class Shares" as referred
to therein.
2. Payment of Fees. For all services to be rendered, facilities
---------------
furnished and expenses paid or assumed by the Distributor as provided in the
Distribution Agreement and herein, the Fund shall pay the Distributor no
compensation.
IN WITNESS WHEREOF, the undersigned have entered into this Agreement,
intending to be legally bound hereby, as of the date and year first above
written.
THE RBB FUND, INC. COUNSELLORS SECURITIES INC.
By______________________ By_______________________
<PAGE>
EXHIBIT (8)(1)
CUSTODY AGREEMENT
AGREEMENT, dated as of May 20, 1996 by and between THE RBB FUND, INC. (the
"Company"), a corporation organized under the laws of the State of Maryland on
behalf of its portfolio, the Numeric Growth Cap Fund (the "Fund"), and CUSTODIAL
TRUST COMPANY, a bank organized and existing under the laws of the State of New
Jersey (the "Custodian").
W I T N E S S E T H:
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WHEREAS, the Company on behalf of the Fund desires that the Fund's
securities, cash and other assets be held and administered by Custodian pursuant
to this Agreement;
WHEREAS, the Fund is an investment portfolio represented by a series of
Shares constituting part of the capital stock of the Company, an open-end
management investment company registered under the 1940 Act (as hereinafter
defined);
WHEREAS, Custodian represents that it is a bank having the qualifications
prescribed in Section 26(a)(i) of the 1940 Act;
NOW, THEREFORE, in consideration of the mutual agreements herein made, the
Company on behalf of the Fund and Custodian hereby agree as follows:
ARTICLE I
DEFINITIONS
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Whenever used in this Agreement, the following terms, unless the context
otherwise requires, shall mean:
1.1 "Authorized Person" means any Officer or other person duly authorized
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by resolution of the Board of Directors to give Oral Instructions and Written
Instructions on behalf
<PAGE>
of the Fund and identified, by name or by office, in Exhibit A hereto or any
person duly designated to do so by an investment adviser of the Fund specified
by the Fund in Exhibit B hereto.
1.2 "Board of Directors" means the Board of Directors of the Company or,
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when permitted under the 1940 Act, the Executive Committee thereof, if any.
1.3 "Book-Entry System" means a book-entry system maintained by a Federal
-----------------
Reserve bank as provided for in Subpart O of Treasury Circular No. 300, 31 CFR
306, in Subpart B of 31 CFR Part 350, or in such other book-entry regulations of
federal agencies as are substantially in the form of such Subpart O.
1.4 "Business Day" means any day recognized as a settlement day by The
------------
New York Stock Exchange, Inc. and on which banks in the State of New Jersey are
open for business.
1.5 "Custody Account" means the account in the name of the Fund, which is
---------------
provided for in Section 3.2 below.
1.6 "Master Repurchase Agreement" means that certain Master Repurchase
---------------------------
Agreement of even date herewith between the Company on behalf of the Fund and
Bear, Stearns & Co. Inc., an affiliate of Custodian ("Bear Stearns"), as it may
from time to time be amended.
1.7. "1940 Act" means the Investment Company Act of 1940, as amended.
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1.8 "Officer" means the President, any Vice President, the Secretary, any
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Assistant Secretary, the Treasurer, or any Assistant Treasurer of the Company.
1.9 "Oral Instructions" means instructions orally transmitted to and
-----------------
accepted by Custodian which are (a) reasonably believed by Custodian to have
been given by an Authorized
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Person, (b) recorded and kept among the records of Custodian made in the
ordinary course of business, and (c) orally confirmed by Custodian.
1.10 "Proper Instructions" means Oral Instructions or Written
-------------------
Instructions. Proper Instructions may be continuing Written Instructions when
deemed appropriate by both parties.
1.11 "Securities" includes, without limitation, common and preferred
----------
stocks, bonds, call options, put options, debentures, notes, bank certificates
of deposit, forward contracts, futures contracts (including those related to
indexes), options on futures contracts or indexes, bankers' acceptances,
mortgage-backed securities or other obligations, and any certificates, receipts,
warrants or other instruments or documents representing rights to receive,
purchase or subscribe for the same, or evidencing or representing any other
rights or interests therein, or any similar property or assets that Custodian
has the facilities to clear and to service.
1.12 "Securities Loan Agreement" means that certain Securities Loan
-------------------------
Agreement of even date herewith between the Company on behalf of the Fund and
Bear, Stearns Securities Corp. ("BSSC"), as it may from time to time be amended.
1.13 "Securities Depository" means The Depository Trust Company and
---------------------
(provided that Custodian has received a copy of a resolution of the Board of
Directors of the Company, certified by an Officer, specifically approving the
use thereof as a depository for the Fund) any other clearing agency registered
with the Securities and Exchange Commission under Section 17A of the Securities
Exchange Act of 1934 (the "1934 Act"), which acts as a system for the central
handling and deposit of Securities where all Securities of any particular class
or series of an issuer deposited within the system are treated as fungible and
may be transferred or pledged by bookkeeping entry without physical delivery of
the Securities.
1.14 "Shares" means the shares into which the capital stock of the Company
------
is divided.
1.15 "Written Instructions" means (a) written communications received by
--------------------
Custodian and signed by two persons reasonably believed by Custodian to be
Authorized Persons, or (b)
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communications by telex or any other such system from two persons reasonably
believed by Custodian to be Authorized Persons, or (c) communications between
electro-mechanical or electronic devices.
ARTICLE II
APPOINTMENT OF CUSTODIAN
------------------------
2.1 Appointment. The Company on behalf of the Fund hereby appoints
-----------
Custodian as custodian of all such Securities, cash and other assets as may be
acceptable to Custodian and from time to time delivered to it by the Fund or
others for the account of the Fund.
2.2 Acceptance. Custodian hereby accepts appointment as such custodian
----------
and agrees to perform the duties thereof as hereinafter set forth.
ARTICLE III
CUSTODY OF CASH AND SECURITIES
------------------------------
3.1 Segregation. All Securities and non-cash property of the Fund in the
-----------
possession of Custodian (other than Securities maintained by Custodian in a
Securities Depository or Book-Entry System) shall be physically segregated from
other Securities and non-cash property in the possession of Custodian and shall
be identified as belonging to the Fund.
3.2 Custody Account. (a) Custodian shall open and maintain in its trust
---------------
department a custody account in the name of the Fund, subject only to draft or
order of Custodian, in which Custodian shall enter and carry all Securities,
cash and other assets of the Fund which are delivered to Custodian and accepted
by it. Custodian shall not be under any duty or obligation to require the Fund
to deliver to it any Securities or funds owned by the Fund and shall have no
responsibility or liability for or on account of Securities or funds not so
delivered.
(b) If Custodian at any time fails to receive any of the documents referred
to in Section 3.5(a) below, then, until such time as it receives such document,
it shall not be
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<PAGE>
obligated to receive any Securities of the Fund into the Custody Account and
shall be entitled to return to the Fund any Securities of the Fund that it is
holding.
(c) Custodian may, but shall not be obligated to, hold Securities that
may be held only in physical form.
(d) Custodian is authorized to disclose the name, address and
securities positions of the Fund to the issuers of such securities when
requested by them to do so.
3.3 Appointment of Agents. (a) Custodian may employ suitable agents,
---------------------
which may include affiliates of Custodian, such as Bear Stearns or BSSC, both of
which are registered broker-dealers. The appointment of any agent pursuant to
this Section 3.3(a) shall not relieve Custodian of any of its obligations or
liabilities under this Agreement. However, no Book-Entry System, Securities
Depository or other securities depository or clearing agency which it is or may
become standard market practice to use for the comparison and settlement of
trades in securities shall be an agent or sub-contractor of Custodian for
purposes of this Section 3.3(a) or otherwise.
(b) Upon notification of the Fund and in its discretion, Custodian may
appoint, and, upon notification of the Fund, at any time remove, any domestic
bank or trust company which is qualified to act as a custodian under the 1940
Act as sub-custodian to hold Securities and cash of the Fund and to carry out
such other provisions of this Agreement as it may determine, and, upon
notification of the Fund, may also open and maintain one or more banking
accounts with such a bank or trust company (any such accounts to be in the name
of Custodian and subject only to its draft or order), provided, however, that
the appointment of any such agent or opening and maintenance of any such
accounts shall be at Custodian's expense and shall not relieve Custodian of any
of its obligations or liabilities under this Agreement.
(c) Upon receipt of Written Instructions to do so and at the Fund's
expense, Custodian shall appoint as sub-custodian such domestic bank or trust
company as is named therein, provided that (i) such bank or trust company is
qualified to act as a custodian under the
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<PAGE>
1940 Act, and (ii) notwithstanding anything to the contrary in Section 9.1 below
or elsewhere in this Agreement, Custodian shall have no greater liability to the
Fund for the actions or omissions of any such sub-custodian than any such sub-
custodian has to Custodian, and Custodian shall not be required to discharge any
such liability which may be imposed on it unless and until such sub-custodian
has effectively indemnified Custodian against it or has otherwise discharged its
liability to Custodian in full.
3.4 Delivery of Assets to Custodian. The Fund shall deliver to Custodian
-------------------------------
the Fund's Securities, cash and other assets, which are acceptable to Custodian,
including (a) payments of income, payments of principal and capital
distributions received by the Fund with respect to such Securities, cash or
other assets owned by the Fund at any time during the term of this Agreement,
and (b) cash received by the Fund for the issuance, at any time during such
term, of Shares. Custodian shall not be responsible for such Securities, cash
or other assets until actually received by it.
3.5 Securities Depositories and Book-Entry Systems. Custodian may
----------------------------------------------
deposit and/or maintain Securities of the Fund in a Securities Depository or in
a Book-Entry System, subject to the following provisions:
(a) Prior to a deposit of Securities of the Fund in any Securities
Depository or Book-Entry System, the Fund shall deliver to Custodian a
resolution of the Board of Directors of the Company, certified by an Officer,
authorizing and instructing Custodian (and any sub-custodian appointed pursuant
to Section 3.3 above) on an on-going basis to deposit in such Securities
Depository or Book-Entry System all Securities eligible for deposit therein and
to make use of such Securities Depository or Book-Entry System to the extent
possible and practical in connection with its performance hereunder (or under
the applicable sub-custody agreement in the case of such sub-custodian),
including, without limitation, in connection with settlements of purchases and
sales of Securities, loans of Securities, and deliveries and returns of
collateral consisting of Securities.
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<PAGE>
(b) Securities of the Fund kept in a Book-Entry System or Securities
Depository shall be kept in an account ("Depository Account") of Custodian in
such Book-Entry System or Securities Depository which includes only assets held
by Custodian as a fiduciary, custodian or otherwise for customers.
(c) The records of Custodian with respect to Securities of the Fund
maintained in a Book-Entry System or Securities Depository shall at all times
identify such Securities as belonging to the Fund.
(d) If Securities purchased by the Fund are to be held in a Book-Entry
System or Securities Depository, Custodian shall pay for such Securities upon
(i) receipt of advice from the Book-Entry System or Securities Depository that
such Securities have been transferred to the Depository Account, and (ii) the
making of an entry on the records of Custodian to reflect such payment and
transfer for the account of the Fund. If Securities sold by the Fund are held
in a Book-Entry System or Securities Depository, Custodian shall transfer such
Securities upon (i) receipt of advice from the Book-Entry System or Securities
Depository that payment for such Securities has been transferred to the
Depository Account, and (ii) the making of an entry on the records of Custodian
to reflect such transfer and payment for the account of the Fund.
(e) Custodian shall provide the Fund with copies of any report obtained by
Custodian from a Book-Entry System or Securities Depository in which Securities
of the Fund are kept on the internal accounting controls and procedures for
safeguarding Securities deposited in such Book-Entry System or Securities
Depository.
(f) At its election, the Company on behalf of the Fund shall be subrogated
to the rights of Custodian with respect to any claim against a Book-Entry System
or Securities Depository or any other person for any loss or damage to the Fund
arising from the use of such Book-Entry System or Securities Depository, if and
to the extent that the Fund has not been made whole for any such loss or damage.
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<PAGE>
3.6 Disbursement of Moneys from the Custody Account. Upon receipt of
-----------------------------------------------
Proper Instructions, Custodian shall disburse moneys from the Custody Account,
but only in the following cases:
(a) For the purchase of Securities for the Fund but only (i) in the
case of Securities (other than options on Securities, futures contracts and
options on futures contracts), against the delivery to Custodian (or any sub-
custodian appointed pursuant to Section 3.3 above) of such Securities registered
as provided in Section 3.9 below or in proper form for transfer or, if the
purchase of such Securities is effected through a Book-Entry System or
Securities Depository, in accordance with the conditions set forth in Section
3.5 above; (ii) in the case of options on Securities, against delivery to
Custodian (or such sub-custodian) of such receipts as are required by the
customs prevailing among dealers in such options; (iii) in the case of futures
contracts and options on futures contracts, against delivery to Custodian (or
such sub-custodian) of evidence of title thereto in favor of the Fund, the
Custodian, any such sub-custodian or any nominee referred to in Section 3.9
below; and (iv) in the case of repurchase or reverse repurchase agreements
entered into by the Fund, against delivery of the purchased Securities either in
certificate form or through an entry crediting Custodian's account at a Book-
Entry System or Securities Depository with such Securities;
(b) In connection with the conversion, exchange or surrender, as set
forth in Section 3.7(f) below, of Securities owned by the Fund;
(c) For the payment of any dividends or capital gain distributions
declared by the Fund;
(d) In payment of the redemption price of Shares as provided in
Article V below;
(e) For the payment of any expense or liability incurred by the Fund,
including but not limited to the following payments for the account of the Fund:
interest, taxes, administration, investment management, investment advisory,
accounting, auditing, transfer
-8-
<PAGE>
agent, custodian, trustee and legal fees; and other operating expenses of the
Fund; in all cases, whether or not such expenses are to be in whole or in part
capitalized or treated as deferred expenses;
(f) For transfer in accordance with the provisions of any agreement among
the Company on behalf of the Fund, Custodian and a broker-dealer, relating to
compliance with rules of The Options Clearing Corporation and of any registered
national securities exchange (or of any similar organization or organizations)
regarding escrow or other arrangements in connection with transactions by the
Fund;
(g) For transfer in accordance with the provisions of any agreement among
the Company on behalf of the Fund, Custodian, and a futures commission merchant,
relating to compliance with the rules of the Commodity Futures Trading
Commission and/or any contract market (or any similar organization or
organizations) regarding account deposits in connection with transactions by the
Fund;
(h) For the funding of any uncertificated time deposit or other interest-
bearing account with any banking institution (including Custodian), but only if
the payment instructions to Custodian detail specific Securities to be acquired;
(i) For the purchase from a bank or other financial institution of loan
participations, but only if Custodian has in its possession a copy of the
agreement between the Company on behalf of the Fund and such bank or other
financial institution with respect to the purchase of such loan participations
and the payment instructions to Custodian detail specific assets to be acquired;
(j) For transfer to a broker-dealer registered under the 1934 Act or in
accordance with the provisions of any agreement among the Company on behalf of
the Fund, Custodian and such a broker-dealer as margin for a short sale of
Securities;
-9-
<PAGE>
(k) For the payment of the amounts of dividends received with respect
to Securities sold short; and
(l) For any other proper purpose, but only upon receipt, in addition
to Proper Instructions, of a copy of a resolution of the Board of Directors,
certified by an Officer, specifying the amount and purpose of such payment,
declaring such purpose to be a proper purpose of the Fund, and naming the person
or persons to whom such payment is to be made.
3.7 Delivery of Securities from the Custody Account. Upon receipt of
-----------------------------------------------
Proper Instructions, Custodian shall release and deliver Securities of the Fund
from the Custody Account but only in the following cases:
(a) Upon the sale of Securities for the account of the Fund but,
subject to Section 4.3 below, only against receipt of payment therefor in cash,
by certified or cashiers' check or bank credit;
(b) In the case of a sale effected through a Book-Entry System or
Securities Depository, in accordance with the provisions of Section 3.5 above;
(c) To an offeror's depository agent in connection with tender or
other similar offers for Securities of the Fund; provided that, in any such
case, the cash or other consideration is to be delivered to Custodian;
(d) To the issuer thereof or its agent (i) for transfer into the name
of the Fund or any of the nominees referred to in Section 3.9 below, or (ii) for
exchange for a different number of certificates or other evidence representing
the same aggregate face amount or number of units; provided that, in any such
case, the new Securities are to be delivered to Custodian;
(e) To the broker selling Securities, for examination in accordance
with the "street delivery" custom;
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<PAGE>
(f) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment of the issuer of
such Securities, or pursuant to provisions for conversion contained in such
Securities, or pursuant to any deposit agreement, including surrender or receipt
of underlying Securities in connection with the issuance or cancellation of
depository receipts; provided that, in any such case, the new Securities and
cash, if any, are to be delivered to Custodian;
(g) Upon receipt of payment therefor pursuant to any repurchase
agreement entered into by the Fund;
(h) In the case of warrants, rights or similar Securities, upon the
exercise thereof, provided that, in any such case, the new Securities and cash,
if any, are to be delivered to Custodian;
(i) For delivery in connection with any loans of Securities pursuant
to any securities loan agreement entered into by the Company on behalf of the
Fund, but only against receipt of such collateral as is required under such
securities loan agreement;
(j) For delivery as security in connection with any borrowings by the
Fund requiring a pledge of assets by the Fund, but only against receipt by
Custodian of the amounts borrowed;
(k) Pursuant to any authorized plan of liquidation, reorganization,
merger, consolidation or recapitalization of the Fund;
(l) For delivery in accordance with the provisions of any agreement
among the Company on behalf of the Fund, Custodian and a broker-dealer, relating
to compliance with the rules of The Options Clearing Corporation and of any
registered national securities exchange (or of any similar organization or
organizations) regarding escrow or other arrangements in connection with
transactions by the Fund;
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<PAGE>
(m) For delivery in accordance with the provisions of any agreement
among the Company on behalf of the Fund, Custodian, and a futures commission
merchant, relating to compliance with the rules of the Commodity Futures Trading
Commission and/or any contract market (or any similar organization or
organizations) regarding account deposits in connection with transactions by the
Fund;
(n) For delivery to a broker-dealer registered under the 1934 Act or
in accordance with the provisions of any agreement among the Company on behalf
of the Fund, Custodian and such a broker-dealer as margin for a short sale of
Securities;
(o) For any other proper purpose, but only upon receipt, in addition
to Proper Instructions, of a copy of a resolution of the Board of Directors,
certified by an Officer, specifying the Securities to be delivered, setting
forth the purpose for which such delivery is to be made, declaring such purpose
to be a proper purpose of the Fund, and naming the person or persons to whom
delivery of such Securities is to be made.
3.8 Actions Not Requiring Proper Instructions. Unless otherwise
-----------------------------------------
instructed by the Fund, Custodian shall with respect to all Securities held for
the Fund:
(a) Subject to Section 9.4 below, collect on a timely basis all income
and other payments to which the Fund is entitled either by law or pursuant to
custom in the securities business;
(b) Subject to Section 9.4 below, collect on a timely basis the amount
payable upon or with respect to all Securities and other assets which may mature
or be called, redeemed, retired or otherwise become payable;
(c) Endorse for collection, in the name of the Fund, checks, drafts
and other negotiable instruments;
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(d) Surrender interim receipts or Securities in temporary form for
Securities in definitive form;
(e) Execute, as custodian, any necessary declarations or certificates
of ownership under the federal income tax laws or the laws or regulations of any
other taxing authority now or hereafter in effect, and prepare and submit
reports to the Internal Revenue Service ("IRS") and to the Fund at such time, in
such manner and containing such information as is prescribed by the IRS;
(f) Hold for the Fund all rights and similar securities issued with
respect to Securities of the Fund; and
(g) In general, attend to all non-discretionary details in connection
with the sale, exchange, substitution, purchase, transfer and other dealings
with Securities and assets of the Fund.
3.9 Registration and Transfer of Securities. All Securities held for the
---------------------------------------
Fund that are issuable only in bearer form shall be held by Custodian in that
form, provided that any such Securities shall be held in a Book-Entry System if
eligible therefor. All other Securities held for the Fund may be registered in
the name of Custodian as agent, any sub-custodian appointed pursuant to Section
3.3 above, any Securities Depository, or any nominee or agent of any of them.
The Fund shall furnish to Custodian appropriate instruments to enable Custodian
to hold or deliver in proper form for transfer, or to register as in this
Section 3.9 provided, any Securities delivered to Custodian which are registered
in the name of the Fund.
3.10 Records. (a) Custodian shall maintain complete and accurate records
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with respect to Securities, cash or other property held for the Fund, including
(i) journals or other records of original entry containing an itemized daily
record in detail of all receipts and deliveries of Securities and all receipts
and disbursements of cash; (ii) ledgers (or other records) reflecting (A)
Securities in transfer, if any, (B) Securities in physical possession, (C)
monies and Securities borrowed and monies and Securities loaned (together with a
record of the collateral therefor and
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substitutions of such collateral), (D) dividends and interest received, and (E)
dividends receivable and interest accrued; and (iii) cancelled checks and bank
records related thereto. Custodian shall keep such other books and records with
respect to Securities, cash and other property of the Fund which is held
hereunder as the Fund may reasonably request.
(b) All such books and records maintained by Custodian shall (i) be
maintained in a form acceptable to the Fund and in compliance with rules and
regulations of the Securities and Exchange Commission, (ii) be the property of
the Fund and at all times during the regular business hours of Custodian be made
available upon request for inspection by duly authorized officers, employees or
agents of the Company on behalf of the Fund and employees or agents of the
Securities and Exchange Commission, and (iii) if required to be maintained by
Rule 31a-1 under the 1940 Act, be preserved for the periods prescribed in Rule
31a-2 under the 1940 Act.
3.11 Reports by Custodian. Custodian shall furnish the Fund with a daily
--------------------
activity statement, including a summary of all transfers to or from the Custody
Account, on the day following such transfers. At least monthly and from time to
time, Custodian shall furnish the Fund with a detailed statement of the
Securities and moneys held for the Fund under this Agreement.
3.12 Other Reports by Custodian. Custodian shall provide the Fund with
--------------------------
such reports as the Fund may reasonably request from time to time on the
internal accounting controls and procedures for safeguarding Securities which
are employed by Custodian or any sub-custodian appointed pursuant to Section 3.3
above.
3.13 Proxies and Other Materials. Unless otherwise instructed by the
---------------------------
Fund, Custodian shall promptly deliver to the Fund (at the address set forth in
Article XVI below) all notices of meetings, proxies and proxy materials which it
receives regarding Securities held in the Custody Account. Before delivering
them to the Fund, Custodian shall cause all proxies relating to such Securities
which are not registered in the name of the Fund, or a nominee thereof, to be
promptly executed by the registered holder of such Securities, without
indication of the manner in which such proxies are to be voted. Unless otherwise
instructed by the Fund,
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<PAGE>
neither Custodian nor any of its agents shall exercise any voting rights with
respect to Securities held hereunder.
3.14 Information on Corporate Actions. Custodian shall promptly transmit
--------------------------------
to the Fund (at the address set forth in Article XVI below) all written
information received by Custodian from issuers of Securities held in the Custody
Account. With respect to tender or exchange offers for such Securities,
Custodian shall promptly transmit to the Fund all written information received
by it from the issuers of the Securities whose tender or exchange is sought and
by the party (or its agents) making the tender or exchange offer. If the Fund
desires to take action with respect to any tender offer, exchange offer or other
similar transaction, the Fund shall notify Custodian at least five Business Days
prior to the date on which Custodian is to take such action.
3.15 Co-operation. Custodian shall cooperate with and supply necessary
------------
information to the entity or entities appointed by the Company on behalf of the
Fund to keep the books of account of the Fund and/or to compute the value of the
assets of the Fund.
ARTICLE IV
PURCHASE AND SALE OF INVESTMENTS OF THE FUND
--------------------------------------------
4.1 Purchase of Securities. Promptly upon each purchase of Securities
----------------------
for the Fund, Written Instructions shall be delivered to Custodian,
specifying (a) the name of the issuer or writer of such Securities, and the
title or other description thereof, (b) the number of shares, principal amount
(and accrued interest, if any), or other units purchased, (c) the date of
purchase and settlement, (d) the purchase price per unit, (e) the total amount
payable upon such purchase, and (f) the name of the person to whom such amount
is payable. Custodian shall upon receipt of such Securities purchased by the
Fund (or, if the Securities are transferred by means of a private placement
transaction, upon the receipt of such Securities or payment instructions to
Custodian which detail specific Securities to be acquired) pay out of the moneys
held for the account of the Fund the total amount specified in such Written
Instructions to the person named therein. Custodian shall not be under any
obligation to pay out moneys to cover the cost of a
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purchase of Securities or other assets for the Fund if there is insufficient
cash available in the Custody Account.
4.2 Sale of Securities. Promptly upon each sale of Securities by the
------------------
Fund, Written Instructions shall be delivered to Custodian, specifying (a) the
name of the issuer or writer of such Securities, and the title or other
description thereof, (b) the number of shares, principal amount (and accrued
interest, if any), or other units sold, (c) the date of sale and settlement, (d)
the sale price per unit, (e) the total amount payable upon such sale, and (f)
the person to whom such Securities are to be delivered. Upon receipt of the
total amount payable to the Fund as specified in such Written Instructions,
Custodian shall deliver such Securities to the person specified in such Written
Instructions. Subject to the foregoing, Custodian may accept payment in such
form as shall be satisfactory to it, and may deliver Securities and arrange for
payment in accordance with the customs prevailing among dealers in Securities.
4.3 Delivery of Securities Sold. Notwithstanding Section 4.2 above
---------------------------
or any other provision of this Agreement, Custodian, when instructed to deliver
Securities against payment, shall be entitled, but only if in accordance with
generally accepted market practice, to deliver such Securities prior to actual
receipt of final payment therefor and, exclusively in the case of Securities in
physical form, to deliver such Securities prior to receipt of payment. In any
such case, the Fund shall bear the risk that final payment for such Securities
may not be made or that such Securities may be returned or otherwise held or
disposed of by or through the person to whom they were delivered, and Custodian
shall have no liability for any of the foregoing.
