THE BEDFORD FAMILY MONEY MARKET PORTFOLIOS
OF
THE RBB FUND, INC.
Money Market Portfolio
Municipal Money Market Portfolio
Government Obligations Money Market Portfolio
This prospectus gives vital information about these money market mutual
funds, advised by BlackRock Institutional Management Corporation ("BIMC" or the
"Adviser"), including information on investment policies, risks and fees. For
your own benefit and protection, please read it before you invest and keep it on
hand for future reference.
Please note that these funds:
(BULLET) are not bank deposits;
(BULLET) are not federally insured;
(BULLET) are not obligations of, or guaranteed or endorsed by PNC Bank,
National Association, PFPC Trust Company or any other bank;
(BULLET) are not obligations of, or guaranteed or endorsed or otherwise
supported by the U.S. Government, the Federal Deposit Insurance
Corporation, the Federal Reserve Board or any other governmental agency;
(BULLET) are not guaranteed to achieve their goal(s);
(BULLET) may not be able to maintain a stable $1 share price and you may
lose money.
- --------------------------------------------------------------------------------
THE SECURITIES DESCRIBED IN THIS PROSPECTUS HAVE BEEN REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION (SEC). THE SEC, HOWEVER, HAS NOT JUDGED THESE
SECURITIES FOR THEIR INVESTMENT MERIT AND HAS NOT DETERMINED THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANYONE WHO TELLS YOU OTHERWISE IS COMMITTING A
CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
PROSPECTUS December 1, 1999
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TABLE OF CONTENTS
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============================== INTRODUCTION TO THE RISK/RETURN SUMMARY .....5
PORTFOLIO DESCRIPTION
A LOOK AT THE GOALS, Money Market .............................6
STRATEGIES, RISKS, EXPENSES
AND FINANCIAL HISTORY OF Municipal Money Market ..................11
EACH PORTFOLIO.
Government Obligations Money Market .....16
DETAILS ABOUT THE SERVICE PORTFOLIO MANAGEMENT
PROVIDERS.
Investment Adviser ......................21
Service Provider Chart ..................22
SHAREHOLDER INFORMATION
POLICIES AND INSTRUCTIONS FOR Pricing Shares ..........................23
OPENING, MAINTAINING AND
CLOSING AN ACCOUNT IN ANY OF Purchase of Shares ......................23
THE PORTFOLIOS.
Redemption of Shares ....................25
Dividends and Distributions .............27
Taxes ...................................27
DETAILS ON DISTRIBUTION PLANS.
DISTRIBUTION ARRANGEMENTS ..................28
============================== FOR MORE INFORMATION ...............Back Cover
3
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INTRODUCTION TO THE RISK/RETURN SUMMARY
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This Prospectus has been written to provide you with the information you
need to make an informed decision about whether to invest in the Bedford Classes
of The RBB Fund, Inc. (the "Company").
The three classes of common stock (each a "Bedford Class") of the Company
offered by this Prospectus represent interests in the Bedford Classes of the
Money Market Portfolio, the Municipal Money Market Portfolio and the Government
Obligations Money Market Portfolio. This Prospectus and the Statement of
Additional Information incorporated herein relate solely to the Bedford Classes
of the Company.
This Prospectus has been organized so that each Portfolio has its own short
section with important facts about that particular Portfolio. Once you read the
short sections about the Portfolios that interest you, read the sections about
Purchase and Redemption of Shares of the Bedford Classes ("Bedford Shares" or
"Shares"). These sections apply to all the Portfolios offered by this
Prospectus.
5
<PAGE>
MONEY MARKET PORTFOLIO
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================================================================================
IMPORTANT DEFINITIONS
ASSET-BACKED SECURITIES: Debt securities that are backed by a pool of assets,
usually loans such as installment sale contracts or credit card receivables.
COMMERCIAL PAPER: Short-term securities with maturities of 1 to 270 days which
are issued by banks, corporations and others.
DOLLAR WEIGHTED AVERAGE MATURITY: The average amount of time until the
organizations that issued the debt securities in the fund's portfolio must pay
off the principal amount of the debt. "Dollar weighted" means the larger the
dollar value of a debt security in the fund, the more weight it gets in
calculating this average.
LIQUIDITY: Liquidity is the ability to easily convert investments into cash
without losing a significant amount of money in the process.
NET ASSET VALUE (NAV): The value of everything the fund owns, minus everything
it owes, divided by the number of shares held by investors.
REPURCHASE AGREEMENT: A special type of a short-term investment. A dealer sells
securities to a fund and agrees to buy them back later at a set price. In
effect, the dealer is borrowing the fund's money for a short time, using the
securities as collateral.
VARIABLE OR FLOATING RATE SECURITIES: Securities whose interest rates adjust
automatically after a certain period of time and/or whenever a predetermined
standard interest rate changes.
================================================================================
INVESTMENT GOAL
The fund seeks to generate current income, to provide you with liquidity
and to protect your investment.
PRIMARY INVESTMENT STRATEGIES.
To achieve this goal, we invest in a diversified portfolio of short term,
high quality, U.S. dollar-denominated instruments, including government, bank,
commercial and other obligations.
Specifically, we may invest in:
1) U.S. dollar-denominated obligations issued or supported by the credit
of U.S. or foreign banks or savings institutions with total assets of
more than $1 billion (including obligations of foreign branches of such
banks).
2) High quality commercial paper and other obligations issued or
guaranteed (or otherwise supported) by U.S. and foreign corporations
and other issuers rated (at the time of purchase) A-2 or higher by
Standard and Poor's, Prime-2 or higher by Moody's, D-2 or higher by
Duff & Phelps, F-2 or higher by Fitch or TBW-2 or higher by Thomson
BankWatch, as well as high quality corporate bonds rated AA (or Aa) or
higher at the time of purchase by those rating agencies.These ratings
must be provided by at least two rating agencies, or by the only rating
agency providing a rating.
3) Unrated notes, paper and other instruments that are determined by us to
be of comparable quality to the instruments described above.
4) Asset-backed securities (including interests in pools of assets such as
mortgages, installment purchase obligations and credit card
receivables).
5) Securities issued or guaranteed by the U.S. Government or by its
agencies or authorities.
6) Dollar-denominated securities issued or guaranteed by foreign
governments or their political subdivisions, agencies or authorities.
7) Securities issued or guaranteed by state or local governmental bodies.
8) Repurchase agreements relating to the above instruments.
The fund seeks to maintain a net asset value of $1.00 per share.
6
<PAGE>
QUALITY
Under guidelines established by the Company's Board of Directors, we will
only purchase securities if such securities or their issuers have (or such
securities are guaranteed or otherwise supported by entities which have)
short-term debt ratings at the time of purchase in the two highest rating
categories from at least two national rating agencies, or one such rating if the
security is rated by only one agency. Securities that are unrated must be
determined to be of comparable quality.
MATURITY
The dollar-weighted average maturity of all the investments of the fund
will be 90 days or less. Only those securities which have remaining maturities
of 397 days or less (except for certain variable and floating rate instruments
and securities collateralizing repurchase agreements) will be purchased.
KEY RISKS
The value of money market investments tends to fall when current interest
rates rise. Money market investments are generally less sensitive to interest
rate changes than longer-term securities.
The fund's securities may not earn as high a level of income as longer term
or lower quality securities, which generally have greater risk and more
fluctuation in value.
The fund's concentration of its investments in the banking industry could
increase risks. The profitability of banks depends largely on the availability
and cost of funds, which can change depending upon economic conditions. Banks
are also exposed to losses if borrowers get into financial trouble and can't
repay their loans.
The obligations of foreign banks and other foreign issuers may involve
certain risks in addition to those of domestic issuers, including higher
transaction costs, less complete financial information, political and economic
instability, less stringent regulatory requirements and less market liquidity.
Unrated notes, paper and other instruments may be subject to the risk that
an issuer may default on its obligation to pay interest and repay principal.
The obligations issued or guaranteed by state or local government bodies
may be issued by entities in the same state and may have interest which is paid
from revenues of similar projects. As a result, changes in economic, business or
political conditions relating to a particular state or types of projects may
impact the fund.
Treasury obligations differ only in their interest rates, maturities and
time of issuance. These differences could result in fluctuations in the value of
such securities depending upon the market. Obligations of U.S. Government
agencies and authorities are supported by varying degrees of credit. The U.S.
Government gives no assurances that it will provide financial support to its
agencies and authorities if it is not obligated by law to do so. Default in
these issuers could negatively impact the fund.
The fund's investment in asset-backed securities may be negatively impacted
by interest rate fluctuations or when an issuer pays principal on an obligation
held by the fund earlier or later than expected. These events may affect their
value and the return on your investment.
The fund could lose money if a seller under a repurchase agreement defaults
or declares bankruptcy.
We may purchase variable and floating rate instruments. Like all debt
instruments, their value is dependent on the credit paying ability of the
issuer. If the issuer were unable to make interest payments or default, the
value of the securities would decline. The absence of an active market for these
securities could make it difficult to dispose of them if the issuer defaults.
7
<PAGE>
The fund, like any business, could be affected if the computer systems on
which it relies do not properly process information beginning on January 1,
2000. While Year 2000 issues could have a negative effect on the fund, BIMC, the
fund's investment adviser, is currently working to avoid such problems. BIMC is
also working with other systems providers and vendors servicing the Portfolios
to determine their systems' ability to handle Year 2000 problems. There is no
guarantee, however, that systems will work properly on or after January 1, 2000.
Year 2000 problems may also hurt issuers whose securities the fund holds or
securities markets generally.
ALTHOUGH WE SEEK TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER
SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND. WHEN YOU INVEST IN
THIS FUND YOU ARE NOT MAKING A BANK DEPOSIT. YOUR INVESTMENT IS NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR BY ANY BANK OR
GOVERNMENTAL AGENCY.
RISK / RETURN INFORMATION
The chart and table below give you a picture of the variability of the
fund's long-term performance for Bedford Shares. The information shows you how
the fund's performance has varied year by year and provides some indication of
the risks of investing in the fund. The chart and the table both assume
reinvestment of dividends and distributions. As with all such investments, past
performance is not an indication of future results. Performance reflects fee
waivers in effect. If fee waivers were not in place, the fund's performance
would be reduced.
AS OF 12/31
ANNUAL TOTAL RETURNS
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
8.8 7.66 3.75 3.09 2.41 3.49 5.18 4.65 4.88 4.75
YEAR-TO-DATE TOTAL RETURN FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999: 4.23%
Best Quarter: 9.49% (quarter ended 6/30/89)
Worst Quarter: 2.34% (quarter ended 6/30/93)
AS OF 12/31/98
AVERAGE ANNUAL TOTAL RETURNS
1 YEAR 5 YEARS 10 YEARS
------ ------- --------
MONEY MARKET 4.75% 4.59% 4.86%
CURRENT YIELD: The seven-day yield for the period ended 12/31/98 for the
fund was 4.38%. Past performance is not an indication of future results. Yields
will vary. You may call (800) 533-7719 to obtain the current seven-day yield of
the fund.
8
<PAGE>
EXPENSES AND FEES
As a shareholder you pay certain fees and expenses. Annual fund operating
expenses are paid out of fund assets and are reflected in the fund's price.
The table below describes the fees and expenses that you may pay if you buy
and hold Bedford Shares of the fund. The table is based on expenses for the most
recent fiscal year.
================================================================================
IMPORTANT DEFINITIONS
MANAGEMENT FEES: Fees paid to the investment adviser for portfolio management
services.
OTHER EXPENSES: Includes administration, transfer agency, custody, professional
fees and registration fees.
DISTRIBUTION AND SERVICE FEES: Fees that are paid to the Distributor for
shareholder account service and maintenance.
================================================================================
ANNUAL FUND OPERATING EXPENSES*
(Expenses that are deducted from fund assets)
Management Fees 1 0.36%
Distribution and service (12b-1) fees 0.59%
Other expenses 0.13%
-----
Total annual fund operating expenses 2 1.08%
=====
* The table does not reflect charges or credits which investors might
incur if they invest through a financial institution.
1. BIMC has voluntarily undertaken that a portion of its management fee
will not be imposed on the fund during the current fiscal year ending
August 31, 2000. As a result of the fee waiver, current management fees
of the fund are 0.25% of average daily net assets. This waiver is
expected to remain in effect for the current fiscal year. However, it
is voluntary and can be modified or terminated at any time without the
fund's consent.
2. As a result of the fee waiver set forth in note 1, the total annual
fund operating expenses which are estimated to be incurred during the
current fiscal year are 0.97%. Although this fee waiver is expected to
remain in effect for the current fiscal year, it is voluntary and may
be terminated at any time at the option of BIMC.
EXAMPLE:
The example is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated and then redeem
all of your shares at the end of each period. The example also assumes that your
investment has a 5% return each year and that the fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your cost would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
BEDFORD SHARES $110 $343 $595 $1,317
9
<PAGE>
FINANCIAL HIGHLIGHTS
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The table below sets forth certain financial information for the periods
indicated, including per share information results for a single fund share. The
term "Total Return" indicates how much your investment would have increased or
decreased during this period of time and assumes that you have reinvested all
dividends and distributions. This information has been derived from the fund's
financial statements audited by PricewaterhouseCoopers LLP, the Company's
independent accountants. This information should be read in conjunction with the
fund's financial statements which, together with the report of independent
accountants, are included in the fund's annual report, which is available upon
request (see back cover for ordering instructions).
FINANCIAL HIGHLIGHTS (b)
(FOR A BEDFORD SHARE OUTSTANDING THROUGHOUT EACH YEAR)
MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
FOR THE FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
AUGUST 31, 1999 AUGUST 31, 1998 AUGUST 31, 1997 AUGUST 31, 1996 AUGUST 31, 1995
--------------- --------------- --------------- --------------- ----------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year ........... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- --------- ---------- ---------- --------
Income from investment operations
Net investment income ....................... 0.0425 0.0473 0.0462 0.0469 0.0486
-------- --------- ---------- ---------- --------
Total from investment operations .......... 0.0425 0.0473 0.0462 0.0469 0.0486
-------- --------- ---------- ---------- --------
Less distributions
Dividends (from net investment income) ...... (0.0425) (0.0473) (0.0462) (0.0469) (0.0486)
-------- --------- ---------- ---------- --------
Total distributions ....................... (0.0425) (0.0473) (0.0462) (0.0469) (0.0486)
-------- --------- ---------- ---------- --------
Net asset value at end of year ................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ========== ========== ========
Total Return ................................... 4.34% 4.84% 4.72% 4.79% 4.97%
Ratios/Supplemental Data
Net assets at end of year (000s) ............ $360,123 $762,739 $1,392,911 $1,109,334 $935,821
Ratios of expenses to average net assets
After advisory/administration fee waivers . .97%(a) .97%(a) .97%(a) .97%(a) .96%(a)
Ratios of net investment income to average net
assets
After advisory/administration fee waivers . 4.25% 4.73% 4.62% 4.69% 4.86%
</TABLE>
(a) Without the waiver of advisory and administration fees and without the
reimbursement of certain operating expenses, the ratios of expenses to
average net assets for the Money Market Portfolio would have been 1.08%,
1.10%, 1.12%, 1.14% and 1.17% for the years ended August 31, 1999, 1998,
1997, 1996 and 1995, respectively.
(b) Financial Highlights relate solely to the Bedford Class of shares within the
portfolio.
10
<PAGE>
MUNICIPAL MONEY MARKET PORTFOLIO
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================================================================================
IMPORTANT DEFINITIONS
DOLLAR WEIGHTED AVERAGE MATURITY: The average amount of time until the
organizations that issued the debt securities in the fund's portfolio must pay
off the principal amount of the debt. "Dollar weighted" means the larger the
dollar value of a debt security in the fund, the more weight it gets in
calculating this average.
GENERAL OBLIGATION BONDS: Bonds which are secured by the issuer's pledge of its
full faith, credit and taxing power for the payment of principal and interest.
LIQUIDITY: Liquidity is the ability to easily convert investments into cash
without losing a significant amount of money in the process.
MUNICIPAL LEASE OBLIGATIONS: These provide participation in municipal lease
agreements and installment purchase contracts, but are not part of the general
obligations of the municipality.
MUNICIPAL SECURITY: A short-term obligation issued by or on behalf of states and
possessions of the United States, their political subdivisions and their
agencies and authorities.
NET ASSET VALUE (NAV): The value of everything the fund owns, minus everything
it owes, divided by the number of shares held by investors.
REVENUE BONDS: Bonds which are secured only by the revenues from a particular
facility or class of facilities, such as a water or sewer system, or from the
proceeds of a special excise tax or other revenue source.
TAX-EXEMPT COMMERCIAL PAPER: Short-term Municipal Securities with maturities of
1 to 270 days.
VARIABLE OR FLOATING RATE SECURITIES: Securities whose interest rates adjust
automatically after a certain period of time and/or whenever a predetermined
standard interest rate changes.
================================================================================
INVESTMENT GOAL
The fund seeks to generate current income exempt from federal income taxes,
to provide you with liquidity and to protect your investment.
PRIMARY INVESTMENT STRATEGIES
To achieve this goal, we invest in a diversified portfolio of Municipal
Securities. Specifically, we may invest in:
1) Fixed and variable rate notes and similar debt instruments rated or
issued by issuers who have ratings at the time of purchase of MIG-2,
VMIG-2 or Prime-2 or higher by Moody's, SP-2 or A-2 or higher by
Standard & Poor's, D-2 or higher by Duff & Phelps, or F-2 or higher by
Fitch (or guaranteed or otherwise supported by entities with such
ratings).
2) Tax-exempt commercial paper and similar debt instruments rated or
issued by issuers who have ratings at the time of purchase of Prime-2
or higher by Moody's, A-2 or higher by Standard & Poor's, D-2 or higher
by Duff & Phelps, or F-2 or higher by Fitch (or guaranteed or otherwise
supported by entities with such ratings).
3) Municipal bonds rated or issued by issuers who have ratings at the time
of purchase of Aa or higher by Moody's or AA or higher by Standard &
Poor's, Duff & Phelps or Fitch (or guaranteed or otherwise supported by
entities with such ratings).
4) Unrated notes, paper and other instruments that are determined by us to
be of comparable quality to the instruments described above.
5) Municipal bonds and notes whose principal and interest payments are
guaranteed by the U.S. Government or one of its agencies or authorities
or which otherwise depend on the credit of the United States.
The fund seeks to maintain a net asset value of $1.00 per share.
We normally invest at least 80% of its net assets in Municipal Securities
and other instruments whose interest is exempt from federal income tax or
subject to the Federal Alternative Minimum Tax.
The fund may hold uninvested cash reserves during temporary defensive
periods or, if in our opinion suitable Municipal Securities are not available.
The fund may hold all of its assets in uninvested cash reserves during temporary
defensive periods. Uninvested cash will not earn income.
We intend to have no more than 25% of its total assets in Municipal
Securities of issuers located in the same state.
11
<PAGE>
QUALITY
Under guidelines established by the Company's Board of Directors, we will
only purchase securities if such securities or their issuers have (or such
securities are guaranteed or otherwise supported by entities which have)
short-term debt ratings at the time of purchase in the two highest rating
categories from at least two national rating agencies, or one such rating if the
security is rated by only one agency. Securities that are unrated must be
determined to be of comparable quality.
MATURITY
The dollar-weighted average maturity of all the investments of the fund
will be 90 days or less. Only those securities which have remaining maturities
of 397 days or less (except for certain variable and floating rate instruments)
will be purchased.
KEY RISKS
The value of money market investments tends to fall when current interest
rates rise. Money market investments are generally less sensitive to interest
rate changes than longer-term securities.
The fund's securities may not earn as high a level of income as longer term
or lower quality securities, which generally have greater risk and more
fluctuation in value.
Municipal Securities include revenue bonds, general obligation bonds and
municipal lease obligations. Revenue bonds include private activity bonds, which
are not payable from the general revenues of the issuer. Consequently, the
credit quality of private activity bonds is usually directly related to the
credit standing of the corporate user of the facility involved. To the extent
that the fund's assets are invested in private activity bonds, the fund will be
subject to the particular risks presented by the laws and economic conditions
relating to such projects and bonds to a greater extent than if its assets were
not so invested. Moral obligation bonds are normally issued by special purpose
public authorities. If the issuer of moral obligation bonds is unable to pay its
debts from current revenues, it may draw on a reserve fund the restoration of
which is a moral but not a legal obligation of the state or municipality which
created the issuer. Risk exists that a municipality will not honor moral
obligation bonds. Municipal lease obligations are not guaranteed by the issuer
and are generally less liquid than other securities.
There may be less information available on the financial condition of
issuers of Municipal Securities than for public corporations. The market for
municipal bonds may be less liquid than for taxable bonds. This means that it
may be harder to buy and sell Municipal Securities, especially on short notice.
The fund may invest in bonds whose interest may be subject to the Federal
Alternative Minimum Tax. Interest received on these bonds by a taxpayer subject
to the Federal Alternative Minimum Tax is taxable.
We may invest 25% or more of assets in Municipal Securities whose interest
is paid solely from revenues of similar projects. For example, the fund may
invest more than 25% of its assets in Municipal Securities related to water or
sewer systems. This type of concentration exposes the fund to the legal and
economic risks relating to those projects.
We will rely on legal opinions of counsel to issuers of Municipal
Securities as to the tax-free status of investments and will not do our own
analysis regarding tax-free status.
The fund may purchase variable and floating rate instruments. Like all debt
instruments, their value is dependent on the credit paying ability of the
issuer. If the issuer were unable to make interest payments or default, the
value of the securities would decline. The absence of an active market for these
securities could make it difficult to dispose of them if the issuer defaults.
12
<PAGE>
The fund, like any business, could be affected if the computer systems on
which it relies do not properly process information beginning on January 1,
2000. While Year 2000 issues could have a negative effect on the fund, BIMC, the
fund's investment adviser, is currently working to avoid such problems. BIMC is
also working with other systems providers and vendors servicing the Portfolios
to determine their systems' ability to handle Year 2000 problems. There is no
guarantee, however, that systems will work properly on or after January 1, 2000.
Year 2000 problems may also hurt issuers whose securities the fund holds or
securities markets generally.
ALTHOUGH WE SEEK TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER
SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND. WHEN YOU INVEST IN
THIS FUND YOU ARE NOT MAKING A BANK DEPOSIT. YOUR INVESTMENT IS NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR BY ANY BANK OR
GOVERNMENTAL AGENCY.
RISK / RETURN INFORMATION
The chart and table below give you a picture of the variability of the
fund's long-term performance for Bedford Shares. The information shows you how
the fund's performance has varied year by year and provides some indication of
the risks of investing in the fund. The chart and the table both assume
reinvestment of dividends and distributions. As with all such investments, past
performance is not an indication of future results. Performance reflects fee
waivers in effect. If fee waivers were not in place, the fund's performance
would be reduced.
AS OF 12/31
ANNUAL TOTAL RETURNS
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
5.77% 5.32% 3.85% 2.40% 1.86% 2.25% 3.14% 2.89% 2.95% 2.77%
Year-to-date total return for the nine months ended September 30, 1999: 2.41%
Best Quarter: 6.24% (quarter ended 6/30/89)
Worst Quarter: 1.74% (quarter ended 3/31/94)
AS OF 12/31/98
AVERAGE ANNUAL TOTAL RETURNS
1 YEAR 5 YEARS 10 YEARS
------ ------- --------
MUNICIPAL MONEY MARKEt 2.77% 2.80% 3.31%
13
<PAGE>
CURRENT YIELD: The seven-day yield for the period ended 12/31/98 for the
fund was 2.81%. Past performance is not an indication of future results. Yields
will vary. You may call (800) 533-7719 to obtain the current seven-day yield of
the fund.
EXPENSES AND FEES
As a shareholder you pay certain fees and expenses. Annual fund operating
expenses are paid out of fund assets and are reflected in the fund's price.
The table below describes the fees and expenses that you may pay if you buy
and hold Bedford Shares of the fund. The table is based on expenses for the most
recent fiscal year.
================================================================================
IMPORTANT DEFINITIONS
MANAGEMENT FEES: Fees paid to the investment adviser for portfolio management
services.
OTHER EXPENSES: Includes administration, transfer agency, custody, professional
fees and registration fees.
DISTRIBUTION AND SERVICE FEES: Fees that are paid to the Distributor for
shareholder account service and maintenance.
================================================================================
ANNUAL FUND OPERATING EXPENSES*
(Expenses that are deducted from fund assets)
Management Fees 1 .................................... 0.35%
Distribution and service (12b-1) fees ................ 0.59%
Other expenses ....................................... 0.21%
-----
Total annual fund operating expenses2 ................ 1.15%
=====
* The table does not reflect charges or credits which investors might
incur if they invest through a financial institution.
1. BIMC has voluntarily undertaken that a portion of its management fee
will not be imposed on the fund during the current fiscal year ended
August 31, 2000. As a result of the fee waiver, current management fees
of the fund are 0.09% of average daily net assets. This waiver is
expected to remain in effect for the current fiscal year. However, it
is voluntary and can be modified or terminated at any time without the
fund's consent.
2. As a result of the fee waiver set forth in note 1, the total annual
fund operating expenses which are estimated to be incurred during the
current fiscal year are 0.89%. Although this fee waiver is expected to
remain in effect for the current fiscal year, it is voluntary and may
be terminated at any time at the option of BIMC.
EXAMPLE:
The example is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated and then redeem
all of your shares at the end of each period. The example also assumes that your
investment has a 5% return each year and that the fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your cost would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
BEDFORD SHARES $117 $365 $633 $1,398
14
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The table below sets forth certain financial information for the periods
indicated, including per share information results for a single fund share. The
term "Total Return" indicates how much your investment would have increased or
decreased during this period of time and assumes that you have reinvested all
dividends and distributions. This information has been derived from the fund's
financial statements audited by PricewaterhouseCoopers LLP, the Company's
independent accountants. This information should be read in conjunction with the
fund's financial statements which, together with the report of independent
accountants, are included in the fund's annual report, which is available upon
request (see back cover for ordering instructions).
FINANCIAL HIGHLIGHTS (b)
(FOR A BEDFORD SHARE OUTSTANDING THROUGHOUT EACH YEAR)
MUNICIPAL MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
FOR THE FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
AUGUST 31, 1999 AUGUST 31, 1998 AUGUST 31, 1997 AUGUST 31, 1996 AUGUST 31, 1995
--------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year ........... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- --------
Income from investment operations
Net investment income ....................... 0.0243 0.0286 0.0285 0.0288 0.0297
-------- -------- -------- -------- --------
Total from investment operations .......... 0.0243 0.0286 0.0285 0.0288 0.0297
-------- -------- -------- -------- --------
Less distributions
Dividends (from net investment income) ...... (0.0243) (0.0286) (0.0285) (0.0288) (0.0297)
-------- -------- -------- -------- --------
Total distributions ....................... (0.0243) (0.0286) (0.0285) (0.0288) (0.0297)
-------- -------- -------- -------- --------
Net asset value at end of year ................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total Return ................................... 2.46% 2.97% 2.88% 2.92% 3.01%
Ratios/Supplemental Data
Net assets at end of period (in thousands) .. $150,278 $147,633 $213,034 $201,940 $198,425
Ratios of expenses to average net assets
After advisory/administration fee waivers . .89%(a) .89%(a) .85%(a) .84%(a) .82%(a)
Ratios of net investment income to average
net assets
After advisory/administration fee waivers . 2.43% 2.86% 2.85% 2.88% 2.97%
(a) Without the waiver of advisory and administration fees and without the
reimbursement of certain operating expenses, the ratios of expenses to
average net assets for the Municipal Money Market Portfolio would have been
1.15%, 1.15%, 1.14%, 1.12% and 1.14% for the years ended August 31, 1999,
1998, 1997, 1996 and 1995, respectively.
(b) Financial Highlights relate solely to the Bedford Class of shares within the
portfolio.
</TABLE>
15
<PAGE>
GOVERNMENT OBLIGATIONS MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
================================================================================
IMPORTANT DEFINITIONS
ASSET-BACKED SECURITIES: Debt securities that are backed by a pool of assets,
usually loans such as installment sale contracts or credit card receivables.
DOLLAR WEIGHTED AVERAGE MATURITY: The average amount of time until the
organizations that issued the debt securities in the fund's portfolio must pay
off the principal amount of the debt. "Dollar weighted" means the larger the
dollar value of a debt security in the fund, the more weight it gets in
calculating this average.
LIQUIDITY: Liquidity is the ability to easily convert investments into cash
without losing a significant amount of money in the process.
NET ASSET VALUE (NAV): The value of everything the fund owns, minus everything
it owes, divided by the number of shares held by investors.
REPURCHASE AGREEMENT: A special type of a short-term investment. A dealer sells
securities to a fund and agrees to buy them back later at a set price. In
effect, the dealer is borrowing the fund's money for a short time, using the
securities as collateral.
VARIABLE OR FLOATING RATE SECURITIES: Securities whose interest rates adjust
automatically after a certain period of time and/or whenever a predetermined
standard interest rate changes.
================================================================================
INVESTMENT GOAL
The fund seeks to generate current income to provide you with liquidity and
to protect your investment.
PRIMARY INVESTMENT STRATEGIES
To achieve this goal, we invest exclusively in short-term U.S. Treasury
bills, notes and other obligations issued or guaranteed by the U.S. Government
or its agencies or instrumentalities and related repurchase agreements.
The fund seeks to maintain a net asset value of $1.00 per share.
QUALITY
Under guidelines established by the Company's Board of Directors, we will
purchase securities if such securities or their issuers have (or such securities
are guaranteed or otherwise supported by entities which have) short-term debt
ratings at the time of purchase in the two highest rating categories from at
least two national rating agencies, or one such rating if the security is rated
by only one agency. The fund may also purchase unrated securities determined by
us to be of comparable quality.
MATURITY
The dollar-weighted average maturity of all the investments of the fund
will be 90 days or less. Only those securities which have remaining maturities
of 397 days or less (except for certain variable and floating rate instruments
and securities collateralizing repurchase agreements) will be purchased.
SECURITIES LENDING
The fund may lend some of its securities on a short-term basis in order to
earn extra income. The fund will receive collateral in cash or high quality
securities equal to the current value of the loaned securities. These loans will
be limited to 33 1/3% of the value of the fund's total assets.
16
<PAGE>
KEY RISKS
The value of money market investments tends to fall when current interest
rates rise. Money market investments are generally less sensitive to interest
rate changes than longer-term securities.
The fund's securities may not earn as high a level of income as longer term
or lower quality securities, which generally have greater risk and more
fluctuation in value.
Treasury obligations differ only in their interest rates, maturities and
time of issuance. These differences could result in fluctuations in the value of
such securities depending upon the market. Obligations of U.S. Government
agencies and authorities are supported by varying degrees of credit. The U.S.
Government gives no assurances that it will provide financial support if it is
not obligated to do so by law. Default in these issuers could negatively impact
the fund.
The fund could lose money if a seller under a repurchase agreement defaults
or declares bankruptcy.
We may purchase variable and floating rate instruments. Like all debt
instruments, their value is dependent on the credit paying ability of the
issuer. If the issuer were unable to make interest payments or default, the
value of the securities would decline. The absence of an active market for these
securities could make it difficult to dispose of them if the issuer defaults.
Securities loans involve the risk of a delay in receiving additional
collateral if the value of the securities goes up while they are on loan. There
is also the risk of delay in recovering the loaned securities and of losing
rights to the collateral if a borrower goes bankrupt. Therefore, the fund may
lose the opportunity to sell the securities at a desirable price. Additionally,
in the event that a borrower of securities would file for bankruptcy or become
insolvent, disposition of the securities may be delayed pending court action.
The fund, like any business, could be affected if the computer systems on
which it relies do not properly process information beginning on January 1,
2000. While Year 2000 issues could have a negative effect on the fund, BIMC, the
fund's investment adviser, is currently working to avoid such problems. BIMC is
also working with other systems providers and vendors servicing the Portfolios
to determine their systems' ability to handle Year 2000 problems. There is no
guarantee, however, that systems will work properly on or after January 1, 2000.
Year 2000 problems may also hurt issuers whose securities the fund holds or
securities markets generally.
ALTHOUGH WE SEEK TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER
SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND. WHEN YOU INVEST IN
THIS FUND YOU ARE NOT MAKING A BANK DEPOSIT. YOUR INVESTMENT IS NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR BY ANY BANK OR
GOVERNMENTAL AGENCY.
17
<PAGE>
RISK/RETURN INFORMATION
The chart and table below give you a picture of the variability of the
fund's long-term performance for Bedford Shares. The information shows you how
the fund's performance has varied year by year and provides some indication of
the risks of investing in the fund. The chart and the table both assume
reinvestment of dividends and distributions. As with all such investments, past
performance is not an indication of future results. Performance reflects fee
waivers in effect. If fee waivers were not in place, the fund's performance
would be reduced.
AS OF 12/31
ANNUAL TOTAL RETURNS
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
- ---- ----- ----- ----- ----- ----- ----- ----- ----- -----
8.62% 7.44% 5.42% 3.01% 2.29% 3.41% 5.06% 4.54% 4.68% 4.59%
Year-to-date total return for the nine months ended September 30, 1999: 4.11%
Best Quarter: 9.21% (quarter ended 6/30/89)
Worst Quarter: 2.29% (quarter ended 3/31/94)
AS OF 12/31/98
AVERAGE ANNUAL TOTAL RETURNS
1 YEAR 5 YEARS 10 YEARS
------ ------- --------
GOVERNMENT OBLIGATIONS MONEY MARKET 4.59% 4.45% 4.89%
CURRENT YIELD: The seven-day yield for the period ended 12/31/98 for the
fund was 4.15%. Past performance is not an indication of future results. Yields
will vary. You may call (800) 533-7719 to obtain the current seven-day yield of
the fund.
18
<PAGE>
EXPENSES AND FEES
As a shareholder you pay certain fees and expenses. Annual fund operating
expenses are paid out of fund assets and are reflected in the fund's price.
The table below describes the fees and expenses that you may pay if you buy
and hold Bedford Shares of the fund. The table is based on expenses for the most
recent fiscal year.
================================================================================
IMPORTANT DEFINITIONS
MANAGEMENT FEES: Fees paid to the investment adviser for portfolio management
services.
OTHER EXPENSES: Includes administration, transfer agency, custody, professional
fees and registration fees.
DISTRIBUTION AND SERVICE FEES: Fees that are paid to the Distributor for
shareholder account service and maintenance.
================================================================================
ANNUAL FUND OPERATING EXPENSES*
(Expenses that are deducted from fund assets)
Management Fees 1 .................................. 0.42%
Distribution and service (12b-1) fees .............. 0.60%
Other expenses ..................................... 0.11%
-----
Total annual fund operating expenses 2 ............. 1.13%
=====
* The table does not reflect charges or credits which investors might
incur if they invest through a financial institution.
1. BIMC has voluntarily undertaken that a portion of its management fee
will not be imposed on the fund during the current fiscal year ending
August 31, 2000. As a result of the fee waiver, current management fees
of the fund are 0.265% of average daily net assets. This waiver is
expected to remain in effect for the current fiscal year. However, it
is voluntary and can be modified or terminated at any time without the
fund's consent.
2. As a result of the fee waiver set forth in note 1, the total annual
fund operating expenses which are estimated to be incurred during the
current fiscal year are 0.975%. Although this fee waiver is expected to
remain in effect for the current fiscal year, it is voluntary and may
be terminated at any time at the option of BIMC.
EXAMPLE:
The example is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated and then redeem
all of your shares at the end of each period. The example also assumes that your
investment has a 5% return each year and that the fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your cost would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
BEDFORD SHARES $115 $359 $622 $1,375
19
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The table below sets forth certain financial information for the periods
indicated, including per share information results for a single fund share. The
term "Total Return" indicates how much your investment would have increased or
decreased during this period of time and assumes that you have reinvested all
dividends and distributions. This information has been derived from the fund's
financial statements audited by PricewaterhouseCoopers LLP, the Company's
independent accountants. This information should be read in conjunction with the
fund's financial statements which, together with the report of independent
accountants, are included in the fund's annual report, which is available upon
request (see back cover for ordering instructions).
FINANCIAL HIGHLIGHTS (b)
(FOR A BEDFORD SHARE OUTSTANDING THROUGHOUT EACH YEAR)
GOVERNMENT OBLIGATIONS MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
FOR THE FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
AUGUST 31, 1999 AUGUST 31, 1998 AUGUST 31, 1997 AUGUST 31, 1996 AUGUST 31, 1995
--------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year ........... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- --------
Income from investment operations
Net investment income ....................... 0.0409 0.0464 0.0449 0.0458 0.0475
-------- -------- -------- -------- --------
Total from investment operations .......... 0.0409 0.0464 0.0449 0.0458 0.0475
-------- -------- -------- -------- --------
Less distributions
Dividends (from net investment income) ...... (0.0409) (0.0464) (0.0449) (0.0458) (0.0475)
-------- -------- -------- -------- --------
Total distributions ....................... (0.0409) (0.0464) (0.0449) (0.0458) (0.0475)
-------- -------- -------- -------- --------
Net asset value at end of year ................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total Return .............................. 4.17% 4.74% 4.59% 4.68% 4.86%
Ratios/Supplemental Data
Net assets at end of period (in thousands) .. $113,050 $128,447 $209,715 $192,599 $163,398
Ratios of expenses to average net assets
After advisory/administration fee waivers . .975%(a) .975%(a) .975%(a) .975%(a) .975%(a)
Ratios of net investment income to average
net assets
After advisory/administration fee waivers . 4.09% 4.63% 4.49% 4.58% 4.75%
</TABLE>
(a) Without the waiver of advisory and administration fees and without the
reimbursement of certain operating expenses, the ratios of expenses to
average net assets for the Government Obligations Money Market Portfolio
would have been 1.13%, 1.10%, 1.09%, 1.10% and 1.13% for the years ended
August 31, 1999, 1998, 1997, 1996 and 1995, respectively.
(b) Financial Highlights relate solely to the Bedford Class of shares within the
portfolio.
20
<PAGE>
PORTFOLIO MANAGEMENT
- --------------------------------------------------------------------------------
INVESTMENT ADVISER
BIMC, a majority-owned indirect subsidiary of PNC Bank, N.A. serves as
investment adviser and is responsible for all purchases and sales of each fund's
portfolio securities. BIMC and its affiliates are one of the largest U.S. bank
managers of mutual funds, with assets currently under management in excess of
$52.9 billion. BIMC (formerly known as PNC Institutional Management Corporation
or PIMC) was organized in 1977 by PNC Bank to perform advisory services for
investment companies and has its principal offices at Bellevue Park Corporate
Center, 400 Bellevue Parkway, Wilmington, DE 19809.
For the fiscal year ended August 31, 1999, BIMC received the following fees
as a percentage of each fund's average net assets:
Money Market Portfolio .250%
Municipal Money Market Portfolio .090%
Government Obligations Money Market Portfolio .265%
The following chart shows the funds' other service providers and includes
their addresses and principal activities.
21
<PAGE>
------------
SHAREHOLDERS
------------
Distribution and
Shareholder Services
------------------------------------ -----------------------------------------
PRINCIPAL DISTRIBUTOR TRANSFER AGENT
PROVIDENT DISTRIBUTORS, INC. PFPC INC.
FOUR FALLS CORPORATE CENTER, 6TH FL. 400 BELLEVUE PARKWAY
WEST CONSHOHOCKEN, PA 19428 WILMINGTON, DE 19809
Distributes shares of the funds. Handles shareholder services,
including record-keeping and statements,
distribution of dividends and processing
of buy and sell requests.
------------------------------------ -----------------------------------------
Asset
Management
------------------------------------ -----------------------------------------
INVESTMENT ADVISER CUSTODIAN
BLACKROCK INSTITUTIONAL PFPC TRUST COMPANY
MANAGEMENT CORPORATION 200 STEVENS DRIVE
400 BELLEVUE PARKWAY LESTER, PA 19113
WILMINGTON, DE 19809
Holds each fund's assets, settles
Manages each fund's business all portfolio trades and collects
and investment activities. most of the valuation data
required for calculating each
fund's net asset value ("NAV").
------------------------------------ -----------------------------------------
Fund
Operations
------------------------------------
ADMINISTRATOR AND FUND
ACCOUNTING AGENT
PFPC INC.
400 BELLEVUE PARKWAY
WILMINGTON, DE 19809
Provides facilities, equipment
and personnel to carry out
administrative services related
to each fund and calculates each
fund's NAV, dividends
and distributions.
------------------------------------
---------------------------------
BOARD OF DIRECTORS
Supervises the funds' activities.
---------------------------------
22
<PAGE>
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
PRICING SHARES
The price of your shares is also referred to as the net asset value (NAV).
The NAV is determined twice daily at 12:00 noon and at 4:00 p.m., Eastern
Time, each day on which both the New York Stock Exchange and the Federal Reserve
Bank of Philadelphia are open. It is calculated by dividing a fund's total
assets, less its liabilities, by the number of shares outstanding.
Each fund values its securities using amortized cost. This method values a
fund holding initially at its cost and then assumes a constant amortization to
maturity of any discount or premium. The amortized cost method ignores any
impact of changing interest rates.
PURCHASE OF SHARES
GENERAL. You may purchase Bedford Shares through an account maintained by
your brokerage firm (the "Account") and you may also purchase Shares directly by
mail or wire. The minimum initial investment is $1,000, and the minimum
subsequent investment is $100. The Company in its sole discretion may accept or
reject any order for purchases of Bedford Shares.
Purchases will be effected at the net asset value next determined after
PFPC, the Company's transfer agent, has received a purchase order in good order
and the Company's custodian has Federal Funds immediately available to it. In
those cases where payment is made by check, Federal Funds will generally become
available two Business Days after the check is received. A "Business Day" is any
day that both the New York Stock Exchange (the "NYSE") and the Federal Reserve
Bank of Philadelphia (the "FRB") are open. On any Business Day, orders which are
accompanied by Federal Funds and received by the Company by 12:00 noon Eastern
Time, and orders as to which payment has been converted into Federal Funds by
12:00 noon Eastern Time, will be executed as of 12:00 noon that Business Day.
Orders which are accompanied by Federal Funds and received by PFPC after 12:00
noon Eastern Time but prior to the close of regular trading on the NYSE
(generally 4:00 p.m. Eastern Time), and orders as to which payment has been
converted into Federal Funds after 12:00 noon Eastern Time but prior to the
close of regular trading on the NYSE on any Business Day, will be executed as of
the close of regular trading on the NYSE on that Business Day, but will not be
entitled to receive dividends declared on such Business Day. Orders which are
accompanied by Federal Funds and received by the Company as of the close of
regular trading on the NYSE or later, and orders as to which payment has been
converted to Federal Funds as of the close of regular trading on the NYSE or
later on a Business Day will be processed as of 12:00 noon Eastern Time on the
following Business Day.
PURCHASES THROUGH AN ACCOUNT. Purchases of Shares may be effected through
an Account with your broker through procedures and requirements established by
your broker. In such event, beneficial ownership of Bedford Shares will be
recorded by your broker and will be reflected in the Account statements provided
to you by your broker. Your broker may impose minimum investment Account
requirements. Even if your broker does not impose a sales charge for purchases
of Bedford Shares, depending on the terms of your Account with your broker, the
broker may charge to your Account fees for automatic investment and other
services provided to your Account. Information concerning Account requirements,
services and charges should be obtained from your broker, and you should read
this Prospectus in conjunction with any information received from your broker.
Shares are held in the street name account of your broker and if you desire to
transfer such shares to the street name account of another broker, you should
contact your current broker.
A broker with whom you maintain an Account may offer you the ability to
purchase Bedford Shares under an automatic purchase program (a "Purchase
Program") established by a participating broker. If you participate in a
Purchase Program, then you will have your "free-credit" cash balances in your
Account automatically invested in Shares of the
23
<PAGE>
Bedford Class designated by you as the "Primary Bedford Class" for your
Purchase Program. The frequency of investments and the minimum investment
requirement will be established by the broker and the Company. In addition, the
broker may require a minimum amount of cash and/or securities to be deposited in
your Account to participate in its Purchase Program. The description of the
particular broker's Purchase Program should be read for details, and any
inquiries concerning your Account under a Purchase Program should be directed to
your broker. As a participant in a Purchase Program, you may change the
designation of the Primary Bedford Class at any time by so instructing your
broker.
If your broker makes special arrangements under which orders for Bedford
Shares are received by PFPC prior to 12:00 noon Eastern Time, and your broker
guarantees that payment for such Shares will be made in available Federal Funds
to the Company's custodian prior to the close of regular trading on the NYSE on
the same day, such purchase orders will be effective and Shares will be
purchased at the offering price in effect as of 12:00 noon Eastern Time on the
date the purchase order is received by PFPC. Otherwise, if the broker has not
made such an arrangement, pricing of shares will occur as described above under
"General".
DIRECT PURCHASES. You may also make direct investments at any time in any
Bedford Class you select through any broker that has entered into a dealer
agreement with the Distributor (a "Dealer"). You may make an initial investment
in any of the Bedford Classes by mail by fully completing and signing an
application obtained from a Dealer (the "Application"), specifying the Portfolio
in which you wish to invest, and mailing it, together with a check payable to
"The Bedford Family" to the Bedford Family, c/o PFPC, P.O. Box 8950, Wilmington,
Delaware 19899. The check must specify the name of the Portfolio for which
shares are being purchased. An Application will be returned to you unless it
contains the name of the Dealer from whom you obtained it. Subsequent purchases
may be made through a Dealer or by forwarding payment to the Company's transfer
agent at the foregoing address.
Provided that your investment is at least $2,500, you may also purchase
Shares in any of the Bedford Classes by having your bank or Dealer wire Federal
Funds to the Company's Custodian, PFPC Trust Company. Your bank or Dealer may
impose a charge for this service. The Company does not currently charge for
effecting wire transfers but reserves the right to do so in the future. In order
to ensure prompt receipt of your Federal Funds wire, for an initial investment,
it is important that you follow these steps:
A. Telephone the Company's transfer agent, PFPC, toll-free (800) 533-7719
and provide your name, address, telephone number, Social Security or
Tax Identification Number, the Bedford Class selected, the amount
being wired, and by which bank or Dealer. PFPC will then provide you
with an account number. (If you have an existing account, you should
also notify PFPC prior to wiring funds.)
B. Instruct your bank or Dealer to wire the specified amount, together
with your assigned account number, to PFPC's account with PNC Bank.
PNC Bank, N.A., Philadelphia, PA
ABA-0310-0005-3.
FROM: (your name)
ACCOUNT NUMBER: (your account number with the Portfolio)
FOR PURCHASE OF: (name of the Portfolio)
AMOUNT: (amount to be invested)
C. Fully complete and sign the Application and mail it to the address
shown thereon. PFPC will not process initial purchases until it
receives a fully completed and signed Application.
For subsequent investments, you should follow steps A and B above.
24
<PAGE>
RETIREMENT PLANS. Bedford Shares may be purchased in conjunction with
individual retirement accounts ("IRAs") and rollover IRAs where PFPC Trust
Company acts as custodian. For further information as to applications and annual
fees, contact the Distributor or your broker. To determine whether the benefits
of an IRA are available and/or appropriate, you should consult with your tax
adviser.
REDEMPTION OF SHARES
GENERAL. Redemption orders are effected at the net asset value per share
next determined after receipt of the order in proper form by the Company's
transfer agent, PFPC. You may redeem all or some of your Shares in accordance
with one of the procedures described below.
REDEMPTION OF SHARES IN AN ACCOUNT. If you beneficially own Bedford Shares
through an Account, you may redeem Bedford Shares in your Account in accordance
with instructions and limitations pertaining to your Account by contacting your
broker. If such notice is received by PFPC by 12:00 noon Eastern Time on any
Business Day, the redemption will be effective as of 12:00 noon Eastern Time on
that day. Payment of the redemption proceeds will be made after 12:00 noon
Eastern Time on the day the redemption is effected, provided that the Company's
custodian is open for business. If the custodian is not open, payment will be
made on the next bank business day. If the redemption request is received
between 12:00 noon and the close of regular trading on the NYSE on a Business
Day, the redemption will be effective as of the close of regular trading on the
NYSE on such Business Day and payment will be made on the next bank business day
following receipt of the redemption request. If all of your Shares are redeemed,
all accrued but unpaid dividends on those Shares will be paid with the
redemption proceeds.
Your brokerage firm may also redeem each day a sufficient number of Shares
of the Primary Bedford Class to cover debit balances created by transactions in
your Account or instructions for cash disbursements. Shares will be redeemed on
the same day that a transaction occurs that results in such a debit balance or
charge.
Each brokerage firm reserves the right to waive or modify criteria for
participation in an Account or to terminate participation in an Account for any
reason.
REDEMPTION OF SHARES OWNED DIRECTLY. If you own Shares directly, you may
redeem any number of Shares by sending a written request to The Bedford Family
c/o PFPC, P.O. Box 8950, Wilmington, Delaware 19899. Redemption requests must be
signed by each shareholder in the same manner as the Shares are registered.
Redemption requests for joint accounts require the signature of each joint
owner. On redemption requests of $5,000 or more, each signature must be
guaranteed. A signature guarantee may be obtained from a domestic bank or trust
company, broker, dealer, clearing agency or savings association who are
participants in a medallion program recognized by the Securities Transfer
Association. The three recognized medallion programs are Securities Transfer
Agents Medallion Program (STAMP), Stock Exchanges Medallion Program (SEMP) and
New York Stock Exchange, Inc. Medallion Signature Program (MSP). Signature
guarantees that are not part of these programs will not be accepted.
If you are a direct investor, you may redeem your Shares without charge by
telephone if you have completed and returned an account application containing
the appropriate telephone election. To add a telephone option to an existing
account that previously did not provide for this option, you must file a
Telephone Authorization Form with PFPC. This form is available from PFPC. Once
this election has been made, you may simply contact PFPC by telephone to request
the redemption by calling (800) 533-7719. Neither the Company, the Distributor,
the Portfolios, the Administrator nor any other Company agent will be liable for
any loss, liability, cost or expense for following the procedures below or for
following instructions communicated by telephone that they reasonably believe to
be genuine.
The Company's telephone transaction procedures include the following
measures: (1) requiring the appropriate telephone transaction privilege forms;
(2) requiring the caller to provide the names of the account owners, the account
social security number and name of the portfolio, all of which must match the
Company's records; (3) requiring the Company's service representative to
complete a telephone transaction form, listing all of the above caller
identification
25
<PAGE>
information; (4) requiring that redemption proceeds be sent only by check to the
account owners of record at the address of record, or by wire only to the owners
of record at the bank account of record; (5) sending a written confirmation for
each telephone transaction to the owners of record at the address of record
within five (5) business days of the call; and (6) maintaining tapes of
telephone transactions for six months, if the Company elects to record
shareholder telephone transactions. For accounts held of record by
broker-dealers (other than the Distributor), financial institutions, securities
dealers, financial planners or other industry professionals, additional
documentation or information regarding the scope of authority is required.
Finally, for telephone transactions in accounts held jointly, additional
information regarding other account holders is required. Telephone transactions
will not be permitted in connection with IRA or other retirement plan accounts
or by attorney-in-fact under power of attorney.
Proceeds of a telephone redemption request will be mailed by check to your
registered address unless you have designated in your Application or Telephone
Authorization Form that such proceeds are to be sent by wire transfer to a
specified checking or savings account. If proceeds are to be sent by wire
transfer, a telephone redemption request received prior to the close of regular
trading on the NYSE will result in redemption proceeds being wired to your bank
account on the next day that a wire transfer can be effected. The minimum
redemption for proceeds sent by wire transfer is $2,500. There is no maximum for
proceeds sent by wire transfer. The Company may modify this redemption service
at any time or charge a service fee upon prior notice to shareholders, although
no fee is currently contemplated.
REDEMPTION BY CHECK. If you are a direct investor or you do not have check
writing privileges for your Account, the Company will provide to you forms of
drafts ("checks") payable through PNC Bank. These checks may be made payable to
the order of anyone. The minimum amount of a check is $100; however, your broker
may establish a higher minimum. If you wish to use this check writing redemption
procedure, you should complete specimen signature cards (available from PFPC),
and then forward such signature cards to PFPC. PFPC will then arrange for the
checks to be honored by PNC Bank. If you own Shares through an Account, you
should contact your broker for signature cards. Investors with joint accounts
may elect to have checks honored with a single signature. Check redemptions will
be subject to PNC Bank's rules governing checks. An investor will be able to
stop payment on a check redemption. The Company or PNC Bank may terminate this
redemption service at any time, and neither shall incur any liability for
honoring checks, for effecting redemptions to pay checks, or for returning
checks which have not been accepted.
When a check is presented to PNC Bank for clearance, PNC Bank, as your
agent, will cause the Company to redeem a sufficient number of your full and
fractional Shares to cover the amount of the check. This procedure enables you
to continue to receive dividends on your Shares representing the amount being
redeemed by check until such time as the check is presented to PNC Bank.
Pursuant to rules under the 1940 Act, checks may not be presented for cash
payment at the offices of PNC Bank. This limitation does not affect checks used
for the payment of bills or cash at other banks.
ADDITIONAL REDEMPTION INFORMATION. The Company ordinarily will make payment
for all Shares redeemed within seven days after receipt by PFPC of a redemption
request in proper form. Although the Company will redeem Shares purchased by
check before the check clears, payment of the redemption proceeds may be delayed
for a period of up to fifteen days after their purchase, pending a determination
that the check has cleared. This procedure does not apply to Shares purchased by
wire payment. You should consider purchasing Shares using a certified or bank
check or money order if you anticipate an immediate need for redemption
proceeds.
The Company does not impose a charge when Shares are redeemed. The Company
reserves the right to redeem any account in a Bedford Class involuntarily, on
thirty days' notice, if such account falls below $500 and during such 30-day
notice period the amount invested in such account is not increased to at least
$500. Payment for Shares redeemed may be postponed or the right of redemption
suspended as provided by the rules of the SEC.
If the Board of Directors determines that it would be detrimental to the
best interest of the remaining shareholders of the funds to make payment wholly
or partly in cash, redemption proceeds may be paid in whole or in part by an
in-kind distribution of readily marketable securities held by a fund instead of
cash in conformity with applicable rules
26
<PAGE>
of the SEC. Investors generally will incur brokerage charges on the sale of
portfolio securities so received in payment of redemptions. The funds have
elected, however, to be governed by Rule 18f-1 under the 1940 Act, so that a
fund is obligated to redeem its Shares solely in cash up to the lesser of
$250,000 or 1% of its net asset value during any 90-day period for any one
shareholder of a fund.
DIVIDENDS AND DISTRIBUTIONS
The Company will distribute substantially all of the net investment income
and net realized capital gains, if any, of each fund to each fund's
shareholders. All distributions are reinvested in the form of additional full
and fractional Shares of the relevant Bedford Class unless a shareholder elects
otherwise. The net investment income (not including any net short-term capital
gains) earned by each fund will be declared as a dividend on a daily basis and
paid monthly. Dividends are payable to shareholders of record immediately prior
to the determination of net asset value made as of the close of trading of the
NYSE. Net short-term capital gains, if any, will be distributed at least
annually.
TAXES
Distributions from the Money Market Portfolio and the Government
Obligations Money Market Portfolio will generally be taxable to shareholders. It
is expected that all, or substantially all, of these distributions will consist
of ordinary income. You will be subject to income tax on these distributions
regardless of whether they are paid in cash or reinvested in additional shares.
The one major exception to these tax principles is that distributions on shares
held in an IRA (or other tax-qualified plan) will not be currently taxable.
Distributions from the Municipal Money Market Portfolio will generally
constitute tax-exempt income for shareholders for federal income tax purposes.
It is possible, depending upon the Portfolios' investments, that a portion of
the Portfolio's distributions could be taxable to shareholders as ordinary
income or capital gains, but it is not expected that this will be the case.
Interest on indebtedness incurred by a shareholder to purchase or carry
shares of the Municipal Money Market Portfolio generally will not be deductible
for federal income tax purposes.
You should note that a portion of the exempt-interest dividends paid by the
Municipal Money Market Portfolio may constitute an item of tax preference for
purposes of determining federal alternative minimum tax liability.
Exempt-interest dividends will also be considered along with other adjusted
gross income in determining whether any Social Security or railroad retirement
payments received by you are subject to federal income taxes.
Although distributions from the Municipal Money Market Portfolio are exempt
for federal income tax purposes, they will generally constitute taxable income
for state and local income tax purposes except that, subject to limitations that
vary depending on the state, distributions from interest paid by a state or
municipal entity may be exempt from tax in that state.
The foregoing is only a summary of certain tax considerations under the
current law, which may be subject to change in the future. Shareholders who are
nonresident aliens, foreign trusts or estates, or foreign corporations or
partnerships may be subject to different United States Federal income tax
treatment. You should consult your tax adviser for further information regarding
federal, state, local and/or foreign tax consequences relevant to your specific
situation.
27
<PAGE>
DISTRIBUTION ARRANGEMENTS
- --------------------------------------------------------------------------------
Bedford Shares of the funds are sold without a sales load on a continuous
basis by Provident Distributors, Inc., whose principal business address is at
Four Falls Corporate Center, West Conshohocken, PA 19428.
The Board of Directors of the Company approved and adopted the Distribution
Agreement and separate Plans of Distribution for each of the Classes
(collectively, the "Plans") pursuant to Rule 12b-1 under the 1940 Act. Under
each of the Plans, the Distributor is entitled to receive from the relevant
Bedford Class a distribution fee, which is accrued daily and paid monthly, of up
to .65% on an annualized basis of the average daily net assets of the relevant
Bedford Class. The actual amount of such compensation is agreed upon from time
to time by the Company's Board of Directors and the Distributor. Under the
Distribution Agreement, the Distributor has agreed to accept compensation for
its services thereunder and under the Plans in the amount of .60% of the average
daily net assets of the relevant Class on an annualized basis in any year. The
Distributor may, in its discretion, voluntarily waive from time to time all or
any portion of its distribution fee.
Under the Distribution Agreement and the relevant Plan, the Distributor may
reallocate an amount up to the full fee that it receives to financial
institutions, including broker/dealers, based upon the aggregate investment
amounts maintained by and services provided to shareholders of any relevant
Class serviced by such financial institutions. the Distributor may also
reimburse broker/dealers for other expenses incurred in the promotion of the
sale of Bedford Shares. The Distributor and/or broker/dealers pay for the cost
of printing (excluding typesetting) and mailing to prospective investors
prospectuses and other materials relating to the Bedford Classes as well as for
related direct mail, advertising and promotional expenses.
Each of the Plans obligates the Company, during the period it is in effect,
to accrue and pay to the Distributor on behalf of each Bedford Class the fee
agreed to under the Distribution Agreement. Payments under the Plans are not
based on expenses actually incurred by the Distributor, and the payments may
exceed distribution expenses actually incurred. Because these fees are paid out
of the funds' assets on an on-going basis, over time these fees will increase
the cost of your investment and may cost you more than paying other types of
sales charges.
28
<PAGE>
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<PAGE>
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<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS OR IN THE FUND'S STATEMENT OF
ADDITIONAL INFORMATION INCORPORATED HEREIN BY REFERENCE, IN CONNECTION WITH THE
OFFERING MADE BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND OR
ITS DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE FUND OR
BY THE DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY
BE MADE.
INVESTMENT ADVISER
BlackRock Institutional Management Corporation
Wilmington, Delaware
DISTRIBUTOR
Provident Distributors, Inc.
West Conshohocken, Pennsylvania
CUSTODIAN
PFPC Trust Company
Lester, Pennsylvania
ADMINISTRATOR AND TRANSFER AGENT
PFPC Inc.
Wilmington, Delaware
COUNSEL
Drinker Biddle & Reath LLP
Philadelphia, Pennsylvania
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
PROSPECTUS
THE BEDFORD FAMILY
MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
MUNICIPAL MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
GOVERNMENT OBLIGATIONS
MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
DECEMBER 1, 1999
<PAGE>
FOR MORE INFORMATION:
This prospectus contains important information you should know before you
invest. Read it carefully and keep it for future reference. More information
about the Bedford Family is available free, upon request, including:
ANNUAL/SEMI-ANNUAL REPORT
These reports contain additional information about each of the funds'
investments, describe the funds' performance, list portfolio holdings, and
discuss recent market conditions and economic trends. The annual report includes
fund strategies for the last fiscal year.
STATEMENT OF ADDITIONAL INFORMATION (SAI)
A Statement of Additional Information, dated December 1, 1999 (SAI), has
been filed with the Securities and Exchange Commission (SEC). The SAI, which
includes additional information about the Bedford Family, may be obtained free
of charge, along with the Bedford Family annual and semi-annual reports, by
calling (800) 533-7719. The SAI, as supplemented from time to time, is
incorporated by reference into this Prospectus (and is legally considered a part
of this Prospectus).
SHAREHOLDER ACCOUNT SERVICE REPRESENTATIVES
Representatives are available to discuss account balance information,
mutual fund prospectuses, literature, programs and services available. Hours: 8
a.m. to 5 p.m. (Eastern time) Monday-Friday. Call: (800) 533-7719.
PURCHASES AND REDEMPTIONS
Call your broker or (800) 533-7719.
WRITTEN CORRESPONDENCE
Post Office Address: Bedford Family
c/o PFPC, Inc.
PO Box 8950
Wilmington, DE 19899-8950
Street Address: Bedford Family
C/O PFPC, INC.
400 Bellevue Parkway
Wilmington, DE 19809
SECURITIES AND EXCHANGE COMMISSION (SEC)
You may also view information about The RBB Fund, Inc. and the Bedford
Family, including the SAI, by visiting the SEC website (http://www.sec.gov) or
the SEC's Public Reference Room in Washington, D.C. Information about the
operation of the public reference room can be obtained by calling the SEC
directly at 1-202-942-8090. Copies of this information can be obtained, for a
duplicating fee, by writing to the Public Reference Section of the SEC,
Washington, D.C. 20549-0102, or by electronic request to [email protected].
INVESTMENT COMPANY ACT FILE NO. 811-05518
<PAGE>
THE BEDFORD FAMILY MONEY MARKET PORTFOLIOS
OF
THE RBB FUND, INC.
Money Market Portfolio
Municipal Money Market Portfolio
Government Obligations Money Market Portfolio
This prospectus gives vital information about these money market mutual
funds, advised by BlackRock Institutional Management Corporation ("BIMC" or the
"Adviser"), including information on investment policies, risks and fees. For
your own benefit and protection, please read it before you invest and keep it on
hand for future reference.
Please note that these funds:
(BULLET) are not bank deposits;
(BULLET) are not federally insured;
(BULLET) are not obligations of, or guaranteed or endorsed by PNC Bank,
National Association, PFPC Trust Company or any other bank;
(BULLET) are not obligations of, or guaranteed or endorsed or otherwise
supported by the U.S. Government, the Federal Deposit Insurance
Corporation, the Federal Reserve Board or any other governmental agency;
(BULLET) are not guaranteed to achieve their goal(s);
(BULLET) may not be able to maintain a stable $1 share price and you may
lose money.
- --------------------------------------------------------------------------------
THE SECURITIES DESCRIBED IN THIS PROSPECTUS HAVE BEEN REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION (SEC). THE SEC, HOWEVER, HAS NOT JUDGED THESE
SECURITIES FOR THEIR INVESTMENT MERIT AND HAS NOT DETERMINED THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANYONE WHO TELLS YOU OTHERWISE IS COMMITTING A
CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
PROSPECTUS December 1, 1999
<PAGE>
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<PAGE>
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
============================== INTRODUCTION TO THE RISK/RETURN SUMMARY .....5
PORTFOLIO DESCRIPTION
A LOOK AT THE GOALS, Money Market .............................6
STRATEGIES, RISKS, EXPENSES
AND FINANCIAL HISTORY OF Municipal Money Market ..................11
EACH PORTFOLIO.
Government Obligations Money Market .....16
DETAILS ABOUT THE SERVICE PORTFOLIO MANAGEMENT
PROVIDERS.
Investment Adviser ......................21
Service Provider Chart ..................22
SHAREHOLDER INFORMATION
POLICIES AND INSTRUCTIONS FOR Pricing Shares ..........................23
OPENING, MAINTAINING AND
CLOSING AN ACCOUNT IN ANY OF Purchase of Shares ......................23
THE PORTFOLIOS.
Redemption of Shares ....................25
Dividends and Distributions .............27
Taxes ...................................27
DETAILS ON DISTRIBUTION PLANS.
DISTRIBUTION ARRANGEMENTS ..................28
============================== FOR MORE INFORMATION ...............Back Cover
3
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<PAGE>
INTRODUCTION TO THE RISK/RETURN SUMMARY
- --------------------------------------------------------------------------------
This Prospectus has been written to provide you with the information you
need to make an informed decision about whether to invest in the Bedford Classes
of The RBB Fund, Inc. (the "Company").
The three classes of common stock (each a "Bedford Class") of the Company
offered by this Prospectus represent interests in the Bedford Classes of the
Money Market Portfolio, the Municipal Money Market Portfolio and the Government
Obligations Money Market Portfolio. This Prospectus and the Statement of
Additional Information incorporated herein relate solely to the Bedford Classes
of the Company.
This Prospectus has been organized so that each Portfolio has its own short
section with important facts about that particular Portfolio. Once you read the
short sections about the Portfolios that interest you, read the sections about
Purchase and Redemption of Shares of the Bedford Classes ("Bedford Shares" or
"Shares"). These sections apply to all the Portfolios offered by this
Prospectus.
5
<PAGE>
MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
================================================================================
IMPORTANT DEFINITIONS
ASSET-BACKED SECURITIES: Debt securities that are backed by a pool of assets,
usually loans such as installment sale contracts or credit card receivables.
COMMERCIAL PAPER: Short-term securities with maturities of 1 to 270 days which
are issued by banks, corporations and others.
DOLLAR WEIGHTED AVERAGE MATURITY: The average amount of time until the
organizations that issued the debt securities in the fund's portfolio must pay
off the principal amount of the debt. "Dollar weighted" means the larger the
dollar value of a debt security in the fund, the more weight it gets in
calculating this average.
LIQUIDITY: Liquidity is the ability to easily convert investments into cash
without losing a significant amount of money in the process.
NET ASSET VALUE (NAV): The value of everything the fund owns, minus everything
it owes, divided by the number of shares held by investors.
REPURCHASE AGREEMENT: A special type of a short-term investment. A dealer sells
securities to a fund and agrees to buy them back later at a set price. In
effect, the dealer is borrowing the fund's money for a short time, using the
securities as collateral.
VARIABLE OR FLOATING RATE SECURITIES: Securities whose interest rates adjust
automatically after a certain period of time and/or whenever a predetermined
standard interest rate changes.
================================================================================
INVESTMENT GOAL
The fund seeks to generate current income, to provide you with liquidity
and to protect your investment.
PRIMARY INVESTMENT STRATEGIES.
To achieve this goal, we invest in a diversified portfolio of short term,
high quality, U.S. dollar-denominated instruments, including government, bank,
commercial and other obligations.
Specifically, we may invest in:
1) U.S. dollar-denominated obligations issued or supported by the credit
of U.S. or foreign banks or savings institutions with total assets of
more than $1 billion (including obligations of foreign branches of such
banks).
2) High quality commercial paper and other obligations issued or
guaranteed (or otherwise supported) by U.S. and foreign corporations
and other issuers rated (at the time of purchase) A-2 or higher by
Standard and Poor's, Prime-2 or higher by Moody's, D-2 or higher by
Duff & Phelps, F-2 or higher by Fitch or TBW-2 or higher by Thomson
BankWatch, as well as high quality corporate bonds rated AA (or Aa) or
higher at the time of purchase by those rating agencies.These ratings
must be provided by at least two rating agencies, or by the only rating
agency providing a rating.
3) Unrated notes, paper and other instruments that are determined by us to
be of comparable quality to the instruments described above.
4) Asset-backed securities (including interests in pools of assets such as
mortgages, installment purchase obligations and credit card
receivables).
5) Securities issued or guaranteed by the U.S. Government or by its
agencies or authorities.
6) Dollar-denominated securities issued or guaranteed by foreign
governments or their political subdivisions, agencies or authorities.
7) Securities issued or guaranteed by state or local governmental bodies.
8) Repurchase agreements relating to the above instruments.
The fund seeks to maintain a net asset value of $1.00 per share.
6
<PAGE>
QUALITY
Under guidelines established by the Company's Board of Directors, we will
only purchase securities if such securities or their issuers have (or such
securities are guaranteed or otherwise supported by entities which have)
short-term debt ratings at the time of purchase in the two highest rating
categories from at least two national rating agencies, or one such rating if the
security is rated by only one agency. Securities that are unrated must be
determined to be of comparable quality.
MATURITY
The dollar-weighted average maturity of all the investments of the fund
will be 90 days or less. Only those securities which have remaining maturities
of 397 days or less (except for certain variable and floating rate instruments
and securities collateralizing repurchase agreements) will be purchased.
KEY RISKS
The value of money market investments tends to fall when current interest
rates rise. Money market investments are generally less sensitive to interest
rate changes than longer-term securities.
The fund's securities may not earn as high a level of income as longer term
or lower quality securities, which generally have greater risk and more
fluctuation in value.
The fund's concentration of its investments in the banking industry could
increase risks. The profitability of banks depends largely on the availability
and cost of funds, which can change depending upon economic conditions. Banks
are also exposed to losses if borrowers get into financial trouble and can't
repay their loans.
The obligations of foreign banks and other foreign issuers may involve
certain risks in addition to those of domestic issuers, including higher
transaction costs, less complete financial information, political and economic
instability, less stringent regulatory requirements and less market liquidity.
Unrated notes, paper and other instruments may be subject to the risk that
an issuer may default on its obligation to pay interest and repay principal.
The obligations issued or guaranteed by state or local government bodies
may be issued by entities in the same state and may have interest which is paid
from revenues of similar projects. As a result, changes in economic, business or
political conditions relating to a particular state or types of projects may
impact the fund.
Treasury obligations differ only in their interest rates, maturities and
time of issuance. These differences could result in fluctuations in the value of
such securities depending upon the market. Obligations of U.S. Government
agencies and authorities are supported by varying degrees of credit. The U.S.
Government gives no assurances that it will provide financial support to its
agencies and authorities if it is not obligated by law to do so. Default in
these issuers could negatively impact the fund.
The fund's investment in asset-backed securities may be negatively impacted
by interest rate fluctuations or when an issuer pays principal on an obligation
held by the fund earlier or later than expected. These events may affect their
value and the return on your investment.
The fund could lose money if a seller under a repurchase agreement defaults
or declares bankruptcy.
We may purchase variable and floating rate instruments. Like all debt
instruments, their value is dependent on the credit paying ability of the
issuer. If the issuer were unable to make interest payments or default, the
value of the securities would decline. The absence of an active market for these
securities could make it difficult to dispose of them if the issuer defaults.
7
<PAGE>
The fund, like any business, could be affected if the computer systems on
which it relies do not properly process information beginning on January 1,
2000. While Year 2000 issues could have a negative effect on the fund, BIMC, the
fund's investment adviser, is currently working to avoid such problems. BIMC is
also working with other systems providers and vendors servicing the Portfolios
to determine their systems' ability to handle Year 2000 problems. There is no
guarantee, however, that systems will work properly on or after January 1, 2000.
Year 2000 problems may also hurt issuers whose securities the fund holds or
securities markets generally.
ALTHOUGH WE SEEK TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER
SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND. WHEN YOU INVEST IN
THIS FUND YOU ARE NOT MAKING A BANK DEPOSIT. YOUR INVESTMENT IS NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR BY ANY BANK OR
GOVERNMENTAL AGENCY.
RISK / RETURN INFORMATION
The chart and table below give you a picture of the variability of the
fund's long-term performance for Bedford Shares. The information shows you how
the fund's performance has varied year by year and provides some indication of
the risks of investing in the fund. The chart and the table both assume
reinvestment of dividends and distributions. As with all such investments, past
performance is not an indication of future results. Performance reflects fee
waivers in effect. If fee waivers were not in place, the fund's performance
would be reduced.
AS OF 12/31
ANNUAL TOTAL RETURNS
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
8.8 7.66 3.75 3.09 2.41 3.49 5.18 4.65 4.88 4.75
YEAR-TO-DATE TOTAL RETURN FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999: 4.23%
Best Quarter: 9.49% (quarter ended 6/30/89)
Worst Quarter: 2.34% (quarter ended 6/30/93)
AS OF 12/31/98
AVERAGE ANNUAL TOTAL RETURNS
1 YEAR 5 YEARS 10 YEARS
------ ------- --------
MONEY MARKET 4.75% 4.59% 4.86%
CURRENT YIELD: The seven-day yield for the period ended 12/31/98 for the
fund was 4.38%. Past performance is not an indication of future results. Yields
will vary. You may call (800) 533-7719 to obtain the current seven-day yield of
the fund.
8
<PAGE>
EXPENSES AND FEES
As a shareholder you pay certain fees and expenses. Annual fund operating
expenses are paid out of fund assets and are reflected in the fund's price.
The table below describes the fees and expenses that you may pay if you buy
and hold Bedford Shares of the fund. The table is based on expenses for the most
recent fiscal year.
================================================================================
IMPORTANT DEFINITIONS
MANAGEMENT FEES: Fees paid to the investment adviser for portfolio management
services.
OTHER EXPENSES: Includes administration, transfer agency, custody, professional
fees and registration fees.
DISTRIBUTION AND SERVICE FEES: Fees that are paid to the Distributor for
shareholder account service and maintenance.
================================================================================
ANNUAL FUND OPERATING EXPENSES*
(Expenses that are deducted from fund assets)
Management Fees 1 0.36%
Distribution and service (12b-1) fees 0.59%
Other expenses 0.13%
-----
Total annual fund operating expenses 2 1.08%
=====
* The table does not reflect charges or credits which investors might
incur if they invest through a financial institution.
1. BIMC has voluntarily undertaken that a portion of its management fee
will not be imposed on the fund during the current fiscal year ending
August 31, 2000. As a result of the fee waiver, current management fees
of the fund are 0.25% of average daily net assets. This waiver is
expected to remain in effect for the current fiscal year. However, it
is voluntary and can be modified or terminated at any time without the
fund's consent.
2. As a result of the fee waiver set forth in note 1, the total annual
fund operating expenses which are estimated to be incurred during the
current fiscal year are 0.97%. Although this fee waiver is expected to
remain in effect for the current fiscal year, it is voluntary and may
be terminated at any time at the option of BIMC.
EXAMPLE:
The example is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated and then redeem
all of your shares at the end of each period. The example also assumes that your
investment has a 5% return each year and that the fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your cost would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
BEDFORD SHARES $110 $343 $595 $1,317
9
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The table below sets forth certain financial information for the periods
indicated, including per share information results for a single fund share. The
term "Total Return" indicates how much your investment would have increased or
decreased during this period of time and assumes that you have reinvested all
dividends and distributions. This information has been derived from the fund's
financial statements audited by PricewaterhouseCoopers LLP, the Company's
independent accountants. This information should be read in conjunction with the
fund's financial statements which, together with the report of independent
accountants, are included in the fund's annual report, which is available upon
request (see back cover for ordering instructions).
FINANCIAL HIGHLIGHTS (b)
(FOR A BEDFORD SHARE OUTSTANDING THROUGHOUT EACH YEAR)
MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
FOR THE FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
AUGUST 31, 1999 AUGUST 31, 1998 AUGUST 31, 1997 AUGUST 31, 1996 AUGUST 31, 1995
--------------- --------------- --------------- --------------- ----------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year ........... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- --------- ---------- ---------- --------
Income from investment operations
Net investment income ....................... 0.0425 0.0473 0.0462 0.0469 0.0486
-------- --------- ---------- ---------- --------
Total from investment operations .......... 0.0425 0.0473 0.0462 0.0469 0.0486
-------- --------- ---------- ---------- --------
Less distributions
Dividends (from net investment income) ...... (0.0425) (0.0473) (0.0462) (0.0469) (0.0486)
-------- --------- ---------- ---------- --------
Total distributions ....................... (0.0425) (0.0473) (0.0462) (0.0469) (0.0486)
-------- --------- ---------- ---------- --------
Net asset value at end of year ................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ========== ========== ========
Total Return ................................... 4.34% 4.84% 4.72% 4.79% 4.97%
Ratios/Supplemental Data
Net assets at end of year (000s) ............ $360,123 $762,739 $1,392,911 $1,109,334 $935,821
Ratios of expenses to average net assets
After advisory/administration fee waivers . .97%(a) .97%(a) .97%(a) .97%(a) .96%(a)
Ratios of net investment income to average net
assets
After advisory/administration fee waivers . 4.25% 4.73% 4.62% 4.69% 4.86%
</TABLE>
(a) Without the waiver of advisory and administration fees and without the
reimbursement of certain operating expenses, the ratios of expenses to
average net assets for the Money Market Portfolio would have been 1.08%,
1.10%, 1.12%, 1.14% and 1.17% for the years ended August 31, 1999, 1998,
1997, 1996 and 1995, respectively.
(b) Financial Highlights relate solely to the Bedford Class of shares within the
portfolio.
10
<PAGE>
MUNICIPAL MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
================================================================================
IMPORTANT DEFINITIONS
DOLLAR WEIGHTED AVERAGE MATURITY: The average amount of time until the
organizations that issued the debt securities in the fund's portfolio must pay
off the principal amount of the debt. "Dollar weighted" means the larger the
dollar value of a debt security in the fund, the more weight it gets in
calculating this average.
GENERAL OBLIGATION BONDS: Bonds which are secured by the issuer's pledge of its
full faith, credit and taxing power for the payment of principal and interest.
LIQUIDITY: Liquidity is the ability to easily convert investments into cash
without losing a significant amount of money in the process.
MUNICIPAL LEASE OBLIGATIONS: These provide participation in municipal lease
agreements and installment purchase contracts, but are not part of the general
obligations of the municipality.
MUNICIPAL SECURITY: A short-term obligation issued by or on behalf of states and
possessions of the United States, their political subdivisions and their
agencies and authorities.
NET ASSET VALUE (NAV): The value of everything the fund owns, minus everything
it owes, divided by the number of shares held by investors.
REVENUE BONDS: Bonds which are secured only by the revenues from a particular
facility or class of facilities, such as a water or sewer system, or from the
proceeds of a special excise tax or other revenue source.
TAX-EXEMPT COMMERCIAL PAPER: Short-term Municipal Securities with maturities of
1 to 270 days.
VARIABLE OR FLOATING RATE SECURITIES: Securities whose interest rates adjust
automatically after a certain period of time and/or whenever a predetermined
standard interest rate changes.
================================================================================
INVESTMENT GOAL
The fund seeks to generate current income exempt from federal income taxes,
to provide you with liquidity and to protect your investment.
PRIMARY INVESTMENT STRATEGIES
To achieve this goal, we invest in a diversified portfolio of Municipal
Securities. Specifically, we may invest in:
1) Fixed and variable rate notes and similar debt instruments rated or
issued by issuers who have ratings at the time of purchase of MIG-2,
VMIG-2 or Prime-2 or higher by Moody's, SP-2 or A-2 or higher by
Standard & Poor's, D-2 or higher by Duff & Phelps, or F-2 or higher by
Fitch (or guaranteed or otherwise supported by entities with such
ratings).
2) Tax-exempt commercial paper and similar debt instruments rated or
issued by issuers who have ratings at the time of purchase of Prime-2
or higher by Moody's, A-2 or higher by Standard & Poor's, D-2 or higher
by Duff & Phelps, or F-2 or higher by Fitch (or guaranteed or otherwise
supported by entities with such ratings).
3) Municipal bonds rated or issued by issuers who have ratings at the time
of purchase of Aa or higher by Moody's or AA or higher by Standard &
Poor's, Duff & Phelps or Fitch (or guaranteed or otherwise supported by
entities with such ratings).
4) Unrated notes, paper and other instruments that are determined by us to
be of comparable quality to the instruments described above.
5) Municipal bonds and notes whose principal and interest payments are
guaranteed by the U.S. Government or one of its agencies or authorities
or which otherwise depend on the credit of the United States.
The fund seeks to maintain a net asset value of $1.00 per share.
We normally invest at least 80% of its net assets in Municipal Securities
and other instruments whose interest is exempt from federal income tax or
subject to the Federal Alternative Minimum Tax.
The fund may hold uninvested cash reserves during temporary defensive
periods or, if in our opinion suitable Municipal Securities are not available.
The fund may hold all of its assets in uninvested cash reserves during temporary
defensive periods. Uninvested cash will not earn income.
We intend to have no more than 25% of its total assets in Municipal
Securities of issuers located in the same state.
11
<PAGE>
QUALITY
Under guidelines established by the Company's Board of Directors, we will
only purchase securities if such securities or their issuers have (or such
securities are guaranteed or otherwise supported by entities which have)
short-term debt ratings at the time of purchase in the two highest rating
categories from at least two national rating agencies, or one such rating if the
security is rated by only one agency. Securities that are unrated must be
determined to be of comparable quality.
MATURITY
The dollar-weighted average maturity of all the investments of the fund
will be 90 days or less. Only those securities which have remaining maturities
of 397 days or less (except for certain variable and floating rate instruments)
will be purchased.
KEY RISKS
The value of money market investments tends to fall when current interest
rates rise. Money market investments are generally less sensitive to interest
rate changes than longer-term securities.
The fund's securities may not earn as high a level of income as longer term
or lower quality securities, which generally have greater risk and more
fluctuation in value.
Municipal Securities include revenue bonds, general obligation bonds and
municipal lease obligations. Revenue bonds include private activity bonds, which
are not payable from the general revenues of the issuer. Consequently, the
credit quality of private activity bonds is usually directly related to the
credit standing of the corporate user of the facility involved. To the extent
that the fund's assets are invested in private activity bonds, the fund will be
subject to the particular risks presented by the laws and economic conditions
relating to such projects and bonds to a greater extent than if its assets were
not so invested. Moral obligation bonds are normally issued by special purpose
public authorities. If the issuer of moral obligation bonds is unable to pay its
debts from current revenues, it may draw on a reserve fund the restoration of
which is a moral but not a legal obligation of the state or municipality which
created the issuer. Risk exists that a municipality will not honor moral
obligation bonds. Municipal lease obligations are not guaranteed by the issuer
and are generally less liquid than other securities.
There may be less information available on the financial condition of
issuers of Municipal Securities than for public corporations. The market for
municipal bonds may be less liquid than for taxable bonds. This means that it
may be harder to buy and sell Municipal Securities, especially on short notice.
The fund may invest in bonds whose interest may be subject to the Federal
Alternative Minimum Tax. Interest received on these bonds by a taxpayer subject
to the Federal Alternative Minimum Tax is taxable.
We may invest 25% or more of assets in Municipal Securities whose interest
is paid solely from revenues of similar projects. For example, the fund may
invest more than 25% of its assets in Municipal Securities related to water or
sewer systems. This type of concentration exposes the fund to the legal and
economic risks relating to those projects.
We will rely on legal opinions of counsel to issuers of Municipal
Securities as to the tax-free status of investments and will not do our own
analysis regarding tax-free status.
The fund may purchase variable and floating rate instruments. Like all debt
instruments, their value is dependent on the credit paying ability of the
issuer. If the issuer were unable to make interest payments or default, the
value of the securities would decline. The absence of an active market for these
securities could make it difficult to dispose of them if the issuer defaults.
12
<PAGE>
The fund, like any business, could be affected if the computer systems on
which it relies do not properly process information beginning on January 1,
2000. While Year 2000 issues could have a negative effect on the fund, BIMC, the
fund's investment adviser, is currently working to avoid such problems. BIMC is
also working with other systems providers and vendors servicing the Portfolios
to determine their systems' ability to handle Year 2000 problems. There is no
guarantee, however, that systems will work properly on or after January 1, 2000.
Year 2000 problems may also hurt issuers whose securities the fund holds or
securities markets generally.
ALTHOUGH WE SEEK TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER
SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND. WHEN YOU INVEST IN
THIS FUND YOU ARE NOT MAKING A BANK DEPOSIT. YOUR INVESTMENT IS NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR BY ANY BANK OR
GOVERNMENTAL AGENCY.
RISK / RETURN INFORMATION
The chart and table below give you a picture of the variability of the
fund's long-term performance for Bedford Shares. The information shows you how
the fund's performance has varied year by year and provides some indication of
the risks of investing in the fund. The chart and the table both assume
reinvestment of dividends and distributions. As with all such investments, past
performance is not an indication of future results. Performance reflects fee
waivers in effect. If fee waivers were not in place, the fund's performance
would be reduced.
AS OF 12/31
ANNUAL TOTAL RETURNS
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
5.77% 5.32% 3.85% 2.40% 1.86% 2.25% 3.14% 2.89% 2.95% 2.77%
Year-to-date total return for the nine months ended September 30, 1999: 2.41%
Best Quarter: 6.24% (quarter ended 6/30/89)
Worst Quarter: 1.74% (quarter ended 3/31/94)
AS OF 12/31/98
AVERAGE ANNUAL TOTAL RETURNS
1 YEAR 5 YEARS 10 YEARS
------ ------- --------
MUNICIPAL MONEY MARKEt 2.77% 2.80% 3.31%
13
<PAGE>
CURRENT YIELD: The seven-day yield for the period ended 12/31/98 for the
fund was 2.81%. Past performance is not an indication of future results. Yields
will vary. You may call (800) 533-7719 to obtain the current seven-day yield of
the fund.
EXPENSES AND FEES
As a shareholder you pay certain fees and expenses. Annual fund operating
expenses are paid out of fund assets and are reflected in the fund's price.
The table below describes the fees and expenses that you may pay if you buy
and hold Bedford Shares of the fund. The table is based on expenses for the most
recent fiscal year.
================================================================================
IMPORTANT DEFINITIONS
MANAGEMENT FEES: Fees paid to the investment adviser for portfolio management
services.
OTHER EXPENSES: Includes administration, transfer agency, custody, professional
fees and registration fees.
DISTRIBUTION AND SERVICE FEES: Fees that are paid to the Distributor for
shareholder account service and maintenance.
================================================================================
ANNUAL FUND OPERATING EXPENSES*
(Expenses that are deducted from fund assets)
Management Fees 1 .................................... 0.35%
Distribution and service (12b-1) fees ................ 0.59%
Other expenses ....................................... 0.21%
-----
Total annual fund operating expenses2 ................ 1.15%
=====
* The table does not reflect charges or credits which investors might
incur if they invest through a financial institution.
1. BIMC has voluntarily undertaken that a portion of its management fee
will not be imposed on the fund during the current fiscal year ended
August 31, 2000. As a result of the fee waiver, current management fees
of the fund are 0.09% of average daily net assets. This waiver is
expected to remain in effect for the current fiscal year. However, it
is voluntary and can be modified or terminated at any time without the
fund's consent.
2. As a result of the fee waiver set forth in note 1, the total annual
fund operating expenses which are estimated to be incurred during the
current fiscal year are 0.89%. Although this fee waiver is expected to
remain in effect for the current fiscal year, it is voluntary and may
be terminated at any time at the option of BIMC.
EXAMPLE:
The example is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated and then redeem
all of your shares at the end of each period. The example also assumes that your
investment has a 5% return each year and that the fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your cost would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
BEDFORD SHARES $117 $365 $633 $1,398
14
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The table below sets forth certain financial information for the periods
indicated, including per share information results for a single fund share. The
term "Total Return" indicates how much your investment would have increased or
decreased during this period of time and assumes that you have reinvested all
dividends and distributions. This information has been derived from the fund's
financial statements audited by PricewaterhouseCoopers LLP, the Company's
independent accountants. This information should be read in conjunction with the
fund's financial statements which, together with the report of independent
accountants, are included in the fund's annual report, which is available upon
request (see back cover for ordering instructions).
FINANCIAL HIGHLIGHTS (b)
(FOR A BEDFORD SHARE OUTSTANDING THROUGHOUT EACH YEAR)
MUNICIPAL MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
FOR THE FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
AUGUST 31, 1999 AUGUST 31, 1998 AUGUST 31, 1997 AUGUST 31, 1996 AUGUST 31, 1995
--------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year ........... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- --------
Income from investment operations
Net investment income ....................... 0.0243 0.0286 0.0285 0.0288 0.0297
-------- -------- -------- -------- --------
Total from investment operations .......... 0.0243 0.0286 0.0285 0.0288 0.0297
-------- -------- -------- -------- --------
Less distributions
Dividends (from net investment income) ...... (0.0243) (0.0286) (0.0285) (0.0288) (0.0297)
-------- -------- -------- -------- --------
Total distributions ....................... (0.0243) (0.0286) (0.0285) (0.0288) (0.0297)
-------- -------- -------- -------- --------
Net asset value at end of year ................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total Return ................................... 2.46% 2.97% 2.88% 2.92% 3.01%
Ratios/Supplemental Data
Net assets at end of period (in thousands) .. $150,278 $147,633 $213,034 $201,940 $198,425
Ratios of expenses to average net assets
After advisory/administration fee waivers . .89%(a) .89%(a) .85%(a) .84%(a) .82%(a)
Ratios of net investment income to average
net assets
After advisory/administration fee waivers . 2.43% 2.86% 2.85% 2.88% 2.97%
(a) Without the waiver of advisory and administration fees and without the
reimbursement of certain operating expenses, the ratios of expenses to
average net assets for the Municipal Money Market Portfolio would have been
1.15%, 1.15%, 1.14%, 1.12% and 1.14% for the years ended August 31, 1999,
1998, 1997, 1996 and 1995, respectively.
(b) Financial Highlights relate solely to the Bedford Class of shares within the
portfolio.
</TABLE>
15
<PAGE>
GOVERNMENT OBLIGATIONS MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
================================================================================
IMPORTANT DEFINITIONS
ASSET-BACKED SECURITIES: Debt securities that are backed by a pool of assets,
usually loans such as installment sale contracts or credit card receivables.
DOLLAR WEIGHTED AVERAGE MATURITY: The average amount of time until the
organizations that issued the debt securities in the fund's portfolio must pay
off the principal amount of the debt. "Dollar weighted" means the larger the
dollar value of a debt security in the fund, the more weight it gets in
calculating this average.
LIQUIDITY: Liquidity is the ability to easily convert investments into cash
without losing a significant amount of money in the process.
NET ASSET VALUE (NAV): The value of everything the fund owns, minus everything
it owes, divided by the number of shares held by investors.
REPURCHASE AGREEMENT: A special type of a short-term investment. A dealer sells
securities to a fund and agrees to buy them back later at a set price. In
effect, the dealer is borrowing the fund's money for a short time, using the
securities as collateral.
VARIABLE OR FLOATING RATE SECURITIES: Securities whose interest rates adjust
automatically after a certain period of time and/or whenever a predetermined
standard interest rate changes.
================================================================================
INVESTMENT GOAL
The fund seeks to generate current income to provide you with liquidity and
to protect your investment.
PRIMARY INVESTMENT STRATEGIES
To achieve this goal, we invest exclusively in short-term U.S. Treasury
bills, notes and other obligations issued or guaranteed by the U.S. Government
or its agencies or instrumentalities and related repurchase agreements.
The fund seeks to maintain a net asset value of $1.00 per share.
QUALITY
Under guidelines established by the Company's Board of Directors, we will
purchase securities if such securities or their issuers have (or such securities
are guaranteed or otherwise supported by entities which have) short-term debt
ratings at the time of purchase in the two highest rating categories from at
least two national rating agencies, or one such rating if the security is rated
by only one agency. The fund may also purchase unrated securities determined by
us to be of comparable quality.
MATURITY
The dollar-weighted average maturity of all the investments of the fund
will be 90 days or less. Only those securities which have remaining maturities
of 397 days or less (except for certain variable and floating rate instruments
and securities collateralizing repurchase agreements) will be purchased.
SECURITIES LENDING
The fund may lend some of its securities on a short-term basis in order to
earn extra income. The fund will receive collateral in cash or high quality
securities equal to the current value of the loaned securities. These loans will
be limited to 33 1/3% of the value of the fund's total assets.
16
<PAGE>
KEY RISKS
The value of money market investments tends to fall when current interest
rates rise. Money market investments are generally less sensitive to interest
rate changes than longer-term securities.
The fund's securities may not earn as high a level of income as longer term
or lower quality securities, which generally have greater risk and more
fluctuation in value.
Treasury obligations differ only in their interest rates, maturities and
time of issuance. These differences could result in fluctuations in the value of
such securities depending upon the market. Obligations of U.S. Government
agencies and authorities are supported by varying degrees of credit. The U.S.
Government gives no assurances that it will provide financial support if it is
not obligated to do so by law. Default in these issuers could negatively impact
the fund.
The fund could lose money if a seller under a repurchase agreement defaults
or declares bankruptcy.
We may purchase variable and floating rate instruments. Like all debt
instruments, their value is dependent on the credit paying ability of the
issuer. If the issuer were unable to make interest payments or default, the
value of the securities would decline. The absence of an active market for these
securities could make it difficult to dispose of them if the issuer defaults.
Securities loans involve the risk of a delay in receiving additional
collateral if the value of the securities goes up while they are on loan. There
is also the risk of delay in recovering the loaned securities and of losing
rights to the collateral if a borrower goes bankrupt. Therefore, the fund may
lose the opportunity to sell the securities at a desirable price. Additionally,
in the event that a borrower of securities would file for bankruptcy or become
insolvent, disposition of the securities may be delayed pending court action.
The fund, like any business, could be affected if the computer systems on
which it relies do not properly process information beginning on January 1,
2000. While Year 2000 issues could have a negative effect on the fund, BIMC, the
fund's investment adviser, is currently working to avoid such problems. BIMC is
also working with other systems providers and vendors servicing the Portfolios
to determine their systems' ability to handle Year 2000 problems. There is no
guarantee, however, that systems will work properly on or after January 1, 2000.
Year 2000 problems may also hurt issuers whose securities the fund holds or
securities markets generally.
ALTHOUGH WE SEEK TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER
SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND. WHEN YOU INVEST IN
THIS FUND YOU ARE NOT MAKING A BANK DEPOSIT. YOUR INVESTMENT IS NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR BY ANY BANK OR
GOVERNMENTAL AGENCY.
17
<PAGE>
RISK/RETURN INFORMATION
The chart and table below give you a picture of the variability of the
fund's long-term performance for Bedford Shares. The information shows you how
the fund's performance has varied year by year and provides some indication of
the risks of investing in the fund. The chart and the table both assume
reinvestment of dividends and distributions. As with all such investments, past
performance is not an indication of future results. Performance reflects fee
waivers in effect. If fee waivers were not in place, the fund's performance
would be reduced.
AS OF 12/31
ANNUAL TOTAL RETURNS
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
- ---- ----- ----- ----- ----- ----- ----- ----- ----- -----
8.62% 7.44% 5.42% 3.01% 2.29% 3.41% 5.06% 4.54% 4.68% 4.59%
Year-to-date total return for the nine months ended September 30, 1999: 4.11%
Best Quarter: 9.21% (quarter ended 6/30/89)
Worst Quarter: 2.29% (quarter ended 3/31/94)
AS OF 12/31/98
AVERAGE ANNUAL TOTAL RETURNS
1 YEAR 5 YEARS 10 YEARS
------ ------- --------
GOVERNMENT OBLIGATIONS MONEY MARKET 4.59% 4.45% 4.89%
CURRENT YIELD: The seven-day yield for the period ended 12/31/98 for the
fund was 4.15%. Past performance is not an indication of future results. Yields
will vary. You may call (800) 533-7719 to obtain the current seven-day yield of
the fund.
18
<PAGE>
EXPENSES AND FEES
As a shareholder you pay certain fees and expenses. Annual fund operating
expenses are paid out of fund assets and are reflected in the fund's price.
The table below describes the fees and expenses that you may pay if you buy
and hold Bedford Shares of the fund. The table is based on expenses for the most
recent fiscal year.
================================================================================
IMPORTANT DEFINITIONS
MANAGEMENT FEES: Fees paid to the investment adviser for portfolio management
services.
OTHER EXPENSES: Includes administration, transfer agency, custody, professional
fees and registration fees.
DISTRIBUTION AND SERVICE FEES: Fees that are paid to the Distributor for
shareholder account service and maintenance.
