RBB FUND INC, 497, 2000-12-11

RBB FUND INC
497, 2000-12-11

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THE RBB FUND, INC.

SUPPLEMENT DATED DECEMBER 11, 2000
TO
BOSTON PARTNERS FAMILY OF FUNDS
INSTITUTIONAL CLASS PROSPECTUS

DATED DECEMBER 1, 1999 (AS REVISED MARCH 28, 2000)

Capitalized terms not defined in this Supplement have the meaning
assigned to them in the Prospectus.

The paragraph "Primary Investment Strategies" in the section entitled
"Boston Partners Bond Fund" on page 19 is revised as follows:

The Fund invests (during normal market conditions) at least 75% of its
total assets at the time of purchase in bonds, including corporate debt
obligations and mortgage-backed and asset-backed securities (collectively, "Debt
Securities") rated investment-grade or better at the time of purchase by
Standard & Poor's Ratings Group ("S&P") or Moody's Investors Service, Inc.
("Moody's") or which are similarly rated by another nationally recognized
statistical rating organization ("Rating Organization"). The Fund may also
purchase Debt Securities which are unrated but deemed by Boston Partners Asset
Management L.P. (the "Adviser") to be comparable in quality to investment-grade
instruments. The Fund may invest up to 25% of its total assets at the time of
purchase in Debt Securities rated "Ba" and "B" by Moody's or "BB" and "B" by S&P
or which are similarly rated by another Rating Organization (i.e., high yield,
high risk securities) or are unrated but deemed by the Adviser to be comparable
in quality to instruments that are so rated. The Fund may invest up to 50% of
its total assets at the time of purchase in U.S. government obligations, and 15%
of its total assets at the time of purchase in convertible securities.

The following language is added to the "Key Risks" section on page 19:

The value of debt securities depends on the ability of issuers to make
principal and interest payments. If an issuer can't meet its payment
obligations, the value of its debt securities will fall. Securities issued or
guaranteed by the U.S. Government and its agencies have historically involved
little risk of loss of principal if held to maturity. Certain U.S. Government
securities, such as Ginnie Maes, are supported by the full faith and credit of
the U.S. Treasury. Others, such as Freddie Macs, are supported by the right of
the issuer to borrow from the U.S. Treasury. Other securities, such as Fannie
Maes, are supported by the discretionary authority of the U.S. Government to
purchase certain obligations of the issuer, and still others are supported by
the issuer's own credit.

Convertible securities have characteristics of both fixed income and
equity securities. The value of a convertible security tends to move with the
market value of the underlying stock, but may also be affected by interest
rates, credit quality of the issuer and any call provisions.

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The paragraph "Primary Investment Strategies" on page 24 in the section
entitled "Boston Partners Long/Short Equity Fund" is revised as follows:

The Fund invests in long positions in stocks identified by Boston
Partners Asset Management L.P. (the "Adviser") as undervalued and short
positions in stocks that the Adviser has identified as overvalued. The cash
proceeds from short sales will be invested in short-term cash instruments to
produce a return on such proceeds just below the federal funds rate. The Fund
will invest in securities principally traded in the United States markets. The
Fund may invest in securities of companies operating for three years or less
("unseasoned issuers"). The Adviser will determine the size of each long or
short position by analyzing the tradeoff between the attractiveness of each
position and its impact on the risk of the overall portfolio. The Fund seeks to
construct a portfolio that has minimal net exposure to the United States equity
market generally and low to neutral exposure to specific industries, specific
market capitalization ranges (e.g., large cap, mid cap and small cap) and
certain other factors.

The following language is added to the "Key Risks" section on page 25:

Unseasoned issuers may not have an established financial history and
may have limited product lines, markets or financial resources. Unseasoned
issuers may depend on a few key personnel for management and may be susceptible
to losses and risks of bankruptcy. As a result, such securities may be more
volatile and difficult to sell.

The paragraph "BOSTON PARTNERS BOND FUND" on page 29 in the section
entitled "Management" is revised as follows:

The day-to-day portfolio management of the Fund is the responsibility
of William R. Leach who is a senior portfolio manager of the Adviser and
Chairman of the Fixed Income Strategy Committee. Prior to joining the Adviser in
April 1995, Mr. Leach was employed by the Boston Company Asset Management, Inc.
from 1988 through April 1995 where he was a senior portfolio manager and
Director of the Fixed Income Strategy Committee. Mr. Leach has over 16 years of
investment experience and is a CFA. Mr. Leach will be assisted by Joseph F.
Feeney, Jr. and Michael A. Mullaney. Mr. Feeney is a Fixed Income Portfolio
Manager with the Adviser and also a CFA. Prior to joining the Adviser in April
1995, he was Assistant Vice President and Mortgage-backed Securities Portfolio
Manager for Putnam Investments. Mr. Mullaney is a Fixed Income Portfolio Manager
who joined the Adviser in June 1997. From 1984 to 1997, he was employed at
Putnam Investments, most recently as Managing Director and Senior Investment
Strategist, specializing in portfolio strategy and management. His prior
experience included a position as a senior Consultant from 1981 to 1983 with
Chase Econometrics/Interactive Data Corporation, where he focused on
quantitative methodologies in fixed income and equity management. He has over 16
years of investment experience. For the fiscal year ended August 31, 1999, the
Fund paid 0% (expressed as a percentage of average net assets) to the Adviser
for its services.

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THE RBB FUND, INC.

SUPPLEMENT DATED DECEMBER 11, 2000
TO
BOSTON PARTNERS FAMILY OF FUNDS
INVESTOR CLASS PROSPECTUS

DATED DECEMBER 1, 1999 (AS REVISED MARCH 28, 2000)

Capitalized terms not defined in this Supplement have the meaning
assigned to them in the Prospectus.

The paragraph "Primary Investment Strategies" in the section entitled
"Boston Partners Bond Fund" on page 17 is revised as follows:

The following language is added to the "Key Risks" section on page 17:

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The paragraph "Primary Investment Strategies" on page 21 in the section
entitled "Boston Partners Long/Short Equity Fund" is revised as follows:

The following language is added to the "Key Risks" section on page 22:

The paragraph "BOSTON PARTNERS BOND FUND" on page 26 in the section
entitled "Management" is revised as follows:

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<PAGE>

BOSTON PARTNERS
FAMILY OF FUNDS
OF
THE RBB FUND, INC.

Institutional and Investor Classes

Boston Partners Large Cap Value Fund
Boston Partners Mid Cap Value Fund
Boston Partners Small Cap Value Fund II
Boston Partners Bond Fund
Boston Partners Long/Short Equity Fund

STATEMENT OF ADDITIONAL INFORMATION

DECEMBER 1, 1999
(AS REVISED MARCH 31, 2000 AND DECEMBER 11, 2000)

This Statement of Additional Information ("SAI") provides information
about the Boston Partners Large Cap Value Fund (the "Large Cap Value Fund"),
Boston Partners Mid Cap Value Fund (the "Mid Cap Value Fund"), Boston Partners
Small Cap Value Fund II (the "Small Cap Value Fund"), Boston Partners Bond Fund
(the "Bond Fund") and the Boston Partners Long/Short Equity Fund (formerly the
Boston Partners Market Neutral Fund) (the "Long/Short Equity Fund") (each a
"Fund" and collectively, the "Funds") of The RBB Fund, Inc. (the "Company").
This information is in addition to the information contained in Boston Partners
Family of Funds Prospectus dated December 1, 1999 (as revised March 28, 2000)
(the "Prospectus").

This SAI is not a prospectus. It should be read in conjunction with the
Prospectus and the Funds' Annual Report dated August 31, 2000. The financial
statements and notes contained in the Annual Report are incorporated by
reference into this SAI. Copies of the Prospectus and Annual Report may be
obtained by calling toll-free (888) 261-4073.

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TABLE OF CONTENTS

PAGE

GENERAL INFORMATION............................................................1

INVESTMENT INSTRUMENTS AND POLICIES............................................1

INVESTMENT LIMITATIONS........................................................20

MANAGEMENT OF THE COMPANY.....................................................24
Directors and Officers...............................................24
Directors' Compensation..............................................26

CONTROL PERSONS...............................................................27

INVESTMENT ADVISORY, DISTRIBUTION AND SERVICING ARRANGEMENTS..................34
Advisory Agreements..................................................34
Custodian and Transfer Agency Agreements.............................37
Administration Agreement.............................................37
Distribution Agreement...............................................39
Administrative Services Agent........................................41

PORTFOLIO TRANSACTIONS........................................................42

PURCHASE AND REDEMPTION INFORMATION...........................................43

VALUATION OF SHARES...........................................................46

PERFORMANCE INFORMATION.......................................................46

TAXES.........................................................................49

ADDITIONAL INFORMATION CONCERNING RBB SHARES..................................50

MISCELLANEOUS.................................................................52
Counsel..............................................................52
Independent Accountants..............................................52

FINANCIAL STATEMENTS..........................................................52

APPENDIX A...................................................................A-1

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GENERAL INFORMATION

RBB was organized as a Maryland corporation on February 29, 1988 and is
an open-end management investment company currently operating or proposing to
operate 17 separate investment portfolios. This Statement of Additional
Information pertains to Institutional and Investor Shares representing interests
in the diversified Funds offered by the Prospectus dated December 1, 1999 (as
revised March 28, 2000).

INVESTMENT INSTRUMENTS AND POLICIES

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

EQUITY MARKETS.

The Funds, with the exception of the Bond Fund, invest primarily in
equity markets at all times. Equity markets can be highly volatile, so that
investing in the Funds involves substantial risk. As a result, investing in the
Funds involves the risk of loss of capital.

MICRO CAP, SMALL CAP AND MID CAP STOCKS.

Securities of companies with micro, small and mid-size capitalizations
tend to be riskier than securities of companies with large capitalizations. This
is because micro, small and mid cap companies typically have smaller product
lines and less access to liquidity than large cap companies, and are therefore
more sensitive to economic downturns. In addition, growth prospects of micro,
small and mid cap companies tend to be less certain than large cap companies,
and the dividends paid on micro, small and mid cap stocks are frequently
negligible. Moreover, micro, small and mid cap stocks have, on occasion,
fluctuated in the opposite direction of large cap stocks or the general stock
market. Consequently, securities of micro, small and mid cap companies tend to
be more volatile than those of large cap companies. The market for micro and
small cap securities may be thinly traded and as a result, greater fluctuations
in the price of micro and small cap securities may occur.

MARKET FLUCTUATION.

Because the investment alternatives available to each Fund may be
limited by the specific objectives of that Fund, investors should be aware that
an investment in a particular Fund may be subject to greater market fluctuation
than an investment in a portfolio of securities representing a broader range of
investment alternatives. In view of the specialized nature of the investment
activities of each Fund, an investment in any single fund should not be
considered a complete investment program.

LENDING OF PORTFOLIO SECURITIES.

Each Fund may lend its portfolio securities to financial institutions
in accordance with the investment restrictions described below. Such loans would
involve risks of delay in receiving additional collateral in the event the value
of the collateral decreased below the value of the securities loaned or of delay
in recovering the securities loaned or even loss of rights in the

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collateral should the borrower of the securities fail financially. However,
loans will be made only to borrowers deemed by the Funds' investment adviser to
be of good standing and only when, in the Adviser's judgment, the income to be
earned from the loans justifies the attendant risks. Any loans of a Fund's
securities will be fully collateralized and marked to market daily.

BORROWING.

The Long/Short Equity Fund may borrow up to 33 1/3 percent of its
respective total assets. The Adviser intends to borrow only for temporary or
emergency purposes, including to meet portfolio redemption requests so as to
permit the orderly disposition of portfolio securities, or to facilitate
settlement transactions on portfolio securities. Investments will not be made
when borrowings exceed 5% of a fund's total assets. Although the principal of
such borrowings will be fixed, the Fund's assets may change in value during the
time the borrowing is outstanding. The Fund expects that some of its borrowings
may be made on a secured basis. In such situations, either the custodian will
segregate the pledged assets for the benefit of the lender or arrangements will
be made with a suitable subcustodian, which may include the lender. If the
securities held by a Fund should decline in value while borrowings are
outstanding, the net asset value of a Fund's outstanding shares will decline in
value by proportionately more than the decline in value suffered by a Fund's
securities. As a result, a Fund's share price may be subject to greater
fluctuation until the borrowing is paid off. The Fund's short sales and related
borrowing are not subject to the restrictions outlined above.

INDEXED SECURITIES.

The Funds may invest in indexed securities whose value is linked to
securities indices. Most such securities have values which rise and fall
according to the change in one or more specified indices, and may have
characteristics similar to direct investments in the underlying securities.
Depending on the index, such securities may have greater volatility than the
market as a whole. Each of the Bond, Large Cap Value, Mid Cap Value and Small
Cap Value Funds do not presently intend to invest more than 5% of their
respective net assets in indexed securities.

REPURCHASE AGREEMENTS.

The Funds 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 securities held subject to a repurchase
agreement may have stated maturities exceeding 13 months, provided the
repurchase agreement itself matures in less than 13 months. The financial
institutions with whom the Fund may enter into repurchase agreements will be
banks which the Adviser considers creditworthy pursuant to criteria approved by
the Board of Directors and non-bank dealers of U.S. Government securities that
are listed on the Federal Reserve Bank of New York's list of reporting dealers.
The Adviser will consider the creditworthiness of a seller 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. The Adviser 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 possible loss

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because of adverse market action or delays in connection with the disposition of
the underlying obligations.

REVERSE REPURCHASE AGREEMENTS AND DOLLAR ROLLS.

The Funds may enter into reverse repurchase agreements with respect to
portfolio securities for temporary purposes (such as to obtain cash to meet
redemption requests) when the liquidation of portfolio securities is deemed
disadvantageous or inconvenient by the Adviser. Reverse repurchase agreements
involve the sale of securities held by a Fund pursuant to the Fund's agreement
to repurchase the securities at an agreed-upon price, date and rate of interest.
Such agreements are considered to be borrowings under the Investment Company Act
of 1940 (the "1940 Act"), and may be entered into only for temporary or
emergency purposes. While reverse repurchase transactions are outstanding, a
Fund will maintain in a segregated account with the Fund's custodian or a
qualified sub-custodian, cash or liquid 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 and the interest received on the cash exchanged
for the securities. The Bond, Large Cap Value, Mid Cap Value and Small Cap Value
Funds may also enter into "dollar rolls," in which it sells fixed income
securities for delivery in the current month and simultaneously contracts to
repurchase substantially similar (same type, coupon and maturity) securities on
a specified future date. During the roll period, a Fund would forgo principal
and interest paid on such securities. The Fund would be compensated by the
difference between the current sales price and the forward price for the future
purchase, as well as by the interest earned on the cash proceeds of the initial
sale. The return on dollar rolls may be negatively impacted by fluctuations in
interest rates. The Funds do not presently intend to engage in reverse
repurchase transactions involving more than 5% of each Fund's respective net
assets. The Bond, Large Cap Value, Mid Cap Value and Small Cap Value Funds do
not presently intend to engage in dollar roll transactions involving more than
5% of each Fund's respective net assets.

PURCHASE WARRANTS

The Funds, with the exception of the Bond Fund, may invest up to 5% of
its net assets in purchase warrants. 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 warrants involves the risk that the Fund could lose
the purchase value of a warrant if the right to subscribe to additional shares
is not executed prior to the warrants' expiration. Also, the purchase of
warrants involves the risk that the effective price paid for the 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.

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U.S. GOVERNMENT OBLIGATIONS.

The Funds may purchase U.S. Government agency and instrumentality
obligations that are debt securities issued by U.S. Government-sponsored
enterprises and federal agencies. Some obligations of agencies and
instrumentalities of the U.S. Government are supported by the full faith and
credit of the U.S. Government or by U.S. Treasury guarantees, such as securities
of the Government National Mortgage Association and the Federal Housing
Authority; others, by the ability of the issuer to borrow, provided approval is
granted, from the U.S. Treasury, such as securities of the Federal Home Loan
Mortgage Corporation and others, only by the credit of the agency or
instrumentality issuing the obligation, such as securities of the Federal
National Mortgage Association and the Federal Loan Banks. U.S. Government
obligations that are not backed by the full faith and credit of the U.S.
Government are subject to greater risks than those that are. U.S. Government
obligations that are backed by the full faith and credit of the U.S. Government
are subject to interest rate risk.

Each Fund's net assets may be invested in obligations issued or
guaranteed by the U.S. Treasury or the agencies or instrumentalities of the U.S.
Government, including options and futures on such obligations. The maturities of
U.S. Government securities usually range from three months to thirty years.
Examples of types of U.S. Government obligations include U.S. Treasury Bills,
Treasury Notes and Treasury Bonds and the obligations of Federal Home Loan
Banks, Federal Farm Credit Banks, Federal Land Banks, the Federal Housing
Administration, Farmers Home Administration, Export-Import Bank of the United
States, Small Business Administration, Federal National Mortgage Association,
Government National Mortgage Association, General Services Administration,
Student Loan Marketing Association, Central Bank for Cooperatives, Federal Home
Loan Mortgage Corporation, Federal Intermediate Credit Banks, the Maritime
Administration, the Asian-American Development Bank and the Inter-American
Development Bank. The Large Cap Value, Mid Cap Value and Small Cap Value Funds
do not presently intend to invest more than 5% of each Fund's respective net
assets in U.S. Government obligations. The Bond Fund does not presently intend
to invest more than 50% of its net assets in U.S. Government obligations.

ILLIQUID SECURITIES.

A Fund may not invest more than 15% of its net assets in illiquid
securities (including repurchase agreements that have a maturity of longer than
seven days), including securities that are illiquid by virtue of the absence of
a readily available market or legal or contractual restrictions on resale.
Securities that have legal or contractual restrictions on resale but have a
readily available market are not considered illiquid for purposes of this
limitation. With respect to each Fund, 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 restricted
or other illiquid securities because of the potential for delays on resale and
uncertainty in valuation. Limitations on resale may have an adverse effect on
the marketability of portfolio securities and a mutual fund might be unable to
dispose of restricted or other illiquid securities promptly or at reasonable
prices and might thereby experience difficulty satisfying redemptions within
seven days. A mutual fund might also have to register such restricted securities
in order to dispose of them

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resulting in additional expense and delay. Adverse market conditions could
impede such a public offering of securities.