4.4 Payment for Securities Sold, etc. In its sole discretion and
---------------------------------
from time to time, Custodian may credit the Custody Account, prior to actual
receipt of final payment thereof, with (a) proceeds from the sale of Securities
which it has been instructed to deliver against payment, (b) proceeds from the
redemption of Securities or other assets of the Fund, and (c) income from cash,
Securities or other assets of the Fund. Any such credit shall be conditional
upon actual receipt by Custodian of final payment and may be reversed if final
payment is not actually received in full. Custodian may, in its sole discretion
and from time to time, permit the Fund to use funds so credited to the Custody
Account in anticipation of actual receipt of final
-16-
<PAGE>
payment. Any such funds shall be repayable immediately upon demand made by
Custodian at any time prior to the actual receipt of all final payments in
anticipation of which funds were credited to the Custody Account.
4.5 Final Payment. For purposes of this Agreement, "final payment"
-------------
means payment in funds which are (or have become) immediately available, under
applicable law are irreversible, and are not subject to any security interest,
levy, lien or other encumbrance.
ARTICLE V
REDEMPTION OF FUND SHARES
-------------------------
5.1 Transfer of Funds. From such funds as may be available for the
-----------------
purpose in the Custody Account, and upon receipt of Proper Instructions
specifying that the funds are required to redeem Shares on account of the Fund,
Custodian shall wire each amount specified in such Proper Instructions to or
through such bank as the Fund may designate therein with respect to such amount.
5.2 No Duty Regarding Paying Banks. Custodian shall not be
------------------------------
responsible for the payment or distribution by any bank designated in Proper
Instructions given pursuant to Section 5.1 above of any amount paid by Custodian
to such bank in accordance with such Proper Instructions.
ARTICLE VI
SEGREGATED ACCOUNTS
-------------------
Upon receipt of Proper Instructions, Custodian shall establish and
maintain a segregated account or accounts for and on behalf of the Fund, into
which account or accounts may be transferred cash and/or Securities, including
Securities maintained in a Depository Account:
(a) in accordance with the provisions of any agreement among the
Company on behalf of the Fund, Custodian and a broker-dealer (or any futures
commission merchant),
-17-
<PAGE>
relating to compliance with the rules of The Options Clearing Corporation or of
any registered national securities exchange (or the Commodity Futures Trading
Commission or any registered contract market), or of any similar organization or
organizations, regarding escrow or other arrangements in connection with
transactions by the Fund,
(b) for purposes of segregating cash or Securities in connection with
securities options purchased or written by the Fund or in connection with
financial futures contracts (or options thereon) purchased or sold by the Fund,
(c) which constitute collateral for loans of Securities made by
the Fund,
(d) for purposes of compliance by the Fund with requirements under the
1940 Act for the maintenance of segregated accounts by registered investment
companies in connection with reverse repurchase agreements, when-issued, delayed
delivery and firm commitment transactions, and short sales of securities, and
(e) for other proper purposes, but only upon receipt of, in addition
to Proper Instructions, a copy of a resolution of the Board of Directors,
certified by an Officer, setting forth the purpose or purposes of such
segregated account and declaring such purposes to be proper purposes of the
Fund.
ARTICLE VII
SECURITIES LENDING TRANSACTIONS
-------------------------------
7.1 Transactions. If and to the extent that the necessary funds and
------------
Securities have been entrusted to it under this Agreement (and unless the Fund
gives it Proper Instructions to do otherwise), Custodian from time to time shall
make for the account of the Fund the transfers of funds and deliveries of
Securities which the Fund is required to make pursuant to the Securities Loan
Agreement and shall receive for the account of the Fund the transfers of funds
and deliveries of Securities which the borrower under the Securities Loan
Agreement is required
-18-
<PAGE>
to make pursuant thereto. Custodian shall make and receive all such transfers
and deliveries pursuant to, and subject to the terms and conditions of, the
Securities Loan Agreement.
7.2 Collateral; Events of Default. Custodian shall daily mark to
-----------------------------
market, in the manner provided for in the Securities Loan Agreement, all loans
of Securities which may from time to time be outstanding thereunder. Custodian
shall promptly notify the Fund of any Default under the Securities Loan
Agreement (as such term "Default" is defined therein) of which it has actual
knowledge.
7.3 Securities Loan Agreement. Custodian hereby acknowledges its
-------------------------
receipt from the Company on behalf of the Fund of a copy of the Securities Loan
Agreement. The Fund shall provide Custodian, prior to the effectiveness thereof,
with a copy of any amendment to the Securities Loan Agreement.
ARTICLE VIII
REPURCHASE TRANSACTIONS
-----------------------
8.1 Transactions. If and to the extent that the funds and Securities
------------
have been entrusted to it under this Agreement (and unless the Fund gives it
Proper Instructions to do otherwise), Custodian from time to time shall make for
the account of the Fund the transfers of funds and deliveries of Securities
which the Fund is required to make pursuant to the Master Repurchase Agreement
and shall receive for the account of the Fund the transfers of funds and
deliveries of Securities which the seller under the Master Repurchase Agreement
is required to make pursuant thereto. Custodian shall make and receive all such
transfers and deliveries pursuant to, and subject to the terms and conditions
of, the Master Repurchase Agreement.
8.2 Collateral; Events of Default. Custodian shall daily mark to
-----------------------------
market the Securities purchased by the Fund under the Master Repurchase
Agreement and held in the Custody Account, and shall give to the seller
thereunder any such notice as may be required by the Master Repurchase Agreement
in connection with such mark-to-market. Custodian shall promptly notify the
Fund of any Event of Default by the seller under the Master Repurchase
-19-
<PAGE>
Agreement (as such term "Event of Default" is defined therein) of which it has
actual knowledge.
8.3 Master Repurchase Agreement. Custodian hereby acknowledges its
---------------------------
receipt from the Company on behalf of the Fund of a copy of the Master
Repurchase Agreement. The Fund shall provide Custodian, prior to the
effectiveness thereof, with a copy of any amendment to the Master Repurchase
Agreement.
ARTICLE IX
CONCERNING THE CUSTODIAN
------------------------
9.1 Standard of Care. Custodian shall be held to the exercise of
----------------
reasonable care in carrying out its obligations under this Agreement, and shall
be without liability to the Fund for any loss, damage, cost, expense (including
attorneys' fees and disbursements), liability or claim which does not arise from
willful misfeasance, bad faith or negligence on the part of Custodian or
reckless disregard by Custodian of its obligations under this Agreement.
Custodian shall be entitled to rely on and may act upon advice of counsel on all
matters, and shall be without liability for any action reasonably taken or
omitted pursuant to such advice. In no event shall Custodian be liable for
special or consequential damages or be liable in any manner whatsoever for any
action taken or omitted upon instructions from the Fund or any agent of the
Company on behalf of the Fund. Custodian shall not be under any obligation at
any time to ascertain whether the Fund is in compliance with the 1940 Act, the
regulations thereunder, the provisions of its charter documents or by-laws, or
its investment objectives, policies and limitations as in effect from time to
time.
9.2 Actual Collection Required. Custodian shall not be liable for,
--------------------------
or considered to be the custodian of, any cash belonging to the Fund or any
money represented by a check, draft or other instrument for the payment of
money, until Custodian or its agents actually receive such cash or collect on
such instrument.
-20-
<PAGE>
9.3 No Responsibility for Title, etc. So long as and to the extent
---------------------------------
that it is in the exercise of reasonable care, Custodian shall not be
responsible for the title, validity or genuineness of any property or evidence
of title thereto received or delivered by it or its agents.
9.4 Limitation on Duty to Collect. Custodian shall promptly notify
-----------------------------
the Fund whenever any money or property due and payable from or on account of
any Securities held hereunder for the Fund is not timely received by it.
Custodian shall not, however, be required to enforce collection, by legal means
or otherwise, of any such money or other property not paid when due, but shall
receive the proceeds of such collections as may be effected by it or its agents
in the ordinary course of Custodian's custody and safekeeping business or of the
custody and safekeeping business of such agents.
9.5 Express Duties Only. Custodian shall have no duties or obligations
-------------------
whatsoever except such duties and obligations as are specifically set forth in
this Agreement, and no covenant or obligation shall be implied in this Agreement
against Custodian. Custodian shall have no discretion whatsoever with respect to
the management, disposition or investment of the Custody Account and is not a
fiduciary to the Fund.
9.6 Compliance with Laws. Custodian undertakes to comply with all
--------------------
applicable requirements of the Securities Act of 1933, the Securities Exchange
Act of 1934, the 1940 Act and the Commodities Exchange Act and any laws, rules
and regulations of governmental authorities having jurisdiction with respect to
the duties to be performed by Custodian hereunder. Except as specifically set
forth herein, Custodian assumes no responsibility for such compliance by the
Fund.
ARTICLE X
INDEMNIFICATION
---------------
10.1 Indemnification. The Fund shall indemnify and hold harmless
---------------
Custodian, any sub-custodian and any nominee of Custodian or any sub-custodian,
from and against any loss, damages, cost, expense (including attorneys' fees and
disbursements), liability (including, without limitation, liability arising
under the Securities Act of 1933, the 1934 Act, the 1940 Act,
-21-
<PAGE>
and any federal or state securities and/or banking laws) or claim arising
directly or indirectly (a) from the fact that Securities are registered in the
name of any such nominee, or (b) from any action or inaction by Custodian or
such sub-custodian or other agent (i) at the request or direction of or in
reliance on the advice of the Fund or any of its agents, or (ii) upon Proper
Instructions, or (c) generally, from the performance of its obligations under
this Agreement, provided that Custodian, any sub-custodian or any nominee of
either of them shall not be indemnified and held harmless from and against any
such loss, damage, cost, expense, liability or claim arising from Custodian's
willful misfeasance, bad faith, negligence or reckless disregard of its
obligations under this Agreement or, in the case of any sub-custodian or its
nominee, from such sub-custodian's willful misfeasance, bad faith, negligence or
reckless disregard of its obligations under the Agreement under which it is
acting.
10.2 Indemnity to be Provided. If the Fund requests Custodian to take
------------------------
any action with respect to Securities, which may, in the opinion of Custodian,
result in Custodian or its nominee becoming liable for the payment of money or
incurring liability of some other form, Custodian shall not be required to take
such action until the Fund shall have provided indemnity therefor to Custodian
in an amount and form satisfactory to Custodian.
10.3 Security. As security for the payment of any present or future
--------
obligation or liability of any kind which the Fund may have to Custodian with
respect to or in connection with the Custody Account or this Agreement, the Fund
hereby pledges to Custodian all cash, Securities and other property of every
kind which is in the Custody Account or otherwise held for the Fund pursuant to
this Agreement, and hereby grants to Custodian a lien, right of set-off and
continuing security interest in such cash, Securities and other property.
10.4 Limitation. Notwithstanding any other provision of this Agreement,
----------
the obligations and liabilities of the Company on behalf of the Fund under this
Agreement are solely those of the Fund, and neither the Company generally nor
any of its other investment portfolios shall be responsible for any of such
obligations or liabilities.
-22-
<PAGE>
ARTICLE XI
FORCE MAJEURE
-------------
Neither Custodian nor the Fund shall be liable for any failure or delay in
performance of its obligations under this Agreement arising out of or caused,
directly or indirectly, by circumstances beyond its reasonable control,
including, without limitation, acts of God; earthquakes; fires; floods; wars;
civil or military disturbances; sabotage; strikes; epidemics; riots; power
failures; computer failure and any such circumstances beyond its reasonable
control as may cause interruption, loss or malfunction of utility,
transportation, computer (hardware or software) or telephone communication
service; accidents; labor disputes; acts of civil or military authority;
governmental actions; or inability to obtain labor, material, equipment or
transportation.
ARTICLE XII
REPRESENTATIONS AND WARRANTIES
------------------------------
Each of the Company on behalf of the Fund and Custodian represents and
warrants for itself that (a) it has all necessary power and authority to perform
its obligations hereunder, (b) the execution and delivery by it of this
Agreement, and the performance by it of its obligations under this Agreement,
have been duly authorized by all necessary action and will not violate any law,
regulation, charter, by-law, or other instrument, restriction or provision
applicable to it or by which it is bound, and (c) this Agreement constitutes a
legal, valid and binding obligation of it, enforceable against it in accordance
with its terms.
ARTICLE XIII
COMPENSATION OF CUSTODIAN
-------------------------
The Fund shall pay Custodian such fees and charges as are set forth in the
fee schedule annexed hereto as Exhibit C, as such fee schedule may from time to
time be revised by Custodian upon 14 days' prior written notice to the Fund. Any
annual fee or other charges payable by the Fund shall be paid monthly by
automatic deduction from the Custody Account. Expenses incurred by Custodian in
the performance of its services hereunder, and all other
-23-
<PAGE>
proper charges and disbursements of the Custody Account, shall be charged to the
Custody Account by Custodian and paid therefrom.
ARTICLE XIV
TAXES
-----
Any and all taxes, including any interest and penalties with respect
thereto, which may be levied or assessed under present or future laws or in
respect of the Custody Account or any income thereof shall be charged to the
Custody Account by Custodian and paid therefrom.
ARTICLE XV
AUTHORIZED PERSONS
------------------
15.1 Authorized Persons. Custodian may rely upon and act in
------------------
accordance with any notice, confirmation, instruction or other communication
received by it from the Fund which is reasonably believed by Custodian to have
been given or signed on behalf of the Fund by one of the Authorized Persons
designated by the Fund in Exhibit A hereto, as it may from time to time be
revised. The Fund may revise Exhibit A hereto at any time by notice in writing
to Custodian given in accordance with Article XVI below, but no revision of
Exhibit A hereto shall be effective until Custodian actually receives such
notice.
15.2 Investment Advisers. Custodian may also act in accordance with
-------------------
any Written or Oral Instructions which are reasonably believed by Custodian to
have been given or signed by one of the persons designated from time to time by
any of the investment advisers of the Fund specified in Exhibit B hereto (if
any) as it may from time to time be revised. The Fund may revise Exhibit B
hereto at any time by notice in writing to Custodian given in accordance with
Article XVI below, and each investment adviser specified in Exhibit B hereto (if
any) may at any time by like notice designate an Authorized Person or remove an
Authorized Person previously designated by it, but no revision of Exhibit B
hereto (if any) and no designation or removal by such investment adviser shall
be effective until Custodian actually receives such notice.
-24-
<PAGE>
15.3 Oral Instructions. Custodian may rely upon and act in
-----------------
accordance with Oral Instructions (as defined in Section 1.9 above). If Written
Instructions confirming Oral Instructions are not received by Custodian prior to
a transaction, it shall in no way affect the validity of the transaction
authorized by such Oral Instructions or the authorization of the Fund to effect
such transaction. Custodian shall incur no liability to the Fund in acting upon
Oral Instructions (as defined in Section 1.9 above). To the extent such Oral
Instructions vary from any confirming Written Instructions, Custodian shall
advise the Fund of such variance but unless confirming Written Instructions are
timely received, such Oral Instructions will govern. Either Custodian or Fund
may electronically record any instructions given by telephone and any other
telephone discussions with respect to the account of the Fund.
ARTICLE XVI
NOTICES
-------
Unless otherwise specified herein, all demands, notices, instructions,
and other communications to be given hereunder shall be sent, delivered or given
to the recipient at the address set forth after its name hereinbelow:
IF TO THE FUND:
NUMERIC GROWTH FUND - THE RBB FUND, INC.
Bellevue Park Corporate Center
400 Bellevue Parkway - Suite 100
Wilmington, DE 19809
Attention: Charles D. Curtis, Jr.
----------------------
Telephone: (302) 791 - 1791
Facsimile: (302) 791 - 3067
IF TO CUSTODIAN:
CUSTODIAL TRUST COMPANY
101 Carnegie Center
Princeton, New Jersey 08540-6231
Attention: Vice President - Trust Operations
---------------------------------
Telephone: (609) 951-2320
Facsimile: (609) 951-2327
or at such other address as either party shall have provided to the other by
notice given in accordance with this Article XVI. Writing shall include
transmissions by or through teletype, facsimile, central processing unit
connection, on-line terminal and magnetic tape.
-25-
<PAGE>
ARTICLE XVII
TERMINATION
-----------
Either party hereto may terminate this Agreement by giving to the other
party a notice in writing specifying the date of such termination, which shall
be not less than sixty (60) days after the date of the giving of such notice.
Upon the date set forth in such notice this Agreement shall terminate, and
Custodian shall, upon receipt of a notice of acceptance by the successor
custodian, on that date (a) deliver directly to the successor custodian or its
agents all Securities (other than Securities held in a Book-Entry System or
Securities Depository) and cash then owned by the Fund and held by Custodian as
custodian, and (b) transfer any Securities held in a Book-Entry System or
Securities Depository to an account of or for the benefit of the Fund, provided
that the Fund shall have paid to Custodian all fees, expenses and other amounts
to the payment or reimbursement of which it shall then be entitled.
ARTICLE XVIII
MISCELLANEOUS
-------------
18.1 Business Days. Nothing contained in this Agreement shall require
-------------
Custodian to perform any function or duties on a day other than a Business Day.
18.2 Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the laws of the State of New York, without regard to the
conflict of law principles thereof.
18.3 References to Custodian. The Fund shall not circulate any printed
-----------------------
matter which contains any reference to Custodian without the prior written
approval of Custodian, excepting printed matter contained in the prospectus or
statement of additional information for the Fund and such other printed matter
as merely identifies Custodian as custodian for the Fund. The Fund shall submit
printed matter requiring approval to Custodian in draft form, allowing
sufficient time for review by Custodian and its counsel prior to any deadline
for printing.
-26-
<PAGE>
18.4 No Waiver. No failure by either party hereto to exercise, and
---------
no delay by such party in exercising, any right hereunder shall operate as a
waiver thereof. The exercise by either party hereto of any right hereunder shall
not preclude the exercise of any other right, and the remedies provided herein
are cumulative and not exclusive of any remedies provided at law or in equity.
18.5 Amendments. This Agreement cannot be changed orally and no
----------
amendment to this Agreement shall be effective unless evidenced by an instrument
in writing executed by the parties hereto.
18.6 Counterparts. This Agreement may be executed in one or more
------------
counterparts, and by the parties hereto on separate counterparts, each of which
shall be deemed an original but all of which together shall constitute but one
and the same instrument.
18.7 Severability. If any provision of this Agreement shall be
------------
invalid, illegal or unenforceable in any respect under any applicable law, the
validity, legality and enforceability of the remaining provisions shall not be
affected or impaired thereby.
18.8 Successors and Assigns. This Agreement shall be binding upon
----------------------
and shall inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that this Agreement shall not be
-------- -------
assignable by either party hereto without the written consent of the other
party. Any purported assignment in violation of this Section 18.8 shall be
void.
18.9 Headings. The headings of sections in this Agreement are for
--------
convenience of reference only and shall not affect the meaning or construction
of any provision of this Agreement.
-27-
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by its representative
thereunto duly authorized, all as of the day and year first above written.
THE RRB FUND, INC. on behalf of CUSTODIAL TRUST COMPANY
THE NUMERIC GROWTH FUND
By By
-------------------- -----------------------------
Authorized Officer Authorized Officer
-28-
<PAGE>
EXHIBIT A
AUTHORIZED PERSONS
Set forth below are the names and specimen signatures of the persons
authorized by the Numeric Growth Fund - The RRB Fund, Inc. to administer the
Custody Account.
Name Signature
---- ---------
- -------------------------------------- --------------------------------------
- -------------------------------------- --------------------------------------
- -------------------------------------- --------------------------------------
- -------------------------------------- --------------------------------------
- -------------------------------------- --------------------------------------
<PAGE>
EXHIBIT B
---------
INVESTMENT ADVISERS
<PAGE>
EXHIBIT C
---------
CUSTODY FEES AND TRANSACTION CHARGES
The Fund shall pay Custodian the following fees and charges for
holdings and transactions in the United States, all such fees and charges to be
payable monthly by deduction from the Custody Account:
(1) an annual fee of the greater of 0.015% (one and one-half basis
points) per annum of the value of the assets in the Custody Account or $5,000,
such fee to be payable monthly based upon the total market value of such assets
as determined on the last Business Day of the month for which such fee is
charged;
(2) a transaction charge of $12 for each receipt or delivery of book-
entry Securities into or from the Custody Account (but not for any such receipt
or delivery (a) in a repurchase transaction representing a cash sweep investment
for the Fund's account or representing the investment by the Fund of cash
collateral for a loan of Securities or (b) of book-entry Securities which are
collateral for a loan of Securities);
(3) a transaction charge of $25 for each receipt or delivery into or
from the Custody Account of Securities in physical form;
(4) a transaction charge for each repurchase transaction in the
Custody Account which represents a cash sweep investment for the Fund's account,
computed at a rate of 0.10% (ten basis points) per annum on the amount of the
purchase price paid by the Fund in such repurchase transaction on the basis of a
360-day year and for the actual number of days such repurchase transaction is
outstanding;
(5) a charge of $10 for each "free" transfer of funds from the
Custody Account;
(6) an administrative fee for each purchase in the Custody Account of
shares or other interests in a money market or other fund, which purchase
represents a cash sweep investment
<PAGE>
for the Fund's account, computed for each day that there is a positive balance
in such fund to equal 1/365th of 0.10% (ten basis points) on the amount of such
positive balance for such day; and
(7) a service charge for each holding of Securities or other property
sold by way of private placement or in such other manner as to require services
by Custodian which in its reasonable judgment are materially in excess of those
ordinarily required for the holding of publicly traded Securities in the United
States.
Fees and charges for holdings and transactions outside the United
States, if any, shall be as separately agreed upon by the Fund and Custodian.
<PAGE>
CUSTODY AGREEMENT
AGREEMENT, dated as of May 20, 1996 by and between THE RBB FUND, INC. (the
"Company"), a corporation organized under the laws of the State of Maryland on
behalf of its portfolio, the Numeric Micro Cap Fund (the "Fund"), and CUSTODIAL
TRUST COMPANY, a bank organized and existing under the laws of the State of New
Jersey (the "Custodian").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company on behalf of the Fund desires that the Fund's
securities, cash and other assets be held and administered by Custodian pursuant
to this Agreement;
WHEREAS, the Fund is an investment portfolio represented by a series of
Shares constituting part of the capital stock of the Company, an open-end
management investment company registered under the 1940 Act (as hereinafter
defined);
WHEREAS, Custodian represents that it is a bank having the qualifications
prescribed in Section 26(a)(i) of the 1940 Act;
NOW, THEREFORE, in consideration of the mutual agreements herein made, the
Company on behalf of the Fund and Custodian hereby agree as follows:
ARTICLE I
DEFINITIONS
-----------
Whenever used in this Agreement, the following terms, unless the context
otherwise requires, shall mean:
<PAGE>
1.1 "Authorized Person" means any Officer or other person duly authorized
-----------------
by resolution of the Board of Directors to give Oral Instructions and Written
Instructions on behalf of the Fund and identified, by name or by office, in
Exhibit A hereto or any person duly designated to do so by an investment adviser
of the Fund specified by the Fund in Exhibit B hereto.
1.2 "Board of Directors" means the Board of Directors of the Company or,
------------------
when permitted under the 1940 Act, the Executive Committee thereof, if any.
1.3 "Book-Entry System" means a book-entry system maintained by a Federal
-----------------
Reserve bank as provided for in Subpart O of Treasury Circular No. 300, 31 CFR
306, in Subpart B of 31 CFR Part 350, or in such other book-entry regulations of
federal agencies as are substantially in the form of such Subpart O.
1.4 "Business Day" means any day recognized as a settlement day by The
------------
New York Stock Exchange, Inc. and on which banks in the State of New Jersey are
open for business.
1.5 "Custody Account" means the account in the name of the Fund, which is
---------------
provided for in Section 3.2 below.
1.6 "Master Repurchase Agreement" means that certain Master Repurchase
---------------------------
Agreement of even date herewith between the Company on behalf of the Fund and
Bear, Stearns & Co. Inc., an affiliate of Custodian ("Bear Stearns"), as it may
from time to time be amended.
1.7. "1940 Act" means the Investment Company Act of 1940, as amended.
--------
1.8 "Officer" means the President, any Vice President, the Secretary, any
-------
Assistant Secretary, the Treasurer, or any Assistant Treasurer of the Company.
<PAGE>
1.9 "Oral Instructions" means instructions orally transmitted to and
-----------------
accepted by Custodian which are (a) reasonably believed by Custodian to have
been given by an Authorized Person, (b) recorded and kept among the records of
Custodian made in the ordinary course of business, and (c) orally confirmed by
Custodian.
1.10 "Proper Instructions" means Oral Instructions or Written
-------------------
Instructions. Proper Instructions may be continuing Written Instructions when
deemed appropriate by both parties.
1.11 "Securities" includes, without limitation, common and preferred
----------
stocks, bonds, call options, put options, debentures, notes, bank certificates
of deposit, forward contracts, futures contracts (including those related to
indexes), options on futures contracts or indexes, bankers' acceptances,
mortgage-backed securities or other obligations, and any certificates, receipts,
warrants or other instruments or documents representing rights to receive,
purchase or subscribe for the same, or evidencing or representing any other
rights or interests therein, or any similar property or assets that Custodian
has the facilities to clear and to service.
1.12 "Securities Loan Agreement" means that certain Securities Loan
-------------------------
Agreement of even date herewith between the Company on behalf of the Fund and
Bear, Stearns Securities Corp. ("BSSC"), as it may from time to time be amended.
1.13 "Securities Depository" means The Depository Trust Company and
---------------------
(provided that Custodian has received a copy of a resolution of the Board of
Directors of the Company, certified by an Officer, specifically approving the
use thereof as a depository for the Fund) any other clearing agency registered
with the Securities and Exchange Commission under Section 17A of the Securities
Exchange Act of 1934 (the "1934 Act"), which acts as a system for the central
handling and deposit of Securities where all Securities of any particular class
or series of
<PAGE>
an issuer deposited within the system are treated as fungible and may be
transferred or pledged by bookkeeping entry without physical delivery of the
Securities.
1.14 "Shares" means the shares into which the capital stock of the Company
------
is divided.
1.15 "Written Instructions" means (a) written communications received by
--------------------
Custodian and signed by two persons reasonably believed by Custodian to be
Authorized Persons, or (b) communications by telex or any other such system from
two persons reasonably believed by Custodian to be Authorized Persons, or (c)
communications between electro-mechanical or electronic devices.
ARTICLE II
APPOINTMENT OF CUSTODIAN
------------------------
2.1 Appointment. The Company on behalf of the Fund hereby appoints
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Custodian as custodian of all such Securities, cash and other assets as may be
acceptable to Custodian and from time to time delivered to it by the Fund or
others for the account of the Fund.