================================================================================
ANNUAL FUND OPERATING EXPENSES*
(Expenses that are deducted from fund assets)
Management Fees 1 .................................. 0.42%
Distribution and service (12b-1) fees .............. 0.60%
Other expenses ..................................... 0.11%
-----
Total annual fund operating expenses 2 ............. 1.13%
=====
* The table does not reflect charges or credits which investors might
incur if they invest through a financial institution.
1. BIMC has voluntarily undertaken that a portion of its management fee
will not be imposed on the fund during the current fiscal year ending
August 31, 2000. As a result of the fee waiver, current management fees
of the fund are 0.265% of average daily net assets. This waiver is
expected to remain in effect for the current fiscal year. However, it
is voluntary and can be modified or terminated at any time without the
fund's consent.
2. As a result of the fee waiver set forth in note 1, the total annual
fund operating expenses which are estimated to be incurred during the
current fiscal year are 0.975%. Although this fee waiver is expected to
remain in effect for the current fiscal year, it is voluntary and may
be terminated at any time at the option of BIMC.
EXAMPLE:
The example is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated and then redeem
all of your shares at the end of each period. The example also assumes that your
investment has a 5% return each year and that the fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your cost would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
BEDFORD SHARES $115 $359 $622 $1,375
19
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The table below sets forth certain financial information for the periods
indicated, including per share information results for a single fund share. The
term "Total Return" indicates how much your investment would have increased or
decreased during this period of time and assumes that you have reinvested all
dividends and distributions. This information has been derived from the fund's
financial statements audited by PricewaterhouseCoopers LLP, the Company's
independent accountants. This information should be read in conjunction with the
fund's financial statements which, together with the report of independent
accountants, are included in the fund's annual report, which is available upon
request (see back cover for ordering instructions).
FINANCIAL HIGHLIGHTS (b)
(FOR A BEDFORD SHARE OUTSTANDING THROUGHOUT EACH YEAR)
GOVERNMENT OBLIGATIONS MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
FOR THE FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
AUGUST 31, 1999 AUGUST 31, 1998 AUGUST 31, 1997 AUGUST 31, 1996 AUGUST 31, 1995
--------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year ........... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- --------
Income from investment operations
Net investment income ....................... 0.0409 0.0464 0.0449 0.0458 0.0475
-------- -------- -------- -------- --------
Total from investment operations .......... 0.0409 0.0464 0.0449 0.0458 0.0475
-------- -------- -------- -------- --------
Less distributions
Dividends (from net investment income) ...... (0.0409) (0.0464) (0.0449) (0.0458) (0.0475)
-------- -------- -------- -------- --------
Total distributions ....................... (0.0409) (0.0464) (0.0449) (0.0458) (0.0475)
-------- -------- -------- -------- --------
Net asset value at end of year ................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total Return .............................. 4.17% 4.74% 4.59% 4.68% 4.86%
Ratios/Supplemental Data
Net assets at end of period (in thousands) .. $113,050 $128,447 $209,715 $192,599 $163,398
Ratios of expenses to average net assets
After advisory/administration fee waivers . .975%(a) .975%(a) .975%(a) .975%(a) .975%(a)
Ratios of net investment income to average
net assets
After advisory/administration fee waivers . 4.09% 4.63% 4.49% 4.58% 4.75%
</TABLE>
(a) Without the waiver of advisory and administration fees and without the
reimbursement of certain operating expenses, the ratios of expenses to
average net assets for the Government Obligations Money Market Portfolio
would have been 1.13%, 1.10%, 1.09%, 1.10% and 1.13% for the years ended
August 31, 1999, 1998, 1997, 1996 and 1995, respectively.
(b) Financial Highlights relate solely to the Bedford Class of shares within the
portfolio.
20
<PAGE>
PORTFOLIO MANAGEMENT
- --------------------------------------------------------------------------------
INVESTMENT ADVISER
BIMC, a majority-owned indirect subsidiary of PNC Bank, N.A. serves as
investment adviser and is responsible for all purchases and sales of each fund's
portfolio securities. BIMC and its affiliates are one of the largest U.S. bank
managers of mutual funds, with assets currently under management in excess of
$52.9 billion. BIMC (formerly known as PNC Institutional Management Corporation
or PIMC) was organized in 1977 by PNC Bank to perform advisory services for
investment companies and has its principal offices at Bellevue Park Corporate
Center, 400 Bellevue Parkway, Wilmington, DE 19809.
For the fiscal year ended August 31, 1999, BIMC received the following fees
as a percentage of each fund's average net assets:
Money Market Portfolio .250%
Municipal Money Market Portfolio .090%
Government Obligations Money Market Portfolio .265%
The following chart shows the funds' other service providers and includes
their addresses and principal activities.
21
<PAGE>
------------
SHAREHOLDERS
------------
Distribution and
Shareholder Services
------------------------------------ -----------------------------------------
PRINCIPAL DISTRIBUTOR TRANSFER AGENT
PROVIDENT DISTRIBUTORS, INC. PFPC INC.
FOUR FALLS CORPORATE CENTER, 6TH FL. 400 BELLEVUE PARKWAY
WEST CONSHOHOCKEN, PA 19428 WILMINGTON, DE 19809
Distributes shares of the funds. Handles shareholder services,
including record-keeping and statements,
distribution of dividends and processing
of buy and sell requests.
------------------------------------ -----------------------------------------
Asset
Management
------------------------------------ -----------------------------------------
INVESTMENT ADVISER CUSTODIAN
BLACKROCK INSTITUTIONAL PFPC TRUST COMPANY
MANAGEMENT CORPORATION 200 STEVENS DRIVE
400 BELLEVUE PARKWAY LESTER, PA 19113
WILMINGTON, DE 19809
Holds each fund's assets, settles
Manages each fund's business all portfolio trades and collects
and investment activities. most of the valuation data
required for calculating each
fund's net asset value ("NAV").
------------------------------------ -----------------------------------------
Fund
Operations
------------------------------------
ADMINISTRATOR AND FUND
ACCOUNTING AGENT
PFPC INC.
400 BELLEVUE PARKWAY
WILMINGTON, DE 19809
Provides facilities, equipment
and personnel to carry out
administrative services related
to each fund and calculates each
fund's NAV, dividends
and distributions.
------------------------------------
---------------------------------
BOARD OF DIRECTORS
Supervises the funds' activities.
---------------------------------
22
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SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
PRICING SHARES
The price of your shares is also referred to as the net asset value (NAV).
The NAV is determined twice daily at 12:00 noon and at 4:00 p.m., Eastern
Time, each day on which both the New York Stock Exchange and the Federal Reserve
Bank of Philadelphia are open. It is calculated by dividing a fund's total
assets, less its liabilities, by the number of shares outstanding.
Each fund values its securities using amortized cost. This method values a
fund holding initially at its cost and then assumes a constant amortization to
maturity of any discount or premium. The amortized cost method ignores any
impact of changing interest rates.
PURCHASE OF SHARES
GENERAL. You may purchase Bedford Shares through an account maintained by
your brokerage firm (the "Account") and you may also purchase Shares directly by
mail or wire. The minimum initial investment is $1,000, and the minimum
subsequent investment is $100. The Company in its sole discretion may accept or
reject any order for purchases of Bedford Shares.
Purchases will be effected at the net asset value next determined after
PFPC, the Company's transfer agent, has received a purchase order in good order
and the Company's custodian has Federal Funds immediately available to it. In
those cases where payment is made by check, Federal Funds will generally become
available two Business Days after the check is received. A "Business Day" is any
day that both the New York Stock Exchange (the "NYSE") and the Federal Reserve
Bank of Philadelphia (the "FRB") are open. On any Business Day, orders which are
accompanied by Federal Funds and received by the Company by 12:00 noon Eastern
Time, and orders as to which payment has been converted into Federal Funds by
12:00 noon Eastern Time, will be executed as of 12:00 noon that Business Day.
Orders which are accompanied by Federal Funds and received by PFPC after 12:00
noon Eastern Time but prior to the close of regular trading on the NYSE
(generally 4:00 p.m. Eastern Time), and orders as to which payment has been
converted into Federal Funds after 12:00 noon Eastern Time but prior to the
close of regular trading on the NYSE on any Business Day, will be executed as of
the close of regular trading on the NYSE on that Business Day, but will not be
entitled to receive dividends declared on such Business Day. Orders which are
accompanied by Federal Funds and received by the Company as of the close of
regular trading on the NYSE or later, and orders as to which payment has been
converted to Federal Funds as of the close of regular trading on the NYSE or
later on a Business Day will be processed as of 12:00 noon Eastern Time on the
following Business Day.
PURCHASES THROUGH AN ACCOUNT. Purchases of Shares may be effected through
an Account with your broker through procedures and requirements established by
your broker. In such event, beneficial ownership of Bedford Shares will be
recorded by your broker and will be reflected in the Account statements provided
to you by your broker. Your broker may impose minimum investment Account
requirements. Even if your broker does not impose a sales charge for purchases
of Bedford Shares, depending on the terms of your Account with your broker, the
broker may charge to your Account fees for automatic investment and other
services provided to your Account. Information concerning Account requirements,
services and charges should be obtained from your broker, and you should read
this Prospectus in conjunction with any information received from your broker.
Shares are held in the street name account of your broker and if you desire to
transfer such shares to the street name account of another broker, you should
contact your current broker.
A broker with whom you maintain an Account may offer you the ability to
purchase Bedford Shares under an automatic purchase program (a "Purchase
Program") established by a participating broker. If you participate in a
Purchase Program, then you will have your "free-credit" cash balances in your
Account automatically invested in Shares of the
23
<PAGE>
Bedford Class designated by you as the "Primary Bedford Class" for your
Purchase Program. The frequency of investments and the minimum investment
requirement will be established by the broker and the Company. In addition, the
broker may require a minimum amount of cash and/or securities to be deposited in
your Account to participate in its Purchase Program. The description of the
particular broker's Purchase Program should be read for details, and any
inquiries concerning your Account under a Purchase Program should be directed to
your broker. As a participant in a Purchase Program, you may change the
designation of the Primary Bedford Class at any time by so instructing your
broker.
If your broker makes special arrangements under which orders for Bedford
Shares are received by PFPC prior to 12:00 noon Eastern Time, and your broker
guarantees that payment for such Shares will be made in available Federal Funds
to the Company's custodian prior to the close of regular trading on the NYSE on
the same day, such purchase orders will be effective and Shares will be
purchased at the offering price in effect as of 12:00 noon Eastern Time on the
date the purchase order is received by PFPC. Otherwise, if the broker has not
made such an arrangement, pricing of shares will occur as described above under
"General".
DIRECT PURCHASES. You may also make direct investments at any time in any
Bedford Class you select through any broker that has entered into a dealer
agreement with the Distributor (a "Dealer"). You may make an initial investment
in any of the Bedford Classes by mail by fully completing and signing an
application obtained from a Dealer (the "Application"), specifying the Portfolio
in which you wish to invest, and mailing it, together with a check payable to
"The Bedford Family" to the Bedford Family, c/o PFPC, P.O. Box 8950, Wilmington,
Delaware 19899. The check must specify the name of the Portfolio for which
shares are being purchased. An Application will be returned to you unless it
contains the name of the Dealer from whom you obtained it. Subsequent purchases
may be made through a Dealer or by forwarding payment to the Company's transfer
agent at the foregoing address.
Provided that your investment is at least $2,500, you may also purchase
Shares in any of the Bedford Classes by having your bank or Dealer wire Federal
Funds to the Company's Custodian, PFPC Trust Company. Your bank or Dealer may
impose a charge for this service. The Company does not currently charge for
effecting wire transfers but reserves the right to do so in the future. In order
to ensure prompt receipt of your Federal Funds wire, for an initial investment,
it is important that you follow these steps:
A. Telephone the Company's transfer agent, PFPC, toll-free (800) 533-7719
and provide your name, address, telephone number, Social Security or
Tax Identification Number, the Bedford Class selected, the amount
being wired, and by which bank or Dealer. PFPC will then provide you
with an account number. (If you have an existing account, you should
also notify PFPC prior to wiring funds.)
B. Instruct your bank or Dealer to wire the specified amount, together
with your assigned account number, to PFPC's account with PNC Bank.
PNC Bank, N.A., Philadelphia, PA
ABA-0310-0005-3.
FROM: (your name)
ACCOUNT NUMBER: (your account number with the Portfolio)
FOR PURCHASE OF: (name of the Portfolio)
AMOUNT: (amount to be invested)
C. Fully complete and sign the Application and mail it to the address
shown thereon. PFPC will not process initial purchases until it
receives a fully completed and signed Application.
For subsequent investments, you should follow steps A and B above.
24
<PAGE>
RETIREMENT PLANS. Bedford Shares may be purchased in conjunction with
individual retirement accounts ("IRAs") and rollover IRAs where PFPC Trust
Company acts as custodian. For further information as to applications and annual
fees, contact the Distributor or your broker. To determine whether the benefits
of an IRA are available and/or appropriate, you should consult with your tax
adviser.
REDEMPTION OF SHARES
GENERAL. Redemption orders are effected at the net asset value per share
next determined after receipt of the order in proper form by the Company's
transfer agent, PFPC. You may redeem all or some of your Shares in accordance
with one of the procedures described below.
REDEMPTION OF SHARES IN AN ACCOUNT. If you beneficially own Bedford Shares
through an Account, you may redeem Bedford Shares in your Account in accordance
with instructions and limitations pertaining to your Account by contacting your
broker. If such notice is received by PFPC by 12:00 noon Eastern Time on any
Business Day, the redemption will be effective as of 12:00 noon Eastern Time on
that day. Payment of the redemption proceeds will be made after 12:00 noon
Eastern Time on the day the redemption is effected, provided that the Company's
custodian is open for business. If the custodian is not open, payment will be
made on the next bank business day. If the redemption request is received
between 12:00 noon and the close of regular trading on the NYSE on a Business
Day, the redemption will be effective as of the close of regular trading on the
NYSE on such Business Day and payment will be made on the next bank business day
following receipt of the redemption request. If all of your Shares are redeemed,
all accrued but unpaid dividends on those Shares will be paid with the
redemption proceeds.
Your brokerage firm may also redeem each day a sufficient number of Shares
of the Primary Bedford Class to cover debit balances created by transactions in
your Account or instructions for cash disbursements. Shares will be redeemed on
the same day that a transaction occurs that results in such a debit balance or
charge.
Each brokerage firm reserves the right to waive or modify criteria for
participation in an Account or to terminate participation in an Account for any
reason.
REDEMPTION OF SHARES OWNED DIRECTLY. If you own Shares directly, you may
redeem any number of Shares by sending a written request to The Bedford Family
c/o PFPC, P.O. Box 8950, Wilmington, Delaware 19899. Redemption requests must be
signed by each shareholder in the same manner as the Shares are registered.
Redemption requests for joint accounts require the signature of each joint
owner. On redemption requests of $5,000 or more, each signature must be
guaranteed. A signature guarantee may be obtained from a domestic bank or trust
company, broker, dealer, clearing agency or savings association who are
participants in a medallion program recognized by the Securities Transfer
Association. The three recognized medallion programs are Securities Transfer
Agents Medallion Program (STAMP), Stock Exchanges Medallion Program (SEMP) and
New York Stock Exchange, Inc. Medallion Signature Program (MSP). Signature
guarantees that are not part of these programs will not be accepted.
If you are a direct investor, you may redeem your Shares without charge by
telephone if you have completed and returned an account application containing
the appropriate telephone election. To add a telephone option to an existing
account that previously did not provide for this option, you must file a
Telephone Authorization Form with PFPC. This form is available from PFPC. Once
this election has been made, you may simply contact PFPC by telephone to request
the redemption by calling (800) 533-7719. Neither the Company, the Distributor,
the Portfolios, the Administrator nor any other Company agent will be liable for
any loss, liability, cost or expense for following the procedures below or for
following instructions communicated by telephone that they reasonably believe to
be genuine.
The Company's telephone transaction procedures include the following
measures: (1) requiring the appropriate telephone transaction privilege forms;
(2) requiring the caller to provide the names of the account owners, the account
social security number and name of the portfolio, all of which must match the
Company's records; (3) requiring the Company's service representative to
complete a telephone transaction form, listing all of the above caller
identification
25
<PAGE>
information; (4) requiring that redemption proceeds be sent only by check to the
account owners of record at the address of record, or by wire only to the owners
of record at the bank account of record; (5) sending a written confirmation for
each telephone transaction to the owners of record at the address of record
within five (5) business days of the call; and (6) maintaining tapes of
telephone transactions for six months, if the Company elects to record
shareholder telephone transactions. For accounts held of record by
broker-dealers (other than the Distributor), financial institutions, securities
dealers, financial planners or other industry professionals, additional
documentation or information regarding the scope of authority is required.
Finally, for telephone transactions in accounts held jointly, additional
information regarding other account holders is required. Telephone transactions
will not be permitted in connection with IRA or other retirement plan accounts
or by attorney-in-fact under power of attorney.
Proceeds of a telephone redemption request will be mailed by check to your
registered address unless you have designated in your Application or Telephone
Authorization Form that such proceeds are to be sent by wire transfer to a
specified checking or savings account. If proceeds are to be sent by wire
transfer, a telephone redemption request received prior to the close of regular
trading on the NYSE will result in redemption proceeds being wired to your bank
account on the next day that a wire transfer can be effected. The minimum
redemption for proceeds sent by wire transfer is $2,500. There is no maximum for
proceeds sent by wire transfer. The Company may modify this redemption service
at any time or charge a service fee upon prior notice to shareholders, although
no fee is currently contemplated.
REDEMPTION BY CHECK. If you are a direct investor or you do not have check
writing privileges for your Account, the Company will provide to you forms of
drafts ("checks") payable through PNC Bank. These checks may be made payable to
the order of anyone. The minimum amount of a check is $100; however, your broker
may establish a higher minimum. If you wish to use this check writing redemption
procedure, you should complete specimen signature cards (available from PFPC),
and then forward such signature cards to PFPC. PFPC will then arrange for the
checks to be honored by PNC Bank. If you own Shares through an Account, you
should contact your broker for signature cards. Investors with joint accounts
may elect to have checks honored with a single signature. Check redemptions will
be subject to PNC Bank's rules governing checks. An investor will be able to
stop payment on a check redemption. The Company or PNC Bank may terminate this
redemption service at any time, and neither shall incur any liability for
honoring checks, for effecting redemptions to pay checks, or for returning
checks which have not been accepted.
When a check is presented to PNC Bank for clearance, PNC Bank, as your
agent, will cause the Company to redeem a sufficient number of your full and
fractional Shares to cover the amount of the check. This procedure enables you
to continue to receive dividends on your Shares representing the amount being
redeemed by check until such time as the check is presented to PNC Bank.
Pursuant to rules under the 1940 Act, checks may not be presented for cash
payment at the offices of PNC Bank. This limitation does not affect checks used
for the payment of bills or cash at other banks.
ADDITIONAL REDEMPTION INFORMATION. The Company ordinarily will make payment
for all Shares redeemed within seven days after receipt by PFPC of a redemption
request in proper form. Although the Company will redeem Shares purchased by
check before the check clears, payment of the redemption proceeds may be delayed
for a period of up to fifteen days after their purchase, pending a determination
that the check has cleared. This procedure does not apply to Shares purchased by
wire payment. You should consider purchasing Shares using a certified or bank
check or money order if you anticipate an immediate need for redemption
proceeds.
The Company does not impose a charge when Shares are redeemed. The Company
reserves the right to redeem any account in a Bedford Class involuntarily, on
thirty days' notice, if such account falls below $500 and during such 30-day
notice period the amount invested in such account is not increased to at least
$500. Payment for Shares redeemed may be postponed or the right of redemption
suspended as provided by the rules of the SEC.
If the Board of Directors determines that it would be detrimental to the
best interest of the remaining shareholders of the funds to make payment wholly
or partly in cash, redemption proceeds may be paid in whole or in part by an
in-kind distribution of readily marketable securities held by a fund instead of
cash in conformity with applicable rules
26
<PAGE>
of the SEC. Investors generally will incur brokerage charges on the sale of
portfolio securities so received in payment of redemptions. The funds have
elected, however, to be governed by Rule 18f-1 under the 1940 Act, so that a
fund is obligated to redeem its Shares solely in cash up to the lesser of
$250,000 or 1% of its net asset value during any 90-day period for any one
shareholder of a fund.
DIVIDENDS AND DISTRIBUTIONS
The Company will distribute substantially all of the net investment income
and net realized capital gains, if any, of each fund to each fund's
shareholders. All distributions are reinvested in the form of additional full
and fractional Shares of the relevant Bedford Class unless a shareholder elects
otherwise. The net investment income (not including any net short-term capital
gains) earned by each fund will be declared as a dividend on a daily basis and
paid monthly. Dividends are payable to shareholders of record immediately prior
to the determination of net asset value made as of the close of trading of the
NYSE. Net short-term capital gains, if any, will be distributed at least
annually.
TAXES
Distributions from the Money Market Portfolio and the Government
Obligations Money Market Portfolio will generally be taxable to shareholders. It
is expected that all, or substantially all, of these distributions will consist
of ordinary income. You will be subject to income tax on these distributions
regardless of whether they are paid in cash or reinvested in additional shares.
The one major exception to these tax principles is that distributions on shares
held in an IRA (or other tax-qualified plan) will not be currently taxable.
Distributions from the Municipal Money Market Portfolio will generally
constitute tax-exempt income for shareholders for federal income tax purposes.
It is possible, depending upon the Portfolios' investments, that a portion of
the Portfolio's distributions could be taxable to shareholders as ordinary
income or capital gains, but it is not expected that this will be the case.
Interest on indebtedness incurred by a shareholder to purchase or carry
shares of the Municipal Money Market Portfolio generally will not be deductible
for federal income tax purposes.
You should note that a portion of the exempt-interest dividends paid by the
Municipal Money Market Portfolio may constitute an item of tax preference for
purposes of determining federal alternative minimum tax liability.
Exempt-interest dividends will also be considered along with other adjusted
gross income in determining whether any Social Security or railroad retirement
payments received by you are subject to federal income taxes.
Although distributions from the Municipal Money Market Portfolio are exempt
for federal income tax purposes, they will generally constitute taxable income
for state and local income tax purposes except that, subject to limitations that
vary depending on the state, distributions from interest paid by a state or
municipal entity may be exempt from tax in that state.
The foregoing is only a summary of certain tax considerations under the
current law, which may be subject to change in the future. Shareholders who are
nonresident aliens, foreign trusts or estates, or foreign corporations or
partnerships may be subject to different United States Federal income tax
treatment. You should consult your tax adviser for further information regarding
federal, state, local and/or foreign tax consequences relevant to your specific
situation.
27
<PAGE>
DISTRIBUTION ARRANGEMENTS
- --------------------------------------------------------------------------------
Bedford Shares of the funds are sold without a sales load on a continuous
basis by Provident Distributors, Inc., whose principal business address is at
Four Falls Corporate Center, West Conshohocken, PA 19428.
The Board of Directors of the Company approved and adopted the Distribution
Agreement and separate Plans of Distribution for each of the Classes
(collectively, the "Plans") pursuant to Rule 12b-1 under the 1940 Act. Under
each of the Plans, the Distributor is entitled to receive from the relevant
Bedford Class a distribution fee, which is accrued daily and paid monthly, of up
to .65% on an annualized basis of the average daily net assets of the relevant
Bedford Class. The actual amount of such compensation is agreed upon from time
to time by the Company's Board of Directors and the Distributor. Under the
Distribution Agreement, the Distributor has agreed to accept compensation for
its services thereunder and under the Plans in the amount of .60% of the average
daily net assets of the relevant Class on an annualized basis in any year. The
Distributor may, in its discretion, voluntarily waive from time to time all or
any portion of its distribution fee.
Under the Distribution Agreement and the relevant Plan, the Distributor may
reallocate an amount up to the full fee that it receives to financial
institutions, including broker/dealers, based upon the aggregate investment
amounts maintained by and services provided to shareholders of any relevant
Class serviced by such financial institutions. the Distributor may also
reimburse broker/dealers for other expenses incurred in the promotion of the
sale of Bedford Shares. The Distributor and/or broker/dealers pay for the cost
of printing (excluding typesetting) and mailing to prospective investors
prospectuses and other materials relating to the Bedford Classes as well as for
related direct mail, advertising and promotional expenses.
Each of the Plans obligates the Company, during the period it is in effect,
to accrue and pay to the Distributor on behalf of each Bedford Class the fee
agreed to under the Distribution Agreement. Payments under the Plans are not
based on expenses actually incurred by the Distributor, and the payments may
exceed distribution expenses actually incurred. Because these fees are paid out
of the funds' assets on an on-going basis, over time these fees will increase
the cost of your investment and may cost you more than paying other types of
sales charges.
28
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS OR IN THE FUND'S STATEMENT OF
ADDITIONAL INFORMATION INCORPORATED HEREIN BY REFERENCE, IN CONNECTION WITH THE
OFFERING MADE BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND OR
ITS DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE FUND OR
BY THE DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY
BE MADE.
INVESTMENT ADVISER
BlackRock Institutional Management Corporation
Wilmington, Delaware
DISTRIBUTOR
Provident Distributors, Inc.
West Conshohocken, Pennsylvania
CUSTODIAN
PFPC Trust Company
Lester, Pennsylvania
ADMINISTRATOR AND TRANSFER AGENT
PFPC Inc.
Wilmington, Delaware
COUNSEL
Drinker Biddle & Reath LLP
Philadelphia, Pennsylvania
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
[GRAPHIC OMITTED]
MORGAN KEEGAN
MOR
ACCOUNT
PROSPECTUS
THE BEDFORD FAMILY
MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
MUNICIPAL MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
GOVERNMENT OBLIGATIONS
MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
DECEMBER 1, 1999
<PAGE>
FOR MORE INFORMATION:
This prospectus contains important information you should know before you
invest. Read it carefully and keep it for future reference. More information
about the Bedford Family is available free, upon request, including:
ANNUAL/SEMI-ANNUAL REPORT
These reports contain additional information about each of the funds'
investments, describe the funds' performance, list portfolio holdings, and
discuss recent market conditions and economic trends. The annual report includes
fund strategies for the last fiscal year.
STATEMENT OF ADDITIONAL INFORMATION (SAI)
A Statement of Additional Information, dated December 1, 1999 (SAI), has
been filed with the Securities and Exchange Commission (SEC). The SAI, which
includes additional information about the Bedford Family, may be obtained free
of charge, along with the Bedford Family annual and semi-annual reports, by
calling (800) 533-7719. The SAI, as supplemented from time to time, is
incorporated by reference into this Prospectus (and is legally considered a part
of this Prospectus).
SHAREHOLDER ACCOUNT SERVICE REPRESENTATIVES
Representatives are available to discuss account balance information,
mutual fund prospectuses, literature, programs and services available. Hours: 8
a.m. to 5 p.m. (Eastern time) Monday-Friday. Call: (800) 533-7719.
PURCHASES AND REDEMPTIONS
Call your broker or (800) 533-7719.
WRITTEN CORRESPONDENCE
Post Office Address: Bedford Family
c/o PFPC, Inc.
PO Box 8950
Wilmington, DE 19899-8950
Street Address: Bedford Family
C/O PFPC, INC.
400 Bellevue Parkway
Wilmington, DE 19809
SECURITIES AND EXCHANGE COMMISSION (SEC)
You may also view information about The RBB Fund, Inc. and the Bedford
Family, including the SAI, by visiting the SEC website (http://www.sec.gov) or
the SEC's Public Reference Room in Washington, D.C. Information about the
operation of the public reference room can be obtained by calling the SEC
directly at 1-202-942-8090. Copies of this information can be obtained, for a
duplicating fee, by writing to the Public Reference Section of the SEC,
Washington, D.C. 20549-0102, or by electronic request to [email protected].
INVESTMENT COMPANY ACT FILE NO. 811-05518
<PAGE>
<PAGE>
THE BEDFORD FAMILY MONEY MARKET PORTFOLIOS
OF
THE RBB FUND, INC.
Money Market Portfolio
Municipal Money Market Portfolio
Government Obligations Money Market Portfolio
This prospectus gives vital information about these money market mutual
funds, advised by BlackRock Institutional Management Corporation ("BIMC" or the
"Adviser"), including information on investment policies, risks and fees. For
your own benefit and protection, please read it before you invest and keep it on
hand for future reference.
Please note that these funds:
(BULLET) are not bank deposits;
(BULLET) are not federally insured;
(BULLET) are not obligations of, or guaranteed or endorsed by PNC Bank,
National Association, PFPC Trust Company or any other bank;
(BULLET) are not obligations of, or guaranteed or endorsed or otherwise
supported by the U.S. Government, the Federal Deposit Insurance
Corporation, the Federal Reserve Board or any other governmental agency;
(BULLET) are not guaranteed to achieve their goal(s);
(BULLET) may not be able to maintain a stable $1 share price and you may
lose money.
- --------------------------------------------------------------------------------
THE SECURITIES DESCRIBED IN THIS PROSPECTUS HAVE BEEN REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION (SEC). THE SEC, HOWEVER, HAS NOT JUDGED THESE
SECURITIES FOR THEIR INVESTMENT MERIT AND HAS NOT DETERMINED THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANYONE WHO TELLS YOU OTHERWISE IS COMMITTING A
CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
PROSPECTUS December 1, 1999
<PAGE>
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<PAGE>
TABLE OF CONTENTS
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============================== INTRODUCTION TO THE RISK/RETURN SUMMARY .....5
PORTFOLIO DESCRIPTION
A LOOK AT THE GOALS, Money Market .............................6
STRATEGIES, RISKS, EXPENSES
AND FINANCIAL HISTORY OF Municipal Money Market ..................11
EACH PORTFOLIO.
Government Obligations Money Market .....16
DETAILS ABOUT THE SERVICE PORTFOLIO MANAGEMENT
PROVIDERS.
Investment Adviser ......................21
Service Provider Chart ..................22
SHAREHOLDER INFORMATION
POLICIES AND INSTRUCTIONS FOR Pricing Shares ..........................23
OPENING, MAINTAINING AND
CLOSING AN ACCOUNT IN ANY OF Purchase of Shares ......................23
THE PORTFOLIOS.
Redemption of Shares ....................25
Dividends and Distributions .............27
Taxes ...................................27
DETAILS ON DISTRIBUTION PLANS.
DISTRIBUTION ARRANGEMENTS ..................28
============================== FOR MORE INFORMATION ...............Back Cover
3
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INTRODUCTION TO THE RISK/RETURN SUMMARY
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This Prospectus has been written to provide you with the information you
need to make an informed decision about whether to invest in the Bedford Classes
of The RBB Fund, Inc. (the "Company").
The three classes of common stock (each a "Bedford Class") of the Company
offered by this Prospectus represent interests in the Bedford Classes of the
Money Market Portfolio, the Municipal Money Market Portfolio and the Government
Obligations Money Market Portfolio. This Prospectus and the Statement of
Additional Information incorporated herein relate solely to the Bedford Classes
of the Company.
This Prospectus has been organized so that each Portfolio has its own short
section with important facts about that particular Portfolio. Once you read the
short sections about the Portfolios that interest you, read the sections about
Purchase and Redemption of Shares of the Bedford Classes ("Bedford Shares" or
"Shares"). These sections apply to all the Portfolios offered by this
Prospectus.
5
<PAGE>
MONEY MARKET PORTFOLIO
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================================================================================
IMPORTANT DEFINITIONS
ASSET-BACKED SECURITIES: Debt securities that are backed by a pool of assets,
usually loans such as installment sale contracts or credit card receivables.
COMMERCIAL PAPER: Short-term securities with maturities of 1 to 270 days which
are issued by banks, corporations and others.
DOLLAR WEIGHTED AVERAGE MATURITY: The average amount of time until the
organizations that issued the debt securities in the fund's portfolio must pay
off the principal amount of the debt. "Dollar weighted" means the larger the
dollar value of a debt security in the fund, the more weight it gets in
calculating this average.
LIQUIDITY: Liquidity is the ability to easily convert investments into cash
without losing a significant amount of money in the process.
NET ASSET VALUE (NAV): The value of everything the fund owns, minus everything
it owes, divided by the number of shares held by investors.
REPURCHASE AGREEMENT: A special type of a short-term investment. A dealer sells
securities to a fund and agrees to buy them back later at a set price. In
effect, the dealer is borrowing the fund's money for a short time, using the
securities as collateral.
VARIABLE OR FLOATING RATE SECURITIES: Securities whose interest rates adjust
automatically after a certain period of time and/or whenever a predetermined
standard interest rate changes.
================================================================================
INVESTMENT GOAL
The fund seeks to generate current income, to provide you with liquidity
and to protect your investment.
PRIMARY INVESTMENT STRATEGIES.
To achieve this goal, we invest in a diversified portfolio of short term,
high quality, U.S. dollar-denominated instruments, including government, bank,
commercial and other obligations.
Specifically, we may invest in:
1) U.S. dollar-denominated obligations issued or supported by the credit
of U.S. or foreign banks or savings institutions with total assets of
more than $1 billion (including obligations of foreign branches of such
banks).
2) High quality commercial paper and other obligations issued or
guaranteed (or otherwise supported) by U.S. and foreign corporations
and other issuers rated (at the time of purchase) A-2 or higher by
Standard and Poor's, Prime-2 or higher by Moody's, D-2 or higher by
Duff & Phelps, F-2 or higher by Fitch or TBW-2 or higher by Thomson
BankWatch, as well as high quality corporate bonds rated AA (or Aa) or
higher at the time of purchase by those rating agencies.These ratings
must be provided by at least two rating agencies, or by the only rating
agency providing a rating.
3) Unrated notes, paper and other instruments that are determined by us to
be of comparable quality to the instruments described above.
4) Asset-backed securities (including interests in pools of assets such as
mortgages, installment purchase obligations and credit card
receivables).
5) Securities issued or guaranteed by the U.S. Government or by its
agencies or authorities.
6) Dollar-denominated securities issued or guaranteed by foreign
governments or their political subdivisions, agencies or authorities.
7) Securities issued or guaranteed by state or local governmental bodies.
8) Repurchase agreements relating to the above instruments.
The fund seeks to maintain a net asset value of $1.00 per share.
6
<PAGE>
QUALITY
Under guidelines established by the Company's Board of Directors, we will
only purchase securities if such securities or their issuers have (or such
securities are guaranteed or otherwise supported by entities which have)
short-term debt ratings at the time of purchase in the two highest rating
categories from at least two national rating agencies, or one such rating if the
security is rated by only one agency. Securities that are unrated must be
determined to be of comparable quality.
MATURITY
The dollar-weighted average maturity of all the investments of the fund
will be 90 days or less. Only those securities which have remaining maturities
of 397 days or less (except for certain variable and floating rate instruments
and securities collateralizing repurchase agreements) will be purchased.
KEY RISKS
The value of money market investments tends to fall when current interest
rates rise. Money market investments are generally less sensitive to interest
rate changes than longer-term securities.
The fund's securities may not earn as high a level of income as longer term
or lower quality securities, which generally have greater risk and more
fluctuation in value.
The fund's concentration of its investments in the banking industry could
increase risks. The profitability of banks depends largely on the availability
and cost of funds, which can change depending upon economic conditions. Banks
are also exposed to losses if borrowers get into financial trouble and can't
repay their loans.
The obligations of foreign banks and other foreign issuers may involve
certain risks in addition to those of domestic issuers, including higher
transaction costs, less complete financial information, political and economic
instability, less stringent regulatory requirements and less market liquidity.
Unrated notes, paper and other instruments may be subject to the risk that
an issuer may default on its obligation to pay interest and repay principal.
The obligations issued or guaranteed by state or local government bodies
may be issued by entities in the same state and may have interest which is paid
from revenues of similar projects. As a result, changes in economic, business or
political conditions relating to a particular state or types of projects may
impact the fund.
Treasury obligations differ only in their interest rates, maturities and
time of issuance. These differences could result in fluctuations in the value of
such securities depending upon the market. Obligations of U.S. Government
agencies and authorities are supported by varying degrees of credit. The U.S.
Government gives no assurances that it will provide financial support to its
agencies and authorities if it is not obligated by law to do so. Default in
these issuers could negatively impact the fund.
The fund's investment in asset-backed securities may be negatively impacted
by interest rate fluctuations or when an issuer pays principal on an obligation
held by the fund earlier or later than expected. These events may affect their
value and the return on your investment.
The fund could lose money if a seller under a repurchase agreement defaults
or declares bankruptcy.
We may purchase variable and floating rate instruments. Like all debt
instruments, their value is dependent on the credit paying ability of the
issuer. If the issuer were unable to make interest payments or default, the
value of the securities would decline. The absence of an active market for these
securities could make it difficult to dispose of them if the issuer defaults.
7
<PAGE>
The fund, like any business, could be affected if the computer systems on
which it relies do not properly process information beginning on January 1,
2000. While Year 2000 issues could have a negative effect on the fund, BIMC, the
fund's investment adviser, is currently working to avoid such problems. BIMC is
also working with other systems providers and vendors servicing the Portfolios
to determine their systems' ability to handle Year 2000 problems. There is no
guarantee, however, that systems will work properly on or after January 1, 2000.
Year 2000 problems may also hurt issuers whose securities the fund holds or
securities markets generally.
ALTHOUGH WE SEEK TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER
SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND. WHEN YOU INVEST IN
THIS FUND YOU ARE NOT MAKING A BANK DEPOSIT. YOUR INVESTMENT IS NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR BY ANY BANK OR
GOVERNMENTAL AGENCY.
RISK / RETURN INFORMATION
The chart and table below give you a picture of the variability of the
fund's long-term performance for Bedford Shares. The information shows you how
the fund's performance has varied year by year and provides some indication of
the risks of investing in the fund. The chart and the table both assume
reinvestment of dividends and distributions. As with all such investments, past
performance is not an indication of future results. Performance reflects fee
waivers in effect. If fee waivers were not in place, the fund's performance
would be reduced.
AS OF 12/31
ANNUAL TOTAL RETURNS
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
8.8 7.66 3.75 3.09 2.41 3.49 5.18 4.65 4.88 4.75
YEAR-TO-DATE TOTAL RETURN FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999: 4.23%
Best Quarter: 9.49% (quarter ended 6/30/89)
Worst Quarter: 2.34% (quarter ended 6/30/93)
AS OF 12/31/98
AVERAGE ANNUAL TOTAL RETURNS
1 YEAR 5 YEARS 10 YEARS
------ ------- --------
MONEY MARKET 4.75% 4.59% 4.86%
CURRENT YIELD: The seven-day yield for the period ended 12/31/98 for the
fund was 4.38%. Past performance is not an indication of future results. Yields
will vary. You may call (800) 533-7719 to obtain the current seven-day yield of
the fund.
8
<PAGE>
EXPENSES AND FEES
As a shareholder you pay certain fees and expenses. Annual fund operating
expenses are paid out of fund assets and are reflected in the fund's price.
The table below describes the fees and expenses that you may pay if you buy
and hold Bedford Shares of the fund. The table is based on expenses for the most
recent fiscal year.
================================================================================
IMPORTANT DEFINITIONS
MANAGEMENT FEES: Fees paid to the investment adviser for portfolio management
services.
OTHER EXPENSES: Includes administration, transfer agency, custody, professional
fees and registration fees.
DISTRIBUTION AND SERVICE FEES: Fees that are paid to the Distributor for
shareholder account service and maintenance.
================================================================================
ANNUAL FUND OPERATING EXPENSES*
(Expenses that are deducted from fund assets)
Management Fees 1 0.36%
Distribution and service (12b-1) fees 0.59%
Other expenses 0.13%
-----
Total annual fund operating expenses 2 1.08%
=====
* The table does not reflect charges or credits which investors might
incur if they invest through a financial institution.
1. BIMC has voluntarily undertaken that a portion of its management fee
will not be imposed on the fund during the current fiscal year ending
August 31, 2000. As a result of the fee waiver, current management fees
of the fund are 0.25% of average daily net assets. This waiver is
expected to remain in effect for the current fiscal year. However, it
is voluntary and can be modified or terminated at any time without the
fund's consent.
2. As a result of the fee waiver set forth in note 1, the total annual
fund operating expenses which are estimated to be incurred during the
current fiscal year are 0.97%. Although this fee waiver is expected to
remain in effect for the current fiscal year, it is voluntary and may
be terminated at any time at the option of BIMC.
EXAMPLE:
The example is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated and then redeem
all of your shares at the end of each period. The example also assumes that your
investment has a 5% return each year and that the fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your cost would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
BEDFORD SHARES $110 $343 $595 $1,317
9
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The table below sets forth certain financial information for the periods
indicated, including per share information results for a single fund share. The
term "Total Return" indicates how much your investment would have increased or
decreased during this period of time and assumes that you have reinvested all
dividends and distributions. This information has been derived from the fund's
financial statements audited by PricewaterhouseCoopers LLP, the Company's
independent accountants. This information should be read in conjunction with the
fund's financial statements which, together with the report of independent
accountants, are included in the fund's annual report, which is available upon
request (see back cover for ordering instructions).
FINANCIAL HIGHLIGHTS (b)
(FOR A BEDFORD SHARE OUTSTANDING THROUGHOUT EACH YEAR)
MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
FOR THE FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
AUGUST 31, 1999 AUGUST 31, 1998 AUGUST 31, 1997 AUGUST 31, 1996 AUGUST 31, 1995
--------------- --------------- --------------- --------------- ----------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year ........... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- --------- ---------- ---------- --------
Income from investment operations
Net investment income ....................... 0.0425 0.0473 0.0462 0.0469 0.0486
-------- --------- ---------- ---------- --------
Total from investment operations .......... 0.0425 0.0473 0.0462 0.0469 0.0486
-------- --------- ---------- ---------- --------
Less distributions
Dividends (from net investment income) ...... (0.0425) (0.0473) (0.0462) (0.0469) (0.0486)
-------- --------- ---------- ---------- --------
Total distributions ....................... (0.0425) (0.0473) (0.0462) (0.0469) (0.0486)
-------- --------- ---------- ---------- --------
Net asset value at end of year ................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ========== ========== ========
Total Return ................................... 4.34% 4.84% 4.72% 4.79% 4.97%
Ratios/Supplemental Data
Net assets at end of year (000s) ............ $360,123 $762,739 $1,392,911 $1,109,334 $935,821
Ratios of expenses to average net assets
After advisory/administration fee waivers . .97%(a) .97%(a) .97%(a) .97%(a) .96%(a)
Ratios of net investment income to average net
assets
After advisory/administration fee waivers . 4.25% 4.73% 4.62% 4.69% 4.86%
</TABLE>
(a) Without the waiver of advisory and administration fees and without the
reimbursement of certain operating expenses, the ratios of expenses to
average net assets for the Money Market Portfolio would have been 1.08%,
1.10%, 1.12%, 1.14% and 1.17% for the years ended August 31, 1999, 1998,
1997, 1996 and 1995, respectively.
(b) Financial Highlights relate solely to the Bedford Class of shares within the
portfolio.
10
<PAGE>
MUNICIPAL MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
================================================================================
IMPORTANT DEFINITIONS
DOLLAR WEIGHTED AVERAGE MATURITY: The average amount of time until the
organizations that issued the debt securities in the fund's portfolio must pay
off the principal amount of the debt. "Dollar weighted" means the larger the
dollar value of a debt security in the fund, the more weight it gets in
calculating this average.
GENERAL OBLIGATION BONDS: Bonds which are secured by the issuer's pledge of its
full faith, credit and taxing power for the payment of principal and interest.
LIQUIDITY: Liquidity is the ability to easily convert investments into cash
without losing a significant amount of money in the process.
MUNICIPAL LEASE OBLIGATIONS: These provide participation in municipal lease
agreements and installment purchase contracts, but are not part of the general
obligations of the municipality.
MUNICIPAL SECURITY: A short-term obligation issued by or on behalf of states and
possessions of the United States, their political subdivisions and their
agencies and authorities.
NET ASSET VALUE (NAV): The value of everything the fund owns, minus everything
it owes, divided by the number of shares held by investors.
REVENUE BONDS: Bonds which are secured only by the revenues from a particular
facility or class of facilities, such as a water or sewer system, or from the
proceeds of a special excise tax or other revenue source.
TAX-EXEMPT COMMERCIAL PAPER: Short-term Municipal Securities with maturities of
1 to 270 days.
VARIABLE OR FLOATING RATE SECURITIES: Securities whose interest rates adjust
automatically after a certain period of time and/or whenever a predetermined
standard interest rate changes.
================================================================================
INVESTMENT GOAL
The fund seeks to generate current income exempt from federal income taxes,
to provide you with liquidity and to protect your investment.
PRIMARY INVESTMENT STRATEGIES
To achieve this goal, we invest in a diversified portfolio of Municipal
Securities. Specifically, we may invest in:
1) Fixed and variable rate notes and similar debt instruments rated or
issued by issuers who have ratings at the time of purchase of MIG-2,
VMIG-2 or Prime-2 or higher by Moody's, SP-2 or A-2 or higher by
Standard & Poor's, D-2 or higher by Duff & Phelps, or F-2 or higher by
Fitch (or guaranteed or otherwise supported by entities with such
ratings).
2) Tax-exempt commercial paper and similar debt instruments rated or
issued by issuers who have ratings at the time of purchase of Prime-2
or higher by Moody's, A-2 or higher by Standard & Poor's, D-2 or higher
by Duff & Phelps, or F-2 or higher by Fitch (or guaranteed or otherwise
supported by entities with such ratings).
3) Municipal bonds rated or issued by issuers who have ratings at the time
of purchase of Aa or higher by Moody's or AA or higher by Standard &
Poor's, Duff & Phelps or Fitch (or guaranteed or otherwise supported by
entities with such ratings).
4) Unrated notes, paper and other instruments that are determined by us to
be of comparable quality to the instruments described above.
5) Municipal bonds and notes whose principal and interest payments are
guaranteed by the U.S. Government or one of its agencies or authorities
or which otherwise depend on the credit of the United States.
The fund seeks to maintain a net asset value of $1.00 per share.
We normally invest at least 80% of its net assets in Municipal Securities
and other instruments whose interest is exempt from federal income tax or
subject to the Federal Alternative Minimum Tax.
The fund may hold uninvested cash reserves during temporary defensive
periods or, if in our opinion suitable Municipal Securities are not available.
The fund may hold all of its assets in uninvested cash reserves during temporary
defensive periods. Uninvested cash will not earn income.
We intend to have no more than 25% of its total assets in Municipal
Securities of issuers located in the same state.
11
<PAGE>
QUALITY
Under guidelines established by the Company's Board of Directors, we will
only purchase securities if such securities or their issuers have (or such
securities are guaranteed or otherwise supported by entities which have)
short-term debt ratings at the time of purchase in the two highest rating
categories from at least two national rating agencies, or one such rating if the
security is rated by only one agency. Securities that are unrated must be
determined to be of comparable quality.
MATURITY
The dollar-weighted average maturity of all the investments of the fund
will be 90 days or less. Only those securities which have remaining maturities
of 397 days or less (except for certain variable and floating rate instruments)
will be purchased.
KEY RISKS
The value of money market investments tends to fall when current interest
rates rise. Money market investments are generally less sensitive to interest
rate changes than longer-term securities.
The fund's securities may not earn as high a level of income as longer term
or lower quality securities, which generally have greater risk and more
fluctuation in value.
Municipal Securities include revenue bonds, general obligation bonds and
municipal lease obligations. Revenue bonds include private activity bonds, which
are not payable from the general revenues of the issuer. Consequently, the
credit quality of private activity bonds is usually directly related to the
credit standing of the corporate user of the facility involved. To the extent
that the fund's assets are invested in private activity bonds, the fund will be
subject to the particular risks presented by the laws and economic conditions
relating to such projects and bonds to a greater extent than if its assets were
not so invested. Moral obligation bonds are normally issued by special purpose
public authorities. If the issuer of moral obligation bonds is unable to pay its
debts from current revenues, it may draw on a reserve fund the restoration of
which is a moral but not a legal obligation of the state or municipality which
created the issuer. Risk exists that a municipality will not honor moral
obligation bonds. Municipal lease obligations are not guaranteed by the issuer
and are generally less liquid than other securities.
There may be less information available on the financial condition of
issuers of Municipal Securities than for public corporations. The market for
municipal bonds may be less liquid than for taxable bonds. This means that it
may be harder to buy and sell Municipal Securities, especially on short notice.
The fund may invest in bonds whose interest may be subject to the Federal
Alternative Minimum Tax. Interest received on these bonds by a taxpayer subject
to the Federal Alternative Minimum Tax is taxable.
We may invest 25% or more of assets in Municipal Securities whose interest
is paid solely from revenues of similar projects. For example, the fund may
invest more than 25% of its assets in Municipal Securities related to water or
sewer systems. This type of concentration exposes the fund to the legal and
economic risks relating to those projects.
We will rely on legal opinions of counsel to issuers of Municipal
Securities as to the tax-free status of investments and will not do our own
analysis regarding tax-free status.
The fund may purchase variable and floating rate instruments. Like all debt
instruments, their value is dependent on the credit paying ability of the
issuer. If the issuer were unable to make interest payments or default, the
value of the securities would decline. The absence of an active market for these
securities could make it difficult to dispose of them if the issuer defaults.
12
<PAGE>
The fund, like any business, could be affected if the computer systems on
which it relies do not properly process information beginning on January 1,
2000. While Year 2000 issues could have a negative effect on the fund, BIMC, the
fund's investment adviser, is currently working to avoid such problems. BIMC is
also working with other systems providers and vendors servicing the Portfolios
to determine their systems' ability to handle Year 2000 problems. There is no
guarantee, however, that systems will work properly on or after January 1, 2000.
Year 2000 problems may also hurt issuers whose securities the fund holds or
securities markets generally.
ALTHOUGH WE SEEK TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER
SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND. WHEN YOU INVEST IN
THIS FUND YOU ARE NOT MAKING A BANK DEPOSIT. YOUR INVESTMENT IS NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR BY ANY BANK OR
GOVERNMENTAL AGENCY.
RISK / RETURN INFORMATION
The chart and table below give you a picture of the variability of the
fund's long-term performance for Bedford Shares. The information shows you how
the fund's performance has varied year by year and provides some indication of
the risks of investing in the fund. The chart and the table both assume
reinvestment of dividends and distributions. As with all such investments, past
performance is not an indication of future results. Performance reflects fee
waivers in effect. If fee waivers were not in place, the fund's performance
would be reduced.
AS OF 12/31
ANNUAL TOTAL RETURNS
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
5.77% 5.32% 3.85% 2.40% 1.86% 2.25% 3.14% 2.89% 2.95% 2.77%
Year-to-date total return for the nine months ended September 30, 1999: 2.41%
Best Quarter: 6.24% (quarter ended 6/30/89)
Worst Quarter: 1.74% (quarter ended 3/31/94)
AS OF 12/31/98
AVERAGE ANNUAL TOTAL RETURNS
1 YEAR 5 YEARS 10 YEARS
------ ------- --------
MUNICIPAL MONEY MARKEt 2.77% 2.80% 3.31%
13
<PAGE>
CURRENT YIELD: The seven-day yield for the period ended 12/31/98 for the
fund was 2.81%. Past performance is not an indication of future results. Yields
will vary. You may call (800) 533-7719 to obtain the current seven-day yield of
the fund.
EXPENSES AND FEES
As a shareholder you pay certain fees and expenses. Annual fund operating
expenses are paid out of fund assets and are reflected in the fund's price.
The table below describes the fees and expenses that you may pay if you buy
and hold Bedford Shares of the fund. The table is based on expenses for the most
recent fiscal year.
================================================================================
IMPORTANT DEFINITIONS
MANAGEMENT FEES: Fees paid to the investment adviser for portfolio management
services.
OTHER EXPENSES: Includes administration, transfer agency, custody, professional
fees and registration fees.
DISTRIBUTION AND SERVICE FEES: Fees that are paid to the Distributor for
shareholder account service and maintenance.
================================================================================
ANNUAL FUND OPERATING EXPENSES*
(Expenses that are deducted from fund assets)
Management Fees 1 .................................... 0.35%
Distribution and service (12b-1) fees ................ 0.59%
Other expenses ....................................... 0.21%
-----
Total annual fund operating expenses2 ................ 1.15%
=====
* The table does not reflect charges or credits which investors might
incur if they invest through a financial institution.
1. BIMC has voluntarily undertaken that a portion of its management fee
will not be imposed on the fund during the current fiscal year ended
August 31, 2000. As a result of the fee waiver, current management fees
of the fund are 0.09% of average daily net assets. This waiver is
expected to remain in effect for the current fiscal year. However, it
is voluntary and can be modified or terminated at any time without the
fund's consent.
2. As a result of the fee waiver set forth in note 1, the total annual
fund operating expenses which are estimated to be incurred during the
current fiscal year are 0.89%. Although this fee waiver is expected to
remain in effect for the current fiscal year, it is voluntary and may
be terminated at any time at the option of BIMC.
EXAMPLE:
The example is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated and then redeem
all of your shares at the end of each period. The example also assumes that your
investment has a 5% return each year and that the fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your cost would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
BEDFORD SHARES $117 $365 $633 $1,398
14
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The table below sets forth certain financial information for the periods
indicated, including per share information results for a single fund share. The
term "Total Return" indicates how much your investment would have increased or
decreased during this period of time and assumes that you have reinvested all
dividends and distributions. This information has been derived from the fund's
financial statements audited by PricewaterhouseCoopers LLP, the Company's
independent accountants. This information should be read in conjunction with the
fund's financial statements which, together with the report of independent
accountants, are included in the fund's annual report, which is available upon
request (see back cover for ordering instructions).
FINANCIAL HIGHLIGHTS (b)
(FOR A BEDFORD SHARE OUTSTANDING THROUGHOUT EACH YEAR)
MUNICIPAL MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
FOR THE FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
AUGUST 31, 1999 AUGUST 31, 1998 AUGUST 31, 1997 AUGUST 31, 1996 AUGUST 31, 1995
--------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year ........... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- --------
Income from investment operations
Net investment income ....................... 0.0243 0.0286 0.0285 0.0288 0.0297
-------- -------- -------- -------- --------
Total from investment operations .......... 0.0243 0.0286 0.0285 0.0288 0.0297
-------- -------- -------- -------- --------
Less distributions
Dividends (from net investment income) ...... (0.0243) (0.0286) (0.0285) (0.0288) (0.0297)
-------- -------- -------- -------- --------
Total distributions ....................... (0.0243) (0.0286) (0.0285) (0.0288) (0.0297)
-------- -------- -------- -------- --------
Net asset value at end of year ................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total Return ................................... 2.46% 2.97% 2.88% 2.92% 3.01%
Ratios/Supplemental Data
Net assets at end of period (in thousands) .. $150,278 $147,633 $213,034 $201,940 $198,425
Ratios of expenses to average net assets
After advisory/administration fee waivers . .89%(a) .89%(a) .85%(a) .84%(a) .82%(a)
Ratios of net investment income to average
net assets
After advisory/administration fee waivers . 2.43% 2.86% 2.85% 2.88% 2.97%
(a) Without the waiver of advisory and administration fees and without the
reimbursement of certain operating expenses, the ratios of expenses to
average net assets for the Municipal Money Market Portfolio would have been
1.15%, 1.15%, 1.14%, 1.12% and 1.14% for the years ended August 31, 1999,
1998, 1997, 1996 and 1995, respectively.
(b) Financial Highlights relate solely to the Bedford Class of shares within the
portfolio.
</TABLE>
15
<PAGE>
GOVERNMENT OBLIGATIONS MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
================================================================================
IMPORTANT DEFINITIONS
ASSET-BACKED SECURITIES: Debt securities that are backed by a pool of assets,
usually loans such as installment sale contracts or credit card receivables.
DOLLAR WEIGHTED AVERAGE MATURITY: The average amount of time until the
organizations that issued the debt securities in the fund's portfolio must pay
off the principal amount of the debt. "Dollar weighted" means the larger the
dollar value of a debt security in the fund, the more weight it gets in
calculating this average.
LIQUIDITY: Liquidity is the ability to easily convert investments into cash
without losing a significant amount of money in the process.
NET ASSET VALUE (NAV): The value of everything the fund owns, minus everything
it owes, divided by the number of shares held by investors.
REPURCHASE AGREEMENT: A special type of a short-term investment. A dealer sells
securities to a fund and agrees to buy them back later at a set price. In
effect, the dealer is borrowing the fund's money for a short time, using the
securities as collateral.
VARIABLE OR FLOATING RATE SECURITIES: Securities whose interest rates adjust
automatically after a certain period of time and/or whenever a predetermined
standard interest rate changes.
================================================================================
INVESTMENT GOAL
The fund seeks to generate current income to provide you with liquidity and
to protect your investment.
PRIMARY INVESTMENT STRATEGIES
To achieve this goal, we invest exclusively in short-term U.S. Treasury
bills, notes and other obligations issued or guaranteed by the U.S. Government
or its agencies or instrumentalities and related repurchase agreements.
The fund seeks to maintain a net asset value of $1.00 per share.
QUALITY
Under guidelines established by the Company's Board of Directors, we will
purchase securities if such securities or their issuers have (or such securities
are guaranteed or otherwise supported by entities which have) short-term debt
ratings at the time of purchase in the two highest rating categories from at
least two national rating agencies, or one such rating if the security is rated
by only one agency. The fund may also purchase unrated securities determined by
us to be of comparable quality.
MATURITY
The dollar-weighted average maturity of all the investments of the fund
will be 90 days or less. Only those securities which have remaining maturities
of 397 days or less (except for certain variable and floating rate instruments
and securities collateralizing repurchase agreements) will be purchased.
SECURITIES LENDING
The fund may lend some of its securities on a short-term basis in order to
earn extra income. The fund will receive collateral in cash or high quality
securities equal to the current value of the loaned securities. These loans will
be limited to 33 1/3% of the value of the fund's total assets.
16
<PAGE>
KEY RISKS
The value of money market investments tends to fall when current interest
rates rise. Money market investments are generally less sensitive to interest
rate changes than longer-term securities.
The fund's securities may not earn as high a level of income as longer term
or lower quality securities, which generally have greater risk and more
fluctuation in value.
Treasury obligations differ only in their interest rates, maturities and
time of issuance. These differences could result in fluctuations in the value of
such securities depending upon the market. Obligations of U.S. Government
agencies and authorities are supported by varying degrees of credit. The U.S.
Government gives no assurances that it will provide financial support if it is
not obligated to do so by law. Default in these issuers could negatively impact
the fund.
The fund could lose money if a seller under a repurchase agreement defaults
or declares bankruptcy.
We may purchase variable and floating rate instruments. Like all debt
instruments, their value is dependent on the credit paying ability of the
issuer. If the issuer were unable to make interest payments or default, the
value of the securities would decline. The absence of an active market for these
securities could make it difficult to dispose of them if the issuer defaults.
Securities loans involve the risk of a delay in receiving additional
collateral if the value of the securities goes up while they are on loan. There
is also the risk of delay in recovering the loaned securities and of losing
rights to the collateral if a borrower goes bankrupt. Therefore, the fund may
lose the opportunity to sell the securities at a desirable price. Additionally,
in the event that a borrower of securities would file for bankruptcy or become
insolvent, disposition of the securities may be delayed pending court action.
The fund, like any business, could be affected if the computer systems on
which it relies do not properly process information beginning on January 1,
2000. While Year 2000 issues could have a negative effect on the fund, BIMC, the
fund's investment adviser, is currently working to avoid such problems. BIMC is
also working with other systems providers and vendors servicing the Portfolios
to determine their systems' ability to handle Year 2000 problems. There is no
guarantee, however, that systems will work properly on or after January 1, 2000.
Year 2000 problems may also hurt issuers whose securities the fund holds or
securities markets generally.
ALTHOUGH WE SEEK TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER
SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND. WHEN YOU INVEST IN
THIS FUND YOU ARE NOT MAKING A BANK DEPOSIT. YOUR INVESTMENT IS NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR BY ANY BANK OR
GOVERNMENTAL AGENCY.
17
<PAGE>
RISK/RETURN INFORMATION
The chart and table below give you a picture of the variability of the
fund's long-term performance for Bedford Shares. The information shows you how
the fund's performance has varied year by year and provides some indication of
the risks of investing in the fund. The chart and the table both assume
reinvestment of dividends and distributions. As with all such investments, past
performance is not an indication of future results. Performance reflects fee
waivers in effect. If fee waivers were not in place, the fund's performance
would be reduced.
AS OF 12/31
ANNUAL TOTAL RETURNS
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
- ---- ----- ----- ----- ----- ----- ----- ----- ----- -----
8.62% 7.44% 5.42% 3.01% 2.29% 3.41% 5.06% 4.54% 4.68% 4.59%
Year-to-date total return for the nine months ended September 30, 1999: 4.11%
Best Quarter: 9.21% (quarter ended 6/30/89)
Worst Quarter: 2.29% (quarter ended 3/31/94)
AS OF 12/31/98
AVERAGE ANNUAL TOTAL RETURNS
1 YEAR 5 YEARS 10 YEARS
------ ------- --------
GOVERNMENT OBLIGATIONS MONEY MARKET 4.59% 4.45% 4.89%
CURRENT YIELD: The seven-day yield for the period ended 12/31/98 for the
fund was 4.15%. Past performance is not an indication of future results. Yields
will vary. You may call (800) 533-7719 to obtain the current seven-day yield of
the fund.
18
<PAGE>
EXPENSES AND FEES
As a shareholder you pay certain fees and expenses. Annual fund operating
expenses are paid out of fund assets and are reflected in the fund's price.
The table below describes the fees and expenses that you may pay if you buy
and hold Bedford Shares of the fund. The table is based on expenses for the most
recent fiscal year.
================================================================================
IMPORTANT DEFINITIONS
MANAGEMENT FEES: Fees paid to the investment adviser for portfolio management
services.
OTHER EXPENSES: Includes administration, transfer agency, custody, professional
fees and registration fees.
DISTRIBUTION AND SERVICE FEES: Fees that are paid to the Distributor for
shareholder account service and maintenance.
================================================================================
ANNUAL FUND OPERATING EXPENSES*
(Expenses that are deducted from fund assets)
Management Fees 1 .................................. 0.42%
Distribution and service (12b-1) fees .............. 0.60%
Other expenses ..................................... 0.11%
-----
Total annual fund operating expenses 2 ............. 1.13%
=====
* The table does not reflect charges or credits which investors might
incur if they invest through a financial institution.
1. BIMC has voluntarily undertaken that a portion of its management fee
will not be imposed on the fund during the current fiscal year ending
August 31, 2000. As a result of the fee waiver, current management fees
of the fund are 0.265% of average daily net assets. This waiver is
expected to remain in effect for the current fiscal year. However, it
is voluntary and can be modified or terminated at any time without the
fund's consent.
2. As a result of the fee waiver set forth in note 1, the total annual
fund operating expenses which are estimated to be incurred during the
current fiscal year are 0.975%. Although this fee waiver is expected to
remain in effect for the current fiscal year, it is voluntary and may
be terminated at any time at the option of BIMC.
EXAMPLE:
The example is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated and then redeem
all of your shares at the end of each period. The example also assumes that your
investment has a 5% return each year and that the fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your cost would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
BEDFORD SHARES $115 $359 $622 $1,375
19
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The table below sets forth certain financial information for the periods
indicated, including per share information results for a single fund share. The
term "Total Return" indicates how much your investment would have increased or
decreased during this period of time and assumes that you have reinvested all
dividends and distributions. This information has been derived from the fund's
financial statements audited by PricewaterhouseCoopers LLP, the Company's
independent accountants. This information should be read in conjunction with the
fund's financial statements which, together with the report of independent
accountants, are included in the fund's annual report, which is available upon
request (see back cover for ordering instructions).
FINANCIAL HIGHLIGHTS (b)
(FOR A BEDFORD SHARE OUTSTANDING THROUGHOUT EACH YEAR)
GOVERNMENT OBLIGATIONS MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
FOR THE FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
AUGUST 31, 1999 AUGUST 31, 1998 AUGUST 31, 1997 AUGUST 31, 1996 AUGUST 31, 1995
--------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year ........... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- --------
Income from investment operations
Net investment income ....................... 0.0409 0.0464 0.0449 0.0458 0.0475
-------- -------- -------- -------- --------
Total from investment operations .......... 0.0409 0.0464 0.0449 0.0458 0.0475
-------- -------- -------- -------- --------
Less distributions
Dividends (from net investment income) ...... (0.0409) (0.0464) (0.0449) (0.0458) (0.0475)
-------- -------- -------- -------- --------
Total distributions ....................... (0.0409) (0.0464) (0.0449) (0.0458) (0.0475)
-------- -------- -------- -------- --------
Net asset value at end of year ................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total Return .............................. 4.17% 4.74% 4.59% 4.68% 4.86%
Ratios/Supplemental Data
Net assets at end of period (in thousands) .. $113,050 $128,447 $209,715 $192,599 $163,398
Ratios of expenses to average net assets
After advisory/administration fee waivers . .975%(a) .975%(a) .975%(a) .975%(a) .975%(a)
Ratios of net investment income to average
net assets
After advisory/administration fee waivers . 4.09% 4.63% 4.49% 4.58% 4.75%
</TABLE>
(a) Without the waiver of advisory and administration fees and without the
reimbursement of certain operating expenses, the ratios of expenses to
average net assets for the Government Obligations Money Market Portfolio
would have been 1.13%, 1.10%, 1.09%, 1.10% and 1.13% for the years ended
August 31, 1999, 1998, 1997, 1996 and 1995, respectively.
(b) Financial Highlights relate solely to the Bedford Class of shares within the
portfolio.
20
<PAGE>
PORTFOLIO MANAGEMENT
- --------------------------------------------------------------------------------
INVESTMENT ADVISER
BIMC, a majority-owned indirect subsidiary of PNC Bank, N.A. serves as
investment adviser and is responsible for all purchases and sales of each fund's
portfolio securities. BIMC and its affiliates are one of the largest U.S. bank
managers of mutual funds, with assets currently under management in excess of
$52.9 billion. BIMC (formerly known as PNC Institutional Management Corporation
or PIMC) was organized in 1977 by PNC Bank to perform advisory services for
investment companies and has its principal offices at Bellevue Park Corporate
Center, 400 Bellevue Parkway, Wilmington, DE 19809.
For the fiscal year ended August 31, 1999, BIMC received the following fees
as a percentage of each fund's average net assets:
Money Market Portfolio .250%
Municipal Money Market Portfolio .090%
Government Obligations Money Market Portfolio .265%
The following chart shows the funds' other service providers and includes
their addresses and principal activities.
21
<PAGE>
------------
SHAREHOLDERS
------------
Distribution and
Shareholder Services
------------------------------------ -----------------------------------------
PRINCIPAL DISTRIBUTOR TRANSFER AGENT
PROVIDENT DISTRIBUTORS, INC. PFPC INC.
FOUR FALLS CORPORATE CENTER, 6TH FL. 400 BELLEVUE PARKWAY
WEST CONSHOHOCKEN, PA 19428 WILMINGTON, DE 19809
Distributes shares of the funds. Handles shareholder services,
including record-keeping and statements,
distribution of dividends and processing
of buy and sell requests.
------------------------------------ -----------------------------------------
Asset
Management
------------------------------------ -----------------------------------------
INVESTMENT ADVISER CUSTODIAN
BLACKROCK INSTITUTIONAL PFPC TRUST COMPANY
MANAGEMENT CORPORATION 200 STEVENS DRIVE
400 BELLEVUE PARKWAY LESTER, PA 19113
WILMINGTON, DE 19809
Holds each fund's assets, settles
Manages each fund's business all portfolio trades and collects
and investment activities. most of the valuation data
required for calculating each
fund's net asset value ("NAV").
------------------------------------ -----------------------------------------
Fund
Operations
------------------------------------
ADMINISTRATOR AND FUND
ACCOUNTING AGENT
PFPC INC.
400 BELLEVUE PARKWAY
WILMINGTON, DE 19809
Provides facilities, equipment
and personnel to carry out
administrative services related
to each fund and calculates each
fund's NAV, dividends
and distributions.
------------------------------------
---------------------------------
BOARD OF DIRECTORS
Supervises the funds' activities.
---------------------------------
22
<PAGE>
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
PRICING SHARES
The price of your shares is also referred to as the net asset value (NAV).
The NAV is determined twice daily at 12:00 noon and at 4:00 p.m., Eastern
Time, each day on which both the New York Stock Exchange and the Federal Reserve
Bank of Philadelphia are open. It is calculated by dividing a fund's total
assets, less its liabilities, by the number of shares outstanding.
Each fund values its securities using amortized cost. This method values a
fund holding initially at its cost and then assumes a constant amortization to
maturity of any discount or premium. The amortized cost method ignores any
impact of changing interest rates.
PURCHASE OF SHARES
GENERAL. You may purchase Bedford Shares through an account maintained by
your brokerage firm (the "Account") and you may also purchase Shares directly by
mail or wire. The minimum initial investment is $1,000, and the minimum
subsequent investment is $100. The Company in its sole discretion may accept or
reject any order for purchases of Bedford Shares.
Purchases will be effected at the net asset value next determined after
PFPC, the Company's transfer agent, has received a purchase order in good order
and the Company's custodian has Federal Funds immediately available to it. In
those cases where payment is made by check, Federal Funds will generally become
available two Business Days after the check is received. A "Business Day" is any
day that both the New York Stock Exchange (the "NYSE") and the Federal Reserve
Bank of Philadelphia (the "FRB") are open. On any Business Day, orders which are
accompanied by Federal Funds and received by the Company by 12:00 noon Eastern
Time, and orders as to which payment has been converted into Federal Funds by
12:00 noon Eastern Time, will be executed as of 12:00 noon that Business Day.
Orders which are accompanied by Federal Funds and received by PFPC after 12:00
noon Eastern Time but prior to the close of regular trading on the NYSE
(generally 4:00 p.m. Eastern Time), and orders as to which payment has been
converted into Federal Funds after 12:00 noon Eastern Time but prior to the
close of regular trading on the NYSE on any Business Day, will be executed as of
the close of regular trading on the NYSE on that Business Day, but will not be
entitled to receive dividends declared on such Business Day. Orders which are
accompanied by Federal Funds and received by the Company as of the close of
regular trading on the NYSE or later, and orders as to which payment has been
converted to Federal Funds as of the close of regular trading on the NYSE or
later on a Business Day will be processed as of 12:00 noon Eastern Time on the
following Business Day.
PURCHASES THROUGH AN ACCOUNT. Purchases of Shares may be effected through
an Account with your broker through procedures and requirements established by
your broker. In such event, beneficial ownership of Bedford Shares will be
recorded by your broker and will be reflected in the Account statements provided
to you by your broker. Your broker may impose minimum investment Account
requirements. Even if your broker does not impose a sales charge for purchases
of Bedford Shares, depending on the terms of your Account with your broker, the
broker may charge to your Account fees for automatic investment and other
services provided to your Account. Information concerning Account requirements,
services and charges should be obtained from your broker, and you should read
this Prospectus in conjunction with any information received from your broker.
Shares are held in the street name account of your broker and if you desire to
transfer such shares to the street name account of another broker, you should
contact your current broker.
A broker with whom you maintain an Account may offer you the ability to
purchase Bedford Shares under an automatic purchase program (a "Purchase
Program") established by a participating broker. If you participate in a
Purchase Program, then you will have your "free-credit" cash balances in your
Account automatically invested in Shares of the
23
<PAGE>
Bedford Class designated by you as the "Primary Bedford Class" for your
Purchase Program. The frequency of investments and the minimum investment
requirement will be established by the broker and the Company. In addition, the
broker may require a minimum amount of cash and/or securities to be deposited in
your Account to participate in its Purchase Program. The description of the
particular broker's Purchase Program should be read for details, and any
inquiries concerning your Account under a Purchase Program should be directed to
your broker. As a participant in a Purchase Program, you may change the
designation of the Primary Bedford Class at any time by so instructing your
broker.
If your broker makes special arrangements under which orders for Bedford
Shares are received by PFPC prior to 12:00 noon Eastern Time, and your broker
guarantees that payment for such Shares will be made in available Federal Funds
to the Company's custodian prior to the close of regular trading on the NYSE on
the same day, such purchase orders will be effective and Shares will be
purchased at the offering price in effect as of 12:00 noon Eastern Time on the
date the purchase order is received by PFPC. Otherwise, if the broker has not
made such an arrangement, pricing of shares will occur as described above under
"General".
DIRECT PURCHASES. You may also make direct investments at any time in any
Bedford Class you select through any broker that has entered into a dealer
agreement with the Distributor (a "Dealer"). You may make an initial investment
in any of the Bedford Classes by mail by fully completing and signing an
application obtained from a Dealer (the "Application"), specifying the Portfolio
in which you wish to invest, and mailing it, together with a check payable to
"The Bedford Family" to the Bedford Family, c/o PFPC, P.O. Box 8950, Wilmington,
Delaware 19899. The check must specify the name of the Portfolio for which
shares are being purchased. An Application will be returned to you unless it
contains the name of the Dealer from whom you obtained it. Subsequent purchases
may be made through a Dealer or by forwarding payment to the Company's transfer
agent at the foregoing address.
Provided that your investment is at least $2,500, you may also purchase
Shares in any of the Bedford Classes by having your bank or Dealer wire Federal
Funds to the Company's Custodian, PFPC Trust Company. Your bank or Dealer may
impose a charge for this service. The Company does not currently charge for
effecting wire transfers but reserves the right to do so in the future. In order
to ensure prompt receipt of your Federal Funds wire, for an initial investment,
it is important that you follow these steps:
A. Telephone the Company's transfer agent, PFPC, toll-free (800) 533-7719
and provide your name, address, telephone number, Social Security or
Tax Identification Number, the Bedford Class selected, the amount
being wired, and by which bank or Dealer. PFPC will then provide you
with an account number. (If you have an existing account, you should
also notify PFPC prior to wiring funds.)
B. Instruct your bank or Dealer to wire the specified amount, together
with your assigned account number, to PFPC's account with PNC Bank.
PNC Bank, N.A., Philadelphia, PA
ABA-0310-0005-3.
FROM: (your name)
ACCOUNT NUMBER: (your account number with the Portfolio)
FOR PURCHASE OF: (name of the Portfolio)
AMOUNT: (amount to be invested)
C. Fully complete and sign the Application and mail it to the address
shown thereon. PFPC will not process initial purchases until it
receives a fully completed and signed Application.
For subsequent investments, you should follow steps A and B above.
24
<PAGE>
RETIREMENT PLANS. Bedford Shares may be purchased in conjunction with
individual retirement accounts ("IRAs") and rollover IRAs where PFPC Trust
Company acts as custodian. For further information as to applications and annual
fees, contact the Distributor or your broker. To determine whether the benefits
of an IRA are available and/or appropriate, you should consult with your tax
adviser.
REDEMPTION OF SHARES
GENERAL. Redemption orders are effected at the net asset value per share
next determined after receipt of the order in proper form by the Company's
transfer agent, PFPC. You may redeem all or some of your Shares in accordance
with one of the procedures described below.
REDEMPTION OF SHARES IN AN ACCOUNT. If you beneficially own Bedford Shares
through an Account, you may redeem Bedford Shares in your Account in accordance
with instructions and limitations pertaining to your Account by contacting your
broker. If such notice is received by PFPC by 12:00 noon Eastern Time on any
Business Day, the redemption will be effective as of 12:00 noon Eastern Time on
that day. Payment of the redemption proceeds will be made after 12:00 noon
Eastern Time on the day the redemption is effected, provided that the Company's
custodian is open for business. If the custodian is not open, payment will be
made on the next bank business day. If the redemption request is received
between 12:00 noon and the close of regular trading on the NYSE on a Business
Day, the redemption will be effective as of the close of regular trading on the
NYSE on such Business Day and payment will be made on the next bank business day
following receipt of the redemption request. If all of your Shares are redeemed,
all accrued but unpaid dividends on those Shares will be paid with the
redemption proceeds.
Your brokerage firm may also redeem each day a sufficient number of Shares
of the Primary Bedford Class to cover debit balances created by transactions in
your Account or instructions for cash disbursements. Shares will be redeemed on
the same day that a transaction occurs that results in such a debit balance or
charge.
Each brokerage firm reserves the right to waive or modify criteria for
participation in an Account or to terminate participation in an Account for any
reason.
REDEMPTION OF SHARES OWNED DIRECTLY. If you own Shares directly, you may
redeem any number of Shares by sending a written request to The Bedford Family
c/o PFPC, P.O. Box 8950, Wilmington, Delaware 19899. Redemption requests must be
signed by each shareholder in the same manner as the Shares are registered.
Redemption requests for joint accounts require the signature of each joint
owner. On redemption requests of $5,000 or more, each signature must be
guaranteed. A signature guarantee may be obtained from a domestic bank or trust
company, broker, dealer, clearing agency or savings association who are
participants in a medallion program recognized by the Securities Transfer
Association. The three recognized medallion programs are Securities Transfer
Agents Medallion Program (STAMP), Stock Exchanges Medallion Program (SEMP) and
New York Stock Exchange, Inc. Medallion Signature Program (MSP). Signature
guarantees that are not part of these programs will not be accepted.
If you are a direct investor, you may redeem your Shares without charge by
telephone if you have completed and returned an account application containing
the appropriate telephone election. To add a telephone option to an existing
account that previously did not provide for this option, you must file a
Telephone Authorization Form with PFPC. This form is available from PFPC. Once
this election has been made, you may simply contact PFPC by telephone to request
the redemption by calling (800) 533-7719. Neither the Company, the Distributor,
the Portfolios, the Administrator nor any other Company agent will be liable for
any loss, liability, cost or expense for following the procedures below or for
following instructions communicated by telephone that they reasonably believe to
be genuine.
The Company's telephone transaction procedures include the following
measures: (1) requiring the appropriate telephone transaction privilege forms;
(2) requiring the caller to provide the names of the account owners, the account
social security number and name of the portfolio, all of which must match the
Company's records; (3) requiring the Company's service representative to
complete a telephone transaction form, listing all of the above caller
identification
25
<PAGE>
information; (4) requiring that redemption proceeds be sent only by check to the
account owners of record at the address of record, or by wire only to the owners
of record at the bank account of record; (5) sending a written confirmation for
each telephone transaction to the owners of record at the address of record
within five (5) business days of the call; and (6) maintaining tapes of
telephone transactions for six months, if the Company elects to record
shareholder telephone transactions. For accounts held of record by
broker-dealers (other than the Distributor), financial institutions, securities
dealers, financial planners or other industry professionals, additional
documentation or information regarding the scope of authority is required.
Finally, for telephone transactions in accounts held jointly, additional
information regarding other account holders is required. Telephone transactions
will not be permitted in connection with IRA or other retirement plan accounts
or by attorney-in-fact under power of attorney.
Proceeds of a telephone redemption request will be mailed by check to your
registered address unless you have designated in your Application or Telephone
Authorization Form that such proceeds are to be sent by wire transfer to a
specified checking or savings account. If proceeds are to be sent by wire
transfer, a telephone redemption request received prior to the close of regular
trading on the NYSE will result in redemption proceeds being wired to your bank
account on the next day that a wire transfer can be effected. The minimum
redemption for proceeds sent by wire transfer is $2,500. There is no maximum for
proceeds sent by wire transfer. The Company may modify this redemption service
at any time or charge a service fee upon prior notice to shareholders, although
no fee is currently contemplated.
REDEMPTION BY CHECK. If you are a direct investor or you do not have check
writing privileges for your Account, the Company will provide to you forms of
drafts ("checks") payable through PNC Bank. These checks may be made payable to
the order of anyone. The minimum amount of a check is $100; however, your broker
may establish a higher minimum. If you wish to use this check writing redemption
procedure, you should complete specimen signature cards (available from PFPC),
and then forward such signature cards to PFPC. PFPC will then arrange for the
checks to be honored by PNC Bank. If you own Shares through an Account, you
should contact your broker for signature cards. Investors with joint accounts
may elect to have checks honored with a single signature. Check redemptions will
be subject to PNC Bank's rules governing checks. An investor will be able to
stop payment on a check redemption. The Company or PNC Bank may terminate this
redemption service at any time, and neither shall incur any liability for
honoring checks, for effecting redemptions to pay checks, or for returning
checks which have not been accepted.
When a check is presented to PNC Bank for clearance, PNC Bank, as your
agent, will cause the Company to redeem a sufficient number of your full and
fractional Shares to cover the amount of the check. This procedure enables you
to continue to receive dividends on your Shares representing the amount being
redeemed by check until such time as the check is presented to PNC Bank.
Pursuant to rules under the 1940 Act, checks may not be presented for cash
payment at the offices of PNC Bank. This limitation does not affect checks used
for the payment of bills or cash at other banks.
ADDITIONAL REDEMPTION INFORMATION. The Company ordinarily will make payment
for all Shares redeemed within seven days after receipt by PFPC of a redemption
request in proper form. Although the Company will redeem Shares purchased by
check before the check clears, payment of the redemption proceeds may be delayed
for a period of up to fifteen days after their purchase, pending a determination
that the check has cleared. This procedure does not apply to Shares purchased by
wire payment. You should consider purchasing Shares using a certified or bank
check or money order if you anticipate an immediate need for redemption
proceeds.
The Company does not impose a charge when Shares are redeemed. The Company
reserves the right to redeem any account in a Bedford Class involuntarily, on
thirty days' notice, if such account falls below $500 and during such 30-day
notice period the amount invested in such account is not increased to at least
$500. Payment for Shares redeemed may be postponed or the right of redemption
suspended as provided by the rules of the SEC.
If the Board of Directors determines that it would be detrimental to the
best interest of the remaining shareholders of the funds to make payment wholly
or partly in cash, redemption proceeds may be paid in whole or in part by an
in-kind distribution of readily marketable securities held by a fund instead of
cash in conformity with applicable rules
26
<PAGE>
of the SEC. Investors generally will incur brokerage charges on the sale of
portfolio securities so received in payment of redemptions. The funds have
elected, however, to be governed by Rule 18f-1 under the 1940 Act, so that a
fund is obligated to redeem its Shares solely in cash up to the lesser of
$250,000 or 1% of its net asset value during any 90-day period for any one
shareholder of a fund.
DIVIDENDS AND DISTRIBUTIONS
The Company will distribute substantially all of the net investment income
and net realized capital gains, if any, of each fund to each fund's
shareholders. All distributions are reinvested in the form of additional full
and fractional Shares of the relevant Bedford Class unless a shareholder elects
otherwise. The net investment income (not including any net short-term capital
gains) earned by each fund will be declared as a dividend on a daily basis and
paid monthly. Dividends are payable to shareholders of record immediately prior
to the determination of net asset value made as of the close of trading of the
NYSE. Net short-term capital gains, if any, will be distributed at least
annually.
TAXES
Distributions from the Money Market Portfolio and the Government
Obligations Money Market Portfolio will generally be taxable to shareholders. It
is expected that all, or substantially all, of these distributions will consist
of ordinary income. You will be subject to income tax on these distributions
regardless of whether they are paid in cash or reinvested in additional shares.
The one major exception to these tax principles is that distributions on shares
held in an IRA (or other tax-qualified plan) will not be currently taxable.
Distributions from the Municipal Money Market Portfolio will generally
constitute tax-exempt income for shareholders for federal income tax purposes.
It is possible, depending upon the Portfolios' investments, that a portion of
the Portfolio's distributions could be taxable to shareholders as ordinary
income or capital gains, but it is not expected that this will be the case.
Interest on indebtedness incurred by a shareholder to purchase or carry
shares of the Municipal Money Market Portfolio generally will not be deductible
for federal income tax purposes.
You should note that a portion of the exempt-interest dividends paid by the
Municipal Money Market Portfolio may constitute an item of tax preference for
purposes of determining federal alternative minimum tax liability.
Exempt-interest dividends will also be considered along with other adjusted
gross income in determining whether any Social Security or railroad retirement
payments received by you are subject to federal income taxes.
Although distributions from the Municipal Money Market Portfolio are exempt
for federal income tax purposes, they will generally constitute taxable income
for state and local income tax purposes except that, subject to limitations that
vary depending on the state, distributions from interest paid by a state or
municipal entity may be exempt from tax in that state.
The foregoing is only a summary of certain tax considerations under the
current law, which may be subject to change in the future. Shareholders who are
nonresident aliens, foreign trusts or estates, or foreign corporations or
partnerships may be subject to different United States Federal income tax
treatment. You should consult your tax adviser for further information regarding
federal, state, local and/or foreign tax consequences relevant to your specific
situation.
27
<PAGE>
DISTRIBUTION ARRANGEMENTS
- --------------------------------------------------------------------------------
Bedford Shares of the funds are sold without a sales load on a continuous
basis by Provident Distributors, Inc., whose principal business address is at
Four Falls Corporate Center, West Conshohocken, PA 19428.
The Board of Directors of the Company approved and adopted the Distribution
Agreement and separate Plans of Distribution for each of the Classes
(collectively, the "Plans") pursuant to Rule 12b-1 under the 1940 Act. Under
each of the Plans, the Distributor is entitled to receive from the relevant
Bedford Class a distribution fee, which is accrued daily and paid monthly, of up
to .65% on an annualized basis of the average daily net assets of the relevant
Bedford Class. The actual amount of such compensation is agreed upon from time
to time by the Company's Board of Directors and the Distributor. Under the
Distribution Agreement, the Distributor has agreed to accept compensation for
its services thereunder and under the Plans in the amount of .60% of the average
daily net assets of the relevant Class on an annualized basis in any year. The
Distributor may, in its discretion, voluntarily waive from time to time all or
any portion of its distribution fee.
Under the Distribution Agreement and the relevant Plan, the Distributor may
reallocate an amount up to the full fee that it receives to financial
institutions, including broker/dealers, based upon the aggregate investment
amounts maintained by and services provided to shareholders of any relevant
Class serviced by such financial institutions. the Distributor may also
reimburse broker/dealers for other expenses incurred in the promotion of the
sale of Bedford Shares. The Distributor and/or broker/dealers pay for the cost
of printing (excluding typesetting) and mailing to prospective investors
prospectuses and other materials relating to the Bedford Classes as well as for
related direct mail, advertising and promotional expenses.
Each of the Plans obligates the Company, during the period it is in effect,
to accrue and pay to the Distributor on behalf of each Bedford Class the fee
agreed to under the Distribution Agreement. Payments under the Plans are not
based on expenses actually incurred by the Distributor, and the payments may
exceed distribution expenses actually incurred. Because these fees are paid out
of the funds' assets on an on-going basis, over time these fees will increase
the cost of your investment and may cost you more than paying other types of
sales charges.
28
<PAGE>
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<PAGE>
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<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS OR IN THE FUND'S STATEMENT OF
ADDITIONAL INFORMATION INCORPORATED HEREIN BY REFERENCE, IN CONNECTION WITH THE
OFFERING MADE BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND OR
ITS DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE FUND OR
BY THE DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY
BE MADE.
INVESTMENT ADVISER
BlackRock Institutional Management Corporation
Wilmington, Delaware
DISTRIBUTOR
Provident Distributors, Inc.
West Conshohocken, Pennsylvania
CUSTODIAN
PFPC Trust Company
Lester, Pennsylvania
ADMINISTRATOR AND TRANSFER AGENT
PFPC Inc.
Wilmington, Delaware
COUNSEL
Drinker Biddle & Reath LLP
Philadelphia, Pennsylvania
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
MORGAN
KEEGAN
Morgan Keegan & Company, Inc.
Members New York Stock Exchange
PROSPECTUS
THE BEDFORD FAMILY
MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
MUNICIPAL MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
GOVERNMENT OBLIGATIONS
MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
DECEMBER 1, 1999
<PAGE>
FOR MORE INFORMATION:
This prospectus contains important information you should know before you
invest. Read it carefully and keep it for future reference. More information
about the Bedford Family is available free, upon request, including:
ANNUAL/SEMI-ANNUAL REPORT
These reports contain additional information about each of the funds'
investments, describe the funds' performance, list portfolio holdings, and
discuss recent market conditions and economic trends. The annual report includes
fund strategies for the last fiscal year.
STATEMENT OF ADDITIONAL INFORMATION (SAI)
A Statement of Additional Information, dated December 1, 1999 (SAI), has
been filed with the Securities and Exchange Commission (SEC). The SAI, which
includes additional information about the Bedford Family, may be obtained free
of charge, along with the Bedford Family annual and semi-annual reports, by
calling (800) 533-7719. The SAI, as supplemented from time to time, is
incorporated by reference into this Prospectus (and is legally considered a part
of this Prospectus).
SHAREHOLDER ACCOUNT SERVICE REPRESENTATIVES
Representatives are available to discuss account balance information,
mutual fund prospectuses, literature, programs and services available. Hours: 8
a.m. to 5 p.m. (Eastern time) Monday-Friday. Call: (800) 533-7719.
PURCHASES AND REDEMPTIONS
Call your broker or (800) 533-7719.
WRITTEN CORRESPONDENCE
Post Office Address: Bedford Family
c/o PFPC, Inc.
PO Box 8950
Wilmington, DE 19899-8950
Street Address: Bedford Family
C/O PFPC, INC.
400 Bellevue Parkway
Wilmington, DE 19809
SECURITIES AND EXCHANGE COMMISSION (SEC)
You may also view information about The RBB Fund, Inc. and the Bedford
Family, including the SAI, by visiting the SEC website (http://www.sec.gov) or
the SEC's Public Reference Room in Washington, D.C. Information about the
operation of the public reference room can be obtained by calling the SEC
directly at 1-202-942-8090. Copies of this information can be obtained, for a
duplicating fee, by writing to the Public Reference Section of the SEC,
Washington, D.C. 20549-0102, or by electronic request to [email protected].
INVESTMENT COMPANY ACT FILE NO. 811-05518
<PAGE>
BEDFORD
MUNICIPAL MONEY MARKET PORTFOLIO
OF
THE RBB FUND, INC.
This prospectus gives vital information about this money market mutual
fund, advised by BlackRock Institutional Management Corporation ("BIMC" or the
"Adviser"), including information on investment policies, risks and fees. For
your own benefit and protection, please read it before you invest and keep it on
hand for future reference.
Please note that this fund:
(BOX) is not a bank deposit;
(BOX) is not federally insured;
(BOX) is not an obligation of, or guaranteed or endorsed by PNC Bank,
National Association, PFPC Trust Company or any other bank;
(BOX) is not an obligation of, or guaranteed or endorsed or otherwise
supported by the U.S. Government, the Federal Deposit Insurance
Corporation, the Federal Reserve Board or any other governmental
agency;
(BOX) is not guaranteed to achieve its goals.
(BOX) may not be able to maintain a stable $1 share price and you may lose
money.
- --------------------------------------------------------------------------------
THE SECURITIES DESCRIBED IN THIS PROSPECTUS HAVE BEEN REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION (SEC). THE SEC, HOWEVER, HAS NOT JUDGED THESE
SECURITIES FOR THEIR INVESTMENT MERIT AND HAS NOT DETERMINED THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANYONE WHO TELLS YOU OTHERWISE IS COMMITTING A
CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
PROSPECTUS December 1, 1999
<PAGE>
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<PAGE>
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
- ------------------------- INTRODUCTION TO THE RISK/RETURN SUMMARY 5
A LOOK AT THE GOALS,
STRATEGIES, RISKS,
EXPENSES AND FINANCIAL
HISTORY OF THE PORTFOLIO. PORTFOLIO DESCRIPTION .................. 6
DETAILS ABOUT THE SERVICE PORTFOLIO MANAGEMENT
PROVIDERS.
Investment Adviser ................ 11
Service Provider Chart ............ 12
POLICIES AND INSTRUCTIONS SHAREHOLDER INFORMATION
FOR OPENING, MAINTAINING
AND CLOSING AN ACCOUNT IN Pricing Shares .................... 13
THE PORTFOLIO.
Purchase of Shares ................ 13
Redemption of Shares .............. 15
Dividends and Distributions ....... 17
Taxes ............................. 17
DETAILS ON DISTRIBUTION DISTRIBUTION ARRANGEMENTS .............. 18
PLANS.
- -------------------------
FOR MORE INFORMATION ................... Back Cover
3
<PAGE>
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<PAGE>
INTRODUCTION TO THE RISK/RETURN SUMMARY
- --------------------------------------------------------------------------------
This Prospectus has been written to provide you with the information you
need to make an informed decision about whether to invest in the Bedford Class
of The Municipal Money Market Portfolio of The RBB Fund, Inc. (the "Company").
This class of common stock (a "Bedford Class") of the Company offered by
this Prospectus represents an interest in the Bedford Class of the Municipal
Money Market Portfolio. This Prospectus and the Statement of Additional
Information incorporated herein relate solely to the Bedford Classes of the
Company.
This Prospectus has been organized so that there is a short section with
important facts about the Portfolio's goals, strategies, risks, expenses and
financial history. Once you read the short section, read the section about
Purchase and Redemption of Shares of the Bedford Class ("Bedford Shares" or
"Shares").
5
<PAGE>
MUNICIPAL MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
IMPORTANT DEFINITIONS
DOLLAR WEIGHTED AVERAGE MATURITY: The average amount of time until the
organizations that issued the debt securities in the fund's portfolio must pay
off the principal amount of the debt. "Dollar weighted" means the larger the
dollar value of a debt security in the fund, the more weight it gets in
calculating this average.
GENERAL OBLIGATION BONDS: Bonds which are secured by the issuer's pledge of its
full faith, credit and taxing power for the payment of principal and interest.
LIQUIDITY: Liquidity is the ability to easily convert investments into cash
without losing a significant amount of money in the process.
MUNICIPAL LEASE OBLIGATIONS: These provide participation in municipal lease
agreements and installment purchase contracts, but are not part of the general
obligations of the municipality.
MUNICIPAL SECURITY: A short-term obligation issued by or on behalf of states and
possessions of the United States, their political subdivisions and their
agencies and authorities.
NET ASSET VALUE (NAV): The value of everything the fund owns, minus everything
it owes, divided by the number of shares held by investors.
REVENUE BONDS: Bonds which are secured only by the revenues from a particular
facility or class of facilities, such as a water or sewer system, or from the
proceeds of a special excise tax or other revenue source.
TAX-EXEMPT COMMERCIAL PAPER: Short-term Municipal Securities with maturities of
1 to 270 days.
VARIABLE OR FLOATING RATE SECURITIES: Securities whose interest rates adjust
automatically after a certain period of time and/or whenever a predetermined
standard interest rate changes.
- --------------------------------------------------------------------------------
INVESTMENT GOAL
The fund seeks to generate current income exempt from federal income taxes,
to provide you with liquidity and to protect your investment.
PRIMARY INVESTMENT STRATEGIES
To achieve this goal, we invest in a diversified portfolio of Municipal
Securities.
Specifically, we may invest in:
1) Fixed and variable rate notes and similar debt instruments rated
or issued by issuers who have ratings at the time of purchase of
MIG-2, VMIG-2 or Prime-2 or higher by Moody's, SP-2 or A-2 or
higher by Standard & Poor's, D-2 or higher by Duff & Phelps, or
F-2 or higher by Fitch (or guaranteed or otherwise supported by
entities with such ratings).
2) Tax-exempt commercial paper and similar debt instruments rated or
issued by issuers who have ratings at the time of purchase of
Prime-2 or higher by Moody's, A-2 or higher by Standard & Poor's,
D-2 or higher by Duff & Phelps, or F-2 or higher by Fitch (or
guaranteed or otherwise supported by entities with such ratings).
3) Municipal bonds rated or issued by issuers who have ratings at
the time of purchase of Aa or higher by Moody's or AA or higher
by Standard & Poor's, Duff & Phelps or Fitch (or guaranteed or
otherwise supported by entities with such ratings).
4) Unrated notes, paper and other instruments that are determined by
us to be of comparable quality to the instruments described
above.
5) Municipal bonds and notes whose principal and interest payments
are guaranteed by the U.S. Government or one of its agencies or
authorities or which otherwise depend on the credit of the United
States.
The fund seeks to maintain a net asset value of $1.00 per share.
We normally invest at least 80% of its net assets in Municipal Securities
and other instruments whose interest is exempt from federal income tax or
subject to the Federal Alternative Minimum Tax.
The fund may hold uninvested cash reserves during temporary defensive
periods or, if in our opinion suitable Municipal Securities are not available.
The fund may hold all of its assets in uninvested cash reserves during temporary
defensive periods. Uninvested cash will not earn income.
We intend to have no more than 25% of its total assets in Municipal
Securities of issuers located in the same state.