Each 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 Funds' adviser that an
adequate trading market exists for the securities. This investment practice
could have the effect of increasing the level of illiquidity in a Fund during
any period that qualified institutional buyers become uninterested in purchasing
restricted securities.

The Adviser will monitor the liquidity of restricted securities held by
a 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).

SECURITIES OF UNSEASONED ISSUERS.

The Market Neutral Fund may invest in securities of unseasoned issuers,
including equity securities of unseasoned issuers which are not readily
marketable, provided the aggregate investment in such securities would not
exceed 25% of the Fund's net assets. The term "unseasoned" refers to issuers
which, together with their predecessors, have been in operation for less than
three years.

CONVERTIBLE SECURITIES.

The Funds may invest in convertible securities. A convertible security
is a bond, debenture, note, preferred stock or other security that may be
converted into or exchanged for a prescribed amount of common stock of the same
or a different issuer within a particular period of time at a specified price or
formula. A convertible security entitles the holder to receive interest paid or
accrued on debt or the dividend paid on preferred stock until the convertible
security matures or is redeemed, converted or exchanged. Before conversion,
convertible securities have characteristics similar to nonconvertible debt
securities in that they ordinarily provide a stable stream of income with
generally higher yields than those of common stocks of the same or similar
issuers. Convertible securities rank senior to common stock in a corporation's
capital structure but are usually subordinated to comparable nonconvertible
securities. While no securities investment is completely without risk,
investments in convertible securities generally entail less risk than the
corporation's common stock, although the extent to which such risk is reduced
depends in large measure upon the degree to which the convertible security sells
above its value as a fixed income security. Convertible securities have unique
investment characteristics in that they generally: (1) have higher yields than
common stocks, but lower yields than comparable non-convertible securities; (2)
are less subject to fluctuation in value than the underlying stock since they
have fixed income characteristics; and (3) provide the potential for capital
appreciation if the market price of the underlying common stock increases.

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The value of a convertible security is a function of its "investment
value" (determined by its yield in comparison with the yields of other
securities of comparable maturity and quality that do not have a conversion
privilege) and its "conversion value" (the security's worth, at market value, if
converted into the underlying common stock). The investment value of a
convertible security is influenced by changes in interest rates, with investment
value declining as interest rates increase and increasing as interest rates
decline. The credit standing of the issuer and other factors also may have an
effect on the convertible security's investment value. The conversion value of a
convertible security is determined by the market price of the underlying common
stock. If the conversion value is low relative to the investment value, the
price of the convertible security is governed principally by its investment
value. Generally the conversion value decreases as the convertible security
approaches maturity. To the extent the market price of the underlying common
stock approaches or exceeds the conversion price, the price of the convertible
security will be increasingly influenced by its conversion value. A convertible
security generally will sell at a premium over its conversion value by the
extent to which investors place value on the right to acquire the underlying
common stock while holding a fixed income security.

A convertible security might be subject to redemption at the option of
the issuer at a price established in the convertible security's governing
instrument. If a convertible security held by a Fund is called for redemption,
that Fund will be required to permit the issuer to redeem the security, convert
it into the underlying common stock or sell it to a third party. The Bond Fund
does not presently intend to invest more than 15% of its net assets, and the
Large Cap Value, Mid Cap Value, Small Cap Value and Long/Short Equity Funds do
not presently intend to invest more than 5% of each Fund's respective net
assets, in convertible securities, or securities received by a Fund upon
conversion thereof.

HEDGING INVESTMENTS.

At such times as the Adviser deems it appropriate and consistent with a
Fund's investment objective, the Large Cap Value, Mid Cap Value, Small Cap Value
and Bond Funds may invest in financial futures contracts and options on
financial futures contracts. The purpose of such transactions is to hedge
against changes in the market value of securities in a Fund caused by
fluctuating interest rates and to close out or offset its existing positions in
such futures contracts or options as described below. Such instruments will not
be used for speculation. Futures contracts and options on futures are discussed
below.

FUTURES CONTRACTS.

The Large Cap Value, Mid Cap Value and Small Cap Value Funds may invest
in financial futures contracts with respect to those securities listed on the S
& P 500 Stock Index ("Index Futures"). The Bond Fund may enter into futures
contracts based on various securities (such as U.S. Government Securities),
foreign securities, securities indices and other financial instruments and
indices. Financial futures contracts obligate the seller to deliver a specific
type of security called for in the contract, at a specified future time, and for
a specified price. Financial futures contracts may be satisfied by actual
delivery of the securities or, more typically, by entering into an offsetting
transaction. In contrast to purchases of a common stock, no price is

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paid or received by a Fund upon the purchase of a futures contract. Upon
entering into a futures contract, the Fund will be required to deposit with its
custodian in a segregated account in the name of the futures broker a specified
amount of cash or securities. This is known by participants in the market as
"initial margin." The type of instruments that may be deposited as initial
margin, and the required amount of initial margin, are determined by the futures
exchange(s) on which the Index Futures are traded. The nature of initial margin
in futures transactions is different from that of margin in securities
transactions in that futures contract margin does not involve the borrowing of
funds by the customer to finance the transactions. Rather, the initial margin is
in the nature of a performance bond or good faith deposit on the contract which
is returned to the Fund upon termination of the futures contract, assuming all
contractual obligations have been satisfied. Subsequent payments, called
"variation margin," to and from the broker, will be made on a daily basis as the
price of the S&P 500 Index fluctuates, making the position in the futures
contract more or less valuable, a process known as "marking to the market." For
example, when a Fund has purchased an Index Future and the price of the S&P 500
Index has risen, that position will have increased in value and the Fund will
receive from the broker a variation margin payment equal to that increase in
value. Conversely, when a Fund has purchased an Index Future and the price of
the S&P 500 Index has declined, the position would be less valuable and the Fund
would be required to make a variation margin payment to the broker. When a Fund
terminates a position in a futures contract, a final determination of variation
margin is made, additional cash is paid by or to the Fund, and the Fund realizes
a gain or a loss.

The price of Index Futures may not correlate perfectly with movement in
the underlying index due to certain market distortions. First, all participants
in the futures market are subject to margin deposit and maintenance
requirements. Rather than meeting additional margin deposit requirements,
investors may close futures contracts through offsetting transactions which
could distort the normal relationship between the S&P 500 Index and futures
markets. Secondly, the deposit requirements in the futures market are less
onerous than margin requirements in the securities market, and as a result the
futures market may attract more speculators than does the securities market.
Increased participation by speculators in the futures market may also cause
temporary price distortions.

There are risks that are associated with the use of futures contracts
for hedging purposes. In certain market conditions, as in a rising interest rate
environment, sales of futures contracts may not completely offset a decline in
value of the portfolio securities against which the futures contracts are being
sold. In the futures market, it may not always be possible to execute a buy or
sell order at the desired price, or to close out an open position due to market
conditions, limits on open positions, and/or daily price fluctuations. Risks in
the use of futures contracts also result from the possibility that changes in
the market interest rates may differ substantially from the changes anticipated
by the Fund's investment adviser when hedge positions were established. Futures
markets are highly volatile and the use of futures may increase the volatility
of a Fund's net asset value. The Large Cap Value, Mid Cap Value, Small Cap Value
and Bond Funds do not presently intend to invest more than 5% of each Fund's
respective net assets in futures contracts.

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OPTIONS ON FUTURES.

The Large Cap Value, Mid Cap Value and Small Cap Value Funds may
purchase and write call and put options on futures contracts with respect to
those securities listed on the S & P 500 Stock Index and enter into closing
transactions with respect to such options to terminate an existing position. The
Bond Fund may purchase and write call and put options on futures contracts based
on various securities (such as U.S. Government Securities), foreign securities,
securities indices and other financial instruments and indices. An option on a
futures contract gives the purchaser the right, in return for the premium paid,
to assume a position in a futures contract. The Funds may use options on futures
contracts in connection with hedging strategies. The purchase of put options on
futures contracts is a means of hedging against the risk of rising interest
rates. The purchase of call options on futures contracts is a means of hedging
against a market advance when a Fund is not fully invested.

Options trading is a highly specialized activity which entails greater
than ordinary investment risks. Options on particular securities may be more
volatile than the underlying securities, and therefore, on a percentage basis,
an investment in the underlying securities themselves. A Fund will write call
options only if they are "covered." In the case of a call option on a security,
the option is "covered" if a Fund owns the security underlying the call or has
an absolute and immediate right to acquire that security without additional cash
consideration (or, if additional cash consideration is required, liquid assets
in such amount as are held in a segregated account by its custodian) upon
conversion or exchange of other securities held by it. For a call option on an
index, the option is covered if a Fund maintains with its custodian liquid
assets equal to the contract value. A call option is also covered if a Fund
holds a call on the same security or index as the call written where the
exercise price of the call held is (i) equal to or less than the exercise price
of the call written, or (ii) greater than the exercise price of the call written
provided the difference is maintained by the Fund in liquid assets in a
segregated account with its custodian.

When a Fund purchases a put option, the premium paid by it is recorded
as an asset of the Fund. When a Fund writes an option, an amount equal to the
net premium (the premium less the commission) received by the Fund is included
in the liability section of the Fund's statement of assets and liabilities as a
deferred credit. The amount of this asset or deferred credit will be
subsequently marked-to-market to reflect the current value of the option
purchased or written. The current value of the traded option is the last sale
price or, in the absence of a sale, the mean between the last bid and asked
prices. If an option purchased by a Fund expires unexercised the Fund realizes a
loss equal to the premium paid. If the Fund enters into a closing sale
transaction on an option purchased by it, the Fund will realize a gain if the
premium received by the Fund on the closing transaction is more than the premium
paid to purchase the option, or a loss if it is less. If an option written by a
Fund expires on the stipulated expiration date or if the Fund enters into a
closing purchase transaction, it will realize a gain (or loss if the cost of a
closing purchase transaction exceeds the net premium received when the option is
sold) and the deferred credit related to such option will be eliminated. If an
option written by a Fund is exercised, the proceeds of the sale will be
increased by the net premium originally received and the Fund will realize a
gain or loss.

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<PAGE>

In addition, a liquid secondary market for particular options, whether
traded over-the-counter or on a national securities exchange ("Exchange"), may
be absent for reasons which include the following: there may be insufficient
trading interest in certain options; restrictions may be imposed by an Exchange
on opening transactions or closing transactions or both; trading halts,
suspensions or other restrictions may be imposed with respect to particular
classes or series of options or underlying securities; unusual or unforeseen
circumstances may interrupt normal operations on an Exchange; the facilities of
an Exchange or the Options Clearing Corporation may not at all times be adequate
to handle current trading volume; or one or more Exchanges could, for economic
or other reasons, decide or be compelled at some future date to discontinue the
trading of options (or a particular class or series of options), in which event
the secondary market on that Exchange (or in that class or series of options)
would cease to exist, although outstanding options that had been issued by the
Options Clearing Corporation as a result of trades on that Exchange would
continue to be exercisable in accordance with their terms.

There is no assurance that a Fund will be able to close out its
financial futures positions at any time, in which case it would be required to
maintain the margin deposits on the contract. There can be no assurance that
hedging transactions will be successful, as there may be imperfect correlations
(or no correlations) between movements in the prices of the futures contracts
and of the securities being hedged, or price distortions due to market
conditions in the futures markets. Such imperfect correlations could have an
impact on the Fund's ability to effectively hedge its securities. The Bond,
Large Cap Value, Mid Cap Value and Small Cap Value Funds do not presently intend
to invest more than 5% of each Fund's respective net assets in options on
futures.

BANK AND CORPORATE OBLIGATIONS.

Each Fund may purchase obligations of issuers in the banking industry,
such as short-term obligations of bank holding companies, certificates of
deposit, bankers' acceptances and time deposits issued by U.S. or foreign banks
or savings institutions having total assets at the time of purchase in excess of
$1 billion. Investment in obligations of foreign banks or foreign branches of
U.S. banks may entail risks that are different from those of investments in
obligations of U.S. banks due to differences in political, regulatory and
economic systems and conditions. The Funds may also make interest-bearing
savings deposits in commercial and savings banks in amounts not in excess of 5%
of its total assets.

Each Fund may invest in debt obligations, such as bonds and debentures,
issued by corporations and other business organizations that are rated at the
time of purchase within the three highest ratings categories of S&P or Moody's
(or which, if unrated, are determined by the Adviser to be of comparable
quality). Unrated securities will be determined to be of comparable quality to
rated debt obligations if, among other things, other outstanding obligations of
the issuers of such securities are rated A or better. See Appendix "A" for a
description of corporate debt ratings. An issuer of debt obligations may default
on its obligation to pay interest and repay principal. Also, changes in the
financial strength of an issuer or changes in the credit rating of a security
may affect its value.

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COMMERCIAL PAPER.

Each Fund may purchase commercial paper rated (at the time of purchase)
"A-1" by S&P or "Prime-1" by Moody's or, when deemed advisable by the Fund's
Adviser, issues rated "A-2" or "Prime-2" by S&P or Moody's, respectively. These
rating symbols are described in Appendix "A" hereto. The Funds may also purchase
unrated commercial paper provided that such paper is determined to be of
comparable quality by the Funds' Adviser pursuant to guidelines approved by the
Board of Directors. Commercial paper issues in which a Fund may invest include
securities issued by corporations without registration under the Securities Act
of 1933, as amended (the "Securities Act") in reliance on the exemption from
such registration afforded by Section 3(a)(3) thereof, and commercial paper
issued in reliance on the so-called "private placement" exemption from
registration, which is afforded by Section 4(2) of the Securities Act ("Section
4(2) paper"). Section 4(2) paper is restricted as to disposition under the
federal securities laws in that any resale must similarly be made in an exempt
transaction. Section 4(2) paper is normally resold to other institutional
investors through or with the assistance of investment dealers who make a market
in Section 4(2) paper, thus providing liquidity. Each Fund does not presently
intend to invest more than 5% of its net assets in commercial paper.

FOREIGN SECURITIES.

Each of the Funds may invest in foreign securities (including equity
securities of foreign issuers trading in U.S. Markets), either directly or
indirectly through American Depository Receipts and through European Depository
Receipts. ADRs are receipts issued by an American bank or trust company
evidencing ownership of underlying securities issued by a foreign issuer. ADRs
may be listed on a national securities exchange or may trade in the
over-the-counter market. ADR prices are denominated in United States dollars;
the underlying security may be denominated in a foreign currency. The underlying
security may be subject to foreign government taxes which would reduce the yield
on such securities. Investments in foreign securities involve higher costs than
investments in U.S. securities, including higher transaction costs as well as
the imposition of additional taxes by foreign governments. In addition, foreign
investments may include additional risks associated with currency exchange
rates, less complete financial information about the issuers, less market
liquidity and political stability. Future political and economic information,
the possible imposition of withholding taxes on interest income, the possible
seizure or nationalization of foreign holdings, the possible establishment of
exchange controls, or the adoption of other governmental restrictions, might
adversely affect the payment of principal and interest on foreign obligations.

Fixed commissions on foreign securities exchanges are generally higher
than negotiated commissions on U.S. exchanges, although the Funds endeavor to
achieve the most favorable net results on their portfolio transactions. There is
generally less government supervision and regulation of securities exchanges,
brokers, dealers and listed companies than in the United States. Settlement
mechanics (e.g., mail service between the United States and foreign countries)
may be slower or less reliable than within the United States, thus increasing
the risk of delayed settlements of portfolio transactions or loss of
certificates for portfolio securities.

Foreign markets also have different clearance and settlement
procedures, and in certain markets there have been times when settlements have
been unable to keep pace with the volume

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<PAGE>

of securities transactions, making it difficult to conduct such transactions.
Such delays in settlement could result in temporary periods when a portion of
the assets of a Fund is uninvested and no return is earned thereon. The
inability of the Funds to make intended security purchases due to settlement
problems could cause a Fund to miss attractive investment opportunities.
Inability to dispose of Fund securities due to settlement problems could result
either in losses to the Fund due to subsequent declines in value of the
securities, or, if a Fund has entered into a contract to sell the securities,
could result in possible liability to the purchaser. Individual foreign
economies may differ favorably or unfavorably from the U.S. economy in such
respects as growth or gross national product, rate of inflation, capital
reinvestment, resource self-sufficiency and balance of payments position.

Although the Funds may invest in securities denominated in foreign
currencies, each Fund values its securities and other assets in U.S. dollars. As
a result, the net asset value of a Fund's shares may fluctuate with U.S. dollar
exchange rates as well as the price changes of the Fund's securities in the
various local markets and currencies. Thus, an increase in the value of the U.S.
dollar compared to the currencies in which a Fund makes its investments could
reduce the effect of increases and magnify the effect of decreases in the price
of the Fund's securities in their local markets. Conversely, a decrease in the
value of the U.S. dollar may have the opposite effect of magnifying the effect
of increases and reducing the effect of decreases in the prices of a Fund's
securities in its foreign markets. In addition to favorable and unfavorable
currency exchange rate developments, each Fund is subject to the possible
imposition of exchange control regulations or freezes on convertibility of
currency.

The Bond Fund may purchase debt obligations issued or guaranteed by
governments (including states, provinces or municipalities) of countries other
than the United States, or by their agencies, authorities or instrumentalities.
The Bond Fund may purchase debt obligations issued or guaranteed by
supranational entities organized or supported by several national governments,
such as the International Bank for Reconstruction and Development (the "World
Bank"), the Inter-American Development Bank, the Asian Development Bank and the
European Investment Bank. The Bond Fund may purchase debt obligations of foreign
corporations or financial institutions, such as Yankee bonds (dollar-denominated
bonds sold in the United States by non-U.S. issuers) and Euro bonds (bonds not
issued in the country (and possibly not in the currency) of the issuer).

