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