6
<PAGE>
QUALITY
Under guidelines established by the Company's Board of Directors, we will
only purchase securities if such securities or their issuers have (or such
securities are guaranteed or otherwise supported by entities which have)
short-term debt ratings at the time of purchase in the two highest rating
categories from at least two national rating agencies, or one such rating if the
security is rated by only one agency. Securities that are unrated must be
determined to be of comparable quality.
MATURITY
The dollar-weighted average maturity of all the investments of the fund
will be 90 days or less. Only those securities which have remaining maturities
of 397 days or less (except for certain variable and floating rate instruments)
will be purchased.
KEY RISKS
The value of money market investments tends to fall when current interest
rates rise. Money market investments are generally less sensitive to interest
rate changes than longer-term securities.
The fund's securities may not earn as high a level of income as longer term
or lower quality securities, which generally have greater risk and more
fluctuation in value.
Municipal Securities include revenue bonds, general obligation bonds and
municipal lease obligations. Revenue bonds include private activity bonds, which
are not payable from the general revenues of the issuer. Consequently, the
credit quality of private activity bonds is usually directly related to the
credit standing of the corporate user of the facility involved. To the extent
that the fund's assets are invested in private activity bonds, the fund will be
subject to the particular risks presented by the laws and economic conditions
relating to such projects and bonds to a greater extent than if its assets were
not so invested. Moral obligation bonds are normally issued by special purpose
public authorities. If the issuer of moral obligation bonds is unable to pay its
debts from current revenues, it may draw on a reserve fund the restoration of
which is a moral but not a legal obligation of the state or municipality which
created the issuer. Risk exists that a municipality will not honor moral
obligation bonds. Municipal lease obligations are not guaranteed by the issuer
and are generally less liquid than other securities.
There may be less information available on the financial condition of
issuers of Municipal Securities than for public corporations. The market for
municipal bonds may be less liquid than for taxable bonds. This means that it
may be harder to buy and sell Municipal Securities, especially on short notice.
The fund may invest in bonds whose interest may be subject to the Federal
Alternative Minimum Tax. Interest received on these bonds by a taxpayer subject
to the Federal Alternative Minimum Tax is taxable.
We may invest 25% or more of assets in Municipal Securities whose interest
is paid solely from revenues of similar projects. For example, the fund may
invest more than 25% of its assets in Municipal Securities related to water or
sewer systems. This type of concentration exposes the fund to the legal and
economic risks relating to those projects.
We will rely on legal opinions of counsel to issuers of Municipal
Securities as to the tax-free status of investments and will not do our own
analysis regarding tax-free status.
The fund may purchase variable and floating rate instruments. Like all debt
instruments, their value is dependent on the credit paying ability of the
issuer. If the issuer were unable to make interest payments or default, the
value of the securities would decline. The absence of an active market for these
securities could make it difficult to dispose of them if the issuer defaults.
7
<PAGE>
The fund, like any business, could be affected if the computer systems on
which it relies do not properly process information beginning on January 1,
2000. While Year 2000 issues could have a negative effect on the fund, BIMC is
currently working to avoid such problems. BIMC, the fund's investment adviser,
is also working with other systems providers and vendors servicing the
Portfolios to determine their systems' ability to handle Year 2000 problems.
There is no guarantee, however, that systems will work properly on or after
January 1, 2000. Year 2000 problems may also hurt issuers whose securities the
fund holds or securities markets generally.
ALTHOUGH WE SEEK TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER
SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND. WHEN YOU INVEST IN
THIS FUND YOU ARE NOT MAKING A BANK DEPOSIT. YOUR INVESTMENT IS NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR BY ANY BANK OR
GOVERNMENTAL AGENCY.
RISK/RETURN INFORMATION
The chart and table below give you a picture of the variability of the
fund's long-term performance for Bedford Shares. The information shows you how
the fund's performance has varied year by year and provides some indication of
the risks of investing in the fund. The chart and the table both assume
reinvestment of dividends and distributions. As with all such investments, past
performance is not an indication of future results. Performance reflects fee
waivers in effect. If fee waivers were not in place, the fund's performance
would be reduced.
AS OF 12/31
ANNUAL TOTAL RETURNS
[GRAPHICOMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
5.77% 5.32% 3.85% 2.40% 1.86% 2.25% 3.14% 2.89% 2.95% 2.77%
Year-to-date total return for the nine months ended September 30, 1999: 2.41%
Best Quarter: 6.24% (quarter ended 6/30/89)
Worst Quarter: 1.74% (quarter ended 3/31/94)
AS OF 12/31/98
AVERAGE ANNUAL TOTAL RETURNS
1 YEAR 5 YEARS 10 YEARS
-------- -------- --------
MUNICIPAL MONEY MARKET 2.77% 2.80% 3.31%
8
<PAGE>
- --------------------------------------------------------------------------------
IMPORTANT DEFINITIONS
MANAGEMENT FEES: Fees paid to the investment adviser for portfolio management
services.
OTHER EXPENSES: Includes administration, transfer agency, custody, professional
fees and registration fees.
DISTRIBUTION AND SERVICE FEES: Fees that are paid to the Distributor for
shareholder account service and maintenance.
- --------------------------------------------------------------------------------
CURRENT YIELD: The seven-day yield for the period ended 12/31/98 for the
fund was 2.81%. Past performance is not an indication of future results. Yields
will vary. You may call (800) 533-7719 to obtain the current seven-day yield of
the fund.
EXPENSES AND FEES
As a shareholder you pay certain fees and expenses. Annual fund operating
expenses are paid out of fund assets and are reflected in the fund's price.
The table below describes the fees and expenses that you may pay if you buy
and hold Bedford Shares of the fund. The table is based on expenses for the most
recent fiscal year.
ANNUAL FUND OPERATING EXPENSES*
(Expenses that are deducted from fund assets)
Management Fees 1 0.35%
Distribution and service (12b-1) fees 0.59%
Other expenses 0.21%
-----
Total annual fund operating expenses 2 1.15%
=====
* The table does not reflect charges or credits which investors might
incur if they invest through a financial institution.
1. BIMC has voluntarily undertaken that a portion of its management fee
will not be imposed on the fund during the current fiscal year ending
August 31, 2000. As a result of the fee waiver, current management fees
of the fund are 0.09% of average daily net assets. This waiver is
expected to remain in effect for the current fiscal year. However, it is
voluntary and can be modified or terminated at any time without the
fund's consent.
2. As a result of the fee waiver set forth in note 1, the total annual fund
operating expenses which are estimated to be incurred during the current
fiscal year are 0.89%. Although this fee waiver is expected to remain in
effect for the current fiscal year, it is voluntary and may be
terminated at any time at the option of BIMC.
EXAMPLE:
The example is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated and then redeem
all of your shares at the end of each period. The example also assumes that your
investment has a 5% return each year and that the fund's operating expenses
remain the same. Although your actual cost may be higher or lower, based on
these assumptions your costs would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
BEDFORD SHARES $117 $365 $633 $1,398
9
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The table below sets forth certain financial information for the periods
indicated including per share information results for a single fund share. The
term "Total Return" indicates how much your investment would have increased or
decreased during this period of time and assumes that you have reinvested all
dividends and distributions. This information has been derived from the fund's
financial statements audited by PricewaterhouseCoopers LLP, the Company's
independent accountants. This information should be read in conjunction with the
fund's financial statements which, together with the report of independent
accountants are included in the fund's annual report, which is available upon
request (see back cover for ordering instructions).
FINANCIAL HIGHLIGHTS (B)
(FOR A BEDFORD SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
MUNICIPAL MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
FOR THE FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
AUGUST 31, 1999 AUGUST 31, 1998 AUGUST 31, 1997 AUGUST 31, 1996 AUGUST 31, 1995
--------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year .............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- --------
Income from investment operations
Net investment income .......................... 0.0243 0.0286 0.0285 0.0288 0.0297
-------- -------- -------- -------- --------
Total from investment operations ............. 0.0243 0.0286 0.0285 0.0288 0.0297
-------- -------- -------- -------- --------
Less distributions
Dividends (from net investment income) ......... (0.0243) (0.0286) (0.0285) (0.0288) (0.0297)
-------- -------- -------- -------- --------
Total distributions .......................... (0.0243) (0.0286) (0.0285) (0.0288) (0.0297)
-------- -------- -------- -------- --------
Net asset value at end of year .................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total return ...................................... 2.46% 2.97% 2.88% 2.92% 3.01%
Ratios/Supplemental Data
Net assets at end of period (in thousands) ..... $150,278 $147,633 $213,034 $201,940 $198,425
Ratios of expenses to average net assets
After advisory/administration fee waivers .... .89%(a) .89%(a) .85%(a) .84%(a) .82%(a)
Ratios of net investment income to average
net assets
After advisory/administration fee waivers .... 2.43% 2.86% 2.85% 2.88% 2.97%
<FN>
(a) Without the waiver of advisory and administration fees and without the
reimbursement of certain operating expenses, the ratios of expenses to
average net assets for the Municipal Money Market Portfolio would have been
1.15%, 1.15%, 1.14%, 1.12% and 1.14% for the years ended August 31, 1999,
1998, 1997, 1996 and 1995, respectively.
(b) Financial Highlights relate solely to the Bedford Class of shares within
the portfolio.
</FN>
</TABLE>
10
<PAGE>
PORTFOLIO MANAGEMENT
- --------------------------------------------------------------------------------
INVESTMENT ADVISER
BIMC, a majority-owned indirect subsidiary of PNC Bank, N.A. serves as
investment adviser and is responsible for all purchases and sales of the fund's
portfolio securities. BIMC and its affiliates are one of the largest U.S. bank
managers of mutual funds, with assets currently under management in excess of
$52.9 billion. BIMC (formerly known as PNC Institutional Management Corporation
or PIMC) was organized in 1977 by PNC Bank to perform advisory services for
investment companies and has its principal offices at Bellevue Park Corporate
Center, 400 Bellevue Parkway, Wilmington, DE 19809.
For the fiscal year ended August 31, 1999, BIMC received an advisory fee of
.09% of the fund's average net assets.
The following chart shows the funds' other service providers and includes
their addresses and principal activities.
11
<PAGE>
------------
SHAREHOLDERS
------------
Distribution and
Shareholder Services
------------------------------------ -----------------------------------------
PRINCIPAL DISTRIBUTOR TRANSFER AGENT
PROVIDENT DISTRIBUTORS, INC. PFPC INC.
FOUR FALLS CORPORATE CENTER, 6TH FL. 400 BELLEVUE PARKWAY
WEST CONSHOHOCKEN, PA 19428 WILMINGTON, DE 19809
Distributes shares of the fund. Handles shareholder services,
including record-keeping and statements,
distribution of dividends and processing
of buy and sell requests.
------------------------------------ -----------------------------------------
Asset
Management
------------------------------------ -----------------------------------------
INVESTMENT ADVISER CUSTODIAN
BLACKROCK INSTITUTIONAL PFPC TRUST COMPANY
MANAGEMENT CORPORATION 200 STEVENS DRIVE
400 BELLEVUE PARKWAY LESTER, PA 19113
WILMINGTON, DE 19809
Holds the fund's assets, settles
Manages the fund's business all portfolio trades and collects
and investment activities. most of the valuation data
required for calculating the
fund's net asset value ("NAV").
------------------------------------ -----------------------------------------
Fund
Operations
------------------------------------
ADMINISTRATOR AND FUND
ACCOUNTING AGENT
PFPC INC.
400 BELLEVUE PARKWAY
WILMINGTON, DE 19809
Provides facilities, equipment
and personnel to carry out
administrative services related
to the fund and calculates the
fund's NAV, dividends
and distributions.
------------------------------------
---------------------------------
BOARD OF DIRECTORS
Supervises the fund's activities.
---------------------------------
12
<PAGE>
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
PRICING SHARES
The price of your shares is also referred to as the net asset value (NAV).
The NAV is determined twice daily at 12:00 noon and at 4:00 p.m., Eastern
time, each day on which both the New York Stock Exchange and the Federal Reserve
Bank of Philadelphia are open. It is calculated by dividing a fund's total
assets, less its liabilities, by the number of shares outstanding.
Each fund values its securities using amortized cost. This method values a
fund holding initially at its cost and then assumes a constant amortization to
maturity of any discount or premium. The amortized cost method ignores any
impact of changing interest rates.
PURCHASE OF SHARES
GENERAL. You may purchase Bedford Shares through an account maintained by
your brokerage firm (the "Account") and you may also purchase Shares directly by
mail or wire. The minimum initial investment is $1,000, and the minimum
subsequent investment is $100. The Company in its sole discretion may accept or
reject any order for purchases of Bedford Shares.
Purchases will be effected at the net asset value next determined after
PFPC, the Company's transfer agent, has received a purchase order in good order
and the Company's custodian has Federal Funds immediately available to it. In
those cases where payment is made by check, Federal Funds will generally become
available two Business Days after the check is received. A "Business Day" is any
day that both the New York Stock Exchange (the "NYSE") and the Federal Reserve
Bank of Philadelphia (the "FRB") are open. On any Business Day, orders which are
accompanied by Federal Funds and received by the Company by 12:00 noon Eastern
Time, and orders as to which payment has been converted into Federal Funds by
12:00 noon Eastern Time, will be executed as of 12:00 noon that Business Day.
Orders which are accompanied by Federal Funds and received by PFPC after 12:00
noon Eastern Time but prior to the close of regular trading on the NYSE
(generally 4:00 p.m. Eastern Time), and orders as to which payment has been
converted into Federal Funds after 12:00 noon Eastern Time but prior to the
close of regular trading on the NYSE on any Business Day, will be executed as of
the close of regular trading on the NYSE on that Business Day, but will not be
entitled to receive dividends declared on such Business Day. Orders which are
accompanied by Federal Funds and received by the Company as of the close of
regular trading on the NYSE or later, and orders as to which payment has been
converted to Federal Funds as of the close of regular trading on the NYSE or
later on a Business Day will be processed as of 12:00 noon Eastern Time on the
following Business Day.
PURCHASES THROUGH AN ACCOUNT. Purchases of Shares may be effected through
an Account with your broker through procedures and requirements established by
your broker. In such event, beneficial ownership of Bedford Shares will be
recorded by your broker and will be reflected in the Account statements provided
to you by your broker. Your broker may impose minimum investment Account
requirements. Even if your broker does not impose a sales charge for purchases
of Bedford Shares, depending on the terms of your Account with your broker, the
broker may charge to your Account fees for automatic investment and other
services provided to your Account. Information concerning Account requirements,
services and charges should be obtained from your broker, and you should read
this Prospectus in conjunction with any information received from your broker.
Shares are held in the street name account of your broker and if you desire to
transfer such shares to the street name account of another broker, you should
contact your current broker.
A broker with whom you maintain an Account may offer you the ability to
purchase Bedford Shares under an automatic purchase program (a "Purchase
Program") established by a participating broker. If you participate in a
Purchase Program, then you will have your "free-credit" cash balances in your
Account automatically invested in Shares of the
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<PAGE>
Bedford Class designated by you as the "Primary Bedford Class" for your Purchase
Program. The frequency of investments and the minimum investment requirement
will be established by the broker and the Company. In addition, the broker may
require a minimum amount of cash and/or securities to be deposited in your
Account to participate in its Purchase Program. The description of the
particular broker's Purchase Program should be read for details, and any
inquiries concerning your Account under a Purchase Program should be directed to
your broker. As a participant in a Purchase Program, you may change the
designation of the Primary Bedford Class at any time by so instructing your
broker.
If your broker makes special arrangements under which orders for Bedford
Shares are received by PFPC prior to 12:00 noon Eastern Time, and your broker
guarantees that payment for such Shares will be made in available Federal Funds
to the Company's custodian prior to the close of regular trading on the NYSE on
the same day, such purchase orders will be effective and Shares will be
purchased at the offering price in effect as of 12:00 noon Eastern Time on the
date the purchase order is received by PFPC. Otherwise, if the broker has not
made such an arrangement, pricing of shares will occur as described above under
"General."
DIRECT PURCHASES. You may also make direct investments at any time in any
Bedford Class you select through any broker that has entered into a dealer
agreement with the Distributor (a "Dealer"). You may make an initial investment
in any of the Bedford Classes by mail by fully completing and signing an
application obtained from a Dealer (the "Application"), specifying the Portfolio
in which you wish to invest, and mailing it, together with a check payable to
"The Bedford Family" to the Bedford Family, c/o PFPC, P.O. Box 8950, Wilmington,
Delaware 19899. The check must specify the name of the Portfolio for which
shares are being purchased. An Application will be returned to you unless it
contains the name of the Dealer from whom you obtained it. Subsequent purchases
may be made through a Dealer or by forwarding payment to the Company's transfer
agent at the foregoing address.
Provided that your investment is at least $2,500, you may also purchase
Shares in any of the Bedford Classes by having your bank or Dealer wire Federal
Funds to the Company's Custodian, PFPC Trust Company. Your bank or Dealer may
impose a charge for this service. The Company does not currently charge for
effecting wire transfers but reserves the right to do so in the future. In order
to ensure prompt receipt of your Federal Funds wire, for an initial investment,
it is important that you follow these steps:
A. Telephone the Company's transfer agent, PFPC, toll-free (800) 533-7719
and provide your name, address, telephone number, Social Security or
Tax Identification Number, the Bedford Class selected, the amount
being wired, and by which bank or Dealer. PFPC will then provide you
with an account number. (If you have an existing account, you should
also notify PFPC prior to wiring funds.)
B. Instruct your bank or Dealer to wire the specified amount, together
with your assigned account number, to PFPC's account with PNC Bank.
PNC Bank, N.A., Philadelphia, PA ABA-0310-0005-3.
FROM: (your name)
ACCOUNT NUMBER: (your account number with the Portfolio)
FOR PURCHASE OF: (name of the Portfolio)
AMOUNT: (amount to be invested)
C. Fully complete and sign the Application and mail it to the address
shown thereon. PFPC will not process initial purchases until it
receives a fully completed and signed Application.
For subsequent investments, you should follow steps A and B above.
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RETIREMENT PLANS. Bedford Shares may be purchased in conjunction with
individual retirement accounts ("IRAs") and rollover IRAs where PFPC Trust
Company acts as custodian. For further information as to applications and annual
fees, contact the Distributor or your broker. To determine whether the benefits
of an IRA are available and/or appropriate, you should consult with your tax
adviser.
REDEMPTION OF SHARES
GENERAL. Redemption orders are effected at the net asset value per share
next determined after receipt of the order in proper form by the Company's
transfer agent, PFPC. You may redeem all or some of your Shares in accordance
with one of the procedures described below.
REDEMPTION OF SHARES IN AN ACCOUNT. If you beneficially own Bedford Shares
through an Account, you may redeem Bedford Shares in your Account in accordance
with instructions and limitations pertaining to your Account by contacting your
broker. If such notice is received by PFPC by 12:00 noon Eastern Time on any
Business Day, the redemption will be effective as of 12:00 noon Eastern Time on
that day. Payment of the redemption proceeds will be made after 12:00 noon
Eastern Time on the day the redemption is effected, provided that the Company's
custodian is open for business. If the custodian is not open, payment will be
made on the next bank business day. If the redemption request is received
between 12:00 noon and the close of regular trading on the NYSE on a Business
Day, the redemption will be effective as of the close of regular trading on the
NYSE on such Business Day and payment will be made on the next bank business day
following receipt of the redemption request. If all of your Shares are redeemed,
all accrued but unpaid dividends on those Shares will be paid with the
redemption proceeds.
Your brokerage firm may also redeem each day a sufficient number of Shares
of the Primary Bedford Class to cover debit balances created by transactions in
your Account or instructions for cash disbursements. Shares will be redeemed on
the same day that a transaction occurs that results in such a debit balance or
charge.
Each brokerage firm reserves the right to waive or modify criteria for
participation in an Account or to terminate participation in an Account for any
reason.
REDEMPTION OF SHARES OWNED DIRECTLY. If you own Shares directly, you may
redeem any number of Shares by sending a written request to The Bedford Family
c/o PFPC, P.O. Box 8950, Wilmington, Delaware 19899. Redemption requests must be
signed by each shareholder in the same manner as the Shares are registered.
Redemption requests for joint accounts require the signature of each joint
owner. On redemption requests of $5,000 or more, each signature must be
guaranteed. A signature guarantee may be obtained from a domestic bank or trust
company, broker, dealer, clearing agency or savings association who are
participants in a medallion program recognized by the Securities Transfer
Association. The three recognized medallion programs are Securities Transfer
Agents Medallion Program (STAMP), Stock Exchanges Medallion Program (SEMP) and
New York Stock Exchange, Inc. Medallion Signature Program (MSP). Signature
guarantees that are not part of these programs will not be accepted.
If you are a direct investor, you may redeem your Shares without charge by
telephone if you have completed and returned an account application containing
the appropriate telephone election. To add a telephone option to an existing
account that previously did not provide for this option, you must file a
Telephone Authorization Form with PFPC. This form is available from PFPC. Once
this election has been made, you may simply contact PFPC by telephone to request
the redemption by calling (800) 533-7719. Neither the Company, the Distributor,
the Portfolios, the Administrator nor any other Company agent will be liable for
any loss, liability, cost or expense for following the procedures below or for
following instructions communicated by telephone that they reasonably believe to
be genuine.
The Company's telephone transaction procedures include the following
measures: (1) requiring the appropriate telephone transaction privilege forms;
(2) requiring the caller to provide the names of the account owners, the account
social security number and name of the portfolio, all of which must match the
Company's records; (3) requiring the Company's service representative to
complete a telephone transaction form, listing all of the above caller iden-
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<PAGE>
tification information; (4) requiring that redemption proceeds be sent only by
check to the account owners of record at the address of record, or by wire only
to the owners of record at the bank account of record; (5) sending a written
confirmation for each telephone transaction to the owners of record at the
address of record within five (5) business days of the call; and (6) maintaining
tapes of telephone transactions for six months, if the Company elects to record
shareholder telephone transactions. For accounts held of record by
broker-dealers (other than the Distributor), financial institutions, securities
dealers, financial planners or other industry professionals, additional
documentation or information regarding the scope of authority is required.
Finally, for telephone transactions in accounts held jointly, additional
information regarding other account holders is required. Telephone transactions
will not be permitted in connection with IRA or other retirement plan accounts
or by attorney-in-fact under power of attorney.
Proceeds of a telephone redemption request will be mailed by check to your
registered address unless you have designated in your Application or Telephone
Authorization Form that such proceeds are to be sent by wire transfer to a
specified checking or savings account. If proceeds are to be sent by wire
transfer, a telephone redemption request received prior to the close of regular
trading on the NYSE will result in redemption proceeds being wired to your bank
account on the next day that a wire transfer can be effected. The minimum
redemption for proceeds sent by wire transfer is $2,500. There is no maximum for
proceeds sent by wire transfer. The Company may modify this redemption service
at any time or charge a service fee upon prior notice to shareholders, although
no fee is currently contemplated.
REDEMPTION BY CHECK. If you are a direct investor or you do not have check
writing privileges for your Account, the Company will provide to you forms of
drafts ("checks") payable through PNC Bank. These checks may be made payable to
the order of anyone. The minimum amount of a check is $100; however, your broker
may establish a higher minimum. If you wish to use this check writing redemption
procedure, you should complete specimen signature cards (available from PFPC),
and then forward such signature cards to PFPC. PFPC will then arrange for the
checks to be honored by PNC Bank. If you own Shares through an Account, you
should contact your broker for signature cards. Investors with joint accounts
may elect to have checks honored with a single signature. Check redemptions will
be subject to PNC Bank's rules governing checks. An investor will be able to
stop payment on a check redemption. The Company or PNC Bank may terminate this
redemption service at any time, and neither shall incur any liability for
honoring checks, for effecting redemptions to pay checks, or for returning
checks which have not been accepted.
When a check is presented to PNC Bank for clearance, PNC Bank, as your
agent, will cause the Company to redeem a sufficient number of your full and
fractional Shares to cover the amount of the check. This procedure enables you
to continue to receive dividends on your Shares representing the amount being
redeemed by check until such time as the check is presented to PNC Bank.
Pursuant to rules under the 1940 Act, checks may not be presented for cash
payment at the offices of PNC Bank. This limitation does not affect checks used
for the payment of bills or cash at other banks.
ADDITIONAL REDEMPTION INFORMATION. The Company ordinarily will make payment
for all Shares redeemed within seven days after receipt by PFPC of a redemption
request in proper form. Although the Company will redeem Shares purchased by
check before the check clears, payment of the redemption proceeds may be delayed
for a period of up to fifteen days after their purchase, pending a determination
that the check has cleared. This procedure does not apply to Shares purchased by
wire payment. You should consider purchasing Shares using a certified or bank
check or money order if you anticipate an immediate need for redemption
proceeds.
The Company does not impose a charge when Shares are redeemed. The Company
reserves the right to redeem any account in a Bedford Class involuntarily, on
thirty days' notice, if such account falls below $500 and during such 30-day
notice period the amount invested in such account is not increased to at least
$500. Payment for Shares redeemed may be postponed or the right of redemption
suspended as provided by the rules of the SEC.
If the Board of Directors determines that it would be detrimental to the
best interests of the remaining shareholders of the funds to make payment wholly
or partly in cash, redemption proceeds may be paid in whole or in part by an
in-kind distribution of readily marketable securities held by a fund instead of
cash in conformity with applicable rules of the SEC. Investors generally will
incur brokerage charges on the sale of portfolio securities so received in
payment
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<PAGE>
of redemptions. The funds have elected, however, to be governed by Rule 18f-1
under the 1940 Act, so that a fund is obligated to redeem its Shares solely in
cash up to the lesser of $250,000 or 1% of its net asset value during any 90-day
period for any one shareholder of a fund.
DIVIDENDS AND DISTRIBUTIONS
The Company will distribute substantially all of the net investment income
and net realized capital gains, if any, of the fund to the fund's shareholders.
All distributions are reinvested in the form of additional full and fractional
Shares of the relevant Bedford Class unless a shareholder elects otherwise.
The net investment income (not including any net short-term capital gains)
earned by each fund will be declared as a dividend on a daily basis and paid
monthly. Dividends are payable to shareholders of record immediately prior to
the determination of net asset value made as of the close of trading of the
NYSE. Net short-term capital gains, if any, will be distributed at least
annually.
TAXES
Distributions from the Municipal Money Market Portfolio will generally
constitute tax-exempt income for shareholders for federal income tax purposes.
It is possible, depending upon the Portfolio's investments, that a portion of
the Portfolio's distributions could be taxable to shareholders as ordinary
income or capital gains, but it is not expected that this will be the case.
Interest on indebtedness incurred by a shareholder to purchase or carry
shares of the Municipal Money Market Portfolio generally will not be deductible
for federal income tax purposes.
You should note that a portion of the exempt-interest dividends paid by the
Municipal Money Market Portfolio may constitute an item of tax preference for
purposes of determining federal alternative minimum tax liability.
Exempt-interest dividends will also be considered along with other adjusted
gross income in determining whether any Social Security or railroad retirement
payments received by you are subject to federal income taxes.
Although distributions from the Municipal Money Market Portfolio are exempt
for federal income tax purposes, they will generally constitute taxable income
for state and local income tax purposes except that, subject to limitations that
vary depending on the state, distributions from interest paid by a state or
municipal entity may be exempt from tax in that state.
The foregoing is only a summary of certain tax considerations under the
current law, which may be subject to change in the future. Shareholders who are
nonresident aliens, foreign trusts or estates, or foreign corporations or
partnerships may be subject to different United States Federal income tax
treatment. You should consult your tax adviser for further information regarding
federal, state, local and/or foreign tax consequences relevant to your specific
situation.
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DISTRIBUTION ARRANGEMENTS
- --------------------------------------------------------------------------------
Bedford Shares of the fund are sold without a sales load on a continuous
basis by Provident Distributors, Inc., whose principal business address is at
Four Falls Corporate Center, West Conshohocken, PA 19428.
The Board of Directors of the Company approved and adopted the Distribution
Agreement and a Plan of Distribution for the Class (the "Plan") pursuant to Rule
12b-1 under the 1940 Act. Under the Plan, the Distributor is entitled to receive
from the Bedford Class a distribution fee, which is accrued daily and paid
monthly, of up to .65% on an annualized basis of the average daily net assets of
the Bedford Class. The actual amount of such compensation is agreed upon from
time to time by the Company's Board of Directors and the Distributor. Under the
Distribution Agreement, the Distributor has agreed to accept compensation for
its services thereunder and under the Plan in the amount of .60% of the average
daily net assets of the Class on an annualized basis in any year. The
Distributor may, in its discretion, voluntarily waive from time to time all or
any portion of its distribution fee.
Under the Distribution Agreement and the Plan, the Distributor may
reallocate an amount up to the full fee that it receives to financial
institutions, including broker/dealers, based upon the aggregate investment
amounts maintained by and services provided to shareholders of the Class
serviced by such financial institutions. The Distributor may also reimburse
broker/dealers for other expenses incurred in the promotion of the sale of
Bedford Shares. The Distributor and/or broker/dealers pay for the cost of
printing (excluding typesetting) and mailing to prospective investors
prospectuses and other materials relating to the Bedford Class as well as for
related direct mail, advertising and promotional expenses.
The Plan obligates the Company, during the period it is in effect, to
accrue and pay to the Distributor on behalf of the Bedford Class the fee agreed
to under the Distribution Agreement. Payments under the Plan are not based on
expenses actually incurred by the Distributor, and the payments may exceed
distribution expenses actually incurred. Because these fees are paid out of the
fund's assets on an on-going basis, over time these fees will increase the cost
of your investment and may cost you more than paying other types of sales
charges.
18
<PAGE>
- --------------------------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS OR IN THE FUND'S STATEMENT OF
ADDITIONAL INFORMATION INCORPORATED HEREIN BY REFERENCE, IN CONNECTION WITH THE
OFFERING MADE BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND OR
ITS DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE FUND OR
BY THE DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY
BE MADE.
INVESTMENT ADVISER
BlackRock Institutional Management Corporation
Wilmington, Delaware
DISTRIBUTOR
Provident Distributors, Inc.
West Conshohocken, Pennsylvania
CUSTODIAN
PFPC Trust Company
Lester, Pennsylvania
ADMINISTRATOR AND TRANSFER AGENT
PFPC Inc.
Wilmington, Delaware
COUNSEL
Drinker Biddle & Reath LLP
Philadelphia, Pennsylvania
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BEDFORD
MUNICIPAL
MONEY MARKET
PORTFOLIO
PROSPECTUS
DECEMBER 1, 1999
- --------------------------------------------------------------------------------
<PAGE>
BEDFORD MUNICIPAL MONEY MARKET PORTFOLIO
FOR MORE INFORMATION:
This prospectus contains important information you should know before you
invest. Read it carefully and keep it for future reference. More information
about the Bedford Municipal Money Market Portfolio is available free, upon
request, including:
ANNUAL/SEMI-ANNUAL REPORT
These reports contain additional information about the fund's investments,
describe the fund's performance, list portfolio holdings, and discuss recent
market conditions and economic trends. The annual report includes fund
strategies for the last fiscal year.
STATEMENT OF ADDITIONAL INFORMATION (SAI)
A Statement of Additional Information, dated December 1, 1999 (SAI) has
been filed with the Securities and Exchange Commission (SEC). The SAI, which
includes additional information about the Bedford Municipal Money Market
Portfolio, may be obtained free of charge, along with the Bedford Municipal
Money Market Portfolio annual and semi-annual reports, by calling (800)
533-7719. The SAI, as supplemented from time to time, is incorporated by
reference into this Prospectus (and is legally considered a part of this
Prospectus).
SHAREHOLDER ACCOUNT SERVICE REPRESENTATIVES
Representatives are available to discuss account balance information,
mutual fund prospectuses, literature, programs and services available. Hours: 8
a.m. to 5 p.m. (Eastern time) Monday-Friday. Call: (800) 533-7719.
PURCHASES AND REDEMPTIONS
Call your broker or (800) 533-7719.
WRITTEN CORRESPONDENCE
Post Office Address: Bedford Family-Municipal Money Market Portfolio
c/o PFPC, Inc.
PO Box 8950
WILMINGTON, DE 19899-8950
Street Address: Bedford Family-Municipal Money Market Portfolio
c/o PFPC, Inc.
400 Bellevue Parkway
Wilmington, DE 19809
SECURITIES AND EXCHANGE COMMISSION (SEC)
You may also view information about The RBB Fund, Inc. and the Bedford
Municipal Money Market Portfolio, including the SAI, by visiting the SEC website
(http://www.sec.gov) or the SEC's Public Reference Room in Washington, D.C.
Information about the operation of the public reference room can be obtained by
calling the SEC directly at 1-202-942-8090. Copies of this information can be
obtained, for a duplicating fee, by writing to the Public Reference Section of
the SEC, Washington, D.C. 20549-0102, or by electronic request to public
[email protected]..
INVESTMENT COMPANY ACT FILE NO. 811-05518
<PAGE>
[GRAPHIC OMITTED]
BEAR
STEARNS
MONEY MARKET
PORTFOLIO
Prospectus
December 1, 1999
FOR INFORMATION ABOUT THE BEAR STEARNS FUNDS, CONSULT THE FOLLOWING PROSPECTUS
<PAGE>
THE BEDFORD FAMILY MONEY MARKET PORTFOLIO
OF
THE RBB FUND, INC.
This prospectus gives vital information about the Bedford Family Money
Market Portfolio, advised by BlackRock Institutional Management Corporation
("BIMC" or the "Adviser"), including information on investment policies, risks
and fees. For your own benefit and protection, please read it before you invest
and keep it on hand for future reference.
Please note that this fund:
- is not a bank deposit;
- is not federally insured;
- is not an obligation of, or guaranteed or endorsed by PNC Bank, National
Association, PFPC Trust Company or any other bank;
- is not an obligation of, or guaranteed or endorsed or otherwise supported
by the U.S. Government, the Federal Deposit Insurance Corporation, the
Federal Reserve Board or any other governmental agency;
- is not guaranteed to achieve its goal(s);
- may not be able to maintain a stable $1 share price and you may lose
money.
- --------------------------------------------------------------------------------
THE SECURITIES DESCRIBED IN THIS PROSPECTUS HAVE BEEN REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION (SEC). THE SEC, HOWEVER, HAS NOT JUDGED THESE
SECURITIES FOR THEIR INVESTMENT MERIT AND HAS NOT DETERMINED THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANYONE WHO TELLS YOU OTHERWISE IS COMMITTING A
CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
PROSPECTUS December 1, 1999
<PAGE>
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<PAGE>
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
================================= INTRODUCTION TO THE RISK/RETURN SUMMARY ....5
A LOOK AT THE GOALS, PORTFOLIO DESCRIPTION ......................6
STRATEGIES, RISKS, EXPENSES
AND FINANCIAL HISTORY OF
THEPORTFOLIO.
PORTFOLIO MANAGEMENT
Investment Adviser ....................11
DETAILS ABOUT THE SERVICE
PROVIDERS. Service Provider Chart ................12
SHAREHOLDER INFORMATION
POLICIES AND INSTRUCTIONS FOR
OPENING, MAINTAINING AND Pricing Shares ........................13
CLOSING AN ACCOUNT IN THE
THE PORTFOLIO. Purchase of Shares ....................13
Redemption of Shares ..................14
Exchange Privilege ....................16
Dividends and Distributions ...........17
Taxes .................................17
DETAILS ON THE DISTRIBUTION PLAN. DISTRIBUTION ARRANGEMENTS .................18
================================= FOR MORE INFORMATION ......................19
3
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<PAGE>
INTRODUCTION TO THE RISK/RETURN SUMMARY
- --------------------------------------------------------------------------------
This Prospectus has been written to provide you with the information you
need to make an informed decision about whether to invest in the Bedford Class
Money Market Portfolio of The RBB Fund, Inc. (the "Company").
The class of common stock of the Company offered by this Prospectus
represents interests in the Bedford Class of the Money Market Portfolio (the
"Bedford Class"). This Prospectus and the Statement of Additional Information
incorporated herein relate solely to the Bedford Class of the Money Market
Portfolio of the Company.
This Prospectus has been organized so that the Money Market Portfolio has a
short section with important facts about the Portfolio. Once you read the short
section about the Portfolio, read the sections about Purchase and Redemption of
Shares of the Bedford Class ("Bedford Shares" or "Shares").
5
<PAGE>
MONEY MARKET PORTFOLIO
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================================================================================
IMPORTANT DEFINITIONS
ASSET-BACKED SECURITIES: Debt securities that are backed by a pool of assets,
usually loans such as installment sale contracts or credit card receivables.
COMMERCIAL PAPER: Short-term securities with maturities of 1 to 270 days which
are issued by banks, corporations and others.
DOLLAR WEIGHTED AVERAGE MATURITY: The average amount of time until the
organizations that issued the debt securities in the fund's portfolio must pay
off the principal amount of the debt. "Dollar weighted" means the larger the
dollar value of a debt security in the fund, the more weight it gets in
calculating this average.
LIQUIDITY: Liquidity is the ability to easily convert investments into cash
without losing a significant amount of money in the process.
NET ASSET VALUE (NAV): The value of everything the fund owns, minus everything
it owes, divided by the number of shares held by investors.
REPURCHASE AGREEMENT: A special type of a short-term investment. A dealer sells
securities to a fund and agrees to buy them back later at a set price. In
effect, the dealer is borrowing the fund's money for a short time, using the
securities as collateral.
VARIABLE OR FLOATING RATE SECURITIES: Securities whose interest rates adjust
automatically after a certain period of time and/or whenever a predetermined
standard interest rate changes.
================================================================================
INVESTMENT GOAL
The fund seeks to generate current income, to provide you with liquidity
and to protect your investment.
PRIMARY INVESTMENT STRATEGIES.
To achieve this goal, we invest in a diversified portfolio of short term,
high quality, U.S. dollar-denominated instruments, including government, bank,
commercial and other obligations.
Specifically, we may invest in:
1)U.S. dollar-denominated obligations issued or supported by the credit of
U.S. or foreign banks or savings institutions with total assets of more
than $1 billion (including obligations of foreign branches of such
banks).
2)High quality commercial paper and other obligations issued or guaranteed
(or otherwise supported) by U.S. and foreign corporations and other
issuers rated (at the time of purchase) A-2 or higher by Standard and
Poor's, Prime-2 or higher by Moody's, D-2 or higher by Duff & Phelps, F-2
or higher by Fitch or TBW-2 or higher by Thomson BankWatch, as well as
high quality corporate bonds rated AA (or Aa) or higher at the time of
purchase by those rating agencies. These ratings must be provided by at
least two rating agencies, or by the only rating agency providing a
rating.
3)Unrated notes, paper and other instruments that are determined by us to
be of comparable quality to the instruments described above.
4)Asset-backed securities (including interests in pools of assets such as
mortgages, installment purchase obligations and credit card receivables).
5)Securities issued or guaranteed by the U.S. Government or by its
agencies or authorities.
6)Dollar-denominated securities issued or guaranteed by foreign
governments or their political subdivisions, agencies or authorities.
7) Securities issued or guaranteed by state or local governmental bodies.
8)Repurchase agreements relating to the above instruments. The fund seeks
to maintain a net asset value of $1.00 per share.
QUALITY
Under guidelines established by the Company's Board of Directors, we will
only purchase securities if such securities or their issuers have (or such
securities are guaranteed or otherwise supported by entities which have)
short-term debt ratings at the time of purchase in the two highest rating
categories from at least two national rating agencies, or one such rating if the
security is rated by only one agency. Securities that are unrated must be
determined to be of comparable quality.
MATURITY
The dollar-weighted average maturity of all the investments of the fund
will be 90 days or less. Only those securities which have remaining maturities
of 397 days or less (except for certain variable and floating rate instruments
and securities collateralizing repurchase agreements) will be purchased.
6
<PAGE>
KEY RISKS
The value of money market investments tends to fall when current interest
rates rise. Money market investments are generally less sensitive to interest
rate changes than longer-term securities.
The fund's securities may not earn as high a level of income as longer term
or lower quality securities, which generally have greater risk and more
fluctuation in value.
The fund's concentration of its investments in the banking industry could
increase risks. The profitability of banks depends largely on the availability
and cost of funds, which can change depending upon economic conditions. Banks
are also exposed to losses if borrowers get into financial trouble and can't
repay their loans.
The obligations of foreign banks and other foreign issuers may involve
certain risks in addition to those of domestic issuers, including higher
transaction costs, less complete financial information, political and economic
instability, less stringent regulatory requirements and less market liquidity.
Unrated notes, paper and other instruments may be subject to the risk that
an issuer may default on its obligation to pay interest and repay pricipal.
The obligations issued or guaranteed by state or local government bodies
may be issued by entities in the same state and may have interest which is paid
from revenues of similar projects. As a result, changes in economic, business or
political conditions relating to a particular state or types of projects may
impact the fund.
Treasury obligations differ only in their interest rates, maturities and
time of issuance. These differences could result in fluctuations in the value of
such securities depending upon the market. Obligations of U.S. Government
agencies and authorities are supported by varying degrees of credit. The U.S.
Government gives no assurances that it will provide financial support to its
agencies and authorities if it is not obligated by law to do so. Default in
these issuers could negatively impact the fund.
The fund's investment in asset-backed securities may be negatively impacted
by interest rate fluctuations or when an issuer pays principal on an obligation
held by the fund earlier or later than expected. These events may affect their
value and the return on your investment.
The fund could lose money if a seller under a repurchase agreement defaults
or declares bankruptcy.
We may purchase variable and floating rate instruments. Like all debt
instruments, their value is dependent on the credit paying ability of the
issuer. If the issuer were unable to make interest payments or default, the
value of the securities would decline. The absence of an active market for these
securities could make it difficult to dispose of them if the issuer defaults.
The fund, like any business, could be affected if the computer systems on
which it relies do not properly process information beginning on January 1,
2000. While Year 2000 issues could have a negative effect on the fund, BIMC, the
fund's investment adviser, is currently working to avoid such problems. BIMC is
also working with other systems providers and vendors servicing the Portfolios
to determine their systems' ability to handle Year 2000 problems. There is no
guarantee, however, that systems will work properly on or after January 1, 2000.
Year 2000 problems may also hurt issuers whose securities the fund holds or
securities markets generally.
ALTHOUGH WE SEEK TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER
SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND. WHEN YOU INVEST IN
THIS FUND YOU ARE NOT MAKING A BANK DEPOSIT. YOUR INVESTMENT IS NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR BY ANY BANK OR
GOVERNMENTAL AGENCY.
7
<PAGE>
RISK / RETURN INFORMATION
The chart and table below give you a picture of the variability of the
fund's long-term performance for Bedford Shares. The information shows you how
the fund's performance has varied year by year and provides some indication of
the risks of investing in the fund. The chart and the table both assume
reinvestment of dividends and distributions. As with all such investments, past
performance is not an indication of future results. Performance reflects fee
waivers in effect. If fee waivers were not in place, the fund's performance
would be reduced.
AS OF 12/31
ANNUAL TOTAL RETURNS
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
8.80% 7.66% 3.75% 3.09% 2.41% 3.49% 5.18% 4.65% 4.88% 4.75%
Year-to-date total return for the nine months ended September 30, 1999: 4.23%
Best Quarter: 9.49% (quarter ended 6/30/89)
Worst Quarter: 2.34% (quarter ended 6/30/93)
AS OF 12/31/98
AVERAGE ANNUAL TOTAL RETURNS
1 YEAR 5 YEARS 10 YEARS
-------- -------- --------
MONEY MARKET 4.75% 4.59% 4.86%
CURRENT YIELD: The seven-day yield for the period ended 12/31/98 for the
fund was 4.38%. Past performance is not an indication of future results. Yields
will vary. You may call (800) 533-7719 to obtain the current seven-day yield of
the fund.
8
<PAGE>
================================================================================
IMPORTANT DEFINITIONS
MANAGEMENT FEES: Fees paid to the investment adviser for portfolio management
services.
OTHER EXPENSES: Includes administration, transfer agency, custody, professional
fees and registration fees.
DISTRIBUTION AND SERVICE FEES: Fees that are paid to the Distributor for
shareholder account service and maintenance.
================================================================================
EXPENSES AND FEES
As a shareholder you pay certain fees and expenses. Annual fund operating
expenses are paid out of fund assets and are reflected in the fund's price.
The table below describes the fees and expenses that you may pay if you buy
and hold Bedford Shares of the fund. The table is based on expenses for the most
recent fiscal year.
Annual Fund Operating Expenses*
(Expenses that are deducted from fund assets)
Management Fees 1 ............................. 0.36%
Distribution and service (12b-1) fees ......... 0.59%
Other expenses ................................ 0.13%
-----
Total annual fund operating expenses 2 ........ 1.08%
=====
* The table does not reflect charges or credits which investors might incur
if they invest through a financial institution.
1.BIMC has voluntarily undertaken that a portion of its management fee
will not be imposed on the fund during the current fiscal year ending
August 31, 2000. As a result of the fee waiver, current management fees
of the fund are 0.25% of average daily net assets. This waiver is
expected to remain in effect for the current fiscal year. However, it is
voluntary and can be modified or terminated at any time without the
fund's consent.
2.As a result of the fee waiver set forth in note 1, the total annual fund
operating expenses which are estimated to be incurred during the current
fiscal year are 0.97%. Although this fee waiver is expected to remain in
effect for the current fiscal year, it is voluntary and may be terminated
at any time at the option of BIMC.
EXAMPLE:
This example is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated and then redeem
all of your shares at the end of each period. The example also assumes that your
investment has a 5% return each year and that the fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your cost would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
BEDFORD SHARES $110 $343 $595 $1,317
9
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The table below sets forth certain financial information for the periods
indicated, including per share information results for a single fund share. The
term "Total Return" indicates how much your investment would have increased or
decreased during this period of time and assumes that you have reinvested all
dividends and distributions. This information has been derived from the fund's
financial statements audited by PricewaterhouseCoopers LLP, the Company's
independent accountants. This information should be read in conjunction with the
fund's financial statements which, together with the report of independent
accountants, are included in the fund's annual report, which is available upon
request (see back cover for ordering instructions).
FINANCIAL HIGHLIGHTS (B)
(FOR A BEDFORD SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
FOR THE FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
AUGUST 31, 1999 AUGUST 31, 1998 AUGUST 31, 1997 AUGUST 31, 1996 AUGUST 31, 1995
--------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year ......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- ---------- ---------- --------
Income from investment operations
Net investment income ..................... 0.0425 0.0473 0.0462 0.0469 0.0486
-------- -------- ---------- ---------- --------
Total from investment operations ........ 0.0425 0.0473 0.0462 0.0469 0.0486
-------- -------- ---------- ---------- --------
Less distributions
Dividends (from net investment income) .... (0.0425) (0.0473) (0.0462) (0.0469) (0.0486)
-------- -------- ---------- ---------- --------
Total distributions ..................... (0.0425) (0.0473) (0.0462) (0.0469) (0.0486)
-------- -------- ---------- ---------- --------
Net asset value at end of year ............... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ========== ========== ========
Total Return 4.34% 4.84% 4.72% 4.79% 4.97%
Ratios/Supplemental Data
Net assets at end of year (000s) .......... $360,123 $762,739 $1,392,911 $1,109,334 $935,821
Ratios of expenses to average net
assets After advisory/administration
fee waivers ............................. .97%(a) .97%(a) .97%(a) .97%(a) .96%(a)
Ratios of net investment income to
average net assets
After advisory/administration
fee waivers ........................... 4.25% 4.73% 4.62% 4.69% 4.86%
</TABLE>
(a) Without the waiver of advisory and administration fees and without the
reimbursement of certain operating expenses, the ratios of expenses to
average net assets for the Money Market Portfolio would have been 2.08%,
1.10%, 1.12%, 1.14% and 1.17% for the years ended August 31, 1999, 1998,
1997, 1996 and 1995, respectively.
(b) Financial Highlights relate solely to the Bedford Class of shares within the
portfolio.
10
<PAGE>
PORTFOLIO MANAGEMENT
- --------------------------------------------------------------------------------
INVESTMENT ADVISER
BIMC, a majority-owned indirect subsidiary of PNC Bank, N.A. serves as
investment adviser and is responsible for all purchases and sales of the fund's
portfolio securities. BIMC and its affiliates are one of the largest U.S. bank
managers of mutual funds, with assets currently under management in excess of
$52.9 billion. BIMC (formerly known as PNC Institutional Management Corporation
or PIMC) was organized in 1977 by PNC Bank to perform advisory services for
investment companies and has its principal offices at Bellevue Park Corporate
Center, 400 Bellevue Parkway, Wilmington, DE 19809.
For the fiscal year ended August 31, 1999, BIMC received an advisory fee of
.25% of the fund's average net assets.
The following chart shows the fund's other service providers and includes
their addresses and principal activities.
11
<PAGE>
------------
SHAREHOLDERS
------------
Distribution and
Shareholder Services
------------------------------------ -----------------------------------------
PRINCIPAL DISTRIBUTOR TRANSFER AGENT
PROVIDENT DISTRIBUTORS, INC. PFPC INC.
FOUR FALLS CORPORATE CENTER, 6TH FL. 400 BELLEVUE PARKWAY
WEST CONSHOHOCKEN, PA 19428 WILMINGTON, DE19809
Distributes shares of the fund. Handles shareholder services,
including record-keeping and statements,
distribution of dividends and processing
of buy and sell requests.
------------------------------------ -----------------------------------------
Asset
Management
------------------------------------ -----------------------------------------
INVESTMENT ADVISER CUSTODIAN
BLACKROCK INSTITUTIONAL PFPC TRUST COMPANY
MANAGEMENT CORPORATION 200 STEVENS DRIVE
400 BELLEVUE PARKWAY LESTER, PA 19113
WILMINGTON, DE 19809
Holds the fund's assets, settles
Manages the fund's business all portfolio trades and collects
and investment activities. most of the valuation data
required for calculating the
fund's net asset value ("NAV").
------------------------------------ -----------------------------------------
Fund
Operations
------------------------------------
ADMINISTRATOR AND FUND
ACCOUNTING AGENT
PFPC INC.
400 BELLEVUE PARKWAY
WILMINGTON, DE 19809
Provides facilities, equipment
and personnel to carry out
administrative services related
to the fund and calculates the
fund's NAV, dividends
and distributions.
------------------------------------
---------------------------------
BOARD OF DIRECTORS
Supervises the fund's activities.
---------------------------------
12
<PAGE>
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
PRICING SHARES
The price of your shares is also referred to as the net asset value (NAV).
The NAV is determined twice daily at 12:00 noon and at 4:00 p.m., Eastern
Time, each day on which both the New York Stock Exchange and the Federal Reserve
Bank of Philadelphia are open. It is calculated by dividing the fund's total
assets, less its liabilities, by the number of shares outstanding.
The fund values its securities using amortized cost. This method values a
fund holding initially at its cost and then assumes a constant amortization to
maturity of any discount or premium. The amortized cost method ignores any
impact of changing interest rates.
PURCHASE OF SHARES
GENERAL. You may purchase Shares directly, through an exchange from
accounts invested in shares of any open-end investment company ("The Bear
Stearns Funds") either sponsored by or advised by Bear, Stearns & Co., Inc.
("Bear Stearns") or its affiliates. You may also purchase Shares through an
account maintained by your brokerage firm (the "Account") or directly by mail or
wire. The minimum initial investment is $1,000, and the minimum subsequent
investment is $250. The Company in its sole discretion may accept or reject any
order for purchases of Shares.
Purchases will be effected at the net asset value next determined after
PFPC, the Company's transfer agent, has received a purchase order in good order
and the Company's custodian has Federal Funds immediately available to it. A
"Business Day" is any day that both the New York Stock Exchange (the "NYSE") and
the Federal Reserve Bank of Philadelphia (the "FRB") are open. On any Business
Day, orders which are accompanied by Federal Funds and received by the Company
by 12:00 noon Eastern Time, and orders as to which payment has been converted
into Federal Funds by 12:00 noon Eastern Time, will be executed as of 12:00 noon
that Business Day. Orders which are accompanied by Federal Funds and received by
PFPC after 12:00 noon Eastern Time but prior to the close of regular trading on
the NYSE (generally 4:00 p.m. Eastern Time), and orders as to which payment has
been converted into Federal Funds after 12:00 noon Eastern Time but prior to the
close of regular trading on the NYSE on any Business Day, will be executed as of
the close of regular trading on the NYSE on that Business Day, but will not be
entitled to receive dividends declared on such Business Day. Orders which are
accompanied by Federal Funds and received by the Company as of the close of
regular trading on the NYSE or later, and orders as to which payment has been
converted to Federal Funds as of the close of regular trading on the NYSE or
later on a Business Day will be processed as of 12:00 noon Eastern Time on the
following Business Day.
If your broker makes special arrangements under which orders for Bedford
Shares are received by PFPC prior to 12:00 noon Eastern Time, and your broker
guarantees that payment for the Shares will be made in available Federal Funds
to the Company's custodian prior to the close of regular trading on the NYSE on
the same day, such purchase orders will be effective and Shares will be
purchased at the offering price in effect as of 12:00 noon Eastern Time on the
date the purchase order is received by PFPC.
PURCHASES THROUGH AN ACCOUNT (other than accounts held by Bear Stearns or
brokers who have clearing arrangements with Bear Stearns). Purchases of Shares
may be effected through an Account with your broker through procedures and
requirements established by your broker. In such event, beneficial ownership of
Shares will be recorded by your broker and will be reflected in the Account
statements provided to you by your broker. Your broker may impose minimum
investment Account requirements. Even if your broker does not impose a sales
charge for purchases of Bedford Shares, depending on the terms of your Account
with your broker, the broker may charge to your Account fees for automatic
investment and other services provided to your Account. Information concerning
Account requirements, services and charges should be obtained from your broker,
and you should read this Prospectus in conjunction with any information received
from your broker. Shares are held in the street name account of your broker and
if you desire to transfer such shares to the street name account of another
broker, you should contact your current broker.
If you are a shareholder of The Bear Stearns Funds, you may purchase
Bedford Shares in exchange for shares of The Bear Stearns Funds. This exchange
privilege is only available if you have an existing account.
See "Exchange Privilege" below.
For distribution services with respect to Bedford Shares held by clients of
Bear Stearns, the Company's Distributor will pay Bear Stearns up to .50% of the
annual average value of such accounts.
DIRECT PURCHASES. You may make an initial investment in Bedford Shares by
mail by fully completing and signing an application (the "Application") and
mailing it, together with a check payable to "The RBB Fund -- Money Market
Portfolio (Bedford Class)," to Bedford Money Market Portfolio, c/o PFPC, P.O.
Box 8960, Wilmington, Delaware 19899. Subsequent purchases may be made by
forwarding payment to the Company's transfer agent at the foregoing address.
13
<PAGE>
You may also purchase Shares by having your bank or broker wire Federal
Funds to the Company's Custodian, PFPC Trust Company. Your bank or broker may
impose a charge for this service. The Company does not currently charge for
effecting wire transfers but reserves the right to do so in the future. In order
to ensure prompt receipt of your Federal Funds wire, for an initial investment,
it is important that you follow these steps:
A. Telephone the Company's transfer agent, PFPC, toll-free (800)
447-1139, and provide your name, address, telephone number, Social
Security or Tax Identification Number, the amount being wired, and
by which bank or broker. PFPC will then provide you with an account
number. (If you have an existing account, you should also notify
PFPC prior to wiring funds.)
B. Instruct your bank or broker to wire the specified amount, together
with your assigned account number, to PFPC's account with PNC Bank.
PNC Bank, N.A., Philadelphia, PA
ABA-0310-0005-3.
CREDIT ACCOUNT NUMBER: 85-5102-0143
FROM: (your name)
ACCOUNT NUMBER: (your account number)
FOR PURCHASE OF: The RBB Fund -- Money Market Portfolio
(Bedford Class)
AMOUNT: (amount to be invested)
C. Fully complete and sign the Application and mail it to the address
shown thereon. PFPC will not process redemptions until it receives a
fully completed and signed Application.
For subsequent investments, you should follow steps A and B above.
RETIREMENT PLANS. Bedford Shares may be purchased in conjunction with
individual retirement accounts ("IRAs") and rollover IRAs where PFPC Trust
Company acts as custodian. For further information as to applications and annual
fees, contact the Distributor or your broker. To determine whether the benefits
of an IRA are available and/or appropriate, you should consult with your tax
adviser.
REDEMPTION OF SHARES
GENERAL. Redemption orders are effected at the net asset value per share
next determined after receipt of the order in proper form by the Company's
transfer agent, PFPC. You may redeem all or some of your Shares in accordance
with one of the procedures described below.
REDEMPTION OF SHARES IN AN ACCOUNT. If you beneficially own Bedford Shares
through an Account, you may redeem them in your Account in accordance with
instructions and limitations pertaining to your Account by contacting your
broker. If such notice is received by PFPC by 12:00 noon Eastern Time on any
Business Day, the redemption will be effective as of 12:00 noon Eastern Time on
that day. Payment of the redemption proceeds will be made after 12:00 noon
Eastern Time on the day the redemption is effected, provided that the Company's
custodian is open for business. If the custodian is not open, payment will be
made on the next bank business day. If the redemption request is received
between 12:00 noon and the close of regular trading on the NYSE on a Business
Day, the redemption will be effective as of the close of regular trading on the
NYSE on such Business Day and payment will be made on the next bank business day
following receipt of the redemption request. If all of your Shares are redeemed,
all accrued but unpaid dividends on those Shares will be paid with the
redemption proceeds.
Each brokerage firm reserves the right to waive or modify criteria for
participation in an Account or to terminate participation in an Account for any
reason.
REDEMPTION OF SHARES OWNED DIRECTLY. If you own Shares directly, you may
redeem any number of Shares by sending a written request to The RBB Fund --
Money Market Portfolio (Bedford Class), c/o PFPC, P.O. Box 8960, Wilmington,
Delaware 19899. Redemption requests must be signed by each shareholder in the
same manner as the Shares are registered. Redemption requests for joint accounts
require the signature of each joint owner. On redemption requests of $5,000 or
more, each signature must be guaranteed. A signature guarantee may be obtained
from a domestic bank or trust company, broker, dealer, clearing agency or
savings association who are participants in a medallion program recognized by
the Securities Transfer Association. The three recognized medallion programs are
Securities Transfer Agents Medallion Program (STAMP), Stock Exchanges Medallion
Program (SEMP) and New York Stock Exchange, Inc. Medallion Signature Program
(MSP). Signature guarantees that are not part of these programs will not be
accepted.
14
<PAGE>
REDEMPTION BY TELEPHONE. If you are a direct investor, you may redeem your
Shares without charge by telephone if you have completed and returned an account
application containing the appropriate telephone election. To add a telephone
option to an existing account that previously did not provide for this option,
you should contact the transfer agent, PFPC, at (800) 447-1139.
Once you are authorized to utilize the telephone redemption option, a
redemption of Shares may be requested by calling PFPC at (800) 447-1139 and
requesting that the redemption proceeds be mailed to the primary registration
address or wired per the authorized instructions. If the telephone redemption
option or the telephone exchange option (as described below) is authorized, PFPC
may act on telephone instructions from any person representing himself or
herself to be a shareholder and believed by PFPC to be genuine. PFPC's records
of such instructions are binding and shareholders, not the Company or PFPC, bear
the risk of loss in the event of unauthorized instructions reasonably believed
by the Company or PFPC to be genuine. PFPC will employ reasonable procedures to
confirm that instructions communicated are genuine and, if it does not, it may
be liable for any losses due to unauthorized or fraudulent instructions. The
procedures employed by PFPC in connection with transactions initiated by
telephone include tape recording of telephone instructions and requiring some
form of personal identification prior to acting upon instructions received by
telephone.
Proceeds of a telephone redemption request will be mailed by check to your
registered address unless you have designated in your Application that such
proceeds are to be sent by wire transfer to a specified checking or savings
account. If proceeds are to be sent by wire transfer, a telephone redemption
request received prior to the close of regular trading on the NYSE will result
in redemption proceeds being wired to your bank account on the next day that a
wire transfer can be effected. The minimum redemption for proceeds sent by wire
transfer is $2,500. There is no maximum for proceeds sent by wire transfer. The
Company may modify this redemption service at any time or charge a service fee
upon prior notice to shareholders, although no fee is currently contemplated.
DURING TIMES OF DRASTIC ECONOMIC OR MARKET CONDITIONS, YOU MAY EXPERIENCE
DIFFICULTY IN CONTACTING BEAR STEARNS, THE DISTRIBUTOR OR YOUR BROKER BY
TELEPHONE TO REQUEST A REDEMPTION OF SHARES. IN SUCH CASES, YOU SHOULD CONSIDER
USING THE OTHER REDEMPTION PROCEDURES DESCRIBED ABOVE. USE OF THESE OTHER
REDEMPTION PROCEDURES MAY RESULT IN THE REDEMPTION REQUEST BEING PROCESSED AT A
LATER TIME THAN IT WOULD HAVE BEEN IF TELEPHONE REDEMPTION HAD BEEN USED.
REDEMPTION BY CHECK. If you are a direct investor or you do not have check
writing privileges for your Account, the Company will provide to you forms of
drafts ("checks") payable through PNC Bank. These checks may be made payable to
the order of anyone. The minimum amount of a check is $250; however, your broker
may establish a higher minimum. If you wish to use this check writing redemption
procedure, you should complete specimen signature cards (available from PFPC),
and then forward such signature cards to PFPC. PFPC will then arrange for the
checks to be honored by PNC Bank. If you own Shares through an Account, you
should contact your broker for signature cards. Investors with joint accounts
may elect to have checks honored with a single signature. Check redemptions will
be subject to PNC Bank's rules governing checks. An investor will be able to
stop payment on a check redemption. The Company or PNC Bank may terminate this
redemption service at any time, and neither shall incur any liability for
honoring checks, for effecting redemptions to pay checks, or for returning
checks which have not been accepted.
When a check is presented to PNC Bank for clearance, PNC Bank, as your
agent, will cause the Company to redeem a sufficient number of your full and
fractional Shares to cover the amount of the check. This procedure enables you
to continue to receive dividends on your Shares representing the amount being
redeemed by check until such time as the check is presented to PNC Bank.
Pursuant to rules under the 1940 Act, checks may not be presented for cash
payment at the offices of PNC Bank. This limitation does not affect checks used
for the payment of bills or cash at other banks.
AUTOMATIC WITHDRAWAL. Automatic withdrawal permits you to request
withdrawal of a specified dollar amount (minimum of $25) on either a monthly or
quarterly basis if the investor has a $5,000 minimum account. You can obtain an
application for automatic withdrawal from Bear Stearns, the Distributor, your
broker, or the transfer agent. Automatic withdrawal may be ended at any time by
either you, the Company or the transfer agent. Shares for which certificates
have been issued may not be redeemed through automatic withdrawal. Purchases of
additional shares concurrently with withdrawals generally are undesirable.
ADDITIONAL REDEMPTION INFORMATION. The Company ordinarily will make payment
for all Shares redeemed within seven days after receipt by PFPC of a redemption
request in proper form. However, if you bought your Shares by check, the Company
will wait for your check to clear (up to 15 days) before it accepts your
redemption request. This procedure does not apply to Shares purchased by wire
payment. You should consider purchasing Shares using a certified or bank check
or money order if you anticipate an immediate need for redemption proceeds.
15
<PAGE>
The Company does not impose a charge when Shares are redeemed, except as
described below. The Company reserves the right to redeem any account in the
Bedford Class involuntarily, on thirty days' notice, if such account falls below
$500 and during such 30-day notice period the amount invested in such account is
not increased to at least $500. Payment for Shares redeemed may be postponed or
the right of redemption suspended as provided by the rules of the SEC.
If the Board of Directors determines that it would be detrimental to the
best interests of the remaining shareholders of the funds to make payment wholly
or partly in cash, redemption proceeds may be paid in whole or in part by an
in-kind distribution of readily marketable securities held by a fund instead of
cash in conformity with applicable rules of the SEC. Investors generally will
incur brokerage charges on the sale of portfolio securities so received in
payment of redemptions. The funds have elected, however, to be governed by Rule
18f-1 under the 1940 Act, so that a fund is obligated to redeem its Shares
solely in cash up to the lessor of $250,000 or 1% of its net asset value during
any 90-day period for any one shareholder of a fund.
EXCHANGE PRIVILEGE
The exchange privilege enables you to purchase Bedford Shares in exchange
for shares of the other mutual funds sponsored or advised by Bear Stearns, to
the extent such shares are offered for sale in your state of residence. These
funds have different investment objectives than the fund. To use this privilege,
you should consult your account executive at Bear Stearns, your investment
dealers who have sales agreements with Bear Stearns, the Distributor, your
broker or the transfer agent to determine if it is available and whether any
conditions are imposed on its use. Currently, exchanges may be made among the
following portfolios (and such additional portfolios which may be added in the
future):
- S&P STARS Portfolio
- Large Cap Value Portfolio
- Small Cap Value Portfolio
- The Insiders Select Fund
- International Equity Portfolio
- Focus List Portfolio
- Balanced Portfolio
To effect an exchange of Shares, exchange instructions must be given to the
transfer agent in writing or by telephone. If you wish to make an exchange, send
a written request to PFPC, Attention: The RBB Fund -- Money Market Portfolio
(Bedford Class), P.O. Box 8960, Wilmington, Delaware 19899. You will
automatically be provided with telephone exchange privileges when opening an
account, unless you indicate otherwise on the account application. If you hold
share certificates, you are not eligible to exchange shares of the fund by phone
because share certificates must accompany all exchange requests. To add this
feature to an existing account that previously did not provide for this option,
a Telephone Authorization Form must be filed with the transfer agent. This form
is available from the transfer agent. Once you have made this election, you may
contact the transfer agent by telephone at (800) 447-1139 to request the
exchange. See "Redemption of Shares--Redemption by Telephone" for a description
of the Company's telephone transaction procedures. During periods of substantial
economic or market change, telephone exchanges may be difficult to complete and
shareholders may have to submit exchange requests to the transfer agent in
writing.
If you do not currently own Bedford Shares or a fund whose shares are being
acquired, a new account will be established with the same registration, dividend
and capital gain options and the same dealer of record as the account from which
shares are exchanged, unless you specify otherwise in writing with all
signatures guaranteed as described above. To participate in an automatic
investment plan or establish automatic withdrawal for the new account, however,
you must file a specific written request before the exchange can be processed.
The exchange privilege may be modified or terminated at any time, or from time
to time, by the Company on 60 days' notice to affected portfolio or fund
shareholders.
Before any exchange, you must obtain and should review a copy of the
current prospectus of the portfolio or fund into which the exchange is being
made. Prospectuses may be obtained from Bear Stearns. Except in the case of
Personal Retirement Plans, the Shares being exchanged must have a current value
of at least $250; furthermore, when establishing a new account by exchange, the
shares being exchanged must have a value of at least the minimum initial
investment required for the portfolio or fund into which the exchange is being
made. If making an exchange to an existing account, the dollar value must equal
or exceed the applicable minimum for subsequent investments. If any amount
remains in the investment portfolio from which the exchange is being made, such
amount must not be below the minimum account value required by the portfolio or
fund.
16
<PAGE>
Shares will be exchanged at the next determined public offering price. To
qualify for the exchange privilege, at the time of the exchange, you must notify
Bear Stearns, the Distributor, your investment dealer or the transfer agent. Any
such qualification is subject to confirmation of your holdings through a check
of appropriate records. No fees currently are charged directly to you for
exchanges, although the Company reserves the right, upon not less than 60 days'
written notice, to charge a $5.00 fee in accordance with rules promulgated by
the SEC. The Company reserves the right to reject any exchange request in whole
or in part. The Exchange Privilege may be modified or terminated at any time
upon notice to shareholders.
The exchange of shares of one portfolio or fund for shares of another is
treated for federal income tax purposes as a sale of the shares given in
exchange by the shareholder and, therefore, an exchanging shareholder may
realize a taxable gain or loss.
REDIRECTED DISTRIBUTION OPTION. The Redirected Distribution Option enables you
to invest automatically dividends or dividends and capital gain distributions,
if any, paid by the fund in shares of another portfolio of the Company or a fund
advised or sponsored by Bear Stearns in which you invest. Shares of the other
portfolio or fund will be purchased at the then current public offering price.
If you are investing in a fund that charges a sales load, you may qualify for
share prices which do not include the sales load or which reflect a reduced
sales load.
This privilege is available only for existing accounts and may not be used to
open new accounts. Minimum subsequent investments do not apply. The Company may
modify or terminate this privilege at any time or charge a service fee. However,
no such fee currently is contemplated.
DIVIDENDS AND DISTRIBUTIONS
The Company will distribute substantially all of the net investment income
and net realized capital gains, if any, of the fund to the fund's shareholders.
All distributions are reinvested in the form of additional full and fractional
Shares of the Class unless a shareholder elects otherwise.
The net investment income (not including any net short-term capital gains)
earned by the fund will be declared as a dividend on a daily basis and paid
monthly. Dividends are payable to shareholders of record immediately prior to
the determination of net asset value made as of the close of trading of the
NYSE. Net short-term capital gains, if any, will be distributed at least
annually.
TAXES
Distributions from the Money Market Portfolio will generally be taxable to
shareholders. It is expected that all, or substantially all, of these
distributions will consist of ordinary income. You will be subject to income tax
on these distributions regardless of whether they are paid in cash or reinvested
in additional shares. The one major exception to these tax principles is that
distributions on shares held in an IRA (or other tax-qualified plan) will not be
currently taxable.
The foregoing is only a summary of certain tax considerations under the
current law, which may be subject to change in the future. Shareholders who are
nonresident aliens, foreign trusts or estates, or foreign corporations or
partnerships may be subject to different United States Federal income tax
treatment. You should consult your tax adviser for further information regarding
federal, state, local and/or foreign tax consequences relevant to your specific
situation.
17
<PAGE>
DISTRIBUTION ARRANGEMENTS
- --------------------------------------------------------------------------------
Bedford Shares of the Money Market Portfolio are sold without a sales load
on a continuous basis by Provident Distributors, Inc., whose principal business
address is at Four Falls Corporate Center, West Conshohocken, PA 19428.
The Board of Directors of the Company approved and adopted the Distribution
Agreement and Plan of Distribution for the Class (the "Plan") pursuant to Rule
12b-1 under the 1940 Act. Under the Plan, the Distributor is entitled to receive
from the Class a distribution fee, which is accrued daily and paid monthly, of
up to .65% on an annualized basis of the average daily net assets of the Class.
The actual amount of such compensation is agreed upon from time to time by the
Company's Board of Directors and the Distributor. Under the Distribution
Agreement, the Distributor has agreed to accept compensation for its services
thereunder and under the Plan in the amount of .60% of the average daily net
assets of the Class on an annualized basis in any year. The Distributor may, in
its discretion, voluntarily waive from time to time all or any portion of its
distribution fee.
Under the Distribution Agreement and the Plan, the Distributor may
reallocate an amount up to the full fee that it receives to financial
institutions, including broker/dealers, based upon the aggregate investment
amounts maintained by and services provided to shareholders of the Class
serviced by such financial institutions. The Distributor may also reimburse
broker/dealers for other expenses incurred in the promotion of the sale of
Bedford Shares. The Distributor and/or broker/dealers pay for the cost of
printing (excluding typesetting) and mailing to prospective investors
prospectuses and other materials relating to the Class as well as for related
direct mail, advertising and promotional expenses.
The Plan obligates the Company, during the period it is in effect, to
accrue and pay to the Distributor on behalf of the Class the fee agreed to under
the Distribution Agreement. Payments under the Plan are not based on expenses
actually incurred by the Distributor, and the payments may exceed distribution
expenses actually incurred. Because these fees are paid out of the fund's assets
on an on-going basis, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges.
18
<PAGE>
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<PAGE>
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<PAGE>
The
Bear Stearns
Funds
575 LEXINGTON AVENUE
NEW YORK, NY 10167
1.800.766.4111
MONEY MARKET PORTFOLIO
INVESTMENT ADVISER
BlackRock Institutional Management Corporation
Wilmington, Delaware
DISTRIBUTOR
Provident Distributors, Inc.
West Conshohocken, Pennsylvania
CUSTODIAN
PFPC Trust Company
Lester, Pennsylvania
ADMINISTRATOR AND TRANSFER AGENT
PFPC Inc.
Wilmington, Delaware
COUNSEL
Drinker Biddle & Reath LLP
Philadelphia, Pennsylvania
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS OR IN THE FUND'S STATEMENT OF
ADDITIONAL INFORMATION INCORPORATED HEREIN BY REFERENCE, IN CONNECTION WITH THE
OFFERING MADE BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND OR
ITS DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE FUND OR
BY THE DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY
BE MADE.
<PAGE>
FOR MORE INFORMATION:
This prospectus contains important information you should know before you
invest. Read it carefully and keep it for future reference. More information
about the Bedford Family Money Market Portfolio is available free, upon request,
including:
ANNUAL/SEMI-ANNUAL REPORT
These reports contain additional information about the fund's investments,
describe the fund's performance, list portfolio holdings, and discuss recent
market conditions and economic trends. The annual report includes fund
strategies for the last fiscal year.
STATEMENT OF ADDITIONAL INFORMATION (SAI)
A Statement of Additional Information, dated December 1, 1999 (SAI), has
been filed with the Securities and Exchange Commission (SEC). The SAI, which
includes additional information about the Bedford Family Money Market Portfolio,
may be obtained free of charge, along with the Bedford Family Money Market
Portfolio annual and semi-annual reports, by calling (800) 533-7719. The SAI, as
supplemented from time to time, is incorporated by reference into this
Prospectus (and is legally considered a part of this Prospectus).
SHAREHOLDER ACCOUNT SERVICE REPRESENTATIVES
Representatives are available to discuss account balance information,
mutual fund prospectuses, literature, programs and services available. Hours: 8
a.m. to 5 p.m. (Eastern time) Monday-Friday. Call: (800) 533-7719.
PURCHASES AND REDEMPTIONS
Call your broker or (800) 533-7719.
WRITTEN CORRESPONDENCE
Post Office Address: Bedford Family -- Money Market Portfolio
c/o PFPC, Inc.
PO Box 8950
Wilmington, DE 19899-8950
Street Address: Bedford Family -- Money Market Portfolio
c/o PFPC, Inc.
400 Bellevue Parkway
Wilmington, DE 19809
SECURITIES AND EXCHANGE COMMISSION (SEC)
You may also view information about The RBB Fund, Inc. and the Bedford
Family Money Market Portfolio, including the SAI, by visiting the SEC website
(http://www.sec.gov) or the SEC's Public Reference Room in Washington, D.C.
Information about the operation of the public reference room can be obtained by
calling the SEC directly at 1-202-942-8090. Copies of this information can be
obtained, for a duplicating fee, by writing to the Public Reference Section of
the SEC, Washington, D.C. 20549-0102, or by electronic request to
[email protected].
INVESTMENT COMPANY ACT FILE NO. 811-05518
<PAGE>
[GRAPHIC OMITTED]
BEAR
STEARNS
MONEY MARKET
PORTFOLIO
Prospectus
December 1, 1999
FOR INFORMATION ABOUT THE BEAR STEARNS FUNDS, CONSULT THE FOLLOWING PROSPECTUS
<PAGE>
THE BEDFORD FAMILY MONEY MARKET PORTFOLIO
OF
THE RBB FUND, INC.
This prospectus gives vital information about the Bedford Family Money
Market Portfolio, advised by BlackRock Institutional Management Corporation
("BIMC" or the "Adviser"), including information on investment policies, risks
and fees. For your own benefit and protection, please read it before you invest
and keep it on hand for future reference.
Please note that this fund:
- is not a bank deposit;
- is not federally insured;
- is not an obligation of, or guaranteed or endorsed by PNC Bank, National
Association, PFPC Trust Company or any other bank;
- is not an obligation of, or guaranteed or endorsed or otherwise supported
by the U.S. Government, the Federal Deposit Insurance Corporation, the
Federal Reserve Board or any other governmental agency;
- is not guaranteed to achieve its goal(s);
- may not be able to maintain a stable $1 share price and you may lose
money.
- --------------------------------------------------------------------------------
THE SECURITIES DESCRIBED IN THIS PROSPECTUS HAVE BEEN REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION (SEC). THE SEC, HOWEVER, HAS NOT JUDGED THESE
SECURITIES FOR THEIR INVESTMENT MERIT AND HAS NOT DETERMINED THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANYONE WHO TELLS YOU OTHERWISE IS COMMITTING A
CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
PROSPECTUS December 1, 1999
<PAGE>
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<PAGE>
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
================================= INTRODUCTION TO THE RISK/RETURN SUMMARY ....5
A LOOK AT THE GOALS, PORTFOLIO DESCRIPTION ......................6
STRATEGIES, RISKS, EXPENSES
AND FINANCIAL HISTORY OF
THEPORTFOLIO.
PORTFOLIO MANAGEMENT
Investment Adviser ....................11
DETAILS ABOUT THE SERVICE
PROVIDERS. Service Provider Chart ................12
SHAREHOLDER INFORMATION
POLICIES AND INSTRUCTIONS FOR
OPENING, MAINTAINING AND Pricing Shares ........................13
CLOSING AN ACCOUNT IN THE
THE PORTFOLIO. Purchase of Shares ....................13
Redemption of Shares ..................14
Exchange Privilege ....................16
Dividends and Distributions ...........17
Taxes .................................17
DETAILS ON THE DISTRIBUTION PLAN. DISTRIBUTION ARRANGEMENTS .................18
================================= FOR MORE INFORMATION ......................19
3
<PAGE>
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<PAGE>
INTRODUCTION TO THE RISK/RETURN SUMMARY
- --------------------------------------------------------------------------------
This Prospectus has been written to provide you with the information you
need to make an informed decision about whether to invest in the Bedford Class
Money Market Portfolio of The RBB Fund, Inc. (the "Company").
The class of common stock of the Company offered by this Prospectus
represents interests in the Bedford Class of the Money Market Portfolio (the
"Bedford Class"). This Prospectus and the Statement of Additional Information
incorporated herein relate solely to the Bedford Class of the Money Market
Portfolio of the Company.
This Prospectus has been organized so that the Money Market Portfolio has a
short section with important facts about the Portfolio. Once you read the short
section about the Portfolio, read the sections about Purchase and Redemption of
Shares of the Bedford Class ("Bedford Shares" or "Shares").
5
<PAGE>
MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
================================================================================
IMPORTANT DEFINITIONS
ASSET-BACKED SECURITIES: Debt securities that are backed by a pool of assets,
usually loans such as installment sale contracts or credit card receivables.
COMMERCIAL PAPER: Short-term securities with maturities of 1 to 270 days which
are issued by banks, corporations and others.
DOLLAR WEIGHTED AVERAGE MATURITY: The average amount of time until the
organizations that issued the debt securities in the fund's portfolio must pay
off the principal amount of the debt. "Dollar weighted" means the larger the
dollar value of a debt security in the fund, the more weight it gets in
calculating this average.
LIQUIDITY: Liquidity is the ability to easily convert investments into cash
without losing a significant amount of money in the process.
NET ASSET VALUE (NAV): The value of everything the fund owns, minus everything
it owes, divided by the number of shares held by investors.
REPURCHASE AGREEMENT: A special type of a short-term investment. A dealer sells
securities to a fund and agrees to buy them back later at a set price. In
effect, the dealer is borrowing the fund's money for a short time, using the
securities as collateral.
VARIABLE OR FLOATING RATE SECURITIES: Securities whose interest rates adjust
automatically after a certain period of time and/or whenever a predetermined
standard interest rate changes.
================================================================================
INVESTMENT GOAL
The fund seeks to generate current income, to provide you with liquidity
and to protect your investment.
PRIMARY INVESTMENT STRATEGIES.
To achieve this goal, we invest in a diversified portfolio of short term,
high quality, U.S. dollar-denominated instruments, including government, bank,
commercial and other obligations.
Specifically, we may invest in:
1)U.S. dollar-denominated obligations issued or supported by the credit of
U.S. or foreign banks or savings institutions with total assets of more
than $1 billion (including obligations of foreign branches of such
banks).
2)High quality commercial paper and other obligations issued or guaranteed
(or otherwise supported) by U.S. and foreign corporations and other
issuers rated (at the time of purchase) A-2 or higher by Standard and
Poor's, Prime-2 or higher by Moody's, D-2 or higher by Duff & Phelps, F-2
or higher by Fitch or TBW-2 or higher by Thomson BankWatch, as well as
high quality corporate bonds rated AA (or Aa) or higher at the time of
purchase by those rating agencies. These ratings must be provided by at
least two rating agencies, or by the only rating agency providing a
rating.
3)Unrated notes, paper and other instruments that are determined by us to
be of comparable quality to the instruments described above.
4)Asset-backed securities (including interests in pools of assets such as
mortgages, installment purchase obligations and credit card receivables).
5)Securities issued or guaranteed by the U.S. Government or by its
agencies or authorities.
6)Dollar-denominated securities issued or guaranteed by foreign
governments or their political subdivisions, agencies or authorities.
7) Securities issued or guaranteed by state or local governmental bodies.
8)Repurchase agreements relating to the above instruments. The fund seeks
to maintain a net asset value of $1.00 per share.
QUALITY
Under guidelines established by the Company's Board of Directors, we will
only purchase securities if such securities or their issuers have (or such
securities are guaranteed or otherwise supported by entities which have)
short-term debt ratings at the time of purchase in the two highest rating
categories from at least two national rating agencies, or one such rating if the
security is rated by only one agency. Securities that are unrated must be
determined to be of comparable quality.
MATURITY
The dollar-weighted average maturity of all the investments of the fund
will be 90 days or less. Only those securities which have remaining maturities
of 397 days or less (except for certain variable and floating rate instruments
and securities collateralizing repurchase agreements) will be purchased.
6
<PAGE>
KEY RISKS
The value of money market investments tends to fall when current interest
rates rise. Money market investments are generally less sensitive to interest
rate changes than longer-term securities.
The fund's securities may not earn as high a level of income as longer term
or lower quality securities, which generally have greater risk and more
fluctuation in value.
The fund's concentration of its investments in the banking industry could
increase risks. The profitability of banks depends largely on the availability
and cost of funds, which can change depending upon economic conditions. Banks
are also exposed to losses if borrowers get into financial trouble and can't
repay their loans.
The obligations of foreign banks and other foreign issuers may involve
certain risks in addition to those of domestic issuers, including higher
transaction costs, less complete financial information, political and economic
instability, less stringent regulatory requirements and less market liquidity.
Unrated notes, paper and other instruments may be subject to the risk that
an issuer may default on its obligation to pay interest and repay pricipal.
The obligations issued or guaranteed by state or local government bodies
may be issued by entities in the same state and may have interest which is paid
from revenues of similar projects. As a result, changes in economic, business or
political conditions relating to a particular state or types of projects may
impact the fund.
Treasury obligations differ only in their interest rates, maturities and
time of issuance. These differences could result in fluctuations in the value of
such securities depending upon the market. Obligations of U.S. Government
agencies and authorities are supported by varying degrees of credit. The U.S.
Government gives no assurances that it will provide financial support to its
agencies and authorities if it is not obligated by law to do so. Default in
these issuers could negatively impact the fund.
The fund's investment in asset-backed securities may be negatively impacted
by interest rate fluctuations or when an issuer pays principal on an obligation
held by the fund earlier or later than expected. These events may affect their
value and the return on your investment.
The fund could lose money if a seller under a repurchase agreement defaults
or declares bankruptcy.
We may purchase variable and floating rate instruments. Like all debt
instruments, their value is dependent on the credit paying ability of the
issuer. If the issuer were unable to make interest payments or default, the
value of the securities would decline. The absence of an active market for these
securities could make it difficult to dispose of them if the issuer defaults.
The fund, like any business, could be affected if the computer systems on
which it relies do not properly process information beginning on January 1,
2000. While Year 2000 issues could have a negative effect on the fund, BIMC, the
fund's investment adviser, is currently working to avoid such problems. BIMC is
also working with other systems providers and vendors servicing the Portfolios
to determine their systems' ability to handle Year 2000 problems. There is no
guarantee, however, that systems will work properly on or after January 1, 2000.
Year 2000 problems may also hurt issuers whose securities the fund holds or
securities markets generally.
ALTHOUGH WE SEEK TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER
SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND. WHEN YOU INVEST IN
THIS FUND YOU ARE NOT MAKING A BANK DEPOSIT. YOUR INVESTMENT IS NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR BY ANY BANK OR
GOVERNMENTAL AGENCY.
7
<PAGE>
RISK / RETURN INFORMATION
The chart and table below give you a picture of the variability of the
fund's long-term performance for Bedford Shares. The information shows you how
the fund's performance has varied year by year and provides some indication of
the risks of investing in the fund. The chart and the table both assume
reinvestment of dividends and distributions. As with all such investments, past
performance is not an indication of future results. Performance reflects fee
waivers in effect. If fee waivers were not in place, the fund's performance
would be reduced.
AS OF 12/31
ANNUAL TOTAL RETURNS
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
8.80% 7.66% 3.75% 3.09% 2.41% 3.49% 5.18% 4.65% 4.88% 4.75%
Year-to-date total return for the nine months ended September 30, 1999: 4.23%
Best Quarter: 9.49% (quarter ended 6/30/89)
Worst Quarter: 2.34% (quarter ended 6/30/93)
AS OF 12/31/98
AVERAGE ANNUAL TOTAL RETURNS
1 YEAR 5 YEARS 10 YEARS
-------- -------- --------
MONEY MARKET 4.75% 4.59% 4.86%
CURRENT YIELD: The seven-day yield for the period ended 12/31/98 for the
fund was 4.38%. Past performance is not an indication of future results. Yields
will vary. You may call (800) 533-7719 to obtain the current seven-day yield of
the fund.
8
<PAGE>
================================================================================
IMPORTANT DEFINITIONS
MANAGEMENT FEES: Fees paid to the investment adviser for portfolio management
services.
OTHER EXPENSES: Includes administration, transfer agency, custody, professional
fees and registration fees.
DISTRIBUTION AND SERVICE FEES: Fees that are paid to the Distributor for
shareholder account service and maintenance.
================================================================================
EXPENSES AND FEES
As a shareholder you pay certain fees and expenses. Annual fund operating
expenses are paid out of fund assets and are reflected in the fund's price.
The table below describes the fees and expenses that you may pay if you buy
and hold Bedford Shares of the fund. The table is based on expenses for the most
recent fiscal year.
Annual Fund Operating Expenses*
(Expenses that are deducted from fund assets)
Management Fees 1 ............................. 0.36%
Distribution and service (12b-1) fees ......... 0.59%
Other expenses ................................ 0.13%
-----
Total annual fund operating expenses 2 ........ 1.08%
=====
* The table does not reflect charges or credits which investors might incur
if they invest through a financial institution.
1.BIMC has voluntarily undertaken that a portion of its management fee
will not be imposed on the fund during the current fiscal year ending
August 31, 2000. As a result of the fee waiver, current management fees
of the fund are 0.25% of average daily net assets. This waiver is
expected to remain in effect for the current fiscal year. However, it is
voluntary and can be modified or terminated at any time without the
fund's consent.
2.As a result of the fee waiver set forth in note 1, the total annual fund
operating expenses which are estimated to be incurred during the current
fiscal year are 0.97%. Although this fee waiver is expected to remain in
effect for the current fiscal year, it is voluntary and may be terminated
at any time at the option of BIMC.
EXAMPLE:
This example is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated and then redeem
all of your shares at the end of each period. The example also assumes that your
investment has a 5% return each year and that the fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your cost would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
BEDFORD SHARES $110 $343 $595 $1,317
9
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The table below sets forth certain financial information for the periods
indicated, including per share information results for a single fund share. The
term "Total Return" indicates how much your investment would have increased or
decreased during this period of time and assumes that you have reinvested all
dividends and distributions. This information has been derived from the fund's
financial statements audited by PricewaterhouseCoopers LLP, the Company's
independent accountants. This information should be read in conjunction with the
fund's financial statements which, together with the report of independent
accountants, are included in the fund's annual report, which is available upon
request (see back cover for ordering instructions).
FINANCIAL HIGHLIGHTS (B)
(FOR A BEDFORD SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
FOR THE FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
AUGUST 31, 1999 AUGUST 31, 1998 AUGUST 31, 1997 AUGUST 31, 1996 AUGUST 31, 1995
--------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year ......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- ---------- ---------- --------
Income from investment operations
Net investment income ..................... 0.0425 0.0473 0.0462 0.0469 0.0486
-------- -------- ---------- ---------- --------
Total from investment operations ........ 0.0425 0.0473 0.0462 0.0469 0.0486
-------- -------- ---------- ---------- --------
Less distributions
Dividends (from net investment income) .... (0.0425) (0.0473) (0.0462) (0.0469) (0.0486)
-------- -------- ---------- ---------- --------
Total distributions ..................... (0.0425) (0.0473) (0.0462) (0.0469) (0.0486)
-------- -------- ---------- ---------- --------
Net asset value at end of year ............... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ========== ========== ========
Total Return 4.34% 4.84% 4.72% 4.79% 4.97%
Ratios/Supplemental Data
Net assets at end of year (000s) .......... $360,123 $762,739 $1,392,911 $1,109,334 $935,821
Ratios of expenses to average net
assets After advisory/administration
fee waivers ............................. .97%(a) .97%(a) .97%(a) .97%(a) .96%(a)
Ratios of net investment income to
average net assets
After advisory/administration
fee waivers ........................... 4.25% 4.73% 4.62% 4.69% 4.86%
</TABLE>
(a) Without the waiver of advisory and administration fees and without the
reimbursement of certain operating expenses, the ratios of expenses to
average net assets for the Money Market Portfolio would have been 2.08%,
1.10%, 1.12%, 1.14% and 1.17% for the years ended August 31, 1999, 1998,
1997, 1996 and 1995, respectively.
(b) Financial Highlights relate solely to the Bedford Class of shares within the
portfolio.
10
<PAGE>
PORTFOLIO MANAGEMENT
- --------------------------------------------------------------------------------
INVESTMENT ADVISER
BIMC, a majority-owned indirect subsidiary of PNC Bank, N.A. serves as
investment adviser and is responsible for all purchases and sales of the fund's
portfolio securities. BIMC and its affiliates are one of the largest U.S. bank
managers of mutual funds, with assets currently under management in excess of
$52.9 billion. BIMC (formerly known as PNC Institutional Management Corporation
or PIMC) was organized in 1977 by PNC Bank to perform advisory services for
investment companies and has its principal offices at Bellevue Park Corporate
Center, 400 Bellevue Parkway, Wilmington, DE 19809.
For the fiscal year ended August 31, 1999, BIMC received an advisory fee of
.25% of the fund's average net assets.
The following chart shows the fund's other service providers and includes
their addresses and principal activities.
11
<PAGE>
------------
SHAREHOLDERS
------------
Distribution and
Shareholder Services
------------------------------------ -----------------------------------------
PRINCIPAL DISTRIBUTOR TRANSFER AGENT
PROVIDENT DISTRIBUTORS, INC. PFPC INC.
FOUR FALLS CORPORATE CENTER, 6TH FL. 400 BELLEVUE PARKWAY
WEST CONSHOHOCKEN, PA 19428 WILMINGTON, DE19809
Distributes shares of the fund. Handles shareholder services,
including record-keeping and statements,
distribution of dividends and processing
of buy and sell requests.
------------------------------------ -----------------------------------------
Asset
Management
------------------------------------ -----------------------------------------
INVESTMENT ADVISER CUSTODIAN
BLACKROCK INSTITUTIONAL PFPC TRUST COMPANY
MANAGEMENT CORPORATION 200 STEVENS DRIVE
400 BELLEVUE PARKWAY LESTER, PA 19113
WILMINGTON, DE 19809
Holds the fund's assets, settles
Manages the fund's business all portfolio trades and collects
and investment activities. most of the valuation data
required for calculating the
fund's net asset value ("NAV").
------------------------------------ -----------------------------------------
Fund
Operations
------------------------------------
ADMINISTRATOR AND FUND
ACCOUNTING AGENT
PFPC INC.
400 BELLEVUE PARKWAY
WILMINGTON, DE 19809
Provides facilities, equipment
and personnel to carry out
administrative services related
to the fund and calculates the
fund's NAV, dividends
and distributions.
------------------------------------
---------------------------------
BOARD OF DIRECTORS
Supervises the fund's activities.
---------------------------------
12
<PAGE>
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
PRICING SHARES
The price of your shares is also referred to as the net asset value (NAV).
The NAV is determined twice daily at 12:00 noon and at 4:00 p.m., Eastern
Time, each day on which both the New York Stock Exchange and the Federal Reserve
Bank of Philadelphia are open. It is calculated by dividing the fund's total
assets, less its liabilities, by the number of shares outstanding.
The fund values its securities using amortized cost. This method values a
fund holding initially at its cost and then assumes a constant amortization to
maturity of any discount or premium. The amortized cost method ignores any
impact of changing interest rates.
PURCHASE OF SHARES
GENERAL. You may purchase Shares directly, through an exchange from
accounts invested in shares of any open-end investment company ("The Bear
Stearns Funds") either sponsored by or advised by Bear, Stearns & Co., Inc.
("Bear Stearns") or its affiliates. You may also purchase Shares through an
account maintained by your brokerage firm (the "Account") or directly by mail or
wire. The minimum initial investment is $1,000, and the minimum subsequent
investment is $250. The Company in its sole discretion may accept or reject any
order for purchases of Shares.
Purchases will be effected at the net asset value next determined after
PFPC, the Company's transfer agent, has received a purchase order in good order
and the Company's custodian has Federal Funds immediately available to it. A
"Business Day" is any day that both the New York Stock Exchange (the "NYSE") and
the Federal Reserve Bank of Philadelphia (the "FRB") are open. On any Business
Day, orders which are accompanied by Federal Funds and received by the Company
by 12:00 noon Eastern Time, and orders as to which payment has been converted
into Federal Funds by 12:00 noon Eastern Time, will be executed as of 12:00 noon
that Business Day. Orders which are accompanied by Federal Funds and received by
PFPC after 12:00 noon Eastern Time but prior to the close of regular trading on
the NYSE (generally 4:00 p.m. Eastern Time), and orders as to which payment has
been converted into Federal Funds after 12:00 noon Eastern Time but prior to the
close of regular trading on the NYSE on any Business Day, will be executed as of
the close of regular trading on the NYSE on that Business Day, but will not be
entitled to receive dividends declared on such Business Day. Orders which are
accompanied by Federal Funds and received by the Company as of the close of
regular trading on the NYSE or later, and orders as to which payment has been
converted to Federal Funds as of the close of regular trading on the NYSE or
later on a Business Day will be processed as of 12:00 noon Eastern Time on the
following Business Day.
If your broker makes special arrangements under which orders for Bedford
Shares are received by PFPC prior to 12:00 noon Eastern Time, and your broker
guarantees that payment for the Shares will be made in available Federal Funds
to the Company's custodian prior to the close of regular trading on the NYSE on
the same day, such purchase orders will be effective and Shares will be
purchased at the offering price in effect as of 12:00 noon Eastern Time on the
date the purchase order is received by PFPC.
PURCHASES THROUGH AN ACCOUNT (other than accounts held by Bear Stearns or
brokers who have clearing arrangements with Bear Stearns). Purchases of Shares
may be effected through an Account with your broker through procedures and
requirements established by your broker. In such event, beneficial ownership of
Shares will be recorded by your broker and will be reflected in the Account
statements provided to you by your broker. Your broker may impose minimum
investment Account requirements. Even if your broker does not impose a sales
charge for purchases of Bedford Shares, depending on the terms of your Account
with your broker, the broker may charge to your Account fees for automatic
investment and other services provided to your Account. Information concerning
Account requirements, services and charges should be obtained from your broker,
and you should read this Prospectus in conjunction with any information received
from your broker. Shares are held in the street name account of your broker and
if you desire to transfer such shares to the street name account of another
broker, you should contact your current broker.
If you are a shareholder of The Bear Stearns Funds, you may purchase
Bedford Shares in exchange for shares of The Bear Stearns Funds. This exchange
privilege is only available if you have an existing account.
See "Exchange Privilege" below.
For distribution services with respect to Bedford Shares held by clients of
Bear Stearns, the Company's Distributor will pay Bear Stearns up to .50% of the
annual average value of such accounts.
