<PAGE>
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS, DATED SEPTEMBER 15, 1998
INFORMATION CONTAINED HEREIN PERTAINING TO THE N/I NUMERIC INVESTORS SMALL CAP
VALUE FUND IS SUBJECT TO COMPLETION OR AMENDMENT. A POST-EFFECTIVE AMENDMENT TO
THE RBB FUND'S REGISTRATION STATEMENT RELATING TO SHARES OF THE N/I NUMERIC
INVESTORS SMALL CAP VALUE FUND HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION. SHARES OF THE N/I NUMERIC INVESTORS SMALL CAP VALUE FUND MAY NOT BE
SOLD NOR MAY OFFERS TO BUY SHARES OF SUCH FUND BE ACCEPTED PRIOR TO THE TIME THE
POST-EFFECTIVE AMENDMENT TO THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS
PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER
TO BUY NOR SHALL THERE BE ANY SALE OF SHARES OF THE N/I NUMERIC INVESTORS SMALL
CAP VALUE FUND IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO THE REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF
ANY SUCH STATE.
N/I NUMERIC INVESTORS family of funds
N/I NUMERIC INVESTORS Small Cap Value Fund
----------------------------------
advised by NUMERIC INVESTORS LP(R)
----------------------------------
Prospectus
____________ __, 1998
<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............................................................. 1
INVESTMENT OBJECTIVE AND POLICIES........................................ 5
INVESTMENT LIMITATIONS................................................... 10
MANAGEMENT............................................................... 11
FUND TRANSACTIONS........................................................ 14
HOW TO PURCHASE SHARES................................................... 14
HOW TO REDEEM SHARES..................................................... 19
NET ASSET VALUE.......................................................... 21
DIVIDENDS AND DISTRIBUTIONS.............................................. 21
DESCRIPTION OF SHARES.................................................... 22
OTHER INFORMATION........................................................ 23
APPENDIX A - PERFORMANCE BENCHMARKS...................................... A-1
</TABLE>
INVESTMENT ADVISER
Numeric Investors L.P.
Cambridge, Massachusetts
CUSTODIAN
Custodial Trust Company
Princeton, New Jersey
CO-ADMINISTRATOR, TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
PFPC Inc.
Wilmington, Delaware
CO-ADMINISTRATOR
Bear Stearns Funds Management Inc.
New York, New York
ADMINISTRATIVE SERVICES AGENT
Provident Distributors, Inc.
-i-
<PAGE>
West Conshohocken, Pennsylvania
DISTRIBUTOR
Provident Distributors, Inc.
West Conshohocken, Pennsylvania
COUNSEL
Drinker Biddle & Reath LLP
Philadelphia, Pennsylvania
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
-ii-
<PAGE>
N/I NUMERIC INVESTORS family of funds
of
The RBB Fund, Inc.
The N/I NUMERIC INVESTORS family of funds consists of five classes of
common stock of The RBB Fund, Inc. ("RBB"), an open-end management investment
company. The shares ("Shares") offered by this Prospectus represent interests in
the N/I NUMERIC INVESTORS Small Cap Value Fund (the "Fund"), one of the
investment portfolios of RBB. The investment objective of the Fund is as
follows:
N/I NUMERIC INVESTORS SMALL CAP VALUE FUND - to provide long-term
capital appreciation. The Fund invests generally in common stock of
companies with smaller ($1.5 billion or less) market capitalizations. The
stock selection process for this Fund is primarily determined by the value
stock model which seeks to identify companies whose securities have market
valuations that are lower than the average market valuations of securities,
as measured by such characteristics as price to earnings ratios and price
to book ratios. Also considered, but of less importance, is the 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.
IMPORTANT FUND CLOSING INFORMATION
NUMERIC INVESTORS L.P. ("NUMERIC"), THE FUND'S INVESTMENT ADVISER, WILL
MONITOR THE FUND'S TOTAL ASSETS AND MAY CLOSE THE FUND AT ANY TIME TO NEW
INVESTMENT DUE TO CONCERNS THAT AN INCREASE IN THE SIZE OF THE 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 N/I NUMERIC INVESTORS family of 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 N/I NUMERIC INVESTORS family of 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 __________ __, 1998, has been filed with the
Securities and Exchange Commission and is incorporated by reference in this
Prospectus. The Prospectus and Statement of Additional Information are available
for reference, along with other related materials, on the SEC Internet Web Site
(http://www.sec.gov). It may also be obtained free of charge by calling (800)
NUMERIC [(800) 686-3742].
<PAGE>
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 ___________ __, 1998
-2-
<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 twenty-___ separate investment portfolios. The class of
Shares offered by this Prospectus represents interests in the N/I NUMERIC
INVESTORS Small Cap Value Fund, one of five investment portfolios of N/I NUMERIC
INVESTORS family of funds. The other portfolios are: N/I NUMERIC INVESTORS
Micro Cap Fund; N/I NUMERIC INVESTORS Growth Fund; N/I NUMERIC INVESTORS Growth
& Value Fund; and N/I NUMERIC INVESTORS Larger Cap 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 Fund is intended for investors who are seeking long-term capital
appreciation, and who do not need to earn current income from their investment
in the Fund. The net asset value per share of Shares representing interests in
the Funds will fluctuate as the value of the portfolio securities change in
response to changing market prices and other factors. Because of the risks
associated with common stock investments, the Fund is intended to be a long-term
investment vehicle and is not designed to provide investors with a means of
speculating on short-term stock market movements. The type of stocks held by
the Fund may be more volatile than stocks of larger companies. 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 that are borne by all of the Fund's shareholders. In order to
minimize such costs, the Fund reserves the right to reject any purchase request
(including exchange purchases from other N/I NUMERIC INVESTORS 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 Fund has adopted exchange privilege limitations
permitting three exchanges per year as described in the section "Exchange
Privilege Limitations." Finally, the Fund reserves the right to suspend the
offering of its shares.
Because of these risks, the Fund 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 Fund. 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 $4.3 billion in assets under management for individual,
limited partnership, mutual fund, pension plan and endowment accounts.
<PAGE>
THE FUND
The investment objective and policies of the Fund are summarized in the table
below. There is no assurance that the Fund will achieve its investment
objective.
<TABLE>
<CAPTION>
N/I INVESTMENT PERFORMANCE
NUMERIC OBJECTIVE/POLICY BENCHMARK*
INVESTORS
FUND
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Small Cap Objective is to provide long-term capital appreciation. Russell 2000 Value
Value The Fund invests generally in common stock of companies Index
with smaller ($1.5 billion or less) market
capitalizations. The stock selection process for this
Fund is primarily determined by the value stock model
which seeks to identify companies whose securities have
market valuations that are lower than the average market
valuations of securities, as measured by such
characteristics as price to earnings ratios and price to
book ratios. Also considered, but of less importance, is
the 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.
</TABLE>
_____________
* For more information on the Fund's benchmark, see Appendix A at the back of
this prospectus.
FEE TABLE
The following table illustrates all expenses and fees (after expected fee
waivers and expense reimbursements) that a shareholder would incur in the Fund.
The expenses and fees in the table for the N/I NUMERIC INVESTORS Small Cap Value
Fund are based on expenses expected to be incurred for the fiscal year ended
August 31, 1999.
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on Purchases (as
percentage of offering price) NONE
Sales Charge Imposed on Reinvested Dividends NONE
Redemption Fees NONE
Exchange Fees1 NONE
_____________
1 Exchanges are limited to three (3) per year. See "How to Purchase Shares -
-Exchange Privilege Limitations."
-2-
<PAGE>
Annual Fund Operating Expenses
(as a percentage of average net assets)
<TABLE>
<CAPTION>
SMALL CAP
VALUE FUND
----------
<S> <C>
Management Fees (after waivers)/1/....................................... 0.34%
12b-1 Fees............................................................... None
Other Expenses (after waivers and reimbursements)/1/.................... 0.66%
Total Fund Operating Expenses, (after waivers and reimbursements)/1/..... 1.00%
====
</TABLE>
__________________
/1/ Before expense reimbursements and waivers, Management Fees would be 0.75%,
Other Expenses would be 0.75% and Total Fund Operating Expenses would be
1.50%.
EXAMPLE
An investor would pay the following expenses on a $1,000 investment in the Fund,
assuming (1) a 5% annual return, and (2) redemption at the end of each time
period:
<TABLE>
<CAPTION>
ONE THREE
YEAR YEARS
---- -----
<S> <C> <C>
Small Cap 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"
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 the Fund will bear directly or
indirectly. (For more complete descriptions of the various costs and expenses,
see "Management" and "Distribution of Shares" below.) The Fee Table reflects
expense reimbursements and a voluntary waiver of Management Fees for the Fund
through the current fiscal year. There can be no assurance that any future
expense reimbursements and waivers (if any) of Management Fees will not vary
from the figures reflected in the Fee Table. Fee waivers and Expense
reimbursements will have the effect of lowering the Fund's overall expense ratio
and increasing its yield or total return to investors. "Other Expenses" for the
Fund are based on estimated amounts for the current fiscal year.
-3-
<PAGE>
OFFERING PRICES
Shares of the N/I NUMERIC INVESTORS Small Cap Value Fund are offered to the
public. Purchase orders receive the next determined net asset value after
receipt of an order in proper form by PFPC Inc. ("PFPC"), the Fund's 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 DISTRIBUTION
("12B-1") FEE.
MINIMUM INITIAL AND SUBSEQUENT INVESTMENTS
The minimum initial investment for the 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
investment 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 N/I NUMERIC INVESTORS fund may be exchanged up to three (3) times
per year for Shares of another N/I NUMERIC INVESTORS fund that is not closed to
new investment at the net 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 generally may be redeemed at any time at their net asset value next
determined after receipt by PFPC of a redemption request. See "How to Redeem
Shares."
RISK FACTORS TO CONSIDER
An investment in the Fund is subject to certain risks, as set forth in detail
under "Investment Objective and Policies." As with other mutual funds, there
can be no assurance that the Fund will achieve its objective. In addition to
its principal investment strategy, the Fund, to the extent set forth under
"Investment Objective and Policies," may engage in the following investment
practices: short sales, borrowings, the lending of portfolio securities, and
options and futures transactions. All of these transactions involve certain
special risks, as set forth under "Investment Objective and Policies." In
addition, the Fund may be subject to a high portfolio turnover rate. See
"Investment Objective and Policies--Portfolio Turnover" and "Taxes."
-4-
<PAGE>
SHAREHOLDER INQUIRIES
For questions regarding shareholder accounts, call toll-free: 1-800-348-5031.
Any questions regarding (i) new or existing accounts or (ii) purchases or
redemptions should be directed to PFPC by writing to it at:
N/I NUMERIC INVESTORS family of funds
c/o PFPC Inc.
Bellevue Park Corporate Center
400 Bellevue Parkway
Wilmington, Delaware 19809
For overnight deliveries:
N/I NUMERIC INVESTORS family of funds
c/o PFPC Inc.
Bellevue Park Corporate Center
400 Bellevue Parkway, Suite 108
Wilmington, Delaware 19809
or by calling PFPC toll-free at:
1-800-348-5031.
To request a prospectus, call toll-free:
1-800 NUMERIC 1-800-686-3742.
For any other questions, call toll-free:
1-800-NUMERIC 1-800-686-3742.
To reach Numeric and the Fund on the Internet: Information is available on the
Internet through the World Wide Web. Shareholders and investment professionals
may obtain information on Numeric and the Fund by accessing:
http://www.numeric.com
To reach Numeric through e-mail:
[email protected]
-5-
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
To meet its investment objective, the Fund employs a specific investment style,
as described below. There is no assurance that the Fund will achieve its
investment objective.
The investment objective of the N/I NUMERIC INVESTORS Small Cap Value Fund is to
provide long-term capital appreciation. The Fund invests generally in common
stock of companies with smaller ($1.5 billion or less) capitalizations, although
it may also invest in middle market-capitalization companies. It may also hold
securities which are convertible into common stock, fixed income securities and
money market securities. Under normal circumstances, the Fund invests at least
65% of its total assets in common stock of companies with market capitalizations
of $1.5 billion or less. Numeric determines its stock selection decisions for
the Fund primarily on the basis of its 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 such characteristics as
price to earnings ratios and price to book ratios. Also considered, but of less
importance, is the 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.
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 that 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, Estrend, 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 the Fund, Numeric may use the
investment instruments and techniques discussed below:
EQUITY MARKETS. The Fund invests primarily in equity markets at all times.
Equity markets can be highly volatile, so that investing in the Fund involves
substantial risk. In addition, the Fund can and will typically invest in stocks
that are riskier and more volatile than the average stock. As a result,
investing in the Fund involves risk of substantial loss of capital.
-6-
<PAGE>
SMALL CAP STOCKS. Securities of companies with small market capitalizations
tend to be riskier than securities of companies with medium or large market
capitalizations. This is because small cap companies typically have smaller
product lines and less access to liquidity than mid cap or large cap companies,
and are therefore more sensitive to economic downturns. In addition, growth
prospects of small cap companies tend to be less certain than mid or large cap
companies, and the dividends paid on small cap stocks are frequently negligible.
Moreover, small cap stocks have, on occasion, fluctuated in the opposite
direction of large cap stocks or the general stock market. Consequently,
securities of small cap companies tend to be more volatile than those of mid and
large cap companies.
MARKET FLUCTUATION. Because the investment alternatives available to the Fund
may be limited by the specific objective of the Fund, investors should be aware
that an investment in the 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 the Fund, an investment in the Fund should not be considered a
complete investment program.
OPTIONS AND FUTURES. The Fund may write covered call options, buy put options,
buy call options and write put options, without limitation except as noted in
this paragraph. Such options may relate to particular securities or to various
indexes and may or may not be listed on a national securities exchange or issued
by the Options Clearing Corporation. The Fund may also invest in futures
contracts and options on futures contracts (index futures contracts or interest
rate futures contracts, as applicable) for hedging purposes, including
conversion of cash to equity.
Options trading is a highly specialized activity which entails greater than
ordinary investment risks. A call option for a particular security gives the
purchaser of the option the right to buy, and a writer the obligation to sell,
the underlying security at the stated exercise price at any time prior to the
expiration of the option, regardless of the market price of the security. The
premium paid to the writer is in consideration for undertaking the obligations
under the option contract. A put option for a particular security gives the
purchaser the right to sell the underlying security at the stated exercise price
at any time prior to the expiration date of the option, regardless of the market
price of the security. In contrast to an option on a particular security, an
option on an index provides the holder with the right to make or receive a cash
settlement upon exercise of the option. The amount of this settlement will be
equal to the difference between the closing price of the index at the time of
exercise and the exercise price of the option expressed in dollars, times a
specified multiple.
The Fund 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 Fund bears the risk that the broker-dealer
will fail to meet its obligations. There is no assurance that the Fund will he
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.
-7-
<PAGE>
To enter into a futures contract, the Fund must make a deposit of an initial
margin either with its custodian in a segregated account in the name of the
futures broker or directly with the futures broker itself. 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 the Fund's investments
(held or intended for purchase) being hedged and that the price of the futures
contract or option may be imperfect; (ii) possible lack of a liquid secondary
market for closing out options or futures positions; (iii) the need for
additional portfolio management skills and techniques; and (iv) losses due to
unanticipated market movements. Successful use of options and futures by the
Fund is subject to Numeric's ability to predict correctly movements in the
direction of the market. For example, if the Fund uses future contracts as a
hedge against the possibility of a decline in the market adversely affecting
securities held by it and securities prices increase instead, the Fund will lose
part or all of the benefit of the increased value of its securities which it has
hedged because it will have approximately equal offsetting losses in its futures
positions. The risk of loss in trading futures contracts in some strategies can
be substantial, due both to the low margin deposits required, and the extremely
high degree of leverage involved in 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 Objective and Policies" in
the Statement of Additional Information.
SHORT SALES. Short sales are transactions in which the 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 the 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 liquid marketable 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.
-8-
<PAGE>
The 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 Fund anticipates 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 the Fund's net assets.
In addition to the short sales discussed above, the Fund may make short sales
"against the box," a transaction in which the Fund enters into a short sale of a
security that the Fund owns. The proceeds of the short sale will be held 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 Fund will make short sales against
the box for purposes of protecting the value of the Fund's net assets.
LENDING OF FUND SECURITIES. The Fund may lend its 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. The Fund
may not make loans in excess of 30% of the value of its total assets.