SHORT SALES.

The Long/Short Equity Fund may enter into short sales. Short sales are
transactions in which a Fund sells a security it does not own in anticipation of
a decline in the market value of that security. To complete such a transaction,
the Fund must borrow the security to make delivery to the buyer. The Fund then
is obligated to replace the security borrowed by purchasing it at the market
price at the time of replacement. The price at such time may be more or less
than the price at which the security was sold by the Fund. Until the security is
replaced, the Fund is required to pay to the lender amounts equal to any
dividend which accrues during the period of the loan. To borrow the security,
the Fund also may be required to pay a premium, which would increase the cost of
the security sold. The proceeds of the short sale will be retained by the
broker, to the extent necessary to meet margin requirements, until the short
position is closed out.

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<PAGE>
Until a Fund replaces a borrowed security in connection with a short
sale, the Fund will: (a) maintain daily a segregated account, containing cash,
cash equivalents, or 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.

A Fund will incur a loss as a result of the short sale if the price of
the security increases between the date of the short sale and the date on which
the Fund replaces the borrowed security. The Fund will realize a gain if the
security declines in price between those dates. This result is the opposite of
what one would expect from a cash purchase of a long position in a security. The
amount of any gain will be decreased, and the amount of any loss increased, by
the amount of any premium or amounts in lieu of interest the Fund may be
required to pay in connection with a short sale. A Fund may purchase call
options to provide a hedge against an increase in the price of a security sold
short by the Fund. See "Futures and Options" above.

The Funds anticipate that the frequency of short sales will vary
substantially in different periods, and they do not intend that any specified
portion of their assets, as a matter of practice, will be invested in short
sales. However, no securities will be sold short if, after effect is given to
any such short sale, the total market value of all securities sold short would
exceed 100% of the value of a Fund's net assets.

SHORT SALES "AGAINST THE BOX."

In addition to the short sales discussed above, the Long/Short Equity
Fund may make short sales "against the box," a transaction in which a 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 Funds
will make short sales against the box for purposes of protecting the value of
the Funds' net assets.

In a short sale, a Fund sells a borrowed security and has a
corresponding obligation to the lender to return the identical security. A Fund
may engage in short sales if at the time of the short sale it owns or has the
right to obtain, at no additional cost, an equal amount of the security being
sold short. This investment technique is known as a short sale "against the
box." In a short sale, a seller does not immediately deliver the securities sold
and is said to have a short position in those securities until delivery occurs.
If a Fund engages in a short sale, the collateral for the short position will be
maintained by the Fund's custodian or a qualified sub-custodian. While the short
sale is open, the Fund will maintain in a segregated account an amount of
securities equal in kind and amount to the securities sold short or securities
convertible into or exchangeable for such equivalent securities. These
securities constitute a Fund's long position. The Funds will not engage in short
sales against the box for speculative purposes. A Fund may, however, make a
short sale as a hedge, when it believes that the price of a security may
decline, causing a decline in the value of a security owned by the Fund (or a
security convertible or exchangeable for such security), or when the Fund wants
to sell the security at an attractive

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<PAGE>

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. The original
long position must also be held for the sixty days after the short position is
closed.) In such case, any future losses in a Fund's long position should be
reduced by a gain in the short position. Conversely, any gain in the long
position should be reduced by a loss in the short position. The extent to which
such gains or losses are reduced will depend upon the amount of the security
sold short relative to the amount a Fund owns. There will be certain additional
transaction costs associated with short sales against the box, but the Funds
will endeavor to offset these costs with the income from the investment of the
cash proceeds of short sales.

EUROPEAN CURRENCY UNIFICATION.

Many European countries have adopted a single European currency, the
euro. On January 1, 1999, the euro became legal tender for all countries
participating in the Economic and Monetary Union ("EMU"). A new European Central
Bank has been created to manage the monetary policy of the new unified region.
On the same date, the exchange rates were irrevocably fixed between the EMU
member countries. National currencies will continue to circulate until they are
replaced by euro coins and bank notes by the middle of 2002.

This change is likely to significantly impact the European capital
markets in which the Funds may invest and may result in a Fund facing additional
risks in pursuing its investment objective. These risks, which include, but are
not limited to, uncertainty as to proper tax treatment of the currency
conversion, volatility of currency exchange rates as a result of the conversion,
uncertainty as to capital market reaction, conversion costs that may affect
issuer profitability and creditworthiness, and lack of participation by some
European countries, may increase the volatility of a Fund's net asset value per
share.

ADDITIONAL INFORMATION ON BOND FUND INVESTMENTS.

The Adviser will select certain mortgage-backed and asset-backed
securities which it believes have better risk/return characteristics versus
other fixed income instruments. Mortgage-backed securities represent pools of
mortgage loans assembled for sale to investors by various governmental agencies
as well as by private issuers. Asset-backed securities represent pools of other
assets (such as automobile installment purchase obligations and credit card
receivables) similarly assembled for sale by private issuers.

MORTGAGE-RELATED SECURITIES. There are a number of important
differences among the agencies and instrumentalities of the U.S. Government that
issue mortgage-related securities and among the securities that they issue.
Mortgage-related securities guaranteed by the Government National Mortgage
Association ("GNMA") include GNMA Mortgage Pass-Through Certificates (also known
as "Ginnie Maes"), which are guaranteed as to the timely payment of principal
and interest by GNMA and such guarantee is backed by the full faith and credit
of the United States. GNMA is a wholly-owned U.S. Government corporation within
the Department of Housing and Urban Development. GNMA certificates also are
supported by the authority of GNMA to borrow funds from the U.S. Treasury to
make payments under its guarantee. Mortgage-related

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<PAGE>

securities issued by the Federal National Mortgage Association ("FNMA") include
FNMA guaranteed Mortgage Pass-Through Certificates (also known as "Fannie
Maes"), which are solely the obligations of the FNMA, are not backed by or
entitled to the full faith and credit of the United States and are supported by
the right of the issuer to borrow from the Treasury. FNMA is a
government-sponsored organization owned entirely by private stockholders. Fannie
Maes are guaranteed as to timely payment of principal and interest by FNMA.
Mortgage-related securities issued by the Federal Home Loan Mortgage Corporation
("FHLMC") include FHLMC Mortgage Participation Certificates (also known as
"Freddie Macs" or "PCs"). FHLMC is a corporate instrumentality of the United
States, created pursuant to an Act of Congress, which is owned entirely by
Federal Home Loan Banks. Freddie Macs are not guaranteed by the United States or
by any Federal Home Loan Banks and do not constitute a debt or obligation of the
United States or of any Federal Home Loan Bank. Freddie Macs entitle the holder
to timely payment of interest, which is guaranteed by the FHLMC. FHLMC
guarantees either ultimate collection or timely payment of all principal
payments on the underlying mortgage loans. When FHLMC does not guarantee timely
payment of principal, FHLMC may remit the amount due on account of its guarantee
of ultimate payment of principal at any time after default on an underlying
mortgage, but in no event later than one year after it becomes payable.

The Fund may invest in multiple class pass-through securities,
including collateralized mortgage obligations ("CMOs") and real estate mortgage
investment conduit ("REMIC") pass-through or participation certificates ("REMIC
Certificates"). These multiple class securities may be issued by U.S. Government
agencies or instrumentalities, including FNMA and FHLMC, or by trusts formed by
private originators of, or investors in, mortgage loans. In general, CMOs and
REMICs are debt obligations of a legal entity that are collateralized by, and
multiple class pass-through securities represent direct ownership interests in,
a pool of residential mortgage loans or mortgage pass-through securities (the
"Mortgage Assets"), the payments on which are used to make payments on the CMOs
or multiple pass-through securities. Investors may purchase beneficial interests
in REMICs, which are known as "regular" interests or "residual" interests. The
Fund does not intend to purchase residual interests.

Each class of CMOs or REMIC Certificates, often referred to as a
"tranche," is issued at a specific adjustable or fixed interest rate and must be
fully retired no later than its final distribution date. Principal prepayments
on the Mortgage Assets underlying the CMOs or REMIC Certificates may cause some
or all of the classes of CMOs or REMIC Certificates to be retired substantially
earlier than their final distribution dates. Generally, interest is paid or
accrues on all classes of CMOs or REMIC Certificates on a monthly basis.

The principal of and interest on the Mortgage Assets may be allocated
among the several classes of CMOs or REMIC Certificates in various ways. In
certain structures (known as "sequential pay" CMOs or REMIC Certificates),
payments of principal, including any principal prepayments, on the Mortgage
Assets generally are applied to the classes of CMOs or REMIC Certificates in the
order of their respective final distribution dates. Thus no payment of principal
will be made on any class of sequential pay CMOs or REMIC Certificates until all
other classes having an earlier final distribution date have been paid in full.

Additional structures of CMOs or REMIC Certificates include, among
others, "parallel pay" CMOs and REMIC Certificates. Parallel pay CMOs or REMIC
Certificates are those

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<PAGE>

which are structured to apply principal payments and prepayments of the Mortgage
Assets to two or more classes concurrently on a proportionate or
disproportionate basis. These simultaneous payments are taken into account in
calculating the final distribution date of each class.

The relative payment rights of the various CMO classes may be subject
to greater volatility and interest-rate risk than other types of mortgage-backed
securities. The average life of asset-backed securities varies with the
underlying instruments or assets and market conditions, which in the case of
mortgages have maximum maturities for forty years. The average life of a
mortgage-backed instrument, in particular, is likely to be substantially less
than the original maturity of the mortgages underlying the securities as the
result of unscheduled principal payments and mortgage prepayments. The
relationship between mortgage prepayment and interest rates may give some
high-yielding mortgage-backed securities less potential for growth in value than
conventional bonds with comparable maturities. In addition, in periods of
falling interest rates, the rate of mortgage prepayments tends to increase.
During such periods, the reinvestment of prepayment proceeds by a Portfolio will
generally be at lower rates than the rates that were carried by the obligations
that have been prepaid. When interest rates rise, the value of an asset-backed
security generally will decline; however, when interest rates decline, the value
of an asset-backed security with prepayment features may not increase as much as
that of other fixed-income securities. Because of these and other reasons, an
asset-backed security's total return may be difficult to predict precisely.

A wide variety of REMIC Certificates may be issued in the parallel pay
or sequential pay structures. These securities include accrual certificates
(also known as "Z-Bonds"), which only accrue interest at a specified rate until
all other certificates having an earlier final distribution date have been
retired and are converted thereafter to an interest-paying security, and planned
amortization class ("PAC") certificates, which are parallel pay REMIC
Certificates that generally require that specified amounts of principal be
applied on each payment date to one or more classes of REMIC Certificates (the
"PAC Certificates"), even though all other principal payments and prepayments of
the Mortgage Assets are then required to be applied to one or more other classes
of the Certificates. The scheduled principal payments for the PAC Certificates
generally have the highest priority on each payment date after interest due has
been paid to all classes entitled to receive interest currently. Shortfalls, if
any, are added to the amount payable on the next payment date. The PAC
Certificate payment schedule is taken into account in calculating the final
distribution date of each class of PAC. In order to create PAC tranches, one or
more tranches generally must be created that absorb most of the volatility in
the underlying Mortgage Assets. These tranches tend to have market prices and
yields that are much more volatile than the PAC classes.

FNMA REMIC Certificates are issued and guaranteed as to timely
distribution of principal and interest by FNMA. In addition, FNMA will be
obligated to distribute on a timely basis to holders of FNMA REMIC Certificates
required installments of principal and interest and to distribute the principal
balance of each class of REMIC Certificates in full, whether or not sufficient
funds are otherwise available.

For FHLMC REMIC Certificates, FHLMC guarantees the timely payment of
interest, and also guarantees the ultimate payment of principal as payments are
required to be made on the underlying mortgage participation certificates
("PCs"). PCs represent undivided interests in

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<PAGE>

specified level payment, residential mortgages or participation therein
purchased by FHLMC and placed in a PC pool. With respect to principal payments
on PCs, FHLMC generally guarantees ultimate collection of all principal of the
related mortgage loans without offset or deduction. FHLMC also guarantees timely
payment of principal on certain PCs, referred to as "Gold PCs."

ASSET-BACKED SECURITIES. Asset-backed securities are generally issued
as pass-through certificates, which represent undivided fractional ownership
interests in an underlying pool of assets, or as debt instruments, which are
also known as collateralized obligations, and are generally issued as the debt
of a special purpose entity organized solely for the purpose of owning such
assets and issuing such debt. Asset-backed securities are often backed by a pool
of assets representing the obligations of a number of different parties.

The yield characteristics of asset-backed securities differ from
traditional debt securities. A major difference is that the principal amount of
the obligations may be prepaid at any time because the underlying assets (i.e.,
loans) generally may be prepaid at any time. As a result, if an asset-backed
security is purchased at a premium, a prepayment rate that is faster than
expected may reduce yield to maturity, while a prepayment rate that is slower
than expected may have the opposite effect of increasing yield to maturity.
Conversely, if an asset-backed security is purchased at a discount, faster than
expected prepayments may increase, while slower than expected prepayments may
decrease, yield to maturity.

In general, the collateral supporting asset-backed securities is of
shorter maturity than mortgage-related securities. Like other fixed-income
securities, when interest rates rise the value of an asset-backed security
generally will decline; however, when interest rates decline, the value of an
asset-backed security with prepayment features may not increase as much as that
of other fixed-income securities.

WHEN-ISSUED PURCHASES AND FORWARD COMMITMENTS. When the Fund agrees to
purchase securities on a when-issued basis or enters into a forward commitment
to purchase securities, the Custodian will set aside cash, U.S. government
securities or other liquid assets equal to the amount of the purchase or the
commitment in a separate account. The market value of the separate account will
be monitored and if such market value declines, the Fund will be required
subsequently to place additional assets in the separate account in order to
ensure that the value of the account remains equal to the amount of the Fund's
commitments.

The Fund will make commitments to purchase securities on a when-issued
basis or to purchase or sell securities on a forward commitment basis only with
the intention of completing the transaction and actually purchasing or selling
the securities. If deemed advisable as a matter of investment strategy, however,
the Fund may dispose of or renegotiate a commitment after it is entered into,
and may sell securities it has committed to purchase before those securities are
delivered to the Fund on the settlement date. In these cases, the Fund may
realize a capital gain or loss.

The value of the securities underlying a when-issued purchase or a
forward commitment to purchase securities, and any subsequent fluctuations in
their value, is taken into account when determining the Fund's net asset value
starting on the day that the Fund agrees to purchase the securities. The Fund
does not earn interest on the securities it has committed to purchase until

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<PAGE>

they are paid for and delivered on the settlement date. When the Fund makes a
forward commitment to sell securities it owns, the proceeds to be received upon
settlement are included in the Fund's assets, and fluctuations in the value of
the underlying securities are not reflected in the Fund's net asset value as
long as the commitment remains in effect.

FORWARD CURRENCY TRANSACTIONS. The Fund's participation in forward
currency contracts will be limited to hedging involving either specific
transactions or portfolio positions. Transaction hedging involves the purchase
or sale of foreign currency with respect to specific receivables or payables of
the Fund generally arising in connection with the purchase or sale of its
portfolio securities. The purpose of transaction hedging is to "lock in" the
U.S. dollar equivalent price of such specific securities. Position hedging is
the sale of foreign currency with respect to portfolio security positions
denominated or quoted in that currency. The Funds will not speculate in foreign
currency exchange transactions. Transaction and position hedging will not be
limited to an overall percentage of the Fund's assets, but will be employed as
necessary to correspond to particular transactions or positions. The Fund may
not hedge its currency positions to an extent greater than the aggregate market
value (at the time of entering into the forward contract) of the securities held
in its portfolio denominated, quoted in, or currently convertible into that
particular currency. When the Fund engages in forward currency transactions,
certain asset segregation requirements must be satisfied to ensure that the use
of foreign currency transactions is unleveraged. When a Fund takes a long
position in a forward currency contract, it must maintain a segregated account
containing liquid assets equal to the purchase price of the contract, less any
margin or deposit. When a Fund takes a short position in a forward currency
contract, the Fund must maintain a segregated account containing liquid assets
in an amount equal to the market value of the currency underlying such contract
(less any margin or deposit), which amount must be at least equal to the market
price at which the short position was established. Asset segregation
requirements are not applicable when a Fund "covers" a forward currency position
generally by entering into an offsetting position.

The transaction costs to the Fund of engaging in forward currency
transactions vary with factors such as the currency involved, the length of the
contract period and prevailing currency market conditions. Because currency
transactions are usually conducted on a principal basis, no fees or commissions
are involved. The use of forward currency contracts does not eliminate
fluctuations in the underlying prices of the securities being hedged, but it
does establish a rate of exchange that can be achieved in the future. Thus,
although forward currency contracts used for transaction or position hedging
purposes may limit the risk of loss due to an increase in the value of the
hedged currency, at the same time they limit potential gain that might result
were the contracts not entered into. Further, the Adviser may be incorrect in
its expectations as to currency fluctuations, and the Fund may incur losses in
connection with its currency transactions that it would not otherwise incur. If
a price movement in a particular currency is generally anticipated, a Fund may
not be able to contract to sell or purchase that currency at an advantageous
price.

At or before the maturity of a forward sale contract, the Fund may sell
a portfolio security and make delivery of the currency, or retain the security
and offset its contractual obligation to deliver the currency by purchasing a
second contract pursuant to which the Fund will obtain, on the same maturity
date, the same amount of the currency which it is obligated to deliver. If the
Fund retains the portfolio security and engages in an offsetting transaction,
the Fund, at the time

-17-
<PAGE>

of execution of the offsetting transaction, will incur a gain or a loss to the
extent that movement has occurred in forward contract prices. Should forward
prices decline during the period between a Fund's entering into a forward
contract for the sale of a currency and the date it enters into an offsetting
contract for the purchase of the currency, the Fund will realize a gain to the
extent the price of the currency it has agreed to sell exceeds the price of the
currency it has agreed to purchase. Should forward prices increase, the Fund
will suffer a loss to the extent the price of the currency it has agreed to sell
is less than the price of the currency it has agreed to purchase in the
offsetting contract. The foregoing principles generally apply also to forward
purchase contracts.