DIRECT PURCHASES. You may make an initial investment in Bedford Shares by
mail by fully completing and signing an application (the "Application") and
mailing it, together with a check payable to "The RBB Fund -- Money Market
Portfolio (Bedford Class)," to Bedford Money Market Portfolio, c/o PFPC, P.O.
Box 8960, Wilmington, Delaware 19899. Subsequent purchases may be made by
forwarding payment to the Company's transfer agent at the foregoing address.
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<PAGE>
You may also purchase Shares by having your bank or broker wire Federal
Funds to the Company's Custodian, PFPC Trust Company. Your bank or broker may
impose a charge for this service. The Company does not currently charge for
effecting wire transfers but reserves the right to do so in the future. In order
to ensure prompt receipt of your Federal Funds wire, for an initial investment,
it is important that you follow these steps:
A. Telephone the Company's transfer agent, PFPC, toll-free (800)
447-1139, and provide your name, address, telephone number, Social
Security or Tax Identification Number, the amount being wired, and
by which bank or broker. PFPC will then provide you with an account
number. (If you have an existing account, you should also notify
PFPC prior to wiring funds.)
B. Instruct your bank or broker to wire the specified amount, together
with your assigned account number, to PFPC's account with PNC Bank.
PNC Bank, N.A., Philadelphia, PA
ABA-0310-0005-3.
CREDIT ACCOUNT NUMBER: 85-5102-0143
FROM: (your name)
ACCOUNT NUMBER: (your account number)
FOR PURCHASE OF: The RBB Fund -- Money Market Portfolio
(Bedford Class)
AMOUNT: (amount to be invested)
C. Fully complete and sign the Application and mail it to the address
shown thereon. PFPC will not process redemptions until it receives a
fully completed and signed Application.
For subsequent investments, you should follow steps A and B above.
RETIREMENT PLANS. Bedford Shares may be purchased in conjunction with
individual retirement accounts ("IRAs") and rollover IRAs where PFPC Trust
Company acts as custodian. For further information as to applications and annual
fees, contact the Distributor or your broker. To determine whether the benefits
of an IRA are available and/or appropriate, you should consult with your tax
adviser.
REDEMPTION OF SHARES
GENERAL. Redemption orders are effected at the net asset value per share
next determined after receipt of the order in proper form by the Company's
transfer agent, PFPC. You may redeem all or some of your Shares in accordance
with one of the procedures described below.
REDEMPTION OF SHARES IN AN ACCOUNT. If you beneficially own Bedford Shares
through an Account, you may redeem them in your Account in accordance with
instructions and limitations pertaining to your Account by contacting your
broker. If such notice is received by PFPC by 12:00 noon Eastern Time on any
Business Day, the redemption will be effective as of 12:00 noon Eastern Time on
that day. Payment of the redemption proceeds will be made after 12:00 noon
Eastern Time on the day the redemption is effected, provided that the Company's
custodian is open for business. If the custodian is not open, payment will be
made on the next bank business day. If the redemption request is received
between 12:00 noon and the close of regular trading on the NYSE on a Business
Day, the redemption will be effective as of the close of regular trading on the
NYSE on such Business Day and payment will be made on the next bank business day
following receipt of the redemption request. If all of your Shares are redeemed,
all accrued but unpaid dividends on those Shares will be paid with the
redemption proceeds.
Each brokerage firm reserves the right to waive or modify criteria for
participation in an Account or to terminate participation in an Account for any
reason.
REDEMPTION OF SHARES OWNED DIRECTLY. If you own Shares directly, you may
redeem any number of Shares by sending a written request to The RBB Fund --
Money Market Portfolio (Bedford Class), c/o PFPC, P.O. Box 8960, Wilmington,
Delaware 19899. Redemption requests must be signed by each shareholder in the
same manner as the Shares are registered. Redemption requests for joint accounts
require the signature of each joint owner. On redemption requests of $5,000 or
more, each signature must be guaranteed. A signature guarantee may be obtained
from a domestic bank or trust company, broker, dealer, clearing agency or
savings association who are participants in a medallion program recognized by
the Securities Transfer Association. The three recognized medallion programs are
Securities Transfer Agents Medallion Program (STAMP), Stock Exchanges Medallion
Program (SEMP) and New York Stock Exchange, Inc. Medallion Signature Program
(MSP). Signature guarantees that are not part of these programs will not be
accepted.
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<PAGE>
REDEMPTION BY TELEPHONE. If you are a direct investor, you may redeem your
Shares without charge by telephone if you have completed and returned an account
application containing the appropriate telephone election. To add a telephone
option to an existing account that previously did not provide for this option,
you should contact the transfer agent, PFPC, at (800) 447-1139.
Once you are authorized to utilize the telephone redemption option, a
redemption of Shares may be requested by calling PFPC at (800) 447-1139 and
requesting that the redemption proceeds be mailed to the primary registration
address or wired per the authorized instructions. If the telephone redemption
option or the telephone exchange option (as described below) is authorized, PFPC
may act on telephone instructions from any person representing himself or
herself to be a shareholder and believed by PFPC to be genuine. PFPC's records
of such instructions are binding and shareholders, not the Company or PFPC, bear
the risk of loss in the event of unauthorized instructions reasonably believed
by the Company or PFPC to be genuine. PFPC will employ reasonable procedures to
confirm that instructions communicated are genuine and, if it does not, it may
be liable for any losses due to unauthorized or fraudulent instructions. The
procedures employed by PFPC in connection with transactions initiated by
telephone include tape recording of telephone instructions and requiring some
form of personal identification prior to acting upon instructions received by
telephone.
Proceeds of a telephone redemption request will be mailed by check to your
registered address unless you have designated in your Application that such
proceeds are to be sent by wire transfer to a specified checking or savings
account. If proceeds are to be sent by wire transfer, a telephone redemption
request received prior to the close of regular trading on the NYSE will result
in redemption proceeds being wired to your bank account on the next day that a
wire transfer can be effected. The minimum redemption for proceeds sent by wire
transfer is $2,500. There is no maximum for proceeds sent by wire transfer. The
Company may modify this redemption service at any time or charge a service fee
upon prior notice to shareholders, although no fee is currently contemplated.
DURING TIMES OF DRASTIC ECONOMIC OR MARKET CONDITIONS, YOU MAY EXPERIENCE
DIFFICULTY IN CONTACTING BEAR STEARNS, THE DISTRIBUTOR OR YOUR BROKER BY
TELEPHONE TO REQUEST A REDEMPTION OF SHARES. IN SUCH CASES, YOU SHOULD CONSIDER
USING THE OTHER REDEMPTION PROCEDURES DESCRIBED ABOVE. USE OF THESE OTHER
REDEMPTION PROCEDURES MAY RESULT IN THE REDEMPTION REQUEST BEING PROCESSED AT A
LATER TIME THAN IT WOULD HAVE BEEN IF TELEPHONE REDEMPTION HAD BEEN USED.
REDEMPTION BY CHECK. If you are a direct investor or you do not have check
writing privileges for your Account, the Company will provide to you forms of
drafts ("checks") payable through PNC Bank. These checks may be made payable to
the order of anyone. The minimum amount of a check is $250; however, your broker
may establish a higher minimum. If you wish to use this check writing redemption
procedure, you should complete specimen signature cards (available from PFPC),
and then forward such signature cards to PFPC. PFPC will then arrange for the
checks to be honored by PNC Bank. If you own Shares through an Account, you
should contact your broker for signature cards. Investors with joint accounts
may elect to have checks honored with a single signature. Check redemptions will
be subject to PNC Bank's rules governing checks. An investor will be able to
stop payment on a check redemption. The Company or PNC Bank may terminate this
redemption service at any time, and neither shall incur any liability for
honoring checks, for effecting redemptions to pay checks, or for returning
checks which have not been accepted.
When a check is presented to PNC Bank for clearance, PNC Bank, as your
agent, will cause the Company to redeem a sufficient number of your full and
fractional Shares to cover the amount of the check. This procedure enables you
to continue to receive dividends on your Shares representing the amount being
redeemed by check until such time as the check is presented to PNC Bank.
Pursuant to rules under the 1940 Act, checks may not be presented for cash
payment at the offices of PNC Bank. This limitation does not affect checks used
for the payment of bills or cash at other banks.
AUTOMATIC WITHDRAWAL. Automatic withdrawal permits you to request
withdrawal of a specified dollar amount (minimum of $25) on either a monthly or
quarterly basis if the investor has a $5,000 minimum account. You can obtain an
application for automatic withdrawal from Bear Stearns, the Distributor, your
broker, or the transfer agent. Automatic withdrawal may be ended at any time by
either you, the Company or the transfer agent. Shares for which certificates
have been issued may not be redeemed through automatic withdrawal. Purchases of
additional shares concurrently with withdrawals generally are undesirable.
ADDITIONAL REDEMPTION INFORMATION. The Company ordinarily will make payment
for all Shares redeemed within seven days after receipt by PFPC of a redemption
request in proper form. However, if you bought your Shares by check, the Company
will wait for your check to clear (up to 15 days) before it accepts your
redemption request. This procedure does not apply to Shares purchased by wire
payment. You should consider purchasing Shares using a certified or bank check
or money order if you anticipate an immediate need for redemption proceeds.
15
<PAGE>
The Company does not impose a charge when Shares are redeemed, except as
described below. The Company reserves the right to redeem any account in the
Bedford Class involuntarily, on thirty days' notice, if such account falls below
$500 and during such 30-day notice period the amount invested in such account is
not increased to at least $500. Payment for Shares redeemed may be postponed or
the right of redemption suspended as provided by the rules of the SEC.
If the Board of Directors determines that it would be detrimental to the
best interests of the remaining shareholders of the funds to make payment wholly
or partly in cash, redemption proceeds may be paid in whole or in part by an
in-kind distribution of readily marketable securities held by a fund instead of
cash in conformity with applicable rules of the SEC. Investors generally will
incur brokerage charges on the sale of portfolio securities so received in
payment of redemptions. The funds have elected, however, to be governed by Rule
18f-1 under the 1940 Act, so that a fund is obligated to redeem its Shares
solely in cash up to the lessor of $250,000 or 1% of its net asset value during
any 90-day period for any one shareholder of a fund.
EXCHANGE PRIVILEGE
The exchange privilege enables you to purchase Bedford Shares in exchange
for shares of the other mutual funds sponsored or advised by Bear Stearns, to
the extent such shares are offered for sale in your state of residence. These
funds have different investment objectives than the fund. To use this privilege,
you should consult your account executive at Bear Stearns, your investment
dealers who have sales agreements with Bear Stearns, the Distributor, your
broker or the transfer agent to determine if it is available and whether any
conditions are imposed on its use. Currently, exchanges may be made among the
following portfolios (and such additional portfolios which may be added in the
future):
- S&P STARS Portfolio
- Large Cap Value Portfolio
- Small Cap Value Portfolio
- The Insiders Select Fund
- International Equity Portfolio
- Focus List Portfolio
- Balanced Portfolio
To effect an exchange of Shares, exchange instructions must be given to the
transfer agent in writing or by telephone. If you wish to make an exchange, send
a written request to PFPC, Attention: The RBB Fund -- Money Market Portfolio
(Bedford Class), P.O. Box 8960, Wilmington, Delaware 19899. You will
automatically be provided with telephone exchange privileges when opening an
account, unless you indicate otherwise on the account application. If you hold
share certificates, you are not eligible to exchange shares of the fund by phone
because share certificates must accompany all exchange requests. To add this
feature to an existing account that previously did not provide for this option,
a Telephone Authorization Form must be filed with the transfer agent. This form
is available from the transfer agent. Once you have made this election, you may
contact the transfer agent by telephone at (800) 447-1139 to request the
exchange. See "Redemption of Shares--Redemption by Telephone" for a description
of the Company's telephone transaction procedures. During periods of substantial
economic or market change, telephone exchanges may be difficult to complete and
shareholders may have to submit exchange requests to the transfer agent in
writing.
If you do not currently own Bedford Shares or a fund whose shares are being
acquired, a new account will be established with the same registration, dividend
and capital gain options and the same dealer of record as the account from which
shares are exchanged, unless you specify otherwise in writing with all
signatures guaranteed as described above. To participate in an automatic
investment plan or establish automatic withdrawal for the new account, however,
you must file a specific written request before the exchange can be processed.
The exchange privilege may be modified or terminated at any time, or from time
to time, by the Company on 60 days' notice to affected portfolio or fund
shareholders.
Before any exchange, you must obtain and should review a copy of the
current prospectus of the portfolio or fund into which the exchange is being
made. Prospectuses may be obtained from Bear Stearns. Except in the case of
Personal Retirement Plans, the Shares being exchanged must have a current value
of at least $250; furthermore, when establishing a new account by exchange, the
shares being exchanged must have a value of at least the minimum initial
investment required for the portfolio or fund into which the exchange is being
made. If making an exchange to an existing account, the dollar value must equal
or exceed the applicable minimum for subsequent investments. If any amount
remains in the investment portfolio from which the exchange is being made, such
amount must not be below the minimum account value required by the portfolio or
fund.
16
<PAGE>
Shares will be exchanged at the next determined public offering price. To
qualify for the exchange privilege, at the time of the exchange, you must notify
Bear Stearns, the Distributor, your investment dealer or the transfer agent. Any
such qualification is subject to confirmation of your holdings through a check
of appropriate records. No fees currently are charged directly to you for
exchanges, although the Company reserves the right, upon not less than 60 days'
written notice, to charge a $5.00 fee in accordance with rules promulgated by
the SEC. The Company reserves the right to reject any exchange request in whole
or in part. The Exchange Privilege may be modified or terminated at any time
upon notice to shareholders.
The exchange of shares of one portfolio or fund for shares of another is
treated for federal income tax purposes as a sale of the shares given in
exchange by the shareholder and, therefore, an exchanging shareholder may
realize a taxable gain or loss.
REDIRECTED DISTRIBUTION OPTION. The Redirected Distribution Option enables you
to invest automatically dividends or dividends and capital gain distributions,
if any, paid by the fund in shares of another portfolio of the Company or a fund
advised or sponsored by Bear Stearns in which you invest. Shares of the other
portfolio or fund will be purchased at the then current public offering price.
If you are investing in a fund that charges a sales load, you may qualify for
share prices which do not include the sales load or which reflect a reduced
sales load.
This privilege is available only for existing accounts and may not be used to
open new accounts. Minimum subsequent investments do not apply. The Company may
modify or terminate this privilege at any time or charge a service fee. However,
no such fee currently is contemplated.
DIVIDENDS AND DISTRIBUTIONS
The Company will distribute substantially all of the net investment income
and net realized capital gains, if any, of the fund to the fund's shareholders.
All distributions are reinvested in the form of additional full and fractional
Shares of the Class unless a shareholder elects otherwise.
The net investment income (not including any net short-term capital gains)
earned by the fund will be declared as a dividend on a daily basis and paid
monthly. Dividends are payable to shareholders of record immediately prior to
the determination of net asset value made as of the close of trading of the
NYSE. Net short-term capital gains, if any, will be distributed at least
annually.
TAXES
Distributions from the Money Market Portfolio will generally be taxable to
shareholders. It is expected that all, or substantially all, of these
distributions will consist of ordinary income. You will be subject to income tax
on these distributions regardless of whether they are paid in cash or reinvested
in additional shares. The one major exception to these tax principles is that
distributions on shares held in an IRA (or other tax-qualified plan) will not be
currently taxable.
The foregoing is only a summary of certain tax considerations under the
current law, which may be subject to change in the future. Shareholders who are
nonresident aliens, foreign trusts or estates, or foreign corporations or
partnerships may be subject to different United States Federal income tax
treatment. You should consult your tax adviser for further information regarding
federal, state, local and/or foreign tax consequences relevant to your specific
situation.
17
<PAGE>
DISTRIBUTION ARRANGEMENTS
- --------------------------------------------------------------------------------
Bedford Shares of the Money Market Portfolio are sold without a sales load
on a continuous basis by Provident Distributors, Inc., whose principal business
address is at Four Falls Corporate Center, West Conshohocken, PA 19428.
The Board of Directors of the Company approved and adopted the Distribution
Agreement and Plan of Distribution for the Class (the "Plan") pursuant to Rule
12b-1 under the 1940 Act. Under the Plan, the Distributor is entitled to receive
from the Class a distribution fee, which is accrued daily and paid monthly, of
up to .65% on an annualized basis of the average daily net assets of the Class.
The actual amount of such compensation is agreed upon from time to time by the
Company's Board of Directors and the Distributor. Under the Distribution
Agreement, the Distributor has agreed to accept compensation for its services
thereunder and under the Plan in the amount of .60% of the average daily net
assets of the Class on an annualized basis in any year. The Distributor may, in
its discretion, voluntarily waive from time to time all or any portion of its
distribution fee.
Under the Distribution Agreement and the Plan, the Distributor may
reallocate an amount up to the full fee that it receives to financial
institutions, including broker/dealers, based upon the aggregate investment
amounts maintained by and services provided to shareholders of the Class
serviced by such financial institutions. The Distributor may also reimburse
broker/dealers for other expenses incurred in the promotion of the sale of
Bedford Shares. The Distributor and/or broker/dealers pay for the cost of
printing (excluding typesetting) and mailing to prospective investors
prospectuses and other materials relating to the Class as well as for related
direct mail, advertising and promotional expenses.
The Plan obligates the Company, during the period it is in effect, to
accrue and pay to the Distributor on behalf of the Class the fee agreed to under
the Distribution Agreement. Payments under the Plan are not based on expenses
actually incurred by the Distributor, and the payments may exceed distribution
expenses actually incurred. Because these fees are paid out of the fund's assets
on an on-going basis, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges.
18
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<PAGE>
The
Bear Stearns
Funds
575 LEXINGTON AVENUE
NEW YORK, NY 10167
1.800.766.4111
MONEY MARKET PORTFOLIO
INVESTMENT ADVISER
BlackRock Institutional Management Corporation
Wilmington, Delaware
DISTRIBUTOR
Provident Distributors, Inc.
West Conshohocken, Pennsylvania
CUSTODIAN
PFPC Trust Company
Lester, Pennsylvania
ADMINISTRATOR AND TRANSFER AGENT
PFPC Inc.
Wilmington, Delaware
COUNSEL
Drinker Biddle & Reath LLP
Philadelphia, Pennsylvania
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS OR IN THE FUND'S STATEMENT OF
ADDITIONAL INFORMATION INCORPORATED HEREIN BY REFERENCE, IN CONNECTION WITH THE
OFFERING MADE BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND OR
ITS DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE FUND OR
BY THE DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY
BE MADE.
<PAGE>
FOR MORE INFORMATION:
This prospectus contains important information you should know before you
invest. Read it carefully and keep it for future reference. More information
about the Bedford Family Money Market Portfolio is available free, upon request,
including:
ANNUAL/SEMI-ANNUAL REPORT
These reports contain additional information about the fund's investments,
describe the fund's performance, list portfolio holdings, and discuss recent
market conditions and economic trends. The annual report includes fund
strategies for the last fiscal year.
STATEMENT OF ADDITIONAL INFORMATION (SAI)
A Statement of Additional Information, dated December 1, 1999 (SAI), has
been filed with the Securities and Exchange Commission (SEC). The SAI, which
includes additional information about the Bedford Family Money Market Portfolio,
may be obtained free of charge, along with the Bedford Family Money Market
Portfolio annual and semi-annual reports, by calling (800) 533-7719. The SAI, as
supplemented from time to time, is incorporated by reference into this
Prospectus (and is legally considered a part of this Prospectus).
SHAREHOLDER ACCOUNT SERVICE REPRESENTATIVES
Representatives are available to discuss account balance information,
mutual fund prospectuses, literature, programs and services available. Hours: 8
a.m. to 5 p.m. (Eastern time) Monday-Friday. Call: (800) 533-7719.
PURCHASES AND REDEMPTIONS
Call your broker or (800) 533-7719.
WRITTEN CORRESPONDENCE
Post Office Address: Bedford Family -- Money Market Portfolio
c/o PFPC, Inc.
PO Box 8950
Wilmington, DE 19899-8950
Street Address: Bedford Family -- Money Market Portfolio
c/o PFPC, Inc.
400 Bellevue Parkway
Wilmington, DE 19809
SECURITIES AND EXCHANGE COMMISSION (SEC)
You may also view information about The RBB Fund, Inc. and the Bedford
Family Money Market Portfolio, including the SAI, by visiting the SEC website
(http://www.sec.gov) or the SEC's Public Reference Room in Washington, D.C.
Information about the operation of the public reference room can be obtained by
calling the SEC directly at 1-202-942-8090. Copies of this information can be
obtained, for a duplicating fee, by writing to the Public Reference Section of
the SEC, Washington, D.C. 20549-0102, or by electronic request to
[email protected].
INVESTMENT COMPANY ACT FILE NO. 811-05518
<PAGE>
[GRAPHIC OMITTED]
CASH PRESERVATION
PORTFOLIOS
OF
THE RBB FUND, INC.
Money Market Portfolio
Municipal Money Market Portfolio
This prospectus gives vital information about these money market mutual
funds, advised by BlackRock Institutional Management Corporation ("BIMC" or the
"Adviser"), including information on investment policies, risks and fees. For
your own benefit and protection, please read it before you invest and keep it on
hand for future reference.
Please note that these funds:
- are not bank deposits;
- are not federally insured;
- are not obligations of, or guaranteed or endorsed by PNC Bank, National
Association, PFPC Trust Company or any other bank;
- are not obligations of, or guaranteed or endorsed or otherwise
supported by the U.S. Government, the Federal Deposit Insurance
Corporation, the Federal Reserve Board or any other governmental
agency;
- are not guaranteed to achieve their goal(s);
- may not be able to maintain a stable $1 share price and you may lose
money.
- --------------------------------------------------------------------------------
THE SECURITIES DESCRIBED IN THIS PROSPECTUS HAVE BEEN REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION (SEC). THE SEC, HOWEVER, HAS NOT JUDGED THESE
SECURITIES FOR THEIR INVESTMENT MERIT AND HAS NOT DETERMINED THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANYONE WHO TELLS YOU OTHERWISE IS COMMITTING A
CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
PROSPECTUS December 1, 1999
<PAGE>
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<PAGE>
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
================================ INTRODUCTION TO THE RISK/RETURN SUMMARY ...5
PORTFOLIO DESCRIPTION
A LOOK AT THE GOALS, Money Market ...........................6
STRATEGIES, RISKS, EXPENSES
AND FINANCIAL HISTORY OF Municipal Money Market ................11
EACH PORTFOLIO.
PORTFOLIO MANAGEMENT
DETAILS ABOUT THE SERVICE Investment Adviser ....................19
PROVIDERS.
Service Provider Chart ................20
SHAREHOLDER INFORMATION
POLICIES AND INSTRUCTIONS FOR Pricing Shares ........................21
OPENING, MAINTAINING AND
CLOSING AN ACCOUNT IN EITHER OF Purchase of Shares ....................21
THE PORTFOLIOS.
Redemption of Shares ..................22
Exchange Privilege ....................24
Dividends and Distributions ...........25
Taxes .................................25
DETAILS ON DISTRIBUTION DISTRIBUTION ARRANGEMENTS ................26
PLANS.
================================ FOR MORE INFORMATION .............Back Cover
3
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<PAGE>
INTRODUCTION TO THE RISK/RETURN SUMMARY
- --------------------------------------------------------------------------------
This Prospectus has been written to provide you with the information you
need to make an informed decision about whether to invest in the Cash
Preservation Classes of The RBB Fund, Inc. (the "Company").
The two classes of common stock (each a "Cash Preservation Class") of the
Company offered by this Prospectus represent interests in the Cash Preservation
Classes of the Money Market Portfolio and the Municipal Money Market Portfolio.
This Prospectus and the Statement of Additional Information incorporated herein
relate solely to the Cash Preservation Classes of the Company.
This Prospectus has been organized so that each Portfolio has its own short
section with important facts about that particular Portfolio. Once you read the
short sections about the Portfolios that interests you, read the sections about
Purchase and Redemption of Shares of the Cash Preservation Classes ("Cash
Preservation Shares"). These sections apply to both of the Portfolios offered by
this Prospectus.
5
<PAGE>
MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
================================================================================
IMPORTANT DEFINITIONS
ASSET-BACKED SECURITIES: Debt securities that are backed by a pool of assets,
usually loans such as installment sale contracts or credit card receivables.
COMMERCIAL PAPER: Short-term securities with maturities of 1 to 270 days which
are issued by banks, corporations and others.
DOLLAR WEIGHTED AVERAGE MATURITY: The average amount of time until the
organizations that issued the debt securities in the fund's portfolio must pay
off the principal amount of the debt. "Dollar weighted" means the larger the
dollar value of a debt security in the fund, the more weight it gets in
calculating this average.
LIQUIDITY: Liquidity is the ability to easily convert investments into cash
without losing a significant amount of money in the process.
NET ASSET VALUE (NAV): The value of everything the fund owns, minus everything
it owes, divided by the number of shares held by investors.
REPURCHASE AGREEMENT: A special type of a short-term investment. A dealer sells
securities to a fund and agrees to buy them back later at a set price. In
effect, the dealer is borrowing the fund's money for a short time, using the
securities as collateral.
VARIABLE OR FLOATING RATE SECURITIES: Securities whose interest rates adjust
automatically after a certain period of time and/or whenever a predetermined
standard interest rate changes.
================================================================================
INVESTMENT GOAL
The fund seeks to generate current income, to provide you with liquidity
and to protect your investment.
PRIMARY INVESTMENT STRATEGIES
To achieve this goal, we invest in a diversified portfolio of short term,
high quality, U.S. dollar-denominated instruments, including government, bank,
commercial and other obligations.
Specifically, we may invest in:
1) U.S. dollar-denominated obligations issued or supported by the credit
of U.S. or foreign banks or savings institutions with total assets of
more than $1 billion (including obligations of foreign branches of such
banks).
2) High quality commercial paper and other obligations issued or
guaranteed (or otherwise supported) by U.S. and foreign corporations
and other issuers rated (at the time of purchase) A-2 or higher by
Standard and Poor's, Prime-2 or higher by Moody's, D-2 or higher by
Duff & Phelps, F-2 or higher by Fitch or TBW-2 or higher by Thomson
BankWatch, as well as high quality corporate bonds rated AA (or Aa) or
higher at the time of purchase by those rating agencies. These ratings
must be provided by at least two rating agencies or by the only rating
agency providing a rating.
3) Unrated notes, paper and other instruments that are determined by us to
be of comparable quality to the instruments described above.
4) Asset-backed securities (including interests in pools of assets such as
mortgages, installment purchase obligations and credit card
receivables).
5) Securities issued or guaranteed by the U.S. Government or by its
agencies or authorities.
6) Dollar-denominated securities issued or guaranteed by foreign
governments or their political subdivisions, agencies or authorities.
7) Securities issued or guaranteed by state or local governmental bodies.
8) Repurchase agreements relating to the above instruments.
The fund seeks to maintain a net asset value of $1.00 per share.
6
<PAGE>
QUALITY
Under guidelines established by the Company's Board of Directors, we will
only purchase securities if such securities or their issuers have (or such
securities are guaranteed or otherwise supported by entities which have)
short-term debt ratings at the time of purchase in the two highest rating
categories from at least two national rating agencies, or one such rating if the
security is rated by only one agency. Securities that are unrated must be
determined to be of comparable quality.
MATURITY
The dollar-weighted average maturity of all the investments of the fund
will be 90 days or less. Only those securities which have remaining maturities
of 397 days or less (except for certain variable and floating rate instruments
and securities collateralizing repurchase agreements) will be purchased.
KEY RISKS
The value of money market investments tends to fall when current interest
rates rise. Money market investments are generally less sensitive to interest
rate changes than longer-term securities.
The fund's securities may not earn as high a level of income as longer term
or lower quality securities, which generally have greater risk and more
fluctuation in value.
The fund's concentration of its investments in the banking industry could
increase risks. The profitability of banks depends largely on the availability
and cost of funds, which can change depending upon economic conditions. Banks
are also exposed to losses if borrowers get into financial trouble and can't
repay their loans.
The obligations of foreign banks and other foreign issuers may involve
certain risks in addition to those of domestic issuers, including higher
transaction costs, less complete financial information, political and economic
instability, less stringent regulatory requirements and less market liquidity.
Unrated notes, paper and other instruments may be subject to the risk that
an issuer may default on its obligation to pay interest and repay principal.
The obligations issued or guaranteed by state or local government bodies
may be issued by entities in the same state and may have interest which is paid
from revenues of similar projects. As a result, changes in economic, business or
political conditions relating to a particular state or types of projects may
impact the fund.
Treasury obligations differ only in their interest rates, maturities and
time of issuance. These differences could result in fluctuations in the value of
such securities depending upon the market. Obligations of U.S. Government
agencies and authorities are supported by varying degrees of credit. The U.S.
Government gives no assurances that it will provide financial support to its
agencies and authorities if it is not obligated by law to do so. Default in
these issuers could negatively impact the fund.
The fund's investment in asset-backed securities may be negatively impacted
by interest rate fluctuations or when an issuer pays principal on an obligation
held by the fund earlier or later than expected. These events may affect their
value and the return on your investment.
The fund could lose money if a seller under a repurchase agreement defaults
or declares bankruptcy.
We may purchase variable and floating rate instruments. Like all debt
instruments, their value is dependent on the credit paying ability of the
issuer. If the issuer were unable to make interest payments or default, the
value of the securities would decline. The absence of an active market for these
securities could make it difficult to dispose of them if the issuer defaults.
7
<PAGE>
The fund, like any business, could be affected if the computer systems on
which it relies do not properly process information beginning on January 1,
2000. While Year 2000 issues could have a negative effect on the fund, BIMC, the
fund's investment adviser, is currently working to avoid such problems. BIMC is
also working with other systems providers and vendors servicing the Portfolios
to determine their systems' ability to handle Year 2000 problems. There is no
guarantee, however, that systems will work properly on or after January 1, 2000.
Year 2000 problems may also hurt issuers whose securities the fund holds or
securities markets generally.
ALTHOUGH WE SEEK TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER
SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND. WHEN YOU INVEST IN
THIS FUND YOU ARE NOT MAKING A BANK DEPOSIT. YOUR INVESTMENT IS NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR BY ANY BANK OR
GOVERNMENTAL AGENCY.
RISK/RETURN INFORMATION
The chart and table below give you a picture of the variability of the
fund's long-term performance for Cash Preservation Shares. The information shows
you how the fund's performance has varied year by year and provides some
indication of the risks of investing in the fund. The chart and the table both
assume reinvestment of dividends and distributions. As with all such
investments, past performance is not an indication of future results.
Performance reflects fee waivers in effect. If fee waivers were not in place,
the fund's performance would be reduced.
AS OF 12/31/98
ANNUAL TOTAL RETURNS
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
8.81% 7.62% 5.55% 3.09% 2.41% 3.30% 5.19% 4.67% 4.82% 4.77%
Year-to-date total return for the nine months ended September 30, 1999: 4.25%
Best Quarter: 9.47% (quarter ended 6/30/89)
Worst Quarter: 2.36% (quarter ended 9/30/93)
AS OF 12/31/98
AVERAGE ANNUAL TOTAL RETURNS
1 YEAR 5 YEARS 10 YEARS
------ ------- --------
MONEY MARKET 4.77% 4.55% 5.01%
8
<PAGE>
CURRENT YIELD: The seven-day yield for the period ended 12/31/98 for the
fund was 4.40%. Past performance is not an indication of future results. Yields
will vary. You may call (800) 430-9618 to obtain the current seven-day yield of
the fund.
EXPENSES AND FEES
As a shareholder you pay certain fees and expenses. Annual fund operating
expenses are paid out of fund assets and are reflected in the fund's price.
The table below describes the fees and expenses that you may pay if you buy
and hold Cash Preservation Shares of the fund. The table is based on expenses
for the most recent fiscal year.
================================================================================
IMPORTANT DEFINITIONS
MANAGEMENT FEES: Fees paid to the investment adviser for portfolio management
services.
OTHER EXPENSES: Includes administration, transfer agency, custody, professional
fees and registration fees.
DISTRIBUTION AND SERVICE FEES: Fees that are paid to the Distributor for
shareholder account service and maintenance.
================================================================================
ANNUAL FUND OPERATING EXPENSES*
(Expenses that are deducted from fund assets)
Management Fees 1 .................................... 0.36%
Distribution and service (12b-1) fees ................ 0.40%
Other expenses 2 ..................................... 8.80%
-----
Total annual fund operating expenses 3 ............... 9.56%
=====
* The table does not reflect charges or credits which investors might
incur if they invest through a financial institution.
1. BIMC has voluntarily undertaken that a portion of its management fee
will not be imposed on the fund during the current fiscal year ending
August 31, 2000. As a result of the fee waiver, current management fees
of the fund are 0.25% of average daily net assets. This waiver is
expected to remain in effect for the current fiscal year. However, it
is voluntary and can be modified or terminated at any time without the
fund's consent.
2. "Other expenses" for the current fiscal year are expected to be less
than the amounts shown above because certain of the fund's service
providers are waiving a portion of their fees and/or reimbursing the
fund for certain other expenses. As a result of these fee waivers,
"Other expenses" of the fund are estimated to be 0.30%. These waivers
and reimbursements are expected to remain in effect for the current
fiscal year. However, they are voluntary and can be modified or
terminated at any time without the fund's consent.
3. As a result of the fee waivers and/or reimbursements set forth in notes
1 and 2, the total annual fund operating expenses which are estimated
to be incurred during the current fiscal year are 0.95%. Although these
fee waivers and/or reimbursements are expected to remain in effect for
the current fiscal year, they are voluntary and may be terminated at
any time at the option of BIMC or the fund's service providers.
EXAMPLE:
The example is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated and then redeem
all of your shares at the end of each period. The example also assumes that your
investment has a 5% return each year and that the fund's operating expenses
remains the same. Although your actual costs may be higher or lower, based on
these assumptions your cost would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
CASH PRESERVATION SHARES $934 $2,677 $4,264 $7,641
9
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The table below sets forth certain financial information for the periods
indicated, including per share information results for a single fund share. The
term "Total Return" indicates how much your investment would have increased or
decreased during this period of time and assumes that you have reinvested all
dividends and distributions. This information has been derived from the fund's
financial statements audited by PricewaterhouseCoopers LLP, the Company's
independent accountants. This information should be read in conjunction with the
fund's financial statements which, together with the report of independent
accountants, are included in the fund's annual report, which is available upon
request (see back cover for ordering instructions).
FINANCIAL HIGHLIGHTS (b)
(FOR A CASH PRESERVATION SHARE OUTSTANDING THROUGHOUT EACH YEAR)
<TABLE>
<CAPTION>
MONEY MARKET PORTFOLIO
FOR THE FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
AUGUST 31, 1999 AUGUST 31, 1998 AUGUST 31, 1997 AUGUST 31, 1996 AUGUST 31, 1995
--------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year ........... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- ------- --------
Income from investment operations
Net investment income ....................... 0.0427 0.0474 0.0464 0.0471 0.0487
-------- -------- -------- ------- --------
Total from investment operations .......... 0.0427 0.0474 0.0464 0.0471 0.0487
-------- -------- -------- ------- --------
Less distributions
Dividends (from net investment income) ...... (0.0427) (0.0474) (0.0464) (0.0471) (0.0487)
-------- -------- -------- ------- --------
Total distributions ....................... (0.0427) (0.0474) (0.0464) (0.0471) (0.0487)
-------- -------- -------- ------- --------
Net asset value at end of year ................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======= --------
Total Return ................................... 4.36% 4.86% 4.74% 4.81% 4.98%
Ratios/Supplemental Data
Net assets at end of period (in thousands) .. $ 131 $ 226 $ 242 $ 202 $ 236
Ratios of expenses to average net assets
After advisory/administration fee waivers . .95%(a) .95%(a) .95%(a) .95%(a) .95%(a)
Ratios of net investment income to
average net assets
After advisory/administration fee waivers . 4.27% 4.74% 4.64% 4.71% 4.87%
</TABLE>
(a) Without the waiver of advisory, administration and transfer agent fees and
without the reimbursement of certain operating expenses, the ratios of
expenses to average net assets for the Money Market Portfolio would have
been 9.56%, 9.84%, 10.68%, 12.08% and 9.34% for the years ended August 31,
1999, 1998, 1997, 1996 and 1995, respectively.
(b) Financial Highlights relate solely to the Cash Preservation Class of shares
within the portfolio.
10
<PAGE>
MUNICIPAL MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
================================================================================
IMPORTANT DEFINITIONS
DOLLAR WEIGHTED AVERAGE MATURITY: The average amount of time until the
organizations that issued the debt securities in the fund's portfolio must pay
off the principal amount of the debt. "Dollar weighted" means the larger the
dollar value of a debt security in the fund, the more weight it gets in
calculating this average.
GENERAL OBLIGATION BONDS: Bonds which are secured by the issuer's pledge of its
full faith, credit and taxing power for the payment of principal and interest.
LIQUIDITY: Liquidity is the ability to easily convert investments into cash
without losing a significant amount of money in the process.
MUNICIPAL LEASE OBLIGATIONS: These provide participation in municipal lease
agreements and installment purchase contracts, but are not part of the general
obligations of the municipality.
MUNICIPAL SECURITY: A short-term obligation issued by or on behalf of states and
possessions of the United States, their political subdivisions and their
agencies and authorities.
NET ASSET VALUE (NAV): The value of everything the fund owns, minus everything
it owes, divided by the number of shares held by investors.
REVENUE BONDS: Bonds which are secured only by the revenues from a particular
facility or class of facilities, such as a water or sewer system, or from the
proceeds of a special excise tax or other revenue source.
TAX-EXEMPT COMMERCIAL PAPER: Short-term Municipal Securities with maturities of
1 to 270 days.
VARIABLE OR FLOATING RATE SECURITIES: Securities whose interest rates adjust
automatically after a certain period of time and/or whenever a predetermined
standard interest rate changes.
================================================================================
INVESTMENT GOAL
The fund seeks to generate current income exempt from federal income taxes,
to provide you with liquidity and to protect your investment.
PRIMARY INVESTMENT STRATEGIES
To achieve this goal, we invest in a diversified portfolio of Municipal
Securities. Specifically, we may invest in:
1) Fixed and variable rate notes and similar debt instruments issued by
issuers who have ratings at the time of purchase of MIG-2, VMIG-2 or
Prime-2 or higher by Moody's, SP-2 or A-2 or higher by Standard &
Poor's, D-2 or higher by Duff & Phelps, or F-2 or higher by Fitch (or
guaranteed or otherwise supported by entities with such ratings).
2) Tax-exempt commercial paper and similar debt instruments issued by
issuers who have ratings at the time of purchase of Prime-2 or higher
by Moody's, A-2 or higher by Standard & Poor's, D-2 or higher by Duff &
Phelps, or F-2 or higher by Fitch (or guaranteed or otherwise supported
by entities with such ratings).
3) Municipal bonds issued by issuers who have ratings at the time of
purchase of Aa or higher by Moody's or AA or higher by Standard &
Poor's, Duff & Phelps or Fitch (or guaranteed or otherwise supported by
entities with such ratings).
4) Unrated notes, paper and other instruments that are determined by us to
be of comparable quality to the instruments described above.
5) Municipal bonds and notes whose principal and interest payments are
guaranteed by the U.S. Government or one of its agencies or authorities
or which otherwise depend on the credit of the United States.
The fund seeks to maintain a net asset value of $1.00 per share.
We normally invest at least 80% of its net assets in Municipal Securities
and other instruments whose interest is exempt from federal income tax or
subject to the Federal Alternative Minimum Tax.
The fund may hold uninvested cash reserves during temporary defensive
periods or, if in our opinion suitable Municipal Securities are not available.
The fund may hold all of its assets in uninvested cash reserves during temporary
defensive periods. Uninvested cash will not earn income.
We intend to have no more than 25% of its total assets in Municipal
Securities of issuers located in the same state.
11
<PAGE>
QUALITY
Under guidelines established by the Company's Board of Directors, we will
only purchase securities if such securities or their issuers have (or such
securities are guaranteed or otherwise supported by entities which have)
short-term debt ratings at the time of purchase in the two highest rating
categories from at least two national rating agencies, or one such rating if the
security is rated by only one agency. Securities that are unrated must be
determined to be of comparable quality.
MATURITY
The dollar-weighted average maturity of all the investments of the fund
will be 90 days or less. Only those securities which have remaining maturities
of 397 days or less (except for certain variable and floating rate instruments)
will be purchased.
KEY RISKS
The value of money market investments tends to fall when current interest
rates rise. Money market investments are generally less sensitive to interest
rate changes than longer-term securities.
The fund's securities may not earn as high a level of income as longer term
or lower quality securities, which generally have greater risk and more
fluctuation in value.
Municipal Securities include revenue bonds, general obligation bonds and
municipal lease obligations. Revenue bonds include private activity bonds, which
are not payable from the general revenues of the issuer. Consequently, the
credit quality of private activity bonds is usually directly related to the
credit standing of the corporate user of the facility involved. To the extent
that the fund's assets are invested in private activity bonds, the fund will be
subject to the particular risks presented by the laws and economic conditions
relating to such projects and bonds to a greater extent than if its assets were
not so invested. Moral obligation bonds are normally issued by special purpose
public authorities. If the issuer of moral obligation bonds is unable to pay its
debts from current revenues, it may draw on a reserve fund the restoration of
which is a moral but not a legal obligation of the state or municipality which
created the issuer. Risk exists that a municipality will not honor moral
obligation bonds. Municipal lease obligations are not guaranteed by the issuer
and are generally less liquid than other securities.
There may be less information available on the financial condition of
issuers of Municipal Securities than for public corporations. The market for
municipal bonds may be less liquid than for taxable bonds. This means that it
may be harder to buy and sell Municipal Securities, especially on short notice.
The fund may invest in bonds whose interest may be subject to the Federal
Alternative Minimum Tax. Interest received on these bonds by a taxpayer subject
to the Federal Alternative Minimum Tax is taxable.
We may invest 25% or more of assets in Municipal Securities whose interest
is paid solely from revenues of similar projects. For example, the fund may
invest more than 25% of its assets in Municipal Securities related to water or
sewer systems. This type of concentration exposes the fund to the legal and
economic risks relating to those projects.
We will rely on legal opinions of counsel to issuers of Municipal
Securities as to the tax-free status of investments and will not do our own
analysis regarding tax-free status.
The fund may purchase variable and floating rate instruments. Like all debt
instruments, their value is dependent on the credit paying ability of the
issuer. If the issuer were unable to make interest payments or default, the
value of the securities would decline.The absence of an active market for these
securities could make it difficult to dispose of them if the issuer defaults.
12
<PAGE>
The fund, like any business, could be affected if the computer systems on
which it relies do not properly process information beginning on January 1,
2000. While Year 2000 issues could have a negative effect on the fund, BIMC, the
fund's investment adviser, is currently working to avoid such problems. BIMC is
also working with other systems providers and vendors servicing the Portfolios
to determine their systems' ability to handle Year 2000 problems. There is no
guarantee, however, that systems will work properly on or after January 1, 2000.
Year 2000 problems may also hurt issuers whose securities the fund holds or
securities markets generally.
ALTHOUGH WE SEEK TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER
SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND. WHEN YOU INVEST IN
THIS FUND YOU ARE NOT MAKING A BANK DEPOSIT. YOUR INVESTMENT IS NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR BY ANY BANK OR
GOVERNMENTAL AGENCY.
RISK/RETURN INFORMATION
The chart and table below give you a picture of the variability of the
fund's long-term performance for Cash Preservation Shares. The information shows
you how the fund's performance has varied year by year and provides some
indication of the risks of investing in the fund. The chart and the table both
assume reinvestment of dividends and distributions. As with all such
investments, past performance is not an indication of future results.
Performance reflects fee waivers in effect. If fee waivers were not in place,
the fund's performance would be reduced.
AS OF 12/31
ANNUAL TOTAL RETURNS
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
----- ----- ----- ----- ----- ----- ----- ----- ----- -----
5.53% 5.08% 3.72% 2.18% 1.94% 2.85% 3.38% 2.33% 2.83% 2.68%
Year-to-date total return for the nine months ended September 30, 1999: 2.32%
Best Quarter: 5.90% (quarter ended 6/30/89)
Worst Quarter: 1.53% (quarter ended 3/31/93)
AS OF 12/31/98
AVERAGE ANNUAL TOTAL RETURNS
1 YEAR 5 YEARS 10 YEARS
------ ------- --------
MUNICIPAL MONEY MARKET 2.68% 2.81% 3.25%
CURRENT YIELD: The seven-day yield for the period ended 12/31/98 for the
fund was 2.27%. Past performance is not an indication of future results. Yields
will vary. You may call (800) 430-9618 to obtain the current seven-day yield of
the fund.
13
<PAGE>
EXPENSES AND FEES
As a shareholder you pay certain fees and expenses. Annual fund operating
expenses are paid out of fund assets and are reflected in the fund's price.
The table below describes the fees and expenses that you may pay if you buy
and hold Cash Preservation Shares of the fund. The table is based on expenses
for the most recent fiscal year.
================================================================================
IMPORTANT DEFINITIONS
MANAGEMENT FEES: Fees paid to the investment adviser for portfolio management
services.
OTHER EXPENSES: Includes administration, transfer agency, custody, professional
fees and registration fees.
DISTRIBUTION AND SERVICE FEES: Fees that are paid to the Distributor for
shareholder account service and maintenance.
================================================================================
ANNUAL FUND OPERATING EXPENSES*
(Expenses that are deducted from fund assets)
Management Fees 1 ............................. 0.35%
Distribution and service (12b-1) fees ......... 0.40%
Other expenses 2 .............................. 11.05%
------
TOTAL ANNUAL FUND OPERATING EXPENSES 3 ............. 11.80%
======
* The table does not reflect charges or credits which investors might
incur if they invest through a financial institution.
1. BIMC has voluntarily undertaken that a portion of its management fee
will not be imposed on the fund during the current fiscal year ending
August 31, 2000. As a result of the fee waiver, current management fees
of the fund are .09% of average daily net assets. This waiver is
expected to remain in effect for the current fiscal year. However, it
is voluntary and can be modified or terminated at any time without the
fund's consent.
2. "Other expenses" for the current fiscal year are expected to be less
than the amounts shown above because certain of the fund's service
providers are waiving a portion of their fees and/or reimbursing the
fund for certain other expenses. As a result of these fee waivers,
"Other expenses" of the fund are estimated to be 0.49%. These waivers
and reimbursements are expected to remain in effect for the current
fiscal year. However, they are voluntary and can be modified or
terminated at any time without the fund's consent.
3. As a result of the fee waivers and/or reimbursements set forth in notes
1 and 2, the total annual fund operating expenses which are estimated
to be incurred during the current fiscal year are 0.98%. Although these
fee waivers and/or reimbursements are expected to remain in effect for
the current fiscal year, they are voluntary and may be terminated at
any time at the option of BIMC or the fund's service providers.
EXAMPLE:
The example is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated and then redeem
all of your shares at the end of each period. The example also assumes that your
investment has a 5% return each year and that the fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your cost would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
CASH PRESERVATION SHARES $1,140 $3,192 $4,975 $8,474
14
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The table below sets forth certain financial information for the periods
indicated, including per share information results for a single fund share. The
term "Total Return" indicates how much your investment would have increased or
decreased during this period of time and assumes that you have reinvested all
dividends and distributions. This information has been derived from the fund's
financial statements audited by PricewaterhouseCoopers LLP, the Company's
independent accountants. This information should be read in conjunction with the
fund's financial statements which, together with the report of independent
accountants, are included in the fund's annual report, which is available upon
request (see back cover for ordering instructions).
FINANCIAL HIGHLIGHTS (b)
(FOR A CASH PRESERVATION SHARE OUTSTANDING THROUGHOUT EACH YEAR)
<TABLE>
<CAPTION>
MUNICIPAL MONEY MARKET PORTFOLIO
FOR THE FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
AUGUST 31, 1999 AUGUST 31, 1998 AUGUST 31, 1997 AUGUST 31, 1996 AUGUST 31, 1995
--------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year ........... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- --------
Income from investment operations
Net investment income ....................... 0.0234 0.0274 0.0272 0.0274 0.0281
-------- -------- -------- -------- --------
Total from investment operations .......... 0.0234 0.0274 0.0272 0.0274 0.0281
-------- -------- -------- -------- --------
Less distributions
Dividends (from net investment income) ...... (0.0234) (0.0274) (0.0272) (0.0274) (0.0281)
-------- -------- -------- -------- --------
Total distributions ....................... (0.0234) (0.0274) (0.0272) (0.0274) (0.0281)
-------- -------- -------- -------- --------
Net asset value at end of year ................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total return ................................... 2.37% 2.82% 2.76% 2.78% 2.84%
Ratios/Supplemental Data
Net assets at end of period (in thousands) .. $ 214 $ 92 $97 $ 116 $ 161
Ratios of expenses to average net assets
After advisory/administration fee waivers . 98%(a) .98%(a) .98%(a) .98%(a) .98%(a)
Ratios of net investment income to average
net assets
After advisory/administration fee waivers . 2.34% 2.78% 2.72% 2.74% 2.81%
</TABLE>
(a) Without the waiver of advisory, administration and transfer agent fees and
without the reimbursement of certain operating expenses, the ratios of
expenses to average net assets for the Municipal Money Market Portfolio
would have been 11.80%, 23.16%, 26.58%, 19.20% and 10.80% for the years
ended August 31, 1999, 1998, 1997, 1996 and 1995, respectively.
(b) Financial Highlights relate solely to the Cash Preservation Class of shares
within the portfolio.
15
<PAGE>
PORTFOLIO MANAGEMENT
- --------------------------------------------------------------------------------
INVESTMENT ADVISER
BIMC, a majority-owned indirect subsidiary of PNC Bank, N.A. serves as
investment adviser and is responsible for all purchases and sales of each fund's
portfolio securities. BIMC and its affiliates are one of the largest U.S. bank
managers of mutual funds, with assets currently under management in excess of
$52.9 billion. BIMC (formerly known as PNC Institutional Management Corporation
or PIMC) was organized in 1977 by PNC Bank to perform advisory services for
investment companies and has its principal offices at Bellevue Park Corporate
Center, 400 Bellevue Parkway, Wilmington, DE 19809.
For the fiscal year ended August 31, 1999, BIMC received the following fees
as a percentage of each fund's average net assets:
Money Market Portfolio .25%
Municipal Money Market Portfolio .09%
The following chart shows the funds' other service providers and includes
their addresses and principal activities.
16
<PAGE>
------------
SHAREHOLDERS
------------
Distribution and
Shareholder Services
------------------------------------ -----------------------------------------
PRINCIPAL DISTRIBUTOR TRANSFER AGENT
PROVIDENT DISTRIBUTORS, INC. PFPC INC.
FOUR FALLS CORPORATE CENTER, 6TH FL. 400 BELLEVUE PARKWAY
WEST CONSHOHOCKEN, PA 19428 WILMINGTON, DE 19809
Distributes shares of the funds. Handles shareholder services,
including record-keeping and statements,
distribution of dividends and processing
of buy and sell requests.
------------------------------------ -----------------------------------------
Asset
Management
------------------------------------ -----------------------------------------
INVESTMENT ADVISER CUSTODIAN
BLACKROCK INSTITUTIONAL PFPC TRUST COMPANY
MANAGEMENT CORPORATION 200 STEVENS DRIVE
400 BELLEVUE PARKWAY LESTER, PA 19113
WILMINGTON, DE 19809
Holds each fund's assets, settles
Manages each fund's business all portfolio trades and collects
and investment activities. most of the valuation data
required for calculating each
fund's net asset value ("NAV").
------------------------------------ -----------------------------------------
Fund
Operations
------------------------------------
ADMINISTRATOR AND FUND
ACCOUNTING AGENT
PFPC INC.
400 BELLEVUE PARKWAY
WILMINGTON, DE 19809
Provides facilities, equipment
and personnel to carry out
administrative services related
to each fund and calculates each
fund's NAV, dividends
and distributions.
------------------------------------
---------------------------------
BOARD OF DIRECTORS
Supervises the funds' activities.
---------------------------------
17
<PAGE>
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
PRICING SHARES
The price of your shares is also referred to as the net asset value (NAV).
The NAV is determined twice daily at 12:00 noon and at 4:00 p.m., Eastern
Time, each day on which both the New York Stock Exchange and the Federal Reserve
Bank of Philadelphia are open. It is calculated by dividing a fund's total
assets, less its liabilities, by the number of shares outstanding.
Each fund values its securities using amortized cost. This method values a
fund holding initially at its cost and then assumes a constant amortization to
maturity of any discount or premium. The amortized cost method ignores any
impact of changing interest rates.
PURCHASE OF SHARES
GENERAL. You may purchase Cash Preservation Shares by mail, wire or
exchange from another Cash Preservation Class as described below. The minimum
initial investment is $1,000 and the minimum subsequent investment is $100
($1,000 if transmitted by wire). The Company in its sole discretion may accept
or reject any order for purchases of Cash Preservation Shares.
If you hold Shares in the street name account of a broker/dealer and you
want to transfer your Shares to another broker/dealer, contact your current
broker/dealer.
Purchases will be effected at the net asset value next determined after
PFPC, the Company's transfer agent, has received a purchase order in good order
and the Company's custodian has Federal Funds immediately available to it. In
those cases where payment is made by check, Federal Funds will generally become
available two Business Days after the check is received. A "Business Day" is any
day that both the New York Stock Exchange (the "NYSE") and the Federal Reserve
Bank of Philadelphia (the "FRB") are open. On any Business Day, orders which are
accompanied by Federal Funds and received by the Company by 12:00 noon Eastern
Time, and orders as to which payment has been converted into Federal Funds by
12:00 noon Eastern Time, will be executed as of 12:00 noon that Business Day.
Orders which are accompanied by Federal Funds and received by PFPC after 12:00
noon Eastern Time but prior to the close of regular trading on the NYSE
(generally 4:00 p.m. Eastern Time), and orders as to which payment has been
converted into Federal Funds after 12:00 noon Eastern Time but prior to the
close of regular trading on the NYSE on any Business Day, will be executed as of
the close of regular trading on the NYSE on that Business Day, but will not be
entitled to receive dividends declared on such Business Day. Orders which are
accompanied by Federal Funds and received by the Company as of the close of
regular trading on the NYSE or later, and orders as to which payment has been
converted to Federal Funds as of the close of regular trading on the NYSE or
later on a Business Day will be processed as of 12:00 noon Eastern Time on the
following Business Day.
PURCHASES BY MAIL. You may also make direct investments at any time in any
Cash Preservation Class you select through any broker that has entered into a
dealer agreement with the Distributor (an "Authorized Dealer"). You may make an
initial investment in any of the Cash Preservation Classes by mail by fully
completing and signing an application obtained from an Authorized Dealer (the
"Application"), specifying the Portfolio in which you wish to invest, and
mailing it, together with a check payable to "Cash Preservation" to the Cash
Preservation Portfolios, c/o PFPC, P.O. Box 8916, Wilmington, Delaware 19899.
The check must specify the name of the Portfolio for which shares are being
purchased. An Application will be returned to you unless it contains the name of
the Authorized Dealer from whom you obtained it. Subsequent purchases may be
made through an Authorized Dealer or by forwarding payment to the Company's
transfer agent at the foregoing address.
18
<PAGE>
PURCHASES BY BANK WIRE. You may also purchase Shares in either of the Cash
Preservation Classes by having your bank or Authorized Dealer wire Federal Funds
to the Company's Custodian, PFPC Trust Company. Your bank or Authorized Dealer
may impose a charge for this service. The Company does not currently charge for
effecting wire transfers but reserves the right to do so in the future. In order
to ensure prompt receipt of your Federal Funds wire, for an initial investment,
it is important that you follow these steps:
A. Telephone the Company's transfer agent, PFPC, toll-free (800) 430-9618
and provide your name, address, telephone number, Social Security or
Tax Identification Number, the Cash Preservation Class selected, the
amount being wired, and by which bank or Authorized Dealer. PFPC will
then provide you with an account number. (If you have an existing
account, you should also notify PFPC prior to wiring funds.)
B. Instruct your bank or Authorized Dealer to wire the specified amount,
together with your assigned account number, to PFPC's account with PNC
Bank:
PNC Bank, N.A., Philadelphia, PA ABA-0310-0005-3.
FROM: (your name)
ACCOUNT NUMBER: (your account number with the Portfolio)
FOR PURCHASE OF: (name of the Portfolio)
AMOUNT: (amount to be invested)
C. Fully complete and sign the Application and mail it to the address
shown thereon. PFPC will not process initial purchases until it
receives a fully completed and signed Application. An Application will
be returned to you unless it contains the name of the Authorized
Dealer from whom you obtained it.
For subsequent investments, you should follow steps A and B above.
BY PAYMENT FROM INSURANCE POLICIES. If you are a recipient of certain
insurance policy payments, you may purchase Shares by completing and signing an
Application, including the section which authorizes your insurance company to
forward policy payments to the Cash Preservation Class indicated on the
Application, and mailing it to PFPC at the address shown thereon. An Application
will be returned to you unless it contains the name of the Authorized Dealer
from whom you obtained it.
AUTOMATIC INVESTMENT PLAN. Additional investments may be made automatically
by authorizing PFPC to withdraw funds from your bank account through an
Automatic Investment Plan. If you wish to participate in an Automatic Investment
Plan, you should call PFPC at (800) 430-9618 to obtain the appropriate form.
RETIREMENT PLANS. Cash Preservation Shares may be purchased in conjunction
with individual retirement accounts ("IRAs") and rollover IRAs where PFPC Trust
Company acts as custodian. For further information as to applications and annual
fees, contact the Distributor or an Authorized Dealer. To determine whether the
benefits of an IRA are available and/or appropriate, you should consult with
your tax adviser.
REDEMPTION OF SHARES
GENERAL. Redemption orders are effected at the net asset value per share
next determined after receipt of the order in proper form by the Company's
transfer agent, PFPC. You may redeem all or some of your Shares in accordance
with one of the procedures described below.
REDEMPTION BY MAIL. You may redeem any number of Shares by sending a
written request to the Company's transfer agent, PFPC Inc., P.O. Box 8916,
Wilmington, Delaware 19899, Attention: Cash Preservation Portfolios. Redemption
requests must be signed by each shareholder in the same manner as the Shares are
registered.
19
<PAGE>
Redemption requests for joint accounts require the signature of each joint
owner. On redemption requests of $5,000 or more, each signature must be
guaranteed. A signature guarantee may be obtained from a domestic bank or trust
company, broker, dealer, clearing agency or savings association who are
participants in a medallion program recognized by the Securities Transfer
Association. The three recognized medallion programs are Securities Transfer
Agents Medallion Program (STAMP), Stock Exchanges Medallion Program (SEMP) and
New York Stock Exchange, Inc. Medallion Signature Program (MSP). Signature
guarantees that are not part of these programs will not be accepted.
REDEMPTION BY TELEPHONE. If you are a direct investor, you may redeem your
Shares without charge by telephone if you have completed and returned an account
application containing the appropriate telephone election. To add a telephone
option to an existing account that previously did not provide for this option,
you must file a Telephone Authorization Form with PFPC. This form is available
from PFPC. Once this election has been made, you may simply contact PFPC by
telephone to request the redemption by calling (800) 430-9618. Neither the
Company, the Distributor, the Portfolios, the Administrator nor any other
Company agent will be liable for any loss, liability, cost or expense for
following the procedures below or for following instructions communicated by
telephone that they reasonably believe to be genuine.
The Company's telephone transaction procedures include the following
measures: (1) requiring the appropriate telephone transaction privilege forms;
(2) requiring the caller to provide the names of the account owners, the account
social security number and name of the portfolio, all of which must match the
Company's records; (3) requiring the Company's service representative to
complete a telephone transaction form, listing all of the above caller
identification information; (4) requiring that redemption proceeds be sent only
by check to the account owners of record at the address of record, or by wire
only to the owners of record at the bank account of record; (5) sending a
written confirmation for each telephone transaction to the owners of record at
the address of record within five (5) business days of the call; and (6)
maintaining tapes of telephone transactions for six months, if the Company
elects to record shareholder telephone transactions. For accounts held of record
by broker-dealers (other than the Distributor), financial institutions,
securities dealers, financial planners or other industry professionals,
additional documentation or information regarding the scope of authority is
required. Finally, for telephone transactions in accounts held jointly,
additional information regarding other account holders is required. Telephone
transactions will not be permitted in connection with IRA or other retirement
plan accounts or by attorney-in-fact under power of attorney.
Proceeds of a telephone redemption request will be mailed by check to your
registered address unless you have designated in your Application or Telephone
Authorization Form that such proceeds are to be sent by wire transfer to a
specified checking or savings account. If proceeds are to be sent by wire
transfer, a telephone redemption request received prior to the close of regular
trading on the NYSE will result in redemption proceeds being wired to your bank
account on the next day that a wire transfer can be effected. The minimum
redemption for proceeds sent by wire transfer is $1,000. There is no maximum for
proceeds sent by wire transfer. The Company may modify this redemption service
at any time or charge a service fee upon prior notice to shareholders, although
no fee is currently contemplated.
REDEMPTION BY CHECK. You may request that the Company provide redemption
checks drawn on a particular Cash Preservation Class. If you hold share
certificates, you are not eligible for this check writing privilege because
share certificates must accompany all redemption requests. Checks will be sent
only to the registered owner(s) and only to the address of record. You may issue
checks made payable to the order of any person in the amount of $100 or more.
The redemption is not effective until the check is processed and cleared by the
transfer agent, and dividends are earned until the redemption is effected.
Because dividends accrue daily, you should not use a check to close an account
as a small balance is likely to result. There is no charge for redemption by
check. If you have check writing privileges and you exchange funds from one Cash
Preservation Class into another Cash Preservation Class, you will automatically
receive a checkbook for the new account (allow three to four weeks for
delivery). The Company or PNC Bank may terminate this redemption service at any
time, and neither shall incur any liability for honoring checks, for effecting
redemptions to pay checks, or for returning checks which have not been accepted.
20
<PAGE>
ADDITIONAL REDEMPTION INFORMATION. The Company ordinarily will make payment
for all Shares redeemed within seven days after receipt by PFPC of a redemption
request in proper form. Although the Company will redeem Shares purchased by
check before the check clears, payment of the redemption proceeds may be delayed
for a period of up to fifteen days after their purchase, pending a determination
that the check has cleared. This procedure does not apply to Shares purchased by
wire payment. You should consider purchasing Shares using a certified or bank
check or money order if you anticipate an immediate need for redemption
proceeds.
The Company does not impose a charge when Shares are redeemed. The Company
reserves the right to redeem any account in a Cash Preservation Class
involuntarily, on thirty days' notice, if such account falls below $500 and
during such 30-day notice period the amount invested in such account is not
increased to at least $500. Payment for Shares redeemed may be postponed or the
right of redemption suspended as provided by the rules of the SEC.
If the Board of Directors determines that it would be detrimental to the
best interests of the remaining shareholders of the funds to make payment wholly
or partly in cash, redemption proceeds may be paid in whole or in part by an
in-kind distribution of readily marketable securities held by a fund instead of
cash in conformity with applicable rules of the SEC. Investors generally will
incur brokerage charges on the sale of portfolio securities so received in
payment of redemptions. The funds have elected, however, to be governed by Rule
18f-1 under the 1940 Act, so that a fund is obligated to redeem its Shares
solely in cash up to the lesser of $250,000 or 1% of its net asset value during
any 90-day period for any one shareholder of a fund.
EXCHANGE PRIVILEGE
If you wish to exchange Shares of one Cash Preservation Class for another
Cash Preservation Class, you may do so by mail or by telephone. In order to
establish a systematic withdrawal plan for the new account, you must file a
written request. The Company and PFPC reserve the right to limit, amend or
terminate these exchange privileges at any time upon 60 days written notice to
shareholders. No exchange fee is currently imposed for exchanges; however, the
Company reserves the right to charge shareholders an exchange fee of $5.00 for
each exchange. If you hold share certificates, the certificates must accompany
your request for an exchange. An exchange of Shares will be treated as a sale
for federal tax purposes.
Detailed Instructions Required. A request for an exchange of Shares must be
sufficiently detailed to enable PFPC to complete the exchange in accordance with
your wishes. The request must name the Portfolio and account number from which
the exchange is to be made. It must also name the Portfolio to which the
exchange is to be made and the account number, if to an existing account. The
request must specify the amount of money or Shares to be exchanged. New accounts
will be established with the same registration and address, and with the same
options as your account from which the exchange is made - an Application is not
needed. If the registration or address of the new account is to be different in
any respect, the request must be in writing with all signatures guaranteed. A
signature guarantee may be obtained from a domestic bank or trust company,
broker, dealer, clearing agency or savings associations who are participants in
a medallion program recognized by the Securities Transfer Association. The three
recognized medallion programs are the Securities Transfer Agents Medallion
Program (STAMP), Stock Exchanges Medallion Program (SEMP) and New York Stock
Exchange, Inc. Medallion Signature Program (MSP). Signature guarantees that are
not part of these programs will not be accepted.
To request an exchange by mail, send a written request (together with any
share certificates issued to the investor) to: Cash Preservation c/o PFPC, P.O.
Box 8916, Wilmington, Delaware 19899. The request must be signed by all
shareholders exactly as their names appear on the Company's records.
If the exchange is to a new account, the dollar value of Shares acquired
must equal or exceed the Portfolio's minimum for a new account; if to an
existing account the dollar value must equal or exceed the Portfolio's minimum
for subsequent investments. If any amount remains in the Cash Preservation Class
from which the exchange is being made, such amount must not drop below the
minimum account value required by that Portfolio.
21
<PAGE>
DIVIDENDS AND DISTRIBUTIONS
The Company will distribute substantially all of the net investment income
and net realized capital gains, if any, of each fund to each fund's
shareholders. All distributions are reinvested in the form of additional full
and fractional Shares of the relevant Cash Preservation Class unless a
shareholder elects otherwise.
The net investment income (not including any net short-term capital gains)
earned by each fund will be declared as a dividend on a daily basis and paid
monthly. Dividends are payable to shareholders of record immediately prior to
the determination of net asset value made as of the close of trading of the
NYSE. Net short-term capital gains, if any, will be distributed at least
annually.
TAXES
Distributions from the Money Market Portfolio will generally be taxable to
shareholders. It is expected that all, or substantially all, of these
distributions will consist of ordinary income. You will be subject to income tax
on these distributions regardless of whether they are paid in cash or reinvested
in additional shares. The one major exception to these tax principles is that
distributions on shares held in an IRA (or other tax-qualified plan) will not be
currently taxable.
Distributions from the Municipal Money Market Portfolio will generally
constitute tax-exempt income for shareholders for federal income tax purposes.
It is possible, depending upon the Portfolios' investments, that a portion of
each Portfolio's distributions could be taxable to shareholders as ordinary
income or capital gains, but it is not expected that this will be the case.
Interest on indebtedness incurred by a shareholder to purchase or carry
shares of the Municipal Money Market Portfolio generally will not be deductible
for federal income tax purposes.
You should note that a portion of the exempt-interest dividends paid by the
Municipal Money Market Portfolio may constitute an item of tax preference for
purposes of determining federal alternative minimum tax liability.
Exempt-interest dividends will also be considered along with other adjusted
gross income in determining whether any Social Security or railroad retirement
payments received by you are subject to federal income taxes.
The foregoing is only a summary of certain tax considerations under the
current law, which may be subject to change in the future. Shareholders who are
nonresident aliens, foreign trusts or estates, or foreign corporations or
partnerships may be subject to different United States Federal income tax
treatment. You should consult your tax adviser for further information regarding
federal, state, local and/or foreign tax consequences relevant to your specific
situation.
22
<PAGE>
DISTRIBUTION ARRANGEMENTS
- --------------------------------------------------------------------------------
Cash Preservation Shares of the funds are sold without a sales load on a
continuous basis by Provident Distributors, Inc., whose principal business
address is at Four Falls Corporate Center, West Conshohocken, PA 19428.
The Board of Directors of the Company approved and adopted the Distribution
Agreement and separate Plans of Distribution for each of the Classes
(collectively, the "Plans") pursuant to Rule 12b-1 under the 1940 Act. Under
each of the Plans, the Distributor is entitled to receive from the relevant Cash
Preservation Class a distribution fee, which is accrued daily and paid monthly,
of up to .65% on an annualized basis of the average daily net assets of the
relevant Cash Preservation Class. The actual amount of such compensation is
agreed upon from time to time by the Company's Board of Directors and the
Distributor. Under the Distribution Agreement, the Distributor has agreed to
accept compensation for its services thereunder and under the Plans in the
amount of .40% of the average daily net assets of the relevant Class on an
annualized basis in any year. The Distributor may, in its discretion,
voluntarily waive from time to time all or any portion of its distribution fee.
Under the Distribution Agreement and the relevant Plan, the Distributor may
reallocate an amount up to the full fee that it receives to financial
institutions, including broker/dealers, based upon the aggregate investment
amounts maintained by and services provided to shareholders of any relevant
Class serviced by such financial institutions. The Distributor may also
reimburse broker/dealers for other expenses incurred in the promotion of the
sale of Cash Preservation Shares. The Distributor and/or broker/dealers pay for
the cost of printing (excluding typesetting) and mailing to prospective
investors prospectuses and other materials relating to the Cash Preservation
Class as well as for related direct mail, advertising and promotional expenses.
Each of the Plans obligates the Company, during the period it is in effect,
to accrue and pay to the Distributor on behalf of each Cash Preservation Class
the fee agreed to under the Distribution Agreement. Payments under the Plans are
not based on expenses actually incurred by the Distributor, and the payments may
exceed distribution expenses actually incurred. Because these fees are paid out
of the funds' assets on an on-going basis, over time these fees will increase
the cost of your investment and may cost you more than paying other types of
sales charges.
23
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS OR IN THE FUND'S STATEMENT OF
ADDITIONAL INFORMATION INCORPORATED HEREIN BY REFERENCE, IN CONNECTION WITH THE
OFFERING MADE BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND OR
ITS DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE FUND OR
BY THE DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY
BE MADE.
INVESTMENT ADVISER
Blackrock Institutional Management Corporation
Wilmington, Delaware
DISTRIBUTOR
Provident Distributors, Inc.
West Conshohocken, Pennsylvania
CUSTODIAN
PFPC Trust Company
Lester, Pennsylvania
ADMINISTRATOR AND TRANSFER AGENT
PFPC Inc.
Wilmington, Delaware
COUNSEL
Drinker Biddle & Reath LLP
Philadelphia, Pennsylvania
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
[GRAPHIC OMITTED]
CASH PRESERVATION
PORTFOLIOS
OF
THE RBB FUND, INC.
MONEY MARKET PORTFOLIO
AND
MUNICIPAL MONEY MARKET
PORTFOLIO
Prospectus
December 1, 1999
<PAGE>
CASH PRESERVATION PORTFOLIOS
1-800-430-9618
FOR MORE INFORMATION
This prospectus contains important information you should know before you
invest. Read it carefully and keep it for future reference. More information
about the Cash Preservation Classes is available free, upon request, including:
ANNUAL/SEMI-ANNUAL REPORT
These reports contain additional information about each of the funds'
investments, describe the funds' performance, list portfolio holdings, and
discuss recent market conditions and economic trends. The annual report includes
fund strategies for the last fiscal year.
STATEMENT OF ADDITIONAL INFORMATION (SAI)
A Statement of Additional Information, dated December 1, 1999 (SAI) has
been filed with the Securities and Exchange Commission (SEC). The SAI, which
includes additional information about the Cash Preservation Classes, may be
obtained free of charge, along with the Cash Preservation Classes' annual and
semi-annual reports, by calling (800) 430-9618. The SAI, as supplemented from
time to time, is incorporated by reference into this Prospectus (and is legally
considered a part of this Prospectus).
SHAREHOLDER ACCOUNT SERVICE REPRESENTATIVES
Representatives are available to discuss account balance information,
mutual fund prospectuses, literature, programs and services available. Hours: 8
a.m. to 5 p.m. (Eastern time) Monday-Friday. Call: (800) 430-9618.
SECURITIES AND EXCHANGE COMMISSION (SEC)
You may also view information about The RBB Fund, Inc. and the Cash
Preservation Portfolios, including the SAI, by visiting the SEC website
(http://www.sec.gov) or the SEC's Public Reference Room in Washington, D.C.
Information about the operation of the public reference room can be obtained by
calling the SEC directly at 1-202-942-8090. Copies of this information can be
obtained, for a duplicating fee, by writing to the Public Reference Section of
the SEC, Washington, D.C. 20549-0102, or by electronic request to
[email protected].
INVESTMENT COMPANY ACT FILE NO. 811-05518
<PAGE>
THE JANNEY MONTGOMERY SCOTT MONEY FUNDS
OF THE RBB FUND, INC.
Money Market Portfolio
Municipal Money Market Portfolio
Government Obligations Money Market Portfolio
New York Municipal Money Market Portfolio
This prospectus gives vital information about these money market mutual
funds, advised by BlackRock Institutional Management Corporation ("BIMC" or the
"Adviser"), including information on investment policies, risks and fees. For
your own benefit and protection, please read it before you invest and keep it on
hand for future reference.
Please note that these funds:
(BULLET) are not bank deposits;
(BULLET) are not federally insured;
(BULLET) are not obligations of, or guaranteed or endorsed by PNC Bank,
National Association, PFPC Trust Company or any other bank;
(BULLET) are not obligations of, or guaranteed or endorsed or otherwise
supported by the U.S. Government, the Federal Deposit Insurance
Corporation, the Federal Reserve Board or any other governmental
agency;
(BULLET) are not guaranteed to achieve their goal(s);
(BULLET) may not be able to maintain a stable $1 share price and you may
lose money.
- --------------------------------------------------------------------------------
THE SECURITIES DESCRIBED IN THIS PROSPECTUS HAVE BEEN REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION (SEC). THE SEC, HOWEVER, HAS NOT JUDGED THESE
SECURITIES FOR THEIR INVESTMENT MERIT AND HAS NOT DETERMINED THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANYONE WHO TELLS YOU OTHERWISE IS COMMITTING A
CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
PROSPECTUS December 1, 1999
<PAGE>
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<PAGE>
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
================================ INTRODUCTION TO THE RISK/RETURN SUMMARY .. 5
PORTFOLIO DESCRIPTION
A LOOK AT THE GOALS, STRATEGIES, Money Market ........................ 6
RISKS, EXPENSES AND FINANCIAL Municipal Money Market ..............11
HISTORY OF EACH PORTFOLIO. Government Obligations Money Market .16
New York Municipal Money Market .....21
PORTFOLIO MANAGEMENT
DETAILS ABOUT THE SERVICE Investment Adviser ..................26
PROVIDERS. Service Provider Chart ..............27
SHAREHOLDER INFORMATION
POLICIES AND INSTRUCTIONS FOR Pricing Shares ......................28
OPENING, MAINTAINING AND Purchase of Shares ..................28
CLOSING AN ACCOUNT IN ANY OF Redemption of Shares ................29
THE PORTFOLIOS. Dividends and Distributions .........30
Taxes ...............................30
DETAILS ON DISTRIBUTION PLANS. DISTRIBUTION ARRANGEMENTS ................31
FOR MORE INFORMATION .............Back Cover
================================
3
<PAGE>
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<PAGE>
INTRODUCTION TO THE RISK/RETURN SUMMARY
- --------------------------------------------------------------------------------
This Prospectus has been written to provide you with the information you
need to make an informed decision about whether to invest in Janney Classes of
The RBB Fund, Inc. (the "Company").
The four classes of common stock (each a "Janney Class") of the Company
offered by this Prospectus represent interests in the Janney Classes of the
Money Market Portfolio, the Municipal Money Market Portfolio, the Government
Obligations Money Market Portfolio and the New York Municipal Money Market
Portfolio. This Prospectus and the Statement of Additional Information
incorporated herein relate solely to the Janney Classes of the Company.
This Prospectus has been organized so that each Portfolio has its own short
section with important facts about that particular Portfolio. Once you read the
short sections about the Portfolios that interest you, read the sections about
Purchase and Redemption of Shares of the Janney Classes ("Janney Shares" or
"Shares"). These sections apply to all the Portfolios offered by this
Prospectus.
5
<PAGE>
MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
================================================================================
IMPORTANT DEFINITIONS
ASSET-BACKED SECURITIES: Debt securities that are backed by a pool of assets,
usually loans such as installment sale contracts or credit card receivables.
COMMERCIAL PAPER: Short-term securities with maturities of 1 to 270 days which
are issued by banks, corporations and others.
DOLLAR WEIGHTED AVERAGE MATURITY: The average amount of time until the
organizations that issued the debt securities in the fund's portfolio must pay
off the principal amount of the debt. "Dollar weighted" means the larger the
dollar value of a debt security in the fund, the more weight it gets in
calculating this average.
LIQUIDITY: Liquidity is the ability to easily convert investments into cash
without losing a significant amount of money in the process.
NET ASSET VALUE (NAV): The value of everything the fund owns, minus everything
it owes, divided by the number of shares held by investors.
REPURCHASE AGREEMENT: A special type of a short-term investment. A dealer sells
securities to a fund and agrees to buy them back later at a set price. In
effect, the dealer is borrowing the fund's money for a short time, using the
securities as collateral.
VARIABLE OR FLOATING RATE SECURITIES: Securities whose interest rates adjust
automatically after a certain period of time and/or whenever a predetermined
standard interest rate changes.
================================================================================
INVESTMENT GOAL
The fund seeks to generate current income, to provide you with liquidity
and to protect your investment.
PRIMARY INVESTMENT STRATEGIES
To achieve this goal, we invest in a diversified portfolio of short term,
high quality, U.S. dollar-denominated instruments, including government, bank,
commercial and other obligations.
Specifically, we may invest in:
1) U.S. dollar-denominated obligations issued or supported by the credit
of U.S. or foreign banks or savings institutions with total assets of
more than $1 billion (including obligations of foreign branches of
such banks).
2) High quality commercial paper and other obligations issued or
guaranteed (or otherwise supported) by U.S. and foreign corporations
and other issuers rated (at the time of purchase) A-2 or higher by
Standard and Poor's, Prime-2 or higher by Moody's, D-2 or higher by
Duff & Phelps, F-2 or higher by Fitch or TBW-2 or higher by Thomson
BankWatch, as well as high quality corporate bonds rated AA (or Aa) or
higher at the time of purchase by those rating agencies. These ratings
must be provided by at least two rating agencies, or by the only
rating agency providing a rating.
3) Unrated notes, paper and other instruments that are determined by us
to be of comparable quality to the instruments described above.
4) Asset-backed securities (including interests in pools of assets such
as mortgages, installment purchase obligations and credit card
receivables).
5) Securities issued or guaranteed by the U.S. Government or by its
agencies or authorities.
6) Dollar-denominated securities issued or guaranteed by foreign
governments or their political subdivisions, agencies or authorities.
7) Securities issued or guaranteed by state or local governmental bodies.
8) Repurchase agreements relating to the above instruments.
The fund seeks to maintain a net asset value of $1.00 per share.
6
<PAGE>
QUALITY
Under guidelines established by the Company's Board of Directors, we will
only purchase securities if such securities or their issuers have (or such
securities are guaranteed or otherwise supported by entities which have)
short-term debt ratings at the time of purchase in the two highest rating
categories from at least two national rating agencies, or one such rating if the
security is rated by only one agency. Securities that are unrated must be
determined to be of comparable quality.
MATURITY
The dollar-weighted average maturity of all the investments of the fund
will be 90 days or less. Only those securities which have remaining maturities
of 397 days or less (except for certain variable and floating rate instruments
and securities collateralizing repurchase agreements) will be purchased.
KEY RISKS
The value of money market investments tends to fall when current interest
rates rise. Money market investments are generally less sensitive to interest
rate changes than longer-term securities.
The fund's securities may not earn as high a level of income as longer term
or lower quality securities, which generally have greater risk and more
fluctuation in value.
The fund's concentration of its investments in the banking industry could
increase risks. The profitability of banks depends largely on the availability
and cost of funds, which can change depending upon economic conditions. Banks
are also exposed to losses if borrowers get into financial trouble and can't
repay their loans.
The obligations of foreign banks and other foreign issuers may involve
certain risks in addition to those of domestic issuers, including higher
transaction costs, less complete financial information, political and economic
instability, less stringent regulatory requirements and less market liquidity.
Unrated notes, paper and other instruments may be subject to the risk that
an issuer may default on its obligation to pay interest and repay principal.
The obligations issued or guaranteed by state or local government bodies
may be issued by entities in the same state and may have interest which is paid
from revenues of similar projects. As a result, changes in economic, business or
political conditions relating to a particular state or types of projects may
impact the fund.
Treasury obligations differ only in their interest rates, maturities and
time of issuance. These differences could result in fluctuations in the value of
such securities depending upon the market. Obligations of U.S. Government
agencies and authorities are supported by varying degrees of credit. The U.S.
Government gives no assurances that it will provide financial support to its
agencies and authorities if it is not obligated by law to do so. Default in
these issuers could negatively impact the fund.
The fund's investment in asset-backed securities may be negatively impacted
by interest rate fluctuations or when an issuer pays principal on an obligation
held by the fund earlier or later than expected. These events may affect their
value and the return on your investment.
The fund could lose money if a seller under a repurchase agreement defaults
or declares bankruptcy.
We may purchase variable and floating rate instruments. Like all debt
instruments, their value is dependent on the credit paying ability of the
issuer. If the issuer were unable to make interest payments or default, the
value of the securities would decline. The absence of an active market for these
securities could make it difficult to dispose of them if the issuer defaults.
7
<PAGE>
The fund, like any business, could be affected if the computer systems on
which it relies do not properly process information beginning on January 1,
2000. While Year 2000 issues could have a negative effect on the fund, BIMC, the
fund's investment adviser, is currently working to avoid such problems. BIMC is
also working with other systems providers and vendors servicing the Portfolios
to determine their systems' ability to handle Year 2000 problems. There is no
guarantee, however, that systems will work properly on or after January 1, 2000.
Year 2000 problems may also hurt issuers whose securities the fund holds or
securities markets generally.
ALTHOUGH WE SEEK TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER
SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND. WHEN YOU INVEST IN
THIS FUND YOU ARE NOT MAKING A BANK DEPOSIT. YOUR INVESTMENT IS NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR BY ANY BANK OR
GOVERNMENTAL AGENCY.
RISK/RETURN INFORMATION
The chart and table below give you a picture of the variability of the
fund's long-term performance for Janney Shares. The information shows you how
the fund's performance has varied year by year and provides some indication of
the risks of investing in the fund. The chart and the table both assume
reinvestment of dividends and distributions. As with all such investments, past
performance is not an indication of future results. Performance reflects fee
waivers in effect. If fee waivers were not in place, the fund's performance
would be reduced.
AS OF 12/31
ANNUAL TOTAL RETURNS
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
5.06% 4.62% 4.85% 4.72%
1995 1996 1997 1998
Year-to-date total return for the nine months ended September 30, 1999: 4.20%
Best Quarter: 5.07% (quarter ended 12/31/95)
Worst Quarter: 4.06% (quarter ended 6/30/99)
AS OF 12/31/98
AVERAGE ANNUAL TOTAL RETURNS
1 YEAR SINCE INCEPTION*
-------- ------------------
MONEY MARKET 4.72% 4.81%
*Commenced operations on 6/12/95.
8
<PAGE>
CURRENT YIELD: The seven-day yield for the period ended 12/31/98 for the
fund was 4.35%. Past performance is not an indication of future results. Yields
will vary. You may call 1-800-JANNEYS to obtain the current seven-day yield of
the fund.
EXPENSES AND FEES
As a shareholder you pay certain fees and expenses. Annual fund operating
expenses are paid out of fund assets and are reflected in the fund's price.
The table below describes the fees and expenses that you may pay if you buy
and hold Janney Shares of the fund. The table is based on expenses for the most
recent fiscal year.
ANNUAL FUND OPERATING EXPENSES*
(Expenses that are deducted from fund assets)
Management Fees 1 ......................................... 0.36%
Distribution and service (12b-1) fees ..................... 0.60%
Other expenses 2 .......................................... 0.23%
-----
Total annual fund operating expenses 3 .................... 1.19%
=====
================================================================================
IMPORTANT DEFINITIONS
MANAGEMENT FEES: Fees paid to the investment adviser for portfolio management
services.
OTHER EXPENSES: Includes administration, transfer agency, custody, professional
fees and registration fees.
DISTRIBUTION AND SERVICE FEES: Fees that are paid to the Distributor for
shareholder account service and maintenance.
================================================================================
* The table does not reflect charges or credits which investors might
incur if they invest through a financial institution.
1. BIMC has voluntarily undertaken that a portion of its management fee
will not be imposed on the fund during the current fiscal year ending
August 31, 2000. As a result of the fee waiver, current management
fees of the fund are 0.25% of average daily net assets. This waiver is
expected to remain in effect for the current fiscal year. However, it
is voluntary and can be modified or terminated at any time without the
fund's consent.
2. "Other expenses" for the current fiscal year are expected to be less
than the amounts shown above because certain of the fund's service
providers are waiving a portion of their fees and/or reimbursing the
fund for certain other expenses. As a result of these fee waivers,
"Other expenses" of the fund are estimated to be 0.15%. These waivers
and reimbursements are expected to remain in effect for the current
fiscal year. However, they are voluntary and can be modified or
terminated at any time without the fund's consent.
3. As a result of the fee waivers and/or reimbursements set forth in
notes 1 and 2, the total annual fund operating expenses which are
estimated to be incurred during the current fiscal year are 1.00%.
Although these fee waivers and/or reimbursements are expected to
remain in effect for the current fiscal year, they are voluntary and
may be terminated at any time at the option of BIMC or the fund's
service providers.
EXAMPLE:
The example is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated and then redeem
all of your shares at the end of each period. The example also assumes that your
investment has a 5% return each year and that the fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your cost would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
JANNEY SHARES $121 $378 $654 $1,443
9
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The table below sets forth certain financial information for the periods
indicated, including per share information results for a single fund share. The
term "Total Return" indicates how much your investment would have increased or
decreased during this period of time and assumes that you have reinvested all
dividends and distributions. This information has been derived from the fund's
financial statements audited by PricewaterhouseCoopers LLP, the Company's
independent accountants. This information should be read in conjunction with the
fund's financial statements which, together with the report of independent
accountants, are included in the fund's annual report, which is available upon
request (see back cover for ordering instructions).
FINANCIAL HIGHLIGHTS (C)
(FOR A JANNEY SHARE OUTSTANDING THROUGHOUT EACH YEAR OR PERIOD)
MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
FOR THE PERIOD
JUNE 12, 1995
FOR THE FOR THE FOR THE FOR THE (COMMENCEMENT OF
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED OPERATIONS) TO
AUGUST 31, 1999 AUGUST 31, 1998 AUGUST 31, 1997 AUGUST 31, 1996 AUGUST 31, 1995
--------------- --------------- --------------- -------------- ----------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year or period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- -------- -------- -------- ---------
Income from investment operations:
Net investment income 0.0422 0.0469 0.0459 0.0465 0.0112
---------- -------- -------- -------- ---------
Total from investment operations 0.0422 0.0469 0.0459 0.0465 0.0112
---------- -------- -------- -------- ---------
Less distributions
Dividends (from net investment income) (0.0422) (0.0469) (0.0459) (0.0465) (0.0112)
---------- -------- -------- -------- ---------
Total distributions (0.0422) (0.0469) (0.0459) (0.0465) (0.0112)
---------- -------- -------- -------- ---------
Net asset value at end of year or period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ======== ======== ======== ========
Total Return 4.30% 4.81% 4.69% 4.76% 5.30%(b)
Ratios/Supplemental Data
Net assets at end of period (in thousands) $1,088,405 $904,526 $736,855 $561,865 $443,645
Ratios of expenses to average net assets
After advisory/administration fee waivers 1.00%(a) 1.00%(a) 1.00%(a) 1.00%(a) 1.00%(a)(b)
Ratios of net investment income to
average net assets
After advisory/administration fee waivers 4.22% 4.69% 4.59% 4.65% 5.04%(b)
<FN>
(a) Without the waiver of advisory, administration and transfer agent fees and
without the reimbursement of certain operating expenses, the ratios of
expenses to average net assets for the Money Market Portfolio would have
been 1.19%, 1.21%, 1.22%, 1.23% and 1.23% for the years or period ended
August 31, 1999, 1998, 1997, 1996 and 1995, respectively.
(b) Annualized.
(c) Financial Highlights relate solely to the Janney Class of shares within the
portfolio.
</FN>
</TABLE>
10
<PAGE>
MUNICIPAL MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
================================================================================
IMPORTANT DEFINITIONS
DOLLAR WEIGHTED AVERAGE MATURITY: The average amount of time until the
organizations that issued the debt securities in the fund's portfolio must pay
off the principal amount of the debt. "Dollar weighted" means the larger the
dollar value of a debt security in the fund, the more weight it gets in
calculating this average.
GENERAL OBLIGATION BONDS: Bonds which are secured by the issuer's pledge of its
full faith, credit and taxing power for the payment of principal and interest.
LIQUIDITY: Liquidity is the ability to easily convert investments into cash
without losing a significant amount of money in the process.
MUNICIPAL LEASE OBLIGATIONS: These provide participation in municipal lease
agreements and installment purchase contracts, but are not part of the general
obligations of the municipality.
MUNICIPAL SECURITY: A short-term obligation issued by or on behalf of states and
possessions of the United States, their political subdivisions and their
agencies and authorities.
NET ASSET VALUE (NAV): The value of everything the fund owns, minus everything
it owes, divided by the number of shares held by investors.
REVENUE BONDS: Bonds which are secured only by the revenues from a particular
facility or class of facilities, such as a water or sewer system, or from the
proceeds of a special excise tax or other revenue source.
TAX-EXEMPT COMMERCIAL PAPER: Short-term Municipal Securities with maturities of
1 to 270 days.
VARIABLE OR FLOATING RATE SECURITIES: Securities whose interest rates adjust
automatically after a certain period of time and/or whenever a predetermined
standard interest rate changes.
================================================================================
INVESTMENT GOAL
PRIMARY INVESTMENT STRATEGIES
To achieve this goal, we invest in a diversified portfolio of Municipal
Securities.
Specifically, we may invest in:
1) Fixed and variable rate notes and similar debt instruments issued by
issuers who have ratings at the time of purchase of MIG-2, VMIG-2 or
Prime-2 or higher by Moody's, SP-2 or A-2 or higher by Standard &
Poor's, D-2 or higher by Duff & Phelps, or F-2 or higher by Fitch (or
guaranteed or otherwise supported by entities with such ratings).
2) Tax-exempt commercial paper and similar debt instruments issued by
issuers who have ratings at the time of purchase of Prime-2 or higher
by Moody's, A-2 or higher by Standard & Poor's, D-2 or higher by Duff
& Phelps, or F-2 or higher by Fitch (or guaranteed or otherwise
supported by entities with such ratings).
3) Municipal bonds issued by issuers who have ratings at the time of
purchase of Aa or higher by Moody's or AA or higher by Standard &
Poor's, Duff & Phelps or Fitch (or guaranteed or otherwise supported
by entities with such ratings).
4) Unrated notes, paper and other instruments that are determined by us
to be of comparable quality to the instruments described above.
5) Municipal bonds and notes whose principal and interest payments are
guaranteed by the U.S. Government or one of its agencies or
authorities or which otherwise depend on the credit of the United
States.
The fund seeks to maintain a net asset value of $1.00 per share.
We normally invest at least 80% of its net assets in Municipal Securities
and other instruments whose interest is exempt from federal income tax or
subject to the Federal Alternative Minimum Tax.
The fund may hold uninvested cash reserves during temporary defensive
periods or, if in our opinion suitable Municipal Securities are not available.
The fund may hold all of its assets in uninvested cash reserves during temporary
defensive periods. Uninvested cash will not earn income.
We intend to have no more than 25% of its total assets in Municipal
Securities of issuers located in the same state.
11
<PAGE>
QUALITY
Under guidelines established by the Company's Board of Directors, we will
only purchase securities if such securities or their issuers have (or such
securities are guaranteed or otherwise supported by entities which have)
short-term debt ratings at the time of purchase in the two highest rating
categories from at least two national rating agencies, or one such rating if the
security is rated by only one agency. Securities that are unrated must be
determined to be of comparable quality.
MATURITY
The dollar-weighted average maturity of all the investments of the fund
will be 90 days or less. Only those securities which have remaining maturities
of 397 days or less (except for certain variable and floating rate instruments)
will be purchased.
KEY RISKS
The value of money market investments tends to fall when current interest
rates rise. Money market investments are generally less sensitive to interest
rate changes than longer-term securities.
The fund's securities may not earn as high a level of income as longer term
or lower quality securities, which generally have greater risk and more
fluctuation in value.
Municipal Securities include revenue bonds, general obligation bonds and
municipal lease obligations. Revenue bonds include private activity bonds, which
are not payable from the general revenues of the issuer. Consequently, the
credit quality of private activity bonds is usually directly related to the
credit standing of the corporate user of the facility involved. To the extent
that the fund's assets are invested in private activity bonds, the fund will be
subject to the particular risks presented by the laws and economic conditions
relating to such projects and bonds to a greater extent than if its assets were
not so invested. Moral obligation bonds are normally issued by special purpose
public authorities. If the issuer of moral obligation bonds is unable to pay its
debts from current revenues, it may draw on a reserve fund the restoration of
which is a moral but not a legal obligation of the state or municipality which
created the issuer. Risk exists that a municipality will not honor moral
obligation bonds. Municipal lease obligations are not guaranteed by the issuer
and are generally less liquid than other securities.
There may be less information available on the financial condition of
issuers of Municipal Securities than for public corporations. The market for
municipal bonds may be less liquid than for taxable bonds. This means that it
may be harder to buy and sell Municipal Securities, especially on short notice.
The fund may invest in bonds whose interest may be subject to the Federal
Alternative Minimum Tax. Interest received on these bonds by a taxpayer subject
to the Federal Alternative Minimum Tax is taxable.
We may invest 25% or more of assets in Municipal Securities whose interest
is paid solely from revenues of similar projects. For example, the fund may
invest more than 25% of its assets in Municipal Securities related to water or
sewer systems. This type of concentration exposes the fund to the legal and
economic risks relating to those projects.
We will rely on legal opinions of counsel to issuers of Municipal
Securities as to the tax-free status of investments and will not do our own
analysis regarding tax-free status.
The fund may purchase variable and floating rate instruments. Like all debt
instruments, their value is dependent on the credit paying ability of the
issuer. If the issuer were unable to make interest payments or default, the
value of the securities would decline. The absence of an active market for these
securities could make it difficult to dispose of them if the issuer defaults.
12
<PAGE>
The fund, like any business, could be affected if the computer systems on
which it relies do not properly process information beginning on January 1,
2000. While Year 2000 issues could have a negative effect on the fund, BIMC, the
fund's investment adviser, is currently working to avoid such problems. BIMC is
also working with other systems providers and vendors servicing the Portfolios
to determine their systems' ability to handle Year 2000 problems. There is no
guarantee, however, that systems will work properly on or after January 1, 2000.
Year 2000 problems may also hurt issuers whose securities the fund holds or
securities markets generally.
ALTHOUGH WE SEEK TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER
SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND. WHEN YOU INVEST IN
THIS FUND YOU ARE NOT MAKING A BANK DEPOSIT. YOUR INVESTMENT IS NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR BY ANY BANK OR
GOVERNMENTAL AGENCY.
RISK/RETURN INFORMATION
The chart and table below give you a picture of the variability of the
fund's long-term performance for Janney Shares. The information shows you how
the fund's performance has varied year by year and provides some indication of
the risks of investing in the fund. The chart and the table both assume
reinvestment of dividends and distributions. As with all such investments, past
performance is not an indication of future results. Performance reflects fee
waivers in effect. If fee waivers were not in place, the fund's performance
would be reduced.
AS OF 12/31
ANNUAL TOTAL RETURNS
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
2.80% 2.84% 2.95% 2.80%
1995 1996 1997 1998
Year-to-date total return for the nine months ended September 30, 1999: 2.44%
Best Quarter: 3.23% (quarter ended 6/30/97)
Worst Quarter: 2.27% (quarter ended 3/31/99)
AS OF 12/31/98
AVERAGE ANNUAL TOTAL RETURNS
1 YEAR SINCE INCEPTION*
-------- ------------------
MUNICIPAL MONEY MARKET 2.80% 2.84%
*Commenced operations on 6/12/95.