2.2 Acceptance. Custodian hereby accepts appointment as such custodian
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and agrees to perform the duties thereof as hereinafter set forth.
ARTICLE III
CUSTODY OF CASH AND SECURITIES
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3.1 Segregation. All Securities and non-cash property of the Fund in the
-----------
possession of Custodian (other than Securities maintained by Custodian in a
Securities Depository or Book-Entry System) shall be physically segregated from
other Securities and non-cash property in the possession of Custodian and shall
be identified as belonging to the Fund.
<PAGE>
3.2 Custody Account. (a) Custodian shall open and maintain in its trust
---------------
department a custody account in the name of the Fund, subject only to draft or
order of Custodian, in which Custodian shall enter and carry all Securities,
cash and other assets of the Fund which are delivered to Custodian and accepted
by it. Custodian shall not be under any duty or obligation to require the Fund
to deliver to it any Securities or funds owned by the Fund and shall have no
responsibility or liability for or on account of Securities or funds not so
delivered.
(b) If Custodian at any time fails to receive any of the documents
referred to in Section 3.5(a) below, then, until such time as it receives such
document, it shall not be obligated to receive any Securities of the Fund into
the Custody Account and shall be entitled to return to the Fund any Securities
of the Fund that it is holding.
(c) Custodian may, but shall not be obligated to, hold Securities that
may be held only in physical form.
(d) Custodian is authorized to disclose the name, address and
securities positions of the Fund to the issuers of such securities when
requested by them to do so.
3.3 Appointment of Agents. (a) Custodian may employ suitable agents,
---------------------
which may include affiliates of Custodian, such as Bear Stearns or BSSC, both of
which are registered broker-dealers. The appointment of any agent pursuant to
this Section 3.3(a) shall not relieve Custodian of any of its obligations or
liabilities under this Agreement. However, no Book-Entry System, Securities
Depository or other securities depository or clearing agency which it is or may
become standard market practice to use for the comparison and settlement of
trades in securities shall be an agent or sub-contractor of Custodian for
purposes of this Section 3.3(a) or otherwise.
(b) Upon notification of the Fund and in its discretion, Custodian may
appoint, and, upon notification of the Fund, at any time remove, any domestic
bank or trust
<PAGE>
company which is qualified to act as a custodian under the 1940 Act as sub-
custodian to hold Securities and cash of the Fund and to carry out such other
provisions of this Agreement as it may determine, and, upon notification of the
Fund, may also open and maintain one or more banking accounts with such a bank
or trust company (any such accounts to be in the name of Custodian and subject
only to its draft or order), provided, however, that the appointment of any such
agent or opening and maintenance of any such accounts shall be at Custodian's
expense and shall not relieve Custodian of any of its obligations or liabilities
under this Agreement.
(c) Upon receipt of Written Instructions to do so and at the Fund's
expense, Custodian shall appoint as sub-custodian such domestic bank or trust
company as is named therein, provided that (i) such bank or trust company is
qualified to act as a custodian under the 1940 Act, and (ii) notwithstanding
anything to the contrary in Section 9.1 below or elsewhere in this Agreement,
Custodian shall have no greater liability to the Fund for the actions or
omissions of any such sub-custodian than any such sub-custodian has to
Custodian, and Custodian shall not be required to discharge any such liability
which may be imposed on it unless and until such sub-custodian has effectively
indemnified Custodian against it or has otherwise discharged its liability to
Custodian in full.
3.4 Delivery of Assets to Custodian. The Fund shall deliver to Custodian
-------------------------------
the Fund's Securities, cash and other assets, which are acceptable to Custodian,
including (a) payments of income, payments of principal and capital
distributions received by the Fund with respect to such Securities, cash or
other assets owned by the Fund at any time during the term of this Agreement,
and (b) cash received by the Fund for the issuance, at any time during such
term, of Shares. Custodian shall not be responsible for such Securities, cash
or other assets until actually received by it.
3.5 Securities Depositories and Book-Entry Systems. Custodian may
----------------------------------------------
deposit and/or maintain Securities of the Fund in a Securities Depository or in
a Book-Entry System, subject to the following provisions:
<PAGE>
(a) Prior to a deposit of Securities of the Fund in any Securities
Depository or Book-Entry System, the Fund shall deliver to Custodian a
resolution of the Board of Directors of the Company, certified by an Officer,
authorizing and instructing Custodian (and any sub-custodian appointed pursuant
to Section 3.3 above) on an on-going basis to deposit in such Securities
Depository or Book-Entry System all Securities eligible for deposit therein and
to make use of such Securities Depository or Book-Entry System to the extent
possible and practical in connection with its performance hereunder (or under
the applicable sub-custody agreement in the case of such sub-custodian),
including, without limitation, in connection with settlements of purchases and
sales of Securities, loans of Securities, and deliveries and returns of
collateral consisting of Securities.
(b) Securities of the Fund kept in a Book-Entry System or Securities
Depository shall be kept in an account ("Depository Account") of Custodian in
such Book-Entry System or Securities Depository which includes only assets held
by Custodian as a fiduciary, custodian or otherwise for customers.
(c) The records of Custodian with respect to Securities of the Fund
maintained in a Book-Entry System or Securities Depository shall at all times
identify such Securities as belonging to the Fund.
(d) If Securities purchased by the Fund are to be held in a Book-Entry
System or Securities Depository, Custodian shall pay for such Securities upon
(i) receipt of advice from the Book-Entry System or Securities Depository that
such Securities have been transferred to the Depository Account, and (ii) the
making of an entry on the records of Custodian to reflect such payment and
transfer for the account of the Fund. If Securities sold by the Fund are held
in a Book-Entry System or Securities Depository, Custodian shall transfer such
Securities upon (i) receipt of advice from the Book-Entry System or Securities
Depository that payment for such
<PAGE>
Securities has been transferred to the Depository Account, and (ii) the making
of an entry on the records of Custodian to reflect such transfer and payment for
the account of the Fund.
(e) Custodian shall provide the Fund with copies of any report
obtained by Custodian from a Book-Entry System or Securities Depository in which
Securities of the Fund are kept on the internal accounting controls and
procedures for safeguarding Securities deposited in such Book-Entry System or
Securities Depository.
(f) At its election, the Company on behalf of the Fund shall be
subrogated to the rights of Custodian with respect to any claim against a Book-
Entry System or Securities Depository or any other person for any loss or damage
to the Fund arising from the use of such Book-Entry System or Securities
Depository, if and to the extent that the Fund has not been made whole for any
such loss or damage.
3.6 Disbursement of Moneys from the Custody Account. Upon receipt of
-----------------------------------------------
Proper Instructions, Custodian shall disburse moneys from the Custody Account,
but only in the following cases:
(a) For the purchase of Securities for the Fund but only (i) in the
case of Securities (other than options on Securities, futures contracts and
options on futures contracts), against the delivery to Custodian (or any sub-
custodian appointed pursuant to Section 3.3 above) of such Securities registered
as provided in Section 3.9 below or in proper form for transfer or, if the
purchase of such Securities is effected through a Book-Entry System or
Securities Depository, in accordance with the conditions set forth in Section
3.5 above; (ii) in the case of options on Securities, against delivery to
Custodian (or such sub-custodian) of such receipts as are required by the
customs prevailing among dealers in such options; (iii) in the case of futures
contracts and options on futures contracts, against delivery to Custodian (or
such sub-custodian) of evidence of title thereto in favor of the Fund, the
Custodian, any such sub-custodian or any nominee referred to in Section 3.9
below; and (iv) in the case of repurchase or reverse
<PAGE>
repurchase agreements entered into by the Fund, against delivery of the
purchased Securities either in certificate form or through an entry crediting
Custodian's account at a Book-Entry System or Securities Depository with such
Securities;
(b) In connection with the conversion, exchange or surrender, as set
forth in Section 3.7(f) below, of Securities owned by the Fund;
(c) For the payment of any dividends or capital gain distributions
declared by the Fund;
(d) In payment of the redemption price of Shares as provided in
Article V below;
(e) For the payment of any expense or liability incurred by the Fund,
including but not limited to the following payments for the account of the Fund:
interest, taxes, administration, investment management, investment advisory,
accounting, auditing, transfer agent, custodian, trustee and legal fees; and
other operating expenses of the Fund; in all cases, whether or not such expenses
are to be in whole or in part capitalized or treated as deferred expenses;
(f) For transfer in accordance with the provisions of any agreement
among the Company on behalf of the Fund, Custodian and a broker-dealer, relating
to compliance with rules of The Options Clearing Corporation and of any
registered national securities exchange (or of any similar organization or
organizations) regarding escrow or other arrangements in connection with
transactions by the Fund;
(g) For transfer in accordance with the provisions of any agreement
among the Company on behalf of the Fund, Custodian, and a futures commission
merchant, relating to compliance with the rules of the Commodity Futures Trading
Commission and/or any contract
<PAGE>
market (or any similar organization or organizations) regarding account deposits
in connection with transactions by the Fund;
(h) For the funding of any uncertificated time deposit or other
interest-bearing account with any banking institution (including Custodian), but
only if the payment instructions to Custodian detail specific Securities to be
acquired;
(i) For the purchase from a bank or other financial institution of
loan participations, but only if Custodian has in its possession a copy of the
agreement between the Company on behalf of the Fund and such bank or other
financial institution with respect to the purchase of such loan participations
and the payment instructions to Custodian detail specific assets to be acquired;
(j) For transfer to a broker-dealer registered under the 1934 Act or
in accordance with the provisions of any agreement among the Company on behalf
of the Fund, Custodian and such a broker-dealer as margin for a short sale of
Securities;
(k) For the payment of the amounts of dividends received with respect
to Securities sold short; and
(l) For any other proper purpose, but only upon receipt, in addition
to Proper Instructions, of a copy of a resolution of the Board of Directors,
certified by an Officer, specifying the amount and purpose of such payment,
declaring such purpose to be a proper purpose of the Fund, and naming the person
or persons to whom such payment is to be made.
3.7 Delivery of Securities from the Custody Account. Upon receipt of
-----------------------------------------------
Proper Instructions, Custodian shall release and deliver Securities of the Fund
from the Custody Account but only in the following cases:
<PAGE>
(a) Upon the sale of Securities for the account of the Fund but,
subject to Section 4.3 below, only against receipt of payment therefor in cash,
by certified or cashiers' check or bank credit;
(b) In the case of a sale effected through a Book-Entry System or
Securities Depository, in accordance with the provisions of Section 3.5 above;
(c) To an offeror's depository agent in connection with tender or
other similar offers for Securities of the Fund; provided that, in any such
case, the cash or other consideration is to be delivered to Custodian;
(d) To the issuer thereof or its agent (i) for transfer into the name
of the Fund or any of the nominees referred to in Section 3.9 below, or (ii) for
exchange for a different number of certificates or other evidence representing
the same aggregate face amount or number of units; provided that, in any such
case, the new Securities are to be delivered to Custodian;
(e) To the broker selling Securities, for examination in accordance
with the "street delivery" custom;
(f) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment of the issuer of
such Securities, or pursuant to provisions for conversion contained in such
Securities, or pursuant to any deposit agreement, including surrender or receipt
of underlying Securities in connection with the issuance or cancellation of
depository receipts; provided that, in any such case, the new Securities and
cash, if any, are to be delivered to Custodian;
(g) Upon receipt of payment therefor pursuant to any repurchase
agreement entered into by the Fund;
<PAGE>
(h) In the case of warrants, rights or similar Securities, upon the
exercise thereof, provided that, in any such case, the new Securities and cash,
if any, are to be delivered to Custodian;
(i) For delivery in connection with any loans of Securities pursuant
to any securities loan agreement entered into by the Company on behalf of the
Fund, but only against receipt of such collateral as is required under such
securities loan agreement;
(j) For delivery as security in connection with any borrowings by the
Fund requiring a pledge of assets by the Fund, but only against receipt by
Custodian of the amounts borrowed;
(k) Pursuant to any authorized plan of liquidation, reorganization,
merger, consolidation or recapitalization of the Fund;
(l) For delivery in accordance with the provisions of any agreement
among the Company on behalf of the Fund, Custodian and a broker-dealer, relating
to compliance with the rules of The Options Clearing Corporation and of any
registered national securities exchange (or of any similar organization or
organizations) regarding escrow or other arrangements in connection with
transactions by the Fund;
(m) For delivery in accordance with the provisions of any agreement
among the Company on behalf of the Fund, Custodian, and a futures commission
merchant, relating to compliance with the rules of the Commodity Futures Trading
Commission and/or any contract market (or any similar organization or
organizations) regarding account deposits in connection with transactions by the
Fund;
<PAGE>
(n) For delivery to a broker-dealer registered under the 1934 Act or
in accordance with the provisions of any agreement among the Company on behalf
of the Fund, Custodian and such a broker-dealer as margin for a short sale of
Securities;
(o) For any other proper purpose, but only upon receipt, in addition
to Proper Instructions, of a copy of a resolution of the Board of Directors,
certified by an Officer, specifying the Securities to be delivered, setting
forth the purpose for which such delivery is to be made, declaring such purpose
to be a proper purpose of the Fund, and naming the person or persons to whom
delivery of such Securities is to be made.
3.8 Actions Not Requiring Proper Instructions. Unless otherwise
-----------------------------------------
instructed by the Fund, Custodian shall with respect to all Securities held for
the Fund:
(a) Subject to Section 9.4 below, collect on a timely basis all income
and other payments to which the Fund is entitled either by law or pursuant to
custom in the securities business;
(b) Subject to Section 9.4 below, collect on a timely basis the amount
payable upon or with respect to all Securities and other assets which may mature
or be called, redeemed, retired or otherwise become payable;
(c) Endorse for collection, in the name of the Fund, checks, drafts
and other negotiable instruments;
(d) Surrender interim receipts or Securities in temporary form for
Securities in definitive form;
(e) Execute, as custodian, any necessary declarations or certificates
of ownership under the federal income tax laws or the laws or regulations of any
other taxing
<PAGE>
authority now or hereafter in effect, and prepare and submit reports to the
Internal Revenue Service ("IRS") and to the Fund at such time, in such manner
and containing such information as is prescribed by the IRS;
(f) Hold for the Fund all rights and similar securities issued with
respect to Securities of the Fund; and
(g) In general, attend to all non-discretionary details in connection
with the sale, exchange, substitution, purchase, transfer and other dealings
with Securities and assets of the Fund.
3.9 Registration and Transfer of Securities. All Securities held for the
---------------------------------------
Fund that are issuable only in bearer form shall be held by Custodian in that
form, provided that any such Securities shall be held in a Book-Entry System if
eligible therefor. All other Securities held for the Fund may be registered in
the name of Custodian as agent, any sub-custodian appointed pursuant to Section
3.3 above, any Securities Depository, or any nominee or agent of any of them.
The Fund shall furnish to Custodian appropriate instruments to enable Custodian
to hold or deliver in proper form for transfer, or to register as in this
Section 3.9 provided, any Securities delivered to Custodian which are registered
in the name of the Fund.
3.10 Records. (a) Custodian shall maintain complete and accurate records
-------
with respect to Securities, cash or other property held for the Fund, including
(i) journals or other records of original entry containing an itemized daily
record in detail of all receipts and deliveries of Securities and all receipts
and disbursements of cash; (ii) ledgers (or other records) reflecting (A)
Securities in transfer, if any, (B) Securities in physical possession, (C)
monies and Securities borrowed and monies and Securities loaned (together with a
record of the collateral therefor and substitutions of such collateral), (D)
dividends and interest received, and (E) dividends receivable and interest
accrued; and (iii) cancelled checks and bank records related thereto. Custodian
shall
<PAGE>
keep such other books and records with respect to Securities, cash and other
property of the Fund which is held hereunder as the Fund may reasonably request.
(b) All such books and records maintained by Custodian shall (i) be
maintained in a form acceptable to the Fund and in compliance with rules and
regulations of the Securities and Exchange Commission, (ii) be the property of
the Fund and at all times during the regular business hours of Custodian be made
available upon request for inspection by duly authorized officers, employees or
agents of the Company on behalf of the Fund and employees or agents of the
Securities and Exchange Commission, and (iii) if required to be maintained by
Rule 31a-1 under the 1940 Act, be preserved for the periods prescribed in Rule
31a-2 under the 1940 Act.
3.11 Reports by Custodian. Custodian shall furnish the Fund with a daily
--------------------
activity statement, including a summary of all transfers to or from the Custody
Account, on the day following such transfers. At least monthly and from time to
time, Custodian shall furnish the Fund with a detailed statement of the
Securities and moneys held for the Fund under this Agreement.
3.12 Other Reports by Custodian. Custodian shall provide the Fund with
--------------------------
such reports as the Fund may reasonably request from time to time on the
internal accounting controls and procedures for safeguarding Securities which
are employed by Custodian or any sub-custodian appointed pursuant to Section 3.3
above.
3.13 Proxies and Other Materials. Unless otherwise instructed by the
---------------------------
Fund, Custodian shall promptly deliver to the Fund (at the address set forth in
Article XVI below) all notices of meetings, proxies and proxy materials which it
receives regarding Securities held in the Custody Account. Before delivering
them to the Fund, Custodian shall cause all proxies relating to such Securities
which are not registered in the name of the Fund, or a nominee thereof, to be
promptly executed by the registered holder of such Securities, without
indication
<PAGE>
of the manner in which such proxies are to be voted. Unless otherwise instructed
by the Fund, neither Custodian nor any of its agents shall exercise any voting
rights with respect to Securities held hereunder.
3.14 Information on Corporate Actions. Custodian shall promptly transmit
--------------------------------
to the Fund (at the address set forth in Article XVI below) all written
information received by Custodian from issuers of Securities held in the Custody
Account. With respect to tender or exchange offers for such Securities,
Custodian shall promptly transmit to the Fund all written information received
by it from the issuers of the Securities whose tender or exchange is sought and
by the party (or its agents) making the tender or exchange offer. If the Fund
desires to take action with respect to any tender offer, exchange offer or other
similar transaction, the Fund shall notify Custodian at least five Business Days
prior to the date on which Custodian is to take such action.
3.15 Co-operation. Custodian shall cooperate with and supply necessary
------------
information to the entity or entities appointed by the Company on behalf of the
Fund to keep the books of account of the Fund and/or to compute the value of the
assets of the Fund.
ARTICLE IV
PURCHASE AND SALE OF INVESTMENTS OF THE FUND
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4.1 Purchase of Securities. Promptly upon each purchase of Securities
----------------------
for the Fund, Written Instructions shall be delivered to Custodian, specifying
(a) the name of the issuer or writer of such Securities, and the title or other
description thereof, (b) the number of shares, principal amount (and accrued
interest, if any), or other units purchased, (c) the date of purchase and
settlement, (d) the purchase price per unit, (e) the total amount payable upon
such purchase, and (f) the name of the person to whom such amount is payable.
Custodian shall upon receipt of such Securities purchased by the Fund (or, if
the Securities are transferred by means of a private placement transaction, upon
the receipt of such Securities or payment instructions to Custodian which detail
specific Securities to be acquired) pay out of the moneys held for the account
of the
<PAGE>
Fund the total amount specified in such Written Instructions to the person named
therein. Custodian shall not be under any obligation to pay out moneys to cover
the cost of a purchase of Securities or other assets for the Fund if there is
insufficient cash available in the Custody Account.
4.2 Sale of Securities. Promptly upon each sale of Securities by the
------------------
Fund, Written Instructions shall be delivered to Custodian, specifying (a) the
name of the issuer or writer of such Securities, and the title or other
description thereof, (b) the number of shares, principal amount (and accrued
interest, if any), or other units sold, (c) the date of sale and settlement, (d)
the sale price per unit, (e) the total amount payable upon such sale, and (f)
the person to whom such Securities are to be delivered. Upon receipt of the
total amount payable to the Fund as specified in such Written Instructions,
Custodian shall deliver such Securities to the person specified in such Written
Instructions. Subject to the foregoing, Custodian may accept payment in such
form as shall be satisfactory to it, and may deliver Securities and arrange for
payment in accordance with the customs prevailing among dealers in Securities.
4.3 Delivery of Securities Sold. Notwithstanding Section 4.2 above or any
---------------------------
other provision of this Agreement, Custodian, when instructed to deliver
Securities against payment, shall be entitled, but only if in accordance with
generally accepted market practice, to deliver such Securities prior to actual
receipt of final payment therefor and, exclusively in the case of Securities in
physical form, to deliver such Securities prior to receipt of payment. In any
such case, the Fund shall bear the risk that final payment for such Securities
may not be made or that such Securities may be returned or otherwise held or
disposed of by or through the person to whom they were delivered, and Custodian
shall have no liability for any of the foregoing.
4.4 Payment for Securities Sold, etc. In its sole discretion and from
---------------------------------
time to time, Custodian may credit the Custody Account, prior to actual receipt
of final payment thereof, with (a) proceeds from the sale of Securities which it
has been instructed to deliver against payment, (b) proceeds from the redemption
of Securities or other assets of the Fund, and (c) income from
<PAGE>
cash, Securities or other assets of the Fund. Any such credit shall be
conditional upon actual receipt by Custodian of final payment and may be
reversed if final payment is not actually received in full. Custodian may, in
its sole discretion and from time to time, permit the Fund to use funds so
credited to the Custody Account in anticipation of actual receipt of final
payment. Any such funds shall be repayable immediately upon demand made by
Custodian at any time prior to the actual receipt of all final payments in
anticipation of which funds were credited to the Custody Account.
4.5 Final Payment. For purposes of this Agreement, "final payment" means
-------------
payment in funds which are (or have become) immediately available, under
applicable law are irreversible, and are not subject to any security interest,
levy, lien or other encumbrance.
ARTICLE V
REDEMPTION OF FUND SHARES
-------------------------
5.1 Transfer of Funds. From such funds as may be available for the
-----------------
purpose in the Custody Account, and upon receipt of Proper Instructions
specifying that the funds are required to redeem Shares on account of the Fund,
Custodian shall wire each amount specified in such Proper Instructions to or
through such bank as the Fund may designate therein with respect to such amount.
5.2 No Duty Regarding Paying Banks. Custodian shall not be responsible
------------------------------
for the payment or distribution by any bank designated in Proper Instructions
given pursuant to Section 5.1 above of any amount paid by Custodian to such bank
in accordance with such Proper Instructions.
ARTICLE VI
SEGREGATED ACCOUNTS
-------------------
<PAGE>
Upon receipt of Proper Instructions, Custodian shall establish and maintain
a segregated account or accounts for and on behalf of the Fund, into which
account or accounts may be transferred cash and/or Securities, including
Securities maintained in a Depository Account:
(a) in accordance with the provisions of any agreement among the
Company on behalf of the Fund, Custodian and a broker-dealer (or any futures
commission merchant), relating to compliance with the rules of The Options
Clearing Corporation or of any registered national securities exchange (or the
Commodity Futures Trading Commission or any registered contract market), or of
any similar organization or organizations, regarding escrow or other
arrangements in connection with transactions by the Fund,
(b) for purposes of segregating cash or Securities in connection with
securities options purchased or written by the Fund or in connection with
financial futures contracts (or options thereon) purchased or sold by the Fund,
(c) which constitute collateral for loans of Securities made by the
Fund,
(d) for purposes of compliance by the Fund with requirements under the
1940 Act for the maintenance of segregated accounts by registered investment
companies in connection with reverse repurchase agreements, when-issued, delayed
delivery and firm commitment transactions, and short sales of securities, and
(e) for other proper purposes, but only upon receipt of, in addition
to Proper Instructions, a copy of a resolution of the Board of Directors,
certified by an Officer, setting forth the purpose or purposes of such
segregated account and declaring such purposes to be proper purposes of the
Fund.
ARTICLE VII
SECURITIES LENDING TRANSACTIONS
-------------------------------
<PAGE>
7.1 Transactions. If and to the extent that the necessary funds and
------------
Securities have been entrusted to it under this Agreement (and unless the Fund
gives it Proper Instructions to do otherwise), Custodian from time to time shall
make for the account of the Fund the transfers of funds and deliveries of
Securities which the Fund is required to make pursuant to the Securities Loan
Agreement and shall receive for the account of the Fund the transfers of funds
and deliveries of Securities which the borrower under the Securities Loan
Agreement is required to make pursuant thereto. Custodian shall make and receive
all such transfers and deliveries pursuant to, and subject to the terms and
conditions of, the Securities Loan Agreement.
7.2 Collateral; Events of Default. Custodian shall daily mark to market,
-----------------------------
in the manner provided for in the Securities Loan Agreement, all loans of
Securities which may from time to time be outstanding thereunder. Custodian
shall promptly notify the Fund of any Default under the Securities Loan
Agreement (as such term "Default" is defined therein) of which it has actual
knowledge.
7.3 Securities Loan Agreement. Custodian hereby acknowledges its receipt
-------------------------
from the Company on behalf of the Fund of a copy of the Securities Loan
Agreement. The Fund shall provide Custodian, prior to the effectiveness thereof,
with a copy of any amendment to the Securities Loan Agreement.
ARTICLE VIII
REPURCHASE TRANSACTIONS
-----------------------
8.1 Transactions. If and to the extent that the funds and Securities have
------------
been entrusted to it under this Agreement (and unless the Fund gives it Proper
Instructions to do otherwise), Custodian from time to time shall make for the
account of the Fund the transfers of funds and deliveries of Securities which
the Fund is required to make pursuant to the Master Repurchase Agreement and
shall receive for the account of the Fund the transfers of funds and deliveries
of Securities which the seller under the Master Repurchase Agreement is required
to
<PAGE>
make pursuant thereto. Custodian shall make and receive all such transfers and
deliveries pursuant to, and subject to the terms and conditions of, the Master
Repurchase Agreement.
8.2 Collateral; Events of Default. Custodian shall daily mark to market
-----------------------------
the Securities purchased by the Fund under the Master Repurchase Agreement and
held in the Custody Account, and shall give to the seller thereunder any such
notice as may be required by the Master Repurchase Agreement in connection with
such mark-to-market. Custodian shall promptly notify the Fund of any Event of
Default by the seller under the Master Repurchase Agreement (as such term "Event
of Default" is defined therein) of which it has actual knowledge.