FOREIGN CURRENCY EXCHANGE TRANSACTIONS. In order to protect against a
possible loss on investments resulting from a decline or appreciation in the
value of a particular foreign currency against the U.S. dollar or another
foreign currency or for other reasons, the Fund is authorized to enter into
forward currency exchange contracts. These contracts involve an obligation to
purchase or sell a specified currency at a future date at a price set at the
time of the contract. Forward currency contracts do not eliminate fluctuations
in the values of portfolio securities but rather may allow the Fund to establish
a rate of exchange for a future point in time.

The Fund may enter into forward foreign currency exchange contracts in
several circumstances. When entering into a contract for the purchase or sale of
a security, the Fund may enter into a contract for the amount of the purchase or
sale price to protect against variations, between the date the security is
purchased or sold and the date on which payment is made or received, in the
value of the foreign currency relative to the U.S. dollar or other foreign
currency.

When the Adviser anticipates that a particular foreign currency may
decline substantially relative to the U.S. dollar or other leading currencies,
in order to reduce risk, the Fund may enter into a forward contract to sell, for
a fixed amount, the amount of foreign currency approximating the value of some
or all of the Fund's securities denominated in such foreign currency. Similarly,
when the securities held by the Fund create a short position in a foreign
currency, the Fund may enter into a forward contract to buy, for a fixed amount,
an amount of foreign currency approximating the short position. With respect to
any forward foreign currency contract, it will generally not be possible to
precisely match the amount covered by that contract and the value of the
securities involved due to the changes in the values of such securities
resulting from market movements between the date the forward contract is entered
into and the date it matures. While forward contracts may offer protection from
losses resulting from declines or appreciation in the value of a particular
foreign currency, they also limit potential gains which might result from
changes in the value of such currency. The Fund will also incur costs in
connection with forward foreign currency exchange contracts and conversions of
foreign currencies and U.S. dollars. In addition, the Adviser may purchase or
sell forward foreign currency exchange contracts for the Fund for non-hedging
purposes when the Adviser anticipates that the foreign currency will appreciate
or depreciate in value.

A separate account consisting of liquid assets, such as cash, U.S.
Government securities or other liquid high grade debt obligations, equal to the
amount of the Fund's assets that could be required to consummate forward
contracts will be established with the Fund's Custodian except to the extent the
contracts are otherwise "covered." For the purpose of determining the adequacy

-18-
<PAGE>

of the securities in the account, the deposited securities will be valued at
market or fair value. If the market or fair value of such securities declines,
additional cash or securities will be placed in the account daily so that the
value of the account will equal the amount of such commitments by the Fund. A
forward contract to sell a foreign currency is "covered" if the Fund owns the
currency (or securities denominated in the currency) underlying the contract, or
holds a forward contract (or call option) permitting the Fund to buy the same
currency at a price no higher than the Fund's price to sell the currency. A
forward contract to buy a foreign currency is "covered" if the Fund holds a
forward contract (or put option) permitting the Fund to sell the same currency
at a price as high as or higher than the Fund's price to buy the currency.

STRIPPED SECURITIES. The Federal Reserve has established an investment
program known as "STRIPS" or "Separate Trading of Registered Interest and
Principal of Securities." The Fund may purchase securities registered under this
program. This program allows the Fund to be able to have beneficial ownership of
zero coupon securities recorded directly in the book-entry record-keeping system
in lieu of having to hold certificates or other evidences of ownership of the
underlying U.S. Treasury securities. The Treasury Department has, within the
past several years, facilitated transfers of such securities by accounting
separately for the beneficial ownership of particular interest coupon and
principal payments on Treasury securities through the Federal Reserve book-entry
record-keeping system.

In addition, the Fund may acquire U.S. Government Obligations and their
unmatured interest coupons that have been separated ("stripped") by their
holder, typically a custodian bank or investment brokerage firm. Having
separated the interest coupons from the underlying principal of the U.S.
Government Obligations, the holder will resell the stripped securities in
custodial receipt programs with a number of different names, including "Treasury
Income Growth Receipts" ("TIGRs") and "Certificate of Accrual on Treasury
Securities" ("CATS"). The stripped coupons are sold separately from the
underlying principal, which is usually sold at a deep discount because the buyer
receives only the right to receive a future fixed payment on the security and
does not receive any rights to periodic interest (cash) payments. The underlying
U.S. Treasury bonds and notes themselves are held in book-entry form at the
Federal Reserve Bank or, in the case of bearer securities (i.e., unregistered
securities which are ostensibly owned by the bearer or holder), in trust on
behalf of the owners.

MONEY MARKET INSTRUMENTS. The Fund may invest in "money market
instruments," for purposes of temporary defensive measures which include, among
other things, bank obligations. Bank obligations include bankers' acceptances,
negotiable certificates of deposit, and non-negotiable time deposits earning a
specified return and issued by a U.S. bank which is a member of the Federal
Reserve System or insured by the Bank Insurance Fund of the Federal Deposit
Insurance Corporation ("FDIC"), or by a savings and loan association or savings
bank which is insured by the Savings Association Insurance Fund of the FDIC.
Such deposits are not FDIC insured and the Fund bears the risk of bank failure.
Bank obligations also include U.S. dollar-denominated obligations of foreign
branches of U.S. banks and obligations of domestic branches of foreign banks.
Such investments may involve risks that are different from investments in
securities of domestic branches of U.S. banks. These risks may include future
unfavorable political and economic developments, possible withholding taxes on
interest income, seizure or nationalization of foreign deposits, currency
controls, interest limitations, or other governmental restrictions which might
affect the payment of principal or interest on the securities held in the

-19-
<PAGE>

Fund. Additionally, these institutions may be subject to less stringent reserve
requirements and to different accounting, auditing, reporting and recordkeeping
requirements than those applicable to domestic branches of U.S. banks. The Fund
will invest in obligations of domestic branches of foreign banks and foreign
branches of domestic banks only when the Adviser believes that the risks
associated with such investment are minimal. The value of money market
instruments tends to fall when current interest rates rise. Money market
instruments are generally less sensitive to interest rate changes than
longer-term securities.

DURATION. Although the Fund has no restriction as to the maximum or
minimum duration of any individual security held by it, during normal market
conditions the Fund's average effective duration will generally be within 5% of
the duration of the Lehman Brothers Aggregate Bond Index. "Duration" is a term
used by investment managers to express the average time to receipt of expected
cash flows (discounted to their present value) on a particular fixed income
instrument or a portfolio of instruments. Duration takes into account the
pattern of a security's cash flow over time, including how cash flow is affected
by prepayments and changes in interest rates. For example, the duration of a
five-year zero coupon bond that pays no interest or principal until the maturity
of the bond is five years. This is because a zero coupon bond produces no cash
flow until the maturity date. On the other hand, a coupon bond that pays
interest semi-annually and matures in five years will have a duration of less
than five years, which reflects the semi-annual cash flows resulting from coupon
payments. Duration also generally defines the effect of interest rate changes on
bond prices. Generally, if interest rates increase by one percent, the value of
a security having an effective duration of five years would decrease in value by
five percent.

INVESTMENT LIMITATIONS

The Funds have adopted the following fundamental investment limitations
which may not be changed without the affirmative vote of the holders of a
majority of the Funds' outstanding shares (as defined in Section 2(a)(42) of the
1940 Act). As used in this Statement of Additional Information and in the
Prospectus, "shareholder approval" and a "majority of the outstanding shares" of
a class, series or Fund 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 Fund represented at a meeting at which the holders of more than 50% of the
outstanding shares of such class, series or Fund are present in person or by
proxy, or (2) more than 50% of the outstanding shares of such class, series or
Fund. Each Fund's investment goals and strategies described in the Prospectuses
may be changed by the Company's Board of Directors without the approval of the
Fund's shareholders. Each Fund may not:

1. Borrow money or issue senior securities, except that each Fund
may borrow from banks and enter into reverse repurchase
agreements and the Bond, Large Cap Value, Mid Cap Value and Small
Cap Value Funds may enter into dollar rolls for temporary
purposes in amounts up to one-third of the value of each Fund's
respective total assets at the time of such borrowing and
provided that, for any borrowing with respect to the Large Cap
Value, Mid Cap Value and Long/Short Equity Funds, there is at
least 300% asset coverage for the borrowings of the Fund. A Fund
may not mortgage, pledge or hypothecate any assets, except in

-20-
<PAGE>

connection with any such borrowing and then in amounts not in
excess of one-third of the value of the Fund's total assets at
the time of such borrowing. However, with respect to the Large
Cap Value, Mid Cap Value and Long/Short Equity Funds, the amount
shall not be in excess of lesser of the dollar amounts borrowed
or 33 1/3% of the value of the Fund's total assets at the time of
such borrowing, provided that for the Long/Short Equity Fund: (a)
short sales and related borrowings of securities are not subject
to this restriction; and (b) for the purposes of this
restriction, collateral arrangements with respect to options,
short sales, stock index, interest rate, currency or other
futures, options on futures contracts, collateral arrangements
with respect to initial and variation margin and collateral
arrangements with respect to swaps and other derivatives are not
deemed to be a pledge or other encumbrance of assets, and
provided that for the Large Cap Value and Mid Cap Value Funds,
any collateral arrangements with respect to the writing of
options, futures contracts and options on futures contracts and
collateral arrangements with respect to initial and variation
margin are not deemed to be a pledge of assets. The Small Cap
Value, Large Cap Value and Bond Funds will not purchase
securities while aggregate borrowings (including reverse
repurchase agreements, dollar rolls and borrowings from banks)
are in excess of 5% of total assets. Securities held in escrow or
separate accounts in connection with a Fund's investment
practices are not considered to be borrowings or deemed to be
pledged for purposes of this limitation; (For purposes of this
Limitation No. 1, any collateral arrangements with respect to, if
applicable, the writing of options and futures contracts, options
on futures contracts, and collateral arrangements with respect to
initial and variation margin are not deemed to be a pledge of
assets).

2. Issue any senior securities, except as permitted under the 1940
Act; (For purposes of this Limitation No. 2, neither the
collateral arrangements with respect to options and futures
identified in Limitation No. 1, nor the purchase or sale of
futures or related options are deemed to be the issuance of
senior securities).

3. Act as an underwriter of securities within the meaning of the
Securities Act, except insofar as it might be deemed to be an
underwriter upon disposition of certain portfolio securities
acquired within the limitation on purchases of restricted
securities;

4. Purchase or sell real estate (including real estate limited
partnership interests), provided that the Fund may invest: (a) in
securities secured by real estate or interests therein or issued
by companies that invest in real estate or interests therein; or
(b) in real estate investment trusts;

5. Purchase or sell commodities or commodity contracts, except that
a Fund may deal in forward foreign exchanges between currencies
of the different countries in which it may invest and purchase
and sell stock index and currency options, stock index futures,
financial futures and currency futures contracts and related
options on such futures;

-21-
<PAGE>

6. Make loans, except through loans of portfolio instruments and
repurchase agreements, provided that for purposes of this
restriction the acquisition of bonds, debentures or other debt
instruments or interests therein and investment in government
obligations, loan participations and assignments, short-term
commercial paper, certificates of deposit and bankers'
acceptances shall not be deemed to be the making of a loan;

7. Invest 25% or more of its total assets, taken at market value at
the time of each investment, in the securities of issuers in any
particular industry (excluding the U.S. Government and its
agencies and instrumentalities); or

8. 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.

In addition to the fundamental investment limitations specified above,
the Long/Short Equity Fund may not:

Purchase any securities which would cause 25% or more of the value of the Fund's
total assets at the time of purchase to be invested in the securities of one or
more issuers conducting their principal business activities in the same
industry, provided that (a) there is no limitation with respect to (i)
instruments issued or guaranteed by the United States, any state, territory or
possession of the United States, the District of Columbia or any of their
authorities, agencies, instrumentalities or political subdivisions, and (ii)
repurchase agreements secured by the instruments described in clause (i); (b)
wholly-owned finance companies will be considered to be in the industries of
their parents if their activities are primarily related to financing the
activities of the parents; and (c) utilities will be divided according to their
services, for example, gas, gas transmission, electric and gas, electric and
telephone will each be considered a separate industry;

For purposes of Investment Limitation No. 1, collateral arrangements
with respect to, if applicable, the writing of options, futures contracts,
options on futures contracts, forward currency contracts and collateral
arrangements with respect to initial and variation margin are not deemed to be a
pledge of assets and neither such arrangements nor the purchase or sale of
futures or related options are deemed to be the issuance of a senior security
for purposes of Investment Limitation No. 2.

In addition to the fundamental investment limitations specified above,
the Long/Short Equity Fund is subject to the following nonfundamental
limitations. The Long/Short Equity Fund may not:

1. Make investments for the purpose of exercising control or
management, but investments by the Fund in wholly-owned
investment entities created under the laws of certain countries
will not be deemed the making of investments for the purpose of
exercising control or management; or

-22-
<PAGE>

2. Purchase securities on margin, except for short-term credits
necessary for clearance of portfolio transactions, and except
that the Fund may make margin deposits in connection with its use
of short sales, options, futures contracts, options on futures
contracts and forward contracts.

The Funds may invest in securities issued by other investment companies
within the limits prescribed by the 1940 Act. As a shareholder of another
investment company, a Fund would bear, along with other shareholders, its pro
rata portion of the other investment company's expenses, including advisory
fees. These expenses would be in addition to the advisory and other expenses
that a Fund bears directly in connection with its own operations.

Securities held by a Fund generally may not be purchased from, sold or
loaned to the Adviser or its affiliates or any of their directors, officers or
employees, acting as principal, unless pursuant to a rule or exemptive order
under the 1940 Act.

If a percentage restriction under one of a Fund's investment policies
or limitations or the use of assets is adhered to at the time a transaction is
effected, later changes in percentages 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).

-23-

<PAGE>

MANAGEMENT OF THE COMPANY

DIRECTORS AND OFFICERS.

The business and affairs of the Company are managed under the direction
of the Company's Board of Directors. The directors and executive officers of the
Company, their ages, business addresses and principal occupations during the
past five years are:

<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
NAME AND ADDRESS AND AGE POSITION WITH FUND DURING PAST FIVE YEARS
------------------------ ------------------ ----------------------
<S> <C> <C>
Arnold M. Reichman - 51 Director Chief Operating Officer of Warburg Pincus
c/o 400 Bellevue Parkway Asset Management, Inc., Executive Officer
Wilmington, DE 19809 and Director of Counsellors Securities Inc.
and Director/Trustee of various investment
companies advised by Warburg Pincus Asset
Management, Inc. until September 15, 1999;
Prior to 1997, Managing Director of Warburg
Pincus Asset Management, Inc.

*Robert Sablowsky - 61 Director Executive Vice President of Fahnestock Co.,
Fahnestock & Company, Inc. Inc. (a registered broker-dealer); Prior to
125 Broad Street October 1996, Executive Vice President of
New York, NY 10004 Gruntal & Co., Inc. (a registered
broker-dealer).

Francis J. McKay - 64 Director Since 1963, Executive Vice President,
Fox Chase Cancer Center Fox Chase Cancer Center (biomedical research and
7701 Burholme Avenue medical care).
Philadelphia, PA 19111

*Marvin E. Sternberg - 65 Director Since 1974, Chairman, Director and
Moyco Technologies, Inc. President, Moyco Technologies, Inc.
200 Commerce Drive (manufacturer of dental supplies and
Montgomeryville, PA 18936 precision coated abrasives).

Julian A. Brodsky - 65 Director Director and Vice Chairman, since 1969
Comcast Corporation Comcast Corporation (cable television and
1500 Market Street communications); Director, Comcast U.K.
35th Floor
Philadelphia, PA 19102
</TABLE>

-24-

<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
NAME AND ADDRESS AND AGE POSITION WITH FUND DURING PAST FIVE YEARS
------------------------ ------------------ ----------------------
<S> <C> <C>

Donald van Roden - 75 Director and Chairman of Self-employed businessman. From February
1200 Old Mill Lane the Board 1980 to March 1987, Vice Chairman,
Wyomissing, PA 19610 SmithKline Beecham Corporation
(pharmaceuticals); Director AAA
Mid-Atlantic (auto service);
Director, Keystone Insurance Co.

Edward J. Roach - 75 President and Treasurer Certified Public Accountant; Vice Chairman
400 Bellevue Parkway of the Board, Fox Chase Cancer Center;
Wilmington, DE 19809 Trustee Emeritus, Pennsylvania School for
the Deaf; Trustee Emeritus,
Immaculata College; President or
Vice President and Treasurer of
various investment companies
advised by subsidiaries of PNC
Bank Corp. (1981-1997); Treasurer
of Chestnut Street Exchange Fund;
Vice President and Treasurer of
Independence Square Income
Securities, Inc.; Director of the
Bradford Funds, Inc.
<FN>

* Each of Mr. Sablowsky and Mr. Sternberg is an "interested person" of
RBB, as that term is defined in the 1940 Act.
</FN>
</TABLE>

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 the Company 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 the Company when the Board of Directors is not in
session.

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

-25-
<PAGE>

DIRECTORS' COMPENSATION.