CURRENT YIELD: The seven-day yield for the period ended 12/31/98 for the
fund was 2.84%. Past performance is not an indication of future results. Yields
will vary. You may call 1-800-JANNEYS to obtain the current seven-day yield of
the fund.
13
<PAGE>
EXPENSES AND FEES
As a shareholder you pay certain fees and expenses. Annual fund operating
expenses are paid out of fund assets and are reflected in the fund's price.
The table below describes the fees and expenses that you may pay if you buy
and hold Janney Shares of the fund. The table is based on expenses for the most
recent fiscal year.
ANNUAL FUND OPERATING EXPENSES*
(Expenses that are deducted from fund assets)
Management Fees 1 ........................................ 0.35%
Distribution and service (12b-1) fees .................... 0.60%
Other expenses 2 ......................................... 0.25%
-----
Total annual fund operating expenses 3 ................... 1.20%
=====
================================================================================
IMPORTANT DEFINITIONS
MANAGEMENT FEES: Fees paid to the investment adviser for portfolio management
services.
OTHER EXPENSES: Includes administration, transfer agency, custody, professional
fees and registration fees.
DISTRIBUTION AND SERVICE FEES: Fees that are paid to the Distributor for
shareholder account service and maintenance.
================================================================================
* The table does not reflect charges or credits which investors might
incur if they invest through a financial institution.
1. BIMC has voluntarily undertaken that a portion of its management fee
will not be imposed on the fund during the current fiscal year ending
August 31, 2000. As a result of the fee waiver, current management
fees of the fund are 0.08% of average daily net assets. This waiver is
expected to remain in effect for the current fiscal year. However, it
is voluntary and can be modified or terminated at any time without the
fund's consent.
2. "Other expenses" for the current fiscal year are expected to be less
than the amounts shown above because certain of the fund's service
providers are waiving a portion of their fees and/or reimbursing the
fund for certain other expenses. As a result of these fee waivers,
"Other expenses" of the fund are estimated to be 0.18%. These waivers
and reimbursements are expected to remain in effect for the current
fiscal year. However, they are voluntary and can be modified or
terminated at any time without the fund's consent.
3. As a result of the fee waivers and/or reimbursements set forth in
notes 1 and 2, the total annual fund operating expenses which are
estimated to be incurred during the current fiscal year are 0.86%.
Although these fee waivers and/or reimbursements are expected to
remain in effect for the current fiscal year, they are voluntary and
may be terminated at any time at the option of BIMC or the fund's
service providers.
EXAMPLE:
The example is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated and then redeem
all of your shares at the end of each period. The example also assumes that your
investment has a 5% return each year and that the fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your cost would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- ------- ------- --------
JANNEY SHARES $122 $381 $660 $1,455
14
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The table below sets forth certain financial information for the periods
indicated, including per share information results for a single fund share. The
term "Total Return" indicates how much your investment would have increased or
decreased during this period of time and assumes that you have reinvested all
dividends and distributions. This information has been derived from the fund's
financial statements audited by PricewaterhouseCoopers LLP, the Company's
independent accountants. This information should be read in conjunction with the
fund's financial statements which, together with the report of independent
accountants, are included in the fund's annual report, which is available upon
request (see back cover for ordering instructions).
FINANCIAL HIGHLIGHTS (C)
(FOR A JANNEY SHARE OUTSTANDING THROUGHOUT EACH YEAR OR PERIOD)
MUNICIPAL MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
FOR THE PERIOD
JUNE 12, 1995
FOR THE FOR THE FOR THE FOR THE (COMMENCEMENT OF
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED OPERATIONS) TO
AUGUST 31, 1999 AUGUST 31, 1998 AUGUST 31, 1997 AUGUST 31, 1996 AUGUST 31, 1995
--------------- ---------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year or period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- ------- -------- ------- ----------
Income from investment operations:
Net investment income 0.0246 0.0290 0.0285 0.0278 0.0063
-------- ------- -------- ------- ----------
Total from investment operations 0.0246 0.0290 0.0285 0.0278 0.0063
-------- ------- -------- ------- ----------
Less distributions
Dividends (from net investment income) (0.0246) (0.0290) (0.0285) (0.0278) (0.0063)
-------- ------- -------- ------- ----------
Total distributions (0.0246) (0.0290) (0.0285) (0.0278) (0.0063)
-------- ------- -------- ------- ----------
Net asset value at end of year or period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======= ======== ======= ==========
Total Return 2.49% 2.94% 2.89% 2.81% 2.87%(b)
Ratios/Supplemental Data
Net assets at end of period (in thousands) $114,539 $97,445 $108,826 $89,428 $113,256
Ratios of expenses to average net assets
After advisory/administration fee waivers 0.86%(a) 0.86%(a) 0.85%(a) 0.94%(a) 1.00%(a)(b)
Ratios of net investment income to average
net assets
After advisory/administration fee waivers 2.46% 2.90% 2.85% 2.78% 2.83%(b)
<FN>
(a) Without the waiver of advisory, administration and transfer agent fees
and without the reimbursement of certain operating expenses, the
ratios of expenses to average net assets for the Municipal Money
Market Portfolio would have been 1.20%, 1.16%, 1.13%, 1.23% and 1.30%
for the years or periods ended August 31, 1999, 1998, 1997, 1996 and
1995, respectively.
(b) Annualized.
(c) Financial Highlights relate solely to the Janney Class of shares
within the portfolio.
</FN>
</TABLE>
15
<PAGE>
GOVERNMENT OBLIGATIONS MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
================================================================================
IMPORTANT DEFINITIONS
ASSET-BACKED SECURITIES: Debt securities that are backed by a pool of assets,
usually loans such as installment sale contracts or credit card receivables.
DOLLAR WEIGHTED AVERAGE MATURITY: The average amount of time until the
organizations that issued the debt securities in the fund's portfolio must pay
off the principal amount of the debt. "Dollar weighted" means the larger the
dollar value of a debt security in the fund, the more weight it gets in
calculating this average.
LIQUIDITY: Liquidity is the ability to easily convert investments into cash
without losing a significant amount of money in the process.
NET ASSET VALUE (NAV): The value of everything the fund owns, minus everything
it owes, divided by the number of shares held by investors.
REPURCHASE AGREEMENT: A special type of a short-term investment. A dealer sells
securities to a fund and agrees to buy them back later at a set price. In
effect, the dealer is borrowing the fund's money for a short time, using the
securities as collateral.
VARIABLE OR FLOATING RATE SECURITIES: Securities whose interest rates adjust
automatically after a certain period of time and/or whenever a predetermined
standard interest rate changes.
================================================================================
INVESTMENT GOAL
The fund seeks to generate current income to provide you with liquidity and
to protect your investment.
PRIMARY INVESTMENT STRATEGIES
To achieve this goal, we invest exclusively in short-term U.S. Treasury
bills, notes and other obligations issued or guaranteed by the U.S. Government
or its agencies or instrumentalities and related repurchase agreements.
The fund seeks to maintain a net asset value of $1.00 per share.
QUALITY
Under guidelines established by the Company's Board of Directors, we will
purchase securities if such securities or their issuers have (or such securities
are guaranteed or otherwise supported by entities which have) short-term debt
ratings at the time of purchase in the two highest rating categories from at
least two national rating agencies, or one such rating if the security is rated
by only one agency. The fund may also purchase unrated securities determined by
us to be of comparable quality.
MATURITY
The dollar-weighted average maturity of all the investments of the fund
will be 90 days or less. Only those securities which have remaining maturities
of 397 days or less (except for certain variable and floating rate instruments
and securities collateralizing repurchase agreements) will be purchased.
SECURITIES LENDING
The fund may lend some of its securities on a short-term basis in order to
earn extra income. The fund will receive collateral in cash or high quality
securities equal to the current value of the loaned securities. These loans will
be limited to 33 1/3% of the value of the fund's total assets.
16
<PAGE>
KEY RISKS
The value of money market investments tends to fall when current interest
rates rise. Money market investments are generally less sensitive to interest
rate changes than longer-term securities.
The fund's securities may not earn as high a level of income as longer term
or lower quality securities, which generally have greater risk and more
fluctuation in value.
Treasury obligations differ only in their interest rates, maturities and
time of issuance. These differences could result in fluctuations in the value of
such securities depending upon the market. Obligations of U.S. Government
agencies and authorities are supported by varying degrees of credit. The U.S.
Government gives no assurances that it will provide financial support if it is
not obligated to do so by law. Default in these issuers could negatively impact
the fund.
The fund could lose money if a seller under a repurchase agreement defaults
or declares bankruptcy.
We may purchase variable and floating rate instruments. Like all debt
instruments their value is dependent on the credit paying ability of the issuer.
If the issuer were unable to make interest payments or default, the value of the
securities would decline. The absence of an active market for these securities
could make it difficult to dispose of them if the issuer defaults.
Securities loans involve the risk of a delay in receiving additional
collateral if the value of the securities goes up while they are on loan. There
is also the risk of delay in recovering the loaned securities and of losing
rights to the collateral if a borrower goes bankrupt. Therefore, the fund may
lose the opportunity to sell securities at a desirable price. Additionally in
the event that a borrower of securities would file for bankruptcy or become
insolvent, disposition of securities may be delayed pending court action.
The fund, like any business, could be affected if the computer systems on
which it relies do not properly process information beginning on January 1,
2000. While Year 2000 issues could have a negative effect on the fund, BIMC, the
fund's investment adviser, is currently working to avoid such problems. BIMC is
also working with other systems providers and vendors servicing the Portfolios
to determine their systems' ability to handle Year 2000 problems. There is no
guarantee, however, that systems will work properly on or after January 1, 2000.
Year 2000 problems may also hurt issuers whose securities the fund holds or
securities markets generally.
ALTHOUGH WE SEEK TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER
SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND. WHEN YOU INVEST IN
THIS FUND YOU ARE NOT MAKING A BANK DEPOSIT. YOUR INVESTMENT IS NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR BY ANY BANK OR
GOVERNMENTAL AGENCY.
17
<PAGE>
RISK/RETURN INFORMATION
The chart and table below give you a picture of the variability of the
fund's long-term performance for Janney Shares. The information shows you how
the fund's performance has varied year by year and provides some indication of
the risks of investing in the fund. The chart and the table both assume
reinvestment of dividends and distributions. As with all such investments, past
performance is not an indication of future results. Performance reflects fee
waivers in effect. If fee waivers were not in place, the fund's performance
would be reduced.
AS OF 12/31
ANNUAL TOTAL RETURNS
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
4.69% 4.57% 4.65% 4.56%
1995 1996 1997 1998
Year-to-date total return for the nine months ended September 30, 1999: 4.09%
Best Quarter: 4.97% (quarter ended 9/30/95)
Worst Quarter: 3.99% (quarter ended 6/30/99)
AS OF 12/31/98
AVERAGE ANNUAL TOTAL RETURNS
1 YEAR SINCE INCEPTION*
-------- ------------------
GOVERNMENT OBLIGATIONS MONEY MARKET 4.56% 4.62%
*Commenced operations on 6/12/95.
CURRENT YIELD: The seven-day yield for the period ended 12/31/98 for the
fund was 4.13%. Past performance is not an indication of future results. Yields
will vary. You may call 1-800-JANNEYS to obtain the current seven-day yield of
the fund.
18
<PAGE>
EXPENSES AND FEES
As a shareholder you pay certain fees and expenses. Annual fund operating
expenses are paid out of fund assets and are reflected in the fund's price.
The table below describes the fees and expenses that you may pay if you buy
and hold Janney Shares of the fund. The table is based on expenses for the most
recent fiscal year.
ANNUAL FUND OPERATING EXPENSES*
(Expenses that are deducted from fund assets)
Management Fees 1 ......................................... 0.42%
Distribution and service (12b-1) fees ..................... 0.60%
Other expenses 2 .......................................... 0.19%
-----
Total annual fund operating expenses 3 .................... 1.21%
=====
================================================================================
IMPORTANT DEFINITIONS
MANAGEMENT FEES: Fees paid to the investment adviser for portfolio management
services.
OTHER EXPENSES: Includes administration, transfer agency, custody, professional
fees and registration fees.
DISTRIBUTION AND SERVICE FEES: Fees that are paid to the Distributor for
shareholder account service and maintenance.
================================================================================
* The table does not reflect charges or credits which investors might
incur if they invest through a financial institution.
1. BIMC has voluntarily undertaken that a portion of its management fee
will not be imposed on the fund during the current fiscal year ending
August 31, 2000. As a result of the fee waiver, current management
fees of the fund are 0.26% of average daily net assets. This waiver is
expected to remain in effect for the current fiscal year. However, it
is voluntary and can be modified or terminated at any time without the
fund's consent.
2. "Other expenses" for the current fiscal year are expected to be less
than the amounts shown above because certain of the fund's service
providers are waiving a portion of their fees and/or reimbursing the
fund for certain other expenses. As a result of these fee waivers,
"Other expenses" of the fund are estimated to be 0.14%. These waivers
and reimbursements are expected to remain in effect for the current
fiscal year. However, they are voluntary and can be modified or
terminated at any time without the fund's consent.
3. As a result of the fee waivers and/or reimbursements set forth in
notes 1 and 2, the total annual fund operating expenses which are
estimated to be incurred during the current fiscal year are 1.00%.
Although these fee waivers and/or reimbursements are expected to
remain in effect for the current fiscal year, they are voluntary and
may be terminated at any time at the option of BIMC or the fund's
service providers.
EXAMPLE:
The example is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated and then redeem
all of your shares at the end of each period. The example also assumes that your
investment has a 5% return each year and that the fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your cost would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- ---------
JANNEY SHARES $123 $384 $665 $1,466
19
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The table below sets forth certain financial information for the periods
indicated, including per share information results for a single fund share. The
term "Total Return" indicates how much your investment would have increased or
decreased during this period of time and assumes that you have reinvested all
dividends and distributions. This information has been derived from the fund's
financial statements audited by PricewaterhouseCoopers LLP, the Company's
independent accountants. This information should be read in conjunction with the
fund's financial statements which, together with the report of independent
accountants, are included in the fund's annual report, which is available upon
request (see back cover for ordering instructions).
FINANCIAL HIGHLIGHTS (c)
(FOR A JANNEY SHARE OUTSTANDING THROUGHOUT EACH YEAR OR PERIOD)
GOVERNMENT OBLIGATIONS MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
FOR THE PERIOD
JUNE 12, 1995
FOR THE FOR THE FOR THE FOR THE (COMMENCEMENT OF
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED OPERATIONS) TO
AUGUST 31, 1999 AUGUST 31, 1998 AUGUST 31, 1997 AUGUST 31, 1996 AUGUST 31, 1995
--------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year or period .... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- ----------
Income from investment operations:
Net investment income .......................... 0.0406 0.0460 0.0447 0.0456 0.0109
-------- -------- -------- -------- ----------
Total from investment operations ............. 0.0406 0.0460 0.0447 0.0456 0.0109
-------- -------- -------- -------- ----------
Less distributions
Dividends (from net investment income) ......... (0.0406) (0.0460) (0.0447) (0.0456) (0.0109)
-------- -------- -------- -------- ----------
Total distributions .......................... (0.0406) (0.0460) (0.0447) (0.0456) (0.0109)
-------- -------- -------- -------- ----------
Net asset value at end of year or period .......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ==========
Total Return ...................................... 4.14% 4.71% 4.56% 4.66% 5.03%(b)
Ratios/Supplemental Data
Net assets at end of period (in thousands) ..... $369,346 $379,065 $352,950 $306,757 $302,585
Ratios of expenses to average net assets
After advisory/administration fee waivers .... 1.00%(a) 1.00%(a) 1.00%(a) 1.00%(a) 1.00%(a)(b)
Ratios of net investment income to average
net assets
After advisory/administration fee waivers .. 4.06% 4.60% 4.47% 4.56% 4.91%(b)
<FN>
(a) Without the waiver of advisory, administration and transfer agent fees and
without the reimbursement of certain operating expenses, the ratios of
expenses to average net assets for the Government Obligations Money Market
Portfolio would have been 1.21%, 1.23%, 1.23%, 1.25% and 1.28% for the
years or periods ended August 31, 1999, 1998, 1997, 1996 and 1995,
respectively.
(b) Annualized.
(c) Financial Highlights relate solely to the Janney Class of shares within the
portfolio.
</FN>
</TABLE>
20
<PAGE>
NEW YORK MUNICIPAL MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
================================================================================
IMPORTANT DEFINITIONS
DOLLAR WEIGHTED AVERAGE MATURITY: The average amount of time until the
organizations that issued the debt securities in the fund's portfolio must pay
off the principal amount of the debt. "Dollar weighted" means the larger the
dollar value of a debt security in the fund, the more weight it gets in
calculating this average.
GENERAL OBLIGATION BONDS: Bonds which are secured by the issuer's pledge of its
full faith, credit and taxing power for the payment of principal and interest.
LIQUIDITY: Liquidity is the ability to easily convert investments into cash
without losing a significant amount of money in the process.
MUNICIPAL LEASE OBLIGATIONS: These provide participation in municipal lease
agreements and installment purchase contracts, but are not part of the general
obligations of the municipality.
MUNICIPAL SECURITY: A short-term obligation issued by or on behalf of states and
possessions of the United States, their political subdivisions and their
agencies and authorities.
NET ASSET VALUE (NAV): The value of everything the fund owns, minus everything
it owes, divided by the number of shares held by investors.
REVENUE BONDS: Bonds which are secured only by the revenues from a particular
facility or class of facilities, such as a water or sewer system, or from the
proceeds of a special excise tax or other revenue source.
TAX-EXEMPT COMMERCIAL PAPER: Short-term Municipal Securities with maturities of
1 to 270 days.
VARIABLE OR FLOATING RATE SECURITIES: Securities whose interest rates adjust
automatically after a certain period of time and/or whenever a predetermined
standard interest rate changes.
================================================================================
INVESTMENT GOAL
The fund seeks to generate current income exempt from federal, New York
State and New York City Personal income taxes, to provide you with liquidity and
to protect your investment.
PRIMARY INVESTMENT STRATEGIES
To achieve this goal, we invest primarily in Municipal Securities of
issuers located in New York.
Specifically, we may invest in:
1) Fixed and variable rate notes and similar debt instruments issued by
issuers who have ratings at the time of purchase of MIG-2, VMIG-2 or
Prime-2 or higher by Moody's, SP-2 or A-2 or higher by Standard &
Poor's, D-2 or higher by Duff & Phelps, or F-2 or higher by Fitch (or
guaranteed or otherwise supported by entities with such ratings).
2) Tax-exempt commercial paper and similar debt instruments issued by
issuers who have ratings at the time of purchase of Prime-2 or higher
by Moody's, A-2 or higher by Standard & Poor's, D-2 or higher by Duff
& Phelps, or F-2 or higher by Fitch (or guaranteed or otherwise
supported by entities with such ratings).
3) Municipal bonds rated or issued by issuers who have ratings at the
time of purchase of Aa or higher by Moody's or AA or higher by
Standard & Poor's, Duff & Phelps or Fitch (or guaranteed or otherwise
supported by entities with such ratings).
4) Unrated notes, paper and other instruments that are determined by us
to be of comparable quality to the instruments described above.
5) Municipal bonds and notes whose principal and interest payments are
guaranteed by the U.S. Government or one of its agencies or
authorities or which otherwise depend on the credit of the United
States.
The fund seeks to maintain a net asset value of $1.00 per share.
We normally invest at least 80% of its net assets in Municipal Securities
and other instruments whose interest is exempt from regular federal income tax.
Up to 20% can be invested in securities which are subject to Federal Alternative
Minimum Tax.
We intend normally to invest at least 65% of its assets in Municipal
Securities of issuers located in New York.
21
<PAGE>
QUALITY
Under guidelines established by the Company's Board of Directors, we will
purchase securities if such securities or their issuers have (or such securities
are guaranteed or otherwise supported by entities which have) short-term debt
ratings at the time of purchase in the two highest rating categories from at
least two national rating agencies, or one such rating if the security is rated
by only one agency. The fund may also purchase securities determined to be of
comparable quality.
MATURITY
The dollar-weighted average maturity of all the investments of the fund
will be 90 days or less. Only those securities which have or are deemed to have
remaining maturities of 397 days or less (except for certain variable and
floating rate instruments and securities collateralizing repurchase agreements)
will be purchased.
KEY RISKS
The value of money market investments tends to fall when current interest
rates rise. Money market investments are generally less sensitive to interest
rate changes than longer-term securities.
The fund's securities may not earn as high a level of income as longer term
or lower quality securities, which generally have greater risk and more
fluctuation in value.
We concentrate its investments in securities of issuers located in New
York. The fund is non-diversified under the Investment Company Act of 1940 (1940
Act). This raises special concerns because the fund's performance is more
dependent upon the performance of a smaller number of securities and issuers
than in a diversified portfolio. Some issuers of New York Municipal Securities
have experienced serious financial difficulties in recent years. The change in
value of any one security may affect the overall value of the fund more than it
would a diversified portfolio. In particular, changes in the economic conditions
and governmental policies of New York and its political subdivisions could hurt
the value of the fund's shares.
Municipal Securities include revenue bonds, general obligation bonds and
municipal lease obligations. Revenue bonds include private activity bonds, which
are not payable from the general revenues of the issuer. Consequently, the
credit quality of private activity bonds is usually directly related to the
credit standing of the corporate users of the facility involved. To the extent
that the fund's assets are invested in private activity bonds, the fund will be
subject to the particular risks presented by the laws and economic conditions
relating to such projects and bonds to a greater extent than if its assets were
not so invested. Moral obligation bonds are normally issued by special purpose
public authorities. If the issuer of moral obligation bonds is unable to pay its
debts from current revenues, it may draw on a reserve fund the restoration of
which is a moral but not a legal obligation of the state or municipality which
created the issuer. Risk exists that a municipality will not honor moral
obligation bonds. Municipal lease obligations are not guaranteed by the issuer
and are generally less liquid than other securities.
There may be less information available on the financial condition of
issuers of Municipal Securities than for public corporations. The market for
municipal bonds may be less liquid than for taxable bonds. This means that it
may be harder to buy and sell Municipal Securities, especially on short notice.
We may invest without limit in bonds the interest on which may be subject
to the Federal Alternative Minimum Tax. Interest on these bonds that is received
by taxpayers subject to the Federal Alternative Minimum Tax is taxable.
We may invest 25% or more of assets in Municipal Securities whose interest
is paid solely from revenues of similar projects. For example, the fund may
invest more than 25% of its assets in Municipal Securities related to water or
sewer systems. This type of concentration exposes the fund to the legal and
economic risks relating to those projects.
We will rely on legal opinions of counsel to issuers of Municipal
Securities as to the tax-free status of investments and will not do our own
analysis regarding tax-free status.
22
<PAGE>
We may purchase variable and floating rate instruments. Like all debt
instruments, their value is dependent on the credit paying ability of the
issuer. If the issuer were unable to make interest payments or default, the
value of the securities would decline. The absence of an active market for these
securities could make it difficult for the fund to dispose of them if the issuer
defaults.
The fund, like any business, could be affected if the computer systems on
which it relies do not properly process information beginning on January 1,
2000. While Year 2000 issues could have a negative effect on the fund, BIMC, the
fund's investment adviser, is currently working to avoid such problems. BIMC is
also working with other systems providers and vendors servicing the Portfolios
to determine their systems' ability to handle Year 2000 problems. There is no
guarantee, however, that systems will work properly on or after January 1, 2000.
Year 2000 problems may also hurt issuers whose securities the fund holds or
securities markets generally.
ALTHOUGH WE SEEK TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER
SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND. WHEN YOU INVEST IN
THIS FUND YOU ARE NOT MAKING A BANK DEPOSIT. YOUR INVESTMENT IS NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR BY ANY BANK OR
GOVERNMENTAL AGENCY.
RISK/RETURN INFORMATION
The chart and table below give you a picture of the variability of the
fund's long-term performance for Janney Shares. The information shows you how
the fund's performance has varied year by year and provides some indication of
the risks of investing in the fund. The chart and the table both assume
reinvestment of dividends and distributions. As with all such investments, past
performance is not an indication of future results. Performance reflects fee
waivers in effect. If fee waivers were not in place, the fund's performance
would be reduced.
AS OF 12/31
ANNUAL TOTAL RETURNS
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
2.72% 2.21% 2.87% 2.61%
1995 1996 1997 1998
Year-to-date total return for the nine months ended September 30, 1999: 2.35%
Best Quarter: 3.03% (quarter ended 12/31/97)
Worst Quarter: 2.19% (quarter ended 3/31/99)
AS OF 12/31/98
AVERAGE ANNUAL TOTAL RETURNS
1 YEAR SINCE INCEPTION*
------ ----------------
NEW YORK MUNICIPAL MONEY MARKET 2.61% 2.60%
*Commenced operations on 6/9/95.
23
<PAGE>
CURRENT YIELD: The seven-day yield for the period ended 12/31/98 for the fund
was 2.75%. Past performance is not an indication of future results. Yields will
vary. You may call 1-800-JANNEYS to obtain the current seven-day yield of the
fund.
EXPENSES AND FEES
As a shareholder you pay certain fees and expenses. Annual fund operating
expenses are paid out of fund assets and are reflected in the fund's price.
The table below describes the fees and expenses that you may pay if you buy
and hold Janney Shares of the fund. The table is based on expenses for the most
recent fiscal year.
ANNUAL FUND OPERATING EXPENSES*
(Expenses that are deducted from fund assets)
Management Fees 1 ......................................... 0.35%
Distribution and service (12b-1) fees ..................... 0.60%
Other expenses 2 .......................................... 0.31%
-----
Total annual fund operating expenses 3 .................... 1.26%
=====
================================================================================
IMPORTANT DEFINITIONS
MANAGEMENT FEES: Fees paid to the investment adviser for portfolio management
services.
OTHER EXPENSES: Includes administration, transfer agency, custody, professional
fees and registration fees.
DISTRIBUTION AND SERVICE FEES: Fees that are paid to the Distributor for
shareholder account service and maintenance.
================================================================================
* The table does not reflect charges or credits which investors might
incur if they invest through a financial institution.
1. BIMC has voluntarily undertaken that a portion of its management fee
will not be imposed on the fund during the current fiscal year ending
August 31, 2000. As a result of the fee waiver, current management
fees of the fund are 0.00% of average daily net assets. This waiver is
expected to remain in effect for the current fiscal year. However, it
is voluntary and can be modified or terminated at any time without the
fund's consent.
2. "Other expenses" for the current fiscal year are expected to be less
than the amounts shown above because certain of the fund's service
providers are waiving a portion of their fees and/or reimbursing the
fund for certain other expenses. As a result of these fee waivers,
"Other expenses" of the fund are estimated to be 0.20%. These waivers
and reimbursements are expected to remain in effect for the current
fiscal year. However, they are voluntary and can be modified or
terminated at any time without the fund's consent.
3. As a result of the fee waivers and/or reimbursements set forth in
notes 1 and 2, the total annual fund operating expenses which are
estimated to be incurred during the current fiscal year are 0.80%.
Although these fee waivers and/or reimbursements are expected to
remain in effect for the current fiscal year, they are voluntary and
may be terminated at any time at the option of BIMC or the fund's
service providers.
EXAMPLE:
The example is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated and then redeem
all of your shares at the end of each period. The example also assumes that your
investment has a 5% return each year and that the fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your cost would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
JANNEY SHARES $128 $400 $692 $1,523
24
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The table below sets forth certain financial information, including per
share information, for the periods indicated. Certain information reflects
results for a single fund share. The term "Total Return" indicates how much your
investment would have increased or decreased during this period of time and
assumes that you have reinvested all dividends and distributions. This
information has been derived from the fund's financial statements audited by
PricewaterhouseCoopers LLP, the Company's independent accountants. This
information should be read in conjunction with the fund's financial statements
which, together with the report of independent accountants, are included in the
fund's annual report, which is available upon request (see back cover for
ordering instructions).
FINANCIAL HIGHLIGHTS (c)
(FOR A JANNEY SHARE OUTSTANDING THROUGHOUT EACH YEAR OR PERIOD)
NEW YORK MUNICIPAL MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
FOR THE PERIOD
JUNE 9, 1995
FOR THE FOR THE FOR THE FOR THE (COMMENCEMENT OF
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED OPERATIONS) TO
AUGUST 31, 1999 AUGUST 31, 1998 AUGUST 31, 1997 AUGUST 31, 1996 AUGUST 31, 1995
--------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning
of year or period ........................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------- ------- ------- ------- ----------
Income from investment operations:
Net investment income ....................... 0.0236 0.0273 0.0276 0.0262 0.0062
------- ------- ------- ------- ----------
Total from investment operations .......... 0.0236 0.0273 0.0276 0.0262 0.0062
------- ------- ------- ------- ----------
Less distributions
Dividends (from net investment income) ...... (0.0236) (0.0273) (0.0276) (0.0262) (0.0062)
------- ------- ------- ------- ----------
Total distributions ....................... (0.0236) (0.0273) (0.0276) (0.0262) (0.0062)
------- ------- ------- ------- ----------
Net asset value at end of year or period ....... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======= ======= ======= ======= ==========
Total Return ................................... 2.38% 2.77% 2.80% 2.65% 2.72%(b)
Ratios/Supplemental Data
Net assets at end of period (in thousands) .. $28,140 $31,055 $30,442 $20,032 $14,671
Ratios of expenses to average net assets
After advisory/administration fee waivers . 0.80%(a) 0.80%(a) 0.80%(a) 0.93%(a) 1.00%(a)(b)
Ratios of net investment income to average
net assets
After advisory/administration
fee waivers ........................... 2.36% 2.73% 2.76% 2.62% 2.68%(b)
<FN>
(a) Without the waiver of advisory, administration and transfer agent fees
and without the reimbursement of certain operating expenses, the
ratios of expenses to average net assets for the Municipal Money
Market Portfolio would have been 1.26%, 1.20%, 1.13%, 1.25% and 1.28%
for the years or periods ended August 31, 1999, 1998, 1997, 1996 and
1995, respectively.
(b) Annualized.
(c) Financial Highlights relate solely to the Janney Class of shares
within the portfolio.
</FN>
</TABLE>
25
<PAGE>
PORTFOLIO MANAGEMENT
- --------------------------------------------------------------------------------
INVESTMENT ADVISER
BIMC, a majority-owned indirect subsidiary of PNC Bank, N.A. serves as
investment adviser and is responsible for all purchases and sales of each fund's
portfolio securities. BIMC and its affiliates are one of the largest U.S. bank
managers of mutual funds, with assets currently under management in excess of
$52.9 billion. BIMC (formerly known as PNC Institutional Management Corporation
or PIMC) was organized in 1977 by PNC Bank to perform advisory services for
investment companies and has its principal offices at Bellevue Park Corporate
Center, 400 Bellevue Parkway, Wilmington, DE 19809.
For the fiscal year ended August 31, 1999, BIMC received the following fees
as a percentage of each fund's average net assets:
Money Market Portfolio .25%
Municipal Money Market Portfolio .09%
Government Obligations Money Market Portfolio .26%
New York Municipal Money Market Portfolio 0%
The following chart shows the funds' other service providers and includes
their addresses and principal activities.
26
<PAGE>
------------
SHAREHOLDERS
------------
Distribution and
Shareholder Services
------------------------------------ -----------------------------------------
PRINCIPAL DISTRIBUTOR TRANSFER AGENT
PROVIDENT DISTRIBUTORS, INC. PFPC INC.
FOUR FALLS CORPORATE CENTER, 6TH FL. 400 BELLEVUE PARKWAY
WEST CONSHOHOCKEN, PA 19428 WILMINGTON, DE 19809
Distributes shares of the funds. Handles shareholder services,
including record-keeping and statements,
distribution of dividends and processing
of buy and sell requests.
------------------------------------ -----------------------------------------
Asset
Management
------------------------------------ -----------------------------------------
INVESTMENT ADVISER CUSTODIAN
BLACKROCK INSTITUTIONAL PFPC TRUST COMPANY
MANAGEMENT COMPANY 200 STEVENS DRIVE
400 BELLEVUE PARKWAY LESTER, PA 19113
WILMINGTON, DE 19809
Holds each fund's assets, settles
Manages each fund's business all portfolio trades and collects
and investment activities. most of the valuation data
required for calculating each
fund's net asset value ("NAV").
------------------------------------ -----------------------------------------
Fund
Operations
------------------------------------
ADMINISTRATOR AND FUND
ACCOUNTING AGENT
PFPC INC.
400 BELLEVUE PARKWAY
WILMINGTON, DE 19809
Provides facilities, equipment
and personnel to carry out
administrative services related
to each fund and calculates the
fund's NAV, dividends
and distributions.
------------------------------------
---------------------------------
BOARD OF DIRECTORS
Supervises the Fund's activities.
---------------------------------
27
<PAGE>
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
PRICING SHARES
The price of your shares is also referred to as the net asset value
("NAV").
The NAV is determined twice daily at 12:00 noon and at 4:00 p.m., Eastern
Time, each day on which both the New York Stock Exchange and the Federal Reserve
Bank of Philadelphia are open. It is calculated by dividing a fund's total
assets, less its liabilities, by the number of shares outstanding.
Each fund values its securities using amortized cost. This method values a
fund holding initially at its cost and then assumes a constant amortization to
maturity of any discount or premium. The amortized cost method ignores any
impact of changing interest rates.
PURCHASE OF SHARES
GENERAL. You may purchase Janney Shares through an account maintained by
Janney Montgomery Scott ("JMS") (the "Account"). The Company in its sole
discretion may accept or reject any order for purchases of Janney Shares.
Purchases will be effected at the net asset value next determined after
PFPC, the Company's transfer agent, has received a purchase order in good order
from JMS and the Company's custodian has Federal Funds immediately available to
it. Prompt transmission of the order to the transfer agent is JMS's
responsibility. In those cases where payment is made by check, Federal Funds
will generally become available two Business Days after the check is received by
JMS. A "Business Day" is any day that both the New York Stock Exchange (the
"NYSE") and the Federal Reserve Bank of Philadelphia (the "FRB") are open. On
any Business Day, orders which are accompanied by Federal Funds and received by
the Company by 12:00 noon Eastern Time, and orders as to which payment has been
converted into Federal Funds by 12:00 noon Eastern Time, will be executed as of
12:00 noon that Business Day. Orders which are accompanied by Federal Funds and
received by PFPC after 12:00 noon Eastern Time but prior to the close of regular
trading on the NYSE (generally 4:00 p.m. Eastern Time), and orders as to which
payment has been converted into Federal Funds after 12:00 noon Eastern Time but
prior to the close of regular trading on the NYSE on any Business Day, will be
executed as of the close of regular trading on the NYSE on that Business Day,
but will not be entitled to receive dividends declared on such Business Day.
Orders which are accompanied by Federal Funds and received by the Company as of
the close of regular trading on the NYSE or later and orders as to which payment
has been converted to Federal Funds as of the close of regular trading on the
NYSE or later on a Business Day will be processed as of 12:00 noon Eastern Time
on the following Business Day.
PURCHASES THROUGH AN ACCOUNT. Purchases of Shares may be effected through
an Account with JMS through procedures and requirements established by JMS. In
such event, beneficial ownership of Janney Shares will be recorded by JMS and
will be reflected in the Account statements provided to you by JMS. JMS may
impose minimum investment Account requirements. Although JMS does not impose a
sales charge for purchases of Janney Shares, depending on the terms of your
Account with JMS, JMS may charge to your Account fees for automatic investment
and other services provided to your Account. Information concerning Account
requirements, services and charges should be obtained from JMS, and you should
read this Prospectus in conjunction with any information received from JMS.
JMS may offer you the ability to purchase Janney Shares under an automatic
purchase program (a "Purchase Program") established by it. If you participate in
a Purchase Program, then you will have your "free-credit" cash balances in your
Account automatically invested in Shares of the Janney Class designated by you
as the "Primary Janney Class" for your Purchase Program. The frequency of
investments and the minimum investment requirement will be established by JMS
and the Company. In addition, JMS may require a minimum amount of cash and/or
securities to be deposited in your Account to participate in its Purchase
Program. The description of JMS's Purchase
28
<PAGE>
Program should be read for details, and any inquiries concerning your Account
under a Purchase Program should be directed to JMS. As a participant in a
Purchase Program, you may change the designation of the Primary Janney Class at
any time by so instructing JMS.
If JMS makes special arrangements under which orders for Janney Shares are
received by PFPC prior to 12:00 noon Eastern Time, and JMS guarantees that
payment for such Shares will be made in available Federal Funds to the Company's
custodian prior to the close of regular trading on the NYSE on the same day,
such purchase orders will be effective and Shares will be purchased at the
offering price in effect as of 12:00 noon Eastern Time on the date the purchase
order is received by PFPC. Otherwise, if JMS has not made such an arrangement,
pricing of shares will occur as described above under "General".
REDEMPTION OF SHARES
GENERAL. Redemption orders are effected at the net asset value per share
next determined after receipt of the order in proper form by the Company's
transfer agent, PFPC. You may redeem all or some of your Shares in accordance
with one of the procedures described below.
REDEMPTION OF SHARES IN AN ACCOUNT. If you beneficially own Janney Shares
through an Account, you may redeem Janney Shares in your Account in accordance
with instructions and limitations pertaining to your Account by contacting JMS.
If such notice is received by PFPC by 12:00 noon Eastern Time on any Business
Day, the redemption will be effective as of 12:00 noon Eastern Time on that day.
It is the responsibility of JMS to transmit redemption orders and credit your
account with redemption proceeds on a timely basis. Payment of the redemption
proceeds will be made after 12:00 noon Eastern Time on the day the redemption is
effected, provided that the Company's custodian is open for business. If the
custodian is not open, payment will be made on the next bank business day. If
the redemption request is received between 12:00 noon and the close of regular
trading on the NYSE on a Business Day, the redemption will be effective as of
the close of regular trading on the NYSE on such Business Day and payment will
be made on the next bank business day following receipt of the redemption
request. If all of your Shares are redeemed, all accrued but unpaid dividends on
those Shares will be paid with the redemption proceeds.
JMS will also redeem each day a sufficient number of Shares of the Primary
Janney Class to cover debit balances created by transactions in your Account or
instructions for cash disbursements. Shares will be redeemed on the same day
that a transaction occurs that results in such a debit balance or charge.
JMS reserves the right to waive or modify criteria for participation in an
Account or to terminate participation in an Account for any reason.
REDEMPTION BY CHECK. The Company will provide to you forms of drafts
("checks") payable through PNC Bank. These checks may be made payable to the
order of anyone. If you wish to use this check writing redemption procedure, you
should complete specimen signature cards (available from JMS), and forward them
to JMS. JMS will then arrange for the checks to be honored by PNC Bank.
Investors with joint accounts may elect to have checks honored with a single
signature. Check redemptions will be subject to PNC Bank's rules governing
checks. An investor will be able to stop payment on a check redemption. The
Company or PNC Bank may terminate this redemption service at any time, and
neither shall incur any liability for honoring checks, for effecting redemptions
to pay checks, or for returning checks which have not been accepted.
When a check is presented to PNC Bank for clearance, PNC Bank, as your
agent, will cause the Company to redeem a sufficient number of your full and
fractional Shares to cover the amount of the check. This procedure enables you
to continue to receive dividends on your Shares representing the amount being
redeemed by check until such time as the check is presented to PNC Bank.
Pursuant to rules under the 1940 Act, checks may not be presented for cash
payment at the offices of PNC Bank. This limitation does not affect checks used
for the payment of bills or cash at other banks.
29
<PAGE>
ADDITIONAL REDEMPTION INFORMATION. The Company ordinarily will make payment
for all Shares redeemed within seven days after receipt by PFPC of a redemption
request in proper form. Although the Company will redeem Shares purchased by
check before the check clears, payment of the redemption proceeds may be delayed
for a period of up to fifteen days after their purchase, pending a determination
that the check has cleared. You should consider purchasing Shares using a
certified or bank check or money order if you anticipate an immediate need for
redemption proceeds.
The Company does not impose a charge when Shares are redeemed. The Company
reserves the right to redeem any account in a Janney Class involuntarily, on
thirty days' notice, if such account falls below $500 and during such 30-day
notice period the amount invested in such account is not increased to at least
$500. Payment for Shares redeemed may be postponed or the right of redemption
suspended as provided by the rules of the SEC.
If the Board of Directors determines that it would be detrimental to the
best interests of the remaining shareholders of the funds to make payment wholly
or partly in cash, redemption proceeds may be paid in whole or in part by an
in-kind distribution of readily marketable securities held by a fund instead of
cash in conformity with applicable rules of the SEC. Investors generally will
incur brokerage charges on the sale of portfolio securities so received in
payment of redemptions. The funds have elected, however, to be governed by Rule
18f-1 under the 1940 Act, so that a fund is obligated to redeem its Shares
solely in cash up to the lesser of $250.000 or 1% of its net asset value during
any 90-day period for any one shareholder of a fund.
DIVIDENDS AND DISTRIBUTIONS
The Company will distribute substantially all of the net investment income
and net realized capital gains, if any, of each fund to each fund's
shareholders. All distributions are reinvested in the form of additional full
and fractional Shares of the relevant Janney Class unless a shareholder elects
otherwise.
The net investment income (not including any net short-term capital gains)
earned by each fund will be declared as a dividend on a daily basis and paid
monthly. Dividends are payable to shareholders of record immediately prior to
the determination of net asset value made as of the close of trading of the
NYSE. Net short-term capital gains, if any, will be distributed at least
annually.
TAXES
Distributions from the Money Market Portfolio and the Government
Obligations Money Market Portfolio will generally be taxable to shareholders. It
is expected that all, or substantially all, of these distributions will consist
of ordinary income. You will be subject to income tax on these distributions
regardless of whether they are paid in cash or reinvested in additional shares.
The one major exception to these tax principles is that distributions on shares
held in an IRA (or other tax-qualified plan) will not be currently taxable.
Distributions from the Municipal Money Market Portfolio will generally
constitute tax-exempt income for shareholders for federal income tax purposes.
It is possible, depending upon the Portfolios' investments, that a portion of
each Portfolio's distributions could be taxable to shareholders as ordinary
income or capital gains, but it is not expected that this will be the case.
Interest on indebtedness incurred by a shareholder to purchase or carry
shares of the Municipal Money Market Portfolio and the New York Municipal Money
Market Portfolio generally will not be deductible for federal income tax
purposes.
You should note that a portion of the exempt-interest dividends paid by the
Municipal Money Market Portfolio and the New York Municipal Money Market
Portfolio may constitute an item of tax preference for purposes of determining
federal alternative minimum tax liability. Exempt-interest dividends will also
be considered along with other adjusted gross income in determining whether any
Social Security or railroad retirement payments received by you are subject to
federal income taxes.
30
<PAGE>
It is anticipated that distributions from the New York Municipal Securities
will generally be exempt from New York State and New York City personal income
(but not corporate franchise) taxes. Although distributions from the Municipal
Money Market Portfolio and the New York Municipal Money Market Portfolio are
exempt for federal income tax purposes, they will generally constitute taxable
income for state and local income tax purposes except that, subject to
limitations that vary depending on the state, distributions from interest paid
by a state or municipal entity may be exempt from tax in that state.
The foregoing is only a summary of certain tax considerations under the
current law, which may be subject to change in the future. Shareholders who are
nonresident aliens, foreign trusts or estates, or foreign corporations or
partnerships may be subject to different United States federal income tax
treatment. You should consult your tax adviser for further information regarding
federal, state, local and/or foreign tax consequences relevant to your specific
situation.
DISTRIBUTION ARRANGEMENTS
- --------------------------------------------------------------------------------
Janney Shares of the funds are sold without a sales load on a continuous
basis by Provident Distributors, Inc., whose principal business address is at
Four Falls Corporate Center, West Conshohocken, PA 19428.
The Board of Directors of the Company approved and adopted the Distribution
Agreement and separate Plans of Distribution for each of the Janney Classes
(collectively, the "Plans") pursuant to Rule 12b-1 under the 1940 Act. Under
each of the Plans, the Distributor is entitled to receive from the relevant
Janney Class a distribution fee, which is accrued daily and paid monthly, of up
to .65% on an annualized basis of the average daily net assets of the relevant
Janney Class. The actual amount of such compensation is agreed upon from time to
time by the Company's Board of Directors and the Distributor. Under the
Distribution Agreement, the Distributor has agreed to accept compensation for
its services thereunder and under the Plans in the amount of .60% of the average
daily net assets of the relevant Class on an annualized basis in any year. The
Distributor may, in its discretion, voluntarily waive from time to time all or
any portion of its distribution fee.
Under the Distribution Agreement and the relevant Plan, the Distributor may
reallocate an amount up to the full fee that it receives to financial
institutions, including broker/dealers, based upon the aggregate investment
amounts maintained by and services provided to shareholders of any relevant
Class serviced by such financial institutions. The Distributor may also
reimburse broker/dealers for other expenses incurred in the promotion of the
sale of Janney Shares. The Distributor and/or broker/dealers pay for the cost of
printing (excluding typesetting) and mailing to prospective investors
prospectuses and other materials relating to the Janney Class as well as for
related direct mail, advertising and promotional expenses.
Each of the Plans obligates the Company, during the period it is in effect,
to accrue and pay to the Distributor on behalf of each Janney Class the fee
agreed to under the Distribution Agreement. Payments under the Plans are not
based on expenses actually incurred by the Distributor, and the payments may
exceed distribution expenses actually incurred. Because these fees are paid out
of the funds' assets on an on-going basis, over time these fees will increase
the cost of your investment and may cost you more than paying other types of
sales charges.
31
<PAGE>
================================================================================
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS OR IN THE FUND'S STATEMENT OF
ADDITIONAL INFORMATION INCORPORATED HEREIN BY REFERENCE, IN CONNECTION WITH THE
OFFERING MADE BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND OR
ITS DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE FUND OR
BY THE DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY
BE MADE.
INVESTMENT ADVISER
Blackrock Institutional Management Corporation
Wilmington, Delaware
DISTRIBUTOR
Provident Distributors, Inc.
West Conshohocken, Pennsylvania
CUSTODIAN
PFPC Trust Company
Lester, Pennsylvania
ADMINISTRATOR AND TRANSFER AGENT
PFPC Inc.
Wilmington, Delaware
COUNSEL
Drinker Biddle & Reath LLP
Philadelphia, Pennsylvania
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
================================================================================
================================================================================
JMS (LOGO)
[GRAPHIC OMITTED]
PROSPECTUS
THE JANNEY
MONTGOMERY SCOTT MONEY FUNDS
MONEY MARKET PORTFOLIO
- ------------------------------
MUNICIPAL
MONEY MARKET PORTFOLIO
- ------------------------------
GOVERNMENT OBLIGATIONS
MONEY MARKET PORTFOLIO
- ------------------------------
NEW YORK MUNICIPAL
MONEY MARKET PORTFOLIO
- ------------------------------
DECEMBER 1, 1999
================================================================================
<PAGE>
THE JANNEY MONTGOMERY SCOTT MONEY FUNDS
1-800-JANNEYS
(1-800-526-6397)
FOR MORE INFORMATION:
This prospectus contains important information you should know before you
invest. Read it carefully and keep it for future reference. More information
about the Janney Family is available free, upon request, including:
ANNUAL/SEMI-ANNUAL REPORT
These reports contain additional information about each of the funds'
investments, describe the funds' performance, list portfolio holdings, and
discuss recent market conditions and economic trends. The annual report includes
fund strategies for the last fiscal year.
STATEMENT OF ADDITIONAL INFORMATION (SAI)
A Statement of Additional Information, dated December 1, 1999 (SAI), has
been filed with the Securities and Exchange Commission (SEC). The SAI, which
includes additional information about the Janney Family, may be obtained free of
charge, along with the Janney Montgomery Scott Money Funds' annual and
semi-annual reports, by calling 1-800-JANNEYS. The SAI, as supplemented from
time to time, is incorporated by reference into this Prospectus (and is legally
considered a part of this Prospectus).
SHAREHOLDER ACCOUNT SERVICE REPRESENTATIVES
Representatives are available to discuss account balance information,
mutual fund prospectuses, literature, programs and services available. Hours: 8
a.m. to 5 p.m. (Eastern time) Monday-Friday. Call: 1-800-JANNEYS.
WRITTEN CORRESPONDENCE
Send to: Janney Montgomery Scott Money Funds
1801 Market Street
Philadelphia, PA 19103-1675
SECURITIES AND EXCHANGE COMMISSION (SEC)
You may also view information about The RBB Fund, Inc. and the Janney
Montgomery Scott Money Funds, including the SAI, by visiting the SEC Website
(http://www.sec.gov) or the SEC's Public Reference Room in Washington, D.C.
Information about the operation of the public reference room can be obtained by
calling the SEC directly at 1-202-942-8090. Copies of this information can be
obtained, for a duplicating fee, by writing to the Public Reference Section of
the SEC, Washington, D.C. 20549-0102, or by electronic request to
[email protected].
INVESTMENT COMPANY ACT FILE NO. 811-05518
<PAGE>
RBB
SELECT MONEY MARKET PORTFOLIO
This prospectus gives vital information about this money market mutual
fund, advised by BlackRock Institutional Management Corporation ("BIMC" or the
"Adviser"), including information on investment policies, risks and fees. For
your own benefit and protection, please read it before you invest and keep it on
hand for future reference.
Please note that this fund:
- is not a bank deposit;
- is not federally insured;
- is not an obligation of, or guaranteed or endorsed by PNC Bank,
National Association, PFPC Trust Company or any other bank;
- is not an obligation of, or guaranteed or endorsed or otherwise
supported by the U.S. Government, the Federal Deposit Insurance
Corporation, the Federal Reserve Board or any other governmental
agency;
- is not guaranteed to achieve its goals;
- may not be able to maintain a stable $1 share price and you may lose
money.
- --------------------------------------------------------------------------------
THE SECURITIES DESCRIBED IN THIS PROSPECTUS HAVE BEEN REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION (SEC). THE SEC, HOWEVER, HAS NOT JUDGED THESE
SECURITIES FOR THEIR INVESTMENT MERIT AND HAS NOT DETERMINED THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANYONE WHO TELLS YOU OTHERWISE IS COMMITTING A
CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
PROSPECTUS December 1, 1999
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK.
<PAGE>
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
================================= INTRODUCTION TO THE RISK/RETURN SUMMARY ....5
A LOOK AT THE GOALS, PORTFOLIO DESCRIPTION ......................6
STRATEGIES, RISKS, EXPENSES
AND FINANCIAL HISTORY OF
THEPORTFOLIO.
PORTFOLIO MANAGEMENT
Investment Adviser ....................10
DETAILS ABOUT THE SERVICE
PROVIDERS. Service Provider Chart ................11
SHAREHOLDER INFORMATION
POLICIES AND INSTRUCTIONS FOR
OPENING, MAINTAINING AND Pricing Shares ........................12
CLOSING AN ACCOUNT IN THE
THE PORTFOLIO. Purchase of Shares ....................12
Redemption of Shares ..................13
Dividends and Distributions ...........14
Taxes .................................14
================================= FOR MORE INFORMATION ..............Back Cover
<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK.
<PAGE>
INTRODUCTION TO THE RISK/RETURN SUMMARY
This Prospectus has been written to provide you with the information you
need to make an informed decision about whether to invest in the RBB Select
Money Market Portfolio of The RBB Fund, Inc. (the "Company").
The class of common stock of the Company offered by this Prospectus
represents interests in the Select Class of the Money Market Portfolio (the
"Select Class"). This Prospectus and the Statement of Additional Information
incorporated herein relate solely to this Class.
This Prospectus has been organized so that there is a short section with
important facts about the Portfolio's goals, strategies, risks, expenses and
financial history. Once you read this short section, read the sections about
Purchase and Redemption of Shares of the Select Class ("Select Shares" or
"Shares").
<PAGE>
MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
================================================================================
IMPORTANT DEFINITIONS
ASSET-BACKED SECURITIES: Debt securities that are backed by a pool of assets,
usually loans such as installment sale contracts or credit card receivables.
COMMERCIAL PAPER: Short-term securities with maturities of 1 to 270 days which
are issued by banks, corporations and others.
DOLLAR WEIGHTED AVERAGE MATURITY: The average amount of time until the
organizations that issued the debt securities in the fund's portfolio must pay
off the principal amount of the debt. "Dollar weighted" means the larger the
dollar value of a debt security in the fund, the more weight it gets in
calculating this average.
LIQUIDITY: Liquidity is the ability to easily convert investments into cash
without losing a significant amount of money in the process.
NET ASSET VALUE (NAV): The value of everything the fund owns, minus everything
it owes, divided by the number of shares held by investors.
REPURCHASE AGREEMENT: A special type of a short-term investment. A dealer sells
securities to a fund and agrees to buy them back later at a set price. In
effect, the dealer is borrowing the fund's money for a short time, using the
securities as collateral.
VARIABLE OR FLOATING RATE SECURITIES: Securities whose interest rates adjust
automatically after a certain period of time and/or whenever a predetermined
standard interest rate changes.
================================================================================
INVESTMENT GOAL
The fund seeks to generate current income, to provide you with liquidity
and to protect your investment.
PRIMARY INVESTMENT STRATEGIES
To achieve this goal, we invest in a diversified portfolio of short term,
high quality, U.S. dollar-denominated instruments, including government, bank,
commercial and other obligations.
Specifically, we may invest in:
1) U.S. dollar-denominated obligations issued or supported by the credit
of U.S. or foreign banks or savings institutions with total assets of
more than $1 billion (including obligations of foreign branches of such
banks).
2) High quality commercial paper and other obligations issued or
guaranteed (or otherwise supported) by U.S. and foreign corporations
and other issuers rated (at the time of purchase) A-2 or higher by
Standard and Poor's, Prime-2 or higher by Moody's, D-2 or higher by
Duff & Phelps, F-2 or higher by Fitch or TBW-2 or higher by Thomson
BankWatch, as well as high quality corporate bonds rated AA (or Aa) or
higher at the time of purchase by those rating agencies. These ratings
must be provided by at least two rating agencies or by the only rating
agency providing a rating.
3) Unrated notes, paper and other instruments that are determined by us to
be of comparable quality to the instruments described above.
4) Asset-backed securities (including interests in pools of assets such as
mortgages, installment purchase obligations and credit card
receivables).
5) Securities issued or guaranteed by the U.S. Government or by its
agencies or authorities.
6) Dollar-denominated securities issued or guaranteed by foreign
governments or their political subdivisions, agencies or authorities.
7) Securities issued or guaranteed by state or local governmental bodies.
8) Repurchase agreements relating to the above instruments.
The fund seeks to maintain a net asset value of $1.00 per share.
6
<PAGE>
QUALITY
Under guidelines established by the Company's Board of Directors, we will
only purchase securities if such securities or their issuers have (or such
securities are guaranteed or otherwise supported by entities which have)
short-term debt ratings at the time of purchase in the two highest rating
categories from at least two national rating agencies, or one such rating if the
security is rated by only one agency. Securities that are unrated must be
determined to be of comparable quality.
MATURITY
The dollar-weighted average maturity of all the investments of the fund
will be 90 days or less. Only those securities which have remaining maturities
of 397 days or less (except for certain variable and floating rate instruments
and securities collateralizing repurchase agreements) will be purchased.
KEY RISKS
The value of money market investments tends to fall when current interest
rates rise. Money market investments are generally less sensitive to interest
rate changes than longer-term securities.
The fund's securities may not earn as high a level of income as longer term
or lower quality securities, which generally have greater risk and more
fluctuation in value.
The fund's concentration of its investments in the banking industry could
increase risks. The profitability of banks depends largely on the availability
and cost of funds, which can change depending upon economic conditions. Banks
are also exposed to losses if borrowers get into financial trouble and can't
repay their loans.
The obligations of foreign banks and other foreign issuers may involve
certain risks in addition to those of domestic issuers, including higher
transaction costs, less complete financial information, political and economic
instability, less stringent regulatory requirements and less market liquidity.
Unrated notes, paper and other instruments may be subject to the risk that
an issuer may default on its obligation to pay interest and repay principal.
The obligations issued or guaranteed by state or local government bodies
may be issued by entities in the same state and may have interest which is paid
from revenues of similar projects. As a result, changes in economic, business or
political conditions relating to a particular state or types of projects may
impact the fund.
Treasury obligations differ only in their interest rates, maturities and
time of issuance. These differences could result in fluctuations in the value of
such securities depending upon the market. Obligations of U.S. Government
agencies and authorities are supported by varying degrees of credit. The U.S.
Government gives no assurances that it will provide financial support to its
agencies and authorities if it is not obligated by law to do so. Default in
these issuers could negatively impact the fund.
The fund's investment in asset-backed securities may be negatively impacted
by interest rate fluctuations or when an issuer pays principal on an obligation
held by the fund earlier or later than expected. These events may affect their
value and the return on your investment.
The fund could lose money if a seller under a repurchase agreement defaults
or declares bankruptcy.
We may purchase variable and floating rate instruments. Like all debt
instruments, their value is dependent on the credit paying ability of the
issuer. If the issuer were unable to make interest payments or default, the
value of the securities would decline. The absence of an active market for these
securities could make it difficult to dispose of them if the issuer defaults.
7
<PAGE>
The fund, like any business, could be affected if the computer systems on
which it relies do not properly process information beginning on January 1,
2000. While Year 2000 issues could have a negative effect on the fund, BIMC, the
fund's investment adviser, is currently working to avoid such problems. BIMC is
also working with other systems providers and vendors servicing the Portfolio to
determine their systems' ability to handle Year 2000 problems. There is no
guarantee, however, that systems will work properly on or after January 1, 2000.
Year 2000 problems may also hurt issuers whose securities the fund holds or
securities markets generally.
ALTHOUGH WE SEEK TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER
SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND. WHEN YOU INVEST IN
THIS FUND YOU ARE NOT MAKING A BANK DEPOSIT. YOUR INVESTMENT IS NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR BY ANY BANK OR
GOVERNMENTAL AGENCY.
EXPENSES AND FEES
As a shareholder you pay certain fees and expenses. Annual fund operating
expenses are paid out of fund assets and are reflected in the fund's price.
The table below describes the fees and expenses that you may pay if you buy
and hold Select Shares of the fund. The table is based on expenses for the most
recent fiscal year.
================================================================================
IMPORTANT DEFINITIONS
MANAGEMENT FEES: Fees paid to the investment adviser for portfolio management
services.
OTHER EXPENSES: Includes administration, transfer agency, custody, professional
fees and registration fees.
================================================================================
ANNUAL FUND OPERATING EXPENSES*
(Expenses that are deducted from fund assets)
Management Fees 1. .......................... 0.36%
Other expenses 2 ............................ 0.05%
----
Total annual fund operating expenses 3 ...... 0.41%
====
* The table does not reflect charges or credits which investors might incur
if they invest through a financial institution.
1. BIMC HAS VOLUNTARILY UNDERTAKEN THAT A PORTION OF ITS MANAGEMENT FEE WILL
NOT BE IMPOSED ON THE FUND DURING THE CURRENT FISCAL YEAR ENDING AUGUST 31,
2000. AS A RESULT OF THE FEE WAIVER, CURRENT MANAGEMENT FEES OF THE FUND
ARE 0.25% OF AVERAGE DAILY NET ASSETS. THIS WAIVER IS EXPECTED TO REMAIN IN
EFFECT FOR THE CURRENT FISCAL YEAR. HOWEVER, IT IS VOLUNTARY AND CAN BE
MODIFIED OR TERMINATED AT ANY TIME WITHOUT THE FUND'S CONSENT.
2. "Other expenses" for the current fiscal year are expected to be less than
the amounts shown above because certain of the fund's service providers are
waiving a portion of their fees and/or reimbursing the fund for certain
other expenses. As a result of these fee waivers, "Other expenses" of the
fund are estimated to be 0.02%. These waivers and reimbursements are
expected to remain in effect for the current fiscal year. However, they are
voluntary and can be modified or terminated at any time without the fund's
consent.
3. As a result of the fee waivers and/or reimbursements set forth in notes 1
and 2, the total annual fund operating expenses which are estimated to be
incurred during the current fiscal year are 0.27%. Although these fee
waivers and/or reimbursements are expected to remain in effect for the
current fiscal year, they are voluntary and may be terminated at any time
at the option of BIMC or the fund's service providers.
EXAMPLE:
The example is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated and then redeem
all of your shares at the end of each period. The example also assumes that your
investment has a 5% return each year and that the fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your cost would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
SELECT SHARES $42 $132 $230 $518
8
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The table below sets forth certain financial information for the periods
indicated, including per share information results for a single fund share. The
term "Total Return" indicates how much your investment would have increased or
decreased during this period of time and assumes that you have reinvested all
dividends and distributions. This information has been derived from the fund's
financial statements audited by PricewaterhouseCoopers LLP, the Company's
independent accountants. This information should be read in conjunction with the
fund's financial statements which, together with the report of independent
accountants, are included in the fund's annual report, which is available upon
request (see back cover for ordering instructions).
FINANCIAL HIGHLIGHTS (B)
(FOR A SELECT SHARE OUTSTANDING THROUGHOUT THE PERIOD)
MONEY MARKET PORTFOLIO FOR THE PERIOD
DECEMBER 15, 1998
(COMMENCEMENT OF OPERATIONS)
TO AUGUST 31, 1999(C)
------------------------
Net asset value, beginning of period $ 1.00
--------
Income from investment operations:
Net investment income 0.0345
--------
Total from investment operations 0.0345
--------
Less distributions
Dividends (from net investment income) (0.0345)
--------
Total distributions (0.0345)
--------
Net asset value, end of period $ 1.00
========
Total Return 3.50%(e)
Ratios/Supplemental Data
Net assets, end of period $230,044
Ratios of expenses to average net assets .27%(a)(d)
Ratios of net investment income to
average net assets 4.82%(d)
(a) Without the waiver of advisory and transfer agent fees and without the
reimbursement of certain operating expenses, the ratios of expenses to
average net assets for the Money Market Portfolio would have been .41% for
the period ended August 31, 1999.
(b) Financial Highlights relate solely to the Select Family of shares within the
portfolio.
(c) On December 15, 1998 the Money Market Portfolio's Select Class began
operations.
(d) Annualized.
(e) Non-Annualized.
9
<PAGE>
PORTFOLIO MANAGEMENT
- --------------------------------------------------------------------------------
INVESTMENT ADVISER
BIMC, a majority-owned indirect subsidiary of PNC Bank, N.A. serves as
investment adviser and is responsible for all purchases and sales of the fund's
portfolio securities. BIMC and its affiliates are one of the largest U.S. bank
managers of mutual funds, with assets currently under management in excess of
$52.9 billion. BIMC (formerly known as PNC Institutional Management Corporation
or PIMC) was organized in 1977 by PNC Bank to perform advisory services for
investment companies and has its principal offices at Bellevue Park Corporate
Center, 400 Bellevue Parkway, Wilmington, DE 19809.
For the fiscal year ended August 31, 1999, BIMC received an advisory fee of
.25% of the fund's average net assets.
The following chart shows the fund's other service providers and includes
their addresses and principal activities.
10
<PAGE>
------------
SHAREHOLDERS
------------
Distribution and
Shareholder Services
------------------------------------ -----------------------------------------
PRINCIPAL DISTRIBUTOR TRANSFER AGENT
PROVIDENT DISTRIBUTORS, INC. PFPC INC.
FOUR FALLS CORPORATE CENTER, 6TH FL. 400 BELLEVUE PARKWAY
WEST CONSHOHOCKEN, PA 19428 WILMINGTON, DE19809
Distributes shares of the fund. Handles shareholder services,
including record-keeping and statements,
distribution of dividends and processing
of buy and sell requests.
------------------------------------ -----------------------------------------
Asset
Management
------------------------------------ -----------------------------------------
INVESTMENT ADVISER CUSTODIAN
BLACKROCK INSTITUTIONAL PFPC TRUST COMPANY
MANAGEMENT CORPORATION 200 STEVENS DRIVE
400 BELLEVUE PARKWAY LESTER, PA 19113
WILMINGTON, DE 19809
Holds the fund's assets, settles
Manages the fund's business all portfolio trades and collects
and investment activities. most of the valuation data
required for calculating the
fund's net asset value ("NAV").
------------------------------------ -----------------------------------------
Fund
Operations
------------------------------------
ADMINISTRATOR AND FUND
ACCOUNTING AGENT
PFPC INC.
400 BELLEVUE PARKWAY
WILMINGTON, DE 19809
Provides facilities, equipment
and personnel to carry out
administrative services related
to the fund and calculates the
fund's NAV, dividends
and distributions.
------------------------------------
---------------------------------
BOARD OF DIRECTORS
Supervises the fund's activities.
---------------------------------
11
<PAGE>
SHAREHOLDER INFORMATION
PRICING SHARES
The price of your shares is also referred to as the net asset value (NAV).
The NAV is determined twice daily at 12:00 noon and at 4:00 p.m., Eastern
Time, each day on which both the New York Stock Exchange and the Federal Reserve
Bank of Philadelphia are open. It is calculated by dividing the fund's total
assets, less its liabilities, by the number of shares outstanding.
The fund values its securities using amortized cost. This method values a
fund holding initially at its cost and then assumes a constant amortization to
maturity of any discount or premium. The amortized cost method ignores any
impact of changing interest rates.
PURCHASE OF SHARES
GENERAL. You may purchase Shares through an account maintained by your
brokerage firm (the "Account") and you may also purchase Shares directly by mail
or wire. The minimum initial investment is $200 million. The Company reserves
the right to waive this minimum investment requirement. There is no minimum
subsequent investment. The Company in its sole discretion may accept or reject
any order for purchases of Shares.
Purchases will be effected at the net asset value next determined after
PFPC, the Company's transfer agent, has received a purchase order in good order
and the Company's custodian has Federal Funds immediately available to it. In
those cases where payment is made by check, Federal Funds will generally become
available two Business Days after the check is received. A "Business Day" is any
day that both the New York Stock Exchange (the "NYSE") and the Federal Reserve
Bank of Philadelphia (the "FRB") are open. On any Business Day, orders which are
accompanied by Federal Funds and received by the Company by 12:00 noon Eastern
Time, and orders as to which payment has been converted into Federal Funds by
12:00 noon Eastern Time, will be executed as of 12:00 noon that Business Day.
Orders which are accompanied by Federal Funds and received by PFPC after 12:00
noon Eastern Time but prior to the close of regular trading on the NYSE
(generally 4:00 p.m. Eastern Time), and orders as to which payment has been
converted into Federal Funds after 12:00 noon Eastern Time but prior to the
close of regular trading on the NYSE on any Business Day, will be executed as of
the close of regular trading on the NYSE on that Business Day, but will not be
entitled to receive dividends declared on such Business Day. Orders which are
accompanied by Federal Funds and received by the Company as of the close of
regular trading on the NYSE or later, and orders as to which payment has been
converted to Federal Funds as of the close of regular trading on the NYSE or
later on a Business Day will be processed as of 12:00 noon Eastern Time on the
following Business Day.
PURCHASES THROUGH AN ACCOUNT. Purchases of Shares may be effected through
your Account with PNC Bank or its affiliates through procedures and requirements
established by PNC Bank or its affiliates. In such event, beneficial ownership
of Shares will be recorded by PNC Bank or its affiliates and will be reflected
in the Account statements provided to you by PNC Bank or its affiliates. PNC
Bank or its affiliates may impose minimum investment Account requirements.
Although PNC Bank or its affiliates do not impose a sales charge for purchases
of Shares, depending on the terms of your Account, PNC Bank or its affiliates
may charge to your Account fees for automatic investment and other services
provided to your Account. Information concerning Account requirements, services
and charges should be obtained from PNC Bank or its affiliates, and you should
read this Prospectus in conjunction with any information received from PNC Bank
or its affiliates.
PNC Bank or its affiliates may offer you the ability to purchase Shares
under an automatic purchase program (a "Purchase Program") established by PNC
Bank or its affiliates. If you participate in a Purchase Program, you will have
your "free-credit" cash balances in your Account with PNC Bank or its affiliates
automatically invested in Select Shares.
12
<PAGE>
The frequency of investments and the minimum investment requirement will be
established by PNC Bank or its affiliates and the Company. In addition, PNC Bank
or its affiliates may require a minimum amount of cash and/or securities to be
deposited in your Account to participate in its Purchase Program. The
description of PNC Bank's or its affiliates' Purchase Program should be read for
details, and any inquiries concerning your Account under a Purchase Program
should be directed to PNC Bank or its affiliates.
If PNC Bank or its affiliates makes special arrangements under which orders
for Select Shares are received by PFPC prior to 12:00 noon Eastern Time, and
your broker guarantees that payment for such Shares will be made in available
Federal Funds to the Company's custodian prior to the close of regular trading
on the NYSE on the same day, such purchase orders will be effective and Shares
will be purchased at the offering price in effect as of 12:00 noon Eastern Time
on the date the purchase order is received by PFPC. Otherwise, if PNC Bank or
its affiliate has not made such an arrangement, pricing of shares will occur as
described above under "General."
REDEMPTION OF SHARES
GENERAL. Redemption orders are effected at the net asset value per share
next determined after receipt of the order in proper form by the Company's
transfer agent, PFPC. You may redeem all or some of your Shares in accordance
with one of the procedures described below.
REDEMPTION OF SHARES IN AN ACCOUNT. If you beneficially own Select Shares
through an Account, you may redeem Shares in your Account in accordance with
instructions and limitations pertaining to your Account by contacting PNC Bank
or its affiliates. If such notice is received by PFPC by 12:00 noon Eastern Time
on any Business Day, the redemption will be effective as of 12:00 noon Eastern
Time on that day. Payment of the redemption proceeds will be made after 12:00
noon Eastern Time on the day the redemption is effected, provided that the
Company's custodian is open for business. If the custodian is not open, payment
will be made on the next bank business day. If the redemption request is
received between 12:00 noon and the close of regular trading on the NYSE on a
Business Day, the redemption will be effective as of the close of regular
trading on the NYSE on such Business Day and payment will be made on the next
bank business day following receipt of the redemption request. If all of your
Shares are redeemed, all accrued but unpaid dividends on those Shares will be
paid with the redemption proceeds.
PNC Bank or its affiliates also redeem each day a sufficient number of
Shares to cover debit balances created by transactions in your Account or
instructions for cash disbursements. Shares will be redeemed on the same day
that a transaction occurs that results in such a debit balance or charge.
PNC Bank or its affiliates reserve the right to waive or modify criteria
for participation in an Account or to terminate participation in an Account for
any reason.
ADDITIONAL REDEMPTION INFORMATION. The Company ordinarily will make payment
for all Shares redeemed within seven days after receipt by PFPC of a redemption
request in proper form. Although the Company will redeem Shares purchased by
check before the check clears, payment of the redemption proceeds may be delayed
for a period of up to fifteen days after their purchase, pending a determination
that the check has cleared. This procedure does not apply to Shares purchased by
wire payment. You should consider purchasing Shares using a certified or bank
check or money order if you anticipate an immediate need for redemption
proceeds.
The Company does not impose a charge when Shares are redeemed. The Company
reserves the right to redeem any account in the Select Class involuntarily, on
thirty days' notice, if such account falls below $1,500 and during such 30-day
notice period the amount invested in such account is not increased to at least
$1,500. Payment for Shares redeemed may be postponed or the right of redemption
suspended as provided by the rules of the SEC.
13
<PAGE>
If the Board of Directors determines that it would be detrimental to the
best interests of the remaining shareholders of the funds to make payment wholly
or partly in cash, redemption proceeds may be paid in whole or in part by an
in-kind distribution of readily marketable securities held by a fund instead of
cash in conformity with applicable rules of the SEC. Investors generally will
incur brokerage charges on the sale of portfolio securities so received in
payment of redemptions. The funds have elected, however, to be governed by Rule
18f-1 under the 1940 Act, so that a fund is obligated to redeem its Shares
solely in cash up to the lesser of $250,000 or 1% of its net asset value during
any 90-day period for any one shareholder of the fund.
DIVIDENDS AND DISTRIBUTIONS
The Company will distribute substantially all of the net investment income
and net realized capital gains, if any, of the fund to each shareholder. All
distributions are reinvested in the form of additional full and fractional
Shares unless a shareholder elects otherwise.
The net investment income (not including any net short-term capital gains)
earned by the fund will be declared as a dividend on a daily basis and paid
monthly. Dividends are payable to shareholders of record immediately prior to
the determination of net asset value made as of the close of trading of the
NYSE. Net short-term capital gains, if any, will be distributed at least
annually.
TAXES
Distributions from the fund will generally be taxable to shareholders. It
is expected that all, or substantially all, of these distributions will consist
of ordinary income. You will be subject to income tax on these distributions
regardless of whether they are paid in cash or reinvested in additional shares.
The one major exception to these tax principles is that distributions on shares
held in an IRA (or other tax-qualified plan) will not be currently taxable.
The foregoing is only a summary of certain tax considerations under the
current law, which may be subject to change in the future. Shareholders who are
nonresident aliens, foreign trusts or estates, or foreign corporations or
partnerships may be subject to different United States Federal income tax
treatment. You should consult your tax adviser for further information regarding
federal, state, local and/or foreign tax consequences relevant to your specific
situation.
14
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS OR IN THE FUND'S STATEMENT OF
ADDITIONAL INFORMATION INCORPORATED HEREIN BY REFERENCE, IN CONNECTION WITH THE
OFFERING MADE BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND OR
ITS DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE FUND OR
BY THE DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY
BE MADE.
INVESTMENT ADVISER
BlackRock Institutional Management Corporation
Wilmington, Delaware
DISTRIBUTOR
Provident Distributors, Inc.
West Conshohocken, Pennsylvania
CUSTODIAN
PFPC Trust Company
Lester, Pennsylvania
ADMINISTRATOR AND TRANSFER AGENT
PFPC Inc.
Wilmington, Delaware
COUNSEL
Drinker Biddle & Reath LLP
Philadelphia, Pennsylvania
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
RBB
Select Money Market
Portfolio
Prospectus
for the Select Shares of the
Money Market Portfolio
December 1, 1999
<PAGE>
RBB SELECT MONEY MARKET PORTFOLIO
1-800-430-9618
FOR MORE INFORMATION:
This prospectus contains important information you should know before you
invest. Read it carefully and keep it for future reference. More information
about the RBB Select Money Market Portfolio is available free, upon request,
including:
ANNUAL/SEMI-ANNUAL REPORT
These reports contain additional information about the fund's investments,
describe the fund's performance, list portfolio holdings, and discuss recent
market conditions and economic trends. The annual report includes fund
strategies for the last fiscal year.
STATEMENT OF ADDITIONAL INFORMATION (SAI)
A Statement of Additional Information, dated December 1, 1999 (SAI), has
been filed with the Securities and Exchange Commission (SEC). The SAI, which
includes additional information about the RBB Select Money Market Portfolio, may
be obtained free of charge, along with the Select Class of the Money Market
Portfolio's annual and semi-annual reports, by calling (800) 430-9618. The SAI,
as supplemented from time to time, is incorporated by reference into this
Prospectus (and is legally considered a part of this Prospectus).
SECURITIES AND EXCHANGE COMMISSION (SEC)
You may also view information about The RBB Fund, Inc. and the Select Class
of the Money Market Portfolio, including the SAI, by visiting the SEC Web site
(http://www.sec.gov) or the SEC's Public Reference Room in Washington, D.C.
Information about the operation of the public reference room can be obtained by
calling the SEC directly at 1-202-942-8090. Copies of this information can be
obtained, for a duplicating fee, by writing to the Public Reference Section of
the SEC, Washington, D.C. 20549-0102, or by electronic request to
[email protected].
INVESTMENT COMPANY ACT FILE NO. 811-05518
<PAGE>
SANSOM STREET MONEY MARKET PORTFOLIO
OF THE RBB FUND, INC.
This prospectus gives vital information about this money market mutual
fund, advised by BlackRock Institutional Management Corporation ("BIMC" or the
"Adviser"), including information on investment policies, risks and fees. For
your own benefit and protection, please read it before you invest and keep it on
hand for future reference.
Please note that this fund:
- is not a bank deposit;
- is not federally insured;
- is not an obligation of, or guaranteed or endorsed by PNC Bank, National
Association, PFPC Trust Company or any other bank;
- is not an obligation of, or guaranteed or endorsed or otherwise supported
by the U.S. Government, the Federal Deposit Insurance Corporation, the
Federal Reserve Board or any other governmental agency;
- is not guaranteed to achieve its goal;
- may not be able to maintain a stable $1 share price and you may lose
money.
- --------------------------------------------------------------------------------
THE SECURITIES DESCRIBED IN THIS PROSPECTUS HAVE BEEN REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION (SEC). THE SEC, HOWEVER, HAS NOT JUDGED THESE
SECURITIES FOR THEIR INVESTMENT MERIT AND HAS NOT DETERMINED THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANYONE WHO TELLS YOU OTHERWISE IS COMMITTING A
CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
PROSPECTUS December 1, 1999
<PAGE>
(THIS PAGE INTENTIONALLY LEFT BLANK.)
<PAGE>
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
================================== INTRODUCTION TO THE RISK/RETURN SUMMARY ...5
A LOOK AT THE GOALS, STRATEGIES, PORTFOLIO DESCRIPTION .....................6
RISKS, EXPENSES AND FINANCIAL
HISTORY OF THE PORTFOLIO.
PORTFOLIO MANAGEMENT
Investment Adviser ....................11
DETAILS ABOUT THE SERVICE
PROVIDERS. Service Provider Chart ................12
POLICIES AND INSTRUCTIONS FOR SHAREHOLDER INFORMATION
OPENING, MAINTAINING AND
CLOSING AN ACCOUNT IN Pricing Shares ........................13
THE PORTFOLIO.
Purchase of Shares ....................13
Redemption of Shares ..................14
Dividends and Distributions ...........16
DETAILS ON THE DISTRIBUTION PLAN.
Taxes .................................16
DISTRIBUTION ARRANGEMENTS ................17
================================== FOR MORE INFORMATION .............Back Cover
3
<PAGE>
(THIS PAGE INTENTIONALLY LEFT BLANK.)
<PAGE>
INTRODUCTION TO THE RISK/RETURN SUMMARY
- --------------------------------------------------------------------------------
This Prospectus has been written to provide you with the information you
need to make an informed decision about whether to invest in the Sansom Street
Money Market Portfolio of The RBB Fund, Inc. (the "Company").
The class of common stock (a "Sansom Street Class") of the Company offered
by this Prospectus represent interests in the Sansom Street Class of the Money
Market Portfolio. This Prospectus and the Statement of Additional Information
incorporated herein relate solely to the Sansom Street Class of the Company.
This Prospectus has been organized so that there is a short section with
important facts about the Portfolio's goals, strategies, risks, expenses and
financial history. Once you read this short section, read the sections about
Purchase and Redemption of Shares of the Sansom Street Class ("Sansom Street
Shares" or "Shares").
5
<PAGE>
MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
================================================================================
IMPORTANT DEFINITIONS
ASSET-BACKED SECURITIES: Debt securities that are backed by a pool of assets,
usually loans such as installment sale contracts or credit card receivables.
COMMERCIAL PAPER: Short-term securities with maturities of 1 to 270 days which
are issued by banks, corporations and others.
DOLLAR WEIGHTED AVERAGE MATURITY: The average amount of time until the
organizations that issued the debt securities in the fund's portfolio must pay
off the principal amount of the debt. "Dollar weighted" means the larger the
dollar value of a debt security in the fund, the more weight it gets in
calculating this average.
LIQUIDITY: Liquidity is the ability to easily convert investments into cash
without losing a significant amount of money in the process.
NET ASSET VALUE (NAV): The value of everything the fund owns, minus everything
it owes, divided by the number of shares held by investors.
REPURCHASE AGREEMENT: A special type of a short-term investment. A dealer sells
securities to a fund and agrees to buy them back later at a set price. In
effect, the dealer is borrowing the fund's money for a short time, using the
securities as collateral.
VARIABLE OR FLOATING RATE SECURITIES: Securities whose interest rates adjust
automatically after a certain period of time and/or whenever a predetermined
standard interest rate changes.
================================================================================
INVESTMENT GOAL
The fund seeks to generate current income, to provide you with liquidity
and to protect your investment.
PRIMARY INVESTMENT STRATEGIES
To achieve this goal, we invest in a diversified portfolio of short term,
high quality, U.S. dollar-denominated instruments, including government, bank,
commercial and other obligations.
Specifically, we may invest in:
1) U.S. dollar-denominated obligations issued or supported by the credit
of U.S. or foreign banks or savings institutions with total assets of
more than $1 billion (including obligations of foreign branches of such
banks).
2) High quality commercial paper and other obligations issued or
guaranteed (or otherwise supported) by U.S. and foreign corporations
and other issuers rated (at the time of purchase) A-2 or higher by
Standard and Poor's, Prime-2 or higher by Moody's, D-2 or higher by
Duff & Phelps, F-2 or higher by Fitch or TBW-2 or higher by Thomson
BankWatch, as well as high quality corporate bonds rated AA (or Aa) or
higher at the time of purchase by those rating agencies. These ratings
must be provided by at least two rating agencies or by the only rating
agency providing a rating.
3) Unrated notes, paper and other instruments that are determined by us to
be of comparable quality to the instruments described above.
4) Asset-backed securities (including interests in pools of assets such as
mortgages, installment purchase obligations and credit card
receivables).
5) Securities issued or guaranteed by the U.S. Government or by its
agencies or authorities.
6) Dollar-denominated securities issued or guaranteed by foreign
governments or their political subdivisions, agencies or authorities.
7) Securities issued or guaranteed by state or local governmental bodies.
8) Repurchase agreements relating to the above instruments.
The fund seeks to maintain a net asset value of $1.00 per share.
6
<PAGE>
QUALITY
Under guidelines established by the Company's Board of Directors, we will
only purchase securities if such securities or their issuers have (or such
securities are guaranteed or otherwise supported by entities which have)
short-term debt ratings at the time of purchase in the two highest rating
categories from at least two national rating agencies, or one such rating if the
security is rated by only one agency. Securities that are unrated must be
determined to be of comparable quality.
MATURITY
The dollar-weighted average maturity of all the investments of the fund
will be 90 days or less. Only those securities which have remaining maturities
of 397 days or less (except for certain variable and floating rate instruments
and securities collateralizing repurchase agreements) will be purchased.
KEY RISKS
The value of money market investments tends to fall when current interest
rates rise. Money market investments are generally less sensitive to interest
rate changes than longer-term securities.
The fund's securities may not earn as high a level of income as longer term
or lower quality securities, which generally have greater risk and more
fluctuation in value.
The fund's concentration of its investments in the banking industry could
increase risks. The profitability of banks depends largely on the availability
and cost of funds, which can change depending upon economic conditions. Banks
are also exposed to losses if borrowers get into financial trouble and can't
repay their loans.
The obligations of foreign banks and other foreign issuers may involve
certain risks in addition to those of domestic issuers, including higher
transaction costs, less complete financial information, political and economic
instability, less stringent regulatory requirements and less market liquidity.
Unrated notes, paper and other instruments may be subject to the risk that
an issuer may default on its obligation to pay interest and repay principal.
The obligations issued or guaranteed by state or local government bodies
may be issued by entities in the same state and may have interest which is paid
from revenues of similar projects. As a result, changes in economic, business or
political conditions relating to a particular state or types of projects may
impact the fund.
Treasury obligations differ only in their interest rates, maturities and
time of issuance. These differences could result in fluctuations in the value of
such securities depending upon the market. Obligations of U.S. Government
agencies and authorities are supported by varying degrees of credit. The U.S.
Government gives no assurances that it will provide financial support to its
agencies and authorities if it is not obligated by law to do so. Default in
these issuers could negatively impact the fund.
The fund's investment in asset-backed securities may be negatively impacted
by interest rate fluctuations or when an issuer pays principal on an obligation
held by the fund earlier or later than expected. These events may affect their
value and the return on your investment.
The fund could lose money if a seller under a repurchase agreement defaults
or declares bankruptcy.
We may purchase variable and floating rate instruments. Like all debt
instruments, their value is dependent on the credit paying ability of the
issuer. If the issuer were unable to make interest payments or default, the
value of the securities would decline. The absence of an active market for these
securities could make it difficult to dispose of them if the issuer defaults.
7
<PAGE>
The fund, like any business, could be affected if the computer systems on
which it relies do not properly process information beginning on January 1,
2000. While Year 2000 issues could have a negative effect on the fund, BIMC, the
fund's investment adviser, is currently working to avoid such problems. BIMC is
also working with other systems providers and vendors servicing the Portfolio to
determine their systems' ability to handle Year 2000 problems. There is no
guarantee, however, that systems will work properly on or after January 1, 2000.
Year 2000 problems may also hurt issuers whose securities the fund holds or
securities markets generally.
ALTHOUGH WE SEEK TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER
SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND. WHEN YOU INVEST IN
THIS FUND YOU ARE NOT MAKING A BANK DEPOSIT. YOUR INVESTMENT IS NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR BY ANY BANK OR
GOVERNMENTAL AGENCY
RISK/RETURN INFORMATION
The chart and table below give you a picture of the variability of the
fund's long-term performance for Sansom Street Shares. The information shows you
how the fund's performance has varied year by year and provides some indication
of the risks of investing in the fund. The chart and the table both assume
reinvestment of dividends and distributions. As with all such investments, past
performance is not an indication of future results. Performance reflects fee
waivers in effect. If fee waivers were not in place, the fund's performance
would be reduced.
AS OF 12/31
ANNUAL TOTAL RETURNS
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN
PRINTED GRAPHIC
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
9.27% 8.15% 6.18% 5.71% 3.01% 4.07% 4.96% 5.03% 5.39% 5.23%
Year-to-date total return for the nine months ended September 30, 1999: 4.71%
Best Quarter: 9.85% (quarter ended 6/30/89)
Worst Quarter: 2.96% (quarter ended 6/30/93)
AS OF 12/31/98
AVERAGE ANNUAL TOTAL RETURNS
1 YEAR 5 YEARS 10 YEARS
------ ------- --------
MONEY MARKET 5.23% 4.93% 5.70%
8
<PAGE>
CURRENT YIELD: The seven-day yield for the period ended 12/31/98 for the
fund was 4.86%. Past performance is not an indication of future results. Yields
will vary. You may call (800) 430-9618 to obtain the current seven-day yield of
the fund.
EXPENSES AND FEES
As a shareholder you pay certain fees and expenses. Annual fund operating
expenses are paid out of fund assets and are reflected in the fund's price.
The table below describes the fees and expenses that you may pay if you buy
and hold Sansom Street Shares of the fund. The table is based on expenses for
the most recent fiscal year.
================================================================================
IMPORTANT DEFINITIONS
MANAGEMENT FEES: Fees paid to the investment adviser for the portfolio
management services.
OTHER EXPENSES: Includes administration, transfer agency, custody, professional
fees and registration fees.
DISTRIBUTION AND SERVICE FEES: Fees that are paid to the Distributor for
shareholder account service and maintenance.
================================================================================
ANNUAL FUND OPERATING EXPENSES*
(Expenses that are deducted from fund assets)
Management Fees 1 ................................ 0.36%
Distribution and service (12b-1) fees ............ 0.05%
Other expenses 2 ................................. 0.21%
-----
Total annual fund operating expenses 3 ........... 0.62%
=====
* The table does not reflect charges or credits which investors might
incur if they invest through a financial institution.
1. BIMC has voluntarily undertaken that a portion of its management fee
will not be imposed on the fund during the current fiscal year ending
August 31, 2000. As a result of the fee waiver, current management fees
of the fund are 0.25% of average daily net assets. This waiver is
expected to remain in effect for the current fiscal year. However, it
is voluntary and can be modified or terminated at any time without the
fund's consent.
2. "Other expenses" for the current fiscal year are expected to be less
than the amounts shown above because certain of the fund's service
providers are waiving a portion of their fees and/or reimbursing the
fund for certain other expenses. As a result of these fee waivers,
"Other expenses" of the fund are estimated to be 0.19%. These waivers
and reimbursements are expected to remain in effect for the current
fiscal year. However, they are voluntary and can be modified or
terminated at any time without the fund's consent.
3. As a result of the fee waivers and/or reimbursements set forth in notes
1 and 2, the total annual fund operating expenses which are estimated
to be incurred during the current fiscal year are 0.49%. Although these
fee waivers and/or reimbursements are expected to remain in effect for
the current fiscal year, they are voluntary and may be terminated at
any time at the option of BIMC or the fund's service providers.
EXAMPLE:
The example is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated and then redeem
all of your shares at the end of each period. The example also assumes that your
investment has a 5% return each year and that the fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your cost would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
SANSOM STREET $63 $199 $346 $774
9
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The table below sets forth certain financial information for the periods
indicated, including per share information results for a single fund share. The
term "Total Return" indicates how much your investment would have increased or
decreased during this period of time and assumes that you have reinvested all
dividends and distributions. This information has been derived from the fund's
financial statements audited by PricewaterhouseCoopers LLP, the Company's
independent accountants. This information should be read in conjunction with the
fund's financial statements which, together with the report of independent
accountants, are included in the fund's annual report, which is available upon
request (see back cover for ordering instructions).
FINANCIAL HIGHLIGHTS (b)
(FOR A SANSOM STREET SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
MONEY MARKET PORTFOLIO
FOR THE FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
AUGUST 31, 1999 AUGUST 31, 1998 AUGUST 31, 1997 AUGUST 31, 1996 AUGUST 31, 1995
--------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- ---------- --------
Income from investment operations:
Net investment income 0.0473 0.0520 0.0510 0.0518 0.0543
-------- -------- -------- ---------- --------
Total from investment operations 0.0473 0.0520 0.0510 0.0518 0.0543
-------- -------- -------- ---------- --------
Less distributions
Dividends (from net investment income) (0.0473) (0.0520) (0.0510) (0.0518) (0.0543)
-------- -------- -------- ---------- --------
Total distributions (0.0473) (0.0520) (0.0510) (0.0518) (0.0543)
-------- -------- -------- ---------- --------
Net asset value at end of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ========= ========
Total Return 4.83% 5.34% 5.22% 5.30% 5.57%
Ratios/Supplemental Data
Net assets at end of year (in thousands) $841,881 $684,066 $570,018 $524,359 $441,614
Ratios of expenses to average net assets
After advisory/administration
fee waivers .49%(a) .49%(a) .49%(a) .48%(a) .39%(a)
Ratios of net investment income to
average net assets
After advisory/administration
fee waivers 4.73% 5.20% 5.10% 5.18% 5.43%
</TABLE>
(a) Without the waiver of advisory and transfer agent fees and without the
reimbursement of certain operating expenses, the ratios of expenses to
average net assets for the Money Market Portfolio would have been .62%,
.62%, .64%, .65% and .59% for the years ended August 31, 1999, 1998, 1997,
1996 and 1995, respectively.
(b) Financial Highlights relate solely to the Sansom Street Class of shares
within the portfolio
10
<PAGE>
PORTFOLIO MANAGEMENT
- --------------------------------------------------------------------------------
INVESTMENT ADVISER
BIMC, a majority-owned indirect subsidiary of PNC Bank, N.A. serves as
investment adviser and is responsible for all purchases and sales of the fund's
portfolio securities. BIMC and its affiliates are one of the largest U.S. bank
managers of mutual funds, with assets currently under management in excess of
$52.9 billion. BIMC (formerly known as PNC Institutional Management Corporation
or PIMC) was organized in 1977 by PNC Bank to perform advisory services for
investment companies and has its principal offices at Bellevue Park Corporate
Center, 400 Bellevue Parkway, Wilmington, DE 19809.
For the fiscal year ended August 31, 1999, BIMC received an advisory fee of
.25% of the fund's average net assets.
The following chart shows the fund's other service providers and includes
their addresses and principal activities.
11
<PAGE>
------------
SHAREHOLDERS
------------
Distribution and
Shareholder Services
------------------------------------ -----------------------------------------
PRINCIPAL DISTRIBUTOR TRANSFER AGENT
PROVIDENT DISTRIBUTORS, INC. PFPC INC.
FOUR FALLS CORPORATE CENTER, 6TH FL. 400 BELLEVUE PARKWAY
WEST CONSHOHOCKEN, PA 19428 WILMINGTON, DE 19809
Distributes shares of the fund. Handles shareholder services,
including record-keeping and statements,
distribution of dividends and processing
of buy and sell requests.
------------------------------------ -----------------------------------------
Asset
Management
------------------------------------ -----------------------------------------
INVESTMENT ADVISER CUSTODIAN
BLACKROCK INSTITUTIONAL PFPC TRUST COMPANY
MANAGEMENT CORPORATION 200 STEVENS DRIVE
400 BELLEVUE PARKWAY LESTER, PA 19113
WILMINGTON, DE 19809
Holds the fund's assets, settles
Manages the fund's business all portfolio trades and collects
and investment activities. most of the valuation data
required for calculating the
fund's net asset value ("NAV").
------------------------------------ -----------------------------------------
Fund
Operations
------------------------------------
ADMINISTRATOR AND FUND
ACCOUNTING AGENT
PFPC INC.
400 BELLEVUE PARKWAY
WILMINGTON, DE 19809
Provides facilities, equipment
and personnel to carry out
administrative services related
to the fund and calculates the
fund's NAV, dividends
and distributions.
------------------------------------
---------------------------------
BOARD OF DIRECTORS
Supervises the fund's activities.
---------------------------------
12
<PAGE>
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
PRICING SHARES
The price of your shares is also referred to as the net asset value (NAV).
The NAV is determined twice daily at 12:00 noon and at 4:00 p.m., Eastern
Time, each day on which both the New York Stock Exchange and the Federal Reserve
Bank of Philadelphia are open. It is calculated by dividing a fund's total
assets, less its liabilities, by the number of shares outstanding.
The fund values its securities using amortized cost. This method values a
fund holding initially at its cost and then assumes a constant amortization to
maturity of any discount or premium. The amortized cost method ignores any
impact of changing interest rates.
PURCHASE OF SHARES
GENERAL. Shares may be purchased through PNC Bank or its affiliates ("PNC")
acting on behalf of its customers, including individuals, trusts, partnerships
and corporations who maintain accounts (such as custody, trust or escrow
accounts) with PNC and who have authorized PNC to invest in the Sansom Street
Class on a customer's behalf. Shares may also be purchase through a
broker-dealer that has entered into a dealer agreement with the Company's
Distributor (a "Dealer"). The minimum initial investment is $1,500. There is no
minimum subsequent investment. The Company in its sole discretion may accept or
reject any order for purchases of Sansom Street Shares.
Purchases will be effected at the net asset value next determined after
PFPC, the Company's transfer agent, has received a purchase order in good order
and the Company's custodian has Federal Funds immediately available to it. In
those cases where payment is made by check, Federal Funds will generally become
available two Business Days after the check is received. A "Business Day" is any
day that both the New York Stock Exchange (the "NYSE") and the Federal Reserve
Bank of Philadelphia (the "FRB") are open. On any Business Day, orders which are
accompanied by Federal Funds and received by the Company by 12:00 noon Eastern
Time, and orders as to which payment has been converted into Federal Funds by
12:00 noon Eastern Time, will be executed as of 12:00 noon that Business Day.
Orders which are accompanied by Federal Funds and received by PFPC after 12:00
noon Eastern Time but prior to the close of regular trading on the NYSE
(generally 4:00 p.m. Eastern Time), and orders as to which payment has been
converted into Federal Funds after 12:00 noon Eastern Time but prior to the
close of regular trading on the NYSE on any Business Day, will be executed as of
the close of regular trading on the NYSE on that Business Day, but will not be
entitled to receive dividends declared on such Business Day. Orders which are
accompanied by Federal Funds and received by the Company as of the close of
regular trading on the NYSE or later, and orders as to which payment has been
converted to Federal Funds as of the close of regular trading on the NYSE or
later on a Business Day will be processed as of 12:00 noon Eastern Time on the
following Business Day.
PURCHASES THROUGH AN ACCOUNT WITH PNC OR A DEALER. Shares may be purchased
through your accounts at PNC or a Dealer through procedures and requirements
established by PNC or a Dealer. Confirmations of Share purchases and redemptions
will be sent to PNC or the Dealer. Beneficial ownership of Sansom Street Shares
will be recorded by PNC or the Dealer and reflected in your account statements
provided by them. If you wish to purchase Sansom Street Shares, contact PNC or a
Dealer.