PORTFOLIO TURNOVER. Numeric will effect portfolio transactions in the Fund
without regard to holding periods if, in its judgment, such transactions are
advisable in light of general market, economic or financial conditions. The
annual portfolio turnover rate for the Fund is not expected to exceed ___%.
Portfolio turnover may vary greatly from year to year as well as within a
particular year. High portfolio turnover rates (100% or more) will generally
result in higher transaction costs to the Fund and may result in the realization
of short-term capital gains that are taxable to shareholders as ordinary income.
The amount of portfolio activity will not be a limiting factor when making
portfolio decisions. See the Statement of Additional Information, "Portfolio
Transactions" and "Taxes."
BORROWING MONEY. As a fundamental policy, the Fund is permitted to borrow to
the extent permitted under the 1940 Act and to mortgage, pledge or hypothecate
its 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%
-9-
<PAGE>
of the value of such company's total assets. However, the Fund currently intends
to borrow money only for temporary or emergency (not leveraging) purposes, in an
amount up to 15% of the value of its 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. The Fund will
not make any additional investments while borrowings exceed 5% of its total
assets.
DEBT SECURITIES. The Fund may invest in debt securities rated no less than
investment grade by either Standard & Poor's Ratings Group ("S&P") or Moody's
Investors Service, Inc. ("Moody's"). Bonds in the lowest investment grade debt
category (e.g., bonds rated BBB by S&P or Baa by Moody's) 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 Fund will not retain a
bond that 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 the 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.
SHORT-TERM DEBT OBLIGATIONS. The Fund may purchase money market instruments to
the extent consistent with the investment objectives and policies. Such
instruments include U.S. Government obligations, repurchase agreements,
certificates of deposit, bankers acceptances and commercial paper.
REPURCHASE AGREEMENTS. The Fund may agree to purchase securities from financial
institutions subject to the seller's agreement to repurchase them at an agreed-
upon time and price ("repurchase agreements"). The financial institutions with
whom the Fund may enter into repurchase agreements will be banks and
broker/dealers which Numeric considers creditworthy pursuant to criteria
approved by the Board of Directors. Numeric will consider, among other things,
whether a repurchase obligation of a seller involves minimal credit risk to the
Fund in determining whether to have the Fund enter into a repurchase agreement.
The seller under a repurchase agreement will be required to maintain the value
of the securities subject to the agreement at not less than the repurchase price
plus accrued interest. Numeric will mark to market daily the value of the
securities and will, if necessary, require the seller to maintain additional
securities, to ensure that the value is not less than the repurchase price.
Default by or bankruptcy of the seller would, however, expose the Fund to a
possible loss because of adverse market action or delays in connection with the
disposition of the underlying obligations.
OTHER INVESTMENT INSTRUMENTS AND TECHNIQUES. In addition to the above
investment instruments and techniques, the Fund presently intends to invest not
more than 5% of the Fund's net assets in when-issued and forward commitments,
illiquid securities, depositary receipts, investment company securities and
convertible securities. These investment instruments and techniques and related
risks are described in greater detail in the Fund's Statement of Additional
Information under "Investment Objective and Policies."
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The Fund's investment objective and policies described above may be changed by
RBB's Board of Directors without shareholder approval. Shareholders will be
provided 30 days prior written notice of any change in the Fund's investment
objective. There is no assurance that the investment objective of the Fund will
be achieved.
INVESTMENT LIMITATIONS
The Fund may not change the following investment limitations (with certain
exceptions, as noted below) without shareholder approval. (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 Objective and Policies.")
THE FUND MAY NOT:
1. Purchase the securities of any one issuer, other than securities issued or
guaranteed by the U.S. Government or its agencies or instrumentalities, if
immediately after and as a result of such purchase more than 5% of the value of
the Fund's total assets would be invested in the securities of such issuer, or
more than 10% of the outstanding voting securities of such issuer would be owned
by the Fund, except that up to 25% of the value of the Fund's total assets may
be invested without regard to such limitations.
2. Borrow money, except to the extent permitted under the 1940 Act or mortgage,
pledge or hypothecate any of its 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 the Fund to be invested in the
obligations of issuers in any industry, provided that there is no limitation
with respect to investments in U.S. Government obligations. (In determining
whether the Fund has complied with this limitation 3, the Fund will not take
into account the value of options and futures.)
4. Make loans, except that the 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 the 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.
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If a percentage restriction under one of the Fund's investment policies or
restrictions or the use of assets is adhered to at the time a transaction is
effected, later changes in percentage resulting from changing values will not be
considered a violation (except with respect to any restrictions that may apply
to borrowings or senior securities issued by the Fund).
MANAGEMENT
BOARD OF DIRECTORS
The business and affairs of RBB and the Fund are managed under the direction of
RBB's Board of Directors.
INVESTMENT ADVISER
For the services provided and the expenses assumed by it, Numeric is entitled to
receive a fee from the Fund at an annual rate of 0.75% of the 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 fee. Numeric
presently intends to waive its fee for the current fiscal year and for the
following fiscal year to the extent necessary to maintain an annualized expense
ratio for the Fund of 1.00%, although there is no guarantee that Numeric will
maintain such waiver indefinitely.
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CO-ADMINISTRATORS
Bear Stearns Funds Management Inc. ("BSFM"), an affiliate of Bear, Stearns & Co.
Inc. ("Bear Stearns"), serves as co-administrator to the Fund. BSFM's principal
business address is 245 Park Avenue, 15th Floor, New York, New York 10167. BSFM
generally assists the Fund in all aspects of its administration and operations.
For its services, BSFM is entitled to a monthly fee calculated at the annual
rate of .05% of the first $150 million of the Fund's average daily net assets
and .02% on all assets above $150 million.
PFPC Inc., an indirect wholly-owned subsidiary of PNC Bank, N.A. ("PNC"), also
serves as co-administrator to the Fund. PFPC's principal business address is
Bellevue Corporate Center, 400 Bellevue Parkway, Wilmington, Delaware 19809.
PFPC assists the Fund in matters relating to the maintenance of financial
records and accounting. For its services, PFPC is entitled to a fee calculated
at the annual rate of .125% of the Fund's average daily net assets.
ADMINISTRATIVE SERVICES AGENT
Provident Distributors, Inc. ("PDI"), with principal offices at Four Falls
Corporate Center, 6th Floor, West Conshohocken, Pennsylvania 19428, provides
certain administrative services to the Funds not otherwise provided by BSFM or
PFPC. PDI furnishes certain internal quasi-legal, executive and administrative
services to the Fund, acts as a liaison between the Fund and its various
services providers and coordinates and assists in the preparation of proxy
statements and reports prepared on behalf of the Fund. For its services, PDI is
entitled to a monthly fee calculated at the annual rate of .15% of the Fund's
average daily net assets.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
PFPC serves as the Fund's transfer agent and dividend disbursing agent. The
services provided and the fees payable by the Fund 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 Fund. The services provided and the fees payable by the Fund
for these services are described in the Statement of Additional Information
under "Investment Advisory, Distribution and Servicing Arrangements."
DISTRIBUTOR
PDI acts as distributor for the Fund pursuant to a distribution agreement with
RBB on behalf of the Fund.
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EXPENSES
The expenses of the Fund are deducted from its total income before dividends are
paid. 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.
Numeric may assume additional expenses of the Fund from time to time. In certain
circumstances, Numeric may assume such expenses on the condition that it is
reimbursed by the Fund for such amounts prior to the end of a fiscal year. In
such event, the reimbursement of such amounts will have the effect of increasing
the Fund's expense ratio and of decreasing the total return or yield to
investors.
FUND TRANSACTIONS
Numeric may consider a number of factors in determining which brokers to use in
purchasing or selling the Fund's securities. These factors, which are more fully
discussed in the Statement of Additional Information, include, but are not
limited to, research services, the reasonableness of commissions and quality of
services and execution. A higher rate of turnover (100% or more) of the Fund's
securities may involve correspondingly higher transaction costs, which will be
borne directly by the Fund. The Fund may enter into brokerage transactions with
and pay brokerage commissions to brokers that are affiliated persons (as such
term is defined in the 1940 Act) provided that the terms of the brokerage
transactions comply with the provisions of the 1940 Act.
Numeric may allocate trades among any or all of its clients, including the Fund.
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 Fund to pay brokerage commissions which may be in excess of the
lowest rates available to brokers who execute transactions for the Fund 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 Fund.
HOW TO PURCHASE SHARES
GENERAL
Shares representing interests in the Fund are offered continuously (subject to
closure of the Funds as described on page __) for sale by the Distributor and
may be purchased without imposition of a sales charge through PFPC, the Fund's
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 "N/I NUMERIC INVESTORS family of funds" to
N/I
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NUMERIC INVESTORS family of funds, c/o PFPC, P.O. Box 8966, Wilmington, Delaware
19899-8966. The name of the Fund 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 the 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. The Fund does
not currently impose a sales charge for effecting wire transfers but reserve the
right to do so in the future. 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 Fund's transfer agent, PFPC, toll-free at (800) 348-5031, and
provide your name, address, telephone number, Social Security or Tax
Identification Number, the name of the Fund, the amount being wired, and by
which bank or broker. 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 initial purchases until it receives a completed
and signed Application.
For subsequent investments, an investor should follow steps A and B above.
Shares of the Fund may be purchased on any Business Day. A "Business Day" is any
day that the New York Stock Exchange (the "NYSE") is open for business.
Currently, the NYSE is closed on weekends and New Year's Day, Dr. Martin Luther
King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas Day and the preceding Friday or
subsequent Monday when one of those holidays falls on a Saturday or Sunday.
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The price paid for the Fund's Shares purchased initially or acquired through the
exercise of an exchange privilege is based on the net asset value next computed
after a purchase order is received in good order by PFPC, provided such order is
transmitted to and received by PFPC prior to the close of regular trading on the
NYSE (generally 4:00 p.m. Eastern Time) on such day. Orders received by PFPC
after the close of regular trading on the NYSE 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.
Some broker-dealers (other than the Distributor), financial institutions,
financial planners and other industry professionals ("Service Agents") may
impose certain conditions on their clients who invest in the Fund such as
initial and subsequent minimums and certain trading restrictions, which are in
addition to or different from those described in this Prospectus. Service Agents
may impose transaction or administrative charges or other direct fees, which
charges and fees would not be imposed if Fund shares are purchased directly from
the Fund. 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 the 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 Fund in accordance with their agreements with clients or
customers. Service Agents or, if applicable, their designees, that have entered
into agreements with the Fund or its agent may enter confirmed purchase or
redemption orders on behalf of clients and customers, with payment to follow no
later than the Fund's pricing on the following Business Day. If payment is not
received by such time, the Service Agent could be held liable for resulting fees
or losses. The Fund may be deemed to have received a purchase or redemption
order when a Service Agent, or, if applicable, its authorized designee, accepts
the order. Orders received by the Fund in proper form will be priced at the
Fund's net asset value next computed after they are accepted by the Service
Agent or its authorized designee.
AUTOMATIC INVESTMENT PLAN
Additional investments in Shares of the Fund 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 PFPC at (800) 348-5031 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.
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RETIREMENT PLANS
N/I NUMERIC INVESTORS family of funds Shares may be purchased in conjunction
with individual retirement accounts ("IRAs"), rollover IRAs, or pension, profit-
sharing or other employer benefit plans. Contact PFPC for further information as
to applications and annual fees. To determine whether the benefits of an IRA are
available and/or appropriate, a shareholder should consult with a tax adviser.
EXCHANGE PRIVILEGE
The exchange privilege is available to shareholders residing in any state in
which the Shares of the Fund being exchanged for may be legally sold. A
shareholder may exchange Shares of the Fund for Shares of any other N/I NUMERIC
INVESTORS Fund up to three (3) times per year (at least 30 days apart). 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.
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. A signature guarantee may be obtained from a domestic
bank or trust company, broker, dealer, clearing agency or savings association
who are participants in a medallion program recognized by the Securities
Transfer Association. The three recognized medallion programs are Securities
Transfer Agents Medallion Program (STAMP), Stock Exchanges Medallion Program
(SEMP) and New York Stock Exchange, Inc. Medallion Signature Program (MSP).
Signature guarantees which are not a part of these programs will not be
accepted. 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 N/I 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 an amount remains in the N/I NUMERIC INVESTORS Fund
from which the exchange is being made that is below the minimum account value
required by RBB, the account will be subject to involuntary redemption.
PURCHASE AND EXCHANGE PRIVILEGE LIMITATIONS
The Fund's 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 Fund and increase transaction costs, the Fund have established
a policy of limiting excessive exchange activity.
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Shareholders are entitled to three (3) exchange redemptions (at least 30 days
apart) from the Fund during any twelve-month period. Notwithstanding these
limitations, the Fund reserves the right to reject any purchase request
(including exchange purchases from other N/I NUMERIC INVESTORS Funds) that the
Adviser reasonably deems to be disruptive to efficient portfolio management.
TELEPHONE TRANSACTIONS
In order to request redemptions and exchanges by telephone, an investor must
have completed and returned an account application containing the appropriate
telephone election. To add a telephone exchange feature to an existing account
that previously did not provide for this option, a Telephone Exchange
Authorization Form (available from PFPC) must be filed with PFPC. Once this
election has been made, the shareholder may simply contact PFPC by telephone to
request the exchange by calling (800) 348-5031. Neither RBB, the Fund, the
Distributor, the Co-Administrators, the Administrative Services Agent, the
transfer agent, nor any other Fund agent 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 they
reasonably believe 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's federal tax
identification number and name of the Fund, all of which must match RBB's
records; (3) permitting exchanges only if the two account registrations are
identical; (4) requiring that redemption proceeds be sent only by check to the
account owners of record at the address of record, or by wire only to the owners
of record at the bank account of record; (5) sending a written confirmation for
each telephone transaction to the owners of record at the address of record
within five (5) business days of the call; and (6) 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.
CLOSING OF FUND
Numeric will monitor the Fund's total assets and may close the Fund at any time
to new investment or new accounts due to concerns that a significant increase in
the size of the 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 the
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Fund is closed to accept new investments from any of its employees or their
spouses, parents 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 N/I
NUMERIC INVESTORS family of 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
according to the procedures described above under "How to Purchase Shares --
Exchange Privilege." A signature guarantee verifies the authenticity of your
signature. You may call PFPC at (800) 348-5031 with respect to questions about
signature guarantees.
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 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. 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 the
close of regular trading on the NYSE will result in redemption proceeds being
wired to the investor's bank account on the next bank business day and the
redemption price will be the net asset value completed as of the close of
regular trading on the NYSE on that Business Day. A redemption request received
after the close of regular trading on the NYSE will be priced at the net asset
value computed on the next Business Day. All redemption requests must be in good
order before being processed. The minimum redemption for proceeds sent by wire
transfer is $2,500. There is no maximum for proceeds sent by wire transfer. The
Fund may modify this redemption service at any time or charge a service fee upon
prior notice to shareholders. No service fee is currently contemplated, although
RBB and PFPC reserve the right to refuse a telephone redemption request if they
deem
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it advisable to do so. RBB's telephone procedures are set forth under "How to
Purchase Shares -- Telephone Transactions" above.
OTHER INFORMATION ON REDEMPTIONS
The Fund is 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 as set forth
above) to The N/I NUMERIC INVESTORS family of funds, c/o PFPC Inc., P. 0. Box
8966, Wilmington, Delaware 19899-8966.
INVOLUNTARY REDEMPTION
RBB reserves the right to redeem a shareholder's account in the Fund at any time
the net asset value of the account in the 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 the 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 Fund reserves the right, if conditions exist which make cash payments
undesirable, to honor any request for redemption of the 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 the 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 Fund has elected, however, to be governed by Rule 18f-1 under the
1940 Act, so that the Fund is obligated to redeem its Shares solely in cash up
to the lesser of $250,000 or 1% of its net asset value during any 90-day period
for any one shareholder of the Fund.
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
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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 of the Fund is calculated as of the close of regular trading
on the NYSE on each Business Day. The net asset value for the Fund is
calculated by adding the value of all its securities, cash and other assets,
deducting its actual and accrued liabilities and dividing the result by the
number of outstanding Shares of the Fund. The net asset value of the Fund is
calculated independently of each other N/I NUMERIC INVESTORS Fund.