The Company currently pays directors $15,000 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 $6,000 per year for his services in this capacity. Directors
are reimbursed for any expenses incurred in attending meetings of the Board of
Directors or any committee thereof. For the year ended August 31, 1999, each of
the following members of the Board of Directors received compensation from RBB
in the following amounts:
<TABLE>
<CAPTION>

AGGREGATE PENSION OR RETIREMENT ESTIMATED ANNUAL TOTAL COMPENSATION FROM
COMPENSATION FROM BENEFITS ACCRUED AS BENEFITS UPON FUND AND FUND COMPLEX
NAME OF PERSON/POSITION REGISTRANT PART OF FUND EXPENSES RETIREMENT PAID TO DIRECTORS
----------------------------------- --------------------- ----------------------- --------------------- ------------------------

<S> <C> <C> <C> <C>
Julian A. Brodsky, Director $19,250 N/A N/A $19,250
Francis J. McKay, Director $16,750 N/A N/A $16,750
Arnold M. Reichman, Director $ 0 N/A N/A $ 0
Robert Sablowsky, Director $18,250 N/A N/A $18,250
Marvin E. Sternberg, Director $19,250 N/A N/A $19,250
Donald van Roden, Director and $25,250 N/A N/A $25,250
Chairman
</TABLE>

On October 24, 1990, the Company adopted, as a participating employer,
the Fund Office Retirement Profit-Sharing Plan and Trust Agreement, a retirement
plan for employees (currently Edward J. Roach) pursuant to which the Company
will contribute on a quarterly basis amounts equal to 10% of the quarterly
compensation of each eligible employee. By virtue of the services performed by
the Company's advisers, custodians, administrators and distributor, the Company
itself requires only one part-time employee. No officer, director or employee of
the Adviser or the Distributor currently receives any compensation from the
Company.

-26-
<PAGE>

CONTROL PERSONS

As of November 17, 1999, to the Company'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 the Company indicated
below. See "Additional Information Concerning Fund Shares" above. The Company
does not know whether such persons also beneficially own such shares.

<TABLE>
<CAPTION>
---------------------------------------- -------------------------------------------------- ------------------------
SHAREHOLDER NAME
FUND NAME AND ADDRESS PERCENTAGE OF FUND HELD
---------------------------------------- -------------------------------------------------- ------------------------
<S> <C> <C>
BEDFORD MUNICIPAL MONEY MARKET Gabe Nechamkin 7.40%
27 Muchmore Road
Harrison, NY 10528-1109
---------------------------------------- -------------------------------------------------- ------------------------
CASH PRESERVATION MONEY MARKET Harold T. Erfer 6.349%
414 Charles Ln.
Wynnewood, PA 19096
---------------------------------------- -------------------------------------------------- ------------------------
Marian E. Kunz 15.602%
52 Weiss Ave.
Flourtown, PA 19031
---------------------------------------- -------------------------------------------------- ------------------------
Karen M. McElhinny and 8.227%
Contribution Account
4943 King Arthur Dr.
Erie, PA 16506
---------------------------------------- -------------------------------------------------- ------------------------
Luanne M. Garvey and Robert J. Garvey 15.438%
2729 Woodland Ave.
Trooper, PA 19403
---------------------------------------- -------------------------------------------------- ------------------------
John Robert Estrada and 5.260%
Shirley Ann Estrada
1700 Raton Dr.
Arlington, TX 76018
---------------------------------------- -------------------------------------------------- ------------------------
Dominic and Barbara Pisciotta and Successors in 12.785%
Tr. Under the Dominic Trst. And Barbara
Pisciotta Caring Tr. Dtd. 01/24/92
207 Woodmere Way
St. Charles, MO 63303
---------------------------------------- -------------------------------------------------- ------------------------
Michael W. Preble 7.456%
1505 W. Cheyenne Dr.
Chandler, AZ 85224
---------------------------------------- -------------------------------------------------- ------------------------
Anthony K. Bailey and Laura A. Bailey 5.085%
5819 E. 35th Street
Tucson, AZ 85711
---------------------------------------- -------------------------------------------------- ------------------------
SANSOM STREET MONEY MARKET Saxon and Co. 65.047%
FBO Paine Webber
A/C 32 32 400 4000038
P.O. Box 7780 1888
Phila., PA 19182
---------------------------------------- -------------------------------------------------- ------------------------
</TABLE>

-27-
<PAGE>

<TABLE>
<CAPTION>
---------------------------------------- -------------------------------------------------- ------------------------
SHAREHOLDER NAME
FUND NAME AND ADDRESS PERCENTAGE OF FUND HELD
---------------------------------------- -------------------------------------------------- ------------------------
<S> <C> <C>
Saxon and Co. 34.953%
c/o PNC Bank, N. A.
F3-F076-02-2
200 Stevens Drive
Ste. 260/ACI
Lester, PA 19113
---------------------------------------- -------------------------------------------------- ------------------------
CASH PRESERVATION Gary L. Lange and Susan D. Lange 72.206%
MUNICIPAL MONEY MARKET JT TEN
837 Timber Glen Ln.
Ballwin, MO 63021-6066
---------------------------------------- -------------------------------------------------- ------------------------
Mark Koehler and Suzanne Koehler 5.800%
JT TEN WROS
3925 Bower St.
St. Louis, MO 63116
---------------------------------------- -------------------------------------------------- ------------------------
RBB SELECT MONEY MARKET Warburg Pincus Capital 10.649%
Appreciation Fund
Attn. Joe Gajewski / PFPC, Inc.
MS W3-F400-03-2
400 Bellevue Parkway
Wilmington, DE 19809
---------------------------------------- -------------------------------------------------- ------------------------
Warburg Pincus Emerging Growth Fund 21.770%
Attn. Joe Gajewski / PFPC, Inc.
MS W3-F400-03-2
400 Bellevue Parkway
Wilmington, DE 19809
---------------------------------------- -------------------------------------------------- ------------------------
Warburg Pincus Growth & Income Fund 6.831%
Attn. Joe Gajewski / PFPC, Inc.
MS W3-F400-03-2
400 Bellevue Parkway
Wilmington, DE 19809
---------------------------------------- -------------------------------------------------- ------------------------
Warburg Pincus Trust Small Company Growth 12.161%
Portfolio
Attn. Joe Gajewski / PFPC, Inc.
MS W3-F400-03-2
400 Bellevue Parkway
Wilmington, DE 19809
---------------------------------------- -------------------------------------------------- ------------------------
Warburg Pincus Trust-International 15.203%
Equity Portfolio
Attn. Joe Gajewski / PFPC, Inc.
MS W3-F400-03-2
400 Bellevue Parkway
Wilmington, DE 19809
---------------------------------------- -------------------------------------------------- ------------------------
Warburg Pincus Japan Growth Fund 5.365%
Attn. Joe Gajewski / PFPC, Inc.
MS W3-F400-03-2
400 Bellevue Parkway
Wilmington, DE 19809
---------------------------------------- -------------------------------------------------- ------------------------
</TABLE>
-28-

<PAGE>

Warburg Pincus Institutional Fund 12.823%
Japan Small Company Fund
Attn: Joe Gajewski/PFPC Inc.
MS W3-F400-03-2
400 Bellevue Parkway
Wilmington, DE 19809
---------------------------------------- -------------------------------------------------- ------------------------
Warburg Pincus Institutional Fund 6.290%
International Equity Portfolio
Attn: Joe Gajewski/PFPC Inc.
MS W3-F400-03-2
400 Bellevue Parkway
Wilmington, DE 19809
---------------------------------------- -------------------------------------------------- ------------------------
N/I MID CAP FUND Charles Schwab & Co. Inc 11.431%
Special Custody Account for the Exclusive
Benefit of Customers
Attn: Mutual Funds A/C 3143-0251
101 Montgomery St.
San Francisco, CA 94104
---------------------------------------- -------------------------------------------------- ------------------------
Gerald T. Reilly 11.249%
TRST RCAB Collective Investors Partnership
U/A DTD 9/19/95
2121 Commonwealth Avenue
Brighton, MA 02135
---------------------------------------- -------------------------------------------------- ------------------------
Janis Claflin, Bruce Fetzer 9.068%
and 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 17.814%
1001 19th St., N. 16th Flr.
Arlington, VA 22209
---------------------------------------- -------------------------------------------------- ------------------------
N/I GROWTH FUND Charles Schwab & Co. Inc 7.515%
Special Custody Account for the Exclusive
Benefit of Customers
Attn: Mutual Funds
101 Montgomery St.
San Francisco, CA 94104
---------------------------------------- -------------------------------------------------- ------------------------
</TABLE>

-29-
<PAGE>

Citibank North America Inc. 43.606%
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
---------------------------------------- -------------------------------------------------- ------------------------
Louisa Stude Sarofim Foundation 6.333%
c/o Nancy Head
DTD. 01/04/91
1001 Fannin 4700
Houston, TX 77002
---------------------------------------- -------------------------------------------------- ------------------------
U.S. Equity Investment Portfolio LP 7.965%
1001 N. US Hwy. One Suite 800
Jupiter, FL 33477
---------------------------------------- -------------------------------------------------- ------------------------
N/I GROWTH AND VALUE FUND Charles Schwab & Co. Inc. 20.546%
Special Custody Account for the Exclusive
Benefit of Customers
Attn: Mutual Funds
101 Montgomery St.
San Francisco, CA 94104
---------------------------------------- -------------------------------------------------- ------------------------
National Investors Services Corp. 7.177%
For the Exclusive Benefit of our Customers
S. 55 Water St. 32nd Floor
New York, NY 10041-3299
---------------------------------------- -------------------------------------------------- ------------------------
N/I LARGER CAP VALUE FUND Charles Schwab & Co. Inc 57.838%
Special Custody Account for the Exclusive
Benefit of Customers
Attn: Mutual Funds
101 Montgomery St.
San Francisco, CA 94104
---------------------------------------- -------------------------------------------------- ------------------------
FTC & Co. 10.526%
Attn: Datalynx 241
Attn: Datalynx 273
P. O. Box 173736
Denver, CO 80217-3736
---------------------------------------- -------------------------------------------------- ------------------------
N/I SMALL CAP VALUE FUND State Street Bank and Trust Company 54.161%
FBO Yale Univ. Ret. Pl. for Staff Emp.
State Street Bank & Tr. Co.
Master Tr. Div.
Attn: Kevin Sutton
Solomon Williard Bldg.
One Enterprise Dr.
North Quincy, MA 02171
---------------------------------------- -------------------------------------------------- ------------------------
</TABLE>

-30-
<PAGE>

Yale University 26.939%
Trst. Yale University Ret. Health Bene. Tr.
Attention: Seth Alexander
230 Prospect St.
New Haven, CT 06511
---------------------------------------- -------------------------------------------------- ------------------------
BOSTON PARTNERS LARGE CAP FUND INST Shady Side Academy Endowment 5.631%
SHARES 423 Fox Chapel Rd.
Pittsburgh, PA 15238
---------------------------------------- -------------------------------------------------- ------------------------
Charles Schwab & Co., Inc. 7.311%
Special Custody Account for
Bene. of Cust.
Attn: Mutual Funds
101 Montgomery St.
San Francisco, CA 94104
---------------------------------------- -------------------------------------------------- ------------------------
Swanee Hunt and Charles Ansbacher Trst. 17.122%
The Hunt Alternatives Fund
c/o Elizabeth Alberti
168 Brattle St.
Cambridge, MA 02138
---------------------------------------- -------------------------------------------------- ------------------------
Union Bank of California 9.643%
FBO Service Employees BP 610001265-01
P. O. Box 85484
San Diego, CA 92186
---------------------------------------- -------------------------------------------------- ------------------------
US Bank National Association 17.536%
FBO A-Dec Inc. DOT 093098
Attn: Mutual Funds A/C 97307536
P. O. Box 64010
St. Paul, MN 55164-0010
---------------------------------------- -------------------------------------------------- ------------------------
Northern Trust Company 16.644%
FBO AEFC Pension Trust
A/C 22-53582
P. O. Box 92956
Chicago, IL 60675
---------------------------------------- -------------------------------------------------- ------------------------
James B. Beam 5.206%
Trst World Publishing Co. Pft Shr Trust
P.O. Box 1511
Wenatchee, WA 98807
---------------------------------------- -------------------------------------------------- ------------------------
BOSTON PARTNERS LARGE CAP FUND Charles Schwab & Co. Inc. 66.397%
INVESTOR SHARES Special Custody Account for Bene. of Cust.
Attn: Mutual Funds
101 Montgomery St.
San Francisco, CA 94104
---------------------------------------- -------------------------------------------------- ------------------------
Jupiter & Co. 6.380%
c/o Investors Bank
PO Box 9130 FPG90
Boston, MA 02110
---------------------------------------- -------------------------------------------------- ------------------------
</TABLE>

-31-
<PAGE>

BOSTON PARTNERS MID CAP VALUE FUND MAC & CO. 5.642%
INST. SHARES A/C CHIF1001182
FBO Childrens Hospital LA
P.O. Box 3198
Pittsburgh, PA 15230-3198
---------------------------------------- -------------------------------------------------- ------------------------
John M. Pontius, Jr. 6.234%
FBO Hartwick College
West Street
Queens, NY 13820
---------------------------------------- -------------------------------------------------- ------------------------
MAC & CO. 7.976%
A/C LEMF5044062
Mutual Funds Operations
P.O. Box 3198
Pittsburgh, PA 15230-3198
---------------------------------------- -------------------------------------------------- ------------------------
The Northern Trust Company 5.046%
FBO Thomas & Betts Master Retirement Trust
Attn: Ellen Shea
8155 T&B Blvd.
Memphis, TN 38123
---------------------------------------- -------------------------------------------------- ------------------------
Norwest Bank Minnesota 5.194%
FBO McCormick & Co.
PEN-BOSTON A/C 12778825
P.O. Box 1533
Minneapolis, MN 55480
---------------------------------------- -------------------------------------------------- ------------------------
BOSTON PARTNERS MID CAP VALUE FUND INV National Financial Svcs. Corp. for Exclusive 17.061%
SHARES Bene. of Our Customers
Sal Vella
200 Liberty St.
New York, NY 10281
---------------------------------------- -------------------------------------------------- ------------------------
Charles Schwab & Co. Inc. 47.450%
Special Custody Account for Bene. of Cust.
Attn: Mutual Funds
101 Montgomery St.
San Francisco, CA 94104
---------------------------------------- -------------------------------------------------- ------------------------
BOSTON PARTNERS BOND FUND Boston Partners Asset Mgmt. L. P. 26.464 %
INSTITUTIONAL SHARES Attn: Jan Penney
28 State St.
Boston, MA 02109
---------------------------------------- -------------------------------------------------- ------------------------
Chiles Foundation 8.499%
111 S.W. Fifth Ave.
Ste. 4050
Portland, OR 97204
---------------------------------------- -------------------------------------------------- ------------------------
The Roman Catholic Diocese of 53.382%
Raleigh, NC
General Endowment
715 Nazareth St.
Raleigh, NC 27606
---------------------------------------- -------------------------------------------------- ------------------------
</TABLE>

-32-
<PAGE>

The Roman Catholic Diocese of 11.654%
Raleigh, NC
Clergy Trust
715 Nazareth St.
Raleigh, NC 27606
---------------------------------------- -------------------------------------------------- ------------------------
BOSTON PARTNERS BOND FUND INVESTOR Charles Schwab & Co. Inc 81.125%
SHARES Special Custody Account for Bene. of Cust.
Attn: Mutual Funds
101 Montgomery St.
San Francisco, CA 94104
---------------------------------------- -------------------------------------------------- ------------------------
Stephen W. Hamilton 16.094%
17 Lakeside Ln.
N. Barrington, IL 60010
---------------------------------------- -------------------------------------------------- ------------------------
BOSTON PARTNERS Desmond J. Heathwood 8.329%
SMALL CAP VALUE 41 Chestnut St.
FUND II - INSTITUTIONAL Boston, MA 02108
SHARES
---------------------------------------- -------------------------------------------------- ------------------------
Boston Partners Asset Mgmt. L. P. 65.889%
Attn: Jan Penney
28 State St.
Boston, MA 02109
---------------------------------------- -------------------------------------------------- ------------------------
Wayne Archambo 6.622%
42 DeLopa Circle
Westwood, MA 02090
---------------------------------------- -------------------------------------------------- ------------------------
David M. Dabora 6.622%
11 White Plains Ct.
San Anselmo, CA 94960
---------------------------------------- -------------------------------------------------- ------------------------
BOSTON PARTNERS National Financial Services Corp. 29.153%
SMALL CAP VALUE For the Exclusive Bene. of our Customers
FUND II - INVESTOR Attn: Mutual Funds 5th Floor
SHARES 200 Liberty St.
1 World Financial Center
New York, NY 10281
---------------------------------------- -------------------------------------------------- ------------------------
Charles Schwab & Co., Inc. 25.078%
Special Custody Account for Bene. of Cust.
Attn: Mutual Funds
101 Montgomery St.
San Francisco, CA 94104
---------------------------------------- -------------------------------------------------- ------------------------
Scott J. Harrington 36.112%
54 Torino Ct.
Danville, CA 94526
---------------------------------------- -------------------------------------------------- ------------------------
BOSTON PARTNERS LONG/SHORT FUND- Boston Partners Asset Mgmt. L. P. 100.000%
INSTITUTIONAL SHARES Attn: Jan Penney
28 State St.
Boston, MA 02109
---------------------------------------- -------------------------------------------------- ------------------------
</TABLE>

-33-
<PAGE>

BOSTON PARTNERS LONG/SHORT FUND- Glenn P. Verrette and Laurie Jo Verrette 6.690%
INVESTOR SHARES Jt. Ten. Wros.
156 Osgood St.
Andover, MA 01810
---------------------------------------- -------------------------------------------------- ------------------------
Thomas Lannan and Kathleen Lannan 89.987%
Jt. Ten. Wros.
P. O. Box 312
Osterville, MA 02655
---------------------------------------- -------------------------------------------------- ------------------------
SCHNEIDER SMALL CAP VALUE FUND Arnold C. Schneider III 13.637%
SEP IRA
826 Turnbridge Rd.
Wayne, PA 19087
---------------------------------------- -------------------------------------------------- ------------------------
SCM Retirement Plan 5.466%
Profit Sharing Plan
460 E. Swedesford Rd.
Ste. 1080
Wayne, PA 19087
---------------------------------------- -------------------------------------------------- ------------------------
Ronald L. Gault 5.399%
IRA
439 W. Nelson St.
Lexington VA 24450
---------------------------------------- -------------------------------------------------- ------------------------
John Frederick Lyness 12.964%
81 Hillcrest Ave.
Summit, NJ 07901
---------------------------------------- -------------------------------------------------- ------------------------
Mark Shevitz 7.206%
Rollover IRA
65 Wardell St.
Rumson, NJ 07760
---------------------------------------- -------------------------------------------------- ------------------------
</TABLE>

As of November 17, 1999, the directors and officers as a group owned
less than 1% of the Company's Shares.