PNC may also impose minimum customer account requirements. Although PNC
does not impose a sales charge for purchases of Sansom Street Shares, depending
upon the terms of your account, PNC may charge account fees for automatic
investment and other cash management services. Information concerning these
minimum account requirements, services and any charges will be provided by PNC
before you authorize the initial purchase of Shares. This Prospectus should be
read in conjunction with any information you receive from PNC.
13
<PAGE>
DIRECT PURCHASES THROUGH A DEALER. You may also make an initial investment
by mail by fully completing and signing an application obtained from a Dealer
(an "Application") and mailing it, together with a check payable to "Sansom
Street Money Market Portfolio," c/o PFPC, P.O. Box 8950, Wilmington, Delaware
19899. An Application will be returned unless it contains the name of the Dealer
from whom it was obtained. Subsequent purchases may be made through a Dealer or
by forwarding payment to the Company's transfer agent at the address above.
Conflict of interest restrictions may apply to an institution's receipt of
compensation paid by the Company in connection with the investment of fiduciary
funds in Sansom Street Shares. Institutions, including banks regulated by the
Comptroller of the Currency and investment advisers and other money managers
subject to the jurisdiction of the SEC, the Department of Labor or state
securities commissions, are urged to consult their legal advisers before
investing fiduciary funds in Sansom Street Shares.
REDEMPTION OF SHARES
GENERAL. Redemption orders are effected at the net asset value per share
next determined after receipt of the order in proper form by the Company's
transfer agent, PFPC. It is the responsibility of PNC and Dealers to transmit
promptly to PFPC your redemption request. If you hold share certificates, the
certificates must accompany the redemption request. You may redeem all or some
of your Shares in accordance with one of the procedures described below.
REDEMPTION OF SHARES IN AN ACCOUNT AT PNC. If you beneficially own Shares
through an account at PNC, you may redeem Sansom Street Shares in accordance
with instructions and limitations pertaining to your account. If the redemption
request is received by PFPC by 12:00 noon Eastern Time on any Business Day, the
redemption will be effective as of 12:00 noon Eastern Time on that day. Payment
for redemption orders effected before 12:00 noon Eastern Time will be wired the
same day in Federal Funds to your account at PNC, provided that the Company's
custodian is open for business. If the custodian is not open, payment will be
made on the next bank business day. Payment for redemption orders which are
received between 12:00 noon Eastern Time and the close of regular trading on the
NYSE on a Business Day will be wired in Federal Funds to your account on the
next bank business day following receipt of the redemption request. No charge
for wiring redemption payments is imposed by the Company, although PNC may
charge your account for redemption services.
REDEMPTION OF SHARES IN AN ACCOUNT FOR NON-PNC CUSTOMERS. If you
beneficially own Shares through an account at a Dealer, you may redeem Shares in
your account in accordance with instructions and limitations pertaining to the
account by contacting the Dealer. If such notice is received by PFPC from the
broker by 12:00 noon Eastern Time on any Business Day, the redemption will be
effective as of 12:00 noon Eastern Time on that day. Payment of the redemption
proceeds will be made after 12:00 noon Eastern Time on the day the redemption is
effected, provided that the Company's custodian is open for business. If the
custodian is not open, payment will be made on the next bank business day. If
the redemption request is received between 12:00 noon and the close of regular
trading of the NYSE on a Business Day, the redemption will be effective as of
the close of regular trading of the NYSE on that Business Day and payment will
be made on the next bank business day following receipt of the redemption
request. If all Shares are redeemed, all accrued but unpaid dividends on those
Shares will be paid with the redemption proceeds.
A Dealer may also redeem each day a sufficient number of your Shares to
cover debit balances created by transactions in your account or instructions for
cash disbursements. Shares will be redeemed on the same day that a transaction
occurs that results in such a debit-balance or charge.
Each Dealer reserves the right to waive or modify criteria for
participation in an account or to terminate participation in an account for any
reason.
REDEMPTION OF SHARES OWNED DIRECTLY. If you own Shares directly, you may
redeem any number of Shares by sending a written request to "Sansom Street Money
Market Portfolio," c/o PFPC, P.O. Box 8950, Wilmington, Delaware 19899.
14
<PAGE>
It is recommended that such request be sent by registered or certified mail if
share certificates accompany the request. Redemption requests must be signed by
each shareholder in the same manner as the Shares are registered. Redemption
requests for joint accounts require the signature of each joint owner. On
redemption requests of $5,000 or more, a signature guarantee is required. A
signature guarantee may be obtained from a domestic bank or trust company,
broker, dealer, clearing agency or savings association who are participants in a
medallion program recognized by the Securities Transfer Association. The three
recognized medallion programs are Securities Transfer Agents Medallion Program
(STAMP), Stock Exchanges Medallion Program (SEMP) and New York Stock Exchange,
Inc. Medallion Signature Program (MSP). Signature guarantees that are not part
of these programs will not be accepted.
If you are a direct investor, you may redeem Shares without charge by
telephone if you have completed and returned an account application containing
the appropriate telephone election. To add a telephone option to an existing
account that previously did not provide for this option, contact PFPC at (800)
430-9618. Once this election has been made, you may simply contact PFPC by
telephone to request a redemption by calling (800) 430-9618. Neither the
Company, the Portfolios, the Distributor, PFPC nor any other Company agent will
be liable for any loss, liability, cost or expense for following the procedures
described below or for following instructions communicated by telephone that
they reasonably believe to be genuine.
The Company's telephone transaction procedures include the following
measures: (1) requiring the appropriate telephone transaction privilege forms;
(2) requiring the caller to provide the names of the account owners, the account
social security number and the name of the portfolio, all of which must match
the Company's records; (3) requiring the Company's service representative to
complete a telephone transaction form, listing all of the above caller
identification information; (4) requiring that redemption proceeds be sent only
by check to the account owners of record at the address of record, or by wire
only to the owners of record at the bank account of record; (5) sending a
written confirmation for each telephone transaction to the owners of record at
the address of record within five (5) business days of the call; and (6)
maintaining tapes of telephone transactions for six months, if the Company
elects to record shareholder telephone transactions. For accounts held of record
by broker-dealers (other than the Distributor), financial institutions,
securities dealers, financial planners or other industry professionals,
additional documentation or information regarding the scope of a caller's
authority is required. Finally, for telephone transactions in accounts held
jointly, additional information regarding other account holders is required.
Telephone transactions will not be permitted in connection with IRA or other
retirement plan accounts or by an attorney-in-fact under power of attorney.
Proceeds of a telephone redemption request will be mailed by check to your
registered address unless you have designated in the Application or telephone
authorization form that such proceeds are to be sent by wire transfer to a
specified checking or savings account. If proceeds are to be sent by wire
transfer, a telephone redemption request received prior to the close of regular
trading on the NYSE will result in redemption proceeds being wired to your bank
account on the next bank business day. The minimum redemption for proceeds sent
by wire transfer is $2,500. There is no maximum for proceeds sent by wire
transfer. The Company may modify this redemption service at any time or charge a
service fee upon prior notice to shareholders, although no fee is currently
contemplated.
REDEMPTION BY CHECK. If you are a direct investor or you do not have check
writing privileges for your account, the Company will provide forms of drafts
("checks") payable through PNC Bank. These checks may be made payable to the
order of anyone. The minimum amount of a check is $100; however, a Dealer may
establish a higher minimum. If you wish to use this check writing redemption
procedure, you should complete specimen signature cards (available from PFPC),
and forward them to PFPC. PFPC will then arrange for the checks to be honored by
PNC Bank. If you own Shares through an account, you should contact your Dealer
for signature cards. Investors with joint accounts may elect to have checks
honored with a single signature. Check redemptions will be subject to PNC Bank's
rules governing checks. You will be able to stop payment on a check redemption.
The Company or PNC Bank may terminate this redemption service at any time, and
neither shall incur any liability for honoring checks, for effecting redemptions
to pay checks, or for returning checks which have not been accepted.
15
<PAGE>
When a check is presented to PNC Bank for clearance, PNC Bank, as your
agent, will cause the Company to redeem a sufficient number of your full and
fractional Shares to cover the amount of the check. This procedure enables you
to continue receiving dividends on those Shares representing the amount being
redeemed by check until such time as the check is presented to PNC Bank.
Pursuant to rules under the 1940 Act, checks may not be presented for cash
payment at the offices of PNC Bank. This limitation does not affect checks used
for the payment of bills or cash at other banks.
ADDITIONAL REDEMPTION INFORMATION. The Company ordinarily will make payment
for all Shares redeemed within seven days after receipt by PFPC of a redemption
request in proper form. Although the Company will redeem Shares purchased by
check before the check clears, payment of redemption proceeds may be delayed for
a period of up to fifteen days after their purchase, pending a determination
that the check has cleared. This procedure does not apply to Shares purchased by
wire payment. Investors should consider purchasing Shares using a certified or
bank check or money order if they anticipate an immediate need for redemption
proceeds.
The Company does not impose a charge when Shares are redeemed. The Company
reserves the right to redeem any account in the Sansom Street Class
involuntarily, on thirty days' notice, if that account falls below $500 and
during that thirty-day notice period the amount invested in the account is not
increased to at least $500. Payment for Shares redeemed may be postponed or the
right of redemption suspended as provided by the rules of the SEC.
If the Board of Directors determines that it would be detrimental to the
best interests of the remaining shareholders of the funds to make payment wholly
or partly in cash, redemption proceeds may be paid in whole or in part by an
in-kind distribution of readily marketable securities held by a fund instead of
cash in conformity with applicable rules of the SEC. Investors generally will
incur brokerage charges on the sale of portfolio securities so received in
payment of redemptions. The funds have elected, however, to be governed by Rule
18f-1 under the 1940 Act, so that a fund is obligated to redeem its Shares
solely in cash up to the lesser of $250,000 or 1% of its net asset value during
any 90-day period of any one shareholder of a fund.
DIVIDENDS AND DISTRIBUTIONS
The Company will distribute substantially all of the net investment income
and net realized capital gains, if any, of the fund to the fund's shareholders.
All distributions are reinvested in the form of additional full and fractional
Shares of the relevant Sansom Street Class unless a shareholder elects
otherwise.
The net investment income (not including any net short-term capital gains)
earned by the fund will be declared as a dividend on a daily basis and paid
monthly. Dividends are payable to shareholders of record immediately prior to
the determination of net asset value made as of the close of trading of the
NYSE. Net short-term capital gains, if any, will be distributed at least
annually.
TAXES
Distributions from the Money Market Portfolio will generally be taxable to
shareholders. It is expected that all, or substantially all, of these
distributions will consist of ordinary income. You will be subject to income tax
on these distributions regardless of whether they are paid in cash or reinvested
in additional shares. The one major exception to these tax principles is that
distributions on shares held in an IRA (or other tax-qualified plan) will not be
currently taxable.
The foregoing is only a summary of certain tax considerations under the
current law, which may be subject to change in the future. Shareholders who are
nonresident aliens, foreign trusts or estates, or foreign corporations or
partnerships may be subject to different United States Federal income tax
treatment. You should consult your tax adviser for further information regarding
federal, state, local and/or foreign tax consequences relevant to your specific
situation.
16
<PAGE>
DISTRIBUTION ARRANGEMENTS
Sansom Street Shares of the fund are sold without a sales load on a
continuous basis by Provident Distributors, Inc., whose principal business
address is at Four Falls Corporate Center, West Conshohocken, PA 19428.
The Board of Directors of the Company approved and adopted the Distribution
Agreement and separate Plan of Distribution for the Sansom Street Class (the
"Plan") pursuant to Rule 12b-1 under the 1940 Act. Under the Plan, the
Distributor is entitled to receive from the Sansom Street Class a distribution
fee, which is accrued daily and paid monthly, of up to .20% on an annualized
basis of the average daily net assets of the Sansom Street Class. The actual
amount of such compensation is agreed upon from time to time by the Company's
Board of Directors and the Distributor. Under the Distribution Agreement, the
Distributor has agreed to accept compensation for its services thereunder and
under the Plan in the amount of .05% of the average daily net assets of the
Class on an annualized basis in any year. The Distributor may, in its
discretion, voluntarily waive from time to time all or any portion of its
distribution fee.
Under the Distribution Agreement and the Plan, the Distributor may
reallocate an amount up to the full fee that it receives to financial
institutions, including broker/dealers, based upon the aggregate investment
amounts maintained by and services provided to shareholders of the Class
serviced by such financial institutions. The Distributor may also reimburse
broker/dealers for other expenses incurred in the promotion of the sale of
Sansom Street Shares. The Distributor and/or broker/dealers pay for the cost of
printing (excluding typesetting) and mailing to prospective investors
prospectuses and other materials relating to the Sansom Street Class as well as
for related direct mail, advertising and promotional expenses.
The Plan obligates the Company, during the period it is in effect, to
accrue and pay to the Distributor on behalf of the Sansom Street Class the fee
agreed to under the Distribution Agreement. Payments under the Plan are not
based on expenses actually incurred by the Distributor, and the payments may
exceed distribution expenses actually incurred. Because these fees are paid out
of the fund's assets on an on-going basis, over time these fees will increase
the cost of your investment and may cost you more than paying other types of
sales charges.
17
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS OR IN THE FUND'S STATEMENT OF
ADDITIONAL INFORMATION INCORPORATED HEREIN BY REFERENCE, IN CONNECTION WITH THE
OFFERING MADE BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND OR
ITS DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE FUND OR
BY THE DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY
BE MADE.
INVESTMENT ADVISER
BlackRock Institutional Management Corporation
Wilmington, Delaware
DISTRIBUTOR
Provident Distributors, Inc.
West Conshohocken, Pennsylvania
CUSTODIAN
PFPC Trust Company
Lester, Pennsylvania
ADMINISTRATOR AND TRANSFER AGENT
PFPC Inc.
Wilmington, Delaware
COUNSEL
Drinker Biddle & Reath LLP
Philadelphia, Pennsylvania
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
THE SANSOM
STREET
MONEY MARKET
PORTFOLIO
Prospectus
December 1, 1999
<PAGE>
THE SANSOM STREET MONEY MARKET PORTFOLIO
1-800-430-9618
FOR MORE INFORMATION:
This prospectus contains important information you should know before you
invest. Read it carefully and keep it for future reference. More information
about the Sansom Street Money Market Portfolio is available free, upon request,
including:
ANNUAL/SEMI-ANNUAL REPORT
These reports contain additional information about the fund's investments,
describe the fund's performance, list portfolio holdings, and discuss recent
market conditions and economic trends. The annual report includes fund
strategies for the last fiscal year.
STATEMENT OF ADDITIONAL INFORMATION (SAI)
A Statement of Additional Information, dated December 1, 1999 (SAI), has
been filed with the Securities and Exchange Commission (SEC). The SAI, which
includes additional information about the Sansom Street Money Market Portfolio,
may be obtained free of charge, along with the Sansom Street Money Market
Portfolio's annual and semi-annual reports, by calling (800) 430-9618. The SAI,
as supplemented from time to time, is incorporated by reference into this
Prospectus (and is legally considered a part of this Prospectus).
SHAREHOLDER ACCOUNT SERVICE REPRESENTATIVES
Representatives are available to discuss account balance information,
mutual fund prospectuses, literature, programs and services available. Hours: 8
a.m. to 5 p.m. (Eastern time) Monday-Friday. Call: (800) 430-9618.
WRITTEN CORRESPONDENCE
Post Office Address: Sansom Street Money Market Portfolio c/o PFPC,
Inc. PO Box 8950 Wilmington, DE 19899-8950
Post Office Address: Sansom Street Money Market Portfolio c/o PFPC, Inc.
400 Bellevue Parkway
Wilmington, DE 19809
SECURITIES AND EXCHANGE COMMISSION (SEC)
You may also view information about The RBB Fund, Inc. and the Sansom
Street Money Market Portfolio, including the SAI, by visiting the SEC website
(http://www.sec.gov) or the SEC's Public Reference Room in Washington, D.C.
Information about the operation of the public reference room can be obtained by
calling the SEC directly at 1-202-942-8090. Copies of this information can be
obtained, for a duplicating fee, by writing to the Public Reference Section of
the SEC, Washington, D.C. 20549-0102, or by electronic request to
[email protected].
INVESTMENT COMPANY ACT FILE NO. 811-05518
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THE PRINCIPAL CLASS
OF THE RBB FUND, INC.
Money Market Portfolio
This prospectus gives vital information about this money market mutual
fund, advised by BlackRock Institutional Management Corporation ("BIMC" or the
"Adviser"), including information on investment policies, risks and fees. For
your own benefit and protection, please read it before you invest and keep it on
hand for future reference.
Please note that this fund:
(BULLET) is not a bank deposit;
(BULLET) is not federally insured;
(BULLET) is not an obligation of, or guaranteed or endorsed by PNC Bank,
National Association, PFPC Trust Company or any other bank;
(BULLET) is not obligation of, or guaranteed or endorsed or otherwise
supported by the U.S. Government, the Federal Deposit Insurance
Corporation, the Federal Reserve Board or any other governmental agency;
(BULLET) is not guaranteed to achieve its goal;
(BULLET) may not be able to maintain a stable $1 share price and you may
lose money.
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THE SECURITIES DESCRIBED IN THIS PROSPECTUS HAVE BEEN REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION (SEC). THE SEC, HOWEVER, HAS NOT JUDGED THESE
SECURITIES FOR THEIR INVESTMENT MERIT AND HAS NOT DETERMINED THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANYONE WHO TELLS YOU OTHERWISE IS COMMITTING A
CRIMINAL OFFENSE.
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PROSPECTUS December 1, 1999
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TABLE OF CONTENTS
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- ------------------------------ INTRODUCTION TO THE RISK/RETURN SUMMARY ..... 5
A LOOK AT THE GOALS,
STRATEGIES, RISKS, EXPENSES PORTFOLIO DESCRIPTION ....................... 6
AND FINANCIAL HISTORY OF THE
PORTFOLIO. PORTFOLIO MANAGEMENT
DETAILS ABOUT THE SERVICE Investment Adviser .....................10
PROVIDERS.
Service Provider Chart .................11
SHAREHOLDER INFORMATION
POLICIES AND INSTRUCTIONS FOR Pricing Shares .........................12
OPENING, MAINTAINING AND
CLOSING AN ACCOUNT IN THE Purchase of Shares .....................12
PORTFOLIO.
Redemption of Shares ...................14
Dividends and Distributions ............16
Taxes ..................................16
DETAILS ON THE DISTRIBUTION DISTRIBUTION ARRANGEMENTS ...................17
PLAN.
- ------------------------------ FOR MORE INFORMATION ................Back Cover
3
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INTRODUCTION TO THE RISK/RETURN SUMMARY
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This Prospectus has been written to provide you with the information you
need to make an informed decision about whether to invest in the Principal Class
of the Money Market Portfolio of The RBB Fund, Inc. (the "Company").
The class of common stock of the Company offered by this Prospectus
represents interests in the Principal Class of the Money Market Portfolio (the
"Principal Class"). This Prospectus and the Statement of Additional Information
incorporated herein relate solely to the Principal Class.
This Prospectus has been organized so that there is a short section with
important facts about the Portfolio's goals, strategies, risks, expenses and
financial history. Once you read this short section, read the sections about
Purchase and Redemption of Shares of the Principal Class ("Principal Shares" or
"Shares").
5
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MONEY MARKET PORTFOLIO
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IMPORTANT DEFINITIONS
ASSET-BACKED SECURITIES: Debt securities that are backed by a pool of assets,
usually loans such as installment sale contracts or credit card receivables.
COMMERCIAL PAPER: Short-term securities with maturities of 1 to 270 days which
are issued by banks, corporations and others.
DOLLAR WEIGHTED AVERAGE MATURITY: The average amount of time until the
organizations that issued the debt securities in the fund's portfolio must pay
off the principal amount of the debt. "Dollar weighted" means the larger the
dollar value of a debt security in the fund, the more weight it gets in
calculating this average.
LIQUIDITY: Liquidity is the ability to easily convert investments into cash
without losing a significant amount of money in the process.
NET ASSET VALUE (NAV): The value of everything the fund owns, minus everything
it owes, divided by the number of shares held by investors.
REPURCHASE AGREEMENT: A special type of a short-term investment. A dealer sells
securities to a fund and agrees to buy them back later at a set price. In
effect, the dealer is borrowing the fund's money for a short time, using the
securities as collateral.
VARIABLE OR FLOATING RATE SECURITIES: Securities whose interest rates adjust
automatically after a certain period of time and/or whenever a predetermined
standard interest rate changes.
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INVESTMENT GOAL
The fund seeks to generate current income, to provide you with liquidity
and to protect your investment.
PRIMARY INVESTMENT STRATEGIES
To achieve this goal, we invest in a diversified portfolio of short term,
high quality, U.S. dollar-denominated instruments, including government, bank,
commercial and other obligations.
Specifically, we may invest in:
1) U.S. dollar-denominated obligations issued or supported by the credit
of U.S. or foreign banks or savings institutions with total assets of
more than $1 billion (including obligations of foreign branches of
such banks).
2) High quality commercial paper and other obligations issued or
guaranteed (or otherwise supported) by U.S. and foreign corporations
and other issuers rated (at the time of purchase) A-2 or higher by
Standard and Poor's, Prime-2 or higher by Moody's, D-2 or higher by
Duff & Phelps, F-2 or higher by Fitch or TBW-2 or higher by Thomson
BankWatch, as well as high quality corporate bonds rated AA (or Aa) or
higher at the time of purchase by those rating agencies. These ratings
must be provided by at least two rating agencies or by the only rating
agency providing a rating.
3) Unrated notes, paper and other instruments that are determined by us
to be of comparable quality to the instruments described above.
4) Asset-backed securities (including interests in pools of assets such
as mortgages, installment purchase obligations and credit card
receivables).
5) Securities issued or guaranteed by the U.S. Government or by its
agencies or authorities.
6) Dollar-denominated securities issued or guaranteed by foreign
governments or their political subdivisions, agencies or authorities.
7) Securities issued or guaranteed by state or local governmental bodies.
8) Repurchase agreements relating to the above instruments.
The fund seeks to maintain a net asset value of $1.00 per share.
6
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QUALITY
Under guidelines established by the Company's Board of Directors, we will
only purchase securities if such securities or their issuers have (or such
securities are guaranteed or otherwise supported by entities which have)
short-term debt ratings at the time of purchase in the two highest rating
categories from at least two national rating agencies, or one such rating if the
security is rated by only one agency. Securities that are unrated must be
determined to be of comparable quality.
MATURITY
The dollar-weighted average maturity of all the investments of the fund
will be 90 days or less. Only those securities which have remaining maturities
of 397 days or less (except for certain variable and floating rate instruments
and securities collateralizing repurchase agreements) will be purchased.
KEY RISKS
The value of money market investments tends to fall when current interest
rates rise. Money market investments are generally less sensitive to interest
rate changes than longer-term securities.
The fund's securities may not earn as high a level of income as longer term
or lower quality securities, which generally have greater risk and more
fluctuation in value.
The fund's concentration of its investments in the banking industry could
increase risks. The profitability of banks depends largely on the availability
and cost of funds, which can change depending upon economic conditions. Banks
are also exposed to losses if borrowers get into financial trouble and can't
repay their loans.
The obligations of foreign banks and other foreign issuers may involve
certain risks in addition to those of domestic issuers, including higher
transaction costs, less complete financial information, political and economic
instability, less stringent regulatory requirements and less market liquidity.
Unrated notes, paper and other instruments may be subject to the risk that
an issuer may default on its obligation to pay interest and repay principal.
The obligations issued or guaranteed by state or local government bodies
may be issued by entities in the same state and may have interest which is paid
from revenues of similar projects. As a result, changes in economic, business or
political conditions relating to a particular state or types of projects may
impact the fund.
Treasury obligations differ only in their interest rates, maturities and
time of issuance. These differences could result in fluctuations in the value of
such securities depending upon the market. Obligations of U.S. Government
agencies and authorities are supported by varying degrees of credit. The U.S.
Government gives no assurances that it will provide financial support to its
agencies and authorities if it is not obligated by law to do so. Default in
these issuers could negatively impact the fund.
The fund's investment in asset-backed securities may be negatively impacted
by interest rate fluctuations or when an issuer pays principal on an obligation
held by the fund earlier or later than expected. These events may affect their
value and the return on your investment. The fund could lose money if a seller
under a repurchase agreement defaults or declares bankruptcy.
We may purchase variable and floating rate instruments. Like all debt
instruments, their value is dependent on the credit paying ability of the
issuer. If the issuer were unable to make interest payments or default, the
value of the securities would decline. The absence of an active market for these
securities could make it difficult to dispose of them if the issuer defaults.
7
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The fund, like any business, could be affected if the computer systems on
which it relies do not properly process information beginning on January 1,
2000. While Year 2000 issues could have a negative effect on the fund, BIMC, the
fund's investment adviser, is currently working to avoid such problems. BIMC is
also working with other systems providers and vendors servicing the Portfolio to
determine their systems' ability to handle Year 2000 problems. There is no
guarantee, however, that systems will work properly on or after January 1, 2000.
Year 2000 problems may also hurt issuers whose securities the fund holds or
securities markets generally.
ALTHOUGH WE SEEK TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER
SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND. WHEN YOU INVEST IN
THIS FUND YOU ARE NOT MAKING A BANK DEPOSIT. YOUR INVESTMENT IS NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR BY ANY BANK OR
GOVERNMENTAL AGENCY.
EXPENSES AND FEES
As a shareholder you pay certain fees and expenses. Annual fund operating
expenses are paid out of fund assets and are reflected in the fund's price.
The table below describes the fees and expenses that you may pay if you buy
and hold Principal Shares of the fund. The table is based on expenses for the
most recent fiscal year.
ANNUAL FUND OPERATING EXPENSES*
(Expenses that are deducted from fund assets)
Management Fees 1 .......................................... 0.36%
Distribution and service (12b-1) fees ...................... 0.40%
Other expenses ............................................. 0.09%
-----
Total annual fund operating expenses 2 ..................... 0.85%
=====
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IMPORTANT DEFINITIONS
MANAGEMENT FEES: Fees paid to the investment adviser for portfolio management
services.
OTHER EXPENSES: Includes administration, transfer agency, custody, professional
fees and registration fees.
DISTRIBUTION AND SERVICE FEES: Fees that are paid to the Distributor for
shareholder account service and
maintenance.
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* The table does not reflect charges or credits which investors might
incur if they invest through a financial institution.
1. BIMC has voluntarily undertaken that a portion of its management fee
will not be imposed on the fund during the current fiscal year ending
August 31, 2000. As a result of the fee waiver, current management
fees of the fund are 0.25% of average daily net assets. This waiver is
expected to remain in effect for the current fiscal year. However, it
is voluntary and can be modified or terminated at any time without the
fund's consent.
2. As a result of the fee waiver set forth in note 1, the total annual
fund operating expenses which are estimated to be incurred during the
current fiscal year are 0.77%. Although this fee waiver is expected to
remain in effect for the current fiscal year, it is voluntary and may
be terminated at any time at the option of BIMC.
EXAMPLE:
The example is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated and then redeem
all of your shares at the end of each period. The example also assumes that your
investment has a 5% return each year and that the fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your cost would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
PRINCIPAL SHARES $87 $271 $471 $1,049
8
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FINANCIAL HIGHLIGHTS
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The table below sets forth certain financial information for the periods
indicated, including per share information results for a single fund share. The
term "Total Return" indicates how much your investment would have increased or
decreased during this period of time and assumes that you have reinvested all
dividends and distributions. This information has been derived from the fund's
financial statements audited by PricewaterhouseCoopers LLP, the Company's
independent accountants. This information should be read in conjunction with the
fund's financial statements which, together with the report of independent
accountants, are included in the fund's annual report, which is available upon
request (see back cover for ordering instructions).
FINANCIAL HIGHLIGHTS (b)
(FOR A PRINCIPAL SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
MONEY MARKET PORTFOLIO
FOR THE
PERIOD JUNE 1, 1999
(COMMENCEMENT OF OPERATIONS)
THROUGH AUGUST 31, 1999(c)
----------------------------
Net asset value at beginning of period ...................... $ 1.00
--------
Income from investment operations:
Net investment income .................................... 0.0110
--------
Total from investment operations ....................... 0.0110
--------
Less distributions
Dividends from net investment income ..................... (0.0110)
Dividends from net realized capital gains ................ --
--------
Total distributions .................................... (0.0110)
--------
Net asset value at end of period ............................ $ 1.00
========
Total Return ................................................ 1.10%(e)
Ratios/Supplemental Data
Net assets, end of period ................................ $218,530
Ratios of expenses to average net assets
After advisory/administration fee waivers .............. .77%(a)(d)
Ratios of net investment income to average net assets
After advisory/administration fee waivers .............. 4.36%(d)
(a) Without the waiver of advisory and transfer agent fees and without the
reimbursement of certain operating expenses, the ratios of expenses to
average net assets for the Money Market Portfolio would have been
.85%, for the period ended August 31, 1999.
(b) Financial Highlights relate solely to the Principal Family of shares
within the portfolio.
(c) On June 1, 1999 the Money Market Portfolio's Principal Class began
operations.
(d) Annualized.
(e) Non-Annualized.
9
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PORTFOLIO MANAGEMENT
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INVESTMENT ADVISER
BIMC, a majority-owned indirect subsidiary of PNC Bank, N.A. serves as
investment adviser and is responsible for all purchases and sales of the fund's
portfolio securities. BIMC and its affiliates are one of the largest U.S. bank
managers of mutual funds, with assets currently under management in excess of
$52.9 billion. BIMC (formerly known as PNC Institutional Management Corporation
or PIMC) was organized in 1977 by PNC Bank to perform advisory services for
investment companies and has its principal offices at Bellevue Park Corporate
Center, 400 Bellevue Parkway, Wilmington, DE 19809.
For the fiscal year ended August 31, 1999, BIMC received an advisory fee of
.25% of the fund's average net assets.
The following chart shows the fund's other service providers and includes
their addresses and principal activities.
10
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------------
SHAREHOLDERS
------------
Distribution and
Shareholder Services
------------------------------------ -----------------------------------------
PRINCIPAL DISTRIBUTOR TRANSFER AGENT
PROVIDENT DISTRIBUTORS, INC. PFPC INC.
FOUR FALLS CORPORATE CENTER, 6TH FL. 400 BELLEVUE PARKWAY
WEST CONSHOHOCKEN, PA 19428 WILMINGTON, DE 19809
Distributes shares of the fund. Handles shareholder services,
including record-keeping and statements,
distribution of dividends and processing
of buy and sell requests.
------------------------------------ -----------------------------------------
Asset
Management
------------------------------------ -----------------------------------------
INVESTMENT ADVISER CUSTODIAN
BLACKROCK INSTITUTIONAL PFPC TRUST COMPANY
MANAGEMENT CORPORATION 200 STEVENS DRIVE
400 BELLEVUE PARKWAY LESTER, PA 19113
WILMINGTON, DE 19809
Holds the fund's assets, settles
Manages the fund's business all portfolio trades and collects
and investment activities. most of the valuation data
required for calculating the
fund's net asset value ("NAV").
------------------------------------ -----------------------------------------
Fund
Operations
------------------------------------
ADMINISTRATOR AND FUND
ACCOUNTING AGENT
PFPC INC.
400 BELLEVUE PARKWAY
WILMINGTON, DE 19809
Provides facilities, equipment
and personnel to carry out
administrative services related
to the fund and calculates the
fund's NAV, dividends
and distributions.
------------------------------------
---------------------------------
BOARD OF DIRECTORS
Supervises the fund's activities.
---------------------------------
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SHAREHOLDER INFORMATION
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PRICING SHARES
The price of your shares is also referred to as the net asset value (NAV).
The NAV is determined twice daily at 12:00 noon and at 4:00 p.m., Eastern
Time, each day on which both the New York Stock Exchange and the Federal Reserve
Bank of Philadelphia are open. It is calculated by dividing the fund's total
assets, less its liabilities, by the number of shares outstanding.
The fund values its securities using amortized cost. This method values a
fund holding initially at its cost and then assumes a constant amortization to
maturity of any discount or premium. The amortized cost method ignores any
impact of changing interest rates.
PURCHASE OF SHARES
GENERAL. You may purchase Principal Shares through an account maintained by
your brokerage firm (the "Account") and you may also purchase Shares directly by
mail or wire. The minimum initial investment is $25,000, and the minimum
subsequent investment is $2,500. The Company in its sole discretion may accept
or reject any order for purchases of Principal Shares.
Purchases will be effected at the net asset value next determined after
PFPC, the Company's transfer agent, has received a purchase order in good order
and the Company's custodian has Federal Funds immediately available to it. In
those cases where payment is made by check, Federal Funds will generally become
available two Business Days after the check is received. A "Business Day" is any
day that both the New York Stock Exchange (the "NYSE") and the Federal Reserve
Bank of Philadelphia (the "FRB") are open. On any Business Day, orders which are
accompanied by Federal Funds and received by the Company by 12:00 noon Eastern
Time, and orders as to which payment has been converted into Federal Funds by
12:00 noon Eastern Time, will be executed as of 12:00 noon that Business Day.
Orders which are accompanied by Federal Funds and received by PFPC after 12:00
noon Eastern Time but prior to the close of regular trading on the NYSE
(generally 4:00 p.m. Eastern Time), and orders as to which payment has been
converted into Federal Funds after 12:00 noon Eastern Time but prior to the
close of regular trading on the NYSE on any Business Day, will be executed as of
the close of regular trading on the NYSE on that Business Day, but will not be
entitled to receive dividends declared on such Business Day. Orders which are
accompanied by Federal Funds and received by the Company as of the close of
regular trading on the NYSE or later, and orders as to which payment has been
converted to Federal Funds as of the close of regular trading on the NYSE or
later on a Business Day will be processed as of 12:00 noon Eastern Time on the
following Business Day.
PURCHASES THROUGH AN ACCOUNT. Purchases of Shares may be effected through
an Account with your broker through procedures and requirements established by
your broker. The minimum and subsequent investment in Shares are set by your
broker. In such event, beneficial ownership of Principal Shares will be recorded
by your broker and will be reflected in the Account statements provided to you
by your broker. Your broker may impose minimum investment Account requirements.
Even if your broker does not impose a sales charge for purchases of Shares,
depending on the terms of your Account with your broker, the broker may charge
to your Account fees for automatic investment and other services provided to
your Account. Information concerning Account requirements, services and charges
should be obtained from your broker, and you should read this Prospectus in
conjunction with any information received from your broker. Shares are held in
the street name account of your broker and if you desire to transfer such shares
to the street name account of another broker, you should contact your current
broker.
A broker with whom you maintain an Account may offer you the ability to
purchase Shares under an automatic purchase program (a "Purchase Program")
established by a participating broker. If you participate in a Purchase Program,
then you will have your "free-credit" cash balances in your Account
automatically invested in Principal
12
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Shares. The frequency of investments and the minimum investment requirement will
be established by the broker and the Company. In addition, the broker may
require a minimum amount of cash and/or securities to be deposited in your
Account to participate in its Purchase Program. The description of the
particular broker's Purchase Program should be read for details, and any
inquiries concerning your Account under a Purchase Program should be directed to
your broker.
If your broker makes special arrangements under which orders for Principal
Shares are received by PFPC prior to 12:00 noon Eastern Time, and your broker
guarantees that payment for such Shares will be made in available Federal Funds
to the Company's custodian prior to the close of regular trading on the NYSE on
the same day, such purchase orders will be effective and Shares will be
purchased at the offering price in effect as of 12:00 noon Eastern Time on the
date the purchase order is received by PFPC. Otherwise, if the broker has not
made such an arrangement, pricing of shares will occur as described above under
"General."
DIRECT PURCHASES. You may also make direct investments at any time in
Shares through any broker that has entered into a dealer agreement with the
Distributor (a "Dealer"). You may make an initial investment by mail by fully
completing and signing an application obtained from a Dealer (the "Application")
and mailing it, together with a check payable to "The Principal Class" to The
Principal Class, c/o PFPC, P.O. Box 8950, Wilmington, Delaware 19899. An
Application will be returned to you unless it contains the name of the Dealer
from whom you obtained it. Subsequent purchases may be made through a Dealer or
by forwarding payment to the Company's transfer agent at the foregoing address.
Provided that your investment is at least $5,000, you may also purchase
Principal Shares by having your bank or Dealer wire Federal Funds to the
Company's Custodian, PFPC Trust Company. Your bank or Dealer may impose a charge
for this service. The Company does not currently charge for effecting wire
transfers but reserves the right to do so in the future. In order to ensure
prompt receipt of your Federal Funds wire, for an initial investment, it is
important that you follow these steps:
A. Telephone the Company's transfer agent, PFPC, toll-free (800)
430-9618, and provide your name, address, telephone number, Social
Security or Tax Identification Number, the amount being wired, and by
which bank or Dealer. PFPC will then provide you with an account
number. (If you have an existing account, you should also notify PFPC
prior to wiring funds.)
B. Instruct your bank or Dealer to wire the specified amount, together
with your assigned account number, to PFPC's account with PNC Bank.
PNC Bank, N.A., Philadelphia, PA
ABA-0310-0005-3.
FROM: (your name)
ACCOUNT NUMBER: (your account number)
FOR PURCHASE OF: Principal Class Money Market Portfolio
AMOUNT: (amount to be invested)
C. Fully complete and sign the Application and mail it to the address
shown thereon. PFPC will not process initial purchases until it
receives a fully completed and signed Application.
For subsequent investments, you should follow steps A and B above.
13
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RETIREMENT PLANS. Principal Shares may be purchased in conjunction with
individual retirement accounts ("IRAs") and rollover IRAs where PFPC Trust
Company acts as custodian. For further information as to applications and annual
fees, contact the Distributor or your broker. To determine whether the benefits
of an IRA are available and/or appropriate, you should consult with your tax
adviser.
REDEMPTION OF SHARES
GENERAL. Redemption orders are effected at the net asset value per share
next determined after receipt of the order in proper form by the Company's
transfer agent, PFPC. You may redeem all or some of your Shares in accordance
with one of the procedures described below.
REDEMPTION OF SHARES IN AN ACCOUNT. If you beneficially own Principal
Shares through an Account, you may redeem Shares in your Account in accordance
with instructions and limitations pertaining to your Account by contacting your
broker. If such notice is received by PFPC by 12:00 noon Eastern Time on any
Business Day, the redemption will be effective as of 12:00 noon Eastern Time on
that day. Payment of the redemption proceeds will be made after 12:00 noon
Eastern Time on the day the redemption is effected, provided that the Company's
custodian is open for business. If the custodian is not open, payment will be
made on the next bank business day. If the redemption request is received
between 12:00 noon and the close of regular trading on the NYSE on a Business
Day, the redemption will be effective as of the close of regular trading on the
NYSE on such Business Day and payment will be made on the next bank business day
following receipt of the redemption request. If all of your Shares are redeemed,
all accrued but unpaid dividends on those Shares will be paid with the
redemption proceeds.
Your brokerage firm may also redeem each day a sufficient number of Shares
to cover debit balances created by transactions in your Account or instructions
for cash disbursements. Shares will be redeemed on the same day that a
transaction occurs that results in such a debit balance or charge.
Each brokerage firm reserves the right to waive or modify criteria for
participation in an Account or to terminate participation in an Account for any
reason.
REDEMPTION OF SHARES OWNED DIRECTLY. If you own Shares directly, you may
redeem any number of Shares by sending a written request to THE PRINCIPAL CLASS,
c/o PFPC, P.O. Box 8950, Wilmington, Delaware 19899. Redemption requests must be
signed by each shareholder in the same manner as the Shares are registered.
Redemption requests for joint accounts require the signature of each joint
owner. On redemption requests of $5,000 or more, each signature must be
guaranteed. A signature guarantee may be obtained from a domestic bank or trust
company, broker, dealer, clearing agency or savings association who are
participants in a medallion program recognized by the Securities Transfer
Association. The three recognized medallion programs are Securities Transfer
Agents Medallion Program (STAMP), Stock Exchanges Medallion Program (SEMP) and
New York Stock Exchange, Inc. Medallion Signature Program (MSP). Signature
guarantees that are not part of these programs will not be accepted.
If you are a direct investor, you may redeem your Shares without charge by
telephone if you have completed and returned an account application containing
the appropriate telephone election. To add a telephone option to an existing
account that previously did not provide for this option, you must file a
Telephone Authorization Form with PFPC. This form is available from PFPC. Once
this election has been made, you may simply contact PFPC by telephone to request
the redemption by calling (800) 430-9618. Neither the Company, the Distributor,
the Portfolio, the Administrator nor any other Company agent will be liable for
any loss, liability, cost or expense for following the procedures below or for
following instructions communicated by telephone that they reasonably believe to
be genuine.
The Company's telephone transaction procedures include the following
measures: (1) requiring the appropriate telephone transaction privilege forms;
(2) requiring the caller to provide the names of the account owners, the account
social security number and name of the portfolio, all of which must match the
Company's records; (3) requiring the Company's service representative to
complete a telephone transaction form, listing all of the above caller
identification
14
<PAGE>
information; (4) requiring that redemption proceeds be sent only by check to the
account owners of record at the address of record, or by wire only to the owners
of record at the bank account of record; (5) sending a written confirmation for
each telephone transaction to the owners of record at the address of record
within five (5) business days of the call; and (6) maintaining tapes of
telephone transactions for six months, if the Company elects to record
shareholder telephone transactions. For accounts held of record by
broker-dealers (other than the Distributor), financial institutions, securities
dealers, financial planners or other industry professionals, additional
documentation or information regarding the scope of authority is required.
Finally, for telephone transactions in accounts held jointly, additional
information regarding other account holders is required. Telephone transactions
will not be permitted in connection with IRA or other retirement plan accounts
or by attorney-in-fact under power of attorney.
Proceeds of a telephone redemption request will be mailed by check to your
registered address unless you have designated in your Application or Telephone
Authorization Form that such proceeds are to be sent by wire transfer to a
specified checking or savings account. If proceeds are to be sent by wire
transfer, a telephone redemption request received prior to the close of regular
trading on the NYSE will result in redemption proceeds being wired to your bank
account on the next day that a wire transfer can be effected. The minimum
redemption for proceeds sent by wire transfer is $5,000. There is no maximum for
proceeds sent by wire transfer. The Company may modify this redemption service
at any time or charge a service fee upon prior notice to shareholders, although
no fee is currently contemplated.
REDEMPTION BY CHECK. If you are a direct investor or you do not have check
writing privileges for your Account, the Company will provide to you forms of
drafts ("checks") payable through PNC Bank. These checks may be made payable to
the order of anyone. The minimum amount of a check is $100; however, your broker
may establish a higher minimum. If you wish to use this check writing redemption
procedure, you should complete specimen signature cards (available from PFPC),
and then forward such signature cards to PFPC. PFPC will then arrange for the
checks to be honored by PNC Bank. If you own Shares through an Account, you
should contact your broker for signature cards. Investors with joint accounts
may elect to have checks honored with a single signature. Check redemptions will
be subject to PNC Bank's rules governing checks. An investor will be able to
stop payment on a check redemption. The Company or PNC Bank may terminate this
redemption service at any time, and neither shall incur any liability for
honoring checks, for effecting redemptions to pay checks, or for returning
checks which have not been accepted.
When a check is presented to PNC Bank for clearance, PNC Bank, as your
agent, will cause the Company to redeem a sufficient number of your full and
fractional Shares to cover the amount of the check. This procedure enables you
to continue to receive dividends on your Shares representing the amount being
redeemed by check until such time as the check is presented to PNC Bank.
Pursuant to rules under the 1940 Act, checks may not be presented for cash
payment at the offices of PNC Bank. This limitation does not affect checks used
for the payment of bills or cash at other banks.
ADDITIONAL REDEMPTION INFORMATION. The Company ordinarily will make payment
for all Shares redeemed within seven days after receipt by PFPC of a redemption
request in proper form. Although the Company will redeem Shares purchased by
check before the check clears, payment of the redemption proceeds may be delayed
for a period of up to fifteen days after their purchase, pending a determination
that the check has cleared. This procedure does not apply to Shares purchased by
wire payment. You should consider purchasing Shares using a certified or bank
check or money order if you anticipate an immediate need for redemption
proceeds.
The Company does not impose a charge when Shares are redeemed. The Company
reserves the right to redeem any account in the Principal Class involuntarily,
on thirty days' notice, if such account falls below $1,500 and during such
30-day notice period the amount invested in such account is not increased to at
least $1,500. Payment for Shares redeemed may be postponed or the right of
redemption suspended as provided by the rules of the SEC.
15
<PAGE>
If the Board of Directors determines that it would be detrimental to the
best interests of the remaining shareholders of the funds to make payment wholly
or partly in cash, redemption proceeds may be paid in whole or in part by an
in-kind distribution of readily marketable securities held by a fund instead of
cash in conformity with applicable rules of the SEC. Investors generally will
incur brokerage charges on the sale of portfolio securities so received in
payment of redemptions. The funds have elected, however, to be governed by Rule
18f-1 under the 1940 Act, so that a fund is obligated to redeem its Shares
solely in cash up to the lesser of $250,000 or 1% of its net asset value during
any 90-day period for any one shareholder of a fund.
DIVIDENDS AND DISTRIBUTIONS
The Company will distribute substantially all of the net investment income
and net realized capital gains, if any, of the fund to each shareholder. All
distributions are reinvested in the form of additional full and fractional
Shares unless a shareholder elects otherwise.
The net investment income (not including any net short-term capital gains)
earned by the fund will be declared as a dividend on a daily basis and paid
monthly. Dividends are payable to shareholders of record immediately prior to
the determination of net asset value made as of the close of trading of the
NYSE. Net short-term capital gains, if any, will be distributed at least
annually.
TAXES
Distributions from the fund will generally be taxable to shareholders. It
is expected that all, or substantially all, of these distributions will consist
of ordinary income. You will be subject to income tax on these distributions
regardless of whether they are paid in cash or reinvested in additional shares.
The one major exception to these tax principles is that distributions on shares
held in an IRA (or other tax-qualified plan) will not be currently taxable.
The foregoing is only a summary of certain tax considerations under the
current law, which may be subject to change in the future. Shareholders who are
nonresident aliens, foreign trusts or estates, or foreign corporations or
partnerships may be subject to different United States Federal income tax
treatment. You should consult your tax adviser for further information regarding
federal, state, local and/or foreign tax consequences relevant to your specific
situation.
16
<PAGE>
DISTRIBUTION ARRANGEMENTS
- --------------------------------------------------------------------------------
Principal Shares are sold without a sales load on a continuous basis by
Provident Distributors, Inc., whose principal business address is at Four Falls
Corporate Center, West Conshohocken, PA 19428.
The Company's Board of Directors of the Company approved and adopted the
Distribution Agreement and a separate Plan of Distribution for the Principal
Class (the "Plan") pursuant to Rule 12b-1 under the 1940 Act. Under the Plan,
the Distributor is entitled to receive from the Class a distribution fee, which
is accrued daily and paid monthly, of up to .40% on an annualized basis of the
average daily net assets of the Class. The actual amount of such compensation is
agreed upon from time to time by the Company's Board of Directors and the
Distributor. Under the Distribution Agreement, the Distributor has agreed to
accept compensation for its services thereunder and under the Plan in the amount
of .40% of the average daily net assets of the Class on an annualized basis in
any year. The Distributor may, in its discretion, voluntarily waive from time to
time all or any portion of its distribution fee.
Under the Distribution Agreement and the Plan, the Distributor may
reallocate an amount up to the full fee that it receives to financial
institutions, including broker/dealers, based upon the aggregate investment
amounts maintained by and services provided to shareholders of the Class
serviced by such financial institutions. The Distributor may also reimburse
broker/dealers for other expenses incurred in the promotion of the sale of
Shares. The Distributor and/or broker/dealers pay for the cost of printing
(excluding typesetting) and mailing to prospective investors prospectuses and
other materials relating to the Principal Class as well as for related direct
mail, advertising and promotional expenses.
The Plan obligates the Company, during the period it is in effect, to
accrue and pay to the Distributor on behalf of the Class the fee agreed to under
the Distribution Agreement. Payments under the Plan are not based on expenses
actually incurred by the Distributor, and the payments may exceed distribution
expenses actually incurred. Because these fees are paid out of the fund's assets
on an on-going basis, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges
17
<PAGE>
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<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS OR IN THE FUND'S STATEMENT OF
ADDITIONAL INFORMATION INCORPORATED HEREIN BY REFERENCE, IN CONNECTION WITH THE
OFFERING MADE BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND OR
ITS DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE FUND OR
BY THE DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY
BE MADE.
- --------------------------------------------------------------------------------
INVESTMENT ADVISER
BlackRock Institutional Management Corporation
Wilmington, Delaware
DISTRIBUTOR
Provident Distributors,Inc.
West Conshohocken, Pennsylvania
CUSTODIAN
PFPC Trust Company
Lester, Pennsylvania
ADMINISTRATOR AND TRANSFER AGENT
PFPC Inc.
Wilmington, Delaware
COUNSEL
Drinker Biddle & Reath LLP
Philadelphia, Pennsylvania
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
[GRAPHIC OMITTED]
THE PRINCIPAL CLASS
Prospectus
Money Market Portfolio
December 1, 1999
<PAGE>
THE PRINCIPAL CLASS
1-800-430-9618
FOR MORE INFORMATION:
This prospectus contains important information you should know before you
invest. Read it carefully and keep it for future reference. More information
about the Principal Class of the Money Market Portfolio is available free, upon
request, including:
ANNUAL/SEMI-ANNUAL REPORT
These reports contain additional information about the fund's investments,
describe the fund's performance, list portfolio holdings, and discuss recent
market conditions and economic trends. The annual report includes fund
strategies for the last fiscal year.
STATEMENT OF ADDITIONAL INFORMATION (SAI)
A Statement of Additional Information, dated December 1, 1999 (SAI), has
been filed with the Securities and Exchange Commission (SEC). The SAI, which
includes additional information about the Principal Money Market Portfolio, may
be obtained free of charge, along with the Principal Class of the Money Market
Portfolio's annual report, by calling (800)-430-9618. The SAI, as supplemented
from time to time, is incorporated by reference into this Prospectus (and is
legally considered a part of this Prospectus).
SHAREHOLDER ACCOUNT SERVICE REPRESENTATIVES
Representatives are available to discuss account balance information,
mutual fund prospectuses, literature, programs and services available. Hours: 8
a.m. to 5 p.m. (Eastern time) Monday-Friday. Call: (800) 430-9618.
PURCHASES AND REDEMPTIONS
Call your broker or (800) 430-9618.
WRITTEN CORRESPONDENCE
Post Office Address: The Principal Class
c/o PFPC Inc.
PO Box 8960
Wilmington, DE 19899-8960
Street Address: The Principal Class
c/o PFPC Inc.
400 Bellevue Parkway
Wilmington, DE 19809
SECURITIES AND EXCHANGE COMMISSION (SEC)
You may also view information about The RBB Fund, Inc. and the Principal
Class of the Money Market Portfolio, including the SAI, by visiting the SEC
website (http://www.sec.gov) or the SEC's Public Reference Room in Washington,
D.C. Information about the operation of the public reference room can be
obtained by calling the SEC directly at 1-202-942-8090. Copies of this
information can be obtained, for a duplicating fee, by writing to the Public
Reference Section of the SEC, Washington, D.C. 20549-0102, or by electronic
request to [email protected].
INVESTMENT COMPANY ACT FILE NO. 811-05518
<PAGE>
THE PRINCIPAL CLASS
OF THE RBB FUND, INC.
Money Market Portfolio
This prospectus gives vital information about this money market mutual
fund, advised by BlackRock Institutional Management Corporation ("BIMC" or the
"Adviser"), including information on investment policies, risks and fees. For
your own benefit and protection, please read it before you invest and keep it on
hand for future reference.
Please note that this fund:
(BULLET) is not a bank deposit;
(BULLET) is not federally insured;
(BULLET) is not an obligation of, or guaranteed or endorsed by PNC Bank,
National Association, PFPC Trust Company or any other bank;
(BULLET) is not obligation of, or guaranteed or endorsed or otherwise
supported by the U.S. Government, the Federal Deposit Insurance
Corporation, the Federal Reserve Board or any other governmental agency;
(BULLET) is not guaranteed to achieve its goal;
(BULLET) may not be able to maintain a stable $1 share price and you may
lose money.
- --------------------------------------------------------------------------------
THE SECURITIES DESCRIBED IN THIS PROSPECTUS HAVE BEEN REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION (SEC). THE SEC, HOWEVER, HAS NOT JUDGED THESE
SECURITIES FOR THEIR INVESTMENT MERIT AND HAS NOT DETERMINED THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANYONE WHO TELLS YOU OTHERWISE IS COMMITTING A
CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
PROSPECTUS December 1, 1999
<PAGE>
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<PAGE>
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
- ------------------------------ INTRODUCTION TO THE RISK/RETURN SUMMARY ..... 5
A LOOK AT THE GOALS,
STRATEGIES, RISKS, EXPENSES PORTFOLIO DESCRIPTION ....................... 6
AND FINANCIAL HISTORY OF THE
PORTFOLIO. PORTFOLIO MANAGEMENT
DETAILS ABOUT THE SERVICE Investment Adviser .....................10
PROVIDERS.
Service Provider Chart .................11
SHAREHOLDER INFORMATION
POLICIES AND INSTRUCTIONS FOR Pricing Shares .........................12
OPENING, MAINTAINING AND
CLOSING AN ACCOUNT IN THE Purchase of Shares .....................12
PORTFOLIO.
Redemption of Shares ...................14
Dividends and Distributions ............16
Taxes ..................................16
DETAILS ON THE DISTRIBUTION DISTRIBUTION ARRANGEMENTS ...................17
PLAN.
- ------------------------------ FOR MORE INFORMATION ................Back Cover
3
<PAGE>
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<PAGE>
INTRODUCTION TO THE RISK/RETURN SUMMARY
- --------------------------------------------------------------------------------
This Prospectus has been written to provide you with the information you
need to make an informed decision about whether to invest in the Principal Class
of the Money Market Portfolio of The RBB Fund, Inc. (the "Company").
The class of common stock of the Company offered by this Prospectus
represents interests in the Principal Class of the Money Market Portfolio (the
"Principal Class"). This Prospectus and the Statement of Additional Information
incorporated herein relate solely to the Principal Class.
This Prospectus has been organized so that there is a short section with
important facts about the Portfolio's goals, strategies, risks, expenses and
financial history. Once you read this short section, read the sections about
Purchase and Redemption of Shares of the Principal Class ("Principal Shares" or
"Shares").
5
<PAGE>
MONEY MARKET PORTFOLIO
- --------------------------------------------------------------------------------
IMPORTANT DEFINITIONS
ASSET-BACKED SECURITIES: Debt securities that are backed by a pool of assets,
usually loans such as installment sale contracts or credit card receivables.
COMMERCIAL PAPER: Short-term securities with maturities of 1 to 270 days which
are issued by banks, corporations and others.
DOLLAR WEIGHTED AVERAGE MATURITY: The average amount of time until the
organizations that issued the debt securities in the fund's portfolio must pay
off the principal amount of the debt. "Dollar weighted" means the larger the
dollar value of a debt security in the fund, the more weight it gets in
calculating this average.
LIQUIDITY: Liquidity is the ability to easily convert investments into cash
without losing a significant amount of money in the process.
NET ASSET VALUE (NAV): The value of everything the fund owns, minus everything
it owes, divided by the number of shares held by investors.
REPURCHASE AGREEMENT: A special type of a short-term investment. A dealer sells
securities to a fund and agrees to buy them back later at a set price. In
effect, the dealer is borrowing the fund's money for a short time, using the
securities as collateral.
VARIABLE OR FLOATING RATE SECURITIES: Securities whose interest rates adjust
automatically after a certain period of time and/or whenever a predetermined
standard interest rate changes.
- --------------------------------------------------------------------------------
INVESTMENT GOAL
The fund seeks to generate current income, to provide you with liquidity
and to protect your investment.
PRIMARY INVESTMENT STRATEGIES
To achieve this goal, we invest in a diversified portfolio of short term,
high quality, U.S. dollar-denominated instruments, including government, bank,
commercial and other obligations.
Specifically, we may invest in:
1) U.S. dollar-denominated obligations issued or supported by the credit
of U.S. or foreign banks or savings institutions with total assets of
more than $1 billion (including obligations of foreign branches of
such banks).
2) High quality commercial paper and other obligations issued or
guaranteed (or otherwise supported) by U.S. and foreign corporations
and other issuers rated (at the time of purchase) A-2 or higher by
Standard and Poor's, Prime-2 or higher by Moody's, D-2 or higher by
Duff & Phelps, F-2 or higher by Fitch or TBW-2 or higher by Thomson
BankWatch, as well as high quality corporate bonds rated AA (or Aa) or
higher at the time of purchase by those rating agencies. These ratings
must be provided by at least two rating agencies or by the only rating
agency providing a rating.
3) Unrated notes, paper and other instruments that are determined by us
to be of comparable quality to the instruments described above.
4) Asset-backed securities (including interests in pools of assets such
as mortgages, installment purchase obligations and credit card
receivables).
5) Securities issued or guaranteed by the U.S. Government or by its
agencies or authorities.
6) Dollar-denominated securities issued or guaranteed by foreign
governments or their political subdivisions, agencies or authorities.
7) Securities issued or guaranteed by state or local governmental bodies.
8) Repurchase agreements relating to the above instruments.
The fund seeks to maintain a net asset value of $1.00 per share.
6
<PAGE>
QUALITY
Under guidelines established by the Company's Board of Directors, we will
only purchase securities if such securities or their issuers have (or such
securities are guaranteed or otherwise supported by entities which have)
short-term debt ratings at the time of purchase in the two highest rating
categories from at least two national rating agencies, or one such rating if the
security is rated by only one agency. Securities that are unrated must be
determined to be of comparable quality.
MATURITY
The dollar-weighted average maturity of all the investments of the fund
will be 90 days or less. Only those securities which have remaining maturities
of 397 days or less (except for certain variable and floating rate instruments
and securities collateralizing repurchase agreements) will be purchased.
KEY RISKS
The value of money market investments tends to fall when current interest
rates rise. Money market investments are generally less sensitive to interest
rate changes than longer-term securities.
The fund's securities may not earn as high a level of income as longer term
or lower quality securities, which generally have greater risk and more
fluctuation in value.
The fund's concentration of its investments in the banking industry could
increase risks. The profitability of banks depends largely on the availability
and cost of funds, which can change depending upon economic conditions. Banks
are also exposed to losses if borrowers get into financial trouble and can't
repay their loans.
The obligations of foreign banks and other foreign issuers may involve
certain risks in addition to those of domestic issuers, including higher
transaction costs, less complete financial information, political and economic
instability, less stringent regulatory requirements and less market liquidity.
Unrated notes, paper and other instruments may be subject to the risk that
an issuer may default on its obligation to pay interest and repay principal.
The obligations issued or guaranteed by state or local government bodies
may be issued by entities in the same state and may have interest which is paid
from revenues of similar projects. As a result, changes in economic, business or
political conditions relating to a particular state or types of projects may
impact the fund.
Treasury obligations differ only in their interest rates, maturities and
time of issuance. These differences could result in fluctuations in the value of
such securities depending upon the market. Obligations of U.S. Government
agencies and authorities are supported by varying degrees of credit. The U.S.
Government gives no assurances that it will provide financial support to its
agencies and authorities if it is not obligated by law to do so. Default in
these issuers could negatively impact the fund.
The fund's investment in asset-backed securities may be negatively impacted
by interest rate fluctuations or when an issuer pays principal on an obligation
held by the fund earlier or later than expected. These events may affect their
value and the return on your investment. The fund could lose money if a seller
under a repurchase agreement defaults or declares bankruptcy.
We may purchase variable and floating rate instruments. Like all debt
instruments, their value is dependent on the credit paying ability of the
issuer. If the issuer were unable to make interest payments or default, the
value of the securities would decline. The absence of an active market for these
securities could make it difficult to dispose of them if the issuer defaults.
7
<PAGE>
The fund, like any business, could be affected if the computer systems on
which it relies do not properly process information beginning on January 1,
2000. While Year 2000 issues could have a negative effect on the fund, BIMC, the
fund's investment adviser, is currently working to avoid such problems. BIMC is
also working with other systems providers and vendors servicing the Portfolio to
determine their systems' ability to handle Year 2000 problems. There is no
guarantee, however, that systems will work properly on or after January 1, 2000.
Year 2000 problems may also hurt issuers whose securities the fund holds or
securities markets generally.
ALTHOUGH WE SEEK TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER
SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND. WHEN YOU INVEST IN
THIS FUND YOU ARE NOT MAKING A BANK DEPOSIT. YOUR INVESTMENT IS NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR BY ANY BANK OR
GOVERNMENTAL AGENCY.
EXPENSES AND FEES
As a shareholder you pay certain fees and expenses. Annual fund operating
expenses are paid out of fund assets and are reflected in the fund's price.
The table below describes the fees and expenses that you may pay if you buy
and hold Principal Shares of the fund. The table is based on expenses for the
most recent fiscal year.
ANNUAL FUND OPERATING EXPENSES*
(Expenses that are deducted from fund assets)
Management Fees 1 .......................................... 0.36%
Distribution and service (12b-1) fees ...................... 0.40%
Other expenses ............................................. 0.09%
-----
Total annual fund operating expenses 2 ..................... 0.85%
=====
- --------------------------------------------------------------------------------
IMPORTANT DEFINITIONS
MANAGEMENT FEES: Fees paid to the investment adviser for portfolio management
services.
OTHER EXPENSES: Includes administration, transfer agency, custody, professional
fees and registration fees.
DISTRIBUTION AND SERVICE FEES: Fees that are paid to the Distributor for
shareholder account service and
maintenance.
- --------------------------------------------------------------------------------
* The table does not reflect charges or credits which investors might
incur if they invest through a financial institution.
1. BIMC has voluntarily undertaken that a portion of its management fee
will not be imposed on the fund during the current fiscal year ending
August 31, 2000. As a result of the fee waiver, current management
fees of the fund are 0.25% of average daily net assets. This waiver is
expected to remain in effect for the current fiscal year. However, it
is voluntary and can be modified or terminated at any time without the
fund's consent.
2. As a result of the fee waiver set forth in note 1, the total annual
fund operating expenses which are estimated to be incurred during the
current fiscal year are 0.77%. Although this fee waiver is expected to
remain in effect for the current fiscal year, it is voluntary and may
be terminated at any time at the option of BIMC.
EXAMPLE:
The example is intended to help you compare the cost of investing in the
fund with the cost of investing in other mutual funds. The example assumes that
you invest $10,000 in the fund for the time periods indicated and then redeem
all of your shares at the end of each period. The example also assumes that your
investment has a 5% return each year and that the fund's operating expenses
remain the same. Although your actual costs may be higher or lower, based on
these assumptions your cost would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
PRINCIPAL SHARES $87 $271 $471 $1,049
8
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The table below sets forth certain financial information for the periods
indicated, including per share information results for a single fund share. The
term "Total Return" indicates how much your investment would have increased or
decreased during this period of time and assumes that you have reinvested all
dividends and distributions. This information has been derived from the fund's
financial statements audited by PricewaterhouseCoopers LLP, the Company's
independent accountants. This information should be read in conjunction with the
fund's financial statements which, together with the report of independent
accountants, are included in the fund's annual report, which is available upon
request (see back cover for ordering instructions).
FINANCIAL HIGHLIGHTS (b)
(FOR A PRINCIPAL SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
MONEY MARKET PORTFOLIO
FOR THE
PERIOD JUNE 1, 1999
(COMMENCEMENT OF OPERATIONS)
THROUGH AUGUST 31, 1999(c)
----------------------------
Net asset value at beginning of period ...................... $ 1.00
--------
Income from investment operations:
Net investment income .................................... 0.0110
--------
Total from investment operations ....................... 0.0110
--------
Less distributions
Dividends from net investment income ..................... (0.0110)
Dividends from net realized capital gains ................ --
--------
Total distributions .................................... (0.0110)
--------
Net asset value at end of period ............................ $ 1.00
========
Total Return ................................................ 1.10%(e)
Ratios/Supplemental Data
Net assets, end of period ................................ $218,530
Ratios of expenses to average net assets
After advisory/administration fee waivers .............. .77%(a)(d)
Ratios of net investment income to average net assets
After advisory/administration fee waivers .............. 4.36%(d)
(a) Without the waiver of advisory and transfer agent fees and without the
reimbursement of certain operating expenses, the ratios of expenses to
average net assets for the Money Market Portfolio would have been
.85%, for the period ended August 31, 1999.
(b) Financial Highlights relate solely to the Principal Family of shares
within the portfolio.
(c) On June 1, 1999 the Money Market Portfolio's Principal Class began
operations.
(d) Annualized.
(e) Non-Annualized.
9
<PAGE>
PORTFOLIO MANAGEMENT
- --------------------------------------------------------------------------------
INVESTMENT ADVISER
BIMC, a majority-owned indirect subsidiary of PNC Bank, N.A. serves as
investment adviser and is responsible for all purchases and sales of the fund's
portfolio securities. BIMC and its affiliates are one of the largest U.S. bank
managers of mutual funds, with assets currently under management in excess of
$52.9 billion. BIMC (formerly known as PNC Institutional Management Corporation
or PIMC) was organized in 1977 by PNC Bank to perform advisory services for
investment companies and has its principal offices at Bellevue Park Corporate
Center, 400 Bellevue Parkway, Wilmington, DE 19809.
For the fiscal year ended August 31, 1999, BIMC received an advisory fee of
.25% of the fund's average net assets.
The following chart shows the fund's other service providers and includes
their addresses and principal activities.
10
<PAGE>
------------
SHAREHOLDERS
------------
Distribution and
Shareholder Services
------------------------------------ -----------------------------------------
PRINCIPAL DISTRIBUTOR TRANSFER AGENT
PROVIDENT DISTRIBUTORS, INC. PFPC INC.
FOUR FALLS CORPORATE CENTER, 6TH FL. 400 BELLEVUE PARKWAY
WEST CONSHOHOCKEN, PA 19428 WILMINGTON, DE 19809
Distributes shares of the fund. Handles shareholder services,
including record-keeping and statements,
distribution of dividends and processing
of buy and sell requests.
------------------------------------ -----------------------------------------
Asset
Management
------------------------------------ -----------------------------------------
INVESTMENT ADVISER CUSTODIAN
BLACKROCK INSTITUTIONAL PFPC TRUST COMPANY
MANAGEMENT CORPORATION 200 STEVENS DRIVE
400 BELLEVUE PARKWAY LESTER, PA 19113
WILMINGTON, DE 19809
Holds the fund's assets, settles
Manages the fund's business all portfolio trades and collects
and investment activities. most of the valuation data
required for calculating the
fund's net asset value ("NAV").
------------------------------------ -----------------------------------------
Fund
Operations
------------------------------------
ADMINISTRATOR AND FUND
ACCOUNTING AGENT
PFPC INC.
400 BELLEVUE PARKWAY
WILMINGTON, DE 19809
Provides facilities, equipment
and personnel to carry out
administrative services related
to the fund and calculates the
fund's NAV, dividends
and distributions.
------------------------------------
---------------------------------
BOARD OF DIRECTORS
Supervises the fund's activities.
---------------------------------
11
<PAGE>
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
PRICING SHARES
The price of your shares is also referred to as the net asset value (NAV).
The NAV is determined twice daily at 12:00 noon and at 4:00 p.m., Eastern
Time, each day on which both the New York Stock Exchange and the Federal Reserve
Bank of Philadelphia are open. It is calculated by dividing the fund's total
assets, less its liabilities, by the number of shares outstanding.
The fund values its securities using amortized cost. This method values a
fund holding initially at its cost and then assumes a constant amortization to
maturity of any discount or premium. The amortized cost method ignores any
impact of changing interest rates.
PURCHASE OF SHARES
GENERAL. You may purchase Principal Shares through an account maintained by
your brokerage firm (the "Account") and you may also purchase Shares directly by
mail or wire. The minimum initial investment is $25,000, and the minimum
subsequent investment is $2,500. The Company in its sole discretion may accept
or reject any order for purchases of Principal Shares.
Purchases will be effected at the net asset value next determined after
PFPC, the Company's transfer agent, has received a purchase order in good order
and the Company's custodian has Federal Funds immediately available to it. In
those cases where payment is made by check, Federal Funds will generally become
available two Business Days after the check is received. A "Business Day" is any
day that both the New York Stock Exchange (the "NYSE") and the Federal Reserve
Bank of Philadelphia (the "FRB") are open. On any Business Day, orders which are
accompanied by Federal Funds and received by the Company by 12:00 noon Eastern
Time, and orders as to which payment has been converted into Federal Funds by
12:00 noon Eastern Time, will be executed as of 12:00 noon that Business Day.
Orders which are accompanied by Federal Funds and received by PFPC after 12:00
noon Eastern Time but prior to the close of regular trading on the NYSE
(generally 4:00 p.m. Eastern Time), and orders as to which payment has been
converted into Federal Funds after 12:00 noon Eastern Time but prior to the
close of regular trading on the NYSE on any Business Day, will be executed as of
the close of regular trading on the NYSE on that Business Day, but will not be
entitled to receive dividends declared on such Business Day. Orders which are
accompanied by Federal Funds and received by the Company as of the close of
regular trading on the NYSE or later, and orders as to which payment has been
converted to Federal Funds as of the close of regular trading on the NYSE or
later on a Business Day will be processed as of 12:00 noon Eastern Time on the
following Business Day.
PURCHASES THROUGH AN ACCOUNT. Purchases of Shares may be effected through
an Account with your broker through procedures and requirements established by
your broker. The minimum and subsequent investment in Shares are set by your
broker. In such event, beneficial ownership of Principal Shares will be recorded
by your broker and will be reflected in the Account statements provided to you
by your broker. Your broker may impose minimum investment Account requirements.
Even if your broker does not impose a sales charge for purchases of Shares,
depending on the terms of your Account with your broker, the broker may charge
to your Account fees for automatic investment and other services provided to
your Account. Information concerning Account requirements, services and charges
should be obtained from your broker, and you should read this Prospectus in
conjunction with any information received from your broker. Shares are held in
the street name account of your broker and if you desire to transfer such shares
to the street name account of another broker, you should contact your current
broker.
A broker with whom you maintain an Account may offer you the ability to
purchase Shares under an automatic purchase program (a "Purchase Program")
established by a participating broker. If you participate in a Purchase Program,
then you will have your "free-credit" cash balances in your Account
automatically invested in Principal
12
<PAGE>
Shares. The frequency of investments and the minimum investment requirement will
be established by the broker and the Company. In addition, the broker may
require a minimum amount of cash and/or securities to be deposited in your
Account to participate in its Purchase Program. The description of the
particular broker's Purchase Program should be read for details, and any
inquiries concerning your Account under a Purchase Program should be directed to
your broker.
If your broker makes special arrangements under which orders for Principal
Shares are received by PFPC prior to 12:00 noon Eastern Time, and your broker
guarantees that payment for such Shares will be made in available Federal Funds
to the Company's custodian prior to the close of regular trading on the NYSE on
the same day, such purchase orders will be effective and Shares will be
purchased at the offering price in effect as of 12:00 noon Eastern Time on the
date the purchase order is received by PFPC. Otherwise, if the broker has not
made such an arrangement, pricing of shares will occur as described above under
"General."
DIRECT PURCHASES. You may also make direct investments at any time in
Shares through any broker that has entered into a dealer agreement with the
Distributor (a "Dealer"). You may make an initial investment by mail by fully
completing and signing an application obtained from a Dealer (the "Application")
and mailing it, together with a check payable to "The Principal Class" to The
Principal Class, c/o PFPC, P.O. Box 8950, Wilmington, Delaware 19899. An
Application will be returned to you unless it contains the name of the Dealer
from whom you obtained it. Subsequent purchases may be made through a Dealer or
by forwarding payment to the Company's transfer agent at the foregoing address.
Provided that your investment is at least $5,000, you may also purchase
Principal Shares by having your bank or Dealer wire Federal Funds to the
Company's Custodian, PFPC Trust Company. Your bank or Dealer may impose a charge
for this service. The Company does not currently charge for effecting wire
transfers but reserves the right to do so in the future. In order to ensure
prompt receipt of your Federal Funds wire, for an initial investment, it is
important that you follow these steps:
A. Telephone the Company's transfer agent, PFPC, toll-free (800)
430-9618, and provide your name, address, telephone number, Social
Security or Tax Identification Number, the amount being wired, and by
which bank or Dealer. PFPC will then provide you with an account
number. (If you have an existing account, you should also notify PFPC
prior to wiring funds.)
B. Instruct your bank or Dealer to wire the specified amount, together
with your assigned account number, to PFPC's account with PNC Bank.
PNC Bank, N.A., Philadelphia, PA
ABA-0310-0005-3.
FROM: (your name)
ACCOUNT NUMBER: (your account number)
FOR PURCHASE OF: Principal Class Money Market Portfolio
AMOUNT: (amount to be invested)
C. Fully complete and sign the Application and mail it to the address
shown thereon. PFPC will not process initial purchases until it
receives a fully completed and signed Application.
For subsequent investments, you should follow steps A and B above.
13
<PAGE>
RETIREMENT PLANS. Principal Shares may be purchased in conjunction with
individual retirement accounts ("IRAs") and rollover IRAs where PFPC Trust
Company acts as custodian. For further information as to applications and annual
fees, contact the Distributor or your broker. To determine whether the benefits
of an IRA are available and/or appropriate, you should consult with your tax
adviser.
REDEMPTION OF SHARES
GENERAL. Redemption orders are effected at the net asset value per share
next determined after receipt of the order in proper form by the Company's
transfer agent, PFPC. You may redeem all or some of your Shares in accordance
with one of the procedures described below.
REDEMPTION OF SHARES IN AN ACCOUNT. If you beneficially own Principal
Shares through an Account, you may redeem Shares in your Account in accordance
with instructions and limitations pertaining to your Account by contacting your
broker. If such notice is received by PFPC by 12:00 noon Eastern Time on any
Business Day, the redemption will be effective as of 12:00 noon Eastern Time on
that day. Payment of the redemption proceeds will be made after 12:00 noon
Eastern Time on the day the redemption is effected, provided that the Company's
custodian is open for business. If the custodian is not open, payment will be
made on the next bank business day. If the redemption request is received
between 12:00 noon and the close of regular trading on the NYSE on a Business
Day, the redemption will be effective as of the close of regular trading on the
NYSE on such Business Day and payment will be made on the next bank business day
following receipt of the redemption request. If all of your Shares are redeemed,
all accrued but unpaid dividends on those Shares will be paid with the
redemption proceeds.
Your brokerage firm may also redeem each day a sufficient number of Shares
to cover debit balances created by transactions in your Account or instructions
for cash disbursements. Shares will be redeemed on the same day that a
transaction occurs that results in such a debit balance or charge.
Each brokerage firm reserves the right to waive or modify criteria for
participation in an Account or to terminate participation in an Account for any
reason.
REDEMPTION OF SHARES OWNED DIRECTLY. If you own Shares directly, you may
redeem any number of Shares by sending a written request to THE PRINCIPAL CLASS,
c/o PFPC, P.O. Box 8950, Wilmington, Delaware 19899. Redemption requests must be
signed by each shareholder in the same manner as the Shares are registered.
Redemption requests for joint accounts require the signature of each joint
owner. On redemption requests of $5,000 or more, each signature must be
guaranteed. A signature guarantee may be obtained from a domestic bank or trust
company, broker, dealer, clearing agency or savings association who are
participants in a medallion program recognized by the Securities Transfer
Association. The three recognized medallion programs are Securities Transfer
Agents Medallion Program (STAMP), Stock Exchanges Medallion Program (SEMP) and
New York Stock Exchange, Inc. Medallion Signature Program (MSP). Signature
guarantees that are not part of these programs will not be accepted.
If you are a direct investor, you may redeem your Shares without charge by
telephone if you have completed and returned an account application containing
the appropriate telephone election. To add a telephone option to an existing
account that previously did not provide for this option, you must file a
Telephone Authorization Form with PFPC. This form is available from PFPC. Once
this election has been made, you may simply contact PFPC by telephone to request
the redemption by calling (800) 430-9618. Neither the Company, the Distributor,
the Portfolio, the Administrator nor any other Company agent will be liable for
any loss, liability, cost or expense for following the procedures below or for
following instructions communicated by telephone that they reasonably believe to
be genuine.
The Company's telephone transaction procedures include the following
measures: (1) requiring the appropriate telephone transaction privilege forms;
(2) requiring the caller to provide the names of the account owners, the account
social security number and name of the portfolio, all of which must match the
Company's records; (3) requiring the Company's service representative to
complete a telephone transaction form, listing all of the above caller
identification
14
<PAGE>
information; (4) requiring that redemption proceeds be sent only by check to the
account owners of record at the address of record, or by wire only to the owners
of record at the bank account of record; (5) sending a written confirmation for
each telephone transaction to the owners of record at the address of record
within five (5) business days of the call; and (6) maintaining tapes of
telephone transactions for six months, if the Company elects to record
shareholder telephone transactions. For accounts held of record by
broker-dealers (other than the Distributor), financial institutions, securities
dealers, financial planners or other industry professionals, additional
documentation or information regarding the scope of authority is required.
Finally, for telephone transactions in accounts held jointly, additional
information regarding other account holders is required. Telephone transactions
will not be permitted in connection with IRA or other retirement plan accounts
or by attorney-in-fact under power of attorney.
Proceeds of a telephone redemption request will be mailed by check to your
registered address unless you have designated in your Application or Telephone
Authorization Form that such proceeds are to be sent by wire transfer to a
specified checking or savings account. If proceeds are to be sent by wire
transfer, a telephone redemption request received prior to the close of regular
trading on the NYSE will result in redemption proceeds being wired to your bank
account on the next day that a wire transfer can be effected. The minimum
redemption for proceeds sent by wire transfer is $5,000. There is no maximum for
proceeds sent by wire transfer. The Company may modify this redemption service
at any time or charge a service fee upon prior notice to shareholders, although
no fee is currently contemplated.
REDEMPTION BY CHECK. If you are a direct investor or you do not have check
writing privileges for your Account, the Company will provide to you forms of
drafts ("checks") payable through PNC Bank. These checks may be made payable to
the order of anyone. The minimum amount of a check is $100; however, your broker
may establish a higher minimum. If you wish to use this check writing redemption
procedure, you should complete specimen signature cards (available from PFPC),
and then forward such signature cards to PFPC. PFPC will then arrange for the
checks to be honored by PNC Bank. If you own Shares through an Account, you
should contact your broker for signature cards. Investors with joint accounts
may elect to have checks honored with a single signature. Check redemptions will
be subject to PNC Bank's rules governing checks. An investor will be able to
stop payment on a check redemption. The Company or PNC Bank may terminate this
redemption service at any time, and neither shall incur any liability for
honoring checks, for effecting redemptions to pay checks, or for returning
checks which have not been accepted.
When a check is presented to PNC Bank for clearance, PNC Bank, as your
agent, will cause the Company to redeem a sufficient number of your full and
fractional Shares to cover the amount of the check. This procedure enables you
to continue to receive dividends on your Shares representing the amount being
redeemed by check until such time as the check is presented to PNC Bank.
Pursuant to rules under the 1940 Act, checks may not be presented for cash
payment at the offices of PNC Bank. This limitation does not affect checks used
for the payment of bills or cash at other banks.
ADDITIONAL REDEMPTION INFORMATION. The Company ordinarily will make payment
for all Shares redeemed within seven days after receipt by PFPC of a redemption
request in proper form. Although the Company will redeem Shares purchased by
check before the check clears, payment of the redemption proceeds may be delayed
for a period of up to fifteen days after their purchase, pending a determination
that the check has cleared. This procedure does not apply to Shares purchased by
wire payment. You should consider purchasing Shares using a certified or bank
check or money order if you anticipate an immediate need for redemption
proceeds.
The Company does not impose a charge when Shares are redeemed. The Company
reserves the right to redeem any account in the Principal Class involuntarily,
on thirty days' notice, if such account falls below $1,500 and during such
30-day notice period the amount invested in such account is not increased to at
least $1,500. Payment for Shares redeemed may be postponed or the right of
redemption suspended as provided by the rules of the SEC.
15
<PAGE>
If the Board of Directors determines that it would be detrimental to the
best interests of the remaining shareholders of the funds to make payment wholly
or partly in cash, redemption proceeds may be paid in whole or in part by an
in-kind distribution of readily marketable securities held by a fund instead of
cash in conformity with applicable rules of the SEC. Investors generally will
incur brokerage charges on the sale of portfolio securities so received in
payment of redemptions. The funds have elected, however, to be governed by Rule
18f-1 under the 1940 Act, so that a fund is obligated to redeem its Shares
solely in cash up to the lesser of $250,000 or 1% of its net asset value during
any 90-day period for any one shareholder of a fund.
DIVIDENDS AND DISTRIBUTIONS
The Company will distribute substantially all of the net investment income
and net realized capital gains, if any, of the fund to each shareholder. All
distributions are reinvested in the form of additional full and fractional
Shares unless a shareholder elects otherwise.
The net investment income (not including any net short-term capital gains)
earned by the fund will be declared as a dividend on a daily basis and paid
monthly. Dividends are payable to shareholders of record immediately prior to
the determination of net asset value made as of the close of trading of the
NYSE. Net short-term capital gains, if any, will be distributed at least
annually.
TAXES
Distributions from the fund will generally be taxable to shareholders. It
is expected that all, or substantially all, of these distributions will consist
of ordinary income. You will be subject to income tax on these distributions
regardless of whether they are paid in cash or reinvested in additional shares.
The one major exception to these tax principles is that distributions on shares
held in an IRA (or other tax-qualified plan) will not be currently taxable.
The foregoing is only a summary of certain tax considerations under the
current law, which may be subject to change in the future. Shareholders who are
nonresident aliens, foreign trusts or estates, or foreign corporations or
partnerships may be subject to different United States Federal income tax
treatment. You should consult your tax adviser for further information regarding
federal, state, local and/or foreign tax consequences relevant to your specific
situation.
16
<PAGE>
DISTRIBUTION ARRANGEMENTS
- --------------------------------------------------------------------------------
Principal Shares are sold without a sales load on a continuous basis by
Provident Distributors, Inc., whose principal business address is at Four Falls
Corporate Center, West Conshohocken, PA 19428.
The Company's Board of Directors of the Company approved and adopted the
Distribution Agreement and a separate Plan of Distribution for the Principal
Class (the "Plan") pursuant to Rule 12b-1 under the 1940 Act. Under the Plan,
the Distributor is entitled to receive from the Class a distribution fee, which
is accrued daily and paid monthly, of up to .40% on an annualized basis of the
average daily net assets of the Class. The actual amount of such compensation is
agreed upon from time to time by the Company's Board of Directors and the
Distributor. Under the Distribution Agreement, the Distributor has agreed to
accept compensation for its services thereunder and under the Plan in the amount
of .40% of the average daily net assets of the Class on an annualized basis in
any year. The Distributor may, in its discretion, voluntarily waive from time to
time all or any portion of its distribution fee.
Under the Distribution Agreement and the Plan, the Distributor may
reallocate an amount up to the full fee that it receives to financial
institutions, including broker/dealers, based upon the aggregate investment
amounts maintained by and services provided to shareholders of the Class
serviced by such financial institutions. The Distributor may also reimburse
broker/dealers for other expenses incurred in the promotion of the sale of
Shares. The Distributor and/or broker/dealers pay for the cost of printing
(excluding typesetting) and mailing to prospective investors prospectuses and
other materials relating to the Principal Class as well as for related direct
mail, advertising and promotional expenses.
The Plan obligates the Company, during the period it is in effect, to
accrue and pay to the Distributor on behalf of the Class the fee agreed to under
the Distribution Agreement. Payments under the Plan are not based on expenses
actually incurred by the Distributor, and the payments may exceed distribution
expenses actually incurred. Because these fees are paid out of the fund's assets
on an on-going basis, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges
17
<PAGE>
(THIS PAGE INTENTIONALLY LEFT BLANK.)
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS OR IN THE FUND'S STATEMENT OF
ADDITIONAL INFORMATION INCORPORATED HEREIN BY REFERENCE, IN CONNECTION WITH THE
OFFERING MADE BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND OR
ITS DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE FUND OR
BY THE DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY
BE MADE.
- --------------------------------------------------------------------------------
INVESTMENT ADVISER
BlackRock Institutional Management Corporation
Wilmington, Delaware
DISTRIBUTOR
Provident Distributors,Inc.
West Conshohocken, Pennsylvania
CUSTODIAN
PFPC Trust Company
Lester, Pennsylvania
ADMINISTRATOR AND TRANSFER AGENT
PFPC Inc.
Wilmington, Delaware
COUNSEL
Drinker Biddle & Reath LLP
Philadelphia, Pennsylvania
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
[GRAPHIC OMITTED]
MORGAN KEEGAN
MOR
ACCOUNT
THE PRINCIPAL CLASS
Prospectus
Money Market Portfolio
December 1, 1999
<PAGE>
THE PRINCIPAL CLASS
1-800-430-9618
FOR MORE INFORMATION:
This prospectus contains important information you should know before you
invest. Read it carefully and keep it for future reference. More information
about the Principal Class of the Money Market Portfolio is available free, upon
request, including:
ANNUAL/SEMI-ANNUAL REPORT
These reports contain additional information about the fund's investments,
describe the fund's performance, list portfolio holdings, and discuss recent
market conditions and economic trends. The annual report includes fund
strategies for the last fiscal year.
STATEMENT OF ADDITIONAL INFORMATION (SAI)
A Statement of Additional Information, dated December 1, 1999 (SAI), has
been filed with the Securities and Exchange Commission (SEC). The SAI, which
includes additional information about the Principal Money Market Portfolio, may
be obtained free of charge, along with the Principal Class of the Money Market
Portfolio's annual report, by calling (800)-430-9618. The SAI, as supplemented
from time to time, is incorporated by reference into this Prospectus (and is
legally considered a part of this Prospectus).
SHAREHOLDER ACCOUNT SERVICE REPRESENTATIVES
Representatives are available to discuss account balance information,
mutual fund prospectuses, literature, programs and services available. Hours: 8
a.m. to 5 p.m. (Eastern time) Monday-Friday. Call: (800) 430-9618.
PURCHASES AND REDEMPTIONS
Call your broker or (800) 430-9618.
WRITTEN CORRESPONDENCE
Post Office Address: The Principal Class
c/o PFPC Inc.
PO Box 8960
Wilmington, DE 19899-8960
Street Address: The Principal Class
c/o PFPC Inc.
400 Bellevue Parkway
Wilmington, DE 19809
SECURITIES AND EXCHANGE COMMISSION (SEC)
You may also view information about The RBB Fund, Inc. and the Principal
Class of the Money Market Portfolio, including the SAI, by visiting the SEC
website (http://www.sec.gov) or the SEC's Public Reference Room in Washington,
D.C. Information about the operation of the public reference room can be
obtained by calling the SEC directly at 1-202-942-8090. Copies of this
information can be obtained, for a duplicating fee, by writing to the Public
Reference Section of the SEC, Washington, D.C. 20549-0102, or by electronic
request to [email protected].
INVESTMENT COMPANY ACT FILE NO. 811-05518
<PAGE>
<PAGE>
<PAGE>
PROSPECTUS
DECEMBER 1, 1999
BOSTON PARTNERS
LARGE CAP VALUE FUND
BOSTON PARTNERS
MID CAP VALUE FUND
BOSTON PARTNERS
MICRO CAP VALUE FUND
BOSTON PARTNERS
BOND FUND
BOSTON PARTNERS
MARKET NEUTRAL FUND
INVESTOR CLASS
[GRAPHIC OMITTED]
bp
BOSTON PARTNERS ASSET MANAGEMENT,L.P.
- -------------------------------------
<PAGE>
BOSTON PARTNERS FAMILY OF FUNDS
OF
THE RBB FUND, INC.
INVESTOR CLASS
BOSTON PARTNERS FAMILY OF FUNDS
LARGE CAP VALUE FUND
MID CAP VALUE FUND
MICRO CAP VALUE FUND
BOND FUND
MARKET NEUTRAL FUND
- --------------------------------------------------------------------------------
THE SECURITIES DESCRIBED IN THIS PROSPECTUS HAVE BEEN REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION (THE "SEC"). THE SEC, HOWEVER, HAS NOT JUDGED
THESE SECURITIES FOR THEIR INVESTMENT MERIT AND HAS NOT DETERMINED THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANYONE WHO TELLS YOU OTHERWISE IS COMMITTING A
CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
PROSPECTUS December 1, 1999
<PAGE>
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
================================= INTRODUCTION ...............................3
DESCRIPTIONS OF THE BOSTON PARTNERS FUNDS
A LOOK AT THE GOALS, STRATEGIES, Boston Partners Large Cap Value Fund ....4
RISKS, EXPENSES AND FINANCIAL
HISTORY OF EACH OF THE Boston Partners Mid Cap Value Fund ......9
BOSTON PARTNERS FUNDS.
Boston Partners Micro Cap Value Fund ...13
Boston Partners Bond Fund ..............17
Boston Partners Market Neutral Fund ....21
MANAGEMENT
DETAILS ABOUT THE SERVICE Investment Adviser .....................25
PROVIDERS.
Service Provider Chart .................27
SHAREHOLDER INFORMATION
POLICIES AND INSTRUCTIONS FOR Pricing of Fund Shares .................28
OPENING, MAINTAINING AND
CLOSING AN ACCOUNT IN ANY OF Purchase of Fund Shares ................28
THE BOSTON PARTNERS FUNDS.
Redemption of Fund Shares ..............30
Exchange Privilege .....................32
Dividends and Distributions ............33
Taxes ..................................33
Multi-Class Structure ..................34
================================= FOR MORE INFORMATION ......................35
2
<PAGE>
INTRODUCTION
- --------------------------------------------------------------------------------
This Prospectus has been written to provide you with the information you
need to make an informed decision about whether to invest in the Investor Class
of the Boston Partners Family of Funds of The RBB Fund, Inc. (the "Company").
The five mutual funds of the Company offered by this Prospectus represent
interests in the Boston Partners Large Cap Value Fund, Boston Partners Mid Cap
Value Fund, Boston Partners Micro Cap Value Fund, Boston Partners Bond Fund, and
Boston Partners Market Neutral Fund (each a "Fund" and collectively, the
"Funds"). This Prospectus and the Statement of Additional Information
incorporated herein relate solely to the Funds.
This Prospectus has been organized so that each Fund has its own short
section with important facts about that particular Fund. Once you read the short
sections about the Funds that interest you, read the "Purchase of Fund Shares"
and "Redemption of Fund Shares" sections. These two sections apply to all the
Funds offered by this Prospectus.
3
<PAGE>
BOSTON PARTNERS LARGE CAP VALUE FUND
- --------------------------------------------------------------------------------
================================================================================
IMPORTANT DEFINITIONS
EQUITY SECURITY: A security, such as a stock, representing ownership of a
company. Bonds, in comparison, are referred to as fixed-income or debt
securities because they represent indebtedness to the bondholder, not ownership.
MARKET CAPITALIZATION: Market capitalization refers to the market value of a
company and is calculated by multiplying the number of shares outstanding by the
current price per share.
VALUE CHARACTERISTICS: Stocks are generally divided into the categories of
"growth" or "value." Value stocks appear to the Adviser to be undervalued by the
market as measured by certain financial formulas. Growth stocks appear to the
Adviser to have earnings growth potential that is greater than the market in
general, and whose growth in revenue is expected to continue for an extended
period of time.
EARNINGS GROWTH: The increased rate of growth in a company's earnings per share
from period to period. Security analysts attempt to identify companies with
earnings growth potential because a pattern of earnings growth generally causes
share prices to increase.
================================================================================
INVESTMENT GOALS
The Fund seeks to provide long-term growth of capital with current income
as a secondary objective.
PRIMARY INVESTMENT STRATEGIES
The Fund invests (during normal market conditions) at least 65% of its
total assets in a diversified portfolio consisting primarily of equity
securities, such as common stocks and securities convertible into common stocks,
of issuers with a market capitalization of $1 billion or greater and identified
by Boston Partners Asset Management L.P. (the "Adviser") as possessing value
characteristics. The Fund may also invest up to 20% of its total assets in
non-U.S. dollar denominated securities.
The Adviser examines various factors in determining the value
characteristics of such issuers including price to book value ratios and price
to earnings ratios. These value characteristics are examined in the context of
the issuer's operating and financial fundamentals such as return on equity and
earnings growth and cash flow. The Adviser selects securities for the Fund based
on a continuous study of trends in industries and companies, earnings power and
growth and other investment criteria.
In general, the Fund's investments are broadly diversified over a number of
industries and, as a matter of policy, the Fund will not invest 25% or more of
its total assets in any one industry.
While the Adviser intends to fully invest the Fund's assets at all times in
accordance with the policies above, the Fund reserves the right to hold up to
100% of its assets, as a temporary defensive measure, in cash and eligible U.S.
dollar-denominated money market instruments. The Adviser will determine when
market conditions warrant temporary defensive measures.
KEY RISKS
(BULLET) At least 65% of the Fund's total assets will be invested in a
diversified portfolio of equity securities, and the net asset value
("NAV") of the Fund will change with changes in the market value of its
portfolio positions.
(BULLET) Investors may lose money.
(BULLET) Although the Fund will invest in stocks the Adviser believes to be
undervalued, there is no guarantee that the prices of these stocks will
not move even lower.
(BULLET) Convertible securities frequently have speculative characteristics
and may be acquired without regard to minimum quality ratings.
Convertible securities and obligations rated in the lowest of the top
four rating categories are subject to greater credit and interest rate
risk than higher rated securities.
(BULLET) The Fund may, for temporary defensive purposes, invest a
percentage of its total assets, without limitation, in cash or various
U.S. dollar-denominated money market instruments. The value of money
market instruments
4
<PAGE>
tends to fall when current interest rates rise. Money market instruments
are generally less sensitive to interest rate changes than longer-term
securities. When the Fund's assets are invested in these instruments, the
Fund may not be achieving its investment objective.
(BULLET) International investing is subject to special risks, including,
but not limited to, currency exchange rate volatility, political, social
or economic instability, and differences in taxation, auditing and other
financial practices.
(BULLET) The Fund may experience relatively large purchases or redemptions
due to asset allocation decisions made by the Adviser for clients
receiving asset allocation account management services involving
investments in the Fund. These transactions may have a material effect on
the Fund, since redemptions caused by reallocations may result in the
Fund selling portfolio securities it might not otherwise sell, resulting
in a higher portfolio turnover rate, and purchases caused by
reallocations may result in the Fund receiving additional cash that will
remain uninvested until additional securities can be purchased. The
Adviser will attempt to minimize the effects of these transactions at all
times.
(BULLET) The Fund could be affected if the computer systems on which it
relies do not properly process information beginning on January 1, 2000.
While Year 2000 issues could have a negative effect on the Fund, the
Adviser is currently working to avoid such problems. The Adviser is also
working with the Fund's other service providers and vendors to determine
their systems' ability to handle Year 2000 problems. There is no
guarantee that the systems will work properly on January 1, 2000. Year
2000 problems may also hurt issuers whose securities the Fund holds or
securities markets generally.
PRIOR PERFORMANCE
ANNUAL TOTAL RETURNS AS OF DECEMBER 31
The bar chart below shows the variability of the annual total returns for
the Investor Class of the Fund for the last two calendar years. The bar chart
provides some indication of the risks of investing in the Fund by showing
changes in the performance of the Fund's Investor Class from year to year. Past
performance is not necessarily an indicator of how the Fund will perform in the
future.
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
1997 1998
------ -------
28.34% (0.77%)
Since inception (January 16, 1997), the highest calendar quarter total
return for the Investor Class of the Fund was 15.30% (quarter ended June 30,
1998) and the lowest calendar quarter total return was (16.07)% (quarter ended
September 30, 1998). The total return was (10.98)% for the calendar nine months
ended September 30, 1999.