Valuation of securities held by the Fund is as follows: securities traded on a
national securities exchange or on the NASDAQ National Market System are valued
at the last reported sale price that day; securities traded on a national
securities exchange or on the NASDAQ National Market System for which there were
no sales on that day and securities traded on other over-the-counter markets for
which market quotations are readily available are valued at the mean of the bid
and asked prices; and securities for which market quotations are not readily
available are valued at fair market value as determined in good faith under
procedures established by 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 RBB's Board of Directors, the Fund may use a pricing
service, bank or broker-dealer experienced in such matters to value the Fund's
securities. A more detailed discussion of net asset value and security
valuation is contained in the Statement of Additional Information.
DIVIDENDS AND DISTRIBUTIONS
The Fund will distribute substantially all of its net investment income and net
realized capital gains, if any, to the Fund's shareholders. All distributions
are reinvested in the form of additional full and fractional Shares of the Fund
unless a shareholder elects otherwise.
The Fund expects 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 Fund and its shareholders and is not
intended as a substitute for careful tax planning. Accordingly, investors in the
Fund should consult their tax advisers with specific reference to their own tax
situation.
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The Fund will elect to be taxed as a regulated investment company for federal
income tax purposes. So long as the Fund qualifies for this tax treatment, it
will be relieved of federal income tax on amounts distributed to shareholders.
Fund shareholders, unless otherwise exempt, will be taxed on Fund
distributions (except distributions that are treated for federal income tax
purposes as a return of capital) regardless of whether the distributions are
received in cash or reinvested in additional shares. Distributions by the Fund
attributable to its "net capital gain" (the excess of its net long-term capital
gain i.e., gains or assets held more than 12 months over its net short-term
capital loss), if any, qualify as "capital gains distributions." These
distributions are taxable to shareholders as long-term capital gain, regardless
of how long each shareholder has held shares. For individuals, long-term capital
gain is generally subject to a maximum federal tax rate of 20%.
RBB will send written notices to shareholders annually regarding the tax
status of distributions made by the Fund. Dividends declared in October,
November or December of any year payable to shareholders of record on a
specified date in such a month will be deemed to have been received by the
shareholders on December 31, if such dividends are paid during January of the
following year.
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
shares just prior to a distribution will nevertheless be taxed on the entire
amount of the distribution received, although the distribution is, in effect, a
return of capital.
Shareholders who sell or redeem shares, or 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. The
gain or loss will be long-term capital gain or loss if the shares have been held
for more than 12 months, and short-term otherwise, except that a loss on shares
held six months or less will be treated as long term capital loss to the extent
of any capital gains distributions received on the shares.
Shareholders who are nonresident alien individuals, foreign trusts or estates,
foreign corporations or foreign partnerships are generally subject to different
U.S. federal income tax treatment from that described above.
DESCRIPTION OF SHARES
RBB has authorized capital of thirty billion shares of Common Stock, $.001 par
value per share, of which ____ billion shares are currently classified into __
different classes of Common Stock (see "Description of Shares" in the Statement
of Additional Information).
Exchanges between the N/I NUMERIC INVESTORS family of funds and other families
of RBB are not permitted. In addition, persons who are shareholders of the Fund
are not permitted to
-22-
<PAGE>
simultaneously acquire shares of the N/I NUMERIC INVESTORS Growth Fund or N/I
NUMERIC INVESTORS Micro Cap Fund by exchange.
THIS PROSPECTUS AND THE STATEMENT OF ADDITIONAL INFORMATION INCORPORATED HEREIN
RELATE PRIMARILY TO THE N/I NUMERIC INVESTORS SMALL CAP VALUE FUND AND DESCRIBE
ONLY THE INVESTMENT OBJECTIVE AND POLICIES, OPERATIONS, CONTRACTS AND OTHER
MATTERS RELATING TO THE N/I NUMERIC INVESTORS SMALL CAP VALUE FUND.
Each share that represents an interest in the Fund has an equal proportionate
interest in the assets belonging to the 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 the 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 N/I NUMERIC INVESTORS 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 ____________ __, 1998, 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 Fund's
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.
-23-
<PAGE>
FUND PERFORMANCE INFORMATION
From time to time, the Fund may advertise its performance, including comparisons
to other mutual funds with similar investment objectives or 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 the Fund. Such total
return quotations will be computed by finding the compounded average annual
total return for each time period that would equate the assumed initial
investment of $1,000 to the ending redeemable value, 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 Fund may also from time to time include in such advertising an aggregate
total return figure or a total return figure that is not calculated according to
the standardized formula in order to compare more accurately the Fund's
performance with other measures of investment return. For example, the 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 benchmark described in the Appendix
to this Prospectus. Performance information may also include evaluation of the
Fund 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.
-24-
<PAGE>
APPENDIX A
PERFORMANCE BENCHMARKS
N/I NUMERIC PERFORMANCE
INVESTORS FUND BENCHMARK DESCRIPTION
- --------------------------------------------------------------------------------
Small Cap Value Russell 2000 Value The Russell 2000 is an index of stocks
Index 1001 through 3000 in the Russell 3000
Index as ranked by total market
capitalization. This index is
segmented into growth and value
categories. The Russell 2000 Value
Index contains stocks from the Russell
2000 with less than average growth
orientation. Companies in this index
generally have low price to book and
price/earnings ratios, higher dividend
yields, and lower forecasted growth
values.
- --------------------------------------------------------------------------------
App.A-1
<PAGE>
N/I NUMERIC INVESTORS family of funds
1-800-NUMERIC (686-3742)
ACCOUNT APPLICATION
Please Note: Do not use this form to open an individual retirement plan account
(such as an IRA). For an IRA application or help with this Application, please
call 1-800-NUMERIC (686-3742).
- --------------------------------------------------------------------------------
1. ACCOUNT REGISTRATION: (PLEASE CHECK THE APPROPRIATE BOX(ES) BELOW.)
- --------------------------------------------------------------------------------
[_] Individual [_] Joint Tenant
- --------------------------------------------------------------------------------
NAME
- --------------------------------------------------------------------------------
SOCIAL SECURITY NUMBER OF PRIMARY OWNER
- --------------------------------------------------------------------------------
NAME OF JOINT OWNER (if applicable)
- --------------------------------------------------------------------------------
JOINT OWNER SOCIAL SECURITY NUMBER
For joint accounts, the account registrants will be joint tenants with right of
survivorship and not tenants in common unless tenants in common or community
property registrations are requested.
GIFT TO MINOR (IF APPLICABLE):
[_] UNIFORM GIFTS/TRANSFERS TO MINOR'S ACT
- --------------------------------------------------------------------------------
NAME OF ADULT CUSTODIAN (ONLY ONE PERMITTED)
- --------------------------------------------------------------------------------
NAME OF MINOR (ONLY ONE PERMITTED)
<PAGE>
- --------------------------------------------------------------------------------
MINOR'S SOCIAL SECURITY NUMBER DATE OF BIRTH
CORPORATION, PARTNERSHIP, TRUST OR OTHER ENTITY (IF APPLICABLE):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NAME OF CORPORATION, PARTNERSHIP, OR OTHER
- --------------------------------------------------------------------------------
NAME(S) OF TRUSTEE(S)
- --------------------------------------------------------------------------------
TAXPAYER IDENTIFICATION NUMBER
- --------------------------------------
TRUST DATE
- --------------------------------------------------------------------------------
2. MAILING ADDRESS:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
STREET OR P.O. BOX APARTMENT NUMBER
- --------------------------------------------------------------------------------
CITY STATE ZIP CODE
( ) ( )
- --------------------------------------------------------------------------------
DAY PHONE NUMBER EVENING PHONE NUMBER
- --------------------------------------------------------------------------------
3. INVESTMENT AMOUNT:
- --------------------------------------------------------------------------------
Minimum initial investment of $3,000 per Fund or $1,000 for an automatic
investment plan.
[_] N/I NUMERIC INVESTORS MICRO CAP $ CLOSED
-------------
[_] N/I NUMERIC INVESTORS GROWTH $ CLOSED
-------------
<PAGE>
[_] N/I NUMERIC INVESTORS GROWTH & VALUE $______________
[_] N/I NUMERIC INVESTORS LARGER CAP VALUE $______________
[_] N/I NUMERIC INVESTORS SMALL CAP VALUE $______________
Make the check payable to N/I NUMERIC INVESTORS family of funds.
Shareholders may not purchase shares of the N/I NUMERIC INVESTORS Funds with a
check issued by a third party and endorsed over to the Funds. Checks for
investment must be made payable to the N/I NUMERIC INVESTORS family of funds.
- --------------------------------------------------------------------------------
4. DISTRIBUTION OPTIONS:
- --------------------------------------------------------------------------------
NOTE: Dividends and capital gains may be reinvested or paid by check. If no
options are selected below, both dividends and capital gains will be reinvested
in additional Fund shares.
DIVIDENDS [_] Pay by check [_] Reinvest
CAPITAL GAINS [_] Pay by check [_] Reinvest
Please check one of the following options:
[_] Please mail checks to Address of Record
(Named in Section 2)
[_] Please electronically credit my Bank of Record
(Named in Section 8)
- --------------------------------------------------------------------------------
5. TELEPHONE EXCHANGE AND REDEMPTION:
- --------------------------------------------------------------------------------
To use either or both of these options, you must initial the appropriate line
below.
I authorize the Transfer Agent to accept instructions from any person to
exchange shares in my account(s) by telephone in accordance with the procedures
and conditions set forth in the Fund's current prospectus.
_____________ _____________ Exchange shares for shares of another N/I
initial joint initial NUMERIC INVESTORS Fund.
<PAGE>
_____________ _____________ Redeem shares, and send the proceeds to the
initial joint initial address of record.
- --------------------------------------------------------------------------------
6. AUTOMATIC INVESTMENT PLAN (IF APPLICABLE):
- --------------------------------------------------------------------------------
Please attach an unsigned, voided check.
The Automatic Investment Plan ($1,000 minimum initial investment), makes
possible regularly scheduled purchases of Fund shares. The Fund's Transfer
Agent can arrange for an amount of money selected by you ($100 minimum to be
deducted from your checking account and used to purchase shares of a specified
N/I NUMERIC INVESTORS Fund.
Please debit $______ from my checking account (named below) on or about the 20th
of every month.
$__________into the ____________Fund __________Start Month.
$100 minimum
$__________into the ____________Fund __________Start Month.
$100 minimum
$__________into the ____________Fund __________Start Month.
$100 minimum
$__________into the ____________Fund __________Start Month.
$100 minimum
$__________into the ____________Fund __________Start Month.
$100 minimum
- --------------------------------------------------------------------------------
7. SYSTEMATIC WITHDRAWAL PLAN (IF APPLICABLE):
- --------------------------------------------------------------------------------
Please attach an unsigned, voided check.
To select this option please fill out the information below:
Fund Name_________________ Amount_____________________
<PAGE>
Startup Month_______________
Frequency Options: [_] Annually [_] Monthly [_] Quarterly
. A minimum account value of $10,000 in a single account is required to
establish a Systematic Withdrawal Plan
. Payments will be made on or near the 25th of the month
Complete only if using Automatic Investment Plan or Systematic Withdrawal
Plan
- --------------------------------------------------------------------------------
8. BANK OF RECORD:
- --------------------------------------------------------------------------------
Complete only if using Automatic Investment Plan (Section 6) or Systematic
Withdrawal Plan (Section 7)
- --------------------------------------------------------------------------------
BANK NAME
- --------------------------------------------------------------------------------
STREET ADDRESS OR P.O. BOX
- --------------------------------------------------------------------------------
CITY STATE ZIP CODE
- --------------------------------------------------------------------------------
BANK ABA NUMBER BANK ACCOUNT NUMBER
- --------------------------------------------------------------------------------
9. SIGNATURES:
- --------------------------------------------------------------------------------
The undersigned warrants that I (we) have full authority and, if a natural
person, I (we) am (are) of legal age to purchase shares pursuant to this Account
Information Form, and I (we) have received a current prospectus for the N/I
NUMERIC INVESTORS Fund(s) in which I (we) am (are) investing.
Under the Interest and Dividend Tax Compliance Act of 1983, the Fund is required
to have the following certification:
UNDER PENALTIES OF PERJURY, I CERTIFY THAT:
(1) THE NUMBER SHOWN ON THIS FORM IS MY CORRECT TAXPAYER IDENTIFICATION NUMBER
(OR I AM WAITING FOR A NUMBER TO BE ISSUED TO ME), AND
(2) I AM NOT SUBJECT TO BACKUP WITHHOLDING BECAUSE (A) I AM EXEMPT FROM BACKUP
WITHHOLDING, OR (B) I HAVE NOT BEEN NOTIFIED BY THE INTERNAL REVENUE SERVICE
THAT I AM SUBJECT
<PAGE>
TO 31% BACKUP WITHHOLDING AS A RESULT OF A FAILURE TO REPORT ALL INTEREST OR
DIVIDENDS, OR (C) THE IRS HAS NOTIFIED ME THAT I AM NO LONGER SUBJECT TO BACKUP
WITHHOLDING.
NOTE: YOU MUST CROSS OUT ITEM (2) ABOVE IF YOU HAVE BEEN NOTIFIED BY THE IRS
THAT YOU ARE CURRENTLY SUBJECT TO BACKUP WITHHOLDING BECAUSE YOU HAVE FAILED TO
REPORT ALL INTEREST AND DIVIDENDS ON YOUR TAX RETURN. THE INTERNAL REVENUE
SERVICE DOES NOT REQUIRE YOUR CONSENT TO ANY PROVISION OF THIS DOCUMENT OTHER
THAN THE CERTIFICATION REQUIRED TO AUDIT BACKUP WITHHOLDING.
- --------------------------------------------------------------------------------
SIGNATURE OF APPLICANT DATE
- --------------------------------------------------------------------------------
PRINT NAME TITLE (IF APPLICABLE)
- --------------------------------------------------------------------------------
SIGNATURE OF JOINT OWNER DATE
- --------------------------------------------------------------------------------
PRINT NAME TITLE (IF APPLICABLE)
(If you are signing for a corporation, you must indicate corporate office or
title. If you wish additional signatories on the account, please include a
corporate resolution. If signing as a fiduciary, you must indicate capacity.)
For information on additional options, such as IRA Applications, rollover
requests for qualified retirement plans, or for wire instructions, please call
us at 1-800-NUMERIC (686-3742). For information on new or existing accounts
call 1-800-348-5031.
MAIL COMPLETED ACCOUNT APPLICATION AND CHECK TO:
N/I NUMERIC INVESTORS FAMILY OF FUNDS
C/O PFPC INC.
P.O. BOX 8966
WILMINGTON, DE 19899-8966
N/I NUMERIC INVESTORS FAMILY OF FUNDS
1-800-NUMERIC [686-3742]
HTTP://WWW.NUMERIC.COM
<PAGE>
INVESTMENT ADVISER
Numeric Investors L.P.
One Memorial Drive
Cambridge, MA 02142
CUSTODIAN
Custodial Trust Company
101 Carnegie Center
Princeton, NJ 05840
CO-ADMINISTRATOR, TRANSFER AGENT
AND DIVIDEND DISBURSING AGENT
PFPC Inc.
Bellevue Corporate Center
400 Bellevue Parkway
Wilmington, DE 19809
CO-ADMINISTRATOR
Bear Stearns Funds Management Inc.
245 Park Avenue, 15th floor
New York, NY 10167
ADMINISTRATIVE SERVICES AGENT AND DISTRIBUTOR
Provident Distributors, Inc.
Four Falls Corporate Center, 6th Floor
West Conshohocken, Pennsylvania 19428
COUNSEL
Drinker Biddle & Reath LLP
1345 Chestnut Street
Philadelphia, PA 19107-3496
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
2400 Eleven Penn Center
Philadelphia, PA 19103
<PAGE>
SUBJECT TO COMPLETION
DATED SEPTEMBER 15, 1998
INFORMATION CONTAINED HEREIN PERTAINING TO THE N/I NUMERIC INVESTORS SMALL CAP
VALUE FUND IS SUBJECT TO COMPLETION OR AMENDMENT. A POST-EFFECTIVE AMENDMENT TO
THE RBB FUND'S REGISTRATION STATEMENT RELATING TO SHARES OF THE N/I NUMERIC
INVESTORS SMALL CAP VALUE FUND HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION. SHARES OF THE N/I NUMERIC INVESTORS SMALL CAP VALUE FUND MAY NOT BE
SOLD NOR MAY OFFERS TO BUY SHARES OF SUCH FUND BE ACCEPTED PRIOR TO THE TIME THE
POST-EFFECTIVE AMENDMENT TO THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS
STATEMENT OF ADDITIONAL INFORMATION SHALL NOT CONSTITUTE A PROSPECTUS.
