--------------------------------------------------------------------------------
THE SCHNEIDER
SMALL CAP
VALUE FUND
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
ANNUAL
REPORT
AUGUST 31, 2000
--------------------------------------------------------------------------------
[SCHNEIDER CAPITAL MANAGEMENT LOGO OMITTED]
SCHNIEDER CAPITAL MANAGEMENT
<PAGE>
SCHNEIDER
SMALL CAP VALUE FUND
ANNUAL INVESTMENT ADVISER'S REPORT
AUGUST 31, 2000
Dear Fellow Shareholder:
We are pleased to provide you with the report of the Schneider Small Cap
Value Fund for the fiscal year ended August 31, 2000.
The Fund earned a solid +14.84% total return (capital appreciation plus
reinvested dividends) during the latest six month period ended August 31, 2000.
Our since inception return continued to be excellent at 107.50%. As the table
below illustrates, our fund's six-month, one year and since inception total
returns have exceeded those of the unmanaged Russell 2000 Value Index.
<TABLE>
<CAPTION>
Six-months 1 year Inception-to-date
<S> <C> <C> <C>
Schneider Small Cap Value Fund 14.84% 13.72% 107.50%
Russell 2000 Value Index 10.57% 13.70% 27.23%
</TABLE>
The U.S. broad market produced modest gains over the past six months
despite extreme volatility during the period. As we expected, six rate increases
have finally taken their toll as the U.S. economy began its much needed
deceleration. In general, small cap stocks performed quite well during the
period, outperforming large caps by a substantial margin.
Healthcare and Energy were the top performing sectors within the Russell
2000 Value Index and the Fund benefitted from overweightings in these areas
during the period. Two key holdings of the Fund in the healthcare sector,
Coventry Healthcare and Foundation Health Systems, doubled in price over the
period responding to receding HMO litigation worry and strong underlying
fundamentals. The well publicized run-up in oil prices helped move stocks in our
energy sector higher.
The Fund was also overweighted with insurance and agriculture (equipment
and fertilizer) stocks. Agriculture stocks were impacted by heavy rains that
caused grain prices to fall, which has delayed their upside potential. However,
commercial line insurance stocks performed well as pricing improved sharply for
these companies.
<PAGE>
SCHNEIDER
SMALL CAP VALUE FUND
ANNUAL INVESTMENT ADVISER'S REPORT
AUGUST 31, 2000
OUTLOOK
We continue to add stocks within the hospitals and savings and loan
industry to the fund. The hospital segment has been devastated by the effects of
massive government cutbacks and with most of the industry losing money, it
appears to us that the political winds have shifted and future legislation is
likely to benefit the industry. Additionally, pricing to HMO's is accelerating
after several years of declines. We believe savings and loans also show promise
for the future. Earnings have been poor because of the inverted yield curve. We
expect the yield curve to normalize which should help earnings rebound and push
valuations higher.
Domestically, it is our opinion that consumption must slow to correct the
imbalances in the economy. We believe that a consumer savings rate of near zero,
a record trade deficit exceeding 4% of GDP, and record private sector debt will
prevent strong growth. The end of the speculative bubble in NASDAQ stocks we
expect will further slow consumption. With a flat yield curve, our outlook is
for a U.S. slowdown given the explosive growth of credit. However, we believe
interest rates have likely peaked, a positive for small cap stocks.
We are finding no shortage of excellent stocks that fit our strategy. We
believe the Fund can continue its record of strong performance, particularly if
value and small-caps regain favor with the investing public.
Thank your for your investment in the Schneider Small Cap Value Fund.