8.3 Master Repurchase Agreement. Custodian hereby acknowledges its
---------------------------
receipt from the Company on behalf of the Fund of a copy of the Master
Repurchase Agreement. The Fund shall provide Custodian, prior to the
effectiveness thereof, with a copy of any amendment to the Master Repurchase
Agreement.
ARTICLE IX
CONCERNING THE CUSTODIAN
------------------------
9.1 Standard of Care. Custodian shall be held to the exercise of
----------------
reasonable care in carrying out its obligations under this Agreement, and shall
be without liability to the Fund for any loss, damage, cost, expense (including
attorneys' fees and disbursements), liability or claim which does not arise from
willful misfeasance, bad faith or negligence on the part of Custodian or
reckless disregard by Custodian of its obligations under this Agreement.
Custodian shall be entitled to rely on and may act upon advice of counsel on all
matters, and shall be without liability for any action reasonably taken or
omitted pursuant to such advice. In no event shall Custodian be liable for
special or consequential damages or be liable in any manner whatsoever for any
action taken or omitted upon instructions from the Fund or any agent of the
Company on behalf of the Fund. Custodian shall not be under any obligation at
any time to ascertain whether
<PAGE>
the Fund is in compliance with the 1940 Act, the regulations thereunder, the
provisions of its charter documents or by-laws, or its investment objectives,
policies and limitations as in effect from time to time.
9.2 Actual Collection Required. Custodian shall not be liable for, or
--------------------------
considered to be the custodian of, any cash belonging to the Fund or any money
represented by a check, draft or other instrument for the payment of money,
until Custodian or its agents actually receive such cash or collect on such
instrument.
9.3 No Responsibility for Title, etc. So long as and to the extent that
---------------------------------
it is in the exercise of reasonable care, Custodian shall not be responsible for
the title, validity or genuineness of any property or evidence of title thereto
received or delivered by it or its agents.
9.4 Limitation on Duty to Collect. Custodian shall promptly notify the
-----------------------------
Fund whenever any money or property due and payable from or on account of any
Securities held hereunder for the Fund is not timely received by it. Custodian
shall not, however, be required to enforce collection, by legal means or
otherwise, of any such money or other property not paid when due, but shall
receive the proceeds of such collections as may be effected by it or its agents
in the ordinary course of Custodian's custody and safekeeping business or of the
custody and safekeeping business of such agents.
9.5 Express Duties Only. Custodian shall have no duties or obligations
-------------------
whatsoever except such duties and obligations as are specifically set forth in
this Agreement, and no covenant or obligation shall be implied in this Agreement
against Custodian. Custodian shall have no discretion whatsoever with respect to
the management, disposition or investment of the Custody Account and is not a
fiduciary to the Fund.
9.6 Compliance with Laws. Custodian undertakes to comply with all
--------------------
applicable requirements of the Securities Act of 1933, the Securities Exchange
Act of 1934, the 1940 Act
<PAGE>
and the Commodities Exchange Act and any laws, rules and regulations of
governmental authorities having jurisdiction with respect to the duties to be
performed by Custodian hereunder. Except as specifically set forth herein,
Custodian assumes no responsibility for such compliance by the Fund.
ARTICLE X
INDEMNIFICATION
---------------
10.1 Indemnification. The Fund shall indemnify and hold harmless
---------------
Custodian, any sub-custodian and any nominee of Custodian or any sub-custodian,
from and against any loss, damages, cost, expense (including attorneys' fees and
disbursements), liability (including, without limitation, liability arising
under the Securities Act of 1933, the 1934 Act, the 1940 Act, and any federal or
state securities and/or banking laws) or claim arising directly or indirectly
(a) from the fact that Securities are registered in the name of any such
nominee, or (b) from any action or inaction by Custodian or such sub-custodian
or other agent (i) at the request or direction of or in reliance on the advice
of the Fund or any of its agents, or (ii) upon Proper Instructions, or (c)
generally, from the performance of its obligations under this Agreement,
provided that Custodian, any sub-custodian or any nominee of either of them
shall not be indemnified and held harmless from and against any such loss,
damage, cost, expense, liability or claim arising from Custodian's willful
misfeasance, bad faith, negligence or reckless disregard of its obligations
under this Agreement or, in the case of any sub-custodian or its nominee, from
such sub-custodian's willful misfeasance, bad faith, negligence or reckless
disregard of its obligations under the Agreement under which it is acting.
10.2 Indemnity to be Provided. If the Fund requests Custodian to take
------------------------
any action with respect to Securities, which may, in the opinion of Custodian,
result in Custodian or its nominee becoming liable for the payment of money or
incurring liability of some other form, Custodian shall not be required to take
such action until the Fund shall have provided indemnity therefor to Custodian
in an amount and form satisfactory to Custodian.
<PAGE>
10.3 Security. As security for the payment of any present or future
--------
obligation or liability of any kind which the Fund may have to Custodian with
respect to or in connection with the Custody Account or this Agreement, the Fund
hereby pledges to Custodian all cash, Securities and other property of every
kind which is in the Custody Account or otherwise held for the Fund pursuant to
this Agreement, and hereby grants to Custodian a lien, right of set-off and
continuing security interest in such cash, Securities and other property.
10.4 Limitation. Notwithstanding any other provision of this Agreement,
----------
the obligations and liabilities of the Company on behalf of the Fund under this
Agreement are solely those of the Fund, and neither the Company generally nor
any of its other investment portfolios shall be responsible for any of such
obligations or liabilities.
ARTICLE XI
FORCE MAJEURE
-------------
Neither Custodian nor the Fund shall be liable for any failure or delay in
performance of its obligations under this Agreement arising out of or caused,
directly or indirectly, by circumstances beyond its reasonable control,
including, without limitation, acts of God; earthquakes; fires; floods; wars;
civil or military disturbances; sabotage; strikes; epidemics; riots; power
failures; computer failure and any such circumstances beyond its reasonable
control as may cause interruption, loss or malfunction of utility,
transportation, computer (hardware or software) or telephone communication
service; accidents; labor disputes; acts of civil or military authority;
governmental actions; or inability to obtain labor, material, equipment or
transportation.
ARTICLE XII
REPRESENTATIONS AND WARRANTIES
------------------------------
Each of the Company on behalf of the Fund and Custodian represents and
warrants for itself that (a) it has all necessary power and authority to perform
its obligations hereunder, (b)
<PAGE>
the execution and delivery by it of this Agreement, and the performance by it of
its obligations under this Agreement, have been duly authorized by all necessary
action and will not violate any law, regulation, charter, by-law, or other
instrument, restriction or provision applicable to it or by which it is bound,
and (c) this Agreement constitutes a legal, valid and binding obligation of it,
enforceable against it in accordance with its terms.
ARTICLE XIII
COMPENSATION OF CUSTODIAN
-------------------------
The Fund shall pay Custodian such fees and charges as are set forth in the
fee schedule annexed hereto as Exhibit C, as such fee schedule may from time to
time be revised by Custodian upon 14 days' prior written notice to the Fund. Any
annual fee or other charges payable by the Fund shall be paid monthly by
automatic deduction from the Custody Account. Expenses incurred by Custodian in
the performance of its services hereunder, and all other proper charges and
disbursements of the Custody Account, shall be charged to the Custody Account by
Custodian and paid therefrom.
ARTICLE XIV
TAXES
-----
Any and all taxes, including any interest and penalties with respect
thereto, which may be levied or assessed under present or future laws or in
respect of the Custody Account or any income thereof shall be charged to the
Custody Account by Custodian and paid therefrom.
ARTICLE XV
AUTHORIZED PERSONS
------------------
15.1 Authorized Persons. Custodian may rely upon and act in accordance
------------------
with any notice, confirmation, instruction or other communication received by it
from the Fund which is reasonably believed by Custodian to have been given or
signed on behalf of the Fund by one of
<PAGE>
the Authorized Persons designated by the Fund in Exhibit A hereto, as it may
from time to time be revised. The Fund may revise Exhibit A hereto at any time
by notice in writing to Custodian given in accordance with Article XVI below,
but no revision of Exhibit A hereto shall be effective until Custodian actually
receives such notice.
15.2 Investment Advisers. Custodian may also act in accordance with
-------------------
any Written or Oral Instructions which are reasonably believed by Custodian to
have been given or signed by one of the persons designated from time to time by
any of the investment advisers of the Fund specified in Exhibit B hereto (if
any) as it may from time to time be revised. The Fund may revise Exhibit B
hereto at any time by notice in writing to Custodian given in accordance with
Article XVI below, and each investment adviser specified in Exhibit B hereto (if
any) may at any time by like notice designate an Authorized Person or remove an
Authorized Person previously designated by it, but no revision of Exhibit B
hereto (if any) and no designation or removal by such investment adviser shall
be effective until Custodian actually receives such notice.
15.3 Oral Instructions. Custodian may rely upon and act in accordance
-----------------
with Oral Instructions (as defined in Section 1.9 above). If Written
Instructions confirming Oral Instructions are not received by Custodian prior to
a transaction, it shall in no way affect the validity of the transaction
authorized by such Oral Instructions or the authorization of the Fund to effect
such transaction. Custodian shall incur no liability to the Fund in acting upon
Oral Instructions (as defined in Section 1.9 above). To the extent such Oral
Instructions vary from any confirming Written Instructions, Custodian shall
advise the Fund of such variance but unless confirming Written Instructions are
timely received, such Oral Instructions will govern. Either Custodian or Fund
may electronically record any instructions given by telephone and any other
telephone discussions with respect to the account of the Fund.
ARTICLE XVI
NOTICES
-------
<PAGE>
Unless otherwise specified herein, all demands, notices, instructions, and
other communications to be given hereunder shall be sent, delivered or given to
the recipient at the address set forth after its name hereinbelow:
IF TO THE FUND:
NUMERIC MICRO CAP FUND - THE RBB FUND, INC.
Bellevue Park Corporate Center
400 Bellevue Parkway - Suite 100
Wilmington, DE 19809
Attention: Charles D. Curtis, Jr.
----------------------
Telephone: (302) 791 - 1791
Facsimile: (302) 791 - 3067
IF TO CUSTODIAN:
CUSTODIAL TRUST COMPANY
101 Carnegie Center
Princeton, New Jersey 08540-6231
Attention: Vice President - Trust Operations
---------------------------------
Telephone: (609) 951-2320
Facsimile: (609) 951-2327
or at such other address as either party shall have provided to the other by
notice given in accordance with this Article XVI. Writing shall include
transmissions by or through teletype, facsimile, central processing unit
connection, on-line terminal and magnetic tape.
ARTICLE XVII
TERMINATION
-----------
Either party hereto may terminate this Agreement by giving to the other
party a notice in writing specifying the date of such termination, which shall
be not less than sixty (60) days after the date of the giving of such notice.
Upon the date set forth in such notice this Agreement shall terminate, and
Custodian shall, upon receipt of a notice of acceptance by the successor
custodian, on that date (a) deliver directly to the successor custodian or its
agents all Securities (other than Securities held in a Book-Entry System or
Securities Depository) and cash then owned by the Fund and held by Custodian as
custodian, and (b) transfer any Securities held in a Book-Entry
<PAGE>
System or Securities Depository to an account of or for the benefit of the Fund,
provided that the Fund shall have paid to Custodian all fees, expenses and other
amounts to the payment or reimbursement of which it shall then be entitled.
ARTICLE XVIII
MISCELLANEOUS
-------------
18.1 Business Days. Nothing contained in this Agreement shall require
-------------
Custodian to perform any function or duties on a day other than a Business Day.
18.2 Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the laws of the State of New York, without regard to the
conflict of law principles thereof.
18.3 References to Custodian. The Fund shall not circulate any printed
-----------------------
matter which contains any reference to Custodian without the prior written
approval of Custodian, excepting printed matter contained in the prospectus or
statement of additional information for the Fund and such other printed matter
as merely identifies Custodian as custodian for the Fund. The Fund shall submit
printed matter requiring approval to Custodian in draft form, allowing
sufficient time for review by Custodian and its counsel prior to any deadline
for printing.
18.4 No Waiver. No failure by either party hereto to exercise, and no
---------
delay by such party in exercising, any right hereunder shall operate as a
waiver thereof. The exercise by either party hereto of any right hereunder shall
not preclude the exercise of any other right, and the remedies provided herein
are cumulative and not exclusive of any remedies provided at law or in equity.
<PAGE>
18.5 Amendments. This Agreement cannot be changed orally and no
----------
amendment to this Agreement shall be effective unless evidenced by an instrument
in writing executed by the parties hereto.
18.6 Counterparts. This Agreement may be executed in one or more
------------
counterparts, and by the parties hereto on separate counterparts, each of which
shall be deemed an original but all of which together shall constitute but one
and the same instrument.
18.7 Severability. If any provision of this Agreement shall be invalid,
------------
illegal or unenforceable in any respect under any applicable law, the
validity, legality and enforceability of the remaining provisions shall not be
affected or impaired thereby.
18.8 Successors and Assigns. This Agreement shall be binding upon and
----------------------
shall inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that this Agreement shall not be
-------- -------
assignable by either party hereto without the written consent of the other
party. Any purported assignment in violation of this Section 18.8 shall be
void.
18.9 Headings. The headings of sections in this Agreement are for
--------
convenience of reference only and shall not affect the meaning or construction
of any provision of this Agreement.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed in its name and on its behalf by its representative thereunto duly
authorized, all as of the day and year first above written.
THE RRB FUND, INC. on behalf of CUSTODIAL TRUST COMPANY
THE NUMERIC MICRO CAP FUND
By By
---------------------------------- ------------------------------------
Authorized Officer Authorized Officer
<PAGE>
EXHIBIT A
AUTHORIZED PERSONS
Set forth below are the names and specimen signatures of the persons
authorized by the Numeric Micro Cap Fund - The RRB Fund, Inc. to administer the
Custody Account.
Name Signature
---- ---------
- -------------------------------------- --------------------------------------
- -------------------------------------- --------------------------------------
- -------------------------------------- --------------------------------------
- -------------------------------------- --------------------------------------
- ---------- ----------
<PAGE>
EXHIBIT B
---------
INVESTMENT ADVISERS
<PAGE>
EXHIBIT C
---------
CUSTODY FEES AND TRANSACTION CHARGES
The Fund shall pay Custodian the following fees and charges for holdings
and transactions in the United States, all such fees and charges to be payable
monthly by deduction from the Custody Account:
(1) an annual fee of the greater of 0.015% (one and one-half basis
points) per annum of the value of the assets in the Custody Account or $5,000,
such fee to be payable monthly based upon the total market value of such assets
as determined on the last Business Day of the month for which such fee is
charged;
(2) a transaction charge of $12 for each receipt or delivery of book-entry
Securities into or from the Custody Account (but not for any such receipt or
delivery (a) in a repurchase transaction representing a cash sweep investment
for the Fund's account or representing the investment by the Fund of cash
collateral for a loan of Securities or (b) of book-entry Securities which are
collateral for a loan of Securities);
(3) a transaction charge of $25 for each receipt or delivery into or from
the Custody Account of Securities in physical form;
(4) a transaction charge for each repurchase transaction in the Custody
Account which represents a cash sweep investment for the Fund's account,
computed at a rate of 0.10% (ten basis points) per annum on the amount of the
purchase price paid by the Fund in such repurchase transaction on the basis of a
360-day year and for the actual number of days such repurchase transaction is
outstanding;
(5) a charge of $10 for each "free" transfer of funds from the Custody
Account;
<PAGE>
(6) an administrative fee for each purchase in the Custody Account of
shares or other interests in a money market or other fund, which purchase
represents a cash sweep investment for the Fund's account, computed for each day
that there is a positive balance in such fund to equal 1/365th of 0.10% (ten
basis points) on the amount of such positive balance for such day; and
(7) a service charge for each holding of Securities or other property sold
by way of private placement or in such other manner as to require services by
Custodian which in its reasonable judgment are materially in excess of those
ordinarily required for the holding of publicly traded Securities in the United
States.
Fees and charges for holdings and transactions outside the United States,
if any, shall be as separately agreed upon by the Fund and Custodian.
<PAGE>
CUSTODY AGREEMENT
AGREEMENT, dated as of May 20, 1996 by and between THE RBB FUND, INC. (the
"Company"), a corporation organized under the laws of the State of Maryland on
behalf of its portfolio, the Numeric Growth Fund (the "Fund"), and CUSTODIAL
TRUST COMPANY, a bank organized and existing under the laws of the State of New
Jersey (the "Custodian").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company on behalf of the Fund desires that the Fund's
securities, cash and other assets be held and administered by Custodian pursuant
to this Agreement;
WHEREAS, the Fund is an investment portfolio represented by a series of
Shares constituting part of the capital stock of the Company, an open-end
management investment company registered under the 1940 Act (as hereinafter
defined);
WHEREAS, Custodian represents that it is a bank having the qualifications
prescribed in Section 26(a)(i) of the 1940 Act;
NOW, THEREFORE, in consideration of the mutual agreements herein made, the
Company on behalf of the Fund and Custodian hereby agree as follows:
ARTICLE I
DEFINITIONS
-----------
Whenever used in this Agreement, the following terms, unless the context
otherwise requires, shall mean:
<PAGE>
1.1 "Authorized Person" means any Officer or other person duly authorized
-----------------
by resolution of the Board of Directors to give Oral Instructions and Written
Instructions on behalf of the Fund and identified, by name or by office, in
Exhibit A hereto or any person duly designated to do so by an investment adviser
of the Fund specified by the Fund in Exhibit B hereto.
1.2 "Board of Directors" means the Board of Directors of the Company or,
------------------
when permitted under the 1940 Act, the Executive Committee thereof, if any.
1.3 "Book-Entry System" means a book-entry system maintained by a Federal
-----------------
Reserve bank as provided for in Subpart O of Treasury Circular No. 300, 31 CFR
306, in Subpart B of 31 CFR Part 350, or in such other book-entry regulations of
federal agencies as are substantially in the form of such Subpart O.
1.4 "Business Day" means any day recognized as a settlement day by The
------------
New York Stock Exchange, Inc. and on which banks in the State of New Jersey are
open for business.
1.5 "Custody Account" means the account in the name of the Fund, which is
---------------
provided for in Section 3.2 below.
1.6 "Master Repurchase Agreement" means that certain Master Repurchase
---------------------------
Agreement of even date herewith between the Company on behalf of the Fund and
Bear, Stearns & Co. Inc., an affiliate of Custodian ("Bear Stearns"), as it may
from time to time be amended.
1.7. "1940 Act" means the Investment Company Act of 1940, as amended.
--------
1.8 "Officer" means the President, any Vice President, the Secretary, any
-------
Assistant Secretary, the Treasurer, or any Assistant Treasurer of the Company.
<PAGE>
1.9 "Oral Instructions" means instructions orally transmitted to and
-----------------
accepted by Custodian which are (a) reasonably believed by Custodian to have
been given by an Authorized Person, (b) recorded and kept among the records of
Custodian made in the ordinary course of business, and (c) orally confirmed by
Custodian.
1.10 "Proper Instructions" means Oral Instructions or Written
-------------------
Instructions. Proper Instructions may be continuing Written Instructions when
deemed appropriate by both parties.
1.11 "Securities" includes, without limitation, common and preferred
----------
stocks, bonds, call options, put options, debentures, notes, bank certificates
of deposit, forward contracts, futures contracts (including those related to
indexes), options on futures contracts or indexes, bankers' acceptances,
mortgage-backed securities or other obligations, and any certificates, receipts,
warrants or other instruments or documents representing rights to receive,
purchase or subscribe for the same, or evidencing or representing any other
rights or interests therein, or any similar property or assets that Custodian
has the facilities to clear and to service.
1.12 "Securities Loan Agreement" means that certain Securities Loan
-------------------------
Agreement of even date herewith between the Company on behalf of the Fund and
Bear, Stearns Securities Corp. ("BSSC"), as it may from time to time be amended.
1.13 "Securities Depository" means The Depository Trust Company and
---------------------
(provided that Custodian has received a copy of a resolution of the Board of
Directors of the Company, certified by an Officer, specifically approving the
use thereof as a depository for the Fund) any other clearing agency registered
with the Securities and Exchange Commission under Section 17A of the Securities
Exchange Act of 1934 (the "1934 Act"), which acts as a system for the central
handling and deposit of Securities where all Securities of any particular class
or series of
<PAGE>
an issuer deposited within the system are treated as fungible and may be
transferred or pledged by bookkeeping entry without physical delivery of the
Securities.
1.14 "Shares" means the shares into which the capital stock of the Company
------
is divided.
1.15 "Written Instructions" means (a) written communications received by
--------------------
Custodian and signed by two persons reasonably believed by Custodian to be
Authorized Persons, or (b) communications by telex or any other such system from
two persons reasonably believed by Custodian to be Authorized Persons, or (c)
communications between electro-mechanical or electronic devices.
ARTICLE II
APPOINTMENT OF CUSTODIAN
------------------------
2.1 Appointment. The Company on behalf of the Fund hereby appoints
-----------
Custodian as custodian of all such Securities, cash and other assets as may be
acceptable to Custodian and from time to time delivered to it by the Fund or
others for the account of the Fund.
2.2 Acceptance. Custodian hereby accepts appointment as such custodian
----------
and agrees to perform the duties thereof as hereinafter set forth.
ARTICLE III
CUSTODY OF CASH AND SECURITIES
------------------------------
3.1 Segregation. All Securities and non-cash property of the Fund in the
-----------
possession of Custodian (other than Securities maintained by Custodian in a
Securities Depository or Book-Entry System) shall be physically segregated from
other Securities and non-cash property in the possession of Custodian and shall
be identified as belonging to the Fund.
<PAGE>
3.2 Custody Account. (a) Custodian shall open and maintain in its trust
---------------
department a custody account in the name of the Fund, subject only to draft or
order of Custodian, in which Custodian shall enter and carry all Securities,
cash and other assets of the Fund which are delivered to Custodian and accepted
by it. Custodian shall not be under any duty or obligation to require the Fund
to deliver to it any Securities or funds owned by the Fund and shall have no
responsibility or liability for or on account of Securities or funds not so
delivered.
(b) If Custodian at any time fails to receive any of the documents
referred to in Section 3.5(a) below, then, until such time as it receives such
document, it shall not be obligated to receive any Securities of the Fund into
the Custody Account and shall be entitled to return to the Fund any Securities
of the Fund that it is holding.
(c) Custodian may, but shall not be obligated to, hold Securities that
may be held only in physical form.
(d) Custodian is authorized to disclose the name, address and
securities positions of the Fund to the issuers of such securities when
requested by them to do so.
3.3 Appointment of Agents. (a) Custodian may employ suitable agents,
---------------------
which may include affiliates of Custodian, such as Bear Stearns or BSSC, both of
which are registered broker-dealers. The appointment of any agent pursuant to
this Section 3.3(a) shall not relieve Custodian of any of its obligations or
liabilities under this Agreement. However, no Book-Entry System, Securities
Depository or other securities depository or clearing agency which it is or may
become standard market practice to use for the comparison and settlement of
trades in securities shall be an agent or sub-contractor of Custodian for
purposes of this Section 3.3(a) or otherwise.
(b) Upon notification of the Fund and in its discretion, Custodian may
appoint, and, upon notification of the Fund, at any time remove, any domestic
bank or trust
<PAGE>
company which is qualified to act as a custodian under the 1940 Act as sub-
custodian to hold Securities and cash of the Fund and to carry out such other
provisions of this Agreement as it may determine, and, upon notification of the
Fund, may also open and maintain one or more banking accounts with such a bank
or trust company (any such accounts to be in the name of Custodian and subject
only to its draft or order), provided, however, that the appointment of any such
agent or opening and maintenance of any such accounts shall be at Custodian's
expense and shall not relieve Custodian of any of its obligations or liabilities
under this Agreement.
(c) Upon receipt of Written Instructions to do so and at the Fund's
expense, Custodian shall appoint as sub-custodian such domestic bank or trust
company as is named therein, provided that (i) such bank or trust company is
qualified to act as a custodian under the 1940 Act, and (ii) notwithstanding
anything to the contrary in Section 9.1 below or elsewhere in this Agreement,
Custodian shall have no greater liability to the Fund for the actions or
omissions of any such sub-custodian than any such sub-custodian has to
Custodian, and Custodian shall not be required to discharge any such liability
which may be imposed on it unless and until such sub-custodian has effectively
indemnified Custodian against it or has otherwise discharged its liability to
Custodian in full.
3.4 Delivery of Assets to Custodian. The Fund shall deliver to Custodian
-------------------------------
the Fund's Securities, cash and other assets, which are acceptable to Custodian,
including (a) payments of income, payments of principal and capital
distributions received by the Fund with respect to such Securities, cash or
other assets owned by the Fund at any time during the term of this Agreement,
and (b) cash received by the Fund for the issuance, at any time during such
term, of Shares. Custodian shall not be responsible for such Securities, cash
or other assets until actually received by it.
3.5 Securities Depositories and Book-Entry Systems. Custodian may
----------------------------------------------
deposit and/or maintain Securities of the Fund in a Securities Depository or in
a Book-Entry System, subject to the following provisions:
<PAGE>
(a) Prior to a deposit of Securities of the Fund in any Securities
Depository or Book-Entry System, the Fund shall deliver to Custodian a
resolution of the Board of Directors of the Company, certified by an Officer,
authorizing and instructing Custodian (and any sub-custodian appointed pursuant
to Section 3.3 above) on an on-going basis to deposit in such Securities
Depository or Book-Entry System all Securities eligible for deposit therein and
to make use of such Securities Depository or Book-Entry System to the extent
possible and practical in connection with its performance hereunder (or under
the applicable sub-custody agreement in the case of such sub-custodian),
including, without limitation, in connection with settlements of purchases and
sales of Securities, loans of Securities, and deliveries and returns of
collateral consisting of Securities.
(b) Securities of the Fund kept in a Book-Entry System or Securities
Depository shall be kept in an account ("Depository Account") of Custodian in
such Book-Entry System or Securities Depository which includes only assets held
by Custodian as a fiduciary, custodian or otherwise for customers.
(c) The records of Custodian with respect to Securities of the Fund
maintained in a Book-Entry System or Securities Depository shall at all times
identify such Securities as belonging to the Fund.