N/I NUMERIC INVESTORS Small Cap Value Fund
(Investment Portfolio of The RBB Fund, Inc.)
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information provides supplementary information
pertaining to shares of the class (the "Shares") representing interests in the
N/I NUMERIC INVESTORS Small Cap Value Fund (the "Fund"), of The RBB Fund, Inc.
("RBB"). This Statement of Additional Information is not a prospectus and
should be read only in conjunction with the Fund's Prospectus dated ___________
__, 1998 (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 ___________ __, 1998.
<TABLE>
<CAPTION>
Prospectus
Page Page
---- ----------
<S> <C> <C>
General...........................................
Investment Objective And Policies.................
Investment Limitations............................
Directors And Officers............................
Investment Advisory, Distribution And Servicing
Arrangements.................................
Fund Transactions.................................
Purchase And Redemption Information...............
Valuation Of Shares...............................
Performance Information...........................
Taxes.............................................
Description Of Shares.............................
Additional Information Concerning Fund Shares.....
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Miscellaneous.....................................
Appendix A.....................................A-1
</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.
-2-
<PAGE>
GENERAL
RBB is an open-end management investment company currently operating or
proposing to operate twenty-_____ separate investment portfolios. RBB is
registered as an open-end investment company 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 Fund offered by the Prospectus dated ____________
__, 1998.
Capitalized terms used herein and not otherwise defined have the same meanings
as are given to them in the Prospectus.
INVESTMENT OBJECTIVE AND POLICIES
The following supplements the information contained in the Prospectus
concerning the investment objective and policies of the Funds.
FUTURES
Futures Contracts. When the Fund purchases a futures contract, it agrees to
purchase a specified underlying instrument at a specified future date. When the
Fund sells a futures contract, it agrees to sell the underlying instrument at a
specified future date. The price at which the purchase and sale will take place
is fixed when the Fund enters into the contract. The underlying instrument may
be a specified type of security, such as U.S. Treasury bonds or notes.
The majority of futures contracts are closed out by entering into an
offsetting purchase or sale transaction in the same contract on the exchange
where they are traded, rather than being held for the life of the contract.
Futures contracts are closed out at their current prices, which may result in a
gain or loss.
If the Fund holds a futures contract until the delivery date, it will be
required to complete the purchase and sale contemplated by the contract. In the
case of futures contracts on securities, the purchaser generally must deliver
the agreed-upon purchase price in cash, and the seller must deliver securities
that meet the specified characteristics of the contract.
The Fund may purchase futures contracts as an alternative to purchasing actual
securities. For example, if the Fund intended to purchase bonds but had not yet
done so, it could purchase a futures contract in order to lock in current bond
prices while deciding on particular investments. This strategy is sometimes
known as an anticipatory hedge. Alternatively, the Fund could purchase a
futures contract if it had cash and short-term securities on hand that it wished
to invest in longer-term securities, but at the same time the Fund wished to
maintain a highly liquid position in order to be prepared to meet redemption
requests or other obligations. In these
-3-
<PAGE>
strategies the Fund would use futures contracts to attempt to achieve an overall
return -- whether positive or negative -- similar to the return from longer-term
securities, while taking advantage of potentially greater liquidity that futures
contracts may offer. Although the Fund would hold cash and liquid debt
securities in a segregated account with a value sufficient to cover its open
futures obligations, the segregated assets would be available to the Fund
immediately upon closing out the futures position, while settlement of
securities transactions can take several days. However, because the Fund's cash
that would otherwise have been invested in higher-yielding bonds would be held
uninvested or invested in short-term securities so long as the futures position
remains open, the Fund's return would involve a smaller amount of interest
income and potentially a greater amount of capital gain or loss.
The Fund may sell futures contracts to hedge its other investments against
changes in value, or as an alternative to sales of securities. For example, if
the investment adviser anticipated a decline in bond prices, but did not wish to
sell bonds owned by the Fund, it could sell a futures contract in order to lock
in a current sale price. If prices subsequently fell, the future contract's
value would be expected to rise and offset all or a portion of the loss in the
bonds that the Fund had hedged. Of course, if prices subsequently rose, the
futures contract's value could be expected to fall and offset all or a portion
of the benefit of the Fund. In this type of strategy, the Fund's return will
tend to involve a larger component of interest income, because the Fund will
remain invested in longer-term securities rather than selling them and investing
the proceeds in short-term securities which generally provide lower yields.
Futures margin payments. The purchaser or seller of a futures contract is not
required to deliver or pay for the underlying instrument unless the contract is
held until the delivery date. However, both the purchaser and seller are
required to deposit "initial margin" with a futures broker (known as a futures
commission merchant, or FCM), when the contract is entered into. Initial margin
deposits are equal to a percentage of the contract's value, as set by the
exchange where the contract is traded, and may be maintained in cash or high
quality liquid securities. If the value of either party's position declines,
that party will be required to make additional "variation margin" payments to
settle the change in value on a daily basis. The party that has a gain may be
entitled to receive all or a portion of this amount. Initial and variation
margin payments are similar to good faith deposits or performance bonds, unlike
margin extended by a securities broker, and initial and variation margin
payments do not constitute purchasing securities on margin for purposes of the
Fund's investment limitations. In the event of the bankruptcy of an FCM that
holds margin on behalf of the Fund, the 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 the Fund does
business.
Correlation of price changes. The prices of futures contracts depend primarily
on the value of their underlying instruments. Because there are a limited number
of types of futures contracts, it is likely that the standardized futures
contracts available to the Fund will not match the Fund's current or anticipated
investments. Futures prices can also diverge from the prices of their underlying
instruments, even if the underlying instruments match the Fund's investments
well. Futures prices are affected by such factors as current and anticipated
short-term interest rates, changes in volatility of the underlying instrument,
and the time remaining until expiration
-4-
<PAGE>
of the contract, which may not affect security prices the same way. Imperfect
correlation between the Fund's investments and its futures positions may also
result from differing levels of demand in the futures markets and the securities
markets, from structural differences in how futures and securities are traded,
or from imposition of daily price fluctuation limits for futures contracts. The
Fund may purchase or sell futures contracts with a greater or lesser value than
the securities 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 the Fund's futures positions are poorly correlated with its other
investments, its futures positions may fail to produce anticipated gains or
result in losses that are not offset by the gains in the Fund's other
investments.
Liquidity of futures contracts. Because futures contracts are generally
settled within a day from the date they are closed out, compared with a
settlement period of seven days for some types of securities, the futures
markets can provide liquidity superior to the securities markets in many cases.
Nevertheless, there is no assurance a liquid secondary market will exist for any
particular futures contract at any particular time. In addition, futures
exchanges may establish daily price fluctuation limits for futures contracts and
may halt trading if a contract's price moves upward or downward more than the
limit in a given day. On volatile trading days when the price fluctuation limit
is reached, it may be impossible for the Fund to enter into new positions or
close out existing positions. If the secondary market for a futures contract is
not liquid because of price fluctuation limits or otherwise, it would prevent
prompt liquidation of unfavorable futures positions, and potentially could
require the Fund to continue to hold a futures position until the delivery date
regardless of changes in its value. As a result, the Fund's access to other
assets held to cover its futures positions could also be impaired.
PUT AND CALL OPTIONS
Purchasing Put Options. By purchasing a put option, the Fund obtains the
right (but not the obligation) to sell the option's underlying instrument at a
fixed strike price. The option may give the Fund the right to sell only on the
option's expiration date, or may be exercisable at any time up to and including
that date. In return for this right, the Fund pays the current market price for
the option (known as the option premium). The option's underlying instrument
may be a security or a futures contract.
The Fund may terminate its position in a put option it has purchased by
allowing it to expire or by exercising the option. If the option is allowed to
expire, the Fund will lose the entire premium it paid. If the Fund exercises
the option, it completes the sale of the underlying instrument at the strike
price. If the Fund exercises a put option on a futures contract, it assumes a
seller's position in the underlying futures contract. Purchasing an option on a
futures contract does not require the Fund to make futures margin payments
unless it exercises the option. The Fund may also terminate a put option
position by closing it out in the secondary market at its current price, if a
liquid secondary market exists.
Put options may be used by the Fund to hedge securities it owns, in a manner
similar to selling futures contracts, by locking in a minimum price at which the
Fund can sell. If security prices fall, the value of the put option would be
expected to rise and offset all or a portion of the
-5-
<PAGE>
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), the Fund would expect to suffer a loss in the
put option if prices do not decline sufficiently to offset the deterioration in
the value of the option premium. This potential loss represents the cost of the
hedge against a fall in prices. At the same time, because the maximum the Fund
has at risk is the cost of the option, purchasing put options does not eliminate
the potential for the Fund to profit from an increase in the value of the
securities hedged to the same extent as selling a futures contract.
Purchasing Call Options. The features of call options are essentially the
same as those of put options, except that the purchaser of a call option obtains
the right to purchase, rather than sell, the underlying instrument at the
option's strike price (call options on futures contracts are settled by
purchasing the underlying futures contract). By purchasing a call option, the
Fund would attempt to participate in potential price increases of the underlying
instrument, with results similar to those obtainable from purchasing a futures
contract, but with risk limited to the cost of the option if security prices
fell. At the same time, the Fund can expect to suffer a loss if security prices
do not rise sufficiently to offset the cost of the option.
The Fund will purchase call options only in connection with "closing purchase
transactions." The Fund may terminate its position in a call option by entering
into a closing purchase transaction. A closing purchase transaction is the
purchase of a call option on the same security with the same exercise price and
call period as the option previously written by the Fund. If the Fund is unable
to enter into a closing purchase transaction, the Fund may be required to hold a
security that it might otherwise have sold to protect against depreciation.
Writing Put Options. When the Fund writes a put option, it takes the opposite
side of the transaction from the option's purchaser. In return for receipt of
the premium, the Fund assumes the obligation to pay the strike price for the
option's underlying instrument if the other party to the option chooses to
exercise it. When writing an option on a futures contract the Fund will be
required to make margin payments to an FCM as described above for futures
contracts. The Fund may seek to terminate its position in a put option it
writes before exercise by closing out the option in the secondary market at its
current price. If the secondary market is not liquid for an option the Fund has
written, however, the Fund must continue to be prepared to pay the strike price
while the option is outstanding, regardless of price changes, and must continue
to set aside assets to cover its position.
The Fund may write put options as an alternative to purchasing actual
securities. If security prices rise, the Fund would expect to profit from a
written put option, although its gain would be limited to the amount of the
premium it received. If security prices remain the same over time, it is likely
that the Fund will also profit, because it should be able to close out the
option at a lower price. If security prices fall, the Fund would expect to
suffer a loss. This loss should be less than the loss the Fund would have
experienced from purchasing the underlying instrument directly, however, because
the premium received for writing the option should mitigate the effects of the
decline. As with other futures and options strategies used as alternatives for
purchasing securities, the Fund's return from writing put options generally will
-6-
<PAGE>
involve a smaller amount of interest income than purchasing longer-term
securities directly, because the Fund's cash will be invested in shorter-term
securities which usually offer lower yields.
Writing Call Options. Writing a call option obligates the Fund to sell or
deliver the option's underlying instrument, in return for the strike price, upon
exercise of the option. The characteristics of writing call options are similar
to those of writing put options, as described above, except that writing covered
call options generally is a profitable strategy if prices remain the same or
fall. Through receipt of the option premium, 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. The Fund may purchase and write options in
combination with each other to adjust the risk and return characteristics of the
overall position. For example, the Fund may purchase a put option and write a
call option on the same underlying instrument, in order to construct a combined
position whose risk and return characteristics are similar to selling a futures
contract. Another possible combined position would involve writing a call
option at one strike price and buying a call option at a lower price, in order
to reduce the risk of the written call option in the event of a substantial
price increase. Because combined options positions involve multiple trades,
they result in higher transaction costs and may be more difficult to open and
close out.
Risks of Options Transactions. Options are subject to risks similar to those
described above with respect to futures contracts, including the risk of
imperfect correlation between the option and the 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 the 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. The Fund will not use
leverage in its options and futures strategies. The Fund will hold securities
or other options or futures positions whose values are expected to offset its
obligations under the hedge strategies. The Fund will not enter into an option
or futures position that exposes the Fund to an obligation to another party
unless it owns either (i) an offsetting position in securities or other options
or futures contracts or (ii) cash, receivables and short-term debt securities
with a value sufficient to cover its potential obligations. The Fund will
comply with guidelines established by the SEC with respect to coverage of
options and futures strategies by mutual funds, and if the guidelines so require
will set aside cash and high grade liquid debt securities in a segregated
account with its custodian bank in the amount prescribed. Securities held in a
segregated account cannot be sold while the futures or option strategy is
outstanding, unless they are replaced with similar securities. As a
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<PAGE>
result, there is a possibility that segregation of a large percentage of the
Fund's assets could impede portfolio management or the Fund's ability to meet
redemption requests or other current obligations.
Limitations on Futures and Options Transactions. RBB, on behalf of the 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 Fund 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 Fund has purchased would exceed 5% of the Fund's net assets after taking
into account unrealized profits and losses on such contracts.
The Fund's 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 Fund will not modify the above limitations to increase its
permissible futures and options activities without supplying additional
information in a current Prospectus or Statement of Additional Information that
has been distributed or made available to the Fund's shareholders.
SHORT SALES "AGAINST THE BOX"
In a short sale, the Fund sells a borrowed security and has a corresponding
obligation to the lender to return the identical security. The Fund may engage
in short sales if at the time of the short sale it owns or has the right to
obtain, at no additional cost, an equal amount of the security being sold short.
This investment technique is known as a short sale "against the box." In a
short sale, a seller does not immediately deliver the securities sold and is
said to have a short position in those securities until delivery occurs. If the
Fund engages in a short sale, the collateral for the short position will be
maintained by the Fund's custodian or a qualified sub-custodian. While the
short sale is open, the Fund will maintain in a segregated account an amount of
securities equal in kind and amount to the securities sold short or securities
convertible into or exchangeable for such equivalent securities. These
securities constitute the Fund's long position. The Fund will not engage in
short sales against the box for speculative purposes. The Fund may, however,
make a short sale as a hedge, when it believes that the price of a security may
decline, causing a decline in the value of a security owned by the Fund (or a
security convertible or exchangeable for such security), or when the Fund wants
to sell the security at an attractive current price, but also wishes possibly to
defer recognition of gain or loss for federal income tax purposes. (A short sale
against the box will defer recognition of gain for federal income tax purposes
only if the Portfolio subsequently closes the short position by making a
purchase of the relevant securities no later than 30 days after the end of the
taxable year.) In such case, any future losses in the Fund's long position
should be reduced by a gain in the short position. Conversely, any gain in the
long position should be reduced by a loss in the short position. The extent to
which such gains or losses are reduced will depend upon the
-8-
<PAGE>
amount of the security sold short relative to the amount the Fund owns. There
will be certain additional transaction costs associated with short sales against
the box, but the Fund will endeavor to offset these costs with the income from
the investment of the cash proceeds of short sales.
SECTION 4(2) PAPER
"Section 4(2) paper" is commercial paper which is issued in reliance on the
"private placement" exemption from registration which is afforded by Section
4(2) of the Securities Act of 1933. Section 4(2) paper is restricted as to
disposition under the federal securities laws and is generally sold to
institutional investors such as the Fund which agrees that it is purchasing the
paper for investment and not with a view to public distribution. Any resale by
the purchaser must be in an exempt transaction. Section 4(2) paper normally is
resold to other institutional investors through or with the assistance of
investment dealers who make a market in the Section 4(2) paper, thereby
providing liquidity. See "Illiquid Securities" below and Appendix "A" for a
list of commercial paper ratings.
RIGHTS OFFERINGS AND PURCHASE WARRANTS
Rights offerings and purchase warrants are privileges issued by a corporation
which enable the owner to subscribe to and purchase a specified number of shares
of the corporation at a specified price during a specified period of time.
Subscription rights normally have a short lifespan to expiration. The purchase
of rights or warrants involves the risk that the Fund could lose the purchase
value of a right or warrant if the right to subscribe to additional shares is
not executed prior to the rights and warrants expiration. Also, the purchase of
rights and/or warrants involves the risk that the effective price paid for the
right and/or warrant added to the subscription price of the related security may
exceed the value of the subscribed security's market price such as when there is
no movement in the level of the underlying security.