/S/ SIGNATURE
Arnold C. Schneider III, CFA
Portfolio Manager
Schneider Capital Management
2
<PAGE>
SCHNEIDER
SMALL CAP VALUE FUND
ANNUAL INVESTMENT ADVISER'S REPORT
AUGUST 31, 2000
Comparison of Change in Value of $10,000 Investment in
Schneider Small Cap Value Fund (1)(2) vs. Russell 2000 Value Index
[line graph omitted]
plot points as follows:
Schneider Russell 2000
Small Cap Value Value Index
9/2/98 . $10000 $10000
9/30/98 10000 10565
10/31/98 11930 10879
11/30/98 12410 11174
12/31/98 12471 11524
1/31/99 13786 11263
2/28/99 12531 10494
3/31/99 13007 10408
4/30/99 15222 11358
5/31/99 16233 11706
6/30/99 18044 12130
7/31/99 18731 11843
8/31/99 18246 11190
9/30/99 17518 10967
10/31/99 16760 10748
11/30/99 17457 10804
12/31/99 18341 11136
1/31/00 17833 10844
2/29/00 18069 11506
3/31/00 19392 11561
4/30/00 19392 11629
5/31/00 19770 11451
6/30/00 19841 11785
7/31/00 19734 12178
8/31/00 20750 12722
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
Total Returns
VALUE ON YEAR ENDED SINCE
AUGUST 31, 2000 AUGUST 31, 2000 INCEPTION(3)
-------------- --------------- ------------
<S> <C> <C> <C>
Schneider Small Cap Value $20,750 13.72% 107.50%
Russell 2000 Value Index $12,722 13.70% 27.23%
--------------------------------------------------------------------------------------------------------------
The Fund's total return is based on an increase in net asset value from
$10.00 per share on September 2, 1998 to $17.57 per share on August 31, 2000,
adjusted for dividends totaling $2.61 per share paid from net realized gains.
<FN>
-----------------
(1) The chart assumes a hypothetical $10,000 initial investment in the Fund made
on September 2, 1998 (inception) and reflects Fund expenses. Investors
should note that the Fund is a professionally managed mutual fund while the
indices are unmanaged, do not incur sales charges and/or expenses and are
not available for investment.
(2) Schneider Capital Management waived a portion of its advisory fee and agreed
to reimburse a portion of the Fund's operating expenses, as necessary, to
maintain the expense limitation, as set forth in the notes to the financial
statements. Total returns shown include fee waivers and expense
reimbursements, if any; total returns would have been lower had there been
no assumption of fees and expenses in excess of expense limitations. Returns
shown include the reinvestment of all dividends and other distributions.
Past performance is not predictive of future performance. Investment return
and principal value will fluctuate, so that your shares, when redeemed, may
be worth more or less than their original cost.
(3) Aggregate return for the period September 2, 1998 (commencement of
operations) through August 31, 2000.
</FN>
</TABLE>
3
<PAGE>
SCHNEIDER
SMALL CAP VALUE FUND
PORTFOLIO OF INVESTMENTS
AUGUST 31, 2000
Shares Value
------- -----------
COMMON STOCKS -- 94.4%
AEROSPACE/DEFENSE -- 1.1%
Orbital Sciences Corp.* ................ 24,000 $ 214,500
-----------
AGRICULTURE -- 1.7%
Corn Products International, Inc. ...... 13,200 331,650
-----------
BANKS - REGIONAL -- 0.8%
Riggs National Corp. ................... 13,100 156,381
-----------
CHEMICALS -- 1.9%
Airgas, Inc.* .......................... 17,800 117,925
IMC Global, Inc. ....................... 16,600 243,812
-----------
361,737
-----------
CHEMICALS & PLASTICS -- 1.0%
Wellman, Inc. .......................... 16,100 194,206
-----------
COMMUNICATION SERVICES -- 1.0%
Metromedia International
Group, Inc.* ........................ 51,200 201,600
-----------
COMPUTER - SOFTWARE -- 0.5%