(d) If Securities purchased by the Fund are to be held in a Book-Entry
System or Securities Depository, Custodian shall pay for such Securities upon
(i) receipt of advice from the Book-Entry System or Securities Depository that
such Securities have been transferred to the Depository Account, and (ii) the
making of an entry on the records of Custodian to reflect such payment and
transfer for the account of the Fund. If Securities sold by the Fund are held
in a Book-Entry System or Securities Depository, Custodian shall transfer such
Securities upon (i) receipt of advice from the Book-Entry System or Securities
Depository that payment for such
<PAGE>
Securities has been transferred to the Depository Account, and (ii) the making
of an entry on the records of Custodian to reflect such transfer and payment for
the account of the Fund.
(e) Custodian shall provide the Fund with copies of any report
obtained by Custodian from a Book-Entry System or Securities Depository in which
Securities of the Fund are kept on the internal accounting controls and
procedures for safeguarding Securities deposited in such Book-Entry System or
Securities Depository.
(f) At its election, the Company on behalf of the Fund shall be
subrogated to the rights of Custodian with respect to any claim against a Book-
Entry System or Securities Depository or any other person for any loss or damage
to the Fund arising from the use of such Book-Entry System or Securities
Depository, if and to the extent that the Fund has not been made whole for any
such loss or damage.
3.6 Disbursement of Moneys from the Custody Account. Upon receipt of
-----------------------------------------------
Proper Instructions, Custodian shall disburse moneys from the Custody Account,
but only in the following cases:
(a) For the purchase of Securities for the Fund but only (i) in the
case of Securities (other than options on Securities, futures contracts and
options on futures contracts), against the delivery to Custodian (or any sub-
custodian appointed pursuant to Section 3.3 above) of such Securities registered
as provided in Section 3.9 below or in proper form for transfer or, if the
purchase of such Securities is effected through a Book-Entry System or
Securities Depository, in accordance with the conditions set forth in Section
3.5 above; (ii) in the case of options on Securities, against delivery to
Custodian (or such sub-custodian) of such receipts as are required by the
customs prevailing among dealers in such options; (iii) in the case of futures
contracts and options on futures contracts, against delivery to Custodian (or
such sub-custodian) of evidence of title thereto in favor of the Fund, the
Custodian, any such sub-custodian or any nominee referred to in Section 3.9
below; and (iv) in the case of repurchase or reverse
<PAGE>
repurchase agreements entered into by the Fund, against delivery of the
purchased Securities either in certificate form or through an entry crediting
Custodian's account at a Book-Entry System or Securities Depository with such
Securities;
(b) In connection with the conversion, exchange or surrender, as set
forth in Section 3.7(f) below, of Securities owned by the Fund;
(c) For the payment of any dividends or capital gain distributions
declared by the Fund;
(d) In payment of the redemption price of Shares as provided in
Article V below;
(e) For the payment of any expense or liability incurred by the Fund,
including but not limited to the following payments for the account of the Fund:
interest, taxes, administration, investment management, investment advisory,
accounting, auditing, transfer agent, custodian, trustee and legal fees; and
other operating expenses of the Fund; in all cases, whether or not such expenses
are to be in whole or in part capitalized or treated as deferred expenses;
(f) For transfer in accordance with the provisions of any agreement
among the Company on behalf of the Fund, Custodian and a broker-dealer, relating
to compliance with rules of The Options Clearing Corporation and of any
registered national securities exchange (or of any similar organization or
organizations) regarding escrow or other arrangements in connection with
transactions by the Fund;
(g) For transfer in accordance with the provisions of any agreement
among the Company on behalf of the Fund, Custodian, and a futures commission
merchant, relating to compliance with the rules of the Commodity Futures Trading
Commission and/or any contract
<PAGE>
market (or any similar organization or organizations) regarding account deposits
in connection with transactions by the Fund;
(h) For the funding of any uncertificated time deposit or other
interest-bearing account with any banking institution (including Custodian), but
only if the payment instructions to Custodian detail specific Securities to be
acquired;
(i) For the purchase from a bank or other financial institution of
loan participations, but only if Custodian has in its possession a copy of the
agreement between the Company on behalf of the Fund and such bank or other
financial institution with respect to the purchase of such loan participations
and the payment instructions to Custodian detail specific assets to be acquired;
(j) For transfer to a broker-dealer registered under the 1934 Act or
in accordance with the provisions of any agreement among the Company on behalf
of the Fund, Custodian and such a broker-dealer as margin for a short sale of
Securities;
(k) For the payment of the amounts of dividends received with respect
to Securities sold short; and
(l) For any other proper purpose, but only upon receipt, in addition
to Proper Instructions, of a copy of a resolution of the Board of Directors,
certified by an Officer, specifying the amount and purpose of such payment,
declaring such purpose to be a proper purpose of the Fund, and naming the person
or persons to whom such payment is to be made.
3.7 Delivery of Securities from the Custody Account. Upon receipt of
-----------------------------------------------
Proper Instructions, Custodian shall release and deliver Securities of the Fund
from the Custody Account but only in the following cases:
<PAGE>
(a) Upon the sale of Securities for the account of the Fund but,
subject to Section 4.3 below, only against receipt of payment therefor in cash,
by certified or cashiers' check or bank credit;
(b) In the case of a sale effected through a Book-Entry System or
Securities Depository, in accordance with the provisions of Section 3.5 above;
(c) To an offeror's depository agent in connection with tender or
other similar offers for Securities of the Fund; provided that, in any such
case, the cash or other consideration is to be delivered to Custodian;
(d) To the issuer thereof or its agent (i) for transfer into the name
of the Fund or any of the nominees referred to in Section 3.9 below, or (ii) for
exchange for a different number of certificates or other evidence representing
the same aggregate face amount or number of units; provided that, in any such
case, the new Securities are to be delivered to Custodian;
(e) To the broker selling Securities, for examination in accordance
with the "street delivery" custom;
(f) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment of the issuer of
such Securities, or pursuant to provisions for conversion contained in such
Securities, or pursuant to any deposit agreement, including surrender or receipt
of underlying Securities in connection with the issuance or cancellation of
depository receipts; provided that, in any such case, the new Securities and
cash, if any, are to be delivered to Custodian;
(g) Upon receipt of payment therefor pursuant to any repurchase
agreement entered into by the Fund;
<PAGE>
(h) In the case of warrants, rights or similar Securities, upon the
exercise thereof, provided that, in any such case, the new Securities and cash,
if any, are to be delivered to Custodian;
(i) For delivery in connection with any loans of Securities pursuant
to any securities loan agreement entered into by the Company on behalf of the
Fund, but only against receipt of such collateral as is required under such
securities loan agreement;
(j) For delivery as security in connection with any borrowings by the
Fund requiring a pledge of assets by the Fund, but only against receipt by
Custodian of the amounts borrowed;
(k) Pursuant to any authorized plan of liquidation, reorganization,
merger, consolidation or recapitalization of the Fund;
(l) For delivery in accordance with the provisions of any agreement
among the Company on behalf of the Fund, Custodian and a broker-dealer, relating
to compliance with the rules of The Options Clearing Corporation and of any
registered national securities exchange (or of any similar organization or
organizations) regarding escrow or other arrangements in connection with
transactions by the Fund;
(m) For delivery in accordance with the provisions of any agreement
among the Company on behalf of the Fund, Custodian, and a futures commission
merchant, relating to compliance with the rules of the Commodity Futures Trading
Commission and/or any contract market (or any similar organization or
organizations) regarding account deposits in connection with transactions by the
Fund;
<PAGE>
(n) For delivery to a broker-dealer registered under the 1934 Act or
in accordance with the provisions of any agreement among the Company on behalf
of the Fund, Custodian and such a broker-dealer as margin for a short sale of
Securities;
(o) For any other proper purpose, but only upon receipt, in addition
to Proper Instructions, of a copy of a resolution of the Board of Directors,
certified by an Officer, specifying the Securities to be delivered, setting
forth the purpose for which such delivery is to be made, declaring such purpose
to be a proper purpose of the Fund, and naming the person or persons to whom
delivery of such Securities is to be made.
3.8 Actions Not Requiring Proper Instructions. Unless otherwise
-----------------------------------------
instructed by the Fund, Custodian shall with respect to all Securities held for
the Fund:
(a) Subject to Section 9.4 below, collect on a timely basis all income
and other payments to which the Fund is entitled either by law or pursuant to
custom in the securities business;
(b) Subject to Section 9.4 below, collect on a timely basis the amount
payable upon or with respect to all Securities and other assets which may mature
or be called, redeemed, retired or otherwise become payable;
(c) Endorse for collection, in the name of the Fund, checks, drafts
and other negotiable instruments;
(d) Surrender interim receipts or Securities in temporary form for
Securities in definitive form;
(e) Execute, as custodian, any necessary declarations or certificates
of ownership under the federal income tax laws or the laws or regulations of any
other taxing
<PAGE>
authority now or hereafter in effect, and prepare and submit reports to the
Internal Revenue Service ("IRS") and to the Fund at such time, in such manner
and containing such information as is prescribed by the IRS;
(f) Hold for the Fund all rights and similar securities issued with
respect to Securities of the Fund; and
(g) In general, attend to all non-discretionary details in connection
with the sale, exchange, substitution, purchase, transfer and other dealings
with Securities and assets of the Fund.
3.9 Registration and Transfer of Securities. All Securities held for the
---------------------------------------
Fund that are issuable only in bearer form shall be held by Custodian in that
form, provided that any such Securities shall be held in a Book-Entry System if
eligible therefor. All other Securities held for the Fund may be registered in
the name of Custodian as agent, any sub-custodian appointed pursuant to Section
3.3 above, any Securities Depository, or any nominee or agent of any of them.
The Fund shall furnish to Custodian appropriate instruments to enable Custodian
to hold or deliver in proper form for transfer, or to register as in this
Section 3.9 provided, any Securities delivered to Custodian which are registered
in the name of the Fund.
3.10 Records. (a) Custodian shall maintain complete and accurate records
-------
with respect to Securities, cash or other property held for the Fund, including
(i) journals or other records of original entry containing an itemized daily
record in detail of all receipts and deliveries of Securities and all receipts
and disbursements of cash; (ii) ledgers (or other records) reflecting (A)
Securities in transfer, if any, (B) Securities in physical possession, (C)
monies and Securities borrowed and monies and Securities loaned (together with a
record of the collateral therefor and substitutions of such collateral), (D)
dividends and interest received, and (E) dividends receivable and interest
accrued; and (iii) cancelled checks and bank records related thereto. Custodian
shall
<PAGE>
keep such other books and records with respect to Securities, cash and other
property of the Fund which is held hereunder as the Fund may reasonably request.
(b) All such books and records maintained by Custodian shall (i) be
maintained in a form acceptable to the Fund and in compliance with rules and
regulations of the Securities and Exchange Commission, (ii) be the property of
the Fund and at all times during the regular business hours of Custodian be made
available upon request for inspection by duly authorized officers, employees or
agents of the Company on behalf of the Fund and employees or agents of the
Securities and Exchange Commission, and (iii) if required to be maintained by
Rule 31a-1 under the 1940 Act, be preserved for the periods prescribed in Rule
31a-2 under the 1940 Act.
3.11 Reports by Custodian. Custodian shall furnish the Fund with a daily
--------------------
activity statement, including a summary of all transfers to or from the Custody
Account, on the day following such transfers. At least monthly and from time to
time, Custodian shall furnish the Fund with a detailed statement of the
Securities and moneys held for the Fund under this Agreement.
3.12 Other Reports by Custodian. Custodian shall provide the Fund with
--------------------------
such reports as the Fund may reasonably request from time to time on the
internal accounting controls and procedures for safeguarding Securities which
are employed by Custodian or any sub-custodian appointed pursuant to Section 3.3
above.
3.13 Proxies and Other Materials. Unless otherwise instructed by the
---------------------------
Fund, Custodian shall promptly deliver to the Fund (at the address set forth in
Article XVI below) all notices of meetings, proxies and proxy materials which it
receives regarding Securities held in the Custody Account. Before delivering
them to the Fund, Custodian shall cause all proxies relating to such Securities
which are not registered in the name of the Fund, or a nominee thereof, to be
promptly executed by the registered holder of such Securities, without
indication
<PAGE>
of the manner in which such proxies are to be voted. Unless otherwise instructed
by the Fund, neither Custodian nor any of its agents shall exercise any voting
rights with respect to Securities held hereunder.
3.14 Information on Corporate Actions. Custodian shall promptly transmit
--------------------------------
to the Fund (at the address set forth in Article XVI below) all written
information received by Custodian from issuers of Securities held in the Custody
Account. With respect to tender or exchange offers for such Securities,
Custodian shall promptly transmit to the Fund all written information received
by it from the issuers of the Securities whose tender or exchange is sought and
by the party (or its agents) making the tender or exchange offer. If the Fund
desires to take action with respect to any tender offer, exchange offer or other
similar transaction, the Fund shall notify Custodian at least five Business Days
prior to the date on which Custodian is to take such action.
3.15 Co-operation. Custodian shall cooperate with and supply necessary
------------
information to the entity or entities appointed by the Company on behalf of the
Fund to keep the books of account of the Fund and/or to compute the value of the
assets of the Fund.
ARTICLE IV
PURCHASE AND SALE OF INVESTMENTS OF THE FUND
--------------------------------------------
4.1 Purchase of Securities. Promptly upon each purchase of Securities
----------------------
for the Fund, Written Instructions shall be delivered to Custodian, specifying
(a) the name of the issuer or writer of such Securities, and the title or other
description thereof, (b) the number of shares, principal amount (and accrued
interest, if any), or other units purchased, (c) the date of purchase and
settlement, (d) the purchase price per unit, (e) the total amount payable upon
such purchase, and (f) the name of the person to whom such amount is payable.
Custodian shall upon receipt of such Securities purchased by the Fund (or, if
the Securities are transferred by means of a private placement transaction, upon
the receipt of such Securities or payment instructions to Custodian which detail
specific Securities to be acquired) pay out of the moneys held for the account
of the
<PAGE>
Fund the total amount specified in such Written Instructions to the person named
therein. Custodian shall not be under any obligation to pay out moneys to cover
the cost of a purchase of Securities or other assets for the Fund if there is
insufficient cash available in the Custody Account.
4.2 Sale of Securities. Promptly upon each sale of Securities by the
------------------
Fund, Written Instructions shall be delivered to Custodian, specifying (a) the
name of the issuer or writer of such Securities, and the title or other
description thereof, (b) the number of shares, principal amount (and accrued
interest, if any), or other units sold, (c) the date of sale and settlement, (d)
the sale price per unit, (e) the total amount payable upon such sale, and (f)
the person to whom such Securities are to be delivered. Upon receipt of the
total amount payable to the Fund as specified in such Written Instructions,
Custodian shall deliver such Securities to the person specified in such Written
Instructions. Subject to the foregoing, Custodian may accept payment in such
form as shall be satisfactory to it, and may deliver Securities and arrange for
payment in accordance with the customs prevailing among dealers in Securities.
4.3 Delivery of Securities Sold. Notwithstanding Section 4.2 above or
---------------------------
any other provision of this Agreement, Custodian, when instructed to deliver
Securities against payment, shall be entitled, but only if in accordance with
generally accepted market practice, to deliver such Securities prior to actual
receipt of final payment therefor and, exclusively in the case of Securities in
physical form, to deliver such Securities prior to receipt of payment. In any
such case, the Fund shall bear the risk that final payment for such Securities
may not be made or that such Securities may be returned or otherwise held or
disposed of by or through the person to whom they were delivered, and Custodian
shall have no liability for any of the foregoing.
4.4 Payment for Securities Sold, etc. In its sole discretion and from
---------------------------------
time to time, Custodian may credit the Custody Account, prior to actual receipt
of final payment thereof, with (a) proceeds from the sale of Securities which
it has been instructed to deliver against payment, (b) proceeds from the
redemption of Securities or other assets of the Fund, and (c) income from
<PAGE>
cash, Securities or other assets of the Fund. Any such credit shall be
conditional upon actual receipt by Custodian of final payment and may be
reversed if final payment is not actually received in full. Custodian may, in
its sole discretion and from time to time, permit the Fund to use funds so
credited to the Custody Account in anticipation of actual receipt of final
payment. Any such funds shall be repayable immediately upon demand made by
Custodian at any time prior to the actual receipt of all final payments in
anticipation of which funds were credited to the Custody Account.
4.5 Final Payment. For purposes of this Agreement, "final payment"
-------------
means payment in funds which are (or have become) immediately available, under
applicable law are irreversible, and are not subject to any security interest,
levy, lien or other encumbrance.
ARTICLE V
REDEMPTION OF FUND SHARES
-------------------------
5.1 Transfer of Funds. From such funds as may be available for the
-----------------
purpose in the Custody Account, and upon receipt of Proper Instructions
specifying that the funds are required to redeem Shares on account of the Fund,
Custodian shall wire each amount specified in such Proper Instructions to or
through such bank as the Fund may designate therein with respect to such amount.
5.2 No Duty Regarding Paying Banks. Custodian shall not be responsible
------------------------------
for the payment or distribution by any bank designated in Proper Instructions
given pursuant to Section 5.1 above of any amount paid by Custodian to such bank
in accordance with such Proper Instructions.
ARTICLE VI
SEGREGATED ACCOUNTS
-------------------
<PAGE>
Upon receipt of Proper Instructions, Custodian shall establish and maintain
a segregated account or accounts for and on behalf of the Fund, into which
account or accounts may be transferred cash and/or Securities, including
Securities maintained in a Depository Account:
(a) in accordance with the provisions of any agreement among the
Company on behalf of the Fund, Custodian and a broker-dealer (or any futures
commission merchant), relating to compliance with the rules of The Options
Clearing Corporation or of any registered national securities exchange (or the
Commodity Futures Trading Commission or any registered contract market), or of
any similar organization or organizations, regarding escrow or other
arrangements in connection with transactions by the Fund,
(b) for purposes of segregating cash or Securities in connection with
securities options purchased or written by the Fund or in connection with
financial futures contracts (or options thereon) purchased or sold by the Fund,
(c) which constitute collateral for loans of Securities made by the
Fund,
(d) for purposes of compliance by the Fund with requirements under the
1940 Act for the maintenance of segregated accounts by registered investment
companies in connection with reverse repurchase agreements, when-issued, delayed
delivery and firm commitment transactions, and short sales of securities, and
(e) for other proper purposes, but only upon receipt of, in addition
to Proper Instructions, a copy of a resolution of the Board of Directors,
certified by an Officer, setting forth the purpose or purposes of such
segregated account and declaring such purposes to be proper purposes of the
Fund.
ARTICLE VII
SECURITIES LENDING TRANSACTIONS
-------------------------------
<PAGE>
7.1 Transactions. If and to the extent that the necessary funds and
------------
Securities have been entrusted to it under this Agreement (and unless the Fund
gives it Proper Instructions to do otherwise), Custodian from time to time shall
make for the account of the Fund the transfers of funds and deliveries of
Securities which the Fund is required to make pursuant to the Securities Loan
Agreement and shall receive for the account of the Fund the transfers of funds
and deliveries of Securities which the borrower under the Securities Loan
Agreement is required to make pursuant thereto. Custodian shall make and receive
all such transfers and deliveries pursuant to, and subject to the terms and
conditions of, the Securities Loan Agreement.
7.2 Collateral; Events of Default. Custodian shall daily mark to
-----------------------------
market, in the manner provided for in the Securities Loan Agreement, all loans
of Securities which may from time to time be outstanding thereunder. Custodian
shall promptly notify the Fund of any Default under the Securities Loan
Agreement (as such term "Default" is defined therein) of which it has actual
knowledge.
7.3 Securities Loan Agreement. Custodian hereby acknowledges its
-------------------------
receipt from the Company on behalf of the Fund of a copy of the Securities Loan
Agreement. The Fund shall provide Custodian, prior to the effectiveness thereof,
with a copy of any amendment to the Securities Loan Agreement.
ARTICLE VIII
REPURCHASE TRANSACTIONS
-----------------------
8.1 Transactions. If and to the extent that the funds and Securities
------------
have been entrusted to it under this Agreement (and unless the Fund gives it
Proper Instructions to do otherwise), Custodian from time to time shall make for
the account of the Fund the transfers of funds and deliveries of Securities
which the Fund is required to make pursuant to the Master Repurchase Agreement
and shall receive for the account of the Fund the transfers of funds and
deliveries of Securities which the seller under the Master Repurchase Agreement
is required to
<PAGE>
make pursuant thereto. Custodian shall make and receive all such transfers and
deliveries pursuant to, and subject to the terms and conditions of, the Master
Repurchase Agreement.
8.2 Collateral; Events of Default. Custodian shall daily mark to market
-----------------------------
the Securities purchased by the Fund under the Master Repurchase Agreement and
held in the Custody Account, and shall give to the seller thereunder any such
notice as may be required by the Master Repurchase Agreement in connection with
such mark-to-market. Custodian shall promptly notify the Fund of any Event of
Default by the seller under the Master Repurchase Agreement (as such term "Event
of Default" is defined therein) of which it has actual knowledge.
8.3 Master Repurchase Agreement. Custodian hereby acknowledges its
---------------------------
receipt from the Company on behalf of the Fund of a copy of the Master
Repurchase Agreement. The Fund shall provide Custodian, prior to the
effectiveness thereof, with a copy of any amendment to the Master Repurchase
Agreement.
ARTICLE IX
CONCERNING THE CUSTODIAN
------------------------
9.1 Standard of Care. Custodian shall be held to the exercise of
----------------
reasonable care in carrying out its obligations under this Agreement, and shall
be without liability to the Fund for any loss, damage, cost, expense (including
attorneys' fees and disbursements), liability or claim which does not arise from
willful misfeasance, bad faith or negligence on the part of Custodian or
reckless disregard by Custodian of its obligations under this Agreement.
Custodian shall be entitled to rely on and may act upon advice of counsel on all
matters, and shall be without liability for any action reasonably taken or
omitted pursuant to such advice. In no event shall Custodian be liable for
special or consequential damages or be liable in any manner whatsoever for any
action taken or omitted upon instructions from the Fund or any agent of the
Company on behalf of the Fund. Custodian shall not be under any obligation at
any time to ascertain whether
<PAGE>
the Fund is in compliance with the 1940 Act, the regulations thereunder, the
provisions of its charter documents or by-laws, or its investment objectives,
policies and limitations as in effect from time to time.
9.2 Actual Collection Required. Custodian shall not be liable for, or
--------------------------
considered to be the custodian of, any cash belonging to the Fund or any money
represented by a check, draft or other instrument for the payment of money,
until Custodian or its agents actually receive such cash or collect on such
instrument.
9.3 No Responsibility for Title, etc. So long as and to the extent that
---------------------------------
it is in the exercise of reasonable care, Custodian shall not be responsible for
the title, validity or genuineness of any property or evidence of title thereto
received or delivered by it or its agents.
9.4 Limitation on Duty to Collect. Custodian shall promptly notify the
-----------------------------
Fund whenever any money or property due and payable from or on account of any
Securities held hereunder for the Fund is not timely received by it. Custodian
shall not, however, be required to enforce collection, by legal means or
otherwise, of any such money or other property not paid when due, but shall
receive the proceeds of such collections as may be effected by it or its agents
in the ordinary course of Custodian's custody and safekeeping business or of the
custody and safekeeping business of such agents.
9.5 Express Duties Only. Custodian shall have no duties or obligations
-------------------
whatsoever except such duties and obligations as are specifically set forth in
this Agreement, and no covenant or obligation shall be implied in this Agreement
against Custodian. Custodian shall have no discretion whatsoever with respect to
the management, disposition or investment of the Custody Account and is not a
fiduciary to the Fund.
9.6 Compliance with Laws. Custodian undertakes to comply with all
--------------------
applicable requirements of the Securities Act of 1933, the Securities Exchange
Act of 1934, the 1940 Act
<PAGE>
and the Commodities Exchange Act and any laws, rules and regulations of
governmental authorities having jurisdiction with respect to the duties to be
performed by Custodian hereunder. Except as specifically set forth herein,
Custodian assumes no responsibility for such compliance by the Fund.
ARTICLE X
INDEMNIFICATION
---------------
10.1 Indemnification. The Fund shall indemnify and hold harmless
---------------
Custodian, any sub-custodian and any nominee of Custodian or any sub-custodian,
from and against any loss, damages, cost, expense (including attorneys' fees and
disbursements), liability (including, without limitation, liability arising
under the Securities Act of 1933, the 1934 Act, the 1940 Act, and any federal or
state securities and/or banking laws) or claim arising directly or indirectly
(a) from the fact that Securities are registered in the name of any such
nominee, or (b) from any action or inaction by Custodian or such sub-custodian
or other agent (i) at the request or direction of or in reliance on the advice
of the Fund or any of its agents, or (ii) upon Proper Instructions, or (c)
generally, from the performance of its obligations under this Agreement,
provided that Custodian, any sub-custodian or any nominee of either of them
shall not be indemnified and held harmless from and against any such loss,
damage, cost, expense, liability or claim arising from Custodian's willful
misfeasance, bad faith, negligence or reckless disregard of its obligations
under this Agreement or, in the case of any sub-custodian or its nominee, from
such sub-custodian's willful misfeasance, bad faith, negligence or reckless
disregard of its obligations under the Agreement under which it is acting.
10.2 Indemnity to be Provided. If the Fund requests Custodian to take
------------------------
any action with respect to Securities, which may, in the opinion of Custodian,
result in Custodian or its nominee becoming liable for the payment of money or
incurring liability of some other form, Custodian shall not be required to take
such action until the Fund shall have provided indemnity therefor to Custodian
in an amount and form satisfactory to Custodian.
<PAGE>
10.3 Security. As security for the payment of any present or future
--------
obligation or liability of any kind which the Fund may have to Custodian with
respect to or in connection with the Custody Account or this Agreement, the Fund
hereby pledges to Custodian all cash, Securities and other property of every
kind which is in the Custody Account or otherwise held for the Fund pursuant to
this Agreement, and hereby grants to Custodian a lien, right of set-off and
continuing security interest in such cash, Securities and other property.
10.4 Limitation. Notwithstanding any other provision of this Agreement,
----------
the obligations and liabilities of the Company on behalf of the Fund under this
Agreement are solely those of the Fund, and neither the Company generally nor
any of its other investment portfolios shall be responsible for any of such
obligations or liabilities.
ARTICLE XI
FORCE MAJEURE
-------------
Neither Custodian nor the Fund shall be liable for any failure or delay in
performance of its obligations under this Agreement arising out of or caused,
directly or indirectly, by circumstances beyond its reasonable control,
including, without limitation, acts of God; earthquakes; fires; floods; wars;
civil or military disturbances; sabotage; strikes; epidemics; riots; power
failures; computer failure and any such circumstances beyond its reasonable
control as may cause interruption, loss or malfunction of utility,
transportation, computer (hardware or software) or telephone communication
service; accidents; labor disputes; acts of civil or military authority;
governmental actions; or inability to obtain labor, material, equipment or
transportation.