ILLIQUID SECURITIES
The Fund may not invest more than 15% of its 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. Repurchase agreements subject to demand are deemed to have a
maturity equal to the notice period.
Mutual funds do not typically hold a significant amount of illiquid securities
because of the potential for delays on resale and uncertainty in valuation.
Limitations on resale may have an adverse effect on the marketability of
portfolio securities and a mutual fund might be unable to dispose of restricted
or other illiquid securities promptly or at reasonable prices and might thereby
experience difficulty 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.
-9-
<PAGE>
The Fund may purchase securities which are not registered under the Securities
Act but which may be sold to "qualified institutional buyers" in accordance with
Rule 144A under the Securities Act. These securities will not be considered
illiquid so long as it is determined by the Fund's adviser that an adequate
trading market exists for the securities. This investment practice could have
the effect of increasing the level of illiquidity in the Fund during any period
that qualified institutional buyers become uninterested in purchasing restricted
securities.
The Adviser will monitor the liquidity of restricted securities in the Fund
under the supervision of the Board of Directors. In reaching liquidity
decisions, the Adviser may consider, among others, the following factors: (1)
the unregistered nature of the security; (2) the frequency of trades and quotes
for the security; (3) the number of dealers wishing to purchase or sell the
security and the number of other potential purchasers; (4) dealer undertakings
to make a market in the security and (5) the nature of the security and the
nature of the marketplace trades (e.g., the time needed to dispose of the
security, the method of soliciting offers and the mechanics of the transfer).
DEPOSITARY RECEIPTS
The Fund's assets may be invested in the securities of foreign issuers 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
Fund 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 participation 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 Fund may invest in securities issued by other investment companies. Under
the 1940 Act, the Fund's 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 the Fund's net assets with respect to any one
investment company and (iii) 10% of the 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 Fund presently
intends to invest in other investment companies only as investment vehicles for
short-term cash. The Fund 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 broker's commission, or when the
purchase is part of a plan of merger, consolidation, reorganization or
acquisition.
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<PAGE>
CONVERTIBLE SECURITIES
The Fund 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, the 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.
REVERSE REPURCHASE AGREEMENTS
Reverse repurchase agreements involve the sale of securities held by the Fund
pursuant to the Fund's agreement to repurchase the securities at an agreed upon
price, date and rate of interest. Such agreements are considered to be
borrowings under the 1940 Act, and may be entered into only for temporary or
emergency purposes. While reverse repurchase transactions are outstanding, the
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 the 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.
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<PAGE>
WHEN-ISSUED SECURITIES AND FORWARD COMMITMENTS
The 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 the 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 the 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. The 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. The Fund does
not intend to engage in when-issued purchases and forward commitments for
speculative purposes but only in furtherance of their investment objectives.
PORTFOLIO TURNOVER
The Fund 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 assets on a
long-term basis, and correspondingly larger brokerage charges and other
transaction costs can be expected to be borne by the Fund. 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, including the Fund, pursue active strategies, which
have higher turnover than passive strategies.
High portfolio turnover (100% or more) 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 or 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 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 lower turnover passive strategies for
taxable investments. For further information, see "Taxes" below.
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The Portfolio turnover rate is calculated by dividing the lesser of the Fund's
annual sales or purchases of portfolio securities (exclusive of purchases or
sales of securities whose maturities at the time of acquisition were one year or
less) by the monthly average value of the securities in the portfolio during the
year.
INVESTMENT LIMITATIONS
The Fund has adopted the following fundamental investment limitations which
may not be changed without the affirmative vote of the holders of a majority of
the Fund's outstanding shares (as defined in Section 2(a)(42) of the 1940 Act).
The Fund 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 the Fund's
total assets would be invested in the securities of such issuer, or more than
10% of the outstanding voting securities of such issuer would be owned by the
Fund, except that up to 25% of the value of the Fund's assets may be invested
without regard to 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 1/3% 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.
3. Purchase any securities which would cause, at the time of purchase, 25% or
more of the value of the total assets of the Fund to be invested in the
obligations of issuers in any industry, provided that there is no limitation
with respect to investments in U.S. Government obligations.
4. Make loans, except that the 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 the 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
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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, the Fund may be deemed
an underwriter under federal securities laws.
7. Purchase or sell real estate or real estate limited partnership
interests, provided that the 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 the
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 2 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.
DIRECTORS AND OFFICERS
The directors and executive officers of RBB, their ages, business
addresses and principal occupations during the past five years are:
Position Principal Occupation
Name and Address and Age with Fund During Past Five Years
- ------------------------ --------- ----------------------
*Arnold M. Reichman 50 Director Senior Managing Director, Chief
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Position Principal Occupation
Name and Address and Age with Fund During Past Five Years
- ------------------------ --------- ----------------------
466 Lexington Avenue Operating Officer and Assistant
New York, NY 10017 Secretary, Warburg Pincus Asset
Management, Inc.; Director and
Executive Officer of Counsellors
Securities Inc.; Director/Trustee
of various investment companies
advised by Warburg Pincus Asset
Management, Inc.
*Robert Sablowsky 59 Director Senior Vice President, Fahnestock
110 Wall Street Co., Inc. (a registered
New York, NY 10005 broker-dealer); Prior to October
1996, Executive Vice President of
Gruntal & Co., Inc. (a registered
broker-dealer).
Francis J. McKay 61 Director Since 1963, Executive Vice
7701 Burholme Avenue President, Fox Chase Cancer Center
Philadelphia, PA 19111 (biomedical research and medical
care).
Marvin E. Sternberg 63 Director Since 1974, Chairman, Director and
937 Mt. Pleasant Road President, Moyco Industries, Inc.
Bryn Mawr, PA 19010 (manufacturer of dental supplies
and precision coated abrasives);
since 1968, Director and
President, Mart MMM, Inc.
(formerly Montgomeryville
Merchandise Mart Inc.) and Mart
PMM, Inc. (formerly Pennsauken
Merchandise Mart, Inc.) (shopping
centers); and since 1975, Director
and Executive Vice President,
Cellucap Mfg. Co., Inc.
(manufacturer of disposable
headwear).
Julian A. Brodsky 64 Director Director and Vice Chairman since
1234 Market Street 1969 Comcast Corporation (cable
16th Floor television and communications);
Philadelphia, PA 19107-3723 Director Comcast Cablevision of
Philadelphia (cable television and
communications) and Nextel
(wireless communications).
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<TABLE>
<CAPTION>
Position Principal Occupation
Name and Address and Age with Fund During Past Five Years
- ------------------------ --------- ----------------------
<S> <C> <C>
Donald van Roden 73 Director Self-employed businessman. From
1200 Old Mill Lane and Chairman of February 1980 to March 1987, Vice
Wyomissing, PA 19610 the Board Chairman, SmithKline Beecham
Corporation (pharmaceuticals);
Director, AAA Mid-Atlantic (auto
service); Director, Keystone
Insurance Co.
Edward J. Roach 74 President Certified Public Accountant; Vice
Suite 100 and Chairman of the Board, Fox Chase
Bellevue Park Treasurer Cancer Center; Trustee Emeritus,
Corporate Center Pennsylvania School for the Deaf;
400 Bellevue Parkway Trustee Emeritus, Immaculata
Wilmington, DE 19809 College; President or Vice
President and Treasurer of various
investment companies advised by
PNC Institutional Management
Corporation; Director, The
Bradford Funds, Inc.
Morgan R. Jones 59 Secretary Chairman of the law firm of
Drinker Biddle & Reath LLP Drinker Biddle & Reath LLP;
1345 Chestnut Street Director, Rocking Horse Child Care
Philadelphia, PA 19107-3496 Centers of America, Inc.
</TABLE>
______________________
* Each of Mr. Sablowsky and Mr. Reichman are "interested persons" of RBB, as
that term is defined in the 1940 Act, by virtue of their respective
positions with Fahnestock Co., Inc. and Counsellors Securities, Inc.,
respectively, each a registered broker-dealer.
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.
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<PAGE>
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 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 any investment adviser or sub-adviser of the Fund or
the Distributor and Mr. Sablowsky, who is considered to be an affiliated person,
$12,000 annually and $1,000 per meeting of the Board or any committee thereof
that is not held in conjunction with a Board meeting. In addition, the Chairman
of the Board receives an additional fee of $5,000 per year for his services in
this capacity. Directors who are not affiliated persons of RBB and Mr. Sablowsky
are reimbursed for any expenses incurred in attending meetings of the Board of
Directors or any committee thereof. For the year ended August 31, 1997, each of
the following members of the Board of Directors received compensation from RBB
in the following amounts:
DIRECTORS' COMPENSATION
-----------------------
<TABLE>
<CAPTION>
PENSION OR
RETIREMENT
AGGREGATE BENEFITS ACCRUED ESTIMATED ANNUAL
COMPENSATION FROM AS PART OF FUND BENEFITS UPON
NAME OF PERSON/ POSITION REGISTRANT EXPENSES RETIREMENT
-------- ---------- -------- ----------
<S> <C> <C> <C>
Julian A. Brodsky, $16,000 N/A N/A
Director
Francis J. McKay, $19,000 N/A N/A
Director
Arnold M. Reichman, $ 0 N/A N/A
Director
Robert Sablowsky, $ 8,000 N/A N/A
Director
Marvin E. Sternberg, $19,000 N/A N/A
Director
Donald van Roden, $24,000 N/A N/A
Director and Chairman
</TABLE>
______________________
On October 24, 1990, RBB adopted, as a participating employer, the
Fund Office Retirement Profit-Sharing Plan and Trust Agreement, a retirement
plan for employees (currently Edward J. Roach and one other employee), pursuant
to which RBB will contribute on a quarterly basis amounts equal to 10% of the
quarterly compensation of each eligible employee. By virtue
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<PAGE>
of the services performed by RBB's advisers, custodians, administrators and
distributor, RBB itself requires only two part-time employees. Drinker Biddle &
Reath LLP, of which Mr. Jones is a partner, receives legal fees as counsel to
RBB. No officer, director or employee of Numeric or the Distributor currently
receives any compensation from RBB.
INVESTMENT ADVISORY, DISTRIBUTION AND SERVICING ARRANGEMENTS
ADVISORY AGREEMENTS
Numeric renders advisory services to the Fund pursuant to an Investment
Advisory Agreement. The Advisory Agreement relating to the Fund is dated
____________, 1998. Under the Advisory Agreement, Numeric is entitled to
receive a fee from the Fund calculated at an annual rate of 0.75% of the Fund's
average daily net assets. For the fiscal year ended August 31, 1999, Numeric
intends to waive its fees to the extent necessary to maintain an annualized
expense ratio for the Fund of 1.00%. There can be no assurance that Numeric
will continue such waivers indefinitely.
The Fund bears all of its 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 portfolios by or under the direction of
RBB's Board of Directors in such manner as the Board determines to be fair and
equitable. Expenses borne by the Fund include, but are not limited to the
expenses listed in the prospectus and the following (or the Fund's share of the
following): (a) the cost (including brokerage commissions) of securities
purchased or sold by the Fund and any losses incurred in connection therewith;
(b) expenses of organizing RBB that are not attributable to a class of RBB; (c)
any costs, expenses or losses arising out of a liability of or claim for damages
or other relief asserted against RBB or the Fund for violation of any law; (d)
any extraordinary expenses; (e) fees, voluntary assessments and other expenses
incurred in connection with membership in investment company organizations; (f)
costs of mailing and tabulating proxies and costs of shareholders' and
directors' meetings; and (g) 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 Agreements, Numeric will not be liable for any error of
judgment or mistake of law or for any loss suffered by RBB or the Fund in
connection with the performance of an Advisory Agreement, 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 Agreement for the Small Cap Value Fund was approved on
_______, 1998 by vote of RBB's Board of Directors, including a majority of those
directors who are not parties to the Advisory Agreement or interested persons
(as defined in the 1940 Act) of such parties. The Advisory Agreement is
terminable by vote of RBB's Board of Directors or by the holders of a majority
of the outstanding voting securities of the Fund, at any time without penalty,
on 60
-18-
<PAGE>
days' written notice to Numeric. The Advisory Agreement for the Small Cap Value
Fund became effective on ___________, 1998 and was approved by written consent
of the sole shareholder of the Fund on ___________, 1998. The Advisory
Agreement terminates automatically in the event of assignment thereof.
The Advisory Agreement provides that Numeric shall at all times have all
rights in and to the Fund's name and all investment models used by or on behalf
of the Fund. Numeric may use the 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 Agreement further provides 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.
CUSTODIAN AGREEMENTS
Custodial Trust Company ("CTC") is custodian of the N/I NUMERIC INVESTORS
Funds' (the "Funds") assets pursuant to custodian agreements dated as of May 20,
1996, as amended (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 at .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.
-19-
<PAGE>
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 supplemented (collectively, the "Transfer Agency
Agreement"). Under the Transfer Agency Agreement, PFPC (a) issues and redeems
Shares of each of the Funds, (b) addresses and mails all communications by the
Funds to record owners of shares of the Funds, 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 Funds. For its services to the Funds 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 April 24, 1996, as
amended, 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 the first $150 million of each Fund's average daily
net assets and .02% on all assets above $150 million.
PFPC also serves as co-administrator to Funds pursuant to Co-Administration
Agreements dated as of April 24, 1996, as amended (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
.125% of each Fund's average daily net assets, exclusive of out-of-pocket
expenses and pricing charges. PFPC is currently waiving fees in excess of .115%
of each Fund's average daily net assets.
ADMINISTRATIVE SERVICES AGENT
Provident Distributors, Inc. ("PDI") provides certain administrative
services to the Fund that are not provided by BSFM or PFPC. These services
include furnishing corporate secretarial, data processing and clerical services,
acting as liaison between the Fund and various service
-20-
<PAGE>
providers and coordinating the preparation of proxy statements and annual, semi-
annual and quarterly reports. As compensation for such administrative services,
PDI is entitled to a monthly fee calculated at the annual rate of .15% of the
Fund's average daily net assets. PDI is currently waiving fees in excess of .03%
of the Fund's average daily net assets.
DISTRIBUTOR
PDI serves as distributor of the Shares pursuant to the terms of a
distribution agreement dated as of May 29, 1998 (the "Distribution Agreement"),
entered into by PDI and RBB. No compensation is payable by RBB to PDI for
distribution services with respect to the Fund.
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 Fund. In executing portfolio transactions,
Numeric seeks to obtain the best price and most favorable execution for the
Fund, taking into account such factors as the price (including the applicable
brokerage commission or dealer spread), size of the order, difficulty of
execution and operational facilities of the firm involved. While Numeric
generally seeks reasonably competitive commission rates, payment of the lowest
commission or spread is not necessarily consistent with obtaining the best price
and execution in particular transactions.
The Fund has no obligation to deal with any broker or group of brokers in
the execution of portfolio transactions. Numeric may, consistent with the
interests of the Fund and subject to the approval of the Board of Directors,
select brokers on the basis of the research, statistical and pricing services
they provide to the Fund and other clients of 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 the Fund and its other clients and that the total
commissions paid by the Fund will be reasonable in relation to the benefits to
the Fund over the long-term.
Corporate debt and U.S. Government securities and many 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 Fund 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 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.
-21-
<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 Fund prior to their maturity at their original cost plus
interest (sometimes adjusted to reflect the actual maturity of the securities),
if it believes that the Fund's anticipated need for liquidity makes such action
desirable. Any such repurchase prior to maturity reduces the possibility that
the Fund would incur a capital loss in liquidating commercial paper (for which
there is no established market), especially if interest rates have risen since
acquisition of the particular commercial paper.
Investment decisions for the Fund and for other investment accounts managed
by 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 the Fund is concerned, in other cases it is believed
to be beneficial to the Fund. The Fund will not purchase securities during the
existence of any underwriting or selling group relating to such security of
which 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.
In no instance will portfolio securities be purchased from or sold to PDI,
PNC Bank or Numeric or any affiliated person of the foregoing entities except as
permitted by SEC exemptive order or by applicable law.
PURCHASE AND REDEMPTION INFORMATION
The Fund reserves the right, if conditions exist that make cash payments
undesirable, to honor any request for redemption or repurchase of the Fund's
shares by making payment in whole or in part in securities chosen by RBB and
valued in the same way as they would be valued for purposes of computing 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 the
Fund is obligated to redeem its shares solely in cash up to the lesser of
$250,000 or 1% of its net asset value during any 90-day period for any one
shareholder of the Fund.