MSC Software Corp.* .................... 10,500 100,275
-----------
DELIVERY SERVICES -- 1.1%
Fritz Companies, Inc.* ................. 14,900 220,706
-----------
ELECTRICAL EQUIPMENT -- 3.1%
Exide Corp. ............................ 29,300 263,700
Sensormatic Electronics Corp.* ......... 20,400 339,150
-----------
602,850
-----------
ENGINEERING & CONSTRUCTION -- 1.0%
Willbros Group, Inc.* .................. 28,200 197,400
-----------
FARM MACHINERY & EQUIPMENT -- 2.1%
CNH Global N.V ......................... 42,300 415,069
-----------
FINANCE -- 3.3%
AmeriCredit Corp.* ..................... 16,400 453,050
Budget Group, Inc., Class A* ........... 39,800 179,100
-----------
632,150
-----------
Shares Value
------- -----------
FOODS -- 4.3%
International Multifoods Corp. ......... 25,400 $ 414,337
Suiza Foods Corp.* ..................... 5,000 250,000
Tate & Lyle PLC - ADR .................. 11,500 172,009
-----------
836,346
-----------
FOODS - MEAT PROCESSING -- 2.4%
Pilgrim's Pride Corp., Class A ......... 43,500 222,937
Smithfield Foods, Inc.* ................ 9,200 244,375
-----------
467,312
-----------
FOOTWEAR -- 1.4%
Barry (R.G.) Corp.* .................... 41,500 132,281
Finish Line, Inc., (The) Class A* ...... 18,000 142,875
-----------
275,156
-----------
GOLD & SILVER ORES -- 0.0%
Glamis Gold Ltd.* ...................... 1,500 2,437
-----------
HEALTHCARE -- 4.7%
Coventry Health Care, Inc.* ............ 10,800 172,800
Foundation Health Systems, Inc.* ....... 13,600 238,850
Humana, Inc.* .......................... 30,000 256,875
Sierra Health Services, Inc.* .......... 44,500 122,375
United Wisconsin Services, Inc. ........ 23,600 123,900
-----------
914,800
-----------
HEALTHCARE - FACILITIES -- 2.4%
American Retirement Corp.* ............. 33,300 174,825
Sunrise Assisted Living, Inc.* ......... 14,300 284,213
-----------
459,038
-----------
HEALTHCARE - HOSPITAL MANAGEMENT -- 1.2%
Quorum Health Group, Inc.* ............. 17,600 226,600
-----------
HEALTHCARE - MISC. -- 0.5%
Angelica Corp. ......................... 12,400 101,525
-----------
HOMEBUILDING -- 2.6%
Champion Enterprises, Inc.* ............ 25,500 168,937
Clayton Homes, Inc. .................... 20,000 195,000
Oakwood Homes Corp. .................... 85,400 138,775
-----------
502,712
-----------
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
SCHNEIDER
SMALL CAP VALUE FUND
PORTFOLIO OF INVESTMENTS (CONTINUED)
AUGUST 31, 2000
Shares Value
------- -----------
INSURANCE - PROPERTY & CASUALTY -- 11.0%
American Financial Group, Inc. ......... 9,200 $ 228,275
E. W. Blanch Holdings, Inc. ............ 15,900 348,806
HCC Insurance Holdings, Inc. ........... 31,100 656,988
Navigators Group, Inc.* ................ 5,200 60,775
Professionals Group, Inc.* ............. 9,050 207,019
PXRE Group Ltd. ........................ 22,200 302,475
RenaissanceRe Holdings Ltd. ............ 3,500 167,563
Zenith National Insurance Corp. ........ 7,000 162,312
-----------
2,134,213
-----------
INSURANCE - SPECIALTY -- 3.1%
FPIC Insurance Group, Inc.* ............ 37,200 564,975
MIIX Group, Inc. (The) ................. 5,100 41,119
-----------
606,094
-----------
MACHINERY - SPECIALIZED -- 2.1%
Metso Oyj - ADR ........................ 16,800 199,500
Stewart & Stevenson Services, Inc. ..... 12,400 199,950
-----------
399,450
-----------
MANUFACTURING - SPECIALTY -- 1.4%
York International Corp. ............... 11,000 273,625
-----------
METAL MINING -- 1.1%
Brush Wellman, Inc. .................... 9,000 210,375
-----------