ARTICLE XII
REPRESENTATIONS AND WARRANTIES
------------------------------
Each of the Company on behalf of the Fund and Custodian represents and
warrants for itself that (a) it has all necessary power and authority to perform
its obligations hereunder, (b)
<PAGE>
the execution and delivery by it of this Agreement, and the performance by it of
its obligations under this Agreement, have been duly authorized by all necessary
action and will not violate any law, regulation, charter, by-law, or other
instrument, restriction or provision applicable to it or by which it is bound,
and (c) this Agreement constitutes a legal, valid and binding obligation of it,
enforceable against it in accordance with its terms.
ARTICLE XIII
COMPENSATION OF CUSTODIAN
-------------------------
The Fund shall pay Custodian such fees and charges as are set forth in
the fee schedule annexed hereto as Exhibit C, as such fee schedule may from time
to time be revised by Custodian upon 14 days' prior written notice to the Fund.
Any annual fee or other charges payable by the Fund shall be paid monthly by
automatic deduction from the Custody Account. Expenses incurred by Custodian in
the performance of its services hereunder, and all other proper charges and
disbursements of the Custody Account, shall be charged to the Custody Account by
Custodian and paid therefrom.
ARTICLE XIV
TAXES
-----
Any and all taxes, including any interest and penalties with respect
thereto, which may be levied or assessed under present or future laws or in
respect of the Custody Account or any income thereof shall be charged to the
Custody Account by Custodian and paid therefrom.
ARTICLE XV
AUTHORIZED PERSONS
------------------
15.1 Authorized Persons. Custodian may rely upon and act in accordance
------------------
with any notice, confirmation, instruction or other communication received by it
from the Fund which is reasonably believed by Custodian to have been given or
signed on behalf of the Fund by one of
<PAGE>
the Authorized Persons designated by the Fund in Exhibit A hereto, as it may
from time to time be revised. The Fund may revise Exhibit A hereto at any time
by notice in writing to Custodian given in accordance with Article XVI below,
but no revision of Exhibit A hereto shall be effective until Custodian actually
receives such notice.
15.2 Investment Advisers. Custodian may also act in accordance with
-------------------
any Written or Oral Instructions which are reasonably believed by Custodian to
have been given or signed by one of the persons designated from time to time by
any of the investment advisers of the Fund specified in Exhibit B hereto (if
any) as it may from time to time be revised. The Fund may revise Exhibit B
hereto at any time by notice in writing to Custodian given in accordance with
Article XVI below, and each investment adviser specified in Exhibit B hereto (if
any) may at any time by like notice designate an Authorized Person or remove an
Authorized Person previously designated by it, but no revision of Exhibit B
hereto (if any) and no designation or removal by such investment adviser shall
be effective until Custodian actually receives such notice.
15.3 Oral Instructions. Custodian may rely upon and act in accordance
-----------------
with Oral Instructions (as defined in Section 1.9 above). If Written
Instructions confirming Oral Instructions are not received by Custodian prior to
a transaction, it shall in no way affect the validity of the transaction
authorized by such Oral Instructions or the authorization of the Fund to effect
such transaction. Custodian shall incur no liability to the Fund in acting upon
Oral Instructions (as defined in Section 1.9 above). To the extent such Oral
Instructions vary from any confirming Written Instructions, Custodian shall
advise the Fund of such variance but unless confirming Written Instructions are
timely received, such Oral Instructions will govern. Either Custodian or Fund
may electronically record any instructions given by telephone and any other
telephone discussions with respect to the account of the Fund.
ARTICLE XVI
NOTICES
-------
<PAGE>
Unless otherwise specified herein, all demands, notices, instructions, and
other communications to be given hereunder shall be sent, delivered or given to
the recipient at the address set forth after its name hereinbelow:
IF TO THE FUND:
NUMERIC GROWTH & VALUE FUND - THE RBB FUND, INC.
Bellevue Park Corporate Center
400 Bellevue Parkway - Suite 100
Wilmington, DE 19809
Attention: Charles D. Curtis, Jr.
-----------------------
Telephone: (302) 791 - 1791
Facsimile: (302) 791 - 3067
IF TO CUSTODIAN:
CUSTODIAL TRUST COMPANY
101 Carnegie Center
Princeton, New Jersey 08540-6231
Attention: Vice President - Trust Operations
---------------------------------
Telephone: (609) 951-2320
Facsimile: (609) 951-2327
or at such other address as either party shall have provided to the other by
notice given in accordance with this Article XVI. Writing shall include
transmissions by or through teletype, facsimile, central processing unit
connection, on-line terminal and magnetic tape.
ARTICLE XVII
TERMINATION
-----------
Either party hereto may terminate this Agreement by giving to the other
party a notice in writing specifying the date of such termination, which shall
be not less than sixty (60) days after the date of the giving of such notice.
Upon the date set forth in such notice this Agreement shall terminate, and
Custodian shall, upon receipt of a notice of acceptance by the successor
custodian, on that date (a) deliver directly to the successor custodian or its
agents all Securities (other than Securities held in a Book-Entry System or
Securities Depository) and cash then owned by the Fund and held by Custodian as
custodian, and (b) transfer any Securities held in a Book-Entry System or
Securities Depository to an account of or for the benefit of the Fund, provided
that the
<PAGE>
Fund shall have paid to Custodian all fees, expenses and other amounts to the
payment or reimbursement of which it shall then be entitled.
ARTICLE XVIII
MISCELLANEOUS
-------------
18.1 Business Days. Nothing contained in this Agreement shall require
-------------
Custodian to perform any function or duties on a day other than a Business Day.
18.2 Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the laws of the State of New York, without regard to the
conflict of law principles thereof.
18.3 References to Custodian. The Fund shall not circulate any printed
-----------------------
matter which contains any reference to Custodian without the prior written
approval of Custodian, excepting printed matter contained in the prospectus or
statement of additional information for the Fund and such other printed matter
as merely identifies Custodian as custodian for the Fund. The Fund shall submit
printed matter requiring approval to Custodian in draft form, allowing
sufficient time for review by Custodian and its counsel prior to any deadline
for printing.
18.4 No Waiver. No failure by either party hereto to exercise, and no
---------
delay by such party in exercising, any right hereunder shall operate as a waiver
thereof. The exercise by either party hereto of any right hereunder shall not
preclude the exercise of any other right, and the remedies provided herein are
cumulative and not exclusive of any remedies provided at law or in equity.
18.5 Amendments. This Agreement cannot be changed orally and no
----------
amendment to this Agreement shall be effective unless evidenced by an instrument
in writing executed by the parties hereto.
<PAGE>
18.6 Counterparts. This Agreement may be executed in one or more
------------
counterparts, and by the parties hereto on separate counterparts, each of which
shall be deemed an original but all of which together shall constitute but one
and the same instrument.
18.7 Severability. If any provision of this Agreement shall be invalid,
------------
illegal or unenforceable in any respect under any applicable law, the validity,
legality and enforceability of the remaining provisions shall not be affected or
impaired thereby.
18.8 Successors and Assigns. This Agreement shall be binding upon and
----------------------
shall inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that this Agreement shall not be
-------- -------
assignable by either party hereto without the written consent of the other
party. Any purported assignment in violation of this Section 18.8 shall be
void.
18.9 Headings. The headings of sections in this Agreement are for
--------
convenience of reference only and shall not affect the meaning or construction
of any provision of this Agreement.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed in its name and on its behalf by its representative thereunto duly
authorized, all as of the day and year first above written.
THE RRB FUND, INC. on behalf of CUSTODIAL TRUST COMPANY
THE NUMERIC GROWTH & VALUE FUND
By By
--------------------------------- ---------------------------------
Authorized Officer Authorized Officer
<PAGE>
EXHIBIT A
AUTHORIZED PERSONS
Set forth below are the names and specimen signatures of the persons
authorized by the Numeric Growth & Value Fund - The RRB Fund, Inc. to administer
the Custody Account.
Name Signature
---- ---------
-------------------------------------- ------------------------------------
-------------------------------------- ------------------------------------
-------------------------------------- ------------------------------------
-------------------------------------- ------------------------------------
---------- ----------
<PAGE>
EXHIBIT B
---------
INVESTMENT ADVISERS
<PAGE>
EXHIBIT C
---------
CUSTODY FEES AND TRANSACTION CHARGES
The Fund shall pay Custodian the following fees and charges for holdings
and transactions in the United States, all such fees and charges to be payable
monthly by deduction from the Custody Account:
(1) an annual fee of the greater of 0.015% (one and one-half basis points)
per annum of the value of the assets in the Custody Account or $5,000, such fee
to be payable monthly based upon the total market value of such assets as
determined on the last Business Day of the month for which such fee is charged;
(2) a transaction charge of $12 for each receipt or delivery of book-entry
Securities into or from the Custody Account (but not for any such receipt or
delivery (a) in a repurchase transaction representing a cash sweep investment
for the Fund's account or representing the investment by the Fund of cash
collateral for a loan of Securities or (b) of book-entry Securities which are
collateral for a loan of Securities);
(3) a transaction charge of $25 for each receipt or delivery into or from
the Custody Account of Securities in physical form;
(4) a transaction charge for each repurchase transaction in the Custody
Account which represents a cash sweep investment for the Fund's account,
computed at a rate of 0.10% (ten basis points) per annum on the amount of the
purchase price paid by the Fund in such repurchase transaction on the basis of a
360-day year and for the actual number of days such repurchase transaction is
outstanding;
(5) a charge of $10 for each "free" transfer of funds from the Custody
Account;
<PAGE>
(6) an administrative fee for each purchase in the Custody Account of
shares or other interests in a money market or other fund, which purchase
represents a cash sweep investment for the Fund's account, computed for each day
that there is a positive balance in such fund to equal 1/365th of 0.10% (ten
basis points) on the amount of such positive balance for such day; and
(7) a service charge for each holding of Securities or other property sold
by way of private placement or in such other manner as to require services by
Custodian which in its reasonable judgment are materially in excess of those
ordinarily required for the holding of publicly traded Securities in the United
States.
Fees and charges for holdings and transactions outside the United States,
if any, shall be as separately agreed upon by the Fund and Custodian.
<PAGE>
Exhibit (9)(qq)
TRANSFER AGENCY AGREEMENT SUPPLEMENT
(Numeric Classes)
This supplemental agreement is entered into this 24th day of April,
1996 by and between THE RBB FUND, INC. (the "Fund") and PFPC Inc., a Delaware
corporation (the "Transfer Agent"), which is an indirect, wholly owned
subsidiary of PNC Bank Corp.
The Fund is a corporation organized under the laws of the State of
Maryland and is an open-end management investment company. The Fund and the
Transfer Agent have entered into a Transfer Agency Agreement, dated as of
November 5, 1991 (as from time to time amended and supplemented, the "Transfer
Agency Agreement"), pursuant to which the Transfer Agent has undertaken to act
as transfer agent, registrar and dividend disbursing agent for the Fund with
respect to the Shares of the Fund, as more fully set forth therein. Certain
capitalized terms used without definition in this Transfer Agency Agreement
Supplement have the meaning specified in the Transfer Agency Agreement.
The Fund agrees with the Transfer Agent as follows:
1. Adoption of Transfer Agency Agreement. The Transfer Agency
-------------------------------------
Agreement is hereby adopted for the Numeric Classes of Common Stock (Classes FF,
GG and HH) of the Fund. Each such Numeric Class shall constitute a "Class" as
referred to in the Transfer Agency Agreement and its shares shall be "Shares" as
referred to therein.
2. Compensation. As compensation for the services rendered by the
------------
Transfer Agent during the term of the Transfer Agency Agreement, the Fund will
pay to the Transfer Agent, with respect to each Class of the Fund, monthly fees
that shall be agreed to from time to time by the Fund and the Transfer Agent,
for each account open at any time during the month for which payment is being
made, plus certain of the Transfer Agent's expenses relating to such services,
as shall be agreed to from time to time by the Fund and the Transfer Agent.
IN WITNESS WHEREOF, the undersigned have entered into this Agreement,
intending to be legally bound hereby, as of the date and year first above
written.
THE RBB FUND, INC. PFPC INC.
By______________________ By_______________________
<PAGE>
Exhibit (9)(rr)
ADMINISTRATION AND ACCOUNTING SERVICES AGREEMENT
TERMS AND CONDITIONS
This Agreement is made as of April 24, 1996 by and between THE RBB
FUND, INC., a Maryland corporation (the "Fund"), and PFPC INC., a Delaware
corporation ("PFPC"), which is an indirect wholly owned subsidiary of PNC
Financial Corp.
The Fund is registered as an open-end, non-diversified investment
company under the Investment Company Act of 1940, as amended (the "1940 Act").
The Fund wishes to retain PFPC to provide administration and accounting services
to its Numeric Micro Cap Fund (the "Portfolio"), and PFPC wishes to furnish such
services.
In consideration of the promises and mutual covenants herein
contained, the parties agree as follows:
1. Definitions.
-----------
(a) "1933 Act" means the Securities Act of 1933, as amended.
--------
(b) "1934 Act" means the Securities Exchange Act of 1934, as amended.
--------
(c) "Authorized Person" means any officer of the Fund and any other
-----------------
person, duly authorized by the Fund's Board of Directors, to give Oral and
Written Instructions on behalf of the Fund and listed on the Certificate
attached hereto as Appendix B or any amendment thereto as may be received by
PFPC from time to
1
<PAGE>
time. An Authorized Person's scope of authority may be limited by the Fund by
setting forth such limitation on the Certificate.
(d) "Book-Entry System" means Federal Reserve Treasury book-entry
-----------------
system for United States and federal agency securities, its successor or
successors, and its nominee or nominees and any book-entry system maintained by
an exchange registered with the SEC under the 1934 Act.
(e) "Oral Instructions" mean oral instructions received by PFPC from
-----------------
an Authorized Person or from a person reasonably believed by PFPC to be an
Authorized Person.
(f) "SEC" means the Securities and Exchange Commission.
---
(g) "Shares" mean the shares of common stock of the Fund representing
------
an interest in the Portfolio.
(h) "Property" means:
--------
(i) any and all securities and other investment items of
the Portfolio which the Fund may from time to time
deposit, or cause to be deposited, with PFPC or which
PFPC may from time to time hold for the Fund on behalf
of the Portfolio;
(ii) all income in respect of any of such securities or
other investment items;
(iii) all proceeds of the sale of any of such securities or
investment items; and
(iv) all proceeds of the sale of Shares which are received
by PFPC from time to time, from or on behalf of the
Fund.
(i) "Written Instructions" mean written instructions signed by two
--------------------
Authorized Persons and received by PFPC. The
2
<PAGE>
instructions may be delivered by hand, mail, tested telegram, cable, telex or
facsimile sending device.
2. Appointment.
-----------
The Fund hereby appoints PFPC to provide administration and accounting
services to the Portfolio, in accordance with the terms set forth in this
Agreement. PFPC accepts such appointment and agrees to furnish such services.
3. Delivery of Documents.
---------------------
The Fund has provided or, where applicable, will provide PFPC with the
following:
(a) certified or authenticated copies of the resolutions of the
Fund's Board of Directors, approving the appointment of PFPC to
provide services pursuant to this Agreement;
(b) a copy of the Fund's most recent effective registration
statement;
(c) a copy of the Fund's advisory agreement or agreements with
respect to the Portfolio;
(d) a copy of the Fund's distribution agreement or agreements with
respect to the Portfolio;
(e) a copy of any additional administration agreement with respect to
the Portfolio;
(f) copies of any shareholder servicing agreements made in respect of
the Portfolio; and
(g) certified or authenticated copies of any and all amendments or
supplements to the foregoing.
4. Compliance with Government Rules and Regulations.
------------------------------------------------
PFPC undertakes to comply with all applicable requirements of the 1933
Act, the 1934 Act and the 1940 Act, and any laws, rules and regulations of
governmental authorities
3
<PAGE>
having jurisdiction with respect to all duties to be performed by PFPC
hereunder. Except as specifically set forth herein, PFPC assumes no
responsibility for such compliance by the Fund.
5. Instructions.
------------
Unless otherwise provided in this Agreement, PFPC shall act only upon
Oral and Written Instructions.
PFPC shall be entitled to rely upon any Oral and Written Instructions
it receives from an Authorized Person (or from a person reasonably believed by
PFPC to be an Authorized Person) pursuant to this Agreement. PFPC may assume
that any Oral or Written Instruction received hereunder is not in any way
inconsistent with the provisions of organizational documents or this Agreement
or of any vote, resolution or proceeding of the Fund's Board of Directors or of
the Fund's shareholders.
The Fund agrees to forward to PFPC Written Instructions confirming
Oral Instructions so that PFPC receives the Written Instructions by the close of
business on the same day that such Oral Instructions are received. The fact
that such confirming Written Instructions are not received by PFPC shall in no
way invalidate the transactions or enforceability of the transactions authorized
by the Oral Instructions. The Fund further agrees that PFPC shall incur no
liability to the Fund in acting upon Oral or Written Instructions provided such
instructions reasonably appear to have been received from an Authorized Person.
4
<PAGE>
6. Right to Receive Advice.
-----------------------
(a) Advice of the Fund. If PFPC is in doubt as to any action it
------------------
should or should not take, PFPC may request directions or advice, including Oral
or Written Instructions, from the Fund.
(b) Advice of Counsel. If PFPC shall be in doubt as to any questions
-----------------
of law pertaining to any action it should or should not take, PFPC may request
advice at its own cost from such counsel of its own choosing (who may be counsel
for the Fund, the Fund's advisor or PFPC, at the option of PFPC).
(c) Conflicting Advice. In the event of a conflict between
------------------
directions, advice or Oral or Written Instructions PFPC receives from the Fund,
and the advice it receives from counsel, PFPC shall be entitled to rely upon and
follow the advice of counsel.
(d) Protection of PFPC. PFPC shall be protected in any action it
------------------
takes or does not take in reliance upon directions, advice or Oral or Written
Instructions it receives from the Fund or from counsel and which PFPC believes,
in good faith, to be consistent with those directions, advice and Oral or
Written Instructions.
Nothing in this paragraph shall be construed so as to impose an
obligation upon PFPC (i) to seek such directions, advice or Oral or Written
Instructions, or (ii) to act in accordance with such directions, advice or Oral
or Written Instructions unless, under the terms of other provisions of this
5
<PAGE>
Agreement, the same is a condition of PFPC's properly taking or not taking such
action.
7. Records.
-------
The books and records pertaining to the Fund, which are in the
possession of PFPC, shall be the property of the Fund. Such books and records
shall be prepared and maintained as required by the 1940 Act and other
applicable securities laws, rules and regulations. The Fund and Authorized
Persons shall have access to such books and records at all times during PFPC's
normal business hours. Upon the reasonable request of the Fund, copies of any
such books and records shall be provided by PFPC to the Fund or to an Authorized
Person at the Fund's expense to be paid from the assets of the Portfolio.
PFPC shall keep the following records:
(a) all books and records with respect to the Portfolio's books of
account;
(b) records of the Portfolio's securities transactions;
(c) all other books and records as PFPC is required to maintain
pursuant to Rule 31a-1 of the 1940 Act and as specifically set
forth in Appendix B hereto.
8. Confidentiality.
---------------
PFPC agrees to keep confidential all records of the Fund and
information relative to the Fund and its shareholders (past, present and
potential), unless the release of such records or information is otherwise
consented to, in writing, by the Fund. The Fund agrees that such consent shall
not be
6
<PAGE>
unreasonably withheld. The Fund further agrees that, should PFPC be required to
provide such information or records to duly constituted authorities (who may
institute civil or criminal contempt proceedings for failure to comply), PFPC
shall not be required to seek the Fund's consent prior to disclosing such
information.
9. Liaison with Accountants.
------------------------
PFPC shall act as liaison with the Fund's independent public
accountants and shall provide account analyses, fiscal year summaries, and other
audit-related schedules, all with respect to the Portfolio. PFPC shall take all
reasonable action in the performance of its obligations under this Agreement to
assure that the necessary information is made available to such accountants for
the expression of their opinion, as such may be required by the Fund from time
to time.
10. Disaster Recovery.
-----------------
PFPC shall enter into and shall maintain in effect with appropriate
parties one or more agreements making reasonable provision of emergency use of
electronic data processing equipment to the extent appropriate equipment is
available. In the event of equipment failures, PFPC shall, at no additional
expense to the Fund, take reasonable steps to minimize service interruptions but
shall have no liability with respect thereto.
7
<PAGE>
11. Compensation.
------------
As compensation for services rendered by PFPC during the term of this
Agreement, the Fund will pay to PFPC from the assets of the Portfolio a fee or
fees as may be agreed to in writing by the Fund and PFPC.
12. Indemnification.
---------------
The Fund agrees to indemnify and hold harmless PFPC and its nominees
from all taxes, charges, expenses, assessments, claims and liabilities
(including, without limitation, liabilities arising under the 1933 Act, the 1934
Act and the 1940 Act, and any state and foreign securities and blue sky laws,
and amendments thereto, and expenses, including (without limitation) attorneys'
fees and disbursements, arising directly or indirectly from any action which
PFPC takes or does not take (i) at the request or on the direction of or in
reliance on the advice of the Fund or (ii) upon Oral or Written Instructions.
Neither PFPC, nor any of its nominees, shall be indemnified against any
liability to the Fund or to its shareholders (or any expenses incident to such
liability) arising out of PFPC's own willful misfeasance, gross negligence or
reckless disregard of its duties and obligations under this Agreement.
13. Responsibility of PFPC.
----------------------
PFPC shall be under no duty to take any action on behalf of the Fund
except as specifically set forth herein or as may be specifically agreed to by
PFPC in writing. PFPC shall be obligated to exercise care and diligence in the
performance of
8
<PAGE>
its duties hereunder, to act in good faith and to use its best efforts, within
reasonable limits, in performing services provided for under this Agreement.
PFPC shall be responsible for failure to perform its duties under this Agreement
arising out of PFPC's gross negligence. Notwithstanding the foregoing, PFPC
shall not be responsible for losses beyond its control, provided that PFPC has
acted in accordance with the standard of care set forth above; and provided
further that PFPC shall only be responsible for that portion of losses or
damages suffered by the fund that are attributable to the gross negligence of
PFPC.
Without limiting the generality of the foregoing or of any other
provision of this Agreement, PFPC, in connection with its duties under this
Agreement, shall not be liable for (a) the validity or invalidity or authority
or lack thereof of any Oral or Written Instruction, notice or other instrument
which conforms to the applicable requirements of this Agreement, and which PFPC
reasonably believes to be genuine; or (b) delays or errors or loss of data
occurring by reason of circumstances beyond PFPC's control, including acts of
civil or military authority, national emergencies, labor difficulties, fire,
flood or catastrophe, acts of God, insurrection, war, riots or failure of the
mails, transportation, communication or power supply.
Notwithstanding anything in this Agreement to the contrary, PFPC shall
have no liability to the Fund for any consequential, special or indirect losses
or damages which the Fund may incur or suffer by or as a consequence of PFPC's
9
<PAGE>
performance of the services provided hereunder, whether or not the likelihood of
such losses or damages was known by PFPC.
14. Description of Accounting Services on a Continuing Basis.
--------------------------------------------------------
PFPC will perform the following accounting functions with respect to
the Portfolio if required:
(i) Journalize investment, capital share and income and
expense activities;
(ii) Verify investment buy/sell trade tickets when received
from the investment advisor (the "Advisor") and
transmit trades to the Fund's foreign custodian (the
"Custodian") for proper settlement;
(iii) Maintain individual ledgers for investment
securities;
(iv) Maintain historical tax lots for each security;
(v) Reconcile cash and investment balances with the
Custodian, and provide the Advisor with the beginning
cash balance available for investment purposes;
(vi) Update the cash availability throughout the day as
required by the Advisor;
(vii) Post to and prepare the Statement of Assets and
Liabilities and the Statement of Operations;
(viii) Calculate various contractual expenses (e.g.,
----
advisory and custody fees);
(ix) Monitor the expense accruals and notify an officer of
the Fund of any proposed adjustments;
(x) Control all disbursements and authorize such
disbursements upon Written Instructions;
10
<PAGE>
(xi) Calculate capital gains and losses;
(xii) Determine net income;
(xiii) Obtain security market quotes from independent
pricing services approved by the Advisor, or if such
quotes are unavailable, then obtain such prices from
Advisor, and in either case calculate the market value
of the investments;
(xiv) Transmit or mail a copy of the daily portfolio
valuation to the Advisor;
(xv) Compute net asset value;
(xvi) As appropriate, compute yields, total return, expense
ratios, portfolio turnover rate, and, if required,
portfolio average dollar-weighted maturity; and
(xvii) Prepare a monthly financial statement, which will
include the following items:
Schedule of Investments
Statement of Assets and Liabilities
Statement of Operations
Cash Statement
Schedule of Capital Gains and Losses.
15. Description of Administration Services on a Continuing Basis.
------------------------------------------------------------
PFPC will perform the following administration services with respect
to the Portfolio:
(i) Prepare quarterly broker security transactions
summaries;
(ii) Prepare monthly security transaction listings;
(iii) (a) Assist in the preparation of support schedules
necessary for completion of federal and state tax
returns; or (b) prepare for execution and file the
Fund's Federal and state tax returns;
11
<PAGE>
(iv) (a) Assist in the preparation of Semi-Annual Reports
with the SEC on Form N-SAR; or (b) prepare and file
the Fund's Semi-Annual Reports with the SEC on Form
N-SAR.
(v) (a) Assist in the preparation of annual, semi-annual,
and quarterly shareholder reports; or (b) prepare and
file with the SEC the Fund's annual, semi-annual, and
quarterly shareholder reports;
(vi) Assist with the preparation of registration statements
and other filings relating to the registration of
Shares;
(vii) Monitor the Portfolio's status as a regulated
investment company under SubChapter M of the Internal
Revenue Code of 1986, as amended; and
(viii) Coordinate contractual relationships and
communications between the Fund and its service
providers.
16. Duration and Termination.
------------------------
This Agreement shall continue until terminated by the Fund or by PFPC
on sixty (60) days' prior written notice to the other party.