INVESTMENT ADVISORY, DISTRIBUTION
AND SERVICING ARRANGEMENTS

ADVISORY AGREEMENTS.

Boston Partners renders advisory services to the Funds pursuant to
Investment Advisory Agreements dated October 16, 1996 with respect to the Bond
and Large Cap Value Funds, May 30, 1997 with respect to the Mid Cap Value Fund,
July 1, 1998 with respect to the Small Cap Value Fund II (formerly the Micro Cap
Value Fund) and November 13, 1998 with respect to the Long/Short Equity Fund
(the "Advisory Agreements"). Boston Partners' general partner is Boston
Partners, Inc.

Boston Partners has investment discretion for the Funds and will make
all decisions affecting the assets of the Funds under the supervision of the
Company's Board of Directors and in

-34-

<PAGE>

accordance with each Fund's stated policies. Boston Partners will select
investments for the Funds. For its services to the Funds, Boston Partners is
entitled to receive a monthly advisory fee under the Advisory Agreements
computed at an annual rate of 0.40% of the Bond Fund's average daily net assets,
2.25% of the Long/Short Equity Fund's average daily net assets, 0.75% of the
Large Cap Value Fund's average daily net assets, 0.80% of the Mid Cap Value
Fund's average daily net assets and 1.25% of the Small Cap Value Fund's average
daily net assets. Until December 31, 2000, Boston Partners has agreed to waive
its fees to the extent necessary to maintain an annualized expense ratio for :
1) the Institutional Class of the Boston Partners Bond Fund, Boston Partners
Long/Short Equity Fund, Boston Partners Large Cap Value Fund, Boston Partners
Mid Cap Value Fund and Boston Partners Small Cap Value Fund II of 0.60%, 2.95%,
1.00%, 1.00% and 1.55%, respectively and 2) the Investor Class of the Boston
Partners Bond Fund, Boston Partners Long/Short Equity Fund, Boston Partners
Large Cap Value Fund, Boston Partners Mid Cap Value Fund and Boston Partners
Small Cap Value Fund II of 0.82%, 3.17%, 1.22%, 1.22% and 1.77%, respectively.
There can be no assurance that Boston Partners will continue such waivers
thereafter.

For the fiscal years ended August 31, 1999, 1998 and 1997 the Fund paid
Boston Partners advisory fees and Boston Partners waived advisory fees as
follows:
<TABLE>
<CAPTION>

ADVISORY FEES PAID
(AFTER WAIVERS AND
FUND REIMBURSEMENTS) WAIVERS REIMBURSEMENTS
---- -------------- ------- --------------

<S> <C> <C> <C>
FISCAL YEAR ENDED AUGUST 31, 1999

Bond $0 $56,220 $72,841
Long/Short Equity 1 $0 $12,727 $121,414
Large Cap Value $450,337 $109,852 $0
Mid Cap Value $926,862 $128,384 $0
Small Cap Value $0 $18,140 $129,809

FISCAL YEAR ENDED AUGUST 31, 1998

Bond 2 $0 $34,418 $54,244
Large Cap Value $250,634 $112,482 $0
Mid Cap Value $235,623 $84,082 $30,520
Small Cap Value 3 $0 $3,155 $19,063
</TABLE>

-35-
<PAGE>
<TABLE>
<CAPTION>

FISCAL YEAR ENDED AUGUST 31, 1997

<S> <C> <C> <C>
Large Cap Value 4 $5,635 $57,752 $26,104
Mid Cap Value 5 $0 $3,606 $32,554
<FN>

1 Commenced operations November 17, 1998.
2 Commenced operations December 30, 1997.
3 Commenced operations July 1, 1998.
4 Institutional class commenced operations January 2, 1997 and Investor Class
commenced operations January 16, 1997.
5 Commenced operations June 2, 1997.
</FN>
</TABLE>

Each class of the Funds bears its own expenses not specifically assumed
by Boston Partners. General expenses of the Company not readily identifiable as
belonging to a portfolio of the Company are allocated among all investment
portfolios by or under the direction of the Company's Board of Directors in such
manner as the Board determines to be fair and equitable. Expenses borne by a
portfolio include, but are not limited to, the following (or a portfolio's share
of the following): (a) the cost (including brokerage commissions) of securities
purchased or sold by a portfolio and any losses incurred in connection
therewith; (b) fees payable to and expenses incurred on behalf of a portfolio by
Boston Partners; (c) any costs, expenses or losses arising out of a liability of
or claim for damages or other relief asserted against the Company or a portfolio
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) the cost of investment company literature
and other publications provided by the Company to its directors and officers;
(g) organizational costs; (h) fees to the investment adviser and PFPC; (i) fees
and expenses of officers and directors who are not affiliated with a portfolios'
investment adviser or Distributor; (j) taxes; (k) interest; (l) legal fees; (m)
custodian fees; (n) auditing fees; (o) brokerage fees and commissions; (p)
certain of the fees and expenses of registering and qualifying the Funds and
their shares for distribution under federal and state securities laws; (q)
expenses of preparing prospectuses and statements of additional information and
distributing annually to existing shareholders that are not attributable to a
particular class of shares of the Company; (r) the expense of reports to
shareholders, shareholders' meetings and proxy solicitations that are not
attributable to a particular class of shares of the Company; (s) fidelity bond
and directors' and officers' liability insurance premiums; (t) the expense of
using independent pricing services; and (u) other expenses which are not
expressly assumed by a portfolio's investment adviser under its advisory
agreement with the portfolio. Each class of the Funds pays its own distribution
fees, if applicable, and may pay a different share than other classes of other
expenses (excluding advisory and custodial fees) if those expenses are actually
incurred in a different amount by such class or if it receives different
services.

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

-36-
<PAGE>

The Advisory Agreements were most recently approved on July 28, 1999 by
vote of the Company's Board of Directors, including a majority of those
directors who are not parties to the Advisory Agreements or interested persons
(as defined in the 1940 Act) of such parties. The Advisory Agreements were
approved by the initial shareholder of each class of the Funds. The Advisory
Agreements are terminable by vote of the Company's Board of Directors or by the
holders of a majority of the outstanding voting securities of the Funds, at any
time without penalty, on 60 days' written notice to Boston Partners. The
Advisory Agreements may also be terminated by Boston Partners on 60 days'
written notice to the Company. The Advisory Agreement terminates automatically
in the event of its assignment.

CUSTODIAN AND TRANSFER AGENCY AGREEMENTS.

PFPC Trust Company is custodian of the Funds' assets pursuant to a
custodian agreement dated August 16, 1988, as amended (the "Custodian
Agreement"). Under the Custodian Agreement, PFPC Trust Company: (a) maintains a
separate account or accounts in the name of each Fund; (b) holds and transfers
portfolio securities on account of each Fund; (c) accepts receipts and makes
disbursements of money on behalf of each Fund; (d) collects and receives all
income and other payments and distributions on account of each Fund's portfolio
securities; and (e) makes periodic reports to the Company's Board of Directors
concerning the Funds' operations. PFPC Trust Company is authorized to select one
or more banks or trust companies to serve as sub-custodian on behalf of the
Funds, provided that PFPC Trust Company remains responsible for the performance
of all of its duties under the Custodian Agreement and holds the Funds harmless
from the acts and omissions of any sub-custodian. For its services to the Funds
under the Custodian Agreement, PFPC Trust Company receives a fee, which is
calculated based upon each Fund's average daily gross assets as follows: $.18
per $1,000 on the first $100 million of average daily gross assets; $.15 per
$1,000 on the next $400 million of average daily gross assets; $.125 per $1,000
on the next $500 million of average daily gross assets; and $.10 per $1,000 on
average daily gross assets over $1 billion, exclusive of transaction charges and
out-of-pocket expenses, which are also charged to the Fund.

PFPC Inc. ("PFPC"), an affiliate of PFPC Trust Company, serves as the
transfer and dividend disbursing agent for the Fund pursuant to a Transfer
Agency Agreement dated November 5, 1991, as supplemented (the "Transfer Agency
Agreement"), under which PFPC: (a) issues and redeems shares of each Fund; (b)
addresses and mails all communications by the Funds to record owners of the
Shares, including reports to shareholders, dividend and distribution notices and
proxy materials for its meetings of shareholders; (c) maintains shareholder
accounts and, if requested, sub-accounts; and (d) makes periodic reports to the
Company's Board of Directors concerning the operations of the Funds. PFPC may,
on 30 days' notice to the Company, assign its duties as transfer and dividend
disbursing agent to any other affiliate of PNC Bank Corp. For its services to
the Funds under the Transfer Agency Agreement, PFPC receives a fee at the annual
rate of $10 per account in the Fund, exclusive of out-of-pocket expenses, and
also receives reimbursement of its out-of-pocket expenses.

ADMINISTRATION AGREEMENT.

PFPC serves as administrator to the Funds pursuant to Administration
and Accounting Services Agreements dated October 16, 1996 with respect to the
Bond and Large Cap Value

-37-
<PAGE>

Funds, May 30, 1997 with respect to the Mid Cap Value Fund, July 1, 1998 with
respect to the Small Cap Value Fund II (formerly the Micro Cap Value Fund) and
November 13, 1998 with respect to the Long/Short Equity Fund (the
"Administration Agreements"). PFPC has agreed to furnish to the Funds
statistical and research data, clerical, accounting and bookkeeping services,
and certain other services required by the Funds. In addition, PFPC has agreed
to prepare and file various reports with the appropriate regulatory agencies and
prepare materials required by the SEC or any state securities commission having
jurisdiction over the Funds. For its services to the Funds, PFPC is entitled to
receive a fee calculated at an annual rate of .125% of each Fund's average daily
net assets, with a minimum annual fee of $75,000 payable monthly on a pro rata
basis. PFPC is currently waiving one-half of its minimum annual fee on the Bond
Fund, Small Cap Fund and the Long/Short Equity Fund.

For the fiscal years ended August 31, 1999, 1998 and 1997, the Funds
paid PFPC administration fees as follows:
<TABLE>
<CAPTION>

ADMINISTRATION FEES PAID
(AFTER WAIVERS AND
FUND REIMBURSEMENTS) WAIVERS REIMBURSEMENTS
---- -------------- ------- --------------

<S> <C> <C> <C>
FISCAL YEAR ENDED AUGUST 31, 1999

Bond $37,499 $37,501 $0
Long/Short Equity 1 $31,250 $31,250 $0
Large Cap Value $93,735 $0 $0
Mid Cap Value $164,882 $0 $0
Small Cap Value $37,500 $37,500 $0

FISCAL YEAR ENDED AUGUST 31, 1998

Bond 2 $25,201 $25,202 $0
Large Cap Value $55,792 $22,142 $0
Mid Cap Value $57,653 $22,352 $0
Small Cap Value 3 $6,250 $6,250 $0
</TABLE>

-38-

<S> <C> <C> <C>
FISCAL YEAR ENDED AUGUST 31, 1997

Large Cap Value 4 $25,000 $25,000 $0
Mid Cap Value 5 $9,166 $9,167 $0
<FN>

The Administration Agreements provide that PFPC shall not be liable for
any error of judgment or mistake of law or any loss suffered by the Company or a
Fund in connection with the performance of the agreement, except a loss
resulting from willful misfeasance, gross negligence or reckless disregard by it
of its duties and obligations thereunder.

DISTRIBUTION AGREEMENT.

Provident Distributors, Inc. ("PDI"), whose principal business address
is Four Falls Corporate Center, 6th Floor, West Conshohocken, PA 19428-2961,
serves as the distributor of the Funds pursuant to the terms of a distribution
agreement, dated as of June 25, 1999, (the "Distribution Agreement") on behalf
of the Institutional and Investor Classes. Pursuant to the Distribution
Agreement and the Plans of Distribution, as amended, for the Investor Class
(together, the "Plans"), which were adopted by the Company in the manner
prescribed by Rule 12b-1 under the 1940 Act, the Distributor will use
appropriate efforts to solicit orders for the sale of each Fund's Shares.
Payments to the Distributor under the Plans are to compensate it for
distribution assistance and expenses assumed and activities intended to result
in the sale of shares of the Investor Class. As compensation for its
distribution services, the Distributor receives, pursuant to the terms of the
Distribution Agreement, a distribution fee under the Plans, to be calculated
daily and paid monthly by the Investor Class, at the annual rate set forth in
the Prospectus.

-39-
<PAGE>

For the fiscal years ended August 31, 1999, 1998 and 1997, the Investor
Class of each of the Funds below paid the Distributor fees as follows: 1
<TABLE>
<CAPTION>

DISTRIBUTION FEES PAID
(AFTER WAIVERS AND
FUND REIMBURSEMENTS) WAIVERS REIMBURSEMENTS
---- -------------- ------- --------------

<S> <C> <C> <C>
FISCAL YEAR ENDED AUGUST 31, 1999

Bond $4,158 $16,630 $0
Long/Short Equity 2 $219 $874 $0
Large Cap Value Fund $20,836 $83,346 $0
Mid Cap Value $38,745 $154,978 $0
Small Cap Value $365 $1,458 $0

FOR THE PERIOD MAY 29, 1998 THROUGH AUGUST 31, 1998

Bond $1,294 $4,063 $0
Large Cap Value Fund $3,387 $22 $0
Mid Cap Value $6,827 $21,843 $0
Small Cap Value 3 $54 $0 $0
<FN>

1 Of the fee amounts disclosed above, $0 was retained by the Distributor.
2 Commenced operations November 17, 1998.
3 Commenced operations July 1, 1998.
</FN>
</TABLE>

For the period September 1, 1997 through May 29, 1998, both the
Institutional Class and Investor Class of the Fund paid the Company's previous
distributor, Counsellors Securities, Inc. ("Counsellors"), a wholly-owned
subsidiary of Warburg Pincus Asset Management, Inc., with a principal business
address of 466 Lexington Avenue, New York, New York 10071, distribution fees as
follows:
<TABLE>
<CAPTION>

DISTRIBUTION FEES PAID
(AFTER WAIVERS AND
FUND REIMBURSEMENTS) WAIVERS REIMBURSEMENTS
---- -------------- ------- --------------

<S> <C> <C> <C>
Bond (Institutional)3 $1,986 $5,461 $0
Bond (Investor)3 $54 $0 $0
Large Cap Value $10,283 $28,278 $0
(Institutional)
Large Cap Value $878 $1,317 $0
(Investor)
Mid Cap Value $8,284 $22,780 $0
(Institutional)
Mid Cap Value $950 $1,425 $0
(Investor)
</TABLE>

-40-
<PAGE>

3 Commenced operations December 30, 1997.

For the period ended August 31, 1997, the Large Cap Value and Mid Cap
Value Funds paid Counsellors fees as follows:

DISTRIBUTION FEES PAID
(AFTER WAIVERS AND
FUND REIMBURSEMENTS) WAIVERS REIMBURSEMENTS
---- -------------- ------- --------------

Large Cap Value Fund $3,325 $0 $0
(Institutional)4
Large Cap Value Fund $155 $0 $0
(Investor)5
Mid Cap Value $161 $0 $0
(Institutional)6
Mid Cap Value $77 $0 $0
(Investor)6

4 Commenced operations January 2, 1997.
5 Commenced operations January 16, 1997.
6 Commenced operations June 2, 1997.

Among other things, the Plans provide that: (1) the Distributor shall
be required to submit quarterly reports to the directors of the Company
regarding all amounts expended under the Plans and the purposes for which such
expenditures were made, including commissions, advertising, printing, interest,
carrying charges and any allocated overhead expenses; (2) the Plans will
continue in effect only so long as they are approved at least annually, and any
material amendment thereto is approved, by the Company's directors, including
the 12b-1 Directors, acting in person at a meeting called for said purpose; (3)
the aggregate amount to be spent by each Fund on the distribution of the Fund's
shares of the Investor Class under the Plans shall not be materially increased
without shareholder approval; and (4) while the Plans remain in effect, the
selection and nomination of the Company's directors who are not "interested
persons" of the Company (as defined in the 1940 Act) shall be committed to the
discretion of such directors who are not "interested persons" of the Company.

Mr. Sablowsky, a director of the Company, had an indirect interest in
the operation of the Plans by virtue of his position with Fahnestock Co., Inc.,
a broker-dealer.

ADMINISTRATIVE SERVICES AGENT.

Provident Distributors, Inc. ("PDI") provides certain administrative
services to the Institutional Class of each Fund that are not provided by PFPC,
pursuant to an Administrative Services Agreement, dated June 25, 1999, between
the Company and PDI. These services include furnishing data processing and
clerical services, acting as liaison between the Funds and various service
providers and coordinating the preparation of 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 average daily net
assets of the Institutional Class.