Under the 1940 Act, the Fund may suspend the right to redemption or
postpone the date of payment upon redemption for any period during which the New
York Stock Exchange (the "NYSE") is closed (other than customary weekend and
holiday closings), or during which trading on the NYSE is restricted, or during
which (as determined by the SEC by rule or regulation) an emergency exists as a
result of which disposal or valuation of portfolio securities is not reasonably
practicable, or for such other periods as the SEC may permit. (The Fund may also
suspend or postpone the recordation of the transfer of its shares upon the
occurrence of any of the foregoing conditions.)
In addition to the situations described in the Prospectus, the Fund may
redeem shares involuntarily to reimburse it for any loss sustained by reason of
the failure of a shareholder to
-22-
<PAGE>
make full payment for shares purchased by the shareholder or to collect any
charge relating to a transaction effected for the benefit of a shareholder as
provided in the Prospectus from time to time.
An illustration of the computation of the public offering price per share
of each of the Fund, based on the value of the Fund's net assets as of September
15, 1998, is as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------
Small
Cap Value
---------
- -------------------------------------------------------
<S> <C>
Net assets....................... $10.00
- -------------------------------------------------------
Outstanding shares............... 1
- -------------------------------------------------------
Net asset value per share........ $10.00
- -------------------------------------------------------
Maximum sales charge............. --
- -------------------------------------------------------
Maximum Offering Price to Public. $10.00
- -------------------------------------------------------
</TABLE>
VALUATION OF SHARES
The net asset value per share of the Fund is calculated as of the close of
regular trading on the NYSE (generally 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, Dr. Martin Luther King, Jr. Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas Day and on the preceding Friday or subsequent Monday when one of
those holidays falls on a Saturday or Sunday. 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 the close of regular trading (generally 4:00
p.m. Eastern Time); 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. Net asset value per share is
calculated by adding the value of the Fund's securities, cash and other assets,
subtracting the actual and accrued liabilities of the Fund, and dividing the
result by the number of outstanding shares of the Fund.
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<PAGE>
In determining the approximate market value of portfolio investments, the
Fund may employ outside organizations, which may use a matrix or formula method
that takes into consideration market indices, matrices, yield curves and other
specific adjustments. This may result in the securities being valued at a price
different from the price that would have been determined had the matrix or
formula method not been used. All cash, receivables and current payables are
carried on the Fund's books at their face value. Other assets, if any, are
valued at fair value as determined in good faith by or under the direction of
RBB's Board of Directors.
PERFORMANCE INFORMATION
TOTAL RETURN. For purposes of quoting and comparing the performance of the
Fund to that of other mutual funds and to stock or other relevant indices in
advertisements or in reports to shareholders, performance 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 = hypothetical initial payment of $1,000
T = average annual total return
n = number of years (1, 5 or 10)
ERV = ending redeemable value at the end of the 1, 5 or
10 year periods (or fractional portion
thereof) of a hypothetical $1,000 payment
made at the beginning of the 1, 5 or 10 year
periods.
Under the foregoing formula, the time periods used in advertising will be
based on rolling calendar quarters, updated to the last day of the most recent
quarter prior to submission of the advertisement for publication, and will cover
one, five and ten year periods or a shorter period dating from the effectiveness
of the Fund's registration statement. In calculating the ending redeemable
value, the maximum sales load is deducted from the initial $1,000 payment and
all dividends and distributions by the Fund are assumed to have been reinvested
at net asset value, as described in the Prospectus, on the reinvestment dates
during the period. Total return, or "T" in the formula above, is computed by
finding the average annual compounded rates of return over the 1, 5 and 10 year
periods (or fractional portion thereof) that would equate the initial amount
invested to the ending redeemable value. Any sales loads that might in the
future be made applicable at the time to reinvestments would be included as
would any recurring account charges that might be imposed by the Fund.
The formula for calculating aggregate total return is as follows:
-24-
<PAGE>
ERV
Aggregate Total Return = [(----) - 1]
P
The calculations are made assuming that (1) all dividends and capital gain
distributions are reinvested on the reinvestment dates at the price per share
existing on the reinvestment date, (2) all recurring fees charged to all
shareholder accounts are included, and (3) for any account fees that vary with
the size of the account, a mean (or median) account size in the Fund during the
periods is reflected. The ending redeemable value (variable "ERV" in the
formula) is determined by assuming complete redemption of the hypothetical
investment after deduction of all non-recurring charges at the end of the
measuring period.
PERFORMANCE. From time to time, the Fund may advertise its average annual
total return over various periods of time. These total return figures show the
average percentage change in value of an investment in the Fund from the
beginning of the measuring period to the end of the measuring period. The
figures reflect changes in the price of the Fund's shares assuming that any
income dividends and/or capital gain distributions made by the Fund during the
period were reinvested in shares of the Fund. Total return will be shown for
recent one-, five- and ten-year periods, and may be shown for other periods as
well (such as from commencement of the Fund's operations or on a year-by-year,
quarterly or current year-to-date basis).
When considering average total return figures for periods longer than one
year, it is important to note that the Fund's annual total return for one year
in the period might have been greater or less than the average for the entire
period. When considering total return figures for periods shorter than one
year, investors should bear in mind that the Fund seeks long-term appreciation
and that such return may not be representative of the Fund's return over a
longer market cycle. The Fund may also advertise aggregate total return figures
for various periods, representing the cumulative change in value of an
investment in the Fund for the specific period (again reflecting changes in the
Fund's share prices and assuming reinvestment of dividends and distributions).
Aggregate and average total returns may be shown by means of schedules, charts
or graphs, may indicate various components of total return (i.e., change in
value of initial investment, income dividends and capital gain distributions)
and would be quoted separately for each class of the Fund's shares.
-25-
<PAGE>
Investors should note that total return figures are based on historical
earnings and are not intended to indicate future performance.
In reports or other communications to investors or in advertising material,
the Fund may describe general economic and market conditions affecting the Fund
and may compare its 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 Fund 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 Fund
may also describe the general biography or work experience of the portfolio
managers of the Fund and may include quotations attributable to the portfolio
managers describing approaches taken in managing the Fund's investments,
research methodology, underlying stock selection or the Fund's investment
objective. The Fund may also discuss the continuum of risk and return relating
to different investments, and the potential impact of foreign stock on a
portfolio otherwise composed of domestic securities. In addition, the Fund may
from time to time compare its expense ratio 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.
TAXES
The following is only a summary of certain additional tax considerations
generally affecting the Fund and its shareholders that are not described in the
Prospectus. No attempt is made to present a detailed explanation of the tax
treatment of the Fund or its shareholders, and the discussion in this Statement
of Additional Information and in the Prospectus is not intended as a substitute
for careful tax planning. Investors are urged to consult their tax advisers
with specific reference to their own tax situation.
The Fund has elected to be taxed as a regulated investment company under Part
I of Subchapter M of Subtitle A, Chapter 1, of the Internal Revenue Code of
1986, as amended (the "Code"). As a regulated investment company, the Fund is
exempt from federal income tax on its net investment income and realized capital
gains that it distributes to shareholders, provided that it distributes an
amount equal to the sum of (a) at least 90% of its investment company taxable
income (net taxable investment income and the excess of net short-term capital
gain over net long-term capital loss, if any, for the year) and (b) at least 90%
of its net tax-exempt interest income, if any, for the year (the "Distribution
Requirement") and satisfies certain
-26-
<PAGE>
other requirements of the Code that are described below. Distributions of
investment company taxable 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.
In addition to the foregoing requirements, at the close of each quarter of the
Fund's taxable year, at least 50% of the value of the Fund's assets must consist
of cash and cash items, U.S. Government securities, securities of other
regulated investment companies, and securities of other issuers (as to which the
Fund has not invested more than 5% of the value of its total assets in
securities of such issuer and as to which the Fund does not hold more than 10%
of the outstanding voting securities of such issuer), and no more than 25% of
the value of the Fund's total assets may be invested in the securities of any
one issuer (other than U.S. Government securities and securities of other
regulated investment companies), or in two or more issuers which the Fund
controls and which are engaged in the same or similar trades or businesses (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 Fund in the form of additional shares will be treated as
receiving a taxable distribution in an amount equal to the fair market value of
the shares received, determined as of the reinvestment date.
The Fund intends to distribute to shareholders its net capital gain (excess of
net long-term capital gain over net short-term capital loss), 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
the Fund prior to the date on which a shareholder acquired shares of the Fund
and whether the distribution was paid in cash or reinvested in shares. The
aggregate amount of distributions designated by the 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 the Fund to shareholders not later than 60 days after
the close of the Fund's taxable year.
In the case of shareholders that are corporations, distributions (other than
capital gain dividends) of the Fund for any taxable year generally qualify for
the dividends received deduction to the extent of the gross amount of
"qualifying dividends" received by the Fund for the year. Generally, a dividend
will be treated as a "qualifying dividend" if it has been received from a
domestic corporation. Distributions of net investment income received by the
Fund from investments in debt securities will be taxable to shareholders as
ordinary income and will not be treated as "qualifying dividends" for purposes
of the dividends received deduction. The Fund will designate the portion, if
any, of the distribution made by the Fund that qualifies for the dividends
received deduction in a written notice mailed by the Fund to corporate
shareholders not later than 60 days after the close of the Fund's taxable year.
-27-
<PAGE>
If for any taxable year the Fund were to fail to qualify as a regulated
investment company, all of its taxable income would be subject to tax at regular
corporate rates without any deduction for distributions to shareholders, and all
distributions would be taxable as ordinary dividends to the extent of the Fund's
current and accumulated earnings and profits. Such distributions would be
eligible for the dividends received deduction in the case of corporate
shareholders.
A shareholder will recognize gain or loss upon a redemption of shares or an
exchange of shares of the Fund for shares of another N/I NUMERIC INVESTORS Fund
upon exercise of the exchange privilege, to the extent of any difference between
the price at which the shares are redeemed or exchanged and the price or prices
at which the shares were originally purchased for cash. However, any loss
realized on a sale of shares of the Fund will be disallowed to the extent an
investor repurchases shares of the 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 the Fund in the form of shares within the 61-day period would
be treated as a purchase for this purpose.
The Code imposes a nondeductible 4% excise tax on regulated investment
companies that do not distribute with respect to each calendar year an amount
equal to 98% of their ordinary income for the calendar year plus 98% of their
capital gain net income for the 1-year period ending on October 31 of such
calendar year. The balance of such income must be distributed during the next
calendar year. For the foregoing purposes, a company is treated as having
distributed any amount on which it is subject to income tax for any taxable year
ending in such calendar year. Investors should note that a Fund may in certain
circumstances be required to liquidate investments in order to make sufficient
distributions to avoid excise tax liability.
The 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 the Fund that he is not subject to backup withholding or
that he is an "exempt recipient."
The foregoing general discussion of federal income tax consequences is based
on the Code and the regulations issued thereunder as in effect on the date of
this Statement of Additional Information. Future legislative or administrative
changes or court decisions may significantly change the conclusions expressed
herein, and any such changes or decisions may have a retroactive effect with
respect to the transactions contemplated herein.
Although the Fund expects to qualify as a "regulated investment company" and
to be relieved of all or substantially all federal income taxes, depending upon
the extent of its activities in states and localities in which its offices are
maintained, in which its agents or independent contractors are located or in
which it is otherwise deemed to be conducting business, the Fund may be subject
to the tax laws of such states or localities.
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<PAGE>
DESCRIPTION OF SHARES
RBB has authorized capital of thirty billion shares of Common Stock, $.001 par
value per share, of which ___ billion shares are currently classified in __
classes 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 (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
(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 (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 (Strategic 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, 100 million shares are classified as Class EE Common Stock, 50
million shares are classified as Class FF Common Stock (n/i Numeric Investors
Micro Cap), 50 million shares are classified as Class GG Common Stock (n/i
Numeric Investors Growth), 50 million shares are classified as Class HH (n/i
Numeric Investors Growth & Value), 100 million shares are classified as Class II
Common Stock (BEA Investor International), 100 million shares are classified as
Class JJ Common Stock (BEA Investor Emerging), 100 million shares are classified
as Class KK Common Stock (BEA Investor High Yield), 100 million shares are
classified as Class LL Common Stock (BEA Investor Global Telecom), 100 million
shares are classified as Class MM Common Stock (BEA Advisor International), 100
million shares are classified as Class NN Common Stock (BEA Advisor Emerging),
100 million shares are classified as Class OO Common Stock (BEA Advisor High
Yield), 100 million shares are classified as Class PP Common Stock (BEA Advisor
Global Telecom), 100 million shares are classified as Class QQ Common Stock
(Boston Partners Institutional Large Cap), 100 million shares are classified as
Class RR Common Stock (Boston Partners Investor Large Cap), 100 million shares
are classified as Class SS Common Stock (Boston Partners Advisor Large Cap), 100
million shares are classified as Class TT Common Stock (Boston Partners Investor
Mid Cap), 100 million shares are classified as Class UU Common Stock (Boston
Partners Institutional Mid Cap), 100 million shares are classified as Class VV
Common Stock (Boston
-29-
<PAGE>
Partners Institutional Bond), 100 million shares are classified as Class WW
Common Stock (Boston Partners Investor Bond), 50 million shares are classified
as Class XX Common Stock (n/i Numeric Investors Larger Cap Value), 100 million
shares are classified as Class YY Common Stock (Schneider Capital Management
Small Cap Value), 100 million shares are classified as Class ZZ Common Stock
(BEA Institutional Long-Short Market Neutral), 100 million shares of Class AAA
Common Stock (BEA Advisor Long-Short Market Neutral), 100 million shares are
classified as Class BBB Common Stock (BEA Institutional Long-Short Equity), 100
million shares of Class CCC Common Stock (BEA Advisor Long-Short Equity), 100
million shares are classified as Class DDD Common Stock (Boston Partners
Institutional Micro Cap), 100 million shares are classified as Class EEE Common
Stock (Boston Partners Investors Micro Cap), 100 million shares are classified
as Class FFF Common Stock (BEA Institutional Select Economic Value Equity), 100
million shares are classified as Class GGG Common Stock (BEA Advisor Select
Economic Value Equity), 100 million shares are classified as Class HHH Common
Stock (BEA Advisor U.S. Core Equity), 100 million shares are classified as Class
III Common Stock (Boston Partners Institutional Market Neutral), 100 million
shares are classified as Class JJJ Common Stock (Boston Partners Investor Market
Neutral), 100 million shares are classified as Class KKK Common Stock (Boston
Partners Institutional Long-Short Equity) 100 million shares are classified as
Class LLL common stock (Boston Partners Investor Long-Short Equity), 100 million
shares are classified as Class MMM Common Stock (n/i Small Cap Value), 700
million shares are classified as Class Janney Money Common Stock (Money), 200
million shares are classified as Class Janney Municipal Money Common Stock
(Municipal Money), 500 million shares are classified as Class Janney Government
Money Common Stock (Government Money), 100 million shares are classified as
Class Janney N.Y. Municipal Money Common Stock (N.Y. Money), 1 million shares
are classified as Select Class 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 (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 (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
(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 (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 (Government Money), 1 million shares are
classified as Zeta 4 Common Stock (N.Y. Money), 1 million shares are classified
as Eta 1 Common Stock (Money), 1 million shares are classified as Eta 2 Common
Stock (Municipal Money), 1 million shares are classified as Eta 3 Common Stock
(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 (Government Money), and 1
million shares are classified as Theta 4 Common Stock (N.Y.
-30-
<PAGE>
Money). Shares of the Class MMM Common Stock constitute the n/i numeric
investors Small Cap Value Fund. 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 fourteen separate
"families": the Cash Preservation Family, the Sansom Street Family, the Bedford
Family, the Janney Montgomery Scott Money Family, the n/i numeric investors
family of funds, the Boston Partners Family, the Schneider Family, the Select
Family, the Beta Family, the Gamma Family, the Delta Family, the Epsilon Family,
the Zeta Family, the Eta Family and the Theta Family. The Cash Preservation
Family represents interests in the Money Market and Municipal Money Market
Funds; the Sansom Street Family represents interests in the Money Market,
Municipal Money Market and Government Obligations Money Market Funds; Bedford
Family represents interests in the Money Market, Municipal Money Market,
Government Obligations Money Market and New York Municipal Money Market Funds;
the N/I NUMERIC INVESTORS family of funds represents interests in five non-money
market portfolios; the Boston Partners Family represents interest in six non-
money market portfolios; the Schneider Family represents interests in one non-
money market portfolio; the Janney Montgomery Scott Family and the Select.,
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 Funds.