17. Notices.
-------
All notices and other communications, including written Instructions,
shall be in writing or by confiding telegram, cable, telex or facsimile sending
device. If notice is sent by confirming telegram, cable, telex or facsimile
sending device, it shall be deemed to have been given immediately. If notice is
sent by first-class mail, it shall be deemed to have been given three days after
it has been mailed. If notice is sent by messenger, it shall be deemed to have
been given on the day it is
12
<PAGE>
delivered. Notices shall be addressed (a) if to PFPC at PFPC's address, 103
Bellevue Parkway, Wilmington, Delaware 19809; (b) if to the Fund, at the address
of the Fund; or (c) if to neither of the foregoing, at such other address as
shall have been notified to the sender of any such Notice or other
communication.
18. Amendments.
----------
This Agreement, or any term thereof, may be changed or waived only by
written amendment, signed by the party against whom enforcement of such change
or waiver is sought.
19. Delegation.
----------
PFPC may assign its rights and delegate its duties hereunder to any
wholly owned direct or indirect subsidiary of Provident National Bank or PNC
Financial Corp, provided that (i) PFPC gives the Fund thirty (30) days' prior
written notice; (ii) the delegate agrees with PFPC to comply with all relevant
provisions of the 1940 Act; and (iii) PFPC and such delegate promptly provide
such information as the Fund may request, and respond to such questions as the
Fund may ask, relative to the delegation, including (without limitation) the
capabilities of the delegate.
20. Counterparts.
------------
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
13
<PAGE>
21. Further Actions.
---------------
Each party agrees to perform such further acts and execute such
further documents as are necessary to effectuate the purposes hereof.
22. Miscellaneous.
-------------
This Agreement embodies the entire agreement and understanding between
the parties and supersedes all prior agreements and understandings relating to
the subject matter hereof, provided that the parties may embody in one or more
separate documents their agreement, if any, with respect to delegated and/or
Oral Instructions.
The captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.
This Agreement shall be deemed to be a contract made in Delaware and
governed by Delaware law. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby. This Agreement shall be binding
and shall inure to the benefit off the parties hereto and their respective
successors.
14
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their officers designated below on the day and year first above
written.
PFPC INC.
By:
-----------------------
THE RBB FUND, INC.
By:
-----------------------
15
<PAGE>
APPENDIX A
[List Books and Records to be
----------------------------
Maintained by PFPC]
------------------
16
<PAGE>
APPENDIX B
----------
Authorized Persons
- ----------------------------------- -----------------------------------
(name) (signature)
- ----------------------------------- -----------------------------------
(name) (signature)
- ----------------------------------- -----------------------------------
(name) (signature)
- ----------------------------------- -----------------------------------
(name) (signature)
- ----------------------------------- -----------------------------------
(name) (signature)
- ----------------------------------- -----------------------------------
(name) (signature)
17
<PAGE>
Exhibit (9)(ss)
ADMINISTRATION AND ACCOUNTING SERVICES AGREEMENT
TERMS AND CONDITIONS
This Agreement is made as of ____________, 1996 by and between THE RBB
FUND, INC., a Maryland corporation (the "Fund"), and PFPC INC., a Delaware
corporation ("PFPC"), which is an indirect wholly owned subsidiary of PNC
Financial Corp.
The Fund is registered as an open-end, non-diversified investment
company under the Investment Company Act of 1940, as amended (the "1940 Act").
The Fund wishes to retain PFPC to provide administration and accounting services
to its Numeric Growth Fund (the "Portfolio"), and PFPC wishes to furnish such
services.
In consideration of the promises and mutual covenants herein
contained, the parties agree as follows:
1. Definitions.
-----------
(a) "1933 Act" means the Securities Act of 1933, as amended.
--------
(b) "1934 Act" means the Securities Exchange Act of 1934, as amended.
--------
(c) "Authorized Person" means any officer of the Fund and any other
-----------------
person, duly authorized by the Fund's Board of Directors, to give Oral and
Written Instructions on behalf of the Fund and listed on the Certificate
attached hereto as Appendix B or any amendment thereto as may be received by
PFPC from time to
1
<PAGE>
time. An Authorized Person's scope of authority may be limited by the Fund by
setting forth such limitation on the Certificate.
(d) "Book-Entry System" means Federal Reserve Treasury book-entry
-----------------
system for United States and federal agency securities, its successor or
successors, and its nominee or nominees and any book-entry system maintained by
an exchange registered with the SEC under the 1934 Act.
(e) "Oral Instructions" mean oral instructions received by PFPC from
-----------------
an Authorized Person or from a person reasonably believed by PFPC to be an
Authorized Person.
(f) "SEC" means the Securities and Exchange Commission.
---
(g) "Shares" mean the shares of common stock of the Fund representing
------
an interest in the Portfolio.
(h) "Property" means:
--------
(i) any and all securities and other investment items of
the Portfolio which the Fund may from time to time
deposit, or cause to be deposited, with PFPC or which
PFPC may from time to time hold for the Fund on behalf
of the Portfolio;
(ii) all income in respect of any of such securities or
other investment items;
(iii) all proceeds of the sale of any of such securities or
investment items; and
(iv) all proceeds of the sale of Shares which are received
by PFPC from time to time, from or on behalf of the
Fund.
(i) "Written Instructions" mean written instructions signed by two
--------------------
Authorized Persons and received by PFPC. The
2
<PAGE>
instructions may be delivered by hand, mail, tested telegram, cable, telex or
facsimile sending device.
2. Appointment.
-----------
The Fund hereby appoints PFPC to provide administration and accounting
services to the Portfolio, in accordance with the terms set forth in this
Agreement. PFPC accepts such appointment and agrees to furnish such services.
3. Delivery of Documents.
---------------------
The Fund has provided or, where applicable, will provide PFPC with the
following:
(a) certified or authenticated copies of the resolutions of the
Fund's Board of Directors, approving the appointment of PFPC to
provide services pursuant to this Agreement;
(b) a copy of the Fund's most recent effective registration
statement;
(c) a copy of the Fund's advisory agreement or agreements with
respect to the Portfolio;
(d) a copy of the Fund's distribution agreement or agreements with
respect to the Portfolio;
(e) a copy of any additional administration agreement with respect to
the Portfolio;
(f) copies of any shareholder servicing agreements made in respect of
the Portfolio; and
(g) certified or authenticated copies of any and all amendments or
supplements to the foregoing.
4. Compliance with Government Rules and Regulations.
------------------------------------------------
PFPC undertakes to comply with all applicable requirements of the 1933
Act, the 1934 Act and the 1940 Act, and any laws, rules and regulations of
governmental authorities
3
<PAGE>
having jurisdiction with respect to all duties to be performed by PFPC
hereunder. Except as specifically set forth herein, PFPC assumes no
responsibility for such compliance by the Fund.
5. Instructions.
------------
Unless otherwise provided in this Agreement, PFPC shall act only upon
Oral and Written Instructions.
PFPC shall be entitled to rely upon any Oral and Written Instructions
it receives from an Authorized Person (or from a person reasonably believed by
PFPC to be an Authorized Person) pursuant to this Agreement. PFPC may assume
that any Oral or Written Instruction received hereunder is not in any way
inconsistent with the provisions of organizational documents or this Agreement
or of any vote, resolution or proceeding of the Fund's Board of Directors or of
the Fund's shareholders.
The Fund agrees to forward to PFPC Written Instructions confirming
Oral Instructions so that PFPC receives the Written Instructions by the close of
business on the same day that such Oral Instructions are received. The fact
that such confirming Written Instructions are not received by PFPC shall in no
way invalidate the transactions or enforceability of the transactions authorized
by the Oral Instructions. The Fund further agrees that PFPC shall incur no
liability to the Fund in acting upon Oral or Written Instructions provided such
instructions reasonably appear to have been received from an Authorized Person.
4
<PAGE>
6. Right to Receive Advice.
-----------------------
(a) Advice of the Fund. If PFPC is in doubt as to any action it
------------------
should or should not take, PFPC may request directions or advice, including Oral
or Written Instructions, from the Fund.
(b) Advice of Counsel. If PFPC shall be in doubt as to any questions
-----------------
of law pertaining to any action it should or should not take, PFPC may request
advice at its own cost from such counsel of its own choosing (who may be counsel
for the Fund, the Fund's advisor or PFPC, at the option of PFPC).
(c) Conflicting Advice. In the event of a conflict between
------------------
directions, advice or Oral or Written Instructions PFPC receives from the Fund,
and the advice it receives from counsel, PFPC shall be entitled to rely upon and
follow the advice of counsel.
(d) Protection of PFPC. PFPC shall be protected in any action it
------------------
takes or does not take in reliance upon directions, advice or Oral or Written
Instructions it receives from the Fund or from counsel and which PFPC believes,
in good faith, to be consistent with those directions, advice and Oral or
Written Instructions.
Nothing in this paragraph shall be construed so as to impose an
obligation upon PFPC (i) to seek such directions, advice or Oral or Written
Instructions, or (ii) to act in accordance with such directions, advice or Oral
or Written Instructions unless, under the terms of other provisions of this
5
<PAGE>
Agreement, the same is a condition of PFPC's properly taking or not taking such
action.
7. Records.
-------
The books and records pertaining to the Fund, which are in the
possession of PFPC, shall be the property of the Fund. Such books and records
shall be prepared and maintained as required by the 1940 Act and other
applicable securities laws, rules and regulations. The Fund and Authorized
Persons shall have access to such books and records at all times during PFPC's
normal business hours. Upon the reasonable request of the Fund, copies of any
such books and records shall be provided by PFPC to the Fund or to an Authorized
Person at the Fund's expense to be paid from the assets of the Portfolio.
PFPC shall keep the following records:
(a) all books and records with respect to the Portfolio's books of
account;
(b) records of the Portfolio's securities transactions;
(c) all other books and records as PFPC is required to maintain
pursuant to Rule 31a-1 of the 1940 Act and as specifically set
forth in Appendix B hereto.
8. Confidentiality.
---------------
PFPC agrees to keep confidential all records of the Fund and
information relative to the Fund and its shareholders (past, present and
potential), unless the release of such records or information is otherwise
consented to, in writing, by the Fund. The Fund agrees that such consent shall
not be
6
<PAGE>
unreasonably withheld. The Fund further agrees that, should PFPC be required to
provide such information or records to duly constituted authorities (who may
institute civil or criminal contempt proceedings for failure to comply), PFPC
shall not be required to seek the Fund's consent prior to disclosing such
information.
9. Liaison with Accountants.
------------------------
PFPC shall act as liaison with the Fund's independent public
accountants and shall provide account analyses, fiscal year summaries, and other
audit-related schedules, all with respect to the Portfolio. PFPC shall take all
reasonable action in the performance of its obligations under this Agreement to
assure that the necessary information is made available to such accountants for
the expression of their opinion, as such may be required by the Fund from time
to time.
10. Disaster Recovery.
-----------------
PFPC shall enter into and shall maintain in effect with appropriate
parties one or more agreements making reasonable provision of emergency use of
electronic data processing equipment to the extent appropriate equipment is
available. In the event of equipment failures, PFPC shall, at no additional
expense to the Fund, take reasonable steps to minimize service interruptions but
shall have no liability with respect thereto.
7
<PAGE>
11. Compensation.
------------
As compensation for services rendered by PFPC during the term of this
Agreement, the Fund will pay to PFPC from the assets of the Portfolio a fee or
fees as may be agreed to in writing by the Fund and PFPC.
12. Indemnification.
---------------
The Fund agrees to indemnify and hold harmless PFPC and its nominees
from all taxes, charges, expenses, assessments, claims and liabilities
(including, without limitation, liabilities arising under the 1933 Act, the 1934
Act and the 1940 Act, and any state and foreign securities and blue sky laws,
and amendments thereto, and expenses, including (without limitation) attorneys'
fees and disbursements, arising directly or indirectly from any action which
PFPC takes or does not take (i) at the request or on the direction of or in
reliance on the advice of the Fund or (ii) upon Oral or Written Instructions.
Neither PFPC, nor any of its nominees, shall be indemnified against any
liability to the Fund or to its shareholders (or any expenses incident to such
liability) arising out of PFPC's own willful misfeasance, gross negligence or
reckless disregard of its duties and obligations under this Agreement.
13. Responsibility of PFPC.
----------------------
PFPC shall be under no duty to take any action on behalf of the Fund
except as specifically set forth herein or as may be specifically agreed to by
PFPC in writing. PFPC shall be obligated to exercise care and diligence in the
performance of
8
<PAGE>
its duties hereunder, to act in good faith and to use its best efforts, within
reasonable limits, in performing services provided for under this Agreement.
PFPC shall be responsible for failure to perform its duties under this Agreement
arising out of PFPC's gross negligence. Notwithstanding the foregoing, PFPC
shall not be responsible for losses beyond its control, provided that PFPC has
acted in accordance with the standard of care set forth above; and provided
further that PFPC shall only be responsible for that portion of losses or
damages suffered by the fund that are attributable to the gross negligence of
PFPC.
Without limiting the generality of the foregoing or of any other
provision of this Agreement, PFPC, in connection with its duties under this
Agreement, shall not be liable for (a) the validity or invalidity or authority
or lack thereof of any Oral or Written Instruction, notice or other instrument
which conforms to the applicable requirements of this Agreement, and which PFPC
reasonably believes to be genuine; or (b) delays or errors or loss of data
occurring by reason of circumstances beyond PFPC's control, including acts of
civil or military authority, national emergencies, labor difficulties, fire,
flood or catastrophe, acts of God, insurrection, war, riots or failure of the
mails, transportation, communication or power supply.
Notwithstanding anything in this Agreement to the contrary, PFPC shall
have no liability to the Fund for any consequential, special or indirect losses
or damages which the Fund may incur or suffer by or as a consequence of PFPC's
9
<PAGE>
performance of the services provided hereunder, whether or not the likelihood of
such losses or damages was known by PFPC.
14. Description of Accounting Services on a Continuing Basis.
--------------------------------------------------------
PFPC will perform the following accounting functions with respect to
the Portfolio if required:
(i) Journalize investment, capital share and income and
expense activities;
(ii) Verify investment buy/sell trade tickets when received
from the investment advisor (the "Advisor") and
transmit trades to the Fund's foreign custodian (the
"Custodian") for proper settlement;
(iii) Maintain individual ledgers for investment
securities;
(iv) Maintain historical tax lots for each security;
(v) Reconcile cash and investment balances with the
Custodian, and provide the Advisor with the beginning
cash balance available for investment purposes;
(vi) Update the cash availability throughout the day as
required by the Advisor;
(vii) Post to and prepare the Statement of Assets and
Liabilities and the Statement of Operations;
(viii) Calculate various contractual expenses (e.g.,
----
advisory and custody fees);
(ix) Monitor the expense accruals and notify an officer of
the Fund of any proposed adjustments;
(x) Control all disbursements and authorize such
disbursements upon Written Instructions;
10
<PAGE>
(xi) Calculate capital gains and losses;
(xii) Determine net income;
(xiii) Obtain security market quotes from independent
pricing services approved by the Advisor, or if such
quotes are unavailable, then obtain such prices from
Advisor, and in either case calculate the market value
of the investments;
(xiv) Transmit or mail a copy of the daily portfolio
valuation to the Advisor;
(xv) Compute net asset value;
(xvi) As appropriate, compute yields, total return, expense
ratios, portfolio turnover rate, and, if required,
portfolio average dollar-weighted maturity; and
(xvii) Prepare a monthly financial statement, which will
include the following items:
Schedule of Investments
Statement of Assets and Liabilities
Statement of Operations
Cash Statement
Schedule of Capital Gains and Losses.
15. Description of Administration Services on a Continuing Basis.
------------------------------------------------------------
PFPC will perform the following administration services with respect
to the Portfolio:
(i) Prepare quarterly broker security transactions
summaries;
(ii) Prepare monthly security transaction listings;
(iii) (a) Assist in the preparation of support schedules
necessary for completion of federal and state tax
returns; or (b) prepare for execution and file the
Fund's Federal and state tax returns;
11
<PAGE>
(iv) (a) Assist in the preparation of Semi-Annual Reports
with the SEC on Form N-SAR; or (b) prepare and file the
Fund's Semi-Annual Reports with the SEC on Form N-SAR.
(v) (a) Assist in the preparation of annual, semi-annual,
and quarterly shareholder reports; or (b) prepare and
file with the SEC the Fund's annual, semi-annual, and
quarterly shareholder reports;
(vi) Assist with the preparation of registration statements
and other filings relating to the registration of
Shares;
(vii) Monitor the Portfolio's status as a regulated
investment company under SubChapter M of the Internal
Revenue Code of 1986, as amended; and
(viii) Coordinate contractual relationships and
communications between the Fund and its service
providers.
16. Duration and Termination.
------------------------
This Agreement shall continue until terminated by the Fund or by PFPC
on sixty (60) days' prior written notice to the other party.
17. Notices.
-------
All notices and other communications, including written Instructions,
shall be in writing or by confiding telegram, cable, telex or facsimile sending
device. If notice is sent by confirming telegram, cable, telex or facsimile
sending device, it shall be deemed to have been given immediately. If notice is
sent by first-class mail, it shall be deemed to have been given three days after
it has been mailed. If notice is sent by messenger, it shall be deemed to have
been given on the day it is
12
<PAGE>
delivered. Notices shall be addressed (a) if to PFPC at PFPC's address, 103
Bellevue Parkway, Wilmington, Delaware 19809; (b) if to the Fund, at the address
of the Fund; or (c) if to neither of the foregoing, at such other address as
shall have been notified to the sender of any such Notice or other
communication.
18. Amendments.
----------
This Agreement, or any term thereof, may be changed or waived only by
written amendment, signed by the party against whom enforcement of such change
or waiver is sought.
19. Delegation.
----------
PFPC may assign its rights and delegate its duties hereunder to any
wholly owned direct or indirect subsidiary of Provident National Bank or PNC
Financial Corp, provided that (i) PFPC gives the Fund thirty (30) days' prior
written notice; (ii) the delegate agrees with PFPC to comply with all relevant
provisions of the 1940 Act; and (iii) PFPC and such delegate promptly provide
such information as the Fund may request, and respond to such questions as the
Fund may ask, relative to the delegation, including (without limitation) the
capabilities of the delegate.
20. Counterparts.
------------
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
13
<PAGE>
21. Further Actions.
---------------
Each party agrees to perform such further acts and execute such
further documents as are necessary to effectuate the purposes hereof.
22. Miscellaneous.
-------------
This Agreement embodies the entire agreement and understanding between
the parties and supersedes all prior agreements and understandings relating to
the subject matter hereof, provided that the parties may embody in one or more
separate documents their agreement, if any, with respect to delegated and/or
Oral Instructions.
The captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.
This Agreement shall be deemed to be a contract made in Delaware and
governed by Delaware law. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby. This Agreement shall be binding
and shall inure to the benefit off the parties hereto and their respective
successors.
14
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their officers designated below on the day and year first above
written.
PFPC INC.
By:
---------------------------
THE RBB FUND, INC.
By:
---------------------------
15
<PAGE>
APPENDIX A
[List Books and Records to be
----------------------------
Maintained by PFPC]
------------------
16
<PAGE>
APPENDIX B
----------
Authorized Persons
- --------------------------------- ---------------------------------
(name) (signature)
- --------------------------------- ---------------------------------
(name) (signature)
- --------------------------------- ---------------------------------
(name) (signature)
- --------------------------------- ---------------------------------
(name) (signature)
- --------------------------------- ---------------------------------
(name) (signature)
- --------------------------------- ---------------------------------
(name) (signature)
17
<PAGE>
Exhibit (9)(tt)
ADMINISTRATION AND ACCOUNTING SERVICES AGREEMENT
TERMS AND CONDITIONS
This Agreement is made as of ____________, 1996 by and between THE RBB
FUND, INC., a Maryland corporation (the "Fund"), and PFPC INC., a Delaware
corporation ("PFPC"), which is an indirect wholly owned subsidiary of PNC
Financial Corp.
The Fund is registered as an open-end, non-diversified investment
company under the Investment Company Act of 1940, as amended (the "1940 Act").
The Fund wishes to retain PFPC to provide administration and accounting services
to its Numeric Growth & Value Fund (the "Portfolio"), and PFPC wishes to furnish
such services.
In consideration of the promises and mutual covenants herein
contained, the parties agree as follows:
1. Definitions.
-----------
(a) "1933 Act" means the Securities Act of 1933, as amended.
--------
(b) "1934 Act" means the Securities Exchange Act of 1934, as amended.
--------
(c) "Authorized Person" means any officer of the Fund and any other
-----------------
person, duly authorized by the Fund's Board of Directors, to give Oral and
Written Instructions on behalf of the Fund and listed on the Certificate
attached hereto as Appendix B or any amendment thereto as may be received by
PFPC from time to
1
<PAGE>
time. An Authorized Person's scope of authority may be limited by the Fund by
setting forth such limitation on the Certificate.
(d) "Book-Entry System" means Federal Reserve Treasury book-entry
-----------------
system for United States and federal agency securities, its successor or
successors, and its nominee or nominees and any book-entry system maintained
by an exchange registered with the SEC under the 1934 Act.
(e) "Oral Instructions" mean oral instructions received by PFPC from
-----------------
an Authorized Person or from a person reasonably believed by PFPC to be an
Authorized Person.
(f) "SEC" means the Securities and Exchange Commission.
---
(g) "Shares" mean the shares of common stock of the Fund representing
------
an interest in the Portfolio.
(h) "Property" means:
--------
(i) any and all securities and other investment items of
the Portfolio which the Fund may from time to time
deposit, or cause to be deposited, with PFPC or which
PFPC may from time to time hold for the Fund on behalf
of the Portfolio;
(ii) all income in respect of any of such securities or
other investment items;
(iii) all proceeds of the sale of any of such securities or
investment items; and
(iv) all proceeds of the sale of Shares which are received
by PFPC from time to time, from or on behalf of the
Fund.
(i) "Written Instructions" mean written instructions signed by two
--------------------
Authorized Persons and received by PFPC. The
2
<PAGE>
instructions may be delivered by hand, mail, tested telegram, cable, telex or
facsimile sending device.
2. Appointment.
-----------
The Fund hereby appoints PFPC to provide administration and accounting
services to the Portfolio, in accordance with the terms set forth in this
Agreement. PFPC accepts such appointment and agrees to furnish such services.
3. Delivery of Documents.
---------------------
The Fund has provided or, where applicable, will provide PFPC with the
following:
(a) certified or authenticated copies of the resolutions of the
Fund's Board of Directors, approving the appointment of PFPC to
provide services pursuant to this Agreement;
(b) a copy of the Fund's most recent effective registration
statement;
(c) a copy of the Fund's advisory agreement or agreements with
respect to the Portfolio;
(d) a copy of the Fund's distribution agreement or agreements with
respect to the Portfolio;
(e) a copy of any additional administration agreement with respect to
the Portfolio;
(f) copies of any shareholder servicing agreements made in respect of
the Portfolio; and
(g) certified or authenticated copies of any and all amendments or
supplements to the foregoing.
4. Compliance with Government Rules and Regulations.
------------------------------------------------
PFPC undertakes to comply with all applicable requirements of the 1933
Act, the 1934 Act and the 1940 Act, and any laws, rules and regulations of
governmental authorities
3
<PAGE>
having jurisdiction with respect to all duties to be performed by PFPC
hereunder. Except as specifically set forth herein, PFPC assumes no
responsibility for such compliance by the Fund.
5. Instructions.
------------
Unless otherwise provided in this Agreement, PFPC shall act only upon
Oral and Written Instructions.
PFPC shall be entitled to rely upon any Oral and Written Instructions
it receives from an Authorized Person (or from a person reasonably believed by
PFPC to be an Authorized Person) pursuant to this Agreement. PFPC may assume
that any Oral or Written Instruction received hereunder is not in any way
inconsistent with the provisions of organizational documents or this Agreement
or of any vote, resolution or proceeding of the Fund's Board of Directors or of
the Fund's shareholders.
The Fund agrees to forward to PFPC Written Instructions confirming
Oral Instructions so that PFPC receives the Written Instructions by the close of
business on the same day that such Oral Instructions are received. The fact
that such confirming Written Instructions are not received by PFPC shall in no
way invalidate the transactions or enforceability of the transactions authorized
by the Oral Instructions. The Fund further agrees that PFPC shall incur no
liability to the Fund in acting upon Oral or Written Instructions provided such
instructions reasonably appear to have been received from an Authorized Person.
4
<PAGE>
6. Right to Receive Advice.
-----------------------
(a) Advice of the Fund. If PFPC is in doubt as to any action it
------------------
should or should not take, PFPC may request directions or advice, including Oral
or Written Instructions, from the Fund.
(b) Advice of Counsel. If PFPC shall be in doubt as to any questions
-----------------
of law pertaining to any action it should or should not take, PFPC may request
advice at its own cost from such counsel of its own choosing (who may be counsel
for the Fund, the Fund's advisor or PFPC, at the option of PFPC).
(c) Conflicting Advice. In the event of a conflict between
------------------
directions, advice or Oral or Written Instructions PFPC receives from the Fund,
and the advice it receives from counsel, PFPC shall be entitled to rely upon and
follow the advice of counsel.
(d) Protection of PFPC. PFPC shall be protected in any action it
------------------
takes or does not take in reliance upon directions, advice or Oral or Written
Instructions it receives from the Fund or from counsel and which PFPC believes,
in good faith, to be consistent with those directions, advice and Oral or
Written Instructions.
Nothing in this paragraph shall be construed so as to impose an
obligation upon PFPC (i) to seek such directions, advice or Oral or Written
Instructions, or (ii) to act in accordance with such directions, advice or Oral
or Written Instructions unless, under the terms of other provisions of this
5
<PAGE>
Agreement, the same is a condition of PFPC's properly taking or not taking such
action.
7. Records.
-------
The books and records pertaining to the Fund, which are in the
possession of PFPC, shall be the property of the Fund. Such books and records
shall be prepared and maintained as required by the 1940 Act and other
applicable securities laws, rules and regulations. The Fund and Authorized
Persons shall have access to such books and records at all times during PFPC's
normal business hours. Upon the reasonable request of the Fund, copies of any
such books and records shall be provided by PFPC to the Fund or to an Authorized
Person at the Fund's expense to be paid from the assets of the Portfolio.