-41-

<PAGE>

PDI is currently waiving fees in excess of .03% of each Fund's average daily net
assets. For the fiscal years ended August 31, 1999 and August 31, 1998, PDI
received administrative services fees from the Institutional Class of the Funds
below as follows:

ADMINISTRATIVE SERVICES
FUND FEES (AFTER WAIVERS) WAIVERS
---- -------------------- -------

FISCAL YEAR ENDED AUGUST 31, 1999

Bond $4,158 $16,630
Long/Short Equity 1 $219 $874
Large Cap Value $20,836 $83,346
Mid Cap Value $38,745 $154,978
Small Cap Value $365 $1,458

PERIOD MAY 29, 1998 THROUGH AUGUST 31, 1998

Bond $3,155 $9,524
Large Cap Value $24,042 $6,662
Mid Cap Value $13,741 $44,606
Small Cap Value 2 $69 $2,277

1 Commenced operations November 17, 1998.
2 Commenced operations July 1, 1998.

PORTFOLIO TRANSACTIONS

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

No Fund has any obligation to deal with any broker or group of brokers
in the execution of portfolio transactions. Boston Partners may, consistent with
the interests of the Funds and subject to the approval of the Board of
Directors, select brokers on the basis of the research, statistical and pricing
services they provide to the Funds and other clients of Boston Partners.
Information and research received from such brokers will be in addition to, and
not in lieu of, the services required to be performed by Boston Partners 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 Boston Partners determines in good faith that such
commission is reasonable in terms either of the transaction or the overall

-42-
<PAGE>

responsibility of Boston Partners to a Fund and its other clients and that the
total commissions paid by a Fund will be reasonable in relation to the benefits
to a Fund over the long-term.

The following chart shows the aggregate brokerage commissions paid by
each Fund for the past three fiscal years:

FUND 1999 1998 1997
---- ---- ---- ----

Bond 1 $665 $804 N/A
Long/Short Equity 2 $19,409 N/A N/A
Large Cap Value 3 $211,118 $165,408 N/A
Mid Cap Value 4 $790,052 $326,951 N/A
Small Cap Value 5 $3,631 N/A N/A

1 Commenced operations December 30, 1997.
2 Commenced operations November 17, 1998.
3 Institutional class commenced operations January 2, 1997 and Investor Class
commenced operations on January 16, 1997.
4 Commenced operations June 2, 1997.
5 Commenced operations July 1, 1998.

The Funds are required to identify any securities of the Company's
regular broker dealers (as defined in Rule 10b-1 under the 1940 Act) or their
parents held by the Funds as of the end of the most recent fiscal year. As of
August 31, 1999, the following Funds held the following securities:

FUND SECURITY VALUE
---- -------- -----

Bond None $0
Long/Short Equity Goldman Sachs Group, Inc. $11,963
Large Cap Value Morgan Stanley & Co. $257,437
Mid Cap Value None $0
Small Cap Value None $0

Investment decisions for each Fund and for other investment accounts
managed by Boston Partners are made independently of each other in the light of
differing conditions. However, the same investment decision may be made for two
or more of such accounts. In such cases, simultaneous transactions are
inevitable. Purchases or sales are then averaged as to price and allocated as to
amount according to a formula deemed equitable to each such account. While in
some cases this practice could have a detrimental effect upon the price or value
of the security as far as a Fund is concerned, in other cases it is believed to
be beneficial to a Fund.

PURCHASE AND REDEMPTION INFORMATION

You may purchase shares through an account maintained by your brokerage
firm and you may also purchase shares directly by mail or wire. The Company
reserves the right, if conditions

-43-
<PAGE>

exist which make cash payments undesirable, to honor any request for redemption
or repurchase of a Fund's shares by making payment in whole or in part in
securities chosen by the Company and valued in the same way as they would be
valued for purposes of computing that Fund's net asset value. If payment is made
in securities, a shareholder may incur transaction costs in converting these
securities into cash. A shareholder will also bear any market risk or tax
consequences as a result of a payment in securities. The Company has elected,
however, to be governed by Rule 18f-1 under the 1940 Act so that each 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. A shareholder will bear the risk of a decline in market value and any tax
consequences associated with a redemption in securities.

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

Shares of the Company are subject to redemption by the Company, at the
redemption price of such shares as in effect from time to time, including,
without limitation: to reimburse a Fund for any loss sustained by reason of the
failure of a shareholder to 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; if
such redemption is, in the opinion of the Company's Board of Directors,
desirable in order to prevent the Company or any Fund from being deemed a
"personal holding company" within the meaning of the Internal Revenue Code of
1986, as amended; or if the net income with respect to any particular class of
common stock should be negative or it should otherwise be appropriate to carry
out the Company's responsibilities under the 1940 Act.

The computation of the hypothetical offering price per share of an
Institutional and Investor Share of the Funds based on the value of each Fund's
net assets on August 31, 1999 and each Fund's Institutional and Investor Shares
outstanding on such date is as follows:

-44-
<PAGE>

INSTITUTIONAL CLASS.
<TABLE>
<CAPTION>

LONG/SHORT LARGE CAP MID CAP SMALL CAP
BOND EQUITY VALUE VALUE VALUE
---- ------ ----- ----- -----

<S> <C> <C> <C> <C> <C>
Net assets $12,041,031 $940,793 $53,111,553 $173,223,501 $1,308,557

Outstanding shares 1,280,021 99,500 4,388,660 15,100,118 150,988

Net asset value $9.41 $9.46 $12.24 $11.47 $8.67
per share

Maximum sales ___ ___ ___ ___ ___
charge

Maximum offering $9.41 $9.46 $12.24 $11.47 $8.67
price to public
</TABLE>

INVESTOR CLASS.
<TABLE>
<CAPTION>

LONG/SHORT LARGE CAP MID CAP SMALL CAP
BOND EQUITY VALUE VALUE VALUE
---- ------ ----- ----- -----

<S> <C> <C> <C> <C> <C>
Net assets $188,379 $230,714 $1,637,506 $2,762,170 $292,973

Outstanding shares 19,900 24,477 132,520 242,821 33,859

Net asset value $9.47 $9.43 $12.36 $11.38 $8.65
per share

Maximum sales ___ ___ ___ ___ ___
charge

Maximum offering $9.47 $9.43 $12.36 $11.38 $8.65
price to public
</TABLE>

-45-

<PAGE>

VALUATION OF SHARES

The net asset values per share of each class of the Fund are calculated
as of the close of 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
these holidays falls on a Saturday or Sunday. Net asset value per share, the
value of an individual share in a fund, is computed by adding the value of the
proportionate interest of each class in a Fund's securities, cash and other
assets, subtracting the actual and accrued liabilities of the class and dividing
the result by the number of outstanding shares of the class. The net asset
values of each class are calculated independently of the other classes.
Securities that 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
the Company's Board of Directors. The amortized cost method of valuation may
also be used with respect to debt obligations with sixty days or less remaining
to maturity.

In determining the approximate market value of portfolio investments,
the Funds may employ outside organizations, which may use a matrix or formula
method that takes into consideration market indices, matrices, yield curves and
other specific adjustments. This may result in the securities being valued at a
price different from the price that would have been determined had the matrix or
formula method not been used. All cash, receivables and current payables are
carried on a Fund's books at their face value. Other assets, if any, are valued
at fair value as determined in good faith by the Company's Board of Directors.

PERFORMANCE INFORMATION

TOTAL RETURN.

The Funds may from time to time advertise "average annual total
return." Each Fund computes such return separately for each class of shares by
determining the average annual compounded rate of return during specified
periods that equates the initial amount invested to the ending redeemable value
of such investment according to the following formula:

-46-
<PAGE>
P(1+T)n = ERV

Where : T = average annual total return;

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

P = hypothetical initial payment of $1,000; and

n = period covered by the computation, expressed in
years.

And when solving for T:

ERV 1/n
T = [(-------) - 1]
P

The Funds, when advertising "aggregate total return," compute such
returns separately for each class of shares by determining the aggregate
compounded rates of return during specified periods that likewise equate the
initial amount invested to the ending redeemable value of such investment. The
formula for calculating aggregate total return is as follows:

ERV
Aggregate Total Return T = [(-------) - 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 a 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 nonrecurring charges at the end of the
measuring period.

-47-
<PAGE>

Calculated according to the SEC Rules, the average annual total returns
for the Funds for the fiscal years ending August 31, 1999, 1998 and 1997 were as
follows:

AVERAGE ANNUAL TOTAL RETURN
----------------------------
FUND INSTITUTIONAL INVESTOR
---- ------------- --------

FOR THE FISCAL YEAR ENDED AUGUST 31, 1999

Bond 3.10% 2.85%
Long/Short Equity1 (5.40)% (5.70)%
Large Cap Value 10.67% 9.85%
Mid Cap Value 6.97% 6.84%
Small Cap Value (11.48)% (11.66)%

FOR THE FISCAL YEAR ENDED AUGUST 31, 1998

Large Cap Value 6.97% 5.75%
Mid Cap Value (3.16%) (3.19%)

FOR THE FISCAL YEAR ENDED AUGUST 1997

Large Cap Value2 24.60% 22.06%
Mid Cap Value3 10.10% 10.10%

1 Commenced operations November 17, 1998.

2 The Institutional Class commenced operations January 2, 1997 and the Investor
Class commenced operations January 16, 1997.

3 The Mid Cap Value Fund commenced operations June 2, 1997.

Calculated according to the above formula, the aggregate total returns
for the Funds were as follows:

AGGREGATE TOTAL RETURN
----------------------------
FUND INSTITUTIONAL INVESTOR
---- ------------- --------

FOR THE FISCAL YEAR ENDED AUGUST 31, 1999

Bond 0.42% 0.17%
Long/Short Equity (5.40)% (5.70)%
Large Cap Value 17.12% 16.86%
Mid Cap Value 21.08% 20.81%
Small Cap Value 13.78% 13.37%

-48-

<PAGE>

FOR THE FISCAL YEAR ENDED AUGUST 31, 1998

Bond 4.79% 4.63%
Large Cap Value 11.85% 9.51%
Mid Cap Value (3.92%) (3.96%)

FOR THE FISCAL YEAR ENDED AUGUST 31, 1997

Large Cap Value 24.60% 22.06%
Mid Cap Value 10.10% 10.10%

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

TAXES

Each Fund intends to qualify as a regulated investment company under
Subchapter M of the Internal Revenue Code, and to distribute out its income to
shareholders each year, so that a Fund itself generally will be relieved of
federal income and excise taxes. If a Fund were to fail to so qualify: (1) the
Fund would be taxed at regular corporate rates without any deduction for
distributions to shareholders; and (2) shareholders would be taxed as if they
received ordinary dividends, although corporate shareholders could be eligible
for the dividends received deduction. Moreover, if a Fund were to fail to make
sufficient distributions in a year, the Fund would be subject to corporate
income taxes and/or excise taxes in respect of the shortfall or, if the
shortball is large enough, the Fund could be disqualified as a regulated
investment company.

The Code imposes a non-deductible 4% excise tax on regulated investment
companies that do not distribute with respect to each calendar year an amount
equal to 98% of their ordinary income for the calendar year and 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 the Funds may in certain circumstances be
required to liquidate investments in order to make sufficient distributions to
avoid excise tax liability.

Each Fund will be required in certain cases to withhold and remit to
the United States Treasury 31% of its 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."

-49-

<PAGE>

ADDITIONAL INFORMATION CONCERNING RBB SHARES

RBB has authorized capital of 30 billion shares of Common Stock at a
par value of $0.001 per share. Currently, 20.026 billion shares have been
classified into 99 classes as shown in the table below. Shares of the Classes
QQ, RR, SS, TT, UU, VV, WW, DDD, EEE, III and JJJ constitute the Funds described
herein. Under RBB's charter, the Board of Directors has the power to classify
and reclassify any unissued shares of Common Stock from time to time.

NUMBER OF NUMBER OF
AUTHORIZED SHARES AUTHORIZED SHARES
CLASS OF COMMON STOCK (MILLIONS) CLASS OF COMMON STOCK (MILLIONS)
------------------------------------- -------------------- ----------------------------------- --------------------

<S> <C> <S> <C>
A (Growth & Income) 100 YY (Schneider Capital Small Cap
Value) 100
B 100 ZZ 100
C (Balanced) 100 AAA 100
D (Tax-Free) 100 BBB 100
E (Money) 500 CCC 100
F (Municipal Money) 500 DDD (Boston Partners
Institutional Small Cap II) 100
G (Money) 500 EEE (Boston Partners Investors
Small Cap II) 100
H (Municipal Money) 500 FFF 100
I (Sansom Money) 1500 GGG 100
J (Sansom Municipal Money) 500 HHH 100
K (Sansom Government Money) 500 III (Boston Partners
Institutional Long/Short Equity) 100
L (Bedford Money) 1500 JJJ (Boston Partners Investors
Long/Short Equity) 100
M (Bedford Municipal Money) 500 KKK (Boston Partners
Institutional Long-Short Equity) 100
N (Bedford Government Money) 500 LLL (Boston Partners Investors
Long-Short Equity) 100
O (Bedford N.Y. Money) 500 MMM (n/i numeric Small Cap Value) 100
P (RBB Government) 100 Class NNN (Bogle Institutional
Small Cap Growth) 100
Q 100 Class OOO (Bogle Investors Small
Cap Growth) 100
R (Municipal Money) 500 Janney (Money) 3000
S (Government Money) 500 Janney (Municipal Money) 200
T 500 Janney (Government Money) 700
U 500 Janney (N.Y. Money) 100
V 500 Select (Money) 700
W 100 Beta 2 (Municipal Money) 1
X 50 Beta 3 (Government Money) 1
Y 50 Beta 4 (N.Y. Money) 1
Z 50 Principal Class (Money) 700
AA 50 Gamma 2 (Municipal Money) 1
BB 50 Gamma 3 (Government Money) 1
CC 50 Gamma 4 (N.Y. Money) 1
DD 100 Delta 1 (Money) 1
EE 100 Delta 2 (Municipal Money) 1
FF (n/i numeric Micro Cap) 50 Delta 3 (Government Money) 1
GG (n/i numeric Growth) 50 Delta 4 (N.Y. Money) 1
HH (n/i numeric Mid Cap) 50 Epsilon 1 (Money) 1
II 100 Epsilon 2 (Municipal Money) 1
JJ 100 Epsilon 3 (Government Money) 1
KK 100 Epsilon 4 (N.Y. Money) 1

-50-
<PAGE>

LL 100 Zeta 1 (Money) 1
MM 100 Zeta 2 (Municipal Money) 1

NN 100 Zeta 3 (Government Money) 1
OO 100 Zeta 4 (N.Y. Money) 1
PP 100 Eta 1 (Money) 1
QQ (Boston Partners Institutional
Large Cap) 100 Eta 2 (Municipal Money) 1
RR (Boston Partners Investors Large
Cap) 100 Eta 3 (Government Money) 1
SS (Boston Partners Advisor Large
Cap) 100 Eta 4 (N.Y. Money) 1
TT (Boston Partners Investors Mid
Cap) 100 Theta 1 (Money) 1
UU (Boston Partners Institutional
Mid Cap) 100 Theta 2 (Municipal Money) 1
VV (Boston Partners Institutional
Bond) 100 Theta 3 (Government Money) 1
WW (Boston Partners Investors Bond) 100
XX (n/i numeric Larger Cap) 50 Theta 4 (N.Y. Money) 1

</TABLE>

The classes of Common Stock have been grouped into 15 separate
"families": the Cash Preservation Family, the Sansom Street Family, the Bedford
Family, the Principal (Gamma) Family, the Janney Montgomery Scott Family, the
Select (Beta) Family, the Schneider Capital Management Family, the n/i numeric
family of funds, the Boston Partners Family, the Bogle Family, the Delta Family,
the Epsilon Family, the Theta Family, the Eta Family, and the Zeta Family. The
Cash Preservation Family represents interests in the Money Market and Municipal
Money Market Portfolios; the Sansom Street Family represents interests in the
Money Market, Municipal Money Market and Government Obligations Money Market
Portfolios; the Bedford Family represents interests in the Money Market,
Municipal Money Market and Government Obligations Money Market Portfolios; the
n/i numeric investors family of funds represents interests in five non-money
market portfolios; the Boston Partners Family represents interests in five
non-money market portfolios; the Bogle Family represents interests in one
non-money market portfolio; the Schneider Capital Management Family represents
interests in one non-money market portfolio; the Janney Montgomery Scott Family,
the Select (Beta) Family, the Principal (Gamma) Family and the Delta, Epsilon,
Zeta, Eta and Theta Families represent interests in the Money Market, Municipal
Money Market, New York Municipal Money Market and Government Obligations Money
Market Portfolios.

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

-51-
<PAGE>

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 of each portfolio affected by the
matter. Rule 18f-2 further provides that a portfolio shall be deemed to be
affected by a matter unless it is clear that the interests of each portfolio in
the matter are identical or that the matter does not affect any interest of the
portfolio. Under the Rule the approval of an investment advisory agreement or
any change in a fundamental investment policy would be effectively acted upon
with respect to a portfolio only if approved by the holders of a majority of the
outstanding voting securities of such portfolio. However, the Rule also provides
that the ratification of the selection of independent public accountants and the
election of directors are not subject to the separate voting requirements and
may be effectively acted upon by shareholders of an investment company voting
without regard to portfolio.

Notwithstanding any provision of Maryland law requiring a greater vote
of shares of RBB's common stock (or of any class voting as a class) in
connection with any corporate action, unless otherwise provided by law (for
example by Rule 18f-2 discussed above), or by RBB's Articles of Incorporation,
RBB may take or authorize such action upon the favorable vote of the holders of
more than 50% of all of the outstanding shares of Common Stock voting without
regard to class (or portfolio).

MISCELLANEOUS

COUNSEL.

The law firm of Drinker Biddle & Reath LLP, One Logan Square, 18th and
Cherry Streets, Philadelphia, Pennsylvania 19103-6996, serves as counsel to the
Company and the non-interested directors.

INDEPENDENT ACCOUNTANTS.

PricewaterhouseCoopers LLP, serves as the Company's independent
accountants. PricewaterhouseCoopers LLP performs an annual audit of the
Company's financial statements.