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 voting 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
voting securities, as defined in the 1940 Act, of each portfolio affected by the
matter. Rule 18f-2 further provides that a portfolio shall be deemed to be
affected by a matter unless it is clear that the interests of each portfolio in
the matter are identical or that the matter does not affect any interest of the
portfolio. Under the Rule, the approval of an investment advisory agreement or
any change in a fundamental investment policy would be effectively acted upon
with respect to a portfolio only if approved by the holders of a majority of the
outstanding voting securities (as defined by the 1940 Act) of such portfolio.
However, the Rule also provides
-31-
<PAGE>
that the ratification of the selection of independent public accountants, the
approval of principal underwriting contracts and the election of directors are
not subject to the separate voting requirements and may be effectively acted
upon by shareholders of an investment company voting without regard to
portfolio.
Notwithstanding any provision of Maryland law requiring a greater vote of
shares of RBB's common stock (or of any class voting as a class) in connection
with any corporate action, unless otherwise provided by law 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 entitled to vote
on the matter voting without regard to class (or portfolio). The name "N/I
NUMERIC INVESTORS" may be used in the name of other portfolios managed by
Numeric.
MISCELLANEOUS
COUNSEL. The law firm of Drinker Biddle & Reath LLP, 1100 Philadelphia
National Bank Building, 1345 Chestnut Street, Philadelphia, Pennsylvania 19107-
3496, serves as counsel to RBB and RBB's non-interested directors.
INDEPENDENT ACCOUNTANTS. PricewaterhouseCoopers LLP, 2400 Eleven Penn Center,
Philadelphia, Pennsylvania 19103, serves as RBB's independent accountants.
CONTROL PERSONS. As of August 28, 1998, 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.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
FUND NAME SHAREHOLDER NAME AND ADDRESS PERCENTAGE OF FUND HELD
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
BEA INT'L EQUITY Employees Ret Plan Marshfield Clini 7.23%
INSTITUTIONAL 1000 N. Oak Avenue
Marshfield, WI 54449-5772
- -----------------------------------------------------------------------------------------------------
Indiana University Foundation 5.05%
Attn: Walter L. Koon, Jr.
P.O. Box 500
Bloomington, IN 47402-0500
- ----------------------------------------------------------------------------------------------------
BEA EMERGING MARKETS Wachovia Bank North Carolina 47.78%
EQUITY INSTITUTIONAL Trust Carolina Power & Light Co.
Supplemental Retirement Trust
P.O. Box 3073
301 N. Main Street, MC NC 31057
Winston-Salem, NC 27101-3819
- ----------------------------------------------------------------------------------------------------
Clariden Bank 6.93%
Clariden Str. 26
- ----------------------------------------------------------------------------------------------------
</TABLE>
-32-
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
FUND NAME SHAREHOLDER NAME AND ADDRESS PERCENTAGE OF FUND HELD
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
CH-8002 Zurich
Switzerland
- -----------------------------------------------------------------------------------------------------
National Academy of Sciences 5.36%
2101 Constitution Ave. NW
Washington, DC 20418-0006
- -----------------------------------------------------------------------------------------------------
Arkansas Public Emp. Retirement Syst. 32.00%
124 W. Capitol Ave.
Little Rock, AR 72201-3704
- -----------------------------------------------------------------------------------------------------
BEA LONG-SHORT MARKET Michael A. Wall TTEE 95.80%
NEUTRAL- INSTITUTIONAL Michael A. Wall Trust
U/A DTD 12/29/1997
P.O. Box 4579
Jackson, WY 83001-4579
- -----------------------------------------------------------------------------------------------------
BEA SELECT ECONOMIC VALUE Patterson & Co. 91.54%
EQUITY-INSTITUTIONAL P.O. Box 7829
Philadelphia, PA 19101-7829
----------------------------------------------------------------------------------------------------
BEA Associates 5.56%
FAO Pension Trust
153 E. 53rd St.
New York, NY 10022-4611
- -----------------------------------------------------------------------------------------------------
BEA U.S. CORE EQUITY Werner & Pfleiderer Pension Plan 8.91%
INSTITUTIONAL Employees
663 E. Crescent Ave.
Ramsey, NJ 07446-1287
----------------------------------------------------------------------------------------------------
Credit Suisse Private Banking Dividend 8.98%
Reinvest Plan
C/o Credit Suisse Pvt Bkg
12 E. 49th St., 40th Floor
New York, NY 10017-1028
- -----------------------------------------------------------------------------------------------------
Washington Hebrew Congregation 16.18%
3935 Macomb St., NW
Washington, DC 20016-3799
- -----------------------------------------------------------------------------------------------------
Fleet National Bank Trst. 8.02%
Hospital St. Raphael Malpractice
Attn: 1958875010
P.O. Box 92800
Rochester, NY 14692-8900
- -----------------------------------------------------------------------------------------------------
Patterson & Co. 32.75%
P.O. Box 7829
Philadelphia, PA 19101-7829
- -----------------------------------------------------------------------------------------------------
FTC & Co. 6.14%
Attn. Datalynx # House Acct.
- -----------------------------------------------------------------------------------------------------
</TABLE>
-33-
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
FUND NAME SHAREHOLDER NAME AND ADDRESS PERCENTAGE OF FUND HELD
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
P.O. Box 173736
Denver, CO 80217-3736
- -----------------------------------------------------------------------------------------------------
Sema & Co. 5.14%
12 E. 49th St. - Fl. 41
New York, NY 10017-1028
- -----------------------------------------------------------------------------------------------------
BEA U.S. CORE FIXED INCOME The Northern Trust Company TTEE 12.80%
INSTITUTIONAL Uniroyal Holdings Bond Fund
c/o Uniroyal Holding Inc.
70 Great Hill Road
Naugatuck, CT 06770-2224
----------------------------------------------------------------------------------------------------
Winifred Masterson Burke Foundation 6.17%
785 Mamaroneck Ave.
White Plains, NY 10605-2593
- -----------------------------------------------------------------------------------------------------
New England UFCW & Employers' Pension 11.86%
Fund Board of Trustees
161 Forbes Rd, Ste. 201
Braintree, MA 02184-2606
- -----------------------------------------------------------------------------------------------------
BEA STRATEGIC GLOBAL FIXED Sunkist Master Trust 52.73%
INCOME FUND 14130 Riverside Dr.
Sherman Oaks, CA 91423-2392
----------------------------------------------------------------------------------------------------
Patterson & Co. 37.70%
P.O. Box 7829
Philadelphia, PA 19101-7829
- -----------------------------------------------------------------------------------------------------
State St. Bank & Trust TTEE 5.48%
Fenway Holdings LLC Master Trust
P.O. Box 470
Boston, MA 02102-0470
- -----------------------------------------------------------------------------------------------------
BEA HIGH YIELD- Carl F Besenbach 18.35%
INSTITUTIONAL Trst Michelin North America Inc.
Master Trust
P.O. Box 19001
Greenville, SC 29602-9001
----------------------------------------------------------------------------------------------------
Southdown Inc. Pension Pl 9.61%
Mac & Co A/C SDIF8575302
Mutual Fund Operations
P.O. Box 3l98
Pittsburgh, PA 15230-3198
- -----------------------------------------------------------------------------------------------------
Edward J. Demske TTEE 5.54%
Miami University Foundation
202 Roudebush Hall
Oxford, OH 45056
- -----------------------------------------------------------------------------------------------------
Fidelity Investments Institutional 16.89%
Operations Co. Inc. as Agent for
- -----------------------------------------------------------------------------------------------------
</TABLE>
-34-
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
FUND NAME SHAREHOLDER NAME AND ADDRESS PERCENTAGE OF FUND HELD
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Certain Employee Benefits Plan
100 Magellan Way #KWIC
Covington, KY 41015-1987
- -----------------------------------------------------------------------------------------------------
MAC & CO A/C CSBF8605082 5.18%
Mutual Fund Operations
P.O. Box 3198
Pittsburgh, PA 15230-3198
- -----------------------------------------------------------------------------------------------------
BEA MUNI BOND Arnold Leon 12.59%
INSTITUTIONAL c/o Fiduciary Trust Company
P.O. Box 3199 Church Street Station
New York, NY 10008-3199
----------------------------------------------------------------------------------------------------
William A. Marquard 36.03%
2199 Maysville Rd.
Carlisle, KY 40311-9716
- -----------------------------------------------------------------------------------------------------
Leo Bogart 5.21%
135 Central Park West 9N
New York, NY 10023-2465
- -----------------------------------------------------------------------------------------------------
Howard Isermann 8.86%
9 Tulane Dr.
Livingston, NJ 07039-6212
- -----------------------------------------------------------------------------------------------------
BEA INT'L EQUITY ADVISOR TRANSCORP 9.45%
FBO William E Burns
P.O. Box 6535
Englewood, CO 80155-6535
- -----------------------------------------------------------------------------------------------------
Charles Schwab & Co. 8.53%
Special Custody Account for the
Exclusive Benefit of Customers
101 Montgomery Street
San Francisco, CA 94104-4122
- -----------------------------------------------------------------------------------------------------
Bob & Co. 76.46%
P.O. Box 1809
Boston, MA 02105-1809
- -----------------------------------------------------------------------------------------------------
</TABLE>
-35-
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
FUND NAME SHAREHOLDER NAME AND ADDRESS PERCENTAGE OF FUND HELD
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
BEA EMERGING MARKETS SEMA & Co. 97.75%
EQUITY ADVISOR 12E 49th St. Fl. 41
New York, NY 10017-1028
----------------------------------------------------------------------------------------------------
BEA GLOBAL TELE- E. M. Warburg Pincus & Co. Inc. 18.48%
COMMUNICATIONS ADVISOR Attn: Sandra Correale
466 Lexington Ave.
New York, NY 10017-3140
----------------------------------------------------------------------------------------------------
Charles Schwab & Co. 14.52%
Special Custody Account for the
Exclusive Benefit of Customers
101 Montgomery St.
San Francisco, CA 94104-4122
- -----------------------------------------------------------------------------------------------------
William W. Priest 5.03%
2 E. 70th St. #5
New York, NY 10021-4913
- -----------------------------------------------------------------------------------------------------
FTC & Co. 25.50%
Attn: DATALYNX #148
P.O. Box 173736
Denver, CO 80217-3736
- -----------------------------------------------------------------------------------------------------
BEA HIGH YIELD ADVISOR Charles Schwab & Co. 83.14%
Special Custody Account for the
Exclusive Benefit of Customers
101 Montgomery St.
San Francisco, CA 94104-4122
- -----------------------------------------------------------------------------------------------------
Richard A. Wilson TTEE 14.19%
E. Francis Wilson TTEE
The Wilson Family Trust
U/A 11/1/95
7612 March Ave.
West Hills, CA 91304-5232
- -----------------------------------------------------------------------------------------------------
CASH PRESERVATION MONEY Jewish Family and Children's Agency of 47.10%
MARKET Phil Capital Campaign
Attn: S. Ramm
1610 Spruce Street
Philadelphia, PA 19103
- -----------------------------------------------------------------------------------------------------
Marian E. Kunz 12.60%
52 Weiss Ave.
Flourtown, PA 19031
- -----------------------------------------------------------------------------------------------------
</TABLE>
-36-
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
FUND NAME SHAREHOLDER NAME AND ADDRESS PERCENTAGE OF FUND HELD
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
SAMSON STREET MONEY MARKET Saxon and Co. 78.00%
FBO Paine Webber
A/C 32 32 400 4000038
P.O. Box 7780 1888
Phila., PA 19182
- -----------------------------------------------------------------------------------------------------
Wasner & Co. for Account of 21.20%
Paine Webber and Managed Assets Sundry
Holdings
Attn: Joe Domizio
76 A 260 ABC 200 Stevens Drive
Lester, PA 19113
- -----------------------------------------------------------------------------------------------------
CASH PRESERVATION Gary L. Lange 36.70%
MUNICIPAL MONEY MARKET and Susan D. Lange
JT TEN
1354 Shady Knoll Ct.
Longwood, FL 32750
- -----------------------------------------------------------------------------------------------------
Andrew Diederich 6.70%
Doris Diederich
JT TEN
1003 Lindeman
Des Peres, MO 63131
- -----------------------------------------------------------------------------------------------------
Kenneth Farwell 12.10%
and Valerie Farwell
3854 Sullivan
St. Louis, MO 63107
- -----------------------------------------------------------------------------------------------------
Gwendolyn Haynes 5.40%
2757 Geyer
St. Louis, MO 63104
- -----------------------------------------------------------------------------------------------------
Emil R. Hunter and 7.60%
Mary J. Hunter JT TEN
428 W. Jefferson
Kirkwood, MO 63122
- -----------------------------------------------------------------------------------------------------
N/I MICRO CAP FUND Charles Schwab & Co. Inc 14.00%
Special Custody Account for the
Exclusive Benefit of Customers
Attn: Mutual Funds
101 Montgomery St.
San Francisco, CA 94104
- -----------------------------------------------------------------------------------------------------
</TABLE>
-37-
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
FUND NAME SHAREHOLDER NAME AND ADDRESS PERCENTAGE OF FUND HELD
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Janis Claflin, Bruce Fetzer and 5.20%
Winston Franklin, Robert Lehman Trst
the John E. Fetzer Institute, Inc.
U/A DTD 06-1992
Attn: Christina Adams
9292 West KL Ave.
Kalamazoo, MI 49009
- -----------------------------------------------------------------------------------------------------
Public Inst. For Social Security 7.30%
1001 19th St., N. 16th Flr.
Arlington, VA 22209
- -----------------------------------------------------------------------------------------------------
Portland General Holdings Inc. 16.60%
DTD 01/29/90
Attn: William J. Valach
121 S.W. Salmon St.
Portland, OR 97202
- -----------------------------------------------------------------------------------------------------
State Street Bank and Trust Company 8.50%
FBO Yale Univ. Ret. Pln for Staff Emp
State Street Bank & Tr Co. Master Tr.
Div
Attn: Kevin Sutton
Solomon Williard Bldg. One Enterprise
Dr.
North Quincy, MA 02171
- -----------------------------------------------------------------------------------------------------
N/I GROWTH FUND Charles Schwab & Co. Inc 18.60%
Special Custody Account for the
Exclusive Benefit of Customers
Attn: Mutual Funds
101 Montgomery St.
San Francisco, CA 94104
- -----------------------------------------------------------------------------------------------------
Citibank North America Inc. 20.60%
Trst Sargent & Lundy Retirement Trust
DTD 06/01/96
Mutual Fund Unit
Bld. B Floor 1 Zone 7
3800 Citibank Center Tampa
Tampa, FL 33610-9122
- -----------------------------------------------------------------------------------------------------
U.S. Equity Investment Portfolio LP 6.20%
1001 N. US Hwy One Suite 800
Jupiter, FL 33477
- -----------------------------------------------------------------------------------------------------
</TABLE>
-38-
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
FUND NAME SHAREHOLDER NAME AND ADDRESS PERCENTAGE OF FUND HELD
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Union Bank of California 5.20%
Trst Sunkist Growers-Match-Svgspln
Trst No. 610001154-03
Mutual Funds Dept. P.O. Box 109
San Diego, CA 92112
- -----------------------------------------------------------------------------------------------------
N/I GROWTH AND VALUE FUND Charles Schwab & Co. Inc. 21.80%
Special Custody Account for the
Exclusive Benefit of Customers
Attn: Mutual Funds
101 Montgomery St.
San Francisco, CA 94104
- -----------------------------------------------------------------------------------------------------
The John E. Fetzer Institute Inc. 7.80%
Attn: Christina Adams
9292 W. KL Ave.
Kalamazoo, MI 49009
- -----------------------------------------------------------------------------------------------------
Bankers Trust Cust Pge-Enron Foundation 5.40%
Attn: Procy Fernandez
300 S. Grand Ave. 40th Floor
Los Angeles, CA 90071
- -----------------------------------------------------------------------------------------------------
N/I LARGER CAP VALUE FUND Charles Schwab & Co. Inc 18.60%
Special Custody Account for the
Exclusive Benefit of Customers
Attn: Mutual Funds
101 Montgomery St.
San Francisco, CA 94104
- -----------------------------------------------------------------------------------------------------
Bank of America NT & SA 17.90%
FBO Community Hospital Central Cal Pn Pl
A/C 10-35-155-2048506
Attn: Mutual Funds 38615
P.O. Box 513577
Los Angeles, CA 90051
- -----------------------------------------------------------------------------------------------------
The John E. Fetzer Institute, Inc. 47.40%
Attn. Christina Adams
9292 W. KL Ave.
Kalamazoo, MI 49009
- -----------------------------------------------------------------------------------------------------
BOSTON PARTNERS LARGE CAP Dr. Janice B. Yost 16.90%
FUND INST SHARES Trst Mary Black Foundation Inc.