PFPC shall keep the following records:
(a) all books and records with respect to the Portfolio's books of
account;
(b) records of the Portfolio's securities transactions;
(c) all other books and records as PFPC is required to maintain
pursuant to Rule 31a-1 of the 1940 Act and as specifically set
forth in Appendix B hereto.
8. Confidentiality.
---------------
PFPC agrees to keep confidential all records of the Fund and
information relative to the Fund and its shareholders (past, present and
potential), unless the release of such records or information is otherwise
consented to, in writing, by the Fund. The Fund agrees that such consent shall
not be
6
<PAGE>
unreasonably withheld. The Fund further agrees that, should PFPC be required to
provide such information or records to duly constituted authorities (who may
institute civil or criminal contempt proceedings for failure to comply), PFPC
shall not be required to seek the Fund's consent prior to disclosing such
information.
9. Liaison with Accountants.
------------------------
PFPC shall act as liaison with the Fund's independent public
accountants and shall provide account analyses, fiscal year summaries, and other
audit-related schedules, all with respect to the Portfolio. PFPC shall take all
reasonable action in the performance of its obligations under this Agreement to
assure that the necessary information is made available to such accountants for
the expression of their opinion, as such may be required by the Fund from time
to time.
10. Disaster Recovery.
-----------------
PFPC shall enter into and shall maintain in effect with appropriate
parties one or more agreements making reasonable provision of emergency use of
electronic data processing equipment to the extent appropriate equipment is
available. In the event of equipment failures, PFPC shall, at no additional
expense to the Fund, take reasonable steps to minimize service interruptions but
shall have no liability with respect thereto.
7
<PAGE>
11. Compensation.
------------
As compensation for services rendered by PFPC during the term of this
Agreement, the Fund will pay to PFPC from the assets of the Portfolio a fee or
fees as may be agreed to in writing by the Fund and PFPC.
12. Indemnification.
---------------
The Fund agrees to indemnify and hold harmless PFPC and its nominees
from all taxes, charges, expenses, assessments, claims and liabilities
(including, without limitation, liabilities arising under the 1933 Act, the 1934
Act and the 1940 Act, and any state and foreign securities and blue sky laws,
and amendments thereto, and expenses, including (without limitation) attorneys'
fees and disbursements, arising directly or indirectly from any action which
PFPC takes or does not take (i) at the request or on the direction of or in
reliance on the advice of the Fund or (ii) upon Oral or Written Instructions.
Neither PFPC, nor any of its nominees, shall be indemnified against any
liability to the Fund or to its shareholders (or any expenses incident to such
liability) arising out of PFPC's own willful misfeasance, gross negligence or
reckless disregard of its duties and obligations under this Agreement.
13. Responsibility of PFPC.
----------------------
PFPC shall be under no duty to take any action on behalf of the Fund
except as specifically set forth herein or as may be specifically agreed to by
PFPC in writing. PFPC shall be obligated to exercise care and diligence in the
performance of
8
<PAGE>
its duties hereunder, to act in good faith and to use its best efforts, within
reasonable limits, in performing services provided for under this Agreement.
PFPC shall be responsible for failure to perform its duties under this Agreement
arising out of PFPC's gross negligence. Notwithstanding the foregoing, PFPC
shall not be responsible for losses beyond its control, provided that PFPC has
acted in accordance with the standard of care set forth above; and provided
further that PFPC shall only be responsible for that portion of losses or
damages suffered by the fund that are attributable to the gross negligence of
PFPC.
Without limiting the generality of the foregoing or of any other
provision of this Agreement, PFPC, in connection with its duties under this
Agreement, shall not be liable for (a) the validity or invalidity or authority
or lack thereof of any Oral or Written Instruction, notice or other instrument
which conforms to the applicable requirements of this Agreement, and which PFPC
reasonably believes to be genuine; or (b) delays or errors or loss of data
occurring by reason of circumstances beyond PFPC's control, including acts of
civil or military authority, national emergencies, labor difficulties, fire,
flood or catastrophe, acts of God, insurrection, war, riots or failure of the
mails, transportation, communication or power supply.
Notwithstanding anything in this Agreement to the contrary, PFPC shall
have no liability to the Fund for any consequential, special or indirect losses
or damages which the Fund may incur or suffer by or as a consequence of PFPC's
9
<PAGE>
performance of the services provided hereunder, whether or not the likelihood of
such losses or damages was known by PFPC.
14. Description of Accounting Services on a Continuing Basis.
--------------------------------------------------------
PFPC will perform the following accounting functions with respect to
the Portfolio if required:
(i) Journalize investment, capital share and income and
expense activities;
(ii) Verify investment buy/sell trade tickets when received
from the investment advisor (the "Advisor") and
transmit trades to the Fund's foreign custodian (the
"Custodian") for proper settlement;
(iii) Maintain individual ledgers for investment
securities;
(iv) Maintain historical tax lots for each security;
(v) Reconcile cash and investment balances with the
Custodian, and provide the Advisor with the beginning
cash balance available for investment purposes;
(vi) Update the cash availability throughout the day as
required by the Advisor;
(vii) Post to and prepare the Statement of Assets and
Liabilities and the Statement of Operations;
(viii) Calculate various contractual expenses (e.g.,
----
advisory and custody fees);
(ix) Monitor the expense accruals and notify an officer of
the Fund of any proposed adjustments;
(x) Control all disbursements and authorize such
disbursements upon Written Instructions;
10
<PAGE>
(xi) Calculate capital gains and losses;
(xii) Determine net income;
(xiii) Obtain security market quotes from independent
pricing services approved by the Advisor, or if such
quotes are unavailable, then obtain such prices from
Advisor, and in either case calculate the market value
of the investments;
(xiv) Transmit or mail a copy of the daily portfolio
valuation to the Advisor;
(xv) Compute net asset value;
(xvi) As appropriate, compute yields, total return, expense
ratios, portfolio turnover rate, and, if required,
portfolio average dollar-weighted maturity; and
(xvii) Prepare a monthly financial statement, which will
include the following items:
Schedule of Investments
Statement of Assets and Liabilities
Statement of Operations
Cash Statement
Schedule of Capital Gains and Losses.
15. Description of Administration Services on a Continuing Basis.
------------------------------------------------------------
PFPC will perform the following administration services with respect
to the Portfolio:
(i) Prepare quarterly broker security transactions
summaries;
(ii) Prepare monthly security transaction listings;
(iii) (a) Assist in the preparation of support schedules
necessary for completion of federal and state tax
returns; or (b) prepare for execution and file the
Fund's Federal and state tax returns;
11
<PAGE>
(iv) (a) Assist in the preparation of Semi-Annual Reports
with the SEC on Form N-SAR; or (b) prepare and file
the Fund's Semi-Annual Reports with the SEC on Form
N-SAR.
(v) (a) Assist in the preparation of annual, semi-annual,
and quarterly shareholder reports; or (b) prepare and
file with the SEC the Fund's annual, semi-annual, and
quarterly shareholder reports;
(vi) Assist with the preparation of registration statements
and other filings relating to the registration of
Shares;
(vii) Monitor the Portfolio's status as a regulated
investment company under SubChapter M of the Internal
Revenue Code of 1986, as amended; and
(viii) Coordinate contractual relationships and
communications between the Fund and its service
providers.
16. Duration and Termination.
------------------------
This Agreement shall continue until terminated by the Fund or by PFPC
on sixty (60) days' prior written notice to the other party.
17. Notices.
-------
All notices and other communications, including written Instructions,
shall be in writing or by confiding telegram, cable, telex or facsimile sending
device. If notice is sent by confirming telegram, cable, telex or facsimile
sending device, it shall be deemed to have been given immediately. If notice is
sent by first-class mail, it shall be deemed to have been given three days after
it has been mailed. If notice is sent by messenger, it shall be deemed to have
been given on the day it is
12
<PAGE>
delivered. Notices shall be addressed (a) if to PFPC at PFPC's address, 103
Bellevue Parkway, Wilmington, Delaware 19809; (b) if to the Fund, at the address
of the Fund; or (c) if to neither of the foregoing, at such other address as
shall have been notified to the sender of any such Notice or other
communication.
18. Amendments.
----------
This Agreement, or any term thereof, may be changed or waived only by
written amendment, signed by the party against whom enforcement of such change
or waiver is sought.
19. Delegation.
----------
PFPC may assign its rights and delegate its duties hereunder to any
wholly owned direct or indirect subsidiary of Provident National Bank or PNC
Financial Corp, provided that (i) PFPC gives the Fund thirty (30) days' prior
written notice; (ii) the delegate agrees with PFPC to comply with all relevant
provisions of the 1940 Act; and (iii) PFPC and such delegate promptly provide
such information as the Fund may request, and respond to such questions as the
Fund may ask, relative to the delegation, including (without limitation) the
capabilities of the delegate.
20. Counterparts.
------------
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
13
<PAGE>
21. Further Actions.
---------------
Each party agrees to perform such further acts and execute such
further documents as are necessary to effectuate the purposes hereof.
22. Miscellaneous.
-------------
This Agreement embodies the entire agreement and understanding between
the parties and supersedes all prior agreements and understandings relating to
the subject matter hereof, provided that the parties may embody in one or more
separate documents their agreement, if any, with respect to delegated and/or
Oral Instructions.
The captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.
This Agreement shall be deemed to be a contract made in Delaware and
governed by Delaware law. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby. This Agreement shall be binding
and shall inure to the benefit off the parties hereto and their respective
successors.
14
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their officers designated below on the day and year first above
written.
PFPC INC.
By:
---------------------------
THE RBB FUND, INC.
By:
---------------------------
15
<PAGE>
APPENDIX A
[List Books and Records to be
----------------------------
Maintained by PFPC]
------------------
16
<PAGE>
APPENDIX B
----------
Authorized Persons
------------------------------ ---------------------------
(name) (signature)
----------------------------- ---------------------------
(name) (signature)
----------------------------- ---------------------------
(name) (signature)
----------------------------- ---------------------------
(name) (signature)
----------------------------- ---------------------------
(name) (signature)
----------------------------- ---------------------------
(name) (signature)
17
<PAGE>
Exhibit (9)(uu)
ADMINISTRATIVE SERVICES AGREEMENT
---------------------------------
This Agreement is made as of the day of , 1996, by and
---- ---------
between THE RBB FUND, INC., a Maryland corporation (the "Fund"), on behalf of
its Numeric Micro Cap Fund, Numeric Growth Fund and Numeric Growth & Value Fund
(collectively, the "Portfolios") and COUNSELLORS FUND SERVICES, INC.
("Counsellors"), a Delaware corporation.
W I T N E S S E T H
WHEREAS, the Fund is registered as an open-end, diversified management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"); and
WHEREAS, the Fund wishes to retain Counsellors to provide certain
administrative services to the Portfolios, and Counsellors is willing to furnish
such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment. The Fund hereby appoints Counsellors to provide certain
------------
administrative services to the Portfolios for the period and on the terms set
forth in this Agreement. Counsellors accepts such appointment and agrees to
furnish the services herein set forth in return for the compensation as provided
in
<PAGE>
Paragraph 6 of this Agreement. Counsellors agrees to comply with all relevant
provisions of the Securities Act of 1933, as amended, the Securities Exchange
Act of 1934, as amended, and 1940 Act and applicable rules and regulations
thereunder.
2. Services on a Continuing Basis. subject to the supervision and
------------------------------
direction of the Board of Directors of the Fund, Counsellors undertakes to
perform the following administrative services for the Portfolios:
(a) Making available office facilities, as requested by the Fund,
(which may be in the offices of Counsellors or a corporate affiliate);
(b) Furnishing data processing services, clerical services and certain
internal quasi-legal, executive and administrative services;
(c) Furnish an 800 telephone line for shareholder inquires and
otherwise assist in the preparation of shareholder communications and notices as
requested by the Fund or the investment adviser to the Portfolios (the
"Investment Adviser").
(d) Assisting in coordinating the preparation of reports to each
Portfolio's shareholders of record and the Securities and Exchange Commission
(the "SEC") including, but not limited to, proxy statements; annual, semi-annual
and quarterly reports to Shareholders; annual and semi-annual reports on Form N-
SAR; and post-effective amendments to the Fund's Registration Statement on Form
N-lA (the "Registration Statement");
2
<PAGE>
(e) Assisting the Investment Adviser, at the Investment Adviser's
request, in monitoring and developing compliance procedures which will include,
among other matters, procedures to assist the Investment Adviser in monitoring
compliance with the each Portfolio's investment objective, policies,
restrictions, tax matters and applicable laws and regulations; and
(f) Acting as liaison between the Fund and the Fund's independent
public accountants, counsel, custodian or custodians, transfer agent and
administrator and taking all reasonable action in the performance of its
obligations under this Agreement to assure that all necessary information is
made available to each of them.
In performing all services under this Agreement, Counsellors shall act in
conformity with applicable law, the Fund's Articles of Incorporation and By-
Laws, and all amendments thereto, and each Portfolio's investment objective,
investment policies and other practices and policies set forth in the Fund's
Registration Statement, as such Registration Statement and practices and
policies may be amended from time to time.
3. Books and Records. In connection with the services provided under
------------------
this Agreement, Counsellors shall maintain such books and records, as required
by the Fund, of the Fund's reports or filings with each Portfolio's
shareholders, the SEC
3
<PAGE>
authorities and other required reports and documents prepared, filed or
distributed on behalf of the Fund.
The books and records pertaining to the Fund or any Portfolio that are in
the possession of Counsellors shall be the property of the Fund. Such books and
records shall be prepared and maintained as required by the 1940 Act and other
applicable securities laws and rules and regulations. The Fund, or the Fund's
authorized representatives, shall have access to such books and records at all
times during Counsellors' normal business hours. Upon the reasonable request of
the Fund, copies of any such books and records shall be provided by Counsellors
to the Fund or the Fund's authorized representative at the Fund's expense.
4. Confidentiality. Counsellors agrees on behalf of itself and its
---------------
employees to treat confidentially all records and other information relative to
the Fund or any Portfolio and its prior, present or potential shareholders and
relative to the Investment Adviser and its prior, present or potential
customers, except, after prior notification to and approval in writing by the
Fund, which approval shall not be unreasonably withheld and may not be withheld
where Counsellors may be exposed to civil or criminal contempt proceedings for
failure to comply, when requested to divulge such information by duly
constituted authorities, or when so requested by the Fund.
4
<PAGE>
5. Right to Receive Advice.
------------------------
(a) Advice of Fund. If Counsellors is in doubt as to any action to be
---------------
taken or omitted by it, it may request, and shall receive, directions or advice
from the Fund.
(b) Advice of Counsel. If Counsellors is in doubt as to any question
------------------
of law involved in any action to be taken or omitted by Counsellors, it may
request advice at its own cost from counsel of its own choosing (who may be
counsel for the Investment Adviser, the Fund or Counsellors, at the option of
Counsellors).
c) Conflicting Advice. In case of conflict between directions or
-------------------
advice received by Counsellors pursuant to subsection (a) of this paragraph and
advice received by Counsellors pursuant to subsection (b) of this paragraph,
Counsellors shall be entitled to rely on and follow the advice received pursuant
to the latter provision alone.
(d) Protection of Counsellors. Counsellors shall be protected in any
--------------------------
action or inaction which it takes in reliance on any directions or advice
received pursuant to subsections (a) or (b) of this paragraph which Counsellors,
after receipt of any such directions or advice in good faith believes to be
consistent with such directions or advice. However, nothing in this paragraph
shall be construed as imposing upon Counsellors any obligation (i) to seek such
directions or advice or (ii) to act in accordance with such directions or advice
when received.
5
<PAGE>
Nothing in this subsection shall excuse Counsellors when an action or omission
on the part of Counsellors constitutes willful misfeasance, bad faith,
negligence or reckless disregard by Counsellors of its duties under this
Agreement.
6. Compensation. In consideration of services rendered pursuant to this
-------------
Agreement, the Fund will pay Counsellors on the first business day of each month
a fee for the previous month, calculated daily. The Fund will also reimburse
Counsellors for its out-of-pocket expenses incurred on behalf of the Fund,
including but not limited to, postage, telephone, telex and Federal Express
charges. The annual fee shall be .l5% of each Portfolio's average daily net
assets exclusive of out-of-pocket expenses. Upon any termination of this
Agreement before the end of any month, the fee for such part of a month shall be
prorated according to the proportion which such period bears to the full monthly
period and shall be payable upon the date of termination of this Agreement. For
the purpose of determining fees payable to Counsellors, the value of a
Portfolio's net assets shall be computed at the times and in the manner
specified in the Fund's Prospectus and Statement of Additional Information as
from time to time in effect. The annual fee paid to Counsellors hereunder may
be amended upon terms as may be specifically agreed to in writing from time to
time by the Fund and Counsellors.
7. Indemnification. The Fund agrees to indemnify and hold harmless
----------------
Counsellors and its nominees from all taxes, charges,
6
<PAGE>
expenses, assessments, claims and liabilities (including, without limitation,
liabilities arising under federal securities and commodities laws and any state
and foreign securities and Blue Sky laws, all as or to be amended from time to
time) and expenses, including (without limitation) attorneys' fees and
disbursements, arising directly or indirectly from any action or thing which
Counsellors takes or does or omits to take or do pursuant to the terms of this
Agreement or otherwise at the request or on the direction of or in reliance on
the advice of the Fund, provided, that neither Counsellors nor any of its
nominees shall be indemnified against any liability to the Fund or to its
Shareholders (or any expenses incident to such liability) arising out of
Counsellors' own willful misfeasance, bad faith, negligence or reckless
disregard of its duties and obligations under this Agreement.
8. Responsibility of Counsellors. Counsellors shall be under no duty to
------------------------------
take any action on behalf of the Fund, except as specifically set forth herein
or as may be specifically agreed to by Counsellors in writing. In the
performance of its duties hereunder, Counsellors shall be obligated to exercise
care and diligence and to act in good faith and to use its best efforts within
reasonable limits in performing services provided for under this Agreement.
Counsellors shall be responsible for its own negligent failure to perform
its duties under this Agreement. Without
7
<PAGE>
limiting the generality of the foregoing or of any other provision of this
Agreement, Counsellors in connection with its duties under this Agreement shall
not be under any duty or obligation to inquire into and shall not be liable for
or in respect of (a) the validity or invalidity or authority or lack thereof of
any notice or other instrument which conforms to the applicable requirements of
this Agreement, and which Counsellors reasonably believes to be genuine; or (b)
delays or errors or loss of data occurring by reason of circumstances beyond
Counsellors' control, including acts of civil or military authority, national
emergencies, labor difficulties, fire, mechanical breakdown, flood or
catastrophe, acts of God, insurrection, war, riots or failure of the mails,
transportation, communication or power supply.
9. Duration and Termination. This Agreement shall continue until
-------------------------
terminated by the Fund or Counsellors on 60 days' written notice.
10. Notices. All notices and other communications hereunder (collectively
--------
referred to as "Notice" or "Notices" in this Paragraph), shall be in writing or
by confirming telegram, Cable, telex or facsimile sending device. Notices shall
be addressed (a) if to Counsellors at Counsellors' address, 466 Lexington
Avenue, New York, New York 10017; (b) if to the Fund, at the address of the
Fund; or (c) if to neither of the foregoing, at such other address as shall have
been notified to
8
<PAGE>
the sender of any such Notice or other communication. If the location of the
sender of a Notice or other communication. If the location of the sender of a
Notice and the address of the addressee thereof are, at the time of sending more
than 100 miles apart, the Notice may be mailed, in which case it shall be deemed
to have been given three days after it is send, or if sent by confirming
telegram, cable, telex, or facsimile sending device charges arising from the
sending of a Notice hereunder shall be paid by the sender.
11. Further Actions. Each party agrees to perform such further acts and
----------------
execute such further documents as are necessary to effectuate the purposes
hereof.
12. Amendments. This Agreement or any part hereof may be changed or
-----------
waived only by an instrument in writing signed by the party against which
enforcement of such change or waiver is sought.
13. Counterparts. This Agreement may be executed in two or more
-------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
14. Miscellaneous. This Agreement embodies the entire agreement and
--------------
understanding between the parties thereto, and supersedes all prior agreements
and understandings, relating to the subject matter hereof. The captions in this
Agreement are included for convenience of reference only and in no way define
9
<PAGE>
or delimit any of the provisions hereof or otherwise affect their construction
or effect. This Agreement shall be deemed to be a contract made in New York and
governed by New York law. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby. This Agreement shall be binding
and shall inure to the benefit of the parties hereto and their respective
successors.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below as of the day and year first above
written.
THE RBB FUND, INC.
By:_________________________
Title:
COUNSELLORS FUND SERVICES, INC.
By:__________________________
Title:
10
<PAGE>
Exhibit (10)
May 9, 1996
The RBB Fund, Inc.
Bellevue Park Corporate Center
400 Bellevue Parkway, Suite 100
Wilmington, DE 19809
Gentlemen:
We have acted as counsel for The RBB Fund, Inc. (the "Fund") in
connection with the registration of the Fund under the Investment Company Act of
1940 (the "1940 Act") and the registration of the Class FF, GG and HH (Numeric)
shares of Common Stock, par value $.001 per share, of the Fund ("Shares") under
the Securities Act of 1933 (the "1933 Act"). In this regard, we have
participated in the preparation of the Post-Effective Amendment No. 34 to the
Registration Statement on Form N-1A, relating to the Fund and the Shares, which
is filed by the Fund under the 1933 Act and the 1940 Act.
We are of the opinion that the Shares to be offered and sold by the
Fund, when issued and sold pursuant to the terms described in the Post-Effective
Amendment to the Registration Statement when it becomes effective and in
conformity with applicable Federal and state securities laws, will be legally
issued, fully paid and nonassessable.
We consent to the use of our name on the back page of the prospectus
and in the statement of additional information under the caption "Miscellaneous
- - Counsel" in the Post-Effective Amendment to the Registration Statement, and we
also consent to the filing of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
/s/ Ballard Spahr Andrew & Ingersoll
<PAGE>
Exhibit (11)
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We consent in this Post-Effective Amendment No. 34 under the Securities Act of
1933, as amended to this Registration Statement on Form N-1A (File No. 33-20827)
of The RBB Fund, Inc. to the reference to our Firm under the headings
"Independent Accountants" in the prospectus and "Miscellaneous--Independent
Accountants" in the Statement of Additional Information.
COOPERS & LYBRAND L.L.P.
/s/ Coopers & Lybrand L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
May 15, 1996
<PAGE>
Exhibit (13)(i)
PURCHASE AGREEMENT
------------------
The RBB Fund, Inc. (the "Fund"), a Maryland corporation, and Numeric
Investors L.P. ("Numeric"), a Delaware limited partnership, intending to be
legally bound, hereby agree with each other as follows:
1. The Fund hereby offers Numeric and Numeric hereby purchases $1,000
worth of shares of Class FF Common Stock (Numeric Micro Cap Fund ) of the Fund
(par value $.001 per share) (such shares hereinafter sometimes collectively
known as "Shares") at a price per Share equivalent to the net asset value per
share of the Numeric Micro Cap Fund shares of the Fund as determined on
, 1996.
The Fund hereby acknowledges receipt from Numeric of funds in the amount of
$1,000.00 in full payment for the Shares.
2. Numeric represents and warrants to the Fund that the Shares are
being acquired for investment purposes and not with a view to the distribution
thereof.
3. This agreement may be executed in counterparts, and all such
counterparts taken together shall be deemed to constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day of , 1996.
THE RBB FUND, INC.
By:------------------------
President
NUMERIC INVESTORS L.P.
By:-------------------------
<PAGE>
Exhibit (13)(j)
PURCHASE AGREEMENT
------------------
The RBB Fund, Inc. (the "Fund"), a Maryland corporation, and Numeric
Investors L.P. ("Numeric"), a Delaware limited partnership, intending to be
legally bound, hereby agree with each other as follows:
1. The Fund hereby offers Numeric and Numeric hereby purchases $1,000
worth of shares of Class GG Common Stock (Numeric Growth Fund ) of the Fund (par
value $.001 per share) (such shares hereinafter sometimes collectively known as
"Shares") at a price per Share equivalent to the net asset value per share of
the Numeric Growth Fund shares of the Fund as determined on , 1996.
The Fund hereby acknowledges receipt from Numeric of funds in the amount of
$1,000.00 in full payment for the Shares.
2. Numeric represents and warrants to the Fund that the Shares are
being acquired for investment purposes and not with a view to the distribution
thereof.
3. This agreement may be executed in counterparts, and all such
counterparts taken together shall be deemed to constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day of , 1996.
THE RBB FUND, INC.
By:------------------------
President
NUMERIC INVESTORS L.P.
By:-------------------------
<PAGE>
Exhibit (13)(k)
PURCHASE AGREEMENT
------------------
The RBB Fund, Inc. (the "Fund"), a Maryland corporation, and Numeric
Investors L.P. ("Numeric"), a Delaware limited partnership, intending to be
legally bound, hereby agree with each other as follows:
1. The Fund hereby offers Numeric and Numeric hereby purchases $1,000
worth of shares of Class HH Common Stock (Numeric Growth & Value Fund) of the
Fund (par value $.001 per share) (such shares hereinafter sometimes collectively
known as "Shares") at a price per Share equivalent to the net asset value per
share of the Numeric Investors Mid Cap Fund shares of the Fund as determined on
, 1996.
The Fund hereby acknowledges receipt from Numeric of funds in the amount of
$1,000.00 in full payment for the Shares.
2. Numeric represents and warrants to the Fund that the Shares are
being acquired for investment purposes and not with a view to the distribution
thereof.
3. This agreement may be executed in counterparts, and all such
counterparts taken together shall be deemed to constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day of , 1996.
THE RBB FUND, INC.
By:________________________
President
NUMERIC INVESTORS, L.P.
By:_________________________
<PAGE>
Exhibit (19)
REPRESENTATION OF COUNSEL PURSUANT TO RULE
485(b) UNDER THE SECURITIES ACT OF 1933
We hereby represent that Post-Effective Amendment No. 34 to the
Registration Statement on Form N-1A of the RBB Fund, Inc. (Registration No. 33-
20827) filed with the Securities and Exchange Commission under the Securities
Act of 1933 and Amendment No. 36 under the Investment Company Act of 1940
contains no disclosures which would render it ineligible to become effective
pursuant to paragraph (b) of Rule 485 under the Securities Act of 1933.
/s/ Ballard Spahr Andrews & Ingersoll
------------------------------------
Ballard Spahr Andrews & Ingersoll
May 13, 1995