FINANCIAL STATEMENTS

The audited financial statements and notes thereto in the Portfolio's
Annual Report to Shareholders for the fiscal year ended August 31, 1999 (the
"1999 Annual Report") are incorporated by reference into this Statement of
Additional Information. No other parts of the 1999 Annual Report are
incorporated by reference herein. The financial statements included in the 1999
Annual Report have been audited by the Company's independent accountants,
PricewaterhouseCoopers LLP. The reports of PricewaterhouseCoopers LLP are
incorporated

-52-
<PAGE>

herein by reference. Such financial statements have been incorporated herein in
reliance upon such reports given upon their authority as experts in accounting
and auditing. Copies of the 1999 Annual Report may be obtained at no charge by
telephoning the Distributor at the telephone number appearing on the front page
of this Statement of Additional Information.

-53-

<PAGE>

APPENDIX A

COMMERCIAL PAPER RATINGS

A Standard & Poor's commercial paper rating is a current
opinion of the creditworthiness of an obligor with respect to financial
obligations 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" - Obligations are rated in the highest category
indicating that the obligor's capacity to meet its financial commitment on the
obligation is strong. Within this category, certain obligations are designated
with a plus sign (+). This indicates that the obligor's capacity to meet its
financial commitment on these obligations is extremely strong.

"A-2" - Obligations are somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions than
obligations in higher rating categories. However, the obligor's capacity to meet
its financial commitment on the obligation is satisfactory.

"A-3" - Obligations exhibit 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.

"B" - Obligations are regarded as having significant
speculative characteristics. The obligor currently has the capacity to meet its
financial commitment on the obligation; however, it faces major ongoing
uncertainties which could lead to the obligor's inadequate capacity to meet its
financial commitment on the obligation.

"C" - Obligations are currently vulnerable to nonpayment and
are dependent upon favorable business, financial, and economic conditions for
the obligor to meet its financial commitment on the obligation.

"D" - Obligations are in payment default. The "D" rating
category is used when payments on an obligation are not made on the date due
even if the applicable grace period has not expired, unless Standard & Poor's
believes that such payments will be made during such grace period. The "D"
rating will be used upon the filing of a bankruptcy petition or the taking of a
similar action if payments on an obligation are jeopardized.

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:

A-1
<PAGE>

"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.

"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
effect 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.

The three rating categories of Duff & Phelps for investment
grade commercial paper and short-term debt are "D-1," "D-2" and "D-3." Duff &
Phelps employs three designations, "D-1+," "D-1" and "D-1-," within the highest
rating category. The following summarizes the rating categories used by Duff &
Phelps for commercial paper:

"D-1+" - Debt possesses the highest certainty of timely
payment. Short-term liquidity, including internal operating factors and/or
access to alternative sources of funds, is outstanding, and safety is just below
risk-free U.S. Treasury short-term obligations.

"D-1" - Debt possesses very high certainty of timely payment.
Liquidity factors are excellent and supported by good fundamental protection
factors. Risk factors are minor.

"D-1-" - Debt possesses high certainty of timely payment.
Liquidity factors are strong and supported by good fundamental protection
factors. Risk factors are very small.

"D-2" - Debt possesses good certainty of timely payment.
Liquidity factors and company fundamentals are sound. Although ongoing funding
needs may enlarge total financing requirements, access to capital markets is
good. Risk factors are small.

"D-3" - Debt possesses satisfactory liquidity and other
protection factors qualify issues as to investment grade. Risk factors are
larger and subject to more variation. Nevertheless, timely payment is expected.

A-2

<PAGE>

"D-4" - Debt possesses speculative investment characteristics.
Liquidity is not sufficient to insure against disruption in debt service.
Operating factors and market access may be subject to a high degree of
variation.

"D-5" - Issuer failed to meet scheduled principal and/or
interest payments.

Fitch IBCA short-term ratings apply to debt obligations that
have time horizons of less than 12 months for most obligations, or up to three
years for U.S. public finance securities. The following summarizes the rating
categories used by Fitch IBCA for short-term obligations:

"F1" - Securities possess the highest credit quality. This
designation indicates the best capacity for timely payment of financial
commitments and may have an added "+" to denote any exceptionally strong credit
feature.

"F2" - Securities possess good credit quality. This
designation indicates a satisfactory capacity for timely payment of financial
commitments, but the margin of safety is not as great as in the case of the
higher ratings.

"F3" - Securities possess fair credit quality. This
designation indicates that the capacity for timely payment of financial
commitments is adequate; however, near-term adverse changes could result in a
reduction to non-investment grade.

"B" - Securities possess speculative credit quality. This
designation indicates minimal capacity for timely payment of financial
commitments, plus vulnerability to near-term adverse changes in financial and
economic conditions.

"C" - Securities possess high default risk. This designation
indicates that default is a real possibility and that the capacity for meeting
financial commitments is solely reliant upon a sustained, favorable business and
economic environment.

"D" - Securities are in actual or imminent payment default.

Thomson Financial BankWatch short-term ratings assess the
likelihood of an untimely payment of principal and interest of debt instruments
with original maturities of one year or less. The following summarizes the
ratings used by Thomson Financial BankWatch:

"TBW-1" - This designation represents Thomson Financial
BankWatch's highest category and indicates a very high likelihood that principal
and interest will be paid on a timely basis.

"TBW-2" - This designation represents Thomson Financial
BankWatch's second-highest category and indicates that while the degree of
safety regarding timely repayment of

A-3

<PAGE>

principal and interest is strong, the relative degree of safety is not as high
as for issues rated "TBW-1."

"TBW-3" - This designation represents Thomson Financial
BankWatch's lowest investment-grade category and indicates that while the
obligation is more susceptible to adverse developments (both internal and
external) than those with higher ratings, the capacity to service principal and
interest in a timely fashion is considered adequate.

"TBW-4" - This designation represents Thomson Financial
BankWatch's lowest rating category and indicates that the obligation is regarded
as non-investment grade and therefore speculative.

CORPORATE AND MUNICIPAL LONG-TERM DEBT RATINGS

The following summarizes the ratings used by Standard & Poor's
for corporate and municipal debt:

"AAA" - An obligation rated "AAA" has 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.

Obligations rated "BB," "B," "CCC," "CC" and "C" are 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" - An obligation rated "BB" is less vulnerable to
nonpayment 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.

"B" - An obligation rated "B" is more vulnerable to nonpayment
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.

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"CCC" - An obligation rated "CCC" is currently vulnerable to
nonpayment, 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 nonpayment.

"C" - The "C" rating may be used to cover a situation where a
bankruptcy petition has been filed or similar action taken, but payments on this
obligation are being continued.

"D" - An obligation rated "D" is in payment default. The "D"
rating category is used when payments on an obligation are not made on the date
due even if the applicable grace period has not expired, unless Standard &
Poor's believes that such payments will be made during such grace period. The
"D" rating also will be used upon the filing of a bankruptcy petition or the
taking of a 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.

"c" - The 'c' subscript is used to provide additional
information to investors that the bank may terminate its obligation to purchase
tendered bonds if the long-term credit rating of the issuer is below an
investment-grade level and/or the issuer's bonds are deemed taxable.

"p" - The letter 'p' indicates that the rating is provisional.
A provisional rating assumes the successful completion of the project financed
by the debt being rated and indicates that payment of debt service requirements
is largely or entirely dependent upon the successful, timely completion of the
project. This rating, however, while addressing credit quality subsequent to
completion of the project, makes no comment on the likelihood of or the risk of
default upon failure of such completion. The investor should exercise his own
judgment with respect to such likelihood and risk.

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

"r" - The 'r' highlights derivative, hybrid, and certain other
obligations that Standard & Poor's believes may experience high volatility or
high variability in expected returns as a result of noncredit risks. Examples of
such obligations are securities with principal or

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<PAGE>

interest return 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.

N.R. Not rated. Debt obligations of issuers outside the United
States and its territories are rated on the same basis as domestic corporate and
municipal issues. The ratings measure the creditworthiness of the obligor but do
not take into account currency exchange and related uncertainties.

The following summarizes the ratings used by Moody's for corporate and
municipal 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 fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risk appear somewhat larger than the "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" indicates 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 operating experience, (c)
rentals which begin when facilities are completed, or (d) payments to which some

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<PAGE>

other limiting condition attaches. Parenthetical rating denotes probable credit
stature upon completion of construction or elimination of basis of condition.

Note: Moody's applies numerical modifiers 1, 2, and 3 in each
generic rating classification from "Aa" through "Caa". The modifier 1 indicates
that the obligation ranks in the higher end of its generic rating category; the
modifier 2 indicates a mid-range ranking; and the modifier 3 indicates a ranking
in the lower end of its generic rating category.

The following summarizes the long-term debt ratings used by
Duff & Phelps for corporate and municipal long-term debt:

"AAA" - Debt is considered to be of the highest credit
quality. The risk factors are negligible, being only slightly more than for
risk-free U.S. Treasury debt.

"AA" - Debt is considered to be of high credit quality.
Protection factors are strong. Risk is modest but may vary slightly from time to
time because of economic conditions.

"A" - Debt possesses protection factors which are average but
adequate. However, risk factors are more variable in periods of greater economic
stress.

"BBB" - Debt possesses below-average protection factors but
such protection factors are still considered sufficient for prudent investment.
Considerable variability in risk is present during economic cycles. This is the
lowest investment grade category.

"BB," "B," "CCC," "DD" and "DP" - Debt that possesses one of
these ratings is considered to be below investment grade. Although below
investment grade, debt rated "BB" is deemed likely to meet obligations when due.
Debt rated "B" possesses the risk that obligations will not be met when due.
Debt rated "CCC" is well below investment grade and has considerable uncertainty
as to timely payment of principal, interest or preferred dividends. Debt rated
"DD" is a defaulted debt obligation, and the rating "DP" represents preferred
stock with dividend arrearages.

To provide more detailed indications of credit quality, the
"AA," "A," "BBB," "BB" and "B" ratings may be modified by the addition of a plus
(+) or minus (-) sign to show relative standing within these major categories.

The following summarizes the ratings used by Fitch IBCA for
corporate and municipal bonds:

"AAA" - Bonds considered to be investment grade and of the
highest credit quality. These ratings denote the lowest expectation of credit
risk and are assigned only in case of exceptionally strong capacity for timely
payment of financial commitments. This capacity is highly unlikely to be
adversely affected by foreseeable events.

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<PAGE>

"AA" - Bonds considered to be investment grade and of very
high credit quality. These ratings denote a very low expectation of credit risk
and indicate very strong capacity for timely payment of financial commitments.
This capacity is not significantly vulnerable to foreseeable events.

"A" - Bonds considered to be investment grade and of high
credit quality. These ratings denote a low expectation of credit risk and
indicate strong capacity for timely payment of financial commitments. This
capacity may, nevertheless, be more vulnerable to changes in circumstances or in
economic conditions than is the case for higher ratings.

"BBB" - Bonds considered to be investment grade and of good
credit quality. These ratings denote that there is currently a low expectation
of credit risk. The capacity for timely payment of financial commitments is
considered adequate, but adverse changes in circumstances and in economic
conditions are more likely to impair this capacity. This is the lowest
investment grade category.

"BB" - Bonds considered to be speculative. These ratings
indicate that there is a possibility of credit risk developing, particularly as
the result of adverse economic change over time; however, business or financial
alternatives may be available to allow financial commitments to be met.
Securities rated in this category are not investment grade.

"B" - Bonds are considered highly speculative. These ratings
indicate that significant credit risk is present, but a limited margin of safety
remains. Financial commitments are currently being met; however, capacity for
continued payment is contingent upon a sustained, favorable business and
economic environment.

"CCC", "CC" and "C" - Bonds have high default risk. Default is
a real possibility, and capacity for meeting financial commitments is solely
reliant upon sustained, favorable business or economic developments. "CC"
ratings indicate that default of some kind appears probable, and "C" ratings
signal imminent default.

"DDD," "DD" and "D" - Bonds are in default. The ratings of
obligations in this category are based on their prospects for achieving partial
or full recovery in a reorganization or liquidation of the obligor. While
expected recovery values are highly speculative and cannot be estimated with any
precision, the following serve as general guidelines. "DDD" obligations have the
highest potential for recovery, around 90%-100% of outstanding amounts and
accrued interest. "DD" indicates potential recoveries in the range of 50%-90%,
and "D" the lowest recovery potential, i.e., below 50%.

Entities rated in this category have defaulted on some or all
of their obligations. Entities rated "DDD" have the highest prospect for
resumption of performance or continued operation with or without a formal
reorganization process. Entities rated "DD" and "D" are generally undergoing a
formal reorganization or liquidation process; those rated "DD" are likely to
satisfy a higher portion of their outstanding obligations, while entities rated
"D" have a poor prospect for repaying all obligations.

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To provide more detailed indications of credit quality, the
Fitch IBCA ratings from and including "AA" to "CCC" may be modified by the
addition of a plus (+) or minus (-) sign to denote relative standing within
these major rating categories.

`NR' indicates the Fitch IBCA does not rate the issuer or
issue in question.

`Withdrawn': A rating is withdrawn when Fitch IBCA deems the
amount of information available to be inadequate for rating purposes, or when an
obligation matures, is called, or refinanced.

RatingAlert: Ratings are placed on RatingAlert to notify
investors that there is a reasonable probability of a rating change and the
likely direction of such change. These are designated as "Positive", indicating
a potential upgrade, "Negative", for a potential downgrade, or "Evolving", if
ratings may be raised, lowered or maintained. RatingAlert is typically resolved
over a relatively short period.

Thomson Financial BankWatch assesses the likelihood of an
untimely repayment of principal or interest over the term to maturity of long
term debt and preferred stock which are issued by United States commercial
banks, thrifts and non-bank banks; non-United States banks; and broker-dealers.
The following summarizes the rating categories used by Thomson BankWatch for
long-term debt ratings:

"AAA" - This designation indicates that the ability to repay
principal and interest on a timely basis is extremely high.

"AA" - This designation indicates a very strong ability to
repay principal and interest on a timely basis, with limited incremental risk
compared to issues rated in the highest category.

"A" - This designation indicates that the ability to repay
principal and interest is strong. Issues rated "A" could be more vulnerable to
adverse developments (both internal and external) than obligations with higher
ratings.

"BBB" - This designation represents the lowest
investment-grade category and indicates an acceptable capacity to repay
principal and interest. Issues rated "BBB" are more vulnerable to adverse
developments (both internal and external) than obligations with higher ratings.

"BB," "B," "CCC" and "CC" - These designations are assigned by
Thomson Financial BankWatch to non-investment grade long-term debt. Such issues
are regarded as having speculative characteristics regarding the likelihood of
timely repayment of principal and interest. "BB" indicates the lowest degree of
speculation and "CC" the highest degree of speculation.

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<PAGE>

"D" - This designation indicates that the long-term debt is in
default.

PLUS (+) OR MINUS (-) - The ratings from "AAA" through "CC"
may include a plus or minus sign designation which indicates where within the
respective category the issue is placed.

MUNICIPAL NOTE RATINGS

A Standard and Poor's note rating reflects the liquidity
factors and market access risks unique to notes due in three years or less. The
following summarizes the ratings used by Standard & Poor's for municipal notes:

"SP-1" - The issuers of these municipal notes exhibit a strong
capacity to pay principal and interest. Those issues determined to possess a
very strong capacity to pay debt service are given a plus (+) designation.

"SP-2" - The issuers of these municipal notes exhibit
satisfactory capacity to pay principal and interest, with some vulnerability to
adverse financial and economic changes over the term of the notes.

"SP-3" - The issuers of these municipal notes exhibit
speculative capacity to pay principal and interest.

Moody's ratings for state and municipal notes and other
short-term loans are designated Moody's Investment Grade ("MIG") and variable
rate demand obligations are designated Variable Moody's Investment Grade
("VMIG"). Such ratings recognize the differences between short-term credit risk
and long-term risk. The following summarizes the ratings by Moody's Investors
Service, Inc. for short-term notes:

"MIG-1"/"VMIG-1" - This designation denotes best quality.
There is present strong protection by established cash flows, superior liquidity
support or demonstrated broad-based access to the market for refinancing.

"MIG-2"/"VMIG-2" - This designation denotes high quality.
Margins of protection are ample although not so large as in the preceding group.

"MIG-3"/"VMIG-3" - This designation denotes favorable quality,
with all security elements accounted for but lacking the undeniable strength of
the preceding grades. Liquidity and cash flow protection may be narrow and
market access for refinancing is likely to be less well established.

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<PAGE>

"MIG-4"/"VMIG-4" - This designation denotes adequate quality.
Protection commonly regarded as required of an investment security is present
and although not distinctly or predominantly speculative, there is specific
risk.

"SG" - This designation denotes speculative quality. Debt
instruments in this category lack margins of protection.

Fitch IBCA and Duff & Phelps use the short-term ratings
described under Commercial Paper Ratings for municipal notes.

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<PAGE>

Law Offices
DRINKER BIDDLE & REATH LLP
One Logan Square
18th & Cherry Streets
Philadelphia, PA 19103-6996

December 11, 2000

VIA EDGAR TRANSMISSION
----------------------

Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549

Re: The RBB Fund, Inc. (the "Registrant")
REGISTRATION NOS. 33-20827/811-05518

Ladies and Gentlemen:

On behalf of the Registrant and pursuant to Rule 497(e) under
the Securities Act of 1933, as amended, transmitted herewith for filing are the
Registrant's Supplements dated December 11, 2000 to the Boston Partners Family
of Funds Institutional and Investor Class Prospectuses, each dated December 1,
1999 (as revised March 28, 2000) and Registrant's Statement of Additional
Information for the Boston Partners Family of Funds dated December 1, 1999 (as
revised March 31, 2000 and December 11, 2000).

If you have any questions about the enclosed, please call me
at (215) 988-2918.

Very truly yours,

/S/ KATHRYN R. WILLIAMS
-----------------------
Kathryn R. Williams

KRW:kmr
Enclosures

cc: Michael P. Malloy, Esq. (w/o enclosures)