Bell Hill 945 E. Main St.
Spartanburg, SC 29302
----------------------------------------------------------------------------------------------------
</TABLE>
-39-
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
FUND NAME SHAREHOLDER NAME AND ADDRESS PERCENTAGE OF FUND HELD
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Saxon And Co. 6.20%
FBO UJF Equity Funds
AC 10-01-001-0578481
P.O. Box 7780-1888
Philadelphia, PA 19182
- -----------------------------------------------------------------------------------------------------
Irving Fireman's Relief & Ret Fund 7.60%
Attn: Edith Auston
825 W. Irving Blvd.
Irvin, TX 75060
- -----------------------------------------------------------------------------------------------------
Wells Fargo Bank 6.80%
Trst Stoel Rives
Tr 008125
P.O. Box 9800
Calabasas, CA 91308
- -----------------------------------------------------------------------------------------------------
James B. Beam 6.40%
Trst World Publishing Co Pft Shr Trust
P.O. Box 1511
Wenatchee, WA 98807
- -----------------------------------------------------------------------------------------------------
Swanee Hunt and Charles Ansbacher 8.20%
Trst The Swanee Hunt Family Fund
C/o Elizabeth Alberti
168 Brattle St.
Cambridge, MA 02138
- -----------------------------------------------------------------------------------------------------
Swanee Hunt and Charles Ansbacher 6.30%
Trst The Hunt Alternatives Fund
C/o Elizabeth Alberti
168 Brattle St.
Cambridge, MA 02138
- -----------------------------------------------------------------------------------------------------
Samuel Gary and Ronald Williams 7.20%
And David Younggren
Trst Gary Tax Advantaged PRO+ PSP
370 17th St. Suite 5300
Denver, CO 80202
- -----------------------------------------------------------------------------------------------------
BOSTON PARTNERS LARGE CAP National Financial Services Corp. 17.60%
FUND INVESTOR SHARES For the Exclusive Bene of Our Customers
Attn: Mutual Funds 5th Floor
200 Liberty St I World Financial Center
New York, NY 10281
- -----------------------------------------------------------------------------------------------------
</TABLE>
-40-
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
FUND NAME SHAREHOLDER NAME AND ADDRESS PERCENTAGE OF FUND HELD
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Charles Schwab & Co. Inc. 74.50%
Special Custody Account for the Benefit
of Customers
Attn: Mutual Funds
101 Montgomery St.
San Francisco, CA 94104
- -----------------------------------------------------------------------------------------------------
BOSTON PARTNERS MID CAP Donaldson Lufkin & Jenrette 11.50%
VALUE FUND INST. SHARES Securities Corporation
Attn: Mutual Funds
P.O. Box 2052
Jersey City, NJ 07303
----------------------------------------------------------------------------------------------------
North American Trst. Co. 5.80%
FBO Cooley Godward
P.O. Box 84419
San Diego, CA 92138
- -----------------------------------------------------------------------------------------------------
John Carroll University 6.70%
20700 N. Park Blvd.
University Heights, OH 44118
- -----------------------------------------------------------------------------------------------------
MAC & CO. 9.50%
A/C BPHF 3006002
Mutual Funds Operations
P.O. Box 3198
Pittsburgh, PA 15230-3198
- -----------------------------------------------------------------------------------------------------
ISTCO 6.80%
P.O. Box 523
Belleville, IL 62222-0523
- -----------------------------------------------------------------------------------------------------
Coastal Insurance Enterprises Inc. 8.70%
Attn: Chris Baldwin
P.O. Box 240429
Montgomery AL 36124
- -----------------------------------------------------------------------------------------------------
Healthcare Workers Compensation Fund 6.00%
Attn: Chris Baldwin
P.O. Box 240429
Montgomery AL 36124
- -----------------------------------------------------------------------------------------------------
BOSTON PARTNERS MID CAP National Financial Svcs Corp. for 12.50%
VALUE FUND INV SHARES Exclusive Bene of Our Customers Sal
Vella
200 Liberty St.
New York, NY 10281
- -----------------------------------------------------------------------------------------------------
</TABLE>
-41-
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
FUND NAME SHAREHOLDER NAME AND ADDRESS PERCENTAGE OF FUND HELD
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Charles Schwab & Co. Inc. 46.00%
Special Custody Account for Benefit of
Customers
Attn: Mutual Funds
101 Montgomery St.
San Francisco, CA 94104
- -----------------------------------------------------------------------------------------------------
George B. Smithy, Jr 5.20%
38 Greenwood Rd.
Wellesley, MA 02181
- -----------------------------------------------------------------------------------------------------
Jupiter & Co. 6.00%
c/o Investors Bank
P.O. Box 9130 FPG 90
Boston, MA 02010
- -----------------------------------------------------------------------------------------------------
BOSTON PARTNERS BOND FUND Boston Partners Asset Mgmt LP 35.10%
INSTITUTIONAL SHARES One Financial Center 43rd Fl.
Boston, MA 02111
----------------------------------------------------------------------------------------------------
Chiles Foundation 16.70%
111 S.W. Fifth Ave.
4010 US Bancorp Tower
Portland, OR 97204
- -----------------------------------------------------------------------------------------------------
The Roman Catholic Diocese of 39.10%
Raleigh, NC
General Endowment
715 Nazareth St.
Raleigh, NC 27606
- -----------------------------------------------------------------------------------------------------
The Roman Catholic Diocese of 9.00%
Raleigh, NC
Clergy Trust
715 Nazareth St.
Raleigh, NC 27606
- -----------------------------------------------------------------------------------------------------
BOSTON PARTNERS BOND FUND Charles Schwab & Co. Inc 77.00%
INVESTOR SHARES Special Custody Account for Benefit of
Customers
Attn: Mutual Funds
101 Montgomery St.
San Francisco, CA 94104
- -----------------------------------------------------------------------------------------------------
Donaldson Lufkin & Jenrette 5.10%
Securities Corporation
Attn: Mutual Funds
P.O. Box 2052
Jersey City, NJ 07303
- -----------------------------------------------------------------------------------------------------
</TABLE>
-42-
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
FUND NAME SHAREHOLDER NAME AND ADDRESS PERCENTAGE OF FUND HELD
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Stephen W. Hamilton 15.30%
17 Lakeside Ln
N. Barrington, IL 60010
- -----------------------------------------------------------------------------------------------------
BOSTON PARTNERS Desmond J. Heathwood 6.80%
MICRO CAP VALUE 41 Chestnut St.
FUND-INSTITUTIONAL Boston, MA 02108
SHARES
- -----------------------------------------------------------------------------------------------------
Boston Partners Asset Management LP 67.70%
One Financial Center
43rd Floor
Boston, MA 02111
- -----------------------------------------------------------------------------------------------------
Wayne Archambo 6.80%
42 DeLopa Circle
Westwood, MA 02090
- -----------------------------------------------------------------------------------------------------
David M. Dabora 6.80%
11 White Plains Ct.
San Anselmo, CA 94960
- -----------------------------------------------------------------------------------------------------
BOSTON PARTNERS National Financial Services Corp. 34.90%
MICRO CAP VALUE For the Exclusive Bene of our Customers
FUND-INVESTOR Attn. Mutual Funds 5th Floor
SHARES 200 Liberty St.
1 World Financial Center
New York, NY 10281
- -----------------------------------------------------------------------------------------------------
Scott J. Harrington 62.10%
54 Torino Ct.
Danville, CA 94526
- -----------------------------------------------------------------------------------------------------
</TABLE>
As of the same date, directors and officers as a group owned less than one
percent of the shares of the Fund.
BANKING LAWS. Banking laws and regulations currently prohibit a bank
holding company registered under the Federal Bank Holding Company Act of 1956 or
any bank or non-bank affiliate thereof from sponsoring, organizing, controlling
or distributing the shares of a registered, open-end investment company
continuously engaged in the issuance of its shares, and prohibit banks generally
from underwriting securities, but such banking laws and regulations do not
prohibit such a holding company or affiliate or banks generally from acting as
investment adviser, administrator, transfer agent or custodian to such an
investment company, or from purchasing shares of such a company as agent for and
upon the order of customers. BIMC, PNC Bank and other institutions that are
banks or bank affiliates are subject to such banking laws and regulations.
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<PAGE>
BIMC and PNC Bank believe they may perform the services for the Fund
contemplated by their respective agreements with RBB without violation of
applicable banking laws or regulations. It should be noted, however, that there
have been no cases deciding whether bank and non-bank subsidiaries of a
registered bank holding company may perform services comparable to those that
are to be performed by these companies, and future changes in either federal or
state statutes and regulations relating to permissible activities of banks and
their subsidiaries or affiliates, as well as further judicial or administrative
decisions or interpretations of present and future statutes and regulations,
could prevent these companies from continuing to perform such services for RBB.
If such were to occur, it is expected that the Board of Directors would
recommend that RBB enter into new agreements or would consider the possible
termination of RBB. Any new advisory or sub-advisory agreement would normally
be subject to shareholder approval. It is not anticipated that any change in
RBB's method of operations as a result of these occurrences would affect its net
asset value per share or result in a financial loss to any shareholder.
SHAREHOLDER APPROVALS. As used in this Statement of Additional Information
and in the Prospectuses, "shareholder approval" and a "majority of the
outstanding shares" of a class, series or Portfolio means, with respect to the
approval of an investment advisory agreement, a distribution plan or a change in
a fundamental investment limitation, the lesser of (1) 67% of the shares of the
particular class, series or Portfolio represented at a meeting at which the
holders of more than 50% of the outstanding shares of such class, series or
Portfolio are present in person or by proxy, or (2) more than 50% of the
outstanding shares of such class, series or Portfolio.
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APPENDIX A
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COMMERCIAL PAPER RATINGS
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A Standard & Poor's ("S&P") 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. The following summarizes the rating
categories used by Standard and Poor's for commercial paper:
"A-1" - The highest category indicates that the degree of safety
regarding timely payment is strong. Those issues determined to possess extremely
strong safety characteristics are denoted with a plus sign (+) designation.
"A-2" - Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated "A-1."
"A-3" - Issues carrying this designation have adequate capacity for
timely payment. They are, however, more vulnerable to the adverse effects of
changes in circumstances than obligations carrying the higher designations.
"B" - Issues are regarded as having only a speculative capacity for
timely payment.
"C" - This rating is assigned to short-term debt obligations with a
doubtful capacity for payment.
"D" - Issues are in payment default. The "D" rating category is used
when interest payments of principal payments are not made on the date due, even
if the applicable grace period has not expired, unless S&P believes such
payments will be made during such grace period.
Moody's commercial paper ratings are opinions of the ability of
issuers to repay punctually senior debt obligations not having an original
maturity in excess of one year, unless explicitly noted. The following
summarizes the rating categories used by Moody's for commercial paper:
"Prime-1" - Issuers (or supporting institutions) have a superior
ability for repayment of senior short-term debt obligations. Prime-1 repayment
ability will often be evidenced by many of the following characteristics:
leading market positions in well-established industries; high rates of return on
funds employed; conservative capitalization structure with moderate reliance on
debt and ample asset protection; broad margins in earnings coverage of fixed
financial charges and high internal cash generation; and well-established access
to a range of financial markets and assured sources of alternate liquidity.
A-1
<PAGE>
"Prime-2" - Issuers (or supporting institutions) have a strong ability
for repayment of senior short-term debt obligations. This will normally be
evidenced by many of the characteristics cited above but to a lesser degree.
Earnings trends and coverage ratios, while sound, may be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.
"Prime-3" - Issuers (or supporting institutions) have an acceptable
ability for repayment of senior short-term debt obligations. The effects of
industry characteristics and market compositions 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.
"Not Prime" - Issuers do not fall within any of the Prime rating
categories.
CORPORATE LONG-TERM DEBT RATINGS
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The following summarizes the ratings used by Standard & Poor's for
corporate debt:
"AAA" - This designation represents the highest rating assigned by
Standard & Poor's. The obligor's capacity to meet its financial commitment on
the obligation is extremely strong.
"AA" - An obligation rated "AA" differs from the highest rated
obligations only in small degree. The obligor's capacity to meet its financial
commitment on the obligation is very strong.
"A" - An obligation rated "A" is somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions than
obligations in higher rated categories. However, the obligor's capacity to meet
its financial commitment on the obligation is still strong.
"BBB" - An obligation rated "BBB" exhibits adequate protection
parameters. However, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity of the obligor to meet its financial
commitment on the obligation.
"BB," "B," "CCC," "CC" and "C" - Debt is regarded as having
significant speculative characteristics. "BB" indicates the least degree of
speculation and "C" the highest. While such obligations will likely have some
quality and protective characteristics, these may be outweighed by large
uncertainties or major exposures to adverse conditions.
"BB" - Debt is less vulnerable to non-payment than other speculative
issues. However, it faces major ongoing uncertainties or exposure to adverse
business, financial or economic conditions which could lead to the obligor's
inadequate capacity to meet its financial commitment on the obligation.
A-2
<PAGE>
"B" - Debt is more vulnerable to non-payment than obligations rated
"BB", but the obligor currently has the capacity to meet its financial
commitment on the obligation. Adverse business, financial or economic conditions
will likely impair the obligor's capacity or willingness to meet its financial
commitment on the obligation.
"CCC" - Debt is currently vulnerable to non-payment, and is dependent
upon favorable business, financial and economic conditions for the obligor to
meet its financial commitment on the obligation. In the event of adverse
business, financial or economic conditions, the obligor is not likely to have
the capacity to meet its financial commitment on the obligation.
"CC" - An obligation rated "CC" is currently highly vulnerable to non-
payment.
"C" - The "C" rating may be used to cover a situation where a
bankruptcy petition has been filed or similar action has been taken, but
payments on this obligation are being continued.
"D" - An obligation rated "D" is in payment default. This rating is
used when payments on an obligation are not made on the date due, even if the
applicable grace period has not expired, unless S & P believes that such
payments will be made during such grace period. "D" rating is also used upon the
filing of a bankruptcy petition or the taking of similar action if payments on
an obligation are jeopardized.
PLUS (+) OR MINUS (-) - The ratings from "AA" through "CCC" may be
modified by the addition of a plus or minus sign to show relative standing
within the major rating categories.
"r" - This rating is attached to highlight derivative, hybrid, and
certain other obligations that S & P believes may experience high volatility or
high variability in expected returns due to non-credit risks. Examples of such
obligations are: securities whose principal or interest return is indexed to
equities, commodities, or currencies; certain swaps and options; and interest-
only and principal-only mortgage securities. The absence of an "r" symbol should
not be taken as an indication that an obligation will exhibit no volatility or
variability in total return.
The following summarizes the ratings used by Moody's for corporate long-
term debt:
"Aaa" - Bonds are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt
edged." 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 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
A-3
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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 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 are considered as medium-grade obligations, (i.e., they
are neither highly protected nor poorly secured). Interest payments 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.
"Ba," "B," "Caa," "Ca," and "C" - Bonds that possess one of these
ratings provide questionable protection of interest and principal ("Ba"
indicates speculative elements; "B" indicates a general lack of characteristics
of desirable investment; "Caa" are of poor standing; "Ca" represents obligations
which are speculative in a high degree; and "C" represents the lowest rated
class of bonds). "Caa," "Ca" and "C" bonds may be in default.
Con. (---) - Bonds for which the security depends upon the completion
of some act or the fulfillment of some condition are rated conditionally. These
are bonds secured by (a) earnings of projects under construction, (b) earnings
of projects unseasoned in operation experience, (c) rentals which begin when
facilities are completed, or (d) payments to which some other limiting condition
attaches. Parenthetical rating denotes probable credit stature upon completion
of construction or elimination of basis of condition.
(P)... - When applied to forward delivery bonds, indicates that the
rating is provisional pending delivery of the bonds. The rating may be revised
prior to delivery if changes occur in the legal documents or the underlying
credit quality of the bonds.
Note: Those bonds in the Aa, A, Baa, Ba and B groups which Moody's
believes possess the strongest investment attributes are designated by the
symbols Aa1, A1, Baa1, Ba1 and B1.
A-4