5
<PAGE>
AVERAGE ANNUAL TOTAL RETURNS -- COMPARISON
The table below shows how the Fund's average annual total returns for the
past one calendar year and since inception, with respect to the Investor Class,
compare with the Standard & Poor's 500 Composite Stock Price Index (the "S&P 500
Index") for the same periods. The S&P 500 Index is an unmanaged index composed
of 500 common stocks, most of which are listed on the New York Stock Exchange.
The S&P 500 Index assigns relative values to the stocks included in the index,
weighted accordingly to each stock's total market value relative to the total
market value of the other stocks included in the index. The table, like the bar
chart, provides some indication of the risks of investing in the Fund by showing
how the Fund's average annual total returns for 1 year and since inception
compare with those of a broad measure of market performance. Past performance is
not necessarily an indicator of how the Fund will perform in the future.
AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31
----------------------------------------------
1 YEAR SINCE INCEPTION
------- ------------------
Investor Class (.77)% 13.14%*
S&P 500 Index 28.57% 28.55%
*Commenced operations on January 16, 1997.
EXPENSES AND FEES
Fund investors pay various expenses, either directly or indirectly. The
purpose of the following table and example is to describe the fees and expenses
that you may pay if you buy and hold shares of the Investor Class of the Fund.
The table is based on expenses for the Investor Class of the Fund for the most
recent fiscal year ended August 31, 1999.
INVESTOR CLASS
--------------
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from Fund assets)
Management fees ...................................... 0.75%
Distribution (12b-1) fees ............................ 0.25%
Other expenses(1) .................................... 0.52%
----
Total annual Fund operating expenses ............. 1.52%
Fee waivers(2) ....................................... 0.30%
----
Net expenses ......................................... 1.22%
====
(1) "Other expenses" include audit, administration, custody, legal,
registration, transfer agency and miscellaneous other charges for the
Investor Class.
(2) The Adviser has agreed that until December 31, 2000, it will waive
advisory fees and reimburse expenses to the extent that total annual
Fund operating expenses exceed 1.22%.
6
<PAGE>
EXAMPLE
The example is intended to help you compare the cost of investing in the
Investor Class of the Fund with the cost of investing in other mutual funds. The
example assumes that you invest $10,000 in the Investor Class of the Fund for
the time periods indicated and then redeem all of your shares at the end of each
period. The example also assumes that your investment has a 5% return each year
and that the operating expenses of the Investor Class of the Fund remain the
same, except for the expiration of the fee waivers and reimbursements on
December 31, 2000. Although your actual costs may be higher or lower, based on
these assumptions your cost would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
$124 $451 $801 $1,787
7
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The table below sets forth certain financial information for the periods
indicated, including per share information results for a single Fund share. The
term "Total Return" indicates how much your investment would have increased or
decreased during this period of time and assumes that you have reinvested all
dividends and distributions. This information has been derived from the Fund's
financial statements audited by PricewaterhouseCoopers LLP, the Company's
independent accountants. This information should be read in conjunction with the
Fund's financial statements which, together with the report of independent
accountants, are included in the Fund's annual report, which is available upon
request (see back cover for ordering instructions).
<TABLE>
<CAPTION>
LARGE CAP VALUE FUND
----------------------------------------------
FOR THE FOR THE FOR THE PERIOD
YEAR ENDED YEAR ENDED JANUARY 16, 1997*
AUGUST 31, AUGUST 31, THROUGH AUGUST 31,
1999 1998 1997
---------- ---------- ------------------
INVESTOR INVESTOR INVESTOR
CLASS CLASS CLASS
---------- ---------- ------------------
<S> <C> <C> <C>
Per Share Operating Performance**
Net asset value, beginning of period .............................. $ 10.70 $ 12.45 $ 10.20
------- ------- -------
Net investment income/(loss) (1) .................................. 0.15 0.06 0.02
Net realized and unrealized gain/(loss) on investments (2) ........ 1.65 (1.27) 2.23
------- ------- -------
Net increase/(decrease) in net assets resulting from operations. .. 1.80 (1.21) 2.25
------- ------- -------
Dividends to shareholders from:
Net investment income ............................................. (0.03) (0.06) --
Net realized capital gains ........................................ (0.11) (0.48) --
------- ------- -------
Total dividends and distributions to shareholders ................. (0.14) (0.54) --
------- ------- -------
Net asset value, end of period .................................... $ 12.36 $ 10.70 $ 12.45
======= ======= =======
Total investment return (3) ....................................... 16.86% (10.28%) 22.06%
======= ======= =========
Ratios/Supplemental Data
Net assets, end of period (000's omitted) ...................... $ 1,637 $ 6,150 $ 683
Ratio of expenses to average net assets (1) .................... 1.25% 1.19% 1.11%(4)
Ratio of expenses to average net assets without
waivers and expense reimbursements ........................... 1.55% 1.74% 3.05%(4)
Ratio of net investment income to average net assets (1) ....... 0.36% 0.68% 0.91%(4)
Portfolio turnover rate ........................................ 156.16% 111.68% 67.16%
</TABLE>
- --------------
* Commencement of operations.
** Calculated based on shares outstanding on the first and last day of the
respective periods, except for dividends and distributions, if any, which
are based on actual shares outstanding on the dates of distributions.
(1) Reflects waivers and reimbursements.
(2) The amount shown for a share outstanding throughout the period is not in
accord with the change in the aggregate gains and losses in investments
during the period because of the timing of sales and repurchases of Fund
shares in relation to fluctuating net asset value during the period.
(3) Total return is not annualized.
(4) Annualized.
8
<PAGE>
BOSTON PARTNERS MID CAP VALUE FUND
- --------------------------------------------------------------------------------
================================================================================
IMPORTANT DEFINITIONS
EQUITY SECURITY: A security, such as a stock, representing ownership of a
company. Bonds, in comparison, are referred to as fixed-income or debt
securities because they represent indebtedness to the bondholder, not ownership.
MARKET CAPITALIZATION: Market capitalization refers to the market value of a
company and is calculated by multiplying the number of shares outstanding by the
current price per share.
VALUE CHARACTERISTICS: Stocks are generally divided into the categories of
"growth" or "value." Value stocks appear to the Adviser to be undervalued by the
market as measured by certain financial formulas. Growth stocks appear to the
Adviser to have earnings growth potential that is greater than the market in
general, and whose growth in revenue is expected to continue for an extended
period of time.
EARNINGS GROWTH: The increased rate of growth in a company's earnings per share
from period to period. Security analysts attempt to identify companies with
earnings growth potential because a pattern of earnings growth generally causes
share prices to increase.
================================================================================
INVESTMENT GOALS
The Fund seeks to provide long-term growth of capital primarily through
investment in equity securities. Current income is a secondary goal.
PRIMARY INVESTMENT STRATEGIES
The Fund pursues its goal by investing, under normal market conditions, at
least 65% of its total assets in a diversified portfolio consisting primarily of
equity securities, such as common stocks of issuers with a market capitalization
of between $200 million and $6 billion and identified by Boston Partners Asset
Management L.P. (the "Adviser") as having value characteristics.
The Adviser examines various factors in determining the value
characteristics of such issuers including price to book value ratios and price
to earnings ratios. These value characteristics are examined in the context of
the issuer's operating and financial fundamentals such as return on equity, and
earnings growth and cash flow. The Adviser selects securities for the Fund based
on a continuous study of trends in industries and companies, earnings power and
growth and other investment criteria.
The Fund may also invest up to 20% of its total assets in non U.S.
dollar-denominated securities.
In general, the Fund's investments are broadly diversified over a number of
industries and, as a matter of policy, the Fund is limited to investing a
maximum of 25% of its total assets in any one industry.
While the Adviser intends to fully invest the Fund's assets at all times in
accordance with the above-mentioned policies, the Fund reserves the right to
hold up to 100% of its assets, as a temporary defensive measure, in cash and
eligible U.S. dollar-denominated money market instruments. The Adviser will
determine when market conditions warrant temporary defensive measures.
KEY RISKS
(BULLET) At least 65% of the Fund's total assets will be invested under
normal market conditions in a diversified portfolio of equity securities,
and the net asset value ("NAV") of the Fund will change with changes in
the market value of its portfolio positions.
(BULLET) Investors may lose money.
(BULLET) The Fund may, for temporary defensive purposes, invest a
percentage of its total assets, without limitation, in cash or various
U.S. dollar-denominated money market instruments. The value of money
market instruments tends to fall when current interest rates rise. Money
market instuments are generally less sensitive to interest rate changes
than longer-term securities. When the Fund's assets are invested in these
instruments, the Fund may not be achieving its investment objective.
9
<PAGE>
(BULLET) Although the Fund will invest in stocks the Adviser believes to be
undervalued, there is no guarantee that the prices of these stocks will
not move even lower.
(BULLET) International investing is subject to special risks, including,
but not limited to, currency exchange rate volatility, political, social
or economic instability, and differences in taxation, auditing and other
financial practices.
(BULLET) The Fund could be affected if the computer systems on which it
relies do not properly process information beginning on January 1, 2000.
While Year 2000 issues could have a negative effect on the Fund, the
Adviser is currently working to avoid such problems. The Adviser is also
working with the Fund's other service providers and vendors to determine
their systems' ability to handle Year 2000 problems. There is no
guarantee that the systems will work properly on January 1, 2000. Year
2000 problems may also hurt issuers whose securities the Fund holds or
securities markets generally.
PRIOR PERFORMANCE
ANNUAL TOTAL RETURNS AS OF DECEMBER 31
The bar chart below shows the total return for the Investor Class of the
Fund during its first full calendar year. Past performance is not necessarily an
indicator of how the Fund will perform in the future.
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
1998
-------
(2.20%)
Since inception (June 2, 1997), the highest calendar quarter total return
for the Investor Class of the Fund was 13.64% (quarter ended March 31, 1998) and
the lowest calendar quarter total return was (20.89)% (quarter ended September
30, 1998). The total return was (10.20)% for the nine months ended September 30,
1999.
10
<PAGE>
AVERAGE ANNUAL TOTAL RETURNS -- COMPARISON
The table below shows how the Fund's average annual total returns for the
past one calendar year and since inception, with respect to the Investor Class,
compare with the Russell 2500 Index for the same periods. The Russell 2500 Index
is an unmanaged index (with no defined investment objective) of common stocks,
includes reinvestment of dividends and is a registered trademark of the Frank
Russell Corporation. The table, like the bar chart, provides some indication of
the risks of investing in the Fund by showing how the Fund's average annual
total returns for 1 year and since inception compare with those of a broad
measure of market performance. Past performance is not necessarily an indicator
of how the Fund will perform in the future.
AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31
----------------------------------------------
1 YEAR SINCE INCEPTION
------ ---------------
Investor Class (2.20)% 8.20%*
Russell 2500 Index 0.38% 10.32%
*Commenced operations on June 2, 1997.
EXPENSES AND FEES
Fund investors pay various expenses, either directly or indirectly. The
purpose of the following table and example is to describe the fees and expenses
that you may pay if you buy and hold shares of the Investor Class of the Fund.
The table is based on expenses for the Investor Class of the Fund for the most
recent fiscal year ended August 31, 1999.
INVESTOR CLASS
--------------
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted
from Fund assets)
Management fees ............................................. 0.80%
Distribution (12b-1) fees ................................... 0.25%
Other expenses(1) ........................................... 0.42%
----
Total annual Fund operating expenses .................... 1.47%
Fee waivers(2) .............................................. 0.25%
----
Net expenses ................................................ 1.22%
====
(1) "Other expenses" include audit, administration, custody, legal,
registration, transfer agency and miscellaneous other charges for the
Investor Class.
(2) The Adviser has agreed that until December 31, 2000, it will waive
advisory fees and reimburse expenses to the extent that total annual
Fund operating expenses exceed 1.22%.
EXAMPLE
The example is intended to help you compare the cost of investing in the
Investor Class of the Fund with the cost of investing in other mutual funds. The
example assumes that you invest $10,000 in the Investor Class of the Fund for
the time periods indicated and then redeem all of your shares at the end of each
period. The example also assumes that your investment has a 5% return each year
and that the operating expenses of the Investor Class of the Fund remain the
same, except for the expiration of the fee waivers and reimbursements on
December 31, 2000. Although your actual costs may be higher or lower, based on
these assumptions your cost would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
$124 $440 $779 $1,736
11
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The table below sets forth certain financial information for the periods
indicated, including per share information results for a single Fund share. The
term "Total Return" indicates how much your investment would have increased or
decreased during this period of time and assumes that you have reinvested all
dividends and distributions. This information has been derived from the Fund's
financial statements audited by PricewaterhouseCoopers LLP, the Company's
independent accountants. This information should be read in conjunction with the
Fund's financial statements which, together with the report of independent
accountants, are included in the Fund's annual report, which is available upon
request (see back cover for ordering instructions).
<TABLE>
<CAPTION>
MID CAP VALUE FUND
---------------------------------------------
FOR THE FOR THE FOR THE PERIOD
YEAR ENDED YEAR ENDED JUNE 2, 1997*
AUGUST 31, AUGUST 31, THROUGH AUGUST 31,
1999 1998 1997
---------- ---------- ------------------
INVESTOR INVESTOR INVESTOR
CLASS CLASS CLASS
---------- ---------- ------------------
<S> <C> <C> <C>
Per Share Operating Performance**
Net asset value, beginning of period ................................ $ 9.42 $ 11.01 $ 10.00
------- ------- -------
Net investment income/(loss) (1) .................................... (0.01) 0.01 0.01
Net realized and unrealized gain/(loss) on investments (2) .......... 1.97 (1.38) 1.00
------- ------- -------
Net increase/(decrease) in net assets resulting from operations. .... 1.96 (1.37) 1.01
------- ------- -------
Dividends to shareholders from:
Net investment income ............................................... -- (0.01) --
Net realized capital gains .......................................... -- (0.21) --
------- ------- -------
Total dividends and distributions to shareholders ................... -- (0.22) --
------- ------- -------
Net asset value, end of period ...................................... $ 11.38 $ 9.42 $ 11.01
======= ======= =======
Total investment return (3) ......................................... 20.81% (12.77%) 10.10%
======= ======= =======
Ratios/Supplemental Data
Net assets, end of period (000's omitted) ........................ $ 2,762 $ 1,828 $ 598
Ratio of expenses to average net assets (1) ...................... 1.25% 1.15% 1.10%(4)
Ratio of expenses to average net assets without
waivers and expense reimbursements ............................. 1.50% 1.82% 12.62%(4)
Ratio of net investment income to average net assets (1) ......... 0.01% (0.02%) 0.61%(4)
Portfolio turnover rate .......................................... 200.09% 167.86% 21.80%
</TABLE>
- ------------
* Commencement of operations.
** Calculated based on shares outstanding on the first and last day of the
respective periods, except for dividends and distributions, if any, which
are based on actual shares outstanding on the dates of distributions.
(1) Reflects waivers and reimbursements.
(2) The amount shown for a share outstanding throughout the period is not in
accord with the change in the aggregate gains and losses in investments
during the period because of the timing of sales and repurchases of Fund
shares in relation to fluctuating net asset value during the period.
(3) Total return is not annualized.
(4) Annualized.
12
<PAGE>
BOSTON PARTNERS MICRO CAP VALUE FUND
- --------------------------------------------------------------------------------
================================================================================
IMPORTANT DEFINITIONS
EQUITY SECURITY: A security, such as a stock, representing ownership of a
company. Bonds, in comparison, are referred to as fixed-income or debt
securities because they represent indebtedness to the bondholder, not ownership.
MARKET CAPITALIZATION: Market capitalization refers to the market value of a
company and is calculated by multiplying the number of shares outstanding by the
current price per share.
VALUE CHARACTERISTICS: Stocks are generally divided into the categories of
"growth" or "value." Value stocks appear to the Adviser to be undervalued by the
market as measured by certain financial formulas. Growth stocks appear to the
Adviser to have earnings growth potential that is greater than the market in
general, and whose growth in revenue is expected to continue for an extended
period of time.
EARNINGS GROWTH: The increased rate of growth in a company's earnings per share
from period to period. Security analysts attempt to identify companies with
earnings growth potential because a pattern of earnings growth generally causes
share prices to increase.
ADRS AND EDRS: Receipts typically issued by a United States bank or trust
company evidencing ownership of underlying foreign securities.
================================================================================
INVESTMENT GOALS
The Fund seeks long-term growth of capital primarily through investment in
equity securities. Current income is a secondary objective.
PRIMARY INVESTMENT STRATEGIES
The Fund pursues its goal by investing, under normal market conditions, at
least 65% of its total assets in a diversified portfolio consisting primarily of
equity securities of issuers with market capitalizations that do not exceed $500
million when purchased by the Fund and identified by Boston Partners Asset
Management L.P. (the "Adviser") as having value characteristics.
The Fund generally invests in the equity securities of small companies. The
Adviser will seek to invest in companies it considers to be well managed and to
have attractive fundamental financial characteristics. The Adviser believes
greater potential for price appreciation exists among small companies since they
tend to be less widely followed by other securities analysts and thus may be
more likely to be undervalued by the market. The Fund may invest from time to
time a portion of its assets, not to exceed 35% (under normal conditions) at the
time of purchase, in companies with considerably larger market capitalizations.
The Adviser examines various factors in determining the value
characteristics of such issuers including price to book value ratios and price
to earnings ratios. These value characteristics are examined in the context of
the issuer's operating and financial fundamentals such as return on equity,
earnings growth and cash flow. The Adviser selects securities for the Fund based
on a fundamental analysis of industries and companies, earnings power and growth
and other investment criteria.
The Fund may invest up to 25% of its total assets in equity securities of
foreign issuers, including American Depository Receipts ("ADRs") and European
Depository Receipts ("EDRs").
In general, the Fund's investments are broadly diversified over a number of
industries and, as a matter of policy, the Fund is limited to investing a
maximum of 25% of its total assets in any one industry.
While the Adviser intends to fully invest the Fund's assets at all times in
accordance with the above-mentioned policies, the Fund reserves the right to
hold up to 100% of its assets, as a temporary defensive measure, in cash and
eligible U.S. dollar-denominated money market instruments. The Adviser will
determine when market conditions warrant temporary defensive measures.
13
<PAGE>
KEY RISKS
(BULLET) At least 65% of the Fund's total assets will be invested in a
diversified portfolio of equity securities, and the net asset value
("NAV") of the Fund will change with changes in the market value of its
portfolio positions.
(BULLET) Investors may lose money.
(BULLET) Although the Fund will invest in stocks the Adviser believes to be
undervalued, there is no guarantee that the prices of these stocks will
not move even lower.
(BULLET) The Fund will invest in smaller issuers which are more volatile
than investments in issuers with a market capitalization greater than
$500 million. Small market capitalization issuers are not as diversified
in their business activities as issuers with market values greater than
$500 million and are more susceptible to changes in the business cycle.
(BULLET) The equity securities in which the Fund invests will often be
traded only in the over-the-counter market or on a regional securities
exchange, may be listed only in the quotation service commonly known as
the "pink sheets," and may not be traded every day or in the volume
typical of trading on a national securities exchange. These equity
securities may also be subject to wide fluctuations in market value. The
trading market for any given equity security may be sufficiently small as
to make it difficult for the Fund to dispose of a substantial block of
such equity securities. The sale by the Fund of portfolio securities to
meet redemptions may require the Fund to sell these securities at a
discount from market prices or during periods when, in the Adviser's
judgement, such sale is not desirable. Moreover, the lack of an efficient
market for these securities may make them difficult to value.
(BULLET) International investing is subject to special risks, including,
but not limited to, currency exchange rate volatility, political, social
or economic instability, and differences in taxation, auditing and other
financial practices.
(BULLET) If the Fund frequently trades its portfolio securities, the Fund
will incur higher brokerage commissions and transaction costs, which
could lower the Fund's performance. In addition to lower performance,
high portfolio turnover could result in taxable capital gains. The annual
portfolio turnover rate for the Fund is not expected to exceed 150%,
however, it may be higher if the Adviser believes it will improve the
Fund's performance.
(BULLET) The Fund may, for temporary defensive purposes, invest a
percentage of its total assets, without limitation, in cash or various
U.S. dollar-denominated money market instruments. 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. When the Fund's assets are invested in these
instruments, the Fund may not be achieving its investment objective.
(BULLET) The Fund could be affected if the computer systems on which it
relies do not properly process information beginning on January 1, 2000.
While Year 2000 issues could have a negative effect on the Fund, the
Adviser is currently working to avoid such problems. The Adviser is also
working with the Fund's other service providers and vendors to determine
their systems' ability to handle Year 2000 problems. There is no
guarantee that the systems will work properly on January 1, 2000. Year
2000 problems may also hurt issuers whose securities the Fund holds or
securities markets generally.
14
<PAGE>
EXPENSES AND FEES
Fund investors pay various expenses, either directly or indirectly. The
purpose of the following table and example is to describe the fees and expenses
that you may pay if you buy and hold shares of the Investor Class of the Fund.
The table is based upon expenses for the Investor Class of the Fund for the most
recent fiscal year ended August 31, 1999.
INVESTOR CLASS
--------------
SHAREHOLDER FEES (fees paid directly from your investment)
Maximum sales charge imposed on purchases .................. None
Maximum deferred sales charge .............................. None
Maximum sales charge imposed on reinvested dividends ....... None
Redemption Fee(1) .......................................... 1.00%
Exchange Fee ............................................... None
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted
from Fund assets)
Management fees ............................................ 1.25%
Distribution (12b-1) fees .................................. 0.25%
Other expenses(2) .......................................... 16.56%
-----
Total annual Fund operating expenses ................... 18.06%
Fee waivers and expense reimbursements(3) .................. 16.29%
-----
Net expenses ............................................... 1.77%
======
(1) To prevent the Fund from being adversely affected by the transaction
costs associated with short-term shareholder transactions, the Fund
will redeem shares at a price equal to the net asset value of the
shares, less an additional transaction fee equal to 1.00% of the net
asset value of all such shares redeemed that have been held for less
than one year. Such fees are not sales charges or contingent deferred
sales charges, but are retained by the Fund for the benefit of all
shareholders.
(2) "Other expenses" include audit, administration, custody, legal,
registration, transfer agency and miscellaneous other charges for the
Investor Class.
(3) The Adviser has agreed that until December 31, 2000, it will waive
advisory fees and reimburse expenses to the extent that total annual
Fund operating expenses exceed 1.77%.
EXAMPLE
The example is intended to help you compare the cost of investing in the
Investor Class of the Fund with the cost of investing in other mutual funds. The
example assumes that you invest $10,000 in the Investor Class of the Fund for
the time periods indicated and then redeem all of your shares at the end of each
period. The example also assumes that your investment has a 5% return each year
and that the operating expenses of the Investor Class of the Fund remain the
same, except for the expiration of the fee waivers and reimbursements on
December 31, 2000. Although your actual costs may be higher or lower, based on
these assumptions your cost would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
$180 $3,437 $5,900 $9,736
15
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The table below sets forth certain financial information for the periods
indicated, including per share information results for a single Fund share. The
term "Total Return" indicates how much your investment would have increased or
decreased during this period of time and assumes that you have reinvested all
dividends and distributions. This information has been derived from the Fund's
financial statements audited by PricewaterhouseCoopers LLP, the Company's
independent accountants. This information should be read in conjunction with the
Fund's financial statements which, together with the report of independent
accountants, are included in the Fund's annual report, which is available upon
request (see back cover for ordering instructions).
<TABLE>
<CAPTION>
MICRO CAP VALUE FUND
-----------------------------------
FOR THE FOR THE PERIOD
YEAR ENDED JULY 1, 1998*
AUGUST 31, THROUGH AUGUST 31,
1999 1998
-------------- ------------------
INVESTOR CLASS INVESTOR CLASS
-------------- ------------------
<S> <C> <C>
Per Share Operating Performance**
Net asset value, beginning of period ...................................... $ 7.63 $ 10.00
------ -------
Net investment income/(loss) (1) .......................................... (0.02) (0.01)
Net realized and unrealized gain/(loss) on investments (2) ................ 1.04 (2.36)
------ -------
Net increase/(decrease) in net assets resulting from operations. .......... 1.02 (2.37)
------ -------
Dividends to shareholders from:
Net investment income ..................................................... -- --
Net realized capital gains ................................................ -- --
------ -------
Total dividends and distributions to shareholders ......................... -- --
------ -------
Net asset value, end of period ............................................ $ 8.65 $ 7.63
====== =======
Total investment return (3) (5) ........................................... 13.37% (23.70%)
====== =======
Ratios/Supplemental Data
Net assets, end of period (000's omitted) .............................. $ 293 $ 129
Ratio of expenses to average net assets (1) ............................ 1.80% 1.80%(4)
Ratio of expenses to average net assets without waivers and
expense reimbursements ............................................... 18.09% 18.61%(4)
Ratio of net investment income to average net assets (1) ............... (0.42%) (0.66%)(4)
Portfolio turnover rate ................................................ 87.48% 11.97%
</TABLE>
- -------------
* Commencement of operations.
** Calculated based on shares outstanding on the first and last day of the
respective periods, except for dividends and distributions, if any, which
are based on actual shares outstanding on the dates of distributions.
(1) Reflects waivers and reimbursements.
(2) The amount shown for a share outstanding throughout the period is not in
accord with the change in the aggregate gains and losses in investments
during the period because of the timing of sales and repurchases of Fund
shares in relation to fluctuating net asset value during the period.
(3) Total return is not annualized.
(4) Annualized.
(5) Redemption fee of 1.00% is not reflected in total return calculations.
16
<PAGE>
BOSTON PARTNERS BOND FUND
- --------------------------------------------------------------------------------
================================================================================
IMPORTANT DEFINITIONS
TOTAL RETURN: A way of measuring Fund performance. Total return is based on a
calculation that takes into account income dividends, capital gain distributions
and the increase or decrease in share price.
FIXED-INCOME SECURITIES: Fixed-income securities are generally bonds, which are
a type of security that functions like a loan. Bonds are "IOUs" issued by
private companies, municipalities or government agencies. By comparison, when
you buy a stock, you are buying ownership in a company. With a bond, your "loan"
is for a specific period, usually 5 to 30 years. You receive regular interest
payments at a fixed rate. Hence the term "fixed-income" security.
INVESTMENT-GRADE FIXED-INCOME SECURITIES: Securities which are rated at the time
of purchase "AAA," "AA," "A," or "BBB" by S&P, "Aaa," "Aa," "A" or "Baa" by
Moody's or which are similarly rated by another Rating Organization or are
unrated but deemed by the Adviser to be comparable in quality to instruments
that are so rated. Debt securities rated "BBB" by S&P, "Baa" by Moody's or the
equivalent rating of another Rating Organization, while still deemed
investment-grade, are considered to have speculative characteristics and are
more sensitive to economic change than higher rated bonds.
CORPORATE DEBT OBLIGATIONS: A long-term bond issued by a corporation, including
railroads and public utilities.
MORTGAGE-BACKED SECURITIES: Pools of mortgage loans assembled for sale to
investors by various governmental agencies as well as by private issuers.
ASSET-BACKED SECURITIES: Pools of assets, usually loans such as installment sale
contracts or credit card receivables, assembled for sale by private issuers.
MATURITY: The date on which an investor in a fixed income security will be paid
in full by the issuer.
================================================================================
INVESTMENT GOALS
The Fund seeks to maximize total return by investing principally in
investment grade fixed-income securities. Current income is a secondary goal.
PRIMARY INVESTMENT STRATEGIES
The Fund invests (during normal market conditions) at least 75% of its
total assets 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 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.
KEY RISKS
(BULLET) The net asset value ("NAV") of the Fund will change with changes
in the market value of its portfolio positions.
(BULLET) Investors may lose money.
(BULLET) The Fund is subject to interest rate risk. Rising interest rates
cause the prices of fixed-income securities to decrease and falling
interest rates cause the prices of fixed-income securities to increase.
Securities with longer maturities can be more sensitive to interest rate
changes. In effect, the longer the maturity of a security, the greater
the impact a change in interest rates could have on the security's price.
(BULLET) High yield, high risk fixed-income securities have a greater risk
of default in the payment of interest and principal than higher rated
securities and are subject to significant changes in price. Investment by
the Fund in such securities involves a high degree of credit risk and
such securities are regarded as speculative by the major rating agencies.
(BULLET) If the Fund frequently trades its portfolio securities, the Fund
will incur higher brokerage commissions and transaction costs, which
could lower the Fund's performance. In addition to lower performance,
high
17
<PAGE>
portfolio turnover could result in taxable capital gains. The annual
portfolio turnover rate for the Fund is not expected to exceed 100%,
however, it may be higher if the Adviser believes it will improve the
Fund's performance.
(BULLET) The Fund may experience relatively large purchases or redemptions
due to asset allocation decisions made by the Adviser for clients
receiving asset allocation account management services involving
investments in the Fund. These transactions may have a material effect on
the Fund, since redemptions caused by reallocations may result in the
Fund selling portfolio securities it might not otherwise sell, resulting
in a higher portfolio turnover rate, and purchases caused by
reallocations may result in the Fund receiving additional cash that will
remain uninvested until additional securities can be purchased. The
Adviser will attempt to minimize the effects of these transactions at all
times.
(BULLET) The Fund could be affected if the computer systems on which it
relies do not properly process information beginning on January 1, 2000.
While Year 2000 issues could have a negative effect on the Fund, the
Adviser is currently working to avoid such problems. The Adviser is also
working with the Fund's other service providers and vendors to determine
their systems' ability to handle Year 2000 problems. There is no
guarantee that the systems will work properly on January 1, 2000. Year
2000 problems may also hurt issuers whose securities the Fund holds or
securities markets generally.
PRIOR PERFORMANCE
ANNUAL TOTAL RETURNS AS OF DECEMBER 31
The bar chart below shows the total return for the Investor Class of the
Fund during its first full calendar year. Past performance is not necessarily an
indicator of how the Fund will perform in the future.
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
7.09%
-----
1998
Since inception (December 30, 1997), the highest calendar quarter total
return for the Investor Class of the Fund was 2.42% (quarter ended September 30,
1998) and the lowest calendar quarter total return was (.58)% (quarter ended
March 31, 1999). The total return was (.14)% for the nine months ended September
30, 1999.
18
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
AVERAGE ANNUAL TOTAL RETURNS -- COMPARISON
The table below shows how the Fund's average annual total returns for the
past one calendar year and since inception, with respect to the Investor Class,
compare with the Lehman Brothers Aggregate Index for the same periods. The
Lehman Brothers Aggregate Index is an unmanaged index containing fixed-income
securities rated investment grade or higher by Moody's, S&P or Fitch Investors
Service. All issues have at least one year to maturity and an outstanding par
value of at least $100 million. The Lehman Brothers Aggregate Index is a
registered trademark of Lehman Brothers, Inc. The table, like the bar chart,
provides some indication of the risks of investing in the Fund by showing how
the Fund's average annual total returns for 1 year and since inception compare
with those of a broad measure of market performance. Past performance is not
necessarily an indicator of how the Fund will perform in the future.
AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31
----------------------------------------------
1 YEAR SINCE INCEPTION
------ --------------
Investor Class 7.09% 7.16%*
Lehman Aggregate Index 8.69% 8.64%
*Commenced operations on December 30, 1997.
EXPENSES AND FEES
Fund investors pay various expenses, either directly or indirectly. The
purpose of the following table and example is to describe the fees and expenses
that you may pay if you buy and hold shares of the Investor Class of the Fund.
The table is based upon expenses for the Investor Class of the Fund for the most
recent fiscal year ended August 31, 1999.
INVESTOR CLASS
--------------
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted
from Fund assets)
Management fees ............................................ 0.40%
Distribution (12b-1) fees .................................. 0.25%
Other expenses(1) .......................................... 1.79%
----
Total annual Fund operating expenses ................... 2.44%
Fee waivers and expense reimbursements(2) .................. 1.62%
----
Net expenses ............................................... 0.82%
====
(1)"Other expenses" include audit, administration, custody, legal,
registration, transfer agency and miscellaneous other charges for the
Investor Class.
(2) The Adviser has agreed that until December 31, 2000, it will waive
advisory fees and reimburse expenses to the extent that total annual
Fund operating expenses exceed .82%.
EXAMPLE
The example is intended to help you compare the cost of investing in the
Investor Class of the Fund with the cost of investing in other mutual funds. The
example assumes that you invest $10,000 in the Investor Class of the Fund for
the time periods indicated and then redeem all of your shares at the end of each
period. The example also assumes that your investment has a 5% return each year
and that the operating expenses of the Investor Class of the Fund remain the
same, except for the expiration of the fee waivers and reimbursements on
December 31, 2000. Although your actual costs may be higher or lower, based on
these assumptions your cost would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
$84 $605 $1,154 $2,653
19
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The table below sets forth certain financial information for the periods
indicated, including per share information results for a single Fund share. The
term "Total Return" indicates how much your investment would have increased or
decreased during this period of time and assumes that you have reinvested all
dividends and distributions. This information has been derived from the Fund's
financial statements audited by PricewaterhouseCoopers LLP, the Company's
independent accountants. This information should be read in conjunction with the
Fund's financial statements which, together with the report of independent
accountants, are included in the Fund's annual report, which is available upon
request (see back cover for ordering instructions).
<TABLE>
<CAPTION>
BOND FUND
-------------------------------------
FOR THE FOR THE PERIOD
YEAR ENDED DECEMBER 30, 1997*
AUGUST 31, THROUGH AUGUST 31,
1999 1998
---------- ------------------
INVESTOR INVESTOR
CLASS CLASS
---------- ------------------
<S> <C> <C>
Per Share Operating Performance**
Net asset value, beginning of period ...................................... $10.10 $10.00
------ ------
Net investment income/(loss) (1) .......................................... 0.93 0.62
Net realized and unrealized gain/(loss) on investments (2) ................ (0.90) (0.16)
------ ------
Net increase/(decrease) in net assets resulting from operations ........... 0.03 0.46
------ ------
Dividends to shareholders from:
Net investment income ..................................................... (0.55) (0.36)
Net realized capital gains ................................................ (0.11) --
------ ------
Total dividends and distributions to shareholders ......................... (0.66) (0.36)
------ ------
Net asset value, end of period ............................................ $ 9.47 $10.10
====== ======
Total investment return (3) ............................................... 0.17% 4.63%
====== ======
Ratios/Supplemental Data
Net assets, end of period (000's omitted) .............................. $ 188 $ 198
Ratio of expenses to average net assets (1) ............................ 0.85% 0.85%(4)
Ratio of expenses to average net assets without waivers and
expense reimbursements ............................................... 2.47% 2.72%(4)
Ratio of net investment income to average net assets (1) ............... 5.97% 5.83%(4)
Portfolio turnover rate ................................................ 57.60% 45.27%
</TABLE>
- ---------------
* Commencement of operations.
** Calculated based on shares outstanding on the first and last day of the
respective periods, except for dividends and distributions, if any, which
are based on actual shares outstanding on the dates of distributions.
(1) Reflects waivers and reimbursements.
(2) The amount shown for a share outstanding throughout the period is not in
accord with the change in the aggregate gains and losses in investments
during the period because of the timing of sales and repurchases of Fund
shares in relation to fluctuating net asset value during the period.
(3) Total return is not annualized.
(4) Annualized.
20
<PAGE>
BOSTON PARTNERS MARKET NEUTRAL FUND
- --------------------------------------------------------------------------------
================================================================================
IMPORTANT DEFINITIONS
MARKET NEUTRAL: Refers to a strategy of investing or engaging in transactions in
equity securities, while seeking to minimize the impact of movements in the
equity markets.
EQUITY SECURITY: A security, such as a stock, representing ownership of a
company. Bonds, in comparison, are referred to as fixed-income or debt
securities because they represent indebtedness to the bondholder, not ownership.
TOTAL RETURN: A way of measuring Fund performance. Total return is based on a
calculation that takes into account income dividends, capital gain distributions
and the increase or decrease in share price.
SALOMON SMITH BARNEY U.S. 1-MONTH TREASURY BILL INDEX(TRADE MARK): An unmanaged
index containing monthly return equivalents of yield averages that are not
marked to market.
SHORT SALE: A sale by the Fund of a security which has been borrowed from a
third party on the expectation that the market price will drop. If the price of
the security drops, the Fund will make a profit by purchasing the security in
the open market at a lower price than the one at which it sold the security. If
the price of the security rises, the Fund may have to cover its short position
at a higher price than the short sale price, resulting in a loss.
SHORT-TERM CASH INSTRUMENTS: These temporary investments include notes issued or
guaranteed by the U.S. Government, its agencies or instrumentalities; commercial
paper rated in the two highest rating categories; certificates of deposit;
repurchase agreements and other high-grade corporate debt securities.
FEDERAL FUNDS RATE: The rate of interest charged by a Federal Reserve bank for
member banks to borrow their federally required reserve.
MARKET CAPITALIZATION: Market capitalization refers to the market value of a
company and is calculated by multiplying the number of shares outstanding by the
current price per share.
ADRS: Receipts typically issued by a United States bank or trust company
evidencing ownership of underlying foreign securities.
================================================================================
INVESTMENT GOALS
The Fund seeks long-term capital appreciation while minimizing exposure to
general equity market risk. The Fund seeks a total return greater than that of
the Salomon Smith Barney U.S. 1-Month Treasury Bill Index.(TRADE MARK)
PRIMARY INVESTMENT STRATEGIES
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 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 Fund's long and short positions may involve (without limit) equity
securities of foreign issuers that are traded in the markets of the United
States as sponsored American Depository Receipts ("ADRs"). The Fund may also
invest up to 20% of its total assets directly in equity securities of foreign
issuers.
To meet margin requirements, redemptions or pending investments, the Fund
may also temporarily hold a portion of its assets in full faith and credit
obligations of the United States government and in short-term notes, commercial
paper or other money market instruments.
While the Adviser intends to fully invest the Fund's assets at all times in
accordance with the above-mentioned policies, the Fund reserves the right to
hold up to 100% of its assets, as a temporary defensive measure, in cash and
eligible U.S. dollar-denominated money market instruments. The Adviser will
determine when market conditions warrant temporary defensive measures.
21
<PAGE>
KEY RISKS
(BULLET) The net asset value ("NAV") of the Fund will change with changes
in the market value of its portfolio positions.
(BULLET) Investors may lose money.
(BULLET) The Fund is subject to the risk of poor stock selection by the
Adviser. In other words, the Adviser may not be successful in its
strategy of taking long positions in undervalued stocks and short
positions in overvalued stocks. Further, since the Adviser will manage
both a long and a short portfolio, there is the risk that the Adviser may
make more poor investment decisions than an adviser of a typical stock
mutual fund with only a long portfolio may make.
(BULLET) Short sales of securities may result in gains if a security's
price declines, but may result in losses if a security's price does not
decline in price.
(BULLET) The Fund could lose money if a seller under a repurchase agreement
defaults or declares bankruptcy.
(BULLET) Securities held in a segregated account cannot be sold while the
position it is covering is outstanding, unless they are replaced with
similar securities. As a result, there is a possibility that segregation
of a large percentage of the Fund's assets could impede portfolio
management or the Fund's ability to meet redemption requests or other
current obligations.
(BULLET) The Fund may, for temporary defensive purposes, invest a
percentage of its total assets, without limitation, in cash or various
U.S. dollar-denominated money market instruments. 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. When the Fund's assets are invested in these
instruments, the Fund may not be achieving its investment objective.
(BULLET) The risks of international investing include, but are not limited
to, currency exchange rate volatility, political, social or economic
instability, and differences in taxation, auditing and other financial
practices.
(BULLET) If the Fund frequently trades its portfolio securities, the Fund
will incur higher brokerage commissions and transaction costs, which
could lower the Fund's performance. In addition to lower performance,
high portfolio turnover could result in taxable capital gains. The annual
portfolio turnover rate for the Fund is not expected to exceed 200%,
however, it may be higher if the Adviser believes it will improve the
Fund's performance.
(BULLET) The Fund could be affected if the computer systems on which it
relies do not properly process information beginning on January 1, 2000.
While Year 2000 issues could have a negative effect on the Fund, the
Adviser is currently working to avoid such problems. The Adviser is also
working with the Fund's other service providers and vendors to determine
their systems' ability to handle Year 2000 problems. There is no
guarantee that the systems will work properly on January 1, 2000. Year
2000 problems may also hurt issuers whose securities the Fund holds or
securities markets generally.
22
<PAGE>
EXPENSES AND FEES
Fund investors pay various expenses, either directly or indirectly. The
purpose of the following table and example is to describe the fees and expenses
that you may pay if you buy and hold shares of the Investor Class of the Fund.
The table is based on expenses for the Investor Class of the Fund for the period
November 17, 1998 (commencement of operations) through August 31, 1999.
INVESTOR CLASS
--------------
SHAREHOLDER FEES (fees paid directly from your investment)
Maximum sales charge imposed on purchases ................... None
Maximum deferred sales charge ............................... None
Maximum sales charge imposed on reinvested dividends ........ None
Redemption Fee(1) ........................................... 1.00%
Exchange Fee ................................................ None
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted
from Fund assets)
Management fees ............................................. 2.25%
Distribution (12b-1) fees ................................... 0.25%
Other expenses(2) ........................................... 24.08%
-----
Total annual Fund operating expenses .................... 26.58%
Fee waivers and expense reimbursements(3) ................... 23.41%
-----
Net expenses ................................................ 3.17%
-----
(1) To prevent the Fund from being adversely affected by the transaction
costs associated with short-term shareholder transactions, the Fund
will redeem shares at a price equal to the net asset value of the
shares, less an additional transaction fee equal to 1.00% of the net
asset value of all such shares redeemed that have been held for less
than one year. Such fees are not sales charges or contingent deferred
sales charges, but are retained by the Fund for the benefit of all
shareholders.
(2) "Other expenses" include audit, administration, custody, legal,
registration, transfer agency and miscellaneous other charges for the
Investor Class. "Other expenses" and "Total annual Fund operating
expenses" include dividends on securities which the Fund has sold short
("short-sale dividends"). Short-sale dividends generally reduce the
market value of the securities by the amount of the dividend declared
-- thus increasing the Fund's unrealized gain or reducing the Fund's
unrealized loss on the securities sold short. Short-sale dividends are
treated as an expense, and increase the Fund's total expense ratio,
although no cash is received or paid by the Fund. The amount of
short-sale dividends is estimated at 0.45% of average net assets for
the current fiscal year.
(3) The Adviser has agreed that until December 31, 2000, it will waive
advisory fees and reimburse expenses to the extent that total annual
Fund operating expenses exceed 2.72% (excluding short sale dividend
expenses).
EXAMPLE
The example is intended to help you compare the cost of investing in the
Investor Class of the Fund with the cost of investing in other mutual funds. The
example assumes that you invest $10,000 in the Investor Class of the Fund for
the time periods indicated and then redeem all of your shares at the end of each
period. The example also assumes that your investment has a 5% return each year
and that the operating expenses of the Investor Class of the Fund remain the
same, except for the expiration of the fee waivers and reimbursements on
December 31, 2000. Although your actual costs may be higher or lower, based on
these assumptions your cost would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
$320 $4,628 $7,277 $10,254
23
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The table below sets forth certain financial information for the periods
indicated, including per share information results for a single Fund share. The
term "Total Return" indicates how much your investment would have increased or
decreased during this period of time and assumes that you have reinvested all
dividends and distributions. This information has been derived from the Fund's
financial statements audited by PricewaterhouseCoopers LLP, the Company's
independent accountants. This information should be read in conjunction with the
Fund's financial statements which, together with the report of independent
accountants, are included in the Fund's annual report, which is available upon
request (see back cover for ordering instructions).
MARKET NEUTRAL FUND
-------------------
FOR THE PERIOD
NOVEMBER 17, 1998*
THROUGH AUGUST 31,
1999
-------------------
INVESTOR CLASS
-------------------
Per Share Operating Performance**
Net asset value, beginning of period $ 10.00
-------
Net investment income/(loss) (1) 0.06
Net realized and unrealized gain/(loss)
on investments (2) (0.63)
-------
Net increase/(decrease) in net assets
resulting from operations (0.57)
-------
Dividends to shareholders from:
Net investment income --
Net realized capital gains --
-------
Total dividends and distributions to shareholders --
-------
Net asset value, end of period $ 9.43
=======
Total investment return (3) (5) (5.70%)
=======
Ratios/Supplemental Data
Net assets, end of period (000's omitted) $ 231
Ratio of expenses to average net assets (1) 2.75%(4)(6)
Ratio of expenses to average net assets
without waivers and expense reimbursements 26.61%(4)(6)
Ratio of net investment income
to average net assets (1) 1.32%(4)
Portfolio turnover rate 218.41%
- -------------
* Commencement of operations.
** Calculated based on shares outstanding on the first and last day of the
respective periods, except for dividends and distributions, if any, which
are based on actual shares outstanding on the dates of distributions.
(1) Reflects waivers and reimbursements.
(2) The amount shown for a share outstanding throughout the period is not in
accord with the change in the aggregate gains and losses in investments
during the period because of the timing of sales and repurchases of Fund
shares in relation to fluctuating net asset value during the period.
(3) Total return is not annualized.
(4) Annualized.
(5) Redemption fee of 1.00% is not reflected in total return calculations.
(6) Without the voluntary waiver of advisory and administration fees, the ratios
of expenses to average net assets for the Investor Class would have been
26.61% (excluding dividend expense) and 27.02% (including dividend expense)
annualized for the period ended August 31, 1999.
24
<PAGE>
MANAGEMENT
- --------------------------------------------------------------------------------
INVESTMENT ADVISOR
Boston Partners Asset Management, L.P. (the "Adviser"), located at 28 State
Street, 21st Floor, Boston, Massachusetts 02109, provides investment advisory
services to the Funds. The Adviser provides investment management and investment
advisory services to investment companies and other institutional accounts. As
of October 31, 1999, the Adviser managed approximately $10.2 billion in assets.
The Adviser is organized as a Delaware limited partnership whose sole general
partner is Boston Partners, Inc., a Delaware corporation. The Adviser manages
each Fund's business and investment activities subject to the authority of the
Company's Board of Directors.
PORTFOLIO MANAGERS
BOSTON PARTNERS LARGE CAP VALUE FUND
The day-to-day portfolio management of the Fund is the responsibility of
Mark E. Donovan and Wayne S. Sharp who are senior portfolio managers of the
Adviser. Mr. Donovan is Chairperson of the Adviser's Equity Strategy Committee
which oversees the investment activities of the Adviser's $5.5 billion in large
cap value institutional equity assets. Prior to joining the Adviser in 1995, Mr.
Donovan was a Senior Vice President and Vice Chairman of The Boston Company
Asset Management, Inc.'s Equity Policy Committee. Mr. Donovan is a Chartered
Financial Analyst ("CFA") and has over fifteen years of investment experience.
Mr. Sharp is Vice Chairperson of the Adviser's Equity Strategy Committee and has
over twenty-one years of investment experience. Prior to joining the Adviser in
April 1995, Mr. Sharp was a Senior Vice President and member of the Equity
Policy Committee of The Boston Company Asset Management, Inc. Mr. Sharp is also
a CFA. For the fiscal year ended August 31, 1999, the Fund paid .60% (expressed
as a percentage of average net assets) to the Adviser for its services.
BOSTON PARTNERS MID CAP VALUE FUND
The day-to-day portfolio management of the Fund is the responsibility of
Wayne J. Archambo who is a senior portfolio manager of the Adviser and a member
of the Adviser's Equity Strategy Committee. Mr. Archambo oversees the investment
activities of the Adviser's $1.5 billion in mid-capitalization activities as
well as $1 billion in small capitalization activities. Prior to joining the
Adviser in April 1995, Mr. Archambo was employed by The Boston Company Asset
Management, Inc. from 1989 through April 1995 where he was a senior portfolio
manager. Mr. Archambo has over 15 years of investment experience and is a CFA.
For the fiscal year ended August 31, 1999, the Fund paid .70% (expressed as a
percentage of average net assets) to the Adviser for its services.
BOSTON PARTNERS MICRO CAP VALUE FUND
The day-to-day portfolio management of the Fund is the responsibility of
David M. Dabora and Wayne J. Archambo who are senior portfolio managers of the
Adviser. Prior to taking on day to day responsibilities for the Micro Cap Value
Fund, Mr. Dabora was an assistant portfolio manager/analyst of the premium
equity product of the Adviser, an all-cap value institutional product. Before
joining the Adviser in April 1995, Mr. Dabora had been employed by The Boston
Company Asset Management, Inc. since 1991 as a senior equity analyst. Mr. Dabora
has over 11 years of investment experience and is a CFA. 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.
25
<PAGE>
BOSTON PARTNERS BOND FUND
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 Glenn S. Davis, Joseph F.
Feeney, Jr. and Michael A. Mullaney. Mr. Davis is a Fixed Income Portfolio
Manager with the Adviser and is also a CFA. Prior to joining the Adviser in
April 1995, he was Vice President and Portfolio Manager at The Boston Company,
specializing in short and intermediate term corporate bonds. Prior to that
position, he was responsible for the Short-term Fixed Income Group at State
Street Global Advisors. He has a total of 17 years of investment experience. 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.
BOSTON PARTNERS MARKET NEUTRAL FUND
The day-to-day portfolio management of the Fund is the responsibility of
Edmund D. Kellogg, subject to the supervision of Harry J. Rosenbluth. Both Mr.
Kellogg and Mr. Rosenbluth are portfolio managers employed by the Adviser.
Previously, Mr. Kellogg was a portfolio manager/analyst for a similar limited
partnership private investment fund and a separate account of the Adviser.
Before joining the Adviser in 1996, Mr. Kellogg was employed by The Keystone
Group since 1991, where he was a portfolio manager and analyst managing
institutional separate accounts. Mr. Kellogg has over 21 years of investment
experience and is a CFA. Mr. Rosenbluth oversees other institutional accounts of
the Adviser and manages a $2.2 billion all-capitalization value equity
institutional separate account product. Prior to joining the Adviser in 1995,
Mr. Rosenbluth was employed by The Boston Company Asset Management, Inc. since
1981 as a senior portfolio manager. Mr. Rosenbluth has over 17 years of
investment experience and is a CFA. For the period ended August 31, 1999, the
Boston Partners Market Neutral Fund paid 0% (expressed as a percentage of
average net assets) to the Adviser for its services.
OTHER SERVICE PROVIDERS
The following chart shows the Funds' other service providers and includes
their addresses and principal activities.
26
<PAGE>
------------
SHAREHOLDERS
------------
Distribution and
Shareholder Services
------------------------------------ -----------------------------------------
PRINCIPAL DISTRIBUTOR TRANSFER AGENT
PROVIDENT DISTRIBUTORS, INC. PFPC INC.
FOUR FALLS CORPORATE CENTER, 6TH FL. 400 BELLEVUE PARKWAY
WEST CONSHOHOCKEN, PA 19428 WILMINGTON, DE 19809
Distributes shares of the Handles shareholder services,
BOSTON PARTNERS Fund. including recordkeeping and statements,
distribution of dividends and processing
of buy, sell and exchange requests.
------------------------------------ -----------------------------------------
Asset
Management
------------------------------------ -----------------------------------------
INVESTMENT ADVISER CUSTODIAN
BOSTON PARTNER ASSET PFPC TRUST COMPANY
MANAGEMENT, L.P. 200 STEVENS DRIVE
28 STATE STREET 21ST FLOOR LESTER, PA 19113
BOSTON, MA 02109
Holds each Fund's assets, settles
Manages each Fund's business all portfolio trades and collects
and investment activities. most of the valuation data
required for calculating each
Fund's net asset value ("NAV").
------------------------------------ -----------------------------------------
Fund
Operations
------------------------------------
ADMINISTRATOR
PFPC INC.
400 BELLEVUE PARKWAY
WILMINGTON, DE 19809
Provides facilities, equipment
and personnel to carry out
administrative services related
to each Fund and calculates the
Fund's NAV, dividends
and distributions.
------------------------------------
---------------------------------
BOARD OF DIRECTORS
Supervises the Fund's activities.
---------------------------------
27
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SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
PRICING OF FUND SHARES
Investor Shares of the Funds ("Shares") are priced at their net asset value
("NAV"). The NAV for the Investor Class of each Fund is calculated by adding the
value of all securities, cash and other assets in a Fund's portfolio, deducting
the Fund's actual and accrued liabilities and dividing by the total number of
Shares outstanding.
Each Fund's NAV is calculated once daily at the close of regular trading on
the New York Stock Exchange ("NYSE") (currently 4:00 p.m. Eastern time) each day
the NYSE is open. Shares will not be priced on the days on which the NYSE is
closed.
Securities held by a Fund are valued using the closing price or the last
sale price on a national securities exchange or on the NASDAQ National Market
System where they are traded. If there were no sales on that day or the
securities are traded on other over-the-counter markets, the mean of the bid and
asked prices is used. Short-term debt investments having maturities of 60 days
or less are amortized to maturity based on their cost. With the approval of the
Company's Board of Directors, a Fund may use a pricing service, bank or
broker-dealer experienced in providing valuations to value a Fund's securities.
If market quotations are unavailable, securities will be valued at fair value as
determined in good faith by the investment adviser according to procedures
adopted by the Company's Board of Directors.
PURCHASE OF FUND SHARES
Shares representing interests in the Funds are offered continuously for
sale by Provident Distributors, Inc. (the "Distributor"). The Board of Directors
of the Company has approved and adopted a Distribution Agreement and Plan of
Distribution for the Shares (the "Plan") pursuant to Rule 12b-1 under the
Investment Company Act of 1940. Under the Plan, the Distributor is entitled to
receive from the Funds a distribution fee with respect to the Shares, which is
accrued daily and paid monthly, of up to 0.25% on an annualized basis of the
average daily net assets of the Shares. The actual amount of such compensation
under the Plan is agreed upon by the Company's Board of Directors and by the
Distributor. Because these fees are paid out of the Funds' assets on an ongoing
basis, over time these fees will increase the cost of your investment and may
cost you more than paying other types of sales charges.
Amounts paid to the Distributor under the Plan may be used by the
Distributor to cover expenses that are related to (i) the sale of the Shares,
(ii) ongoing servicing and/or maintenance of the accounts of Shareholders, and
(iii) sub-transfer agency services, subaccounting services or administrative
services related to the sale of the Shares, all as set forth in the Funds' 12b-1
Plan. The Distributor may delegate some or all of these functions to Service
Organizations. See "Purchases Through Intermediaries" below.
The Plan obligates the Fund, during the period it is in effect, to accrue
and pay to the Distributor on behalf of the Shares the fee agreed to under the
Distribution Agreement. Payments under the Plan are not tied exclusively to
expenses actually incurred by the Distributor, and the payments may exceed
distribution expenses actually incurred.
PURCHASES THROUGH INTERMEDIARIES. Shares of the Funds may be available
through certain brokerage firms, financial institutions and other industry
professionals (collectively, "Service Organizations"). Certain features of the
Shares, such as the initial and subsequent investment minimums and certain
trading restrictions, may be modified or waived by Service Organizations.
Service Organizations may impose transaction or administrative charges or other
direct fees, which charges and fees would not be imposed if Shares are purchased
directly from the Company. Therefore, you should contact the Service
Organization acting on your behalf concerning the fees (if any) charged in
connection with a purchase or redemption of Shares and should read this
Prospectus in light of the terms governing your accounts with the Service
Organization. Service Organizations will be responsible for promptly
transmitting client or customer purchase and redemption orders to the Company in
accordance with their agreements with the Company and with clients or customers.
Service Organizations or, if applicable, their designees that have entered into
agreements with the
28
<PAGE>
Company or its agent may enter confirmed purchase orders on behalf of clients
and customers, with payment to follow no later than the Company's pricing on the
following Business Day. If payment is not received by such time, the Service
Organization could be held liable for resulting fees or losses. The Company will
be deemed to have received a purchase or redemption order when a Service
Organization, or, if applicable, its authorized designee, accepts a purchase or
redemption order in good order. Orders received by the Company in good order
will be priced at the appropriate Fund's net asset value next computed after
they are accepted by the Service Organization or its authorized designee.
For administration, subaccounting, transfer agency and/or other services,
the Adviser, the Distributor or their affiliates may pay Service Organizations
and certain recordkeeping organizations a fee of up to .35% (the "Service Fee")
of the average annual net asset value of accounts with the Company maintained by
such Service Organizations or recordkeepers. The Service Fee payable to any one
Service Organization is determined based upon a number of factors, including the
nature and quality of service provided, the operations processing requirements
of the relationship and the standardized fee schedule of the Service
Organization or recordkeeper.
GENERAL. You may also purchase Shares of each Fund at the NAV per share
next calculated after your order is received by PFPC Inc. (the "Transfer Agent")
in proper form as described below. After an initial purchase is made, the
Transfer Agent will set up an account for you on RBB's records. The minimum
initial investment in any Fund is $2,500 and the minimum additional investment
is $100. For purposes of meeting the minimum initial purchase, purchases by
clients which are part of endowments, foundations or other related groups may be
combined. You can only purchase Shares of each Fund on days the NYSE is open and
through the means described below.
INITIAL INVESTMENT BY MAIL. An account may be opened by completing and
signing the application included with this Prospectus and mailing it to the
Transfer Agent at the address noted below, together with a check ($2,500
minimum) payable to the Fund in which you would like to invest. Third party
checks will not be accepted.
BOSTON PARTNERS [NAME OF FUND]
c/o PFPC Inc.
P.O. Box 8852
Wilmington, DE 19899-8852
The name of the Fund to be purchased should be designated on the
application and should appear on the check. Payment for the purchase of Shares
received by mail will be credited to a shareholder's account at the NAV per
share of the Fund next determined after receipt of payment in good order.
INITIAL INVESTMENT BY WIRE. Shares of each Fund may be purchased by wiring
federal funds to PNC Bank (see instructions below). A completed application must
be forwarded to the Transfer Agent at the address noted above under "Initial
Investment by Mail" in advance of the wire. For each Fund, notification must be
given to the Transfer Agent at (888) 261-4073 prior to 4:00 p.m., Eastern time,
on the wire date. (Prior notification must also be received from investors with
existing accounts.) Funds should be wired to:
PNC Bank, NA
Philadelphia, Pennsylvania 19103
ABA# 0310-0005-3
Account # 86-1108-2507
F/B/O BOSTON PARTNERS [NAME OF FUND]
Ref. (Account Number)
Shareholder Name
Federal funds purchases will be accepted only on a day on which the NYSE
and PNC Bank, NA are open for business.
29
<PAGE>
ADDITIONAL INVESTMENTS. Additional investments may be made at any time
(minimum investment $100) by purchasing Shares of any Fund at NAV by mailing a
check to the Transfer Agent at the address noted above under "Initial Investment
by Mail" (payable to Boston Partners [name of Fund]) or by wiring monies to PNC
Bank, NA as outlined above under "Initial Investment by Wire." For each Fund,
notification must be given to the Transfer Agent at (888) 261-4073 prior to 4:00
p.m., Eastern time, on the wire date. Initial and additional purchases made by
check cannot be redeemed until payment of the purchase has been collected.
AUTOMATIC INVESTMENT PLAN. Additional investments in Shares of the Funds
may be made automatically by authorizing the Transfer Agent to withdraw funds
from your bank account through an Automatic Investment Plan ($100 minimum).
Investors desiring to participate in an Automatic Investment Plan should call
the Transfer Agent at (888) 261-4073 to obtain the appropriate forms.
RETIREMENT PLANS. Shares may be purchased in conjunction with individual
retirement accounts ("IRAs") and rollover IRAs where PFPC Trust Company acts as
custodian. For further information as to applications and annual fees, contact
the Transfer Agent at (888) 261-4073. To determine whether the benefits of an
IRA are available and/or appropriate, you should consult with a tax adviser.
OTHER PURCHASE INFORMATION. The Company reserves the right, in its sole
discretion, to suspend the offering of Shares or to reject purchase orders when,
in the judgment of management, such suspension or rejection is in the best
interests of the Funds. As of the date of this Prospectus, the Boston Partners
Micro Cap Value Fund intends to suspend the offering of Shares upon the Fund's
attaining $300 million in total assets.
REDEMPTION OF FUND SHARES
You may redeem Shares of the Funds at the next NAV calculated after a
redemption request is received by the Transfer Agent in proper form. You can
only redeem Shares on days the NYSE is open and through the means described
below.
You may redeem Shares of each Fund by mail, or, if you are authorized, by
telephone. The value of Shares redeemed may be more or less than the purchase
price, depending on the market value of the investment securities held by a
Fund. There is no charge for a redemption. However, if a shareholder of the
Boston Partners Micro Cap Value or Boston Partners Market Neutral Funds redeems
Shares held for less than 1 year, a transaction fee of 1% of the net asset value
of the Shares redeemed at the time of redemption will be charged. For purposes
of this redemption feature, shares purchased first will be considered to be
shares first redeemed.
REDEMPTION BY MAIL. Your redemption requests should be addressed to BOSTON
PARTNERS [name of Fund], c/o PFPC Inc., P.O. Box 8852, Wilmington, DE 19899-8852
and must include:
a. a letter of instruction specifying the number of shares or dollar
amount to be redeemed, signed by all registered owners of the shares in
the exact names in which they are registered;
b. any required signature guarantees, which are required when (i) the
redemption request proceeds are to be sent to someone other than the
registered shareholder(s) or (ii) the redemption request is for $10,000
or more. A signature guarantee may be obtained from a domestic bank or
trust company, broker, dealer, clearing agency or savings association
who are participants in a Medallion Program recognized by the
Securities Transfer Association. The three recognized Medallion
Programs are Securities Transfer Agent Medallion Program (STAMP), Stock
Exchanges Medallion Program (SEMP) and New York Stock Exchange, Inc.
Medallion Program (MSP). Signature Guarantees, which are not a part of
these programs, will not be accepted. Please note that a notary public
stamp or seal is not acceptable; and
c. other supporting legal documents, if required, in the case of estates,
trusts, guardianships, custodianships, corporations, pension and profit
sharing plans and other organizations.
30
<PAGE>
REDEMPTION BY TELEPHONE. In order to request a telephone redemption, you
must have returned your account application containing a telephone election. To
add a telephone redemption option to an existing account, contact the Transfer
Agent by calling (888) 261-4073 for a Telephone Authorization Form.
Once you are authorized to utilize the telephone redemption option, a
redemption of Shares may be requested by calling the Transfer Agent at (888)
261-4073 and requesting that the redemption proceeds be mailed to the primary
registration address or wired per the authorized instructions. If the telephone
redemption option or the telephone exchange option (as described below) is
authorized, the Transfer Agent may act on telephone instructions from any person
representing himself or herself to be a shareholder and believed by the Transfer
Agent to be genuine. The Transfer Agent's records of such instructions are
binding and shareholders, not the Company or the Transfer Agent, bear the risk
of loss in the event of unauthorized instructions reasonably believed by the
Company or the Transfer Agent to be genuine. The Transfer Agent will employ
reasonable procedures to confirm that instructions communicated are genuine and,
if it does not, it may be liable for any losses due to unauthorized or
fraudulent instructions. The procedures employed by the Transfer Agent in
connection with transactions initiated by telephone include tape recording of
telephone instructions and requiring some form of personal identification prior
to acting upon instructions received by telephone.
SYSTEMATIC WITHDRAWAL PLAN. If your account has a value of at least
$10,000, you may establish a Systematic Withdrawal Plan and receive regular
periodic payments. A request to establish a Systematic Withdrawal Plan must be
submitted in writing to the Transfer Agent at P.O. Box 8852, Wilmington Delaware
19899-8852. Each withdrawal redemption will be processed on or about the 25th of
the month and mailed as soon as possible thereafter. There are no service
charges for maintenance; the minimum amount that you may withdraw each period is
$100. (This is merely the minimum amount allowed and should not be mistaken for
a recommended amount.) The holder of a Systematic Withdrawal Plan will have any
income dividends and any capital gains distributions reinvested in full and
fractional shares at net asset value. To provide funds for payment, Shares will
be redeemed in such amount as is necessary at the redemption price. The
systematic withdrawal of Shares may reduce or possibly exhaust the Shares in
your account, particularly in the event of a market decline. As with other
redemptions, a systematic withdrawal payment is a sale for federal income tax
purposes. Payments made pursuant to a Systematic Withdrawal Plan cannot be
considered as actual yield or income since part of such payments may be a return
of capital.
You will ordinarily not be allowed to make additional investments of less
than the aggregate annual withdrawals under the Systematic Withdrawal Plan
during the time you have the plan in effect and, while a Systematic Withdrawal
Plan is in effect, you may not make periodic investments under the Automatic
Investment Plan. You will receive a confirmation of each transaction and the
Share and cash balance remaining in your plan. The plan may be terminated on
written notice by the shareholder or by the Fund and will terminate
automatically if all Shares are liquidated or withdrawn from the account or upon
the death or incapacity of the shareholder. You may change the amount and
schedule of withdrawal payments or suspend such payments by giving written
notice to the Fund's transfer agent at least ten Business Days prior to the end
of the month preceding a scheduled payment.
TRANSACTION FEE ON CERTAIN REDEMPTIONS OF THE BOSTON PARTNERS MICRO CAP
VALUE AND BOSTON PARTNERS MARKET NEUTRAL FUNDS
The Boston Partners Micro Cap Value and Boston Partners Market Neutral
Funds require the payment of a transaction fee on redemptions of Shares held for
less than one year equal to 1.00% of the net asset value of such Shares redeemed
at the time of redemption. This additional transaction fee is paid to each Fund,
NOT to the adviser, distributor or transfer agent. It is NOT a sales charge or a
contingent deferred sales charge. The fee does not apply to redeemed Shares that
were purchased through reinvested dividends or capital gain distributions. The
purpose of the additional transaction fee is to indirectly allocate transaction
costs associated with redemptions to those investors making redemptions after
holding their shares for a short period, thus protecting existing shareholders.
These costs include: (1) brokerage costs; (2) market impact costs -- i.e., the
decrease in market prices which may result when a
31
<PAGE>
Fund sells certain securities in order to raise cash to meet the redemption
request; (3) the realization of capital gains by the other shareholders in each
Fund; and (4) the effect of the "bid-ask" spread in the over-the-counter market.
The 1.00% amount represents each Fund's estimate of the brokerage and other
transaction costs which may be incurred by each Fund in disposing of stocks in
which each Fund may invest. Without the additional transaction fee, each Fund
would generally be selling its shares at a price less than the cost to each Fund
of acquiring the portfolio securities necessary to maintain its investment
characteristics, resulting in reduced investment performance for all
shareholders in the Funds. With the additional transaction fee, the transaction
costs of selling additional stocks are not borne by all existing shareholders,
but the source of funds for these costs is the transaction fee paid by those
investors making redemptions of the Boston Partners Micro Cap Value and Boston
Partners Market Neutral Funds.
INVOLUNTARY REDEMPTION. The Company reserves the right to redeem a
shareholder's account in any Fund at any time the net asset value of the account
in such Fund falls below $500 as the result of a redemption or an exchange
request. Shareholders will be notified in writing that the value of their
account in a Fund is less than $500 and will be allowed 30 days to make
additional investments before the redemption is processed. The transaction fee
applicable to the Boston Partners Micro Cap Value and Boston Partners Market
Neutral Funds will not be charged when shares are involuntarily redeemed.
OTHER REDEMPTION INFORMATION. Redemption proceeds for Shares of the Funds
recently purchased by check may not be distributed until payment for the
purchase has been collected, which may take up to fifteen days from the purchase
date.
Shareholders can avoid this delay by utilizing the wire purchase option.
Other than as described above, payment of the redemption proceeds will be
made within seven days after receipt of an order for a redemption. The Company
may suspend the right of redemption or postpone the date at times when the NYSE
is closed or under any emergency circumstances as determined by the SEC.
If the Board of Directors determines that it would be detrimental to the
best interests of the remaining shareholders of the Funds to make payment wholly
or partly in cash, redemption proceeds may be paid in whole or in part by an
in-kind distribution of readily marketable securities held by a Fund instead of
cash in conformity with applicable rules of the SEC. Investors generally will
incur brokerage charges on the sale of portfolio securities so received in
payment of redemptions. The Funds have elected, however, to be governed by Rule
18f-1 under the 1940 Act, so that a Fund is obligated to redeem its Shares
solely in cash up to the lesser of $250,000 or 1% of its net asset value during
any 90-day period for any one shareholder of a Fund.
EXCHANGE PRIVILEGE
The exchange privilege is available to shareholders residing in any state
in which the Shares being acquired may be legally sold. A shareholder may
exchange Investor Shares of any Boston Partners Fund for Investor Shares of
another Boston Partners Fund, up to six (6) times per year. Such exchange will
be effected at the net asset value of the exchanged Investor Shares and the net
asset value of the Investor Shares to be acquired next determined after PFPC's
receipt of a request for an exchange. An exchange of Boston Partners Micro Cap
Value or Boston Partners Market Neutral Shares held for less than 1 year (with
the exception of Shares purchased through dividend reinvestment or the
reinvestment of capital gains) will be subject to the 1.00% transaction fee. An
exchange of Shares will be treated as a sale for federal income tax purposes. A
shareholder may make an exchange by sending a written request to the Transfer
Agent or, if authorized, by telephone (see "Redemption by Telephone" above).
If the exchanging shareholder does not currently own Investor Shares of the
Fund whose Shares are being acquired, a new account will be established with the
same registration, dividend and capital gain options as the account from which
shares are exchanged, unless otherwise specified in writing by the shareholder
with all signatures guaranteed. See "Redemption By Mail" for information on
signature guarantees. The exchange privilege may be modified or terminated at
any time, or from time to time, by the Company, upon 60 days' written notice to
shareholders.
32
<PAGE>
If an exchange is to a new account in a Fund advised by the Adviser, the
dollar value of the Shares acquired must equal or exceed the Fund's minimum for
a new account; if to an existing account, the dollar value must equal or exceed
the Fund's minimum for additional investments. If an amount remains in the Fund
from which the exchange is being made that is below the minimum account value
required, the account will be subject to involuntary redemption.
The Funds' exchange privilege is not intended to afford shareholders a way
to speculate on short-term movements in the market. Accordingly, in order to
prevent excessive use of the exchange privilege that may potentially disrupt the
management of the Funds and increase transaction costs, the Funds have
established a policy of limiting excessive exchange activity. Shareholders are
entitled to six (6) exchange redemptions (at least 30 days apart) from each Fund
during any twelve-month period. Notwithstanding these limitations, the Funds
reserve the right to reject any purchase request (including exchange purchases
from other Boston Partners Funds) that is deemed to be disruptive to efficient
portfolio management.
DIVIDENDS AND DISTRIBUTIONS
Each Fund will distribute substantially all of its net investment income
and net realized capital gains, if any, to its shareholders. All distributions
are reinvested in the form of additional full and fractional Shares of the Fund
unless a shareholder elects otherwise.
Each Fund will declare and pay dividends from net investment income
annually, except the Boston Partners Bond Fund, which will declare and pay
dividends from net investment income monthly. Net realized capital gains
(including net short-term capital gains), if any, will be distributed by the
Funds at least annually.
TAXES
Each Fund contemplates declaring as dividends each year all or
substantially all of its taxable income, including its net capital gain (the
excess of long-term capital gain over short-term capital loss). Distributions
attributable to the net capital gain of a Fund will be taxable to you as
long-term capital gain, regardless of how long you have held your Shares. Other
Fund distributions will generally be taxable as ordinary income. You will be
subject to income tax on Fund distributions regardless whether they are paid in
cash or reinvested in additional Shares. You will be notified annually of the
tax status of distributions to you.
You should note that if you purchase Shares just before a distribution, the
purchase price will reflect the amount of the upcoming distribution, but you
will be taxable on the entire amount of the distribution received, even though,
as an economic matter, the distribution simply constitutes a return of a portion
of your purchase price. This is known as "buying into a dividend."
You will recognize taxable gain or loss on a sale, exchange or redemption
of your Shares, including an exchange for Shares of another Fund, based on the
difference between your tax basis in the Shares and the amount you receive for
them. (To aid in computing your tax basis, you generally should retain your
account statements for the periods during which you held Shares.)
Any loss realized on Shares held for six months or less will be treated as
a long-term capital loss to the extent of any capital gain dividends that were
received on the Shares.
The one major exception to these tax principles is that distributions on,
and sales, exchanges and redemptions of, Shares held in an IRA (or other
tax-qualified plan) will not be currently taxable.
Shareowners may also be subject to state and local taxes on distributions
and redemptions. State income taxes may not apply however, to the portions of
each Fund's distributions, if any, that are attributable to interest on federal
securities or interest on securities of the particular state or localities
within the state. Shareowners should consult their tax advisers regarding the
tax status of distributions in their state and locality.
33
<PAGE>
The foregoing is only a summary of certain tax considerations under current
law, which may be subject to change in the future. Shareholders who are
nonresident aliens, foreign trusts or estates, or foreign corporations or
partnerships, may be subject to different United States federal income tax
treatment. You should consult your tax adviser for further information regarding
federal, state, local and/or foreign tax consequences relevant to your specific
situation.
MULTI-CLASS STRUCTURE
Each Fund also offers Institutional Shares, which are offered directly to
institutional investors in a separate prospectus. Shares of each class of the
Funds represent equal pro rata interests and accrue dividends and calculate net
asset value and performance quotations in the same manner. The performance of
each class is quoted separately due to different actual expenses. The total
return on Investor Shares of a Fund can be expected to differ from the total
return on Institutional Shares of the same Fund. Information concerning
Institutional class shares of the Funds can be requested by calling the Fund at
(888) 261-4073.
34
<PAGE>
BOSTON PARTNERS FAMILY OF FUNDS
OF
THE RBB FUND, INC.
(888) 261-4073
HTTP://WWW.BOSTONPARTNERSFUNDS.COM
FOR MORE INFORMATION:
This prospectus contains important information you should know before you
invest. Read it carefully and keep it for future reference. More information
about the BOSTON PARTNERS FAMILY OF FUNDS is available free, upon request,
including:
ANNUAL/SEMI-ANNUAL REPORT
These reports contain additional information about each of the Fund's
investments, describe each of the Fund's performance, list portfolio holdings,
and discuss recent market conditions and economic trends. The annual report
includes fund strategies that significantly affected the Funds' performance
during their last fiscal year.
STATEMENT OF ADDITIONAL INFORMATION (SAI)
A Statement of Additional Information, dated December 1, 1999 (SAI), has
been filed with the Securities and Exchange Commission (SEC). The SAI, which
includes additional information about the BOSTON PARTNERS FAMILY OF FUNDS, may
be obtained free of charge, along with the annual and semi-annual reports, by
calling (888) 261-4073. The SAI, as supplemented from time to time, is
incorporated by reference into this Prospectus.
SHAREHOLDER INQUIRIES
Representatives are available to discuss account balance information,
mutual fund prospectuses, literature, programs and services available. Hours: 8
a.m. to 6 p.m. (Eastern time) Monday-Friday. Call: (888) 261-4073 or visit the
website of Boston Partners Asset Management L.P. at
http://www.bostonpartnersfunds.com.
PURCHASES AND REDEMPTIONS
Call (888) 261-4073.
WRITTEN CORRESPONDENCE
Post Office Address: BOSTON PARTNERS FAMILY OF FUNDS, c/o PFPC, Inc. PO Box
8852, Wilmington, DE 19899-8852
Street Address: BOSTON PARTNERS FAMILY OF FUNDS, c/o PFPC, Inc. 400
Bellevue Parkway, Wilmington, DE 19809
SECURITIES AND EXCHANGE COMMISSION (SEC)
You may also view information about The RBB Fund, Inc. and the BOSTON
PARTNERS FAMILY OF FUNDS, including the SAI, by visiting the SEC website
(http://www.sec.gov) or the SEC's Public Reference Room in Washington, D.C.
Information about the operation of the public reference room can be obtained by
calling the SEC directly at 1-202-942-8090. Copies of this information can be
obtained, for a duplicating fee, by writing to the Public Reference Section of
the SEC, Washington, D.C. 20549-0102, or by electronic request to
[email protected].
INVESTMENT COMPANY ACT FILE NO. 811-05518
35
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS OR IN RBB'S STATEMENT OF
ADDITIONAL INFORMATION INCORPORATED HEREIN BY REFERENCE, IN CONNECTION WITH THE
OFFERING MADE BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY RBB OR ITS DISTRIBUTOR.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY RBB OR BY THE DISTRIBUTOR IN
ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE.
INVESTMENT ADVISER
Boston Partners Asset Management, L.P.
Boston, Massachusetts
CUSTODIAN
PFPC Trust Company
Lester, Pennsylvania
TRANSFER AGENT AND ADMINISTRATOR
PFPC Inc.
Wilmington, Delaware
DISTRIBUTOR
Provident Distributors,Inc.
West Conshohocken, Pennsylvania
COUNSEL
Drinker Biddle & Reath LLP
Philadelphia, Pennsylvania
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
<PAGE>
PROSPECTUS
DECEMBER 1, 1999
BOSTON PARTNERS
LARGE CAP VALUE FUND
BOSTON PARTNERS
MID CAP VALUE FUND
BOSTON PARTNERS
MICRO CAP VALUE FUND
BOSTON PARTNERS
BOND FUND
BOSTON PARTNERS
MARKET NEUTRAL FUND
INSTITUTIONAL CLASS
bp (LOGO)
BOSTON PARTNERS ASSET MANAGEMENT, L.P.
[GRAPHIC OMITTED]
<PAGE>
BOSTON PARTNERS FAMILY OF FUNDS
OF
THE RBB FUND, INC.
INSTITUTIONAL CLASS
BOSTON PARTNERS FAMILY OF FUNDS
LARGE CAP VALUE FUND
MID CAP VALUE FUND
MICRO CAP VALUE FUND
BOND FUND
MARKET NEUTRAL FUND
- --------------------------------------------------------------------------------
THE SECURITIES DESCRIBED IN THIS PROSPECTUS HAVE BEEN REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION (THE "SEC"). THE SEC, HOWEVER, HAS NOT JUDGED
THESE SECURITIES FOR THEIR INVESTMENT MERIT AND HAS NOT DETERMINED THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANYONE WHO TELLS YOU OTHERWISE IS COMMITTING A
CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
PROSPECTUS December 1, 1999
<PAGE>
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
================================ INTRODUCTION ................................ 3
DESCRIPTIONS OF THE BOSTON PARTNERS FUNDS
Boston Partners Large Cap Value Fund ...... 4
Boston Partners Mid Cap Value Fund ........ 9
A LOOK AT THE GOALS, STRATEGIES,
RISKS, EXPENSES AND FINANCIAL Boston Partners Micro Cap Value Fund ......14
HISTORY OF EACH OF THE
BOSTON PARTNERS FUNDS. Boston Partners Bond Fund .................19
Boston Partners Market Neutral Fund .......24
MANAGEMENT
Investment Adviser ........................28
DETAILS ABOUT THE SERVICE
PROVIDERS. Service Provider Chart ....................30
SHAREHOLDER INFORMATION
POLICIES AND INSTRUCTIONS FOR
OPENING, MAINTAINING AND Pricing of Fund Shares ....................31
CLOSING AN ACCOUNT IN ANY OF
THE BOSTON PARTNERS FUNDS. Purchase of Fund Shares ...................31
================================
Redemption of Fund Shares .................32
Exchange Privilege ........................34
Dividends and Distributions ...............35
Taxes .....................................35
Multi-Class Structure .....................36
FOR MORE INFORMATION ........................37
2
<PAGE>
INTRODUCTION TO THE RISK/RETURN SUMMARY
- --------------------------------------------------------------------------------
This Prospectus has been written to provide you with the information you
need to make an informed decision about whether to invest in the Institutional
Class of the Boston Partners Family of Funds of The RBB Fund, Inc.
(the "Company").
The five mutual funds of the Company offered by this Prospectus represent
interests in the Boston Partners Large Cap Value Fund, Boston Partners Mid Cap
Value Fund, Boston Partners Micro Cap Value Fund, Boston Partners Bond Fund and
Boston Partners Market Neutral Fund (each a "Fund" and collectively, the
"Funds"). This Prospectus and the Statement of Additional Information
incorporated herein relate solely to the Funds.
This Prospectus has been organized so that each Fund has its own short
section with important facts about that particular Fund. Once you read the short
sections about the Funds that interest you, read the "Purchase of Fund Shares"
and "Redemption of Fund Shares" sections. These two sections apply to all the
Funds offered by this Prospectus.
3
<PAGE>
BOSTON PARTNERS LARGE CAP VALUE FUND
- --------------------------------------------------------------------------------
================================================================================
IMPORTANT DEFINITIONS
EQUITY SECURITY: A security, such as a stock, representing ownership of a
company. Bonds, in comparison, are referred to as fixed-income or debt
securities because they represent indebtedness to the bondholder, not ownership.
MARKET CAPITALIZATION: Market capitalization refers to the market value of a
company and is calculated by multiplying the number of shares outstanding by the
current price per share.
VALUE CHARACTERISTICS: Stocks are generally divided into the categories of
"growth" or "value." Value stocks appear to the Adviser to be undervalued by the
market as measured by certain financial formulas. Growth stocks appear to the
Adviser to have earnings growth potential that is greater than the market in
general, and whose growth in revenue is expected to continue for an extended
period of time.
EARNINGS GROWTH: The increased rate of growth in a company's earnings per share
from period to period. Security analysts attempt to identify companies with
earnings growth potential because a pattern of earnings growth generally causes
share prices to increase.
================================================================================
INVESTMENT GOALS
The Fund seeks to provide long-term growth of capital with current income
as a secondary objective.
PRIMARY INVESTMENT STRATEGIES
The Fund invests (during normal market conditions) at least 65% of its
total assets in a diversified portfolio consisting primarily of equity
securities, such as common stocks and securities convertible into common stocks,
of issuers with a market capitalization of $1 billion or greater and identified
by Boston Partners Asset Management L.P. (the "Adviser") as possessing value
characteristics. The Fund may also invest up to 20% of its total assets in
non-U.S. dollar denominated securities.
The Adviser examines various factors in determining the value
characteristics of such issuers including price to book value ratios and price
to earnings ratios. These value characteristics are examined in the context of
the issuer's operating and financial fundamentals such as return on equity and
earnings growth and cash flow. The Adviser selects securities for the Fund based
on a continuous study of trends in industries and companies, earnings power and
growth and other investment criteria.
In general, the Fund's investments are broadly diversified over a number of
industries and, as a matter of policy, the Fund will not invest 25% or more of
its total assets in any one industry.
While the Adviser intends to fully invest the Fund's assets at all times in
accordance with the policies above, the Fund reserves the right to hold up to
100% of its assets, as a temporary defensive measure, in cash and eligible U.S.
dollar-denominated money market instruments. The Adviser will determine when
market conditions warrant temporary defensive measures.
KEY RISKS
(BULLET) At least 65% of the Fund's total assets will be invested in a
diversified portfolio of equity securities, and the net asset value
("NAV") of the Fund will change with changes in the market value of its
portfolio positions.
(BULLET) Investors may lose money.
(BULLET) Although the Fund will invest in stocks the Adviser believes to be
undervalued, there is no guarantee that the prices of these stocks will
not move even lower.
(BULLET) Convertible securities frequently have speculative characteristics
and may be acquired without regard to minimum quality ratings.
Convertible securities and obligations rated in the lowest of the top
four rating categories are subject to greater credit and interest rate
risk than higher rated securities.
4
<PAGE>
(BULLET) The Fund may, for temporary defensive purposes, invest a
percentage of its total assets, without limitation, in cash or various
U.S. dollar-denominated money market instruments. 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. When the Fund's assets are invested in these
instruments, the Fund may not be achieving its investment objective.
(BULLET) International investing is subject to special risks, including,
but not limited to, currency exchange rate volatility, political, social
or economic instability, and differences in taxation, auditing and other
financial practices.
(BULLET) The Fund may experience relatively large purchases or redemptions
due to asset allocation decisions made by the Adviser for clients
receiving asset allocation account management services involving
investments in the Fund. These transactions may have a material effect on
the Fund, since redemptions caused by reallocations may result in the
Fund selling portfolio securities it might not otherwise sell, resulting
in a higher portfolio turnover rate, and purchases caused by
reallocations may result in the Fund receiving additional cash that will
remain uninvested until additional securities can be purchased. The
Adviser will attempt to minimize the effects of these transactions at all
times.
(BULLET) The Fund could be affected if the computer systems on which it
relies do not properly process information beginning on January 1, 2000.
While Year 2000 issues could have a negative effect on the Fund, the
Adviser is currently working to avoid such problems. The Adviser is also
working with the Fund's other service providers and vendors to determine
their systems' ability to handle Year 2000 problems. There is no
guarantee that the systems will work properly on January 1, 2000. Year
2000 problems may also hurt issuers whose securities the Fund holds or
securities markets generally.
PRIOR PERFORMANCE
ANNUAL TOTAL RETURNS AS OF DECEMBER 31
The bar chart below shows the variability of the annual total returns for
the Institutional Class of the Fund for the last two calendar years. The bar
chart provides some indication of the risks of investing in the Fund by showing
changes in the performance of the Fund's Institutional Class from year to year.
Past performance is not necessarily an indicator of how the Fund will perform in
the future.
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
1997 31.09
1998 (0.64%)
5
<PAGE>
Since inception (January 2, 1997), the highest calendar quarter total
return for the Institutional Class of the Fund was 15.39% (quarter ended June
30, 1997) and the lowest calendar quarter total return was (16.02)% (quarter
ended September 30, 1998). The total return was (10.93)% for the nine months
ended September 30, 1999.
AVERAGE ANNUAL TOTAL RETURNS -- COMPARISON
The table below shows how the Fund's average annual total returns for the
past one calendar year and since inception, with respect to the Institutional
Class, compare with the Standard & Poor's 500 Composite Stock Price Index (the
"S&P 500 Index") for the same periods. The S&P 500 Index is an unmanaged index
composed of 500 common stocks, most of which are listed on the New York Stock
Exchange. The S&P 500 Index assigns relative values to the stocks included in
the index, weighted accordingly to each stock's total market value relative to
the total market value of the other stocks included in the index. The table,
like the bar chart, provides some indication of the risks of investing in the
Fund by showing how the Fund's average annual total returns for 1 year and since
inception compare with those of a broad measure of market performance. Past
performance is not necessarily an indicator of how the Fund will perform in the
future.
AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31
----------------------------------------------
1 YEAR SINCE INCEPTION
------ ---------------
Institutional Class (.64)% 14.15%*
S&P 500 Index 28.57% 30.99%
*Commenced operations on January 2, 1997.
EXPENSES AND FEES
Fund investors pay various expenses, either directly or indirectly. The
purpose of the following table and example is to describe the fees and expenses
that you may pay if you buy and hold shares of the Institutional Class of the
Fund. The table is based on expenses for the Institutional Class of the Fund for
the most recent fiscal year ended August 31, 1999.
INSTITUTIONAL CLASS
-------------------
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted
from Fund assets)
Management fees ......................................... 0.75%
Distribution (12b-1) fees ............................... None
Other expenses(1) ....................................... 0.55%
----
Total annual Fund operating expenses ................ 1.30%
Fee waivers(2) .......................................... 0.30%
----
Net expenses ............................................ 1.00%
====
(1) "Other expenses" include audit, administration, custody, legal,
registration, transfer agency and miscellaneous other charges for the
Institutional Class.
(2) The Adviser has agreed that until December 31, 2000, it will waive
advisory fees and reimburse expenses to the extent that total annual
Fund operating expenses exceed 1.00%.
6
<PAGE>
EXAMPLE
The example is intended to help you compare the cost of investing in the
Institutional Class of the Fund with the cost of investing in other mutual
funds. The example assumes that you invest $10,000 in the Institutional Class of
the Fund for the time periods indicated and then redeem all of your shares at
the end of each period. The example also assumes that your investment has a 5%
return each year and that the operating expenses of the Institutional Class of
the Fund remain the same, except for the expiration of the fee waivers and
reimbursements on December 31, 2000. Although your actual costs may be higher or
lower, based on these assumptions your cost would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
$102 $383 $684 $1,541
7
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The table below sets forth certain financial information for the periods
indicated, including per share information results for a single Fund share. The
term "Total Return" indicates how much your investment would have increased or
decreased during this period of time and assumes that you have reinvested all
dividends and distributions. This information has been derived from the Fund's
financial statements audited by PricewaterhouseCoopers LLP, the Company's
independent accountants. This information should be read in conjunction with the
Fund's financial statements which, together with the report of independent
accountants, are included in the Fund's annual report, which is available upon
request (see back cover for ordering instructions).
<TABLE>
<CAPTION>
LARGE CAP VALUE FUND
-------------------------------------------------
FOR THE FOR THE FOR THE PERIOD
YEAR ENDED YEAR ENDED JANUARY 2, 1997*
AUGUST 31, AUGUST 31, THROUGH AUGUST 31,
1999 1998 1997
------------- ------------- ------------------
INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL
CLASS CLASS CLASS
------------- ------------- ------------------
<S> <C> <C> <C>
Per Share Operating Performance**
Net asset value, beginning of period ............................. $ 10.58 $ 12.46 $ 10.00
------- ------- -------
Net investment income/(loss) (1) ................................. 0.05 0.12 0.05
Net realized and unrealized gain/(loss) on investments (2) ....... 1.76 (1.31) 2.41
------- ------- -------
Net increase/(decrease) in net assets resulting from operations .. 1.81 (1.19) 2.46
------- ------- -------
Dividends to shareholders from:
Net investment income ............................................ (0.04) (0.08) --
Net realized capital gains ....................................... (0.11) (0.61) --
------- ------- -------
Total dividends and distributions to shareholders ................ (0.15) (0.69) --
------- ------- -------
Net asset value, end of period ................................... $ 12.24 $ 10.58 $ 12.46
======= ======= =======
Total investment return .......................................... 17.12% (10.23%) 24.60%(3)
======= ======= =======
Ratios/Supplemental Data
Net assets, end of period (000's omitted) ..................... $53,112 $50,724 $24,603
Ratio of expenses to average net assets (1) ................... 1.00% 1.00% 1.00%(4)
Ratio of expenses to average net assets without
waivers and expense reimbursements .......................... 1.30% 1.49% 2.64%(4)
Ratio of net investment income to average net assets (1) ...... 0.61% 0.87% 1.19%(4)
Portfolio turnover rate ....................................... 156.16% 111.68% 67.16%
</TABLE>
- ------------
* Commencement of operations.
** Calculated based on shares outstanding on the first and last day of the
respective periods, except for dividends and distributions, if any, which
are based on actual shares outstanding on the dates of distributions.
(1) Reflects waivers and reimbursements.
(2) The amount shown for a share outstanding throughout the period is not in
accord with the change in the aggregate gains and losses in investments
during the period because of the timing of sales and repurchases of Fund
shares in relation to fluctuating net asset value during the period.
(3) Total return is not annualized.
(4) Annualized.
8
<PAGE>
BOSTON PARTNERS MID CAP VALUE FUND
- --------------------------------------------------------------------------------
================================================================================
IMPORTANT DEFINITIONS
EQUITY SECURITY: A security, such as a stock, representing ownership of a
company. Bonds, in comparison, are referred to as fixed-income or debt
securities because they represent indebtedness to the bondholder, not ownership.
MARKET CAPITALIZATION: Market capitalization refers to the market value of a
company and is calculated by multiplying the number of shares outstanding by the
current price per share.
VALUE CHARACTERISTICS: Stocks are generally divided into the categories of
"growth" or "value." Value stocks appear to the Adviser to be undervalued by the
market as measured by certain financial formulas. Growth stocks appear to the
Adviser to have earnings growth potential that is greater than the market in
general, and whose growth in revenue is expected to continue for an extended
period of time.
EARNINGS GROWTH: The increased rate of growth in a company's earnings per share
from period to period. Security analysts attempt to identify companies with
earnings growth potential because a pattern of earnings growth generally causes
share prices to increase.
======================
INVESTMENT GOALS
The Fund seeks to provide long-term growth of capital primarily through
investment in equity securities. Current income is a secondary goal.
PRIMARY INVESTMENT STRATEGIES
The Fund pursues its goal by investing, under normal market conditions, at
least 65% of its total assets in a diversified portfolio consisting primarily of
equity securities, such as common stocks of issuers with a market capitalization
of between $200 million and $6 billion and identified by Boston Partners Asset
Management L.P.(the "Adviser") as having value characteristics.
The Adviser examines various factors in determining the value
characteristics of such issuers including price to book value ratios and price
to earnings ratios. These value characteristics are examined in the context of
the issuer's operating and financial fundamentals such as return on equity, and
earnings growth and cash flow. The Adviser selects securities for the Fund based
on a continuous study of trends in industries and companies, earnings power and
growth and other investment criteria.
The Fund may also invest up to 20% of its total assets in non U.S.
dollar-denominated securities.
In general, the Fund's investments are broadly diversified over a number of
industries and, as a matter of policy, the Fund is limited to investing a
maximum of 25% of its total assets in any one industry.
While the Adviser intends to fully invest the Fund's assets at all times in
accordance with the above-mentioned policies, the Fund reserves the right to
hold up to 100% of its assets, as a temporary defensive measure, in cash and
eligible U.S. dollar-denominated money market instruments. The Adviser will
determine when market conditions warrant temporary defensive measures.
KEY RISKS
(BULLET) At least 65% of the Fund's total assets will be invested under
normal market conditions in a diversified portfolio of equity securities,
and the net asset value ("NAV") of the Fund will change with changes in
the market value of its portfolio positions.
(BULLET) Investors may lose money.
(BULLET) The Fund may, for temporary defensive purposes, invest a
percentage of its total assets, without limitation, in cash or various
U.S. dollar-denominated money market instruments. 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. When the Fund's assets are invested in these
instruments, the Fund may not be achieving its investment objective.
9
<PAGE>
(BULLET) Although the Fund will invest in stocks the Adviser believes to be
undervalued, there is no guarantee that the prices of these stocks will
not move even lower.
(BULLET) International investing is subject to special risks, including,
but not limited to, currency exchange rate volatility, political, social
or economic instability, and differences in taxation, auditing and other
financial practices.
(BULLET) The Fund could be affected if the computer systems on which it
relies do not properly process information beginning on January 1, 2000.
While Year 2000 issues could have a negative effect on the Fund, the
Adviser is currently working to avoid such problems. The Adviser is also
working with the Fund's other service providers and vendors to determine
their systems' ability to handle Year 2000 problems. There is no
guarantee that the systems will work properly on January 1, 2000. Year
2000 problems may also hurt issuers whose securities the Fund holds or
securities markets generally.
PRIOR PERFORMANCE
ANNUAL TOTAL RETURNS AS OF DECEMBER 31
The bar chart below shows the total return for the Institutional Class of
the Fund during its first full calendar year. Past performance is not
necessarily an indicator of how the Fund will perform in the future.
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
1998
-----
(2.20%)
Since inception (June 2, 1997), the highest calendar quarter total return
for the Institutional Class of the Fund was 13.55% (quarter ended March 31,
1998) and the lowest calendar quarter total return was (20.90)% (quarter ended
September 30, 1998). The total return was (10.20)% for the nine months ended
September 30, 1999.
10
<PAGE>
AVERAGE ANNUAL TOTAL RETURNS -- COMPARISON
The table below shows how the Fund's average annual total returns for the
past one calendar year and since inception, with respect to the Institutional
Class, compare with the Russell 2500 Index for the same periods. The Russell
2500 Index is an unmanaged index (with no defined investment objective) of
common stocks, includes reinvestment of dividends and is a registered trademark
of the Frank Russell Corporation. The table, like the bar chart, provides some
indication of the risks of investing in the Fund by showing how the Fund's
average annual total returns for 1 year and since inception compare with those
of a broad measure of market performance. Past performance is not necessarily an
indicator of how the Fund will perform in the future.
AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31
----------------------------------------------
1 YEAR SINCE INCEPTION
------- ---------------
Institutional Class (2.20)% 8.28%*
Russell 2500 Index 0.38% 10.32%
*Commenced operations on June 2, 1997.
EXPENSES AND FEES
Fund investors pay various expenses, either directly or indirectly. The
purpose of the following table and example is to describe the fees and expenses
that you may pay if you buy and hold shares of the Institutional Class of the
Fund. The table is based on expenses for the Institutional Class of the Fund for
the most recent fiscal year ended August 31, 1999.
INSTITUTIONAL CLASS
-------------------
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted
from Fund assets)
Management fees ........................................... 0.80%
Distribution (12b-1) fees ................................. None
Other expenses(1) ......................................... 0.45%
----
Total annual Fund operating expenses .................. 1.25%
Fee waivers(2) ............................................ 0.25%
----
Net expenses .............................................. 1.00%
====
(1) "Other expenses" include audit, administration, custody, legal,
registration, transfer agency and miscellaneous other charges for the
Institutional Class.
(2) The Adviser has agreed that until December 31, 2000, it will waive
advisory fees and reimburse expenses to the extent that total annual
Fund operating expenses exceed 1.00%.
11
<PAGE>
EXAMPLE
The example is intended to help you compare the cost of investing in the
Institutional Class of the Fund with the cost of investing in other mutual
funds. The example assumes that you invest $10,000 in the Institutional Class of
the Fund for the time periods indicated and then redeem all of your shares at
the end of each period. The example also assumes that your investment has a 5%
return each year and that the operating expenses of the Institutional Class of
the Fund remain the same, except for the expiration of the fee waivers and
reimbursements on December 31, 2000. Although your actual costs may be higher or
lower, based on these assumptions your cost would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
$102 $372 $662 $1,489
12
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The table below sets forth certain financial information for the periods
indicated, including per share information results for a single Fund share. The
term "Total Return" indicates how much your investment would have increased or
decreased during this period of time and assumes that you have reinvested all
dividends and distributions. This information has been derived from the Fund's
financial statements audited by PricewaterhouseCoopers LLP, the Company's
independent accountants. This information should be read in conjunction with the
Fund's financial statements which, together with the report of independent
accountants, are included in the Fund's annual report, which is available upon
request (see back cover for ordering instructions).
<TABLE>
<CAPTION>
MID CAP VALUE FUND
----------------------------------------------------
FOR THE FOR THE FOR THE PERIOD
YEAR ENDED YEAR ENDED JUNE 2, 1997*
AUGUST 31, AUGUST 31, THROUGH AUGUST 31,
1999 1998 1997
------------- ------------- ------------------
INSTITUTIONAL INSTITUTIONAL INSTITUTIONAL
CLASS CLASS CLASS
------------- ------------- ------------------
Per Share Operating Performance**
<S> <C> <C> <C>
Net asset value, beginning of period ............................. $ 9.48 $ 11.01 $10.00
-------- ------- ------
Net investment income/(loss) (1) ................................. 0.02 0.01 0.01
Net realized and unrealized gain/(loss) on investments (2) ....... 1.98 (1.39) 1.00
-------- ------- ------
Net increase/(decrease) in net assets resulting from operations. . 2.00 (1.38) 1.01
-------- ------- ------
Dividends to shareholders from:
Net investment income ............................................ (0.01) (0.01) --
Net realized capital gains ....................................... -- (0.14) --
-------- ------- ------
Total dividends and distributions to shareholders ................ (0.01) (0.15) --
-------- ------- ------
Net asset value, end of period ................................... $ 11.47 $ 9.48 $11.01
======== ======= ======
Total investment return .......................................... 21.08% (12.73%) 10.10%(3)
======== ======= ======
Ratios/Supplemental Data
Net assets, end of period (000's omitted) ..................... $173,224 $67,568 $3,750
Ratio of expenses to average net assets (1) ................... 1.00% 1.00% 1.00%(4)
Ratio of expenses to average net assets without
waivers and expense reimbursements .......................... 1.25% 1.57% 12.37%(4)
Ratio of net investment income to average net assets (1) ...... 0.17% 0.13% 1.08%(4)
Portfolio turnover rate ....................................... 200.09% 167.86% 21.80%
<FN>
- -------------
* Commencement of operations.
** Calculated based on shares outstanding on the first and last day of the
respective periods, except for dividends and distributions, if any, which
are based on actual shares outstanding on the dates of distributions.
(1) Reflects waivers and reimbursements.
(2) The amount shown for a share outstanding throughout the period is not in
accord with the change in the aggregate gains and losses in investments
during the period because of the timing of sales and repurchases of Fund
shares in relation to fluctuating net asset value during the period.
(3) Total return is not annualized.
(4) Annualized.
</FN>
</TABLE>
13
<PAGE>
BOSTON PARTNERS MICRO CAP VALUE FUND
- --------------------------------------------------------------------------------
================================================================================
IMPORTANT DEFINITIONS
EQUITY SECURITY: A security, such as a stock, representing ownership of a
company. Bonds, in comparison, are referred to as fixed-income or debt
securities because they represent indebtedness to the bondholder, not ownership.
MARKET CAPITALIZATION: Market capitalization refers to the market value of a
company and is calculated by multiplying the number of shares outstanding by the
current price per share.
VALUE CHARACTERISTICS: Stocks are generally divided into the categories of
"growth" or "value." Value stocks appear to the Adviser to be undervalued by the
market as measured by certain financial formulas. Growth stocks appear to the
Adviser to have earnings growth potential that is greater than the market in
general, and whose growth in revenue is expected to continue for an extended
period of time.
EARNINGS GROWTH: The increased rate of growth in a company's earnings per share
from period to period. Security analysts attempt to identify companies with
earnings growth potential because a pattern of earnings growth generally causes
share prices to increase.
ADRS AND EDRS: Receipts typically issued by a United States bank or trust
company evidencing ownership of underlying foreign securities.
================================================================================
INVESTMENT GOALS
The Fund seeks long-term growth of capital primarily through investment in
equity securities. Current income is a secondary objective.
PRIMARY INVESTMENT STRATEGIES
The Fund pursues its goal by investing, under normal market conditions, at
least 65% of its total assets in a diversified portfolio consisting primarily of
equity securities of issuers with market capitalizations that do not exceed $500
million when purchased by the Fund and identified by Boston Partners Asset
Management L.P. (the "Adviser") as having value characteristics.
The Fund generally invests in the equity securities of small companies. The
Adviser will seek to invest in companies it considers to be well managed and to
have attractive fundamental financial characteristics. The Adviser believes
greater potential for price appreciation exists among small companies since they
tend to be less widely followed by other securities analysts and thus may be
more likely to be undervalued by the market. The Fund may invest from time to
time a portion of its assets, not to exceed 35% (under normal conditions) at the
time of purchase, in companies with considerably larger market capitalizations.
The Adviser examines various factors in determining the value
characteristics of such issuers including price to book value ratios and price
to earnings ratios. These value characteristics are examined in the context of
the issuer's operating and financial fundamentals such as return on equity,
earnings growth and cash flow. The Adviser selects securities for the Fund based
on a fundamental analysis of industries and companies, earnings power and growth
and other investment criteria.
The Fund may invest up to 25% of its total assets in equity securities of
foreign issuers, including American Depository Receipts ("ADRs") and European
Depository Receipts ("EDRs").
In general, the Fund's investments are broadly diversified over a number of
industries and, as a matter of policy, the Fund is limited to investing a
maximum of 25% of its total assets in any one industry.
While the Adviser intends to fully invest the Fund's assets at all times in
accordance with the above-mentioned policies, the Fund reserves the right to
hold up to 100% of its assets, as a temporary defensive measure, in cash and
eligible U.S. dollar-denominated money market instruments. The Adviser will
determine when market conditions warrant temporary defensive measures.
14
<PAGE>
KEY RISKS
(BULLET) At least 65% of the Fund's total assets will be invested in a
diversified portfolio of equity securities, and the net asset value
("NAV") of the Fund will change with changes in the market value of its
portfolio positions.
(BULLET) Investors may lose money.
(BULLET) Although the Fund will invest in stocks the Adviser believes to be
undervalued, there is no guarantee that the prices of these stocks will
not move even lower.
(BULLET) The Fund will invest in smaller issuers which are more volatile
than investments in issuers with a market capitalization greater than
$500 million. Small market capitalization issuers are not as diversified
in their business activities as issuers with market values greater than
$500 million and are more susceptible to changes in the business cycle.
(BULLET) The equity securities in which the Fund invests will often be
traded only in the over-the-counter market or on a regional securities
exchange, may be listed only in the quotation service commonly known as
the "pink sheets," and may not be traded every day or in the volume
typical of trading on a national securities exchange. These equity
securities may also be subject to wide fluctuations in market value. The
trading market for any given equity security may be sufficiently small as
to make it difficult for the Fund to dispose of a substantial block of
such equity securities. The sale by the Fund of portfolio securities to
meet redemptions may require the Fund to sell these securities at a
discount from market prices or during periods when, in the Adviser's
judgement, such sale is not desirable. Moreover, the lack of an efficient
market for these securities may make them difficult to value.
(BULLET) International investing is subject to special risks, including,
but not limited to, currency exchange rate volatility, political, social
or economic instability, and differences in taxation, auditing and other
financial practices.
(BULLET) If the Fund frequently trades its portfolio securities, the Fund
will incur higher brokerage commissions and transaction costs, which
could lower the Fund's performance. In addition to lower performance,
high portfolio turnover could result in taxable capital gains. The annual
portfolio turnover rate for the Fund is not expected to exceed 150%,
however, it may be higher if the Adviser believes it will improve the
Fund's performance.
(BULLET) The Fund may, for temporary defensive purposes, invest a
percentage of its total assets, without limitation, in cash or various
U.S. dollar-denominated money market instruments. 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. When the Fund's assets are invested in these
instruments, the Fund may not be achieving its investment objective.
(BULLET) The Fund could be affected if the computer systems on which it
relies do not properly process information beginning on January 1, 2000.
While Year 2000 issues could have a negative effect on the Fund, the
Adviser is currently working to avoid such problems. The Adviser is also
working with the Fund's other service providers and vendors to determine
their systems' ability to handle Year 2000 problems. There is no
guarantee that the systems will work properly on January 1, 2000. Year
2000 problems may also hurt issuers whose securities the Fund holds or
securities markets generally.
15
<PAGE>
EXPENSES AND FEES
Fund investors pay various expenses, either directly or indirectly. The
purpose of the following table and example is to describe the fees and expenses
that you may pay if you buy and hold shares of the Institutional Class of the
Fund. The table is based upon expenses for the Institutional Class of the Fund
for the most recent fiscal year ended August 31, 1999.
INSTITUTIONAL CLASS
-------------------
SHAREHOLDER FEES (fees paid directly from your investment)
Maximum sales charge imposed on purchases ................. None
Maximum deferred sales charge ............................. None
Maximum sales charge imposed on reinvested dividends ...... None
Redemption Fee(1) ......................................... 1.00%
Exchange Fee .............................................. None
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted
from Fund assets)
Management fees ........................................... 1.25%
Distribution (12b-1) fees ................................. None
Other expenses(2) ......................................... 16.59%
-----
Total annual Fund operating expenses .................. 17.84%
Fee waivers and expense reimbursements(3) ................. 16.29%
-----
Net expenses .............................................. 1.55%
=====
(1) To prevent the Fund from being adversely affected by the transaction
costs associated with short-term shareholder transactions, the Fund
will redeem shares at a price equal to the net asset value of the
shares, less an additional transaction fee equal to 1.00% of the net
asset value of all such shares redeemed that have been held for less
than one year. Such fees are not sales charges or contingent deferred
sales charges, but are retained by the Fund for the benefit of
remaining shareholders.
(2) "Other expenses" include audit, administration, custody, legal,
registration, transfer agency and miscellaneous other charges for the
Institutional Class.
(3) The Adviser has agreed that until December 31, 2000, it will waive
advisory fees and reimburse expenses to the extent that total annual
Fund operating expenses exceed 1.55%.
16
<PAGE>
EXAMPLE
The example is intended to help you compare the cost of investing in the
Institutional Class of the Fund with the cost of investing in other mutual
funds. The example assumes that you invest $10,000 in the Institutional Class of
the Fund for the time periods indicated and then redeem all of your shares at
the end of each period. The example also assumes that your investment has a 5%
return each year and that the operating expenses of the Institutional Class of
the Fund remain the same, except for the expiration of the fee waivers and
reimbursements on December 31,2000. Although your actual costs may be higher or
lower, based on these assumptions your cost would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
$158 $3,390 $5,846 $9,704
17
<PAGE>
FINANCIAL HIGHLIGHTS
The table below sets forth certain financial information for the periods
indicated, including per share information results for a single Fund share. The
term "Total Return" indicates how much your investment would have increased or
decreased during this period of time and assumes that you have reinvested all
dividends and distributions. This information has been derived from the Fund's
financial statements audited by PricewaterhouseCoopers LLP, the Company's
independent accountants. This information should be read in conjunction with the
Fund's financial statements which, together with the report of independent
accountants, are included in the Fund's annual report, which is available upon
request (see back cover for ordering instructions).
<TABLE>
<CAPTION>
MICRO CAP VALUE FUND
-------------------------------------
FOR THE FOR THE PERIOD
YEAR ENDED JULY 1, 1998*
AUGUST 31, THROUGH AUGUST 31,
1999 1998
------------- ------------------
INSTITUTIONAL INSTITUTIONAL
CLASS CLASS
------------- ------------------
<S> <C> <C>
Per Share Operating Performance**
Net asset value, beginning of period ................................... $ 7.62 $ 10.00
------ -------
Net investment income/(loss) (1) ....................................... (0.01) (0.01)
Net realized and unrealized gain/(loss) on investments (2) ............. 1.06 (2.37)
------ -------
Net increase/(decrease) in net assets resulting from operations. ....... 1.05 (2.38)
------ -------
Dividends to shareholders from:
Net investment income .................................................. -- --
Net realized capital gains ............................................. -- --
------ -------
Total dividends and distributions to shareholders ...................... -- --
------ -------
Net asset value, end of period ......................................... $ 8.67 $ 7.62
====== =======
Total investment return (5) ............................................ 13.78% (23.80%)(3)
====== =======
Ratios/Supplemental Data
Net assets, end of period (000's omitted) ........................... $ 1,309 $ 1,120
Ratio of expenses to average net assets (1) ......................... 1.55% 1.55%(4)
Ratio of expenses to average net assets without waivers and
expense reimbursements ............................................ 17.84% 17.63%(4)
Ratio of net investment (loss) to average net assets (1) ............ (0.17%) (0.34%)(4)
Portfolio turnover rate ............................................. 87.48% 11.97%
</TABLE>
- ------------
* Commencement of operations.
** Calculated based on shares outstanding on the first and last day of the
respective periods, except for dividends and distributions, if any, which
are based on actual shares outstanding on the dates of distributions.
(1) Reflects waivers and reimbursements.
(2) The amount shown for a share outstanding throughout the period is not in
accord with the change in the aggregate gains and losses in investments
during the period because of the timing of sales and repurchases of Fund
shares in relation to fluctuating net asset value during the period.
(3) Total return is not annualized.
(4) Annualized.
(5) Redemption fee of 1.00% is not reflected in total return calculations.
18
<PAGE>
BOSTON PARTNERS BOND FUND
- --------------------------------------------------------------------------------
================================================================================
IMPORTANT DEFINITIONS
TOTAL RETURN: A way of measuring Fund performance. Total return is based on a
calculation that takes into account income dividends, capital gain distributions
and the increase or decrease in share price.
FIXED-INCOME SECURITIES: Fixed-income securities are generally bonds, which are
a type of security that functions like a loan. Bonds are "IOUs" issued by
private companies, municipalities or government agencies. By comparison, when
you buy a stock, you are buying ownership in a company. With a bond, your "loan"
is for a specific period, usually 5 to 30 years. You receive regular interest
payments at a fixed rate. Hence the term "fixed-income" security.
INVESTMENT-GRADE FIXED-INCOME SECURITIES: Securities which are rated at the time
of purchase "AAA," "AA," "A," or "BBB" by S&P, "Aaa," "Aa," "A" or "Baa" by
Moody's or which are similarly rated by another Rating Organization or are
unrated but deemed by the Adviser to be comparable in quality to instruments
that are so rated. Debt securities rated "BBB" by S&P, "Baa" by Moody's or the
equivalent rating of another Rating Organization, while still deemed
investment-grade, are considered to have speculative characteristics and are
more sensitive to economic change than higher rated bonds.
CORPORATE DEBT OBLIGATIONS: A long-term bond issued by a corporation, including
railroads and public utilities.
MORTGAGE-BACKED SECURITIES: Pools of mortgage loans assembled for sale to
investors by various governmental agencies as well as by private issuers.
ASSET-BACKED SECURITIES: Pools of assets, usually loans such as installment sale
contracts or credit card receivables, assembled for sale by private issuers.
MATURITY: The date on which an investor in a fixed income security will be paid
in full by the issuer.
================================================================================
INVESTMENT GOALS
The Fund seeks to maximize total return by investing principally in
investment grade fixed-income securities. Current income is a secondary goal.
PRIMARY INVESTMENT STRATEGIES
The Fund invests (during normal market conditions) at least 75% of its
total assets 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 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.
KEY RISKS
(BULLET) The net asset value ("NAV") of the Fund will change with changes
in the market value of its portfolio positions.
(BULLET) Investors may lose money.
(BULLET) The Fund is subject to interest rate risk. Rising interest rates
cause the prices of fixed-income securities to decrease and falling
interest rates cause the prices of fixed-income securities to increase.
Securities with longer maturities can be more sensitive to interest rate
changes. In effect, the longer the maturity of a security, the greater
the impact a change in interest rates could have on the security's price.
(BULLET) High yield, high risk fixed-income securities have a greater risk
of default in the payment of interest and principal than higher rated
securities and are subject to significant changes in price. Investment by
the Fund in such securities involves a high degree of credit risk and
such securities are regarded as speculative by the major rating agencies.
(BULLET) If the Fund frequently trades its portfolio securities, the Fund
will incur higher brokerage commissions and transaction costs, which
could lower the Fund's performance. In addition to lower perfor-
19
<PAGE>
mance, high portfolio turnover could result in taxable capital gains. The
annual portfolio turnover rate for the Fund is not expected to exceed
100%, however, it may be higher if the Adviser believes it will improve
the Fund's performance.
(BULLET) The Fund may experience relatively large purchases or redemptions
due to asset allocation decisions made by the Adviser for clients
receiving asset allocation account management services involving
investments in the Fund. These transactions may have a material effect on
the Fund, since redemptions caused by reallocations may result in the
Fund selling portfolio securities it might not otherwise sell, resulting
in a higher portfolio turnover rate, and purchases caused by
reallocations may result in the Fund receiving additional cash that will
remain uninvested until additional securities can be purchased. The
Adviser will attempt to minimize the effects of these transactions at all
times.
(BULLET) The Fund could be affected if the computer systems on which it
relies do not properly process information beginning on January 1, 2000.
While Year 2000 issues could have a negative effect on the Fund, the
Adviser is currently working to avoid such problems. The Adviser is also
working with the Fund's other service providers and vendors to determine
their systems' ability to handle Year 2000 problems. There is no
guarantee that the systems will work properly on January 1, 2000. Year
2000 problems may also hurt issuers whose securities the Fund holds or
securities markets generally.
PRIOR PERFORMANCE
ANNUAL TOTAL RETURNS AS OF DECEMBER 31
The bar chart below shows the total return for the Institutional Class of
the Fund during its first full calendar year. Past performance is not
necessarily an indicator of how the Fund will perform in the future.
[GRAPHIC OMITTED]
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
1998
----
7.37%
Since inception (December 30, 1997), the highest calendar quarter total
return for the Institutional Class of the Fund was 2.50% (quarter ended
September 30, 1998) and the lowest calendar quarter total return was (.53)%
(quarter ended March 31, 1999). The total return was (.08)% for the nine months
ended September 30, 1999.
20
<PAGE>
AVERAGE ANNUAL TOTAL RETURNS -- COMPARISON
The table below shows how the Fund's average annual total returns for the
past one calendar year and since inception, with respect to the Institutional
Class, compare with the Lehman Aggregate Index for the same periods. The Lehman
Aggregate Index is an unmanaged index containing fixed-income securities rated
investment grade or higher by Moody's, S&P or Fitch Investors Service. All
issues have at least one year to maturity and an outstanding par value of at
least $100 million. The Lehman Aggregate Index is a registered trademark of
Lehman Brothers, Inc. The table, like the bar chart, provides some indication of
the risks of investing in the Fund by showing how the Fund's average annual
total returns for 1 year and since inception compare with those of a broad
measure of market performance. Past performance is not necessarily an indicator
of how the Fund will perform in the future.
AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31
----------------------------------------------
1 YEAR SINCE INCEPTION
------ ---------------
Institutional Class 7.37% 7.44%*
Lehman Aggregate Index 8.69% 8.64%
*Commenced operations on December 30, 1997.
EXPENSES AND FEES
Fund investors pay various expenses, either directly or indirectly. The
purpose of the following table and example is to describe the fees and expenses
that you may pay if you buy and hold shares of the Institutional Class of the
Fund. The table is based upon expenses for the Institutional Class of the Fund
for the most recent fiscal year ended August 31, 1999.
INSTITUTIONAL CLASS
-------------------
ANNUAL FUND OPERATING EXPENSES (expenses
that are deducted from Fund assets)
Management fees ........................................ 0.40%
Distribution (12b-1) fees .............................. None
Other expenses(1) ...................................... 1.82%
----
Total annual Fund operating expenses ............... 2.22%
Fee waivers and expense reimbursements(2) .............. 1.62%
----
Net expenses ........................................... 0.60%
====
(1) "Other expenses" include audit, administration, custody, legal,
registration, transfer agency and miscellaneous other charges for the
Institutional Class.
(2) The Adviser has agreed that until December 31, 2000, it will waive
advisory fees and reimburse expenses to the extent that total annual Fund
operating expenses exceed 0.60%.
21
<PAGE>
EXAMPLE
The example is intended to help you compare the cost of investing in the
Institutional Class of the Fund with the cost of investing in other mutual
funds. The example assumes that you invest $10,000 in the Institutional Class of
the Fund for the time periods indicated and then redeem all of your shares at
the end of each period. The example also assumes that your investment has a 5%
return each year and that the operating expenses of the Institutional Class of
the Fund remain the same, except for the expiration of the fee waivers and
reimbursements on December 31, 2000. Although your actual costs may be higher or
lower, based on these assumptions your cost would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
$61 $538 $1,041 $2,427
22
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The table below sets forth certain financial information for the periods
indicated, including per share information results for a single Fund share. The
term "Total Return" indicates how much your investment would have increased or
decreased during this period of time and assumes that you have reinvested all
dividends and distributions. This information has been derived from the Fund's
financial statements audited by PricewaterhouseCoopers LLP, the Company's
independent accountants. This information should be read in conjunction with the
Fund's financial statements which, together with the report of independent
accountants, are included in the Fund's annual report, which is available upon
request (see back cover for ordering instructions).
<TABLE>
<CAPTION>
BOND FUND
----------------------------------
FOR THE FOR THE PERIOD
YEAR ENDED DECEMBER 30, 1997*
AUGUST 31, THROUGH AUGUST 31,
1999 1998
------------- ------------------
INSTITUTIONAL INSTITUTIONAL
CLASS CLASS
------------- ------------------
<S> <C> <C>
Per Share Operating Performance**
Net asset value, beginning of period ....................................... $ 10.08 $ 10.00
------- -------
Net investment income/(loss) (1). .......................................... 0.96 0.78
Net realized and unrealized gain/(loss) on investments (2) ................. (0.90) (0.31)
------- -------
Net increase/(decrease) in net assets resulting from operations. ........... 0.06 0.47
------- -------
Dividends to shareholders from:
Net investment income. ..................................................... (0.62) (0.39)
Net realized capital gains ................................................. (0.11) --
------- -------
Total dividends and distributions to shareholders .......................... (0.73) (0.39)
------- -------
Net asset value, end of period ............................................. $ 9.41 $ 10.08
======= =======
Total investment return (3) ................................................ 0.42% 4.79%
======= =======
Ratios/Supplemental Data
Net assets, end of period (000's omitted). .............................. $12,041 $15,509
Ratio of expenses to average net assets (1). ............................ 0.60% 0.60%(4)
Ratio of expenses to average net assets without waivers and
expense reimbursements ................................................ 2.22% 2.82%(4)
Ratio of net investment income to average net assets (1) ................ 6.22% 6.06%(4)
Portfolio turnover rate. ................................................ 57.60% 45.27%
</TABLE>
- ------------
* Commencement of operations.
** Calculated based on shares outstanding on the first and last day of the
respective periods, except for dividends and distributions, if any, which
are based on actual shares outstanding on the dates of distributions.
(1) Reflects waivers and reimbursements.
(2) The amount shown for a share outstanding throughout the period is not in
accord with the change in the aggregate gains and losses in investments
during the period because of the timing of sales and repurchases of Fund
shares in relation to fluctuating net asset value during the period.
(3) Total return is not annualized.
(4) Annualized.
23
<PAGE>
BOSTON PARTNERS MARKET NEUTRAL FUND
- --------------------------------------------------------------------------------
================================================================================
IMPORTANT DEFINITIONS
MARKET NEUTRAL: Refers to a strategy of investing or engaging in transactions in
equity securities, while seeking to minimize the impact of movements in the
equity markets.
EQUITY SECURITY: A security, such as a stock, representing ownership of a
company. Bonds, in comparison, are referred to as fixed-income or debt
securities because they represent indebtedness to the bondholder, not ownership.
TOTAL RETURN: A way of measuring Fund performance. Total return is based on a
calculation that takes into account income dividends, capital gain distributions
and the increase or decrease in share price.
SALOMON SMITH BARNEY U.S. 1-MONTH TREASURY BILL INDEX(TRADE MARK): An unmanaged
index containing monthly return equivalents of yield averages that are not
marked to market.
SHORT SALE: A sale by the Fund of a security which has been borrowed from a
third party on the expectation that the market price will drop. If the price of
the security drops, the Fund will make a profit by purchasing the security in
the open market at a lower price than the one at which it sold the security. If
the price of the security rises, the Fund may have to cover its short position
at a higher price than the short sale price, resulting in a loss.
SHORT-TERM CASH INSTRUMENTS: These temporary investments include notes issued or
guaranteed by the U.S. Government, its agencies or instrumentalities; commercial
paper rated in the two highest rating categories; certificates of deposit;
repurchase agreements and other high-grade corporate debt securities.
FEDERAL FUNDS RATE: The rate of interest charged by a Federal Reserve bank for
member banks to borrow their federally required reserve.
MARKET CAPITALIZATION: Market capitalization refers to the market value of a
company and is calculated by multiplying the number of shares outstanding by the
current price per share.
ADRS: Receipts typically issued by a United States bank or trust company
evidencing ownership of underlying foreign securities.
================================================================================
INVESTMENT GOALS
The Fund seeks long-term capital appreciation while minimizing exposure to
general equity market risk. The Fund seeks a total return greater than that of
the Salomon Smith Barney U.S. 1-Month Treasury Bill Index.(TRADE MARK)
PRIMARY INVESTMENT STRATEGIES
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 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 Fund's long and short positions may involve (without limit) equity
securities of foreign issuers that are traded in the markets of the United
States as sponsored American Depository Receipts ("ADRs"). The Fund may also
invest up to 20% of its total assets directly in equity securities of foreign
issuers.
To meet margin requirements, redemptions or pending investments, the Fund
may also temporarily hold a portion of its assets in full faith and credit
obligations of the United States government and in short-term notes, commercial
paper or other money market instruments.
While the Adviser intends to fully invest the Fund's assets at all times in
accordance with the above-mentioned policies, the Fund reserves the right to
hold up to 100% of its assets, as a temporary defensive measure, in cash and
eligible U.S. dollar-denominated money market instruments. The Adviser will
determine when market conditions warrant temporary defensive measures.
24
<PAGE>
KEY RISKS
(BULLET) The net asset value ("NAV") of the Fund will change with changes
in the market value of its portfolio positions.
(BULLET) Investors may lose money.
(BULLET) The Fund is subject to the risk of poor stock selection by the
Adviser. In other words, the Adviser may not be successful in its
strategy of taking long positions in undervalued stocks and short
positions in overvalued stocks. Further, since the Adviser will manage
both a long and a short portfolio, there is the risk that the Adviser may
make more poor investment decisions than an adviser of a typical stock
mutual fund with only a long portfolio may make.
(BULLET) Short sales of securities may result in gains if a security's
price declines, but may result in losses if a security's price does not
decline in price.
(BULLET) The Fund could lose money if a seller under a repurchase agreement
defaults or declares bankruptcy.
(BULLET) Securities held in a segregated account cannot be sold while the
position it is covering is outstanding, unless they are replaced with
similar securities. As a result, there is a possibility that segregation
of a large percentage of the Fund's assets could impede portfolio
management or the Fund's ability to meet redemption requests or other
current obligations.
(BULLET) The Fund may, for temporary defensive purposes, invest a
percentage of its total assets, without limitations, in cash or various
U.S. dollar-denominated money market instruments. 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. When the Fund's assets are invested in these
instruments, the Fund may not be achieving its investment objective.
(BULLET) The risks of international investing include, but are not limited
to, currency exchange rate volatility, political, social or economic
instability, and differences in taxation, auditing and other financial
practices.
(BULLET) If the Fund frequently trades its portfolio securities, the Fund
will incur higher brokerage commissions and transaction costs, which
could lower the Fund's performance. In addition to lower performance,
high portfolio turnover could result in taxable capital gains. The annual
portfolio turnover rate for the Fund is not expected to exceed 200%,
however, it may be higher if the Adviser believes it will improve the
Fund's performance.
(BULLET) The Fund could be affected if the computer systems on which it
relies do not properly process information beginning on January 1, 2000.
While Year 2000 issues could have a negative effect on the Fund, the
Adviser is currently working to avoid such problems. The Adviser is also
working with the Fund's other service providers and vendors to determine
their systems' ability to handle Year 2000 problems. There is no
guarantee that the systems will work properly on January 1, 2000. Year
2000 problems may also hurt issuers whose securities the Fund holds or
securities markets generally.
EXPENSES AND FEES
Fund investors pay various expenses, either directly or indirectly. The
purpose of the following table and example is to describe the fees and expenses
that you may pay if you buy and hold shares of the Institutional Class of the
Fund. The table is based on expenses for the Institutional Class of the Fund for
the period November 17, 1998 (commencement of operations) through August 31,
1999.
25
<PAGE>
INSTITUTIONAL CLASS
-------------------
SHAREHOLDER FEES (fees paid directly
from your investment)
Maximum sales charge imposed on purchases .............. None
Maximum deferred sales charge .......................... None
Maximum sales charge imposed on reinvested dividends ... None
Redemption Fee(1) ...................................... 1.00%
Exchange Fee ........................................... None
ANNUAL FUND OPERATING EXPENSES (expenses that
are deducted from Fund assets)
Management fees ........................................ 2.25%
Distribution (12b-1) fees .............................. None
Other expenses(2) ...................................... 24.11%
-----
Total annual Fund operating expenses ............... 26.36%
Fee waivers and expense reimbursements(3) .............. 23.41%
-----
Net expenses ........................................... 2.95%
=====
(1) To prevent the Fund from being adversely affected by the transaction
costs associated with short-term shareholder transactions, the Fund
will redeem shares at a price equal to the net asset value of the
shares, less an additional transaction fee equal to 1.00% of the net
asset value of all such shares redeemed that have been held for less
than one year. Such fees are not sales charges or contingent deferred
sales charges, but are retained by the Fund for the benefit of all
shareholders.
(2) "Other expenses" include audit, administration, custody, legal,
registration, transfer agency and miscellaneous other charges for the
Institutional Class. "Other expenses" and "Total annual Fund operating
expenses" include dividends on securities which the Fund has sold short
("short-sale dividends"). Short-sale dividends generally reduce the
market value of the securities by the amount of the dividend declared
-- thus increasing the Fund's unrealized gain or reducing the Fund's
unrealized loss on the securities sold short. Short-sale dividends are
treated as an expense, and increase the Fund's total expense ratio,
although no cash is received or paid by the Fund. The amount of
short-sale dividends is estimated at 0.45% of average net assets for
the current fiscal year.
(3) The Adviser has agreed that until December 31, 2000, it will waive
advisory fees and reimburse expenses to the extent that total annual
Fund operating expenses exceed 2.50% excluding short sale dividend
expense.
EXAMPLE
The example is intended to help you compare the cost of investing in the
Institutional Class of the Fund with the cost of investing in other mutual
funds. The example assumes that you invest $10,000 in the Institutional Class of
the Fund for the time periods indicated and then redeem all of your shares at
the end of each period. The example also assumes that your investment has a 5%
return each year and that the operating expenses of the Institutional Class of
the Fund remain the same, except for the expiration of the fee waivers and
reimbursements on December 31, 2000. Although your actual costs may be higher or
lower, based on these assumptions your cost would be:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
$298 $4,590 $7,245 $10,253
26
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The table below sets forth certain financial information for the periods
indicated, including per share information results for a single Fund share. The
term "Total Return" indicates how much your investment would have increased or
decreased during this period of time and assumes that you have reinvested all
dividends and distributions. This information has been derived from the Fund's
financial statements audited by PricewaterhouseCoopers LLP, the Company's
independent accountants. This information should be read in conjunction with the
Fund's financial statements which, together with the report of independent
accountants, are included in the Fund's annual report, which is available upon
request (see back cover for ordering instructions).
MARKET NEUTRAL FUND
-------------------
FOR THE PERIOD
NOVEMBER 17, 1998*
THROUGH AUGUST 31,
1999
-------------------
INSTITUTIONAL CLASS
-------------------
Per Share Operating Performance**
Net asset value, beginning of period .................. $ 10.00
-------
Net investment income/(loss) (1) ...................... 0.12
Net realized and unrealized gain/(loss)
on investments (2) ................................. (0.66)
-------
Net increase/(decrease) in net assets
resulting from operations .......................... (0.54)
-------
Dividends to shareholders from:
Net investment income ................................. --
Net realized capital gains ............................ --
-------
Total dividends and distributions to shareholders ..... --
-------
Net asset value, end of period ........................ $ 9.46
=======
Total investment return (3) (5) ....................... (5.40%)
=======
Ratios/Supplemental Data
Net assets, end of period (000's omitted) .......... $ 941
Ratio of expenses to average net assets (1) ........ 2.50%(4)(6)
Ratio of expenses to average net assets
without waivers and expense reimbursements ...... 26.36%(4)(6)
Ratio of net investment income to
average net assets (1) .......................... 1.57%(4)
Portfolio turnover rate ............................ 218.41%
- ------------
* Commencement of operations.
** Calculated based on shares outstanding on the sfirst and last day of the
respective periods, except for dividends and distributions, if any, which
are based on actual shares outstanding on the dates of distributions.
(1) Reflects waivers and reimbursements.
(2) The amount shown for a share outstanding throughout the period is not in
accord with the change in the aggregate gains and losses in investments
during the period because of the timing of sales and repurchases of Fund
shares in relation to fluctuating net asset value during the period.
(3) Total return is not annualized.
(4) Annualized.
(5) Redemption fee of 1.00% is not reflected in total return calculations.
(6) Without the voluntary waiver of advisory and administration fees, the ratios
of expenses to average net assets for the Institutional Class would have
been 26.36% (excluding dividend expense) and 26.77% (including dividend
expense) annualized for the period ended August 31, 1999.
27
<PAGE>
MANAGEMENT
- --------------------------------------------------------------------------------
INVESTMENT ADVISER
Boston Partners Asset Management, L.P. (the "Adviser"), located at 28 State
Street, 21st Floor, Boston, Massachusetts 02109, provides investment advisory
services to the Funds. The Adviser provides investment management and investment
advisory services to investment companies and other institutional accounts. As
of October, 1999, the Adviser managed approximately $10.2 billion in assets. The
Adviser is organized as a Delaware limited partnership whose sole general
partner is Boston Partners, Inc., a Delaware corporation. The Adviser manages
each Fund's business and investment activities subject to the authority of the
Company's Board of Directors.
PORTFOLIO MANAGERS
BOSTON PARTNERS LARGE CAP VALUE FUND
The day-to-day portfolio management of the Fund is the responsibility of
Mark E. Donovan and Wayne S. Sharp who are senior portfolio managers of the
Adviser. Mr. Donovan is Chairperson of the Adviser's Equity Strategy Committee
which oversees the investment activities of the Adviser's $5.5 billion in large
cap value institutional equity assets. Prior to joining the Adviser in 1995, Mr.
Donovan was a Senior Vice President and Vice Chairman of The Boston Company
Asset Management, Inc.'s Equity Policy Committee. Mr. Donovan is a Chartered
Financial Analyst ("CFA") and has over fifteen years of investment experience.
Mr. Sharp is Vice Chairperson of the Adviser's Equity Strategy Committee and has
over twenty-one years of investment experience. Prior to joining the Adviser in
April 1995, Mr. Sharp was a Senior Vice President and member of the Equity
Policy Committee of The Boston Company Asset Management, Inc. Mr. Sharp is also
a CFA. For the fiscal year ended August 31, 1999, the Fund paid .60% (expressed
as a percentage of average net assets) to the Adviser for its services.
BOSTON PARTNERS MID CAP VALUE FUND
The day-to-day portfolio management of the Fund is the responsibility of
Wayne J. Archambo who is a Senior portfolio manager of the Adviser and a member
of the Adviser's Equity Strategy Committee. Mr. Archambo oversees the investment
activities of the Adviser's $1.5 billion in mid-capitalization activities as
well as $1 billion in small capitalization activities. Prior to joining the
Adviser in April 1995, Mr. Archambo was employed by The Boston Company Asset
Management, Inc. from 1989 through April 1995 where he was a senior portfolio
manager. Mr. Archambo has over 15 years of investment experience and is a CFA.
For the fiscal year ended August 31, 1999, the Fund paid .70% (expressed as a
percentage of average net assets) to the Adviser for its services.
BOSTON PARTNERS MICRO CAP VALUE FUND
The day-to-day portfolio management of the Fund is the responsibility of
David M. Dabora and Wayne J. Archambo who are senior portfolio managers of the
Adviser. Prior to taking on day to day responsibilities for the Micro Cap Value
Fund, Mr. Dabora was an assistant portfolio manager/analyst of the premium
equity product of the Adviser, an all-cap value institutional product. Before
joining the Adviser in April 1995, Mr. Dabora had been employed by The Boston
Company Asset Management, Inc. since 1991 as a senior equity analyst. Mr. Dabora
has over 11 years of investment experience and is a CFA. 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.
28
<PAGE>
BOSTON PARTNERS BOND FUND
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 Glenn S. Davis, Joseph F.
Feeney, Jr. and Michael A. Mullaney. Mr. Davis is a Fixed Income Portfolio
Manager with the Adviser and is also a CFA. Prior to joining the Adviser in
April 1995, he was Vice President and Portfolio Manager at The Boston Company,
specializing in short and intermediate term corporate bonds. Prior to that
position, he was responsible for the Short-term Fixed Income Group at State
Street Global Advisors. He has a total of 17 years of investment experience. 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.
BOSTON PARTNERS MARKET NEUTRAL FUND
The day-to-day portfolio management of the Fund is the responsibility of
Edmund D. Kellogg, subject to the supervision of Harry J. Rosenbluth. Both Mr.
Kellogg and Mr. Rosenbluth are portfolio managers employed by the Adviser.
Previously, Mr. Kellogg was a portfolio manager/analyst for a similar limited
partnership private investment fund and a separate account of the Adviser.
Before joining the Adviser in 1996, Mr. Kellogg was employed by The Keystone
Group since 1991, where he was a portfolio manager and analyst managing
institutional separate accounts. Mr. Kellogg has over 21 years of investment
experience and is a CFA. Mr. Rosenbluth oversees other institutional accounts of
the Adviser and manages a $2.2 billion all-capitalization value equity
institutional separate account product. Prior to joining the Adviser in 1995,
Mr. Rosenbluth was employed by The Boston Company Asset Management, Inc. since
1981 as a senior portfolio manager. Mr. Rosenbluth has over 17 years of
investment experience and is a CFA. For the period ended August 31, 1999, the
Boston Partners Market Neutral Fund paid 0% (expressed as a percentage of
average net assets) to the Adviser for its services.
OTHER SERVICE PROVIDERS
The following chart shows the Funds' other service providers and includes
their addresses and principal activities.
29
<PAGE>
------------
SHAREHOLDERS
------------
Distribution and
Shareholder Services
------------------------------------ -----------------------------------------
PRINCIPAL DISTRIBUTOR TRANSFER AGENT AND DIVIDEND
DISBURSING AGENT
PROVIDENT DISTRIBUTORS, INC.
FOUR FALLS CORPORATE CENTER, 6TH FL. PFPC INC.
WEST CONSHOHOCKEN, PA 19428 400 BELLEVUE PARKWAY
WILMINGTON, DE 19809
Distributes shares of the
BOSTON PARTNERS Funds. Handles shareholder services,
including recordkeeping and statements,
distribution of dividends and processing
of buy, sell and exchange requests.
------------------------------------ -----------------------------------------
Asset
Management
------------------------------------ -----------------------------------------
INVESTMENT ADVISER CUSTODIAN
BOSTON PARTNER ASSET PFPC TRUST COMPANY
MANAGEMENT, L.P. 200 STEVENS DRIVE
28 STATE STREET 21ST FLOOR LESTER, PA 19113
BOSTON, MA 02109
Holds each Fund's assets, settles
Manages each Fund's business all portfolio trades and collects
and investment activities. most of the valuation data
required for calculating each
Fund's net asset value ("NAV").
------------------------------------ -----------------------------------------
Fund
Operations
------------------------------------
ADMINISTRATOR
PFPC INC.
400 BELLEVUE PARKWAY
WILMINGTON, DE 19809
Provides facilities, equipment
and personnel to carry out
administrative services related
to each Fund and calculates each
Fund's NAV, dividends
and distributions.
------------------------------------
---------------------------------
BOARD OF DIRECTORS
Supervises the Funds' activities.
---------------------------------
30
<PAGE>
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
PRICING OF FUND SHARES
Institutional Shares of the Funds ("Shares") are priced at their net asset
value ("NAV"). The NAV for the Institutional Class of each Fund is calculated by
adding the value of all securities, cash and other assets in a Fund's portfolio,
deducting the Fund's actual and accrued liabilities and dividing by the total
number of Shares outstanding.
Each Fund's NAV is calculated once daily at the close of regular trading on
the New York Stock Exchange ("NYSE") (currently 4:00 p.m. Eastern time) each day
the NYSE is open. Shares will not be priced on the days on which the NYSE is
closed.
Securities held by a Fund are valued using the closing price or the last
sale price on a national securities exchange or on the NASDAQ National Market
System where they are traded. If there were no sales on that day or the
securities are traded on other over-the-counter markets, the mean of the bid and
asked prices is used. Short-term debt investments having maturities of 60 days
or less are amortized to maturity based on their cost. With the approval of the
Company's Board of Directors, a Fund may use a pricing service, bank or
broker-dealer experienced in providing valuations to value a Fund's securities.
If market quotations are unavailable, securities will be valued at fair value as
determined in good faith by the investment adviser according to procedures
adopted by the Company's Board of Directors.
PURCHASE OF FUND SHARES
Shares representing interests in the Funds are offered continuously for
sale by Provident Distributors, Inc. (the "Distributor"). You may purchase
Shares of each Fund at the NAV per share next calculated after your order is
received by PFPC Inc. (the "Transfer Agent") in proper form as described below.
After an initial purchase is made, the Transfer Agent will set up an account for
you on RBB's records. The minimum initial investment in any Fund is $100,000 and
the minimum additional investment is $5,000. For purposes of meeting the minimum
initial purchase, purchases by clients which are part of endowments, foundations
or other related groups may be combined. You can only purchase Shares of each
Fund on days the NYSE is open and through the means described below. Shares may
be purchased by principals and employees of the Adviser and by their spouses and
children either directly or through any trust that has the principal, employee,
spouse or child as the primary beneficiaries, their individual retirement
accounts, or any pension and profit-sharing plan of the Adviser without being
subject to the minimum investment limitations.
INITIAL INVESTMENT BY MAIL. An account may be opened by completing and
signing the application included with this Prospectus and mailing it to the
Transfer Agent at the address noted below, together with a check ($100,000
minimum) payable to the Fund in which you would like to invest. Third party
checks will not be accepted.
BOSTON PARTNERS [NAME OF FUND]
c/o PFPC Inc.
P.O. Box 8852
Wilmington, DE 19899-8852
The name of the Fund to be purchased should be designated on the
application and should appear on the check. Payment for the purchase of Shares
received by mail will be credited to a shareholder's account at the NAV per
share of the Fund next determined after receipt of payment in good order.
31
<PAGE>
INITIAL INVESTMENT BY WIRE. Shares of each Fund may be purchased by wiring
federal funds to PNC Bank (see instructions below). A completed application must
be forwarded to the Transfer Agent at the address noted above under "Initial
Investment by Mail" in advance of the wire. For each Fund, notification must be
given to the Transfer Agent at (888) 261-4073 prior to 4:00 p.m., Eastern time,
on the wire date. (Prior notification must also be received from investors with
existing accounts.) Funds should be wired to:
PNC Bank, NA
Philadelphia, Pennsylvania 19103
ABA# 0310-0005-3
Account # 86-1108-2507
F/B/O BOSTON PARTNERS [NAME OF FUND]
Ref. (Account Number)
Federal funds purchases will be accepted only on a day on which the NYSE
and PNC Bank, NA are open for business.
ADDITIONAL INVESTMENTS. Additional investments may be made at any time
(minimum investment $5,000) by purchasing Shares of any Fund at NAV by mailing a
check to the Transfer Agent at the address noted above under "Initial Investment
by Mail" (payable to Boston Partners [name of Fund]) or by wiring monies to PNC
Bank, NA as outlined above under "Initial Investment by Wire." For each Fund,
notification must be given to the Transfer Agent at (888) 261-4073 prior to 4:00
p.m., Eastern time, on the wire date. Initial and additional purchases made by
check cannot be redeemed until payment of the purchase has been collected.
AUTOMATIC INVESTMENT PLAN. Additional investments in Shares of the Funds
may be made automatically by authorizing the Transfer Agent to withdraw funds
from your bank account through an Automatic Investment Plan ($5,000 minimum).
Investors desiring to participate in an Automatic Investment Plan should call
the Transfer Agent at (888) 261-4073 to obtain the appropriate forms.
OTHER PURCHASE INFORMATION. The Company reserves the right, in its sole
discretion, to suspend the offering of Shares or to reject purchase orders when,
in the judgment of management, such suspension or rejection is in the best
interests of the Funds. As of the date of this Prospectus, the Boston Partners
Micro Cap Value Fund intends to suspend the offering of Shares upon the Fund's
attaining $300 million in total assets.
REDEMPTION OF FUND SHARES
You may redeem Shares of the Funds at the next NAV calculated after a
redemption request is received by the Transfer Agent in proper form. You can
only redeem Shares on days the NYSE is open and through the means described
below.
You may redeem Shares of each Fund by mail, or, if you are authorized, by
telephone. The value of Shares redeemed may be more or less than the purchase
price, depending on the market value of the investment securities held by a
Fund. There is no charge for a redemption. However, if a shareholder of the
Boston Partners Market Neutral, or Boston Partners Micro Cap Value Funds redeems
Shares held for less than 1 year, a transaction fee of 1% of the net asset value
of the Shares redeemed at the time of redemption will be charged. For purposes
of this redemption feature, shares purchased first will be considered to be
shares first redeemed.
32
<PAGE>
REDEMPTION BY MAIL. Your redemption requests should be addressed to BOSTON
PARTNERS [name of Fund], c/o PFPC Inc., P.O. Box 8852, Wilmington, DE 19899-8852
and must include:
a. a letter of instruction specifying the number of shares or dollar
amount to be redeemed, signed by all registered owners of the shares in
the exact names in which they are registered;
b. any required signature guarantees, which are required when (i) the
redemption request proceeds are to be sent to someone other than the
registered shareholder(s) or (ii) the redemption request is for $10,000
or more. A signature guarantee may be obtained from a domestic bank or
trust company, broker, dealer, clearing agency or savings association
who are participants in a Medallion Program recognized by the
Securities Transfer Association. The three recognized Medallion
Programs are Securities Transfer Agent Medallion Program (STAMP), Stock
Exchanges Medallion Program (SEMP) and New York Stock Exchange, Inc.
Medallion Program (MSP). Signature Guarantees, which are not a part of
these programs, will not be accepted. Please note that a notary public
stamp or seal is not acceptable; and
c. other supporting legal documents, if required, in the case of estates,
trusts, guardianships, custodianships, corporations, pension and profit
sharing plans and other organizations.
REDEMPTION BY TELEPHONE. In order to request a telephone redemption, you
must have returned your account application containing a telephone election. To
add a telephone redemption option to an existing account, contact the Transfer
Agent by calling (888) 261-4073 for a Telephone Authorization Form.
Once you are authorized to utilize the telephone redemption option, a
redemption of Shares may be requested by calling the Transfer Agent at (888)
261-4073 and requesting that the redemption proceeds be mailed to the primary
registration address or wired per the authorized instructions. If the telephone
redemption option or the telephone exchange option (as described below) is
authorized, the Transfer Agent may act on telephone instructions from any person
representing himself or herself to be a shareholder and believed by the Transfer
Agent to be genuine. The Transfer Agent's records of such instructions are
binding and shareholders, not the Company or the Transfer Agent, bear the risk
of loss in the event of unauthorized instructions reasonably believed by the
Company or the Transfer Agent to be genuine. The Transfer Agent will employ
reasonable procedures to confirm that instructions communicated are genuine and,
if it does not, it may be liable for any losses due to unauthorized or
fraudulent instructions. The procedures employed by the Transfer Agent in
connection with transactions initiated by telephone include tape recording of
telephone instructions and requiring some form of personal identification prior
to acting upon instructions received by telephone.
TRANSACTION FEE ON CERTAIN REDEMPTIONS OF THE BOSTON PARTNERS MARKET
NEUTRAL, AND BOSTON PARTNERS MICRO CAP VALUE FUNDS
The Boston Partners Micro Cap Value and Boston Partners Market Neutral
Funds require the payment of a transaction fee on redemptions of Shares held for
less than one year equal to 1.00% of the net asset value of such Shares redeemed
at the time of redemption. This additional transaction fee is paid to each Fund,
NOT to the adviser, distributor or transfer agent. It is NOT a sales charge or a
contingent deferred sales charge. The fee does not apply to redeemed Shares that
were purchased through reinvested dividends or capital gain distributions. The
purpose of the additional transaction fee is to indirectly allocate transaction
costs associated with redemptions to those investors making redemptions after
holding their shares for a short period, thus protecting existing shareholders.
These costs include: (1) brokerage costs; (2) market impact costs -- i.e., the
decrease in market prices which may result when a Fund sells certain securities
in order to raise cash to meet the redemption request; (3) the realization of
capital gains by the other shareholders in each Fund; and (4) the effect of the
"bid-ask" spread in the over-the-counter market. The 1.00% amount represents
each Fund's estimate of the brokerage and other transaction costs which may be
incurred by each Fund in disposing of stocks in which each Fund may invest.
Without the additional transaction fee, each Fund would generally be selling its
shares at a price less than the cost to each Fund of acquiring the portfolio
securities
33
<PAGE>
necessary to maintain its investment characteristics, resulting in reduced
investment performance for all shareholders in the Funds. With the additional
transaction fee, the transaction costs of selling additional stocks are not
borne by all existing shareholders, but the source of funds for these costs is
the transaction fee paid by those investors making redemptions of the Boston
Partners Micro Cap Value and Boston Partners Market Neutral Funds.
INVOLUNTARY REDEMPTION. The Company reserves the right to redeem a
shareholder's account in any Fund at any time the net asset value of the account
in such Fund falls below $500 as the result of a redemption or an exchange
request. Shareholders will be notified in writing that the value of their
account in a Fund is less than $500 and will be allowed 30 days to make
additional investments before the redemption is processed. The transaction fee
applicable to the Boston Partners Market Neutral and Boston Partners Micro Cap
Value Funds will not be charged when shares are involuntarily redeemed.
OTHER REDEMPTION INFORMATION. Redemption proceeds for Shares of the Funds
recently purchased by check may not be distributed until payment for the
purchase has been collected, which may take up to fifteen days from the purchase
date. Shareholders can avoid this delay by utilizing the wire purchase option.
Other than as described above, payment of the redemption proceeds will be
made within seven days after receipt of an order for a redemption. The Company
may suspend the right of redemption or postpone the date at times when the NYSE
is closed or under any emergency circumstances as determined by the SEC.
If the Board of Directors determines that it would be detrimental to the
best interests of the remaining shareholders of the Funds to make payment wholly
or partly in cash, redemption proceeds may be paid in whole or in part by an
in-kind distribution of readily marketable securities held by a Fund instead of
cash in conformity with applicable rules of the SEC. Investors generally will
incur brokerage charges on the sale of portfolio securities so received in
payment of redemptions. The Funds have elected, however, to be governed by Rule
18f-1 under the 1940 Act, so that a Fund is obligated to redeem its Shares
solely in cash up to the lesser of $250,000 or 1% of its net asset value during
any 90-day period for any one shareholder of a Fund.
EXCHANGE PRIVILEGE
The exchange privilege is available to shareholders residing in any state
in which the Shares being acquired may be legally sold. A shareholder may
exchange Institutional Shares of any Boston Partners Fund for Institutional
Shares of another Boston Partners Fund, up to six (6) times per year. Such
exchange will be effected at the net asset value of the exchanged Institutional
Shares and the net asset value of the Institutional Shares to be acquired next
determined after PFPC's receipt of a request for an exchange. An exchange of
Boston Partners Micro Cap Value or Boston Partners Market Neutral Shares held
for less than 1 year (with the exception of Shares purchased through dividend
reinvestment or the reinvestment of capital gains) will be subject to the 1.00%
transaction fee. An exchange of Shares will be treated as a sale for federal
income tax purposes. A shareholder may make an exchange by sending a written
request to the Transfer Agent or, if authorized, by telephone (see "Redemption
by Telephone" above).
If the exchanging shareholder does not currently own Institutional Shares
of the Fund whose Shares are being acquired, a new account will be established
with the same registration, dividend and capital gain options as the account
from which shares are exchanged, unless otherwise specified in writing by the
shareholder with all signatures guaranteed. See "Redemption By Mail" for
information on signature guarantees. The exchange privilege may be modified or
terminated at any time, or from time to time, by the Company, upon 60 days'
written notice to shareholders.
If an exchange is to a new account in a Fund advised by the Adviser, the
dollar value of the Shares acquired must equal or exceed the Fund's minimum for
a new account; if to an existing account, the dollar value must equal or exceed
the Fund's minimum for additional investments. If an amount remains in the Fund
from which the exchange is being made that is below the minimum account value
required, the account will be subject to involuntary redemption.
34
<PAGE>
The Funds' exchange privilege is not intended to afford shareholders a way
to speculate on short-term movements in the market. Accordingly, in order to
prevent excessive use of the exchange privilege that may potentially disrupt the
management of the Funds and increase transaction costs, the Funds have
established a policy of limiting excessive exchange activity. Shareholders are
entitled to six (6) exchange redemptions (at least 30 days apart) from each Fund
during any twelve-month period. Notwithstanding these limitations, the Funds
reserve the right to reject any purchase request (including exchange purchases
from other Boston Partners Funds) that is deemed to be disruptive to efficient
portfolio management.
DIVIDENDS AND DISTRIBUTIONS
Each Fund will distribute substantially all of its net investment income
and net realized capital gains, if any, to its shareholders. All distributions
are reinvested in the form of additional full and fractional Shares of the Fund
unless a shareholder elects otherwise.
Each Fund will declare and pay dividends from net investment income
annually, except the Boston Partners Bond Fund, which will declare and pay
dividends from net investment income monthly. Net realized capital gains
(including net short-term capital gains), if any, will be distributed by the
Funds at least annually.
TAXES
Each Fund contemplates declaring as dividends each year all or
substantially all of its taxable income, including its net capital gain (the
excess of long-term capital gain over short-term capital loss). Distributions
attributable to the net capital gain of a Fund will be taxable to you as
long-term capital gain, regardless of how long you have held your Shares. Other
Fund distributions will generally be taxable as ordinary income. You will be
subject to income tax on Fund distributions regardless whether they are paid in
cash or reinvested in additional Shares. You will be notified annually of the
tax status of distributions to you.
You should note that if you purchase Shares just before a distribution, the
purchase price will reflect the amount of the upcoming distribution, but you
will be taxable on the entire amount of the distribution received, even though,
as an economic matter, the distribution simply constitutes a return of a portion
of your purchase price. This is known as "buying into a dividend."
You will recognize taxable gain or loss on a sale, exchange or redemption
of your Shares, including an exchange for Shares of another Fund, based on the
difference between your tax basis in the Shares and the amount you receive for
them. (To aid in computing your tax basis, you generally should retain your
account statements for the periods during which you held Shares.)
Any loss realized on Shares held for six months or less will be treated as
a long-term capital loss to the extent of any capital gain dividends that were
received on the Shares.
The one major exception to these tax principles is that distributions on,
and sales, exchanges and redemptions of, Shares held in an IRA (or other
tax-qualified plan) will not be currently taxable.
Shareowners may also be subject to state and local taxes on distributions
and redemptions. State income taxes may not apply however, to the portions of
each Fund's distributions, if any, that are attributable to interest on federal
securities or interest on securities of the particular state or localities
within the state. Shareowners should consult their tax advisers regarding the
tax status of distributions in their state and locality.
The foregoing is only a summary of certain tax considerations under current
law, which may be subject to change in the future. Shareholders who are
nonresident aliens, foreign trusts or estates, or foreign corporations or
partnerships, may be subject to different United States federal income tax
treatment. You should consult your tax adviser for further information regarding
federal, state, local and/or foreign tax consequences relevant to your specific
situation.
35
<PAGE>
MULTI-CLASS STRUCTURE
Each Fund also offers Investor Shares, which are offered directly to
individual investors in a separate prospectus. Shares of each class of the Funds
represent equal pro rata interests and accrue dividends and calculate net asset
value and performance quotations in the same manner. The performance of each
class is quoted separately due to different actual expenses. The total return on
Institutional Shares of a Fund can be expected to differ from the total return
on Investor Shares of the same Fund. Information concerning Investor class
shares of the Funds can be requested by calling the Fund at (888) 261-4073.
36
<PAGE>
BOSTON PARTNERS FAMILY OF FUNDS
OF
THE RBB FUND, INC.
(888) 261-4073
HTTP://WWW.BOSTONPARTNERSFUNDS.COM
FOR MORE INFORMATION:
This prospectus contains important information you should know before you
invest. Read it carefully and keep it for future reference. More information
about the BOSTON PARTNERS FAMILY OF FUNDS is available free, upon request,
including:
ANNUAL/SEMI-ANNUAL REPORT
These reports contain additional information about each of the Fund's
investments, describe each of the Fund's performance, list portfolio holdings,
and discuss recent market conditions and economic trends. The annual report
includes fund strategies that significantly affected the Funds' performance
during their last fiscal year.
STATEMENT OF ADDITIONAL INFORMATION (SAI)
A Statement of Additional Information, dated December 1, 1999 (SAI), has
been filed with the Securities and Exchange Commission. The SAI, which includes
additional information about the BOSTON PARTNERS FAMILY OF FUNDS, may be
obtained free of charge, along with the annual and semi-annual reports, by
calling (888) 261-4073. The SAI, as supplemented from time to time, is
incorporated by reference into this Prospectus.
SHAREHOLDER INQUIRIES
Representatives are available to discuss account balance information,
mutual fund prospectuses, literature, programs and services available. Hours: 8
a.m. to 6 p.m. (Eastern time) Monday-Friday. Call: (888) 261-4073 or visit the
website of Boston Partners Asset Management L.P. at
http://www.bostonpartnersfunds.com.
PURCHASES AND REDEMPTIONS
Call (888) 261-4073.
WRITTEN CORRESPONDENCE
Post Office Address: BOSTON PARTNERS FAMILY OF FUNDS, c/o PFPC, Inc. PO Box
8852, Wilmington, DE 19899-8852
Street Address: BOSTON PARTNERS FAMILY OF FUNDS, c/o PFPC, Inc. 400
Bellevue Parkway, Wilmington, DE 19809
SECURITIES AND EXCHANGE COMMISSION (SEC)
You may also view information about The RBB Fund, Inc. and the BOSTON
PARTNERS FAMILY OF FUNDS, including the SAI, by visiting the SEC website
(http://www.sec.gov) or the SEC's Public Reference Room in Washington, D.C.
Information about the operation of the public reference room can be obtained by
calling the SEC directly at 1-202-942-8090. Copies of this information can be
obtained, for a duplicating fee, by writing to the Public Reference Section of
the SEC, Washington, D.C. 20549-0102, or by electronic request to
[email protected].
INVESTMENT COMPANY ACT FILE NO. 811-05518
37
<PAGE>
(THIS PAGE INTENTIONALLY LEFT BLANK.)
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS OR IN RBB'S STATEMENT OF
ADDITIONAL INFORMATION INCORPORATED HEREIN BY REFERENCE, IN CONNECTION WITH THE
OFFERING MADE BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY RBB OR ITS DISTRIBUTOR.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY RBB OR BY THE DISTRIBUTOR IN
ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE.
INVESTMENT ADVISER
Boston Partners Asset Management, L.P.
Boston, Massachusetts
CUSTODIAN
PFPC Trust Company
Lester, Pennsylvania
TRANSFER AGENT AND ADMINISTRATOR
PFPC Inc.
Wilmington, Delaware
DISTRIBUTOR
Provident Distributors,Inc.
West Conshohocken, Pennsylvania
COUNSEL
Drinker Biddle & Reath LLP
Philadelphia, Pennsylvania
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
<PAGE>
THE SCHNEIDER
SMALL CAP
VALUE FUND
PROSPECTUS
DECEMBER 1, 1999
[GRAPHIC OMITTED]
SCHNEIDER CAPITAL MANAGEMENT
<PAGE>
SCHNEIDER SMALL CAP VALUE FUND
OF THE RBB FUND, INC.
This prospectus gives vital information about the Schneider Small Cap Value
Fund, an investment portfolio of The RBB Fund, Inc. ("RBB"), including
information on investment policies, risks and fees. For your own benefit and
protection, please read it before you invest and keep it on hand for future
reference.
- --------------------------------------------------------------------------------
THE SECURITIES DESCRIBED IN THIS PROSPECTUS HAVE BEEN REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION (SEC). THE SEC, HOWEVER, HAS NOT JUDGED THESE
SECURITIES FOR THEIR INVESTMENT MERIT AND HAS NOT DETERMINED THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANYONE WHO TELLS YOU OTHERWISE IS COMMITTING A
CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
PROSPECTUS December 1, 1999
<PAGE>
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
- ----------------------------------------
A LOOK AT THE GOALS, STRATEGIES,
RISKS AND FINANCIAL HISTORY OF THE FUND.
DETAILS ABOUT THE SERVICE
PROVIDERS.
POLICIES AND INSTRUCTIONS FOR OPENING,
MAINTAINING AND CLOSING AN ACCOUNT
IN ANY OF THE PORTFOLIOS.
- ----------------------------------------
FUND DESCRIPTION
Investment Goal ................................................ 3
Primary Investment Strategies .................................. 3
Key Risks ...................................................... 3
Expenses and Fees .............................................. 4
Financial Highlights ........................................... 5
Additional Information on the Fund's
Investment Objective and Principal Strategies ................. 6
Risks of Investing in the Fund ................................. 7
MANAGEMENT OF THE FUND
Investment Adviser ............................................. 8
Portfolio Manager .............................................. 8
Service Provider Chart ......................................... 9
SHAREHOLDER INFORMATION
Pricing of Fund Shares .........................................10
Purchase of Fund Shares ........................................10
Redemption of Fund Shares ......................................11
Dividends and Distributions ....................................13
Taxes ..........................................................14
FOR MORE INFORMATION ................................................15
2
<PAGE>
SCHNEIDER SMALL CAP VALUE FUND
- --------------------------------------------------------------------------------
INVESTMENT GOAL
The Fund seeks long-term capital growth by investing primarily in common
stocks of companies which have capitalizations that are less than the largest
company in the Russell 2000 Index ("small cap companies") and which Schneider
Capital Management Company (the "Adviser") believes are undervalued. There can
be no guarantee that the Fund will achieve its investment objective.
PRIMARY INVESTMENT STRATEGIES
Under normal market conditions, at least 65% of the Fund's assets will be
invested in small cap companies described above. As of September 30, 1999, the
company with the largest market capitalization in the Russell 2000 Index was
$3.4 billion and the weighted average market capitalization of companies that
comprised the Russell 2000 Index was $800 million. The Russell 2000 Index is an
unmanaged index composed of the 2,000 smallest stocks in the Russell 3000 Index,
a market value weighted index of the 3,000 largest U.S. publicly-traded
companies. As of September 30, 1999, the weighted average capitalization of
companies held by the Fund was $590 million.
KEY RISKS
(BOX)The Fund invests in common stocks which are subject to market,
economic and business risks that will cause their prices to fluctuate
over time. Therefore, the value of your investment in the Fund may go
up and down, sometimes rapidly and unpredictably, and you could lose
money.
(BOX)Stocks of small companies may be more volatile than, and not as
readily marketable as, those of larger companies. Small companies may
also have limited product lines, markets or financial resources and
may be dependent on relatively small or inexperienced management
groups. Additionally, the trading volume of small company securities
may make them more difficult to sell than those of larger companies.
(BOX)Value investing involves the risk that the Fund's investment in
companies whose securities are believed to be undervalued, relative to
their underlying profitability, will not appreciate in value as
anticipated.
3
<PAGE>
EXPENSES AND FEES
As a shareholder you pay certain fees and expenses. Annual Fund operating
expenses are paid out of Fund assets and are reflected in the Fund's price.
The table below describes the fees and expenses that you may pay if you buy
and hold shares of the Fund. The table is based on expenses for the period
September 2, 1998 through August 31, 1999.
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
Redemption fee 1 ......................................... 1.75%
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM
FUND ASSETS)
Management Fees .......................................... 1.00%
Distribution and Service (12b-1) fees .................... None
Other expenses ........................................... 2.90%
-------
Total Annual Fund Operating Expenses ..................... 3.90%
Fee Waiver and Expense Reimbursements2 ................... (2.80)%
-------
Net Expenses ............................................. 1.10%
=======
1. Shares of the Fund not purchased through reinvested dividends or
capital gains distributions and held less than one year are subject to
the above redemption fee. This fee is intended to encourage long-term
investment in the Fund, to avoid transaction and other expenses caused
by early redemption, and to facilitate portfolio management. See
"Redemption of Fund Shares -- Transaction fee on Certain Redemptions"
below for more information.
2. The Adviser has agreed that, until December 31, 2000, it will waive
advisory fees and reimburse expenses to the extent total operating
expenses exceed 1.10%.
EXAMPLE:
THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THE
FUND WITH THE COST OF INVESTING IN OTHER MUTUAL FUNDS. THE EXAMPLE ASSUMES THAT
YOU INVEST $10,000 IN THE FUND FOR THE TIME PERIODS INDICATED AND THEN REDEEM
ALL OF YOUR SHARES AT THE END OF EACH PERIOD. THE EXAMPLE ALSO ASSUMES THAT YOUR
INVESTMENT HAS A 5% RETURN EACH YEAR AND THAT THE FUND'S OPERATING EXPENSES
REMAIN THE SAME, EXCEPT FOR THE EXPIRATION OF THE FEE WAIVERS AND REIMBURSEMENTS
ON DECEMBER 31, 2000. ALTHOUGH YOUR ACTUAL COSTS MAY BE HIGHER OR LOWER, BASED
ON THESE ASSUMPTIONS YOUR COST WOULD BE:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
$291 $932 $1,769 $3,945
4
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The table below sets forth certain financial information for the periods
indicated, including per share information results for a single Fund share. The
term "Total Return" indicates how much your investment would have increased or
decreased during this period of time and assumes that you have reinvested all
dividends and distributions. This information has been derived from the Fund's
financial statements audited by PricewaterhouseCoopers LLP, the Company's
independent accountants. This information should be read in conjunction with the
Fund's financial statements which, together with the report of independent
accountants, are included in the Fund's annual report, which is available upon
request (see back cover for ordering instructions).
FINANCIAL HIGHLIGHTS
SCHNEIDER SMALL CAP VALUE FUND
FOR THE PERIOD
SEPTEMBER 2, 1998*
THROUGH AUGUST 31, 1999
------------------------
PER SHARE OPERATING PERFORMANCE**
Net asset value, beginning of period .................. $ 10.00
Net investment (loss) ................................. (0.02)
Net realized and unrealized gain/(loss)
on investments and foreign
exchange transactions, if any(2) .................. 8.19
-------
Net increase/(decrease) in net assets
resulting from operations .......................... 8.17
-------
Dividends and distributions to
shareholders from:
Net investment income ................................. --
Net realized capital gains ............................ (0.13)
-------
Total dividends and distributions
to shareholders ................................ (0.13)
-------
Net asset value, end of period ........................ $ 18.04
=======
Total investment return(3) ....................... 82.46%
=======
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) ............. $12,924
Ratio of expenses to average net assets(1)(4) ...... 1.10%
Ratio of net investment income to
average net assets(1)(4) ......................... (0.17)%
Portfolio turnover rate ............................... 145.99%
- -----------------
* Commencement of operations.
** Calculated based on shares outstanding on the first and last day of the
period, except for dividends and distributions, if any, which are based on
actual shares outstanding on the dates of distributions.
(1) Reflects waivers and reimbursements.
(2) The amounts shown for each share outstanding throughout the period are not
in accord with the changes in the aggregate gains and losses on investments
during the period because of the timing of sales and repurchases of Fund
shares in relation to fluctuating net asset value during the period.
(3) Not annualized.
(4) Without the waiver of advisory, administration and transfer agent fees and
without the reimbursement of certain operating expenses, the ratio of
expenses to average net assets annualized for the period September 2, 1998
through August 31, 1999 would have been 3.90%, and the ratio of net
investment loss to average net assets would have been (2.97%).
5
<PAGE>
ADDITIONAL INFORMATION ON THE FUND'S INVESTMENT OBJECTIVE AND PRINCIPAL
STRATEGIES
The Fund seeks long-term capital growth by investing primarily in common
stocks of companies which have capitalizations that are less than the largest
company in the Russell 2000 Index and which the Adviser believes are
undervalued. The Fund's investment objective and the policies described above
may be changed by RBB's Board of Directors without the approval of the Fund's
shareholders. However, as a matter of policy, the Fund would not materially
change its investment objective without notifying shareholders.
The Adviser selects securities for the Fund based on a continued study of
trends in industries and companies, industry literature, company reports,
financial reports, company presentations, earnings power and growth and other
investment criteria.
The Fund may invest in securities that the Adviser believes may exhibit the
following characteristics:
(BOX)have low price-to-earnings and low price-to-book value ratios;
(BOX)are typically considered out of favor by the market as a result of
decelerating revenue growth, declining profit margins and increasing
competition.
The Fund may sell securities when the Adviser believes:
(BOX)a security becomes widely recognized by the professional investment
community as a result of accelerating revenue growth, expanding
margins and decreased competition;
(BOX)a security appreciates in value to the point that it is considered to
be overvalued;
(BOX)the Fund's holdings should be rebalanced to include a more attractive
stock or stocks; or
(BOX)an issuer's earnings potential is in jeopardy.
The Fund 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. The Fund will invest in convertible securities without regard to their
credit ratings.
The Fund may invest up to 20% of the value of its net assets in securities
of foreign issuers including American Depository Receipts ("ADRs"). ADRs are
receipts typically issued by a U.S. bank or trust company which evidence
ownership of underlying securities issued by a foreign corporation. For the
purposes of the percentage limitation above, a security of a foreign company
whose primary business is in the U.S. will not be considered a foreign security
if it is denominated in U.S. dollars and is principally traded on a U.S.
exchange.
While the Adviser intends to fully invest the Fund's assets at all times in
accordance with the above-mentioned policies, the Fund reserves the right to
hold up to 100% of its assets, as a temporary defensive measure, in cash and
eligible U.S. dollar-denominated money market instruments. Eligible money market
instruments include bank obligations, such as certificates of deposit and
bankers' acceptances issued by foreign or domestic banks or financial
institutions that have total assets of more than $2.5 billion, and commercial
paper rated in the top rating category by S&P, Moody's, D&P or Fitch and unrated
commercial paper determined to be of comparable quality by the Adviser. The
Adviser will determine when market conditions warrant temporary defensive
measures.
6
<PAGE>
RISKS OF INVESTING IN THE FUND
Investing in the Fund involves the following principal risks:
SMALL COMPANY RISK. Investments in common stocks in general are subject to
market, economic and business risks that will cause their price to fluctuate
over time. Therefore, an investment in the Fund may be more suitable for
long-term investors who can bear the risk of these fluctuations. Furthermore,
while securities of small capitalization companies may offer greater opportunity
for capital appreciation than larger companies, investment in such companies
presents greater risks than investment in larger, more established companies.
Indeed, historically, small capitalization stocks have been more volatile in
price than larger capitalization stocks. Among the reasons for the greater price
volatility of these securities are the lower degree of liquidity in the markets
for such stocks, and the potentially greater sensitivity of such small companies
to changes in or failure of management, and in many other changes in
competitive, business, industry and economic conditions, including risks
associated with limited product lines, markets, management depth, or financial
resources. Besides exhibiting greater volatility, micro and small company stocks
may, to a degree, fluctuate independently of larger company stocks. Small
company stocks may decline in price as large company stocks rise, or rise in
price as large company stocks decline. Investors should therefore expect that
the price of the Fund's shares will be more volatile than the shares of a fund
that invests in larger capitalization stocks. Additionally, while the markets in
securities of small companies have grown rapidly in recent years, such
securities may trade less frequently and in smaller volume than more widely held
securities. The values of these securities may fluctuate more sharply than those
of other securities, and the Fund may experience some difficulty in establishing
or closing out positions in these securities at prevailing market prices. There
may be less publicly available information about the issuers of these securities
or less market interest in such securities than in the case of larger companies,
and it may take a longer period of time for the prices of such securities to
reflect the full value of their issuers' underlying earnings potential or
assets.
FOREIGN SECURITY RISK: Since foreign securities are usually denominated in
foreign currencies, the value of the Fund's portfolio could be affected by
currency exchange rates and exchange control regulations. Other risks include:
(BOX)seizure, expropriation or nationalization of a company's assets;
(BOX)less publicly available information and differing regulations and
standards;
(BOX)the impact of political, social or economic instability, or
diplomatic events;
(BOX)securities that are less liquid and harder to value than those of a
U.S. issuer.
As a result of these risks, the Fund may be more volatile than a fund
investing solely in U.S. companies. These risks may be greater if the Fund
invests in developing countries.
OPPORTUNITY RISK. As with all mutual funds, the Fund is subject to the risk
of missing out on an opportunity because the assets necessary to take advantage
of it are tied up in less advantageous investments.
VALUE STOCK RISK. Although the Fund will invest in stocks the Adviser
believes to be undervalued, there is no guarantee that the prices of these
stocks will not move even lower.
TEMPORARY INVESTMENT RISK. 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. When the
Fund's assets are invested in these instruments, the Fund may not be achieving
its investment objective.
CONVERTIBLE SECURITIES RISK. When interest rates increase, fixed-income
securities will decline in value. In particular, convertible securities
frequently have speculative characteristics and may be acquired without regard
to minimum quality ratings. Convertible securites and obligations rated in the
lowest of the top four rating categories are subject to greater credit and
interest rate risk than higher rated securities.
7
<PAGE>
YEAR 2000 RISK. The Fund, like any business, could be affected if the
computer systems on which it relies do not properly process information
beginning on January 1, 2000. While Year 2000 issues could have a negative
effect on the Fund, the Adviser and PFPC are currently working to avoid such
problems. The Adviser and PFPC are also working with other systems providers and
vendors to determine their systems' ability to handle Year 2000 problems. There
is no guarantee, however, that systems will work properly on or after January 1,
2000. Year 2000 problems may also hurt issuers whose securities the Fund holds
or securities markets generally.
MANAGEMENT OF THE FUND
- --------------------------------------------------------------------------------
INVESTMENT ADVISER
Schneider Capital Management Company, located at 460 East Swedesford Road,
Suite 1080, Wayne, PA 19087, serves as the Fund's investment adviser. The
Adviser provides investment management and investment advisory services to
investment companies and other institutional accounts that had aggregate total
assets under management of approximately $500 million as of September 30, 1999.
Schneider Capital Management Company is 100% employee-owned, and was founded in
1996.
For the fiscal year ended August 31, 1999, the Adviser received no fees due
to a waiver of its investment advisory fee for the period September 2, 1998
through August 31, 1999.
PORTFOLIO MANAGER
The President and Chief Investment Officer of the Adviser, Arnold C.
Schneider III, is primarily responsible for the day-to-day management of the
Fund's investment portfolio. Mr. Schneider founded the Adviser in 1996, and has
managed the Fund since its inception. Prior to 1996, he was a senior vice
president and partner of Wellington Management Company, where he was responsible
for institutional accounts and mutual fund portfolios since 1987.
8
<PAGE>
------------
SHAREHOLDERS
------------
Distribution and
Shareholder Services
------------------------------------ -----------------------------------------
PRINCIPAL DISTRIBUTOR TRANSFER AGENT
PROVIDENT DISTRIBUTORS, INC. PFPC INC.
FOUR FALLS CORPORATE CENTER, 6TH FL. 400 BELLEVUE PARKWAY
WEST CONSHOHOCKEN, PA 19428 WILMINGTON, DE 19809
Distributes shares of the Fund. Handles shareholder services,
including record-keeping and statements,
distribution of dividends and processing
of buy and sell requests.
------------------------------------ -----------------------------------------
Asset
Management
------------------------------------ -----------------------------------------
INVESTMENT ADVISER CUSTODIAN
SCHNEIDER CAPITAL PFPC TRUST COMPANY
MANAGEMENT COMPANY 200 STEVENS DRIVE
460 EAST SWEDESFORD ROAD, SUITE 1080 LESTER, PA 19113
WAYNE, PA 19087
Holds the Fund's assets, settles
Manages the Fund's business all portfolio trades and collects
and investment activities. most of the valuation data
required for calculating the
Fund's net asset value ("NAV").
------------------------------------ -----------------------------------------
Fund
Operations
------------------------------------
ADMINISTRATOR AND FUND
ACCOUNTING AGENT
PFPC INC.
400 BELLEVUE PARKWAY
WILMINGTON, DE 19809
Provides facilities, equipment
and personnel to carry out
administrative services related
to the Fund and calculates the
Fund's NAV, dividends
and distributions.
------------------------------------
---------------------------------
BOARD OF DIRECTORS
Supervises the Fund's activities.
---------------------------------
9
<PAGE>
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
PRICING OF FUND SHARES
Shares of the Fund are priced at their net asset value ("NAV"). The NAV of
the Fund is calculated as follows:
Value of Assets Attributable to a Class
NAV = - Value of Liabilities Attributable to the Same Class
-----------------------------------------------------
Number of Outstanding Shares of the Class
The Fund's NAV is calculated as of the close of regular trading hours
(currently 4:00 p.m. Eastern time) on each day the New York Stock Exchange (the
"NYSE") is open for business. The Fund will effect purchases or redemptions of
Fund shares at the next NAV calculated after receipt of your order or request in
proper form as described below under "Initial Investment by Mail."
Equity securities held by the Fund are valued using the closing price or
the last sale price on the exchange or in the principal over-the-counter market
where they are traded. If the last sale price is unavailable, the last available
quote or last bid price is normally used. Debt securities held by the Fund
generally are valued based on quoted bid prices. Short term debt investments
having maturities of 60 days or less are amortized to maturity based on their
cost. If market quotations are unavailable or if an event occurs after the close
of an exchange that is expected to materially affect the value of a security
held by the Fund, securities and other assets will be valued at fair value as
determined in good faith by the Adviser according to procedures adopted by the
Fund's Board of Directors.
If the Fund holds foreign equity securities, the calculation of the Fund's
NAV will not occur at the same time as the determination of the value of the
foreign equity securities in the Fund's portfolio, since these securities are
traded on foreign exchanges. Additionally if the foreign equity securities held
by the Fund trade on days when the Fund does not price its shares, the NAV of
the Fund's shares may change when shareholders will not be able to purchase or
redeem the Fund's shares. As a result, the Fund's pricing may not reflect
fluctuations in the value of foreign securities.
PURCHASE OF FUND SHARES
Shares are offered on a continuous basis and are sold without any sales
charges. You may purchase Fund Shares directly from the Fund at the NAV per
share next calculated after your order is received by the Transfer Agent in
proper form. After an initial purchase is made, the Transfer Agent will set up
an account for you on the Fund's records, which will show all of your
transactions and the balance of the shares you own. You can only purchase shares
on days the NYSE is open and through the means described below. Initial
investments in the Fund must be at least $20,000, and subsequent minimum
investments must be at least $2,500. For purposes of meeting the minimum initial
purchase, clients which are part of endowments, foundations or other related
groups may be aggregated. The Fund's officers are authorized to waive the
minimum initial and subsequent investment requirements.
Investors may be charged a fee if they effect transactions through a broker
or agent. Brokers and other intermediaries are authorized to accept orders on
the Fund's behalf and those orders will receive the following day's NAV.
10
<PAGE>
INITIAL INVESTMENT BY MAIL. Subject to acceptance by the Fund, an account
may be opened by completing and signing an Account Application and mailing it to
the Fund at the address noted below, together with a check payable to Schneider
Small Cap Value Fund. Third party endorsed checks or foreign checks will not be
accepted.
Schneider Small Cap Value Fund
c/o PFPC Inc.
P.O. Box 8945
Wilmington, DE 19899
Subject to acceptance by the Fund, payment for the purchase of shares
received by mail will be credited to a shareholder's account at the NAV per
share of the Fund next determined after receipt of payment in good order.
INITIAL INVESTMENT BY WIRE. Subject to acceptance by the Fund, shares may
be purchased by wiring federal funds to PNC Bank (see instructions below). A
completed Account Application must be forwarded to the Transfer Agent at the
address noted above under "Initial Investment by Mail" in advance of the wire.
Notification must be given to the Transfer Agent at (888) 520-3277 prior to 4:00
p.m., Eastern time, on the wire date. (Prior notification must also be received
from investors with existing accounts.) Funds should be wired to:
PNC Bank, NA
Philadelphia, Pennsylvania 19103
ABA# 0310-0005-3
Account #86-0172-6452
F/B/O Schneider Small Cap Value Fund
Ref. (Shareholder's Name; Account Number)
Federal funds purchases will be accepted only on a day on which the Fund
and PNC Bank, NA are open for business.
ADDITIONAL INVESTMENTS. Additional investments may be made at any time
($2,500 minimum) by purchasing shares at NAV by mailing a check to the Transfer
Agent at the address noted above under "Initial Investment by Mail" (payable to
Schneider Small Cap Value Fund) or by wiring monies to the custodian bank as
outlined above under "Initial Investment by Wire." Notification must be given to
the Transfer Agent at (888) 520-3277 prior to 4:00 p.m., Eastern time, on the
wire date. Initial and additional purchases made by check cannot be redeemed
until payment of the purchase has been collected, which may take up to fifteen
days from the purchase date.
OTHER PURCHASE INFORMATION. The Fund reserves the right, in its sole
discretion, to suspend the offering of Shares or to reject purchase orders when,
in the judgment of management, such suspension or rejection is in the best
interest of the Fund.
Purchases of the Fund's shares will be made in full and fractional shares
of the Fund calculated to three decimal places.
REDEMPTION OF FUND SHARES
You may redeem Shares of the Fund at the next NAV calculated after a
redemption request is received by the Transfer Agent in proper form. You can
only redeem shares of the Fund on days the NYSE is open and through the means
described below.
You may redeem Shares of the Fund by mail, or, if you are authorized, by
telephone. The value of shares redeemed may be more or less than the purchase
price, depending on the market value of the investment securities held by the
Fund. There is no charge for redemptions of shares held for more than 1 year.
11
<PAGE>
REDEMPTION BY MAIL. Your redemption requests should be addressed to
Schneider Small Cap Value Fund, c/o PFPC Inc., P.O. Box 8945, Wilmington, DE
19899 and must include:
(BOX)a letter of instruction, if required, or a stock assignment specifying
the number of shares or dollar amount to be redeemed, signed by all
registered owners of the shares in the exact names in which they are
registered;
(BOX)any required signature guarantees, which are required when (i) the
redemption request proceeds are to be sent to someone other than the
registered shareholder(s), (ii) the redemption request is for $10,000
or more, or (iii) a share transfer request is made. A signature
guarantee may be obtained from a domestic bank or trust company,
broker, dealer, clearing agency or savings association who are
participants in a Medallion Program recognized by the Securities
Transfer Association. The three recognized Medallion Programs are
Securities Transfer Agent Medallion Program (STAMP), Stock Exchanges
Medallion Program (SEMP) and New York Stock Exchange, Inc. Medallion
Program (MSP). Signature Guarantees, which are not a part of these
programs, will not be accepted. Please note that a notary public stamp
or seal is not acceptable; and
(BOX)other supporting legal documents, if required, in the case of
estates, trusts, guardianships, custodianships, corporations, pension
and profit sharing plans and other organizations.
REDEMPTION BY TELEPHONE. In order to utilize the Telephone Redemption
Option, you must indicate that option on your Account Application. You may then
initiate a redemption of shares by calling the Transfer Agent at (888) 520-3277
and requesting that the redemption proceeds be mailed to the primary
registration address or wired per the authorized instructions. If the Telephone
Redemption Option is authorized, the Transfer Agent may act on telephone
instructions from any person representing himself or herself to be a shareholder
and believed by the Transfer Agent to be genuine. The Transfer Agent's records
of such instructions are binding and shareholders, not the Fund or its Transfer
Agent, bear the risk of loss in the event of unauthorized instructions
reasonably believed by the Fund or its Transfer Agent to be genuine. The
Transfer Agent will employ reasonable procedures to confirm that instructions
communicated are genuine and, if it does not, it may be liable for any losses
due to unauthorized or fraudulent instructions. The procedures employed by the
Transfer Agent in connection with transactions initiated by telephone include
tape recording of telephone instructions and requiring some form of personal
identification prior to acting upon instructions received by telephone.
TRANSACTION FEE ON CERTAIN REDEMPTIONS. The Fund requires the payment of a
transaction fee on redemptions of Shares held for less than one year equal to
1.75% of the net asset value of such Shares redeemed at the time of redemption.
This additional transaction fee is paid to the Fund, NOT to the adviser,
distributor or transfer agent. It is NOT a sales charge or a contingent deferred
sales charge. The fee does not apply to redeemed Shares that were purchased
through reinvested dividends or capital gain distributions. The purpose of the
additional transaction fee is to indirectly allocate transaction costs
associated with redemptions to those investors making redemptions after holding
their shares for a short period, thus protecting existing shareholders. These
costs include: (1) brokerage costs; (2) market impact costs -- i.e., the
decrease in market prices which may result when the Fund sells certain
securities in order to raise cash to meet the redemption request; (3) the
realization of capital gains by the other shareholders in the Fund; and (4) the
effect of the "bid-ask" spread in the over-the-counter market. The 1.75% amount
represents the Fund's estimate of the brokerage and other transaction costs
which may be incurred by the Fund in disposing of stocks in which the Fund may
invest. Without the additional transaction fee, the Fund would generally be
selling its shares at a price less than the cost to the Fund of acquiring the
portfolio securities necessary to maintain its investment characteristics,
resulting in reduced investment performance for all shareholders in the Fund.
With the additional transaction fee, the transaction costs of selling additional
stocks are not borne by all existing shareholders, but the source of funds for
these costs is the transaction fee paid by those investors making redemptions.
For purposes of this redemption feature, shares purchased first will be
considered to be shares first redeemed.
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SYSTEMATIC WITHDRAWAL PLAN. If your account has a value of at least
$20,000, you may establish a Systematic Withdrawal Plan and receive regular
periodic payments. A request to establish a Systematic Withdrawal Plan must be
submitted in writing to the Transfer Agent at P.O. Box 8945, Wilmington Delaware
19899. Each withdrawal redemption will be processed on or about the 25th of the
month and mailed as soon as possible thereafter. There are no service charges
for maintenance; the minimum amount that you may withdraw each period is $100.
(This is merely the minimum amount allowed and should not be mistaken for a
recommended amount.) The holder of a Systematic Withdrawal Plan will have any
income dividends and any capital gains distributions reinvested in full and
fractional shares at net asset value. To provide funds for payment, Shares will
be redeemed in such amount as is necessary at the redemption price. The
systematic withdrawal of Shares may reduce or possibly exhaust the Shares in
your account, particularly in the event of a market decline. As with other
redemptions, a systematic withdrawal payment is a sale for federal income tax
purposes. Payments made pursuant to a Systematic Withdrawal Plan cannot be
considered as actual yield or income since part of such payments may be a return
of capital.
You will ordinarily not be allowed to make additional investments of less
than the aggregate annual withdrawals under the Systematic Withdrawal Plan
during the time you have the plan in effect. You will receive a confirmation of
each transaction showing the sources of the payment and the Share and cash
balance remaining in your account. The Systematic Withdrawal Plan may be
terminated on written notice by the shareholder or by the Fund and will
terminate automatically if all Shares are liquidated or withdrawn from the
account or upon the death or incapacity of the shareholder. You may change the
amount and schedule of withdrawal payments or suspend such payments by giving
written notice to the Fund's transfer agent at least ten Business Days prior to
the end of the month preceding a scheduled payment.
OTHER REDEMPTION INFORMATION. Redemption proceeds for shares of the Fund
recently purchased by check may not be distributed until payment for the
purchase has been collected, which may take up to fifteen days from the purchase
date. Shareholders can avoid this delay by utilizing the wire purchase option.
If the Board of Directors determines that it would be detrimental to the
best interests of the remaining shareholders of the Fund to make payment wholly
or partly in cash, redemption proceeds may be paid in whole or in part by an
in-kind distribution of readily marketable securities held by the Fund instead
of cash in conformity with applicable rules of the SEC. Investors generally will
incur brokerage charges on the sale of portfolio securities so received in
payment of redemptions. The Fund has elected, however, to be governed by Rule
18f-1 under the Investment Company Act of 1940, so that the Fund is obligated to
redeem its shares solely in cash up to the lesser of $250,000 or 1% of its net
asset value during any 90-day period for any one shareholder of the Fund.
INVOLUNTARY REDEMPTION. The Fund reserves the right to redeem your account
at any time the net asset value of the account falls below $5,000 as the result
of a redemption or an exchange request.
You will be notified in writing that the value of your account is less than
$5,000 and will be allowed 30 days to make additional investments before the
redemption is processed.
DIVIDENDS AND DISTRIBUTIONS
The Fund will distribute substantially all of the net investment income and
net realized capital gains, if any, of the Fund to the Fund's shareholders. All
distributions are reinvested in the form of additional full and fractional
Shares unless you elect otherwise.
The Fund will declare and pay dividends from net investment income annually
and pays them in the calendar year in which they are declared. Net realized
capital gains (including net short-term capital gains), if any, will be
distributed at least annually.
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TAXES
FEDERAL TAXES. The Fund contemplates declaring as dividends each year all
or substantially all of its taxable income, including its net capital gain (the
excess of long-term capital gain over short-term capital loss). Distributions
attributable to the net capital gain of the Fund will be taxable to you as
long-term capital gain, regardless of how long you have held your shares. Other
Fund distributions (other than exempt-interest dividends, discussed below) will
generally be taxable as ordinary income. You will be subject to income tax on
Fund distributions regardless whether they are paid in cash or reinvested in
additional shares. You will be notified annually of the tax status of
distributions to you.
You should note that if you purchase shares just before a distribution, the
purchase price will reflect the amount of the upcoming distribution, but you
will be taxable on the entire amount of the distribution received, even though,
as an economic matter, the distribution simply constitutes a return of a portion
of your purchase price. This is known as "buying into a dividend."
You will recognize taxable gain or loss on a sale, exchange or redemption
of your shares, based on the difference between your tax basis in the shares and
the amount you receive for them. (To aid in computing your tax basis, you
generally should retain your account statements for the periods during which you
held shares.)
Any loss realized on shares held for six months or less will be treated as
a long-term capital loss to the extent of any capital gain dividends that were
received on the shares.
The one major exception to these tax principles is that distributions on,
and sales, exchanges and redemptions of, shares held in an IRA (or other
tax-qualified plan) will not be currently taxable.
The foregoing is only a summary of certain tax considerations under current
law, which may be subject to change in the future. Shareholders who are
nonresident aliens, foreign trusts or estates, or foreign corporations or
partnerships, may be subject to different United States federal income tax
treatment. You should consult your tax adviser for further information regarding
federal, state, local and/or foreign tax consequences relevant to your specific
situation.
The Fund may be required to withhold federal income tax at a rate of 31%
("backup withholding") from dividends and redemption proceeds paid to
non-corporate shareholders. This tax may be withheld from dividends if (i) you
fail to furnish the Fund with your correct taxpayer identification number, (ii)
the Internal Revenue Service ("IRS") notifies the Fund that you have failed to
report properly certain interest and dividend income to the IRS and to respond
to notices to that effect, or (iii) when required to do so, you fail to certify
that you are not subject to backup withholding.
STATE AND LOCAL TAXES. Shareowners may also be subject to state and local
taxes on distributions and redemptions. State income taxes may not apply,
however, to the portions of the Fund's distributions, if any, that are
attributable to interest on federal securities or interest on securities of the
particular state or localities within the state. Shareowners should consult
their tax advisers regarding the tax status of distributions in their state and
locality.
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THE SCHNEIDER SMALL CAP VALUE FUND
FOR MORE INFORMATION:
This prospectus contains important information you should know before you
invest. Read it carefully and keep it for future reference. More information
about the Schneider Small Cap Value Fund is available free, upon request,
including:
ANNUAL/SEMI-ANNUAL REPORT
These reports contain additional information about the Fund's investments,
describe the Fund's performance, list portfolio holdings, and discuss recent
market conditions and economic trends. The annual report includes fund
strategies that significantly affected the Fund's performance during its last
fiscal year.
STATEMENT OF ADDITIONAL INFORMATION (SAI)
A Statement of Additional Information, dated December 1, 1999, has been
filed with the Securities and Exchange Commission. The SAI, which includes
additional information about the Schneider Small Cap Value Fund, may be obtained
free of charge, along with the Schneider Small Cap Value Fund annual and
semi-annual reports, by calling (888) 520-3277. The SAI, as supplemented from
time to time, is incorporated by reference into this Prospectus (and is legally
considered a part of this Prospectus).
SHAREHOLDER ACCOUNT SERVICE REPRESENTATIVES
Representatives are available to discuss account balance information,
mutual fund prospectuses, literature, programs and services available. Hours: 8
a.m. to 6 p.m. (Eastern time) Monday-Friday. Call: (888) 520-3277.
PURCHASES AND REDEMPTIONS
Call your registered representative or (888) 520-3277.
WRITTEN CORRESPONDENCE
Post Office Address: Schneider Small Cap Value Fund
c/o PFPC, Inc. PO Box 8945,
Wilmington, DE 19899
Street Address: Schneider Small Cap Value Fund,
c/o PFPC, Inc. 400 Bellevue Parkway,
Wilmington, DE 19809
SECURITIES AND EXCHANGE COMMISSION (SEC)
You may also view information about The RBB Fund, Inc. and the Schneider
Small Cap Value Fund, including the SAI, by visiting the SEC website
(http://www.sec.gov) or the SEC's Public Reference Room in Washington, D.C.
Information about the operation of the public reference room can be obtained by
calling the SEC directly at 1-202-942-8090. Copies of this information can be
obtained, for a duplicating fee, by writing to the Public Reference Section of
the SEC, Washington, D.C. 20549-0102, or by electronic request to
[email protected].
INVESTMENT COMPANY ACT FILE NO. 811-05518
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS OR IN RBB'S STATEMENT OF
ADDITIONAL INFORMATION INCORPORATED HEREIN BY REFERENCE, IN CONNECTION WITH THE
OFFERING MADE BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY RBB OR ITS DISTRIBUTOR.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY RBB OR BY THE DIS-TRIBUTOR IN
ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE.
INVESTMENT ADVISER
Schneider Capital Management Company
Wayne, Pennsylvania
CUSTODIAN
PFPC Trust Company
Lester, Pennsylvania
TRANSFER AGENT AND ADMINISTRATOR
PFPC Inc.
Wilmington, Delaware
DISTRIBUTOR
Provident Distributors, Inc.
West Conshohocken, Pennsylvania
COUNSEL
Drinker Biddle & Reath LLP
Philadelphia, Pennsylvania
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