NATURAL GAS - DISTRIBUTION -- 0.2%
Star Gas Partners, L.P. ................ 4,321 35,378
-----------
OFFICE/PLANT AUTOMATION -- 0.5%
Unova, Inc.* ........................... 13,000 97,500
-----------
OIL & GAS - REFINING -- 1.5%
Tesoro Petroleum Corp.* ................ 11,700 112,613
Valero Energy Corp. .................... 6,000 180,750
-----------
293,363
-----------
OIL & GAS - SERVICES -- 3.6%
Friede Goldman Halter, Inc.* ........... 36,200 203,625
Smedvig ASA - ADR, Class B ............. 15,400 271,425
Trico Marine Services, Inc.* ........... 15,800 229,100
-----------
704,150
-----------
Shares Value
------- -----------
PACKAGING/CONTAINERS -- 0.7%
Gaylord Containers Corp., Class A* ..... 45,900 $ 126,225
-----------
PAPER -- 4.0%
Longview Fibre Co. ..................... 23,000 261,625
Mercer International, Inc. ............. 51,500 508,563
-----------
770,188
-----------
PLASTIC PRODUCTS -- 2.3%
Tupperware Corp. ....................... 22,200 448,163
-----------
REAL ESTATE -- 1.7%
American Real Estate Partners, L.P.* ... 16,800 149,625
Newhall Land & Farming Co. ............. 7,300 179,763
-----------
329,388
-----------
RETAIL - GROCERY STORES -- 0.8%
The Great Atlantic & Pacific Tea
Co., Inc. ........................... 11,000 154,000
-----------
RETAIL - SPECIALTY -- 1.9%
J. Baker, Inc. ......................... 28,100 140,500
Intertan, Inc.* ........................ 15,650 217,144
-----------
357,644
-----------
SAVINGS & LOAN ASSOCIATIONS -- 7.7%
Bank Plus Corp.* ....................... 49,500 167,063
Bay View Capital Corp. ................. 42,800 417,300
FirstFed Financial Corp.* .............. 15,200 273,600
Republic Security Financal Corp. ....... 19,700 84,956
Washington Federal, Inc. ............... 9,500 197,125
Westcorp, Inc. ......................... 27,600 360,525
-----------
1,500,569
-----------
SEMICONDUCTORS - EQUIPMENT -- 2.1%
Ultratech Stepper, Inc.* ............... 22,800 410,400
-----------
SEMICONDUCTORS - TECHNOLOGY -- 1.0%
General Semiconductor, Inc.* ........... 12,700 184,944
-----------
SERVICES - SPECIALTY -- 0.7%
Billing Concepts Corp.* ................ 10,300 33,475
Policy Management Systems Corp.* ....... 8,000 108,000
-----------
141,475
-----------
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
SCHNEIDER
SMALL CAP VALUE FUND
PORTFOLIO OF INVESTMENTS (CONCLUDED)
AUGUST 31, 2000
Shares Value
------- --------
SHIPPING -- 3.7%
Kirby Corp.* ........................... 10,000 $ 235,625
Overseas Shipholding Group, Inc. ....... 7,600 223,725
Sea Containers Ltd., Class A ........... 5,000 142,500
Tidewater, Inc. ........................ 2,800 113,050
-----------
714,900
-----------
STEEL - SPECIALTY -- 1.6%
NS Group, Inc.* ........................ 18,000 317,250
-----------
TIRES & INNER TUBES -- 0.8%
Titan International, Inc. .............. 29,600 149,850
-----------
UTILITIES -- 2.8%
Avista Corp. ........................... 9,700 178,844
Sierra Pacific Resources ............... 10,700 189,256
Unisource Energy Corp. ................. 10,600 164,962
-----------
533,062
-----------
TOTAL COMMON STOCKS
(Cost $16,797,317) .................. 18,306,656
-----------
CANADIAN COMMON STOCK -- 1.9%
Boardwalk Equities, Inc.* .............. 29,000 235,007
Canadian Hotel Income
Properties, REIT .................... 18,661 122,117
Fairfax Financial Holdings Ltd.* ....... 100 13,427
-----------
TOTAL CANADIAN COMMON STOCK
(Cost $376,935) ................... 370,551
-----------
FRENCH COMMON STOCK -- 2.3%
Compagnie Francaise d'Etudes de
Construction Technip ................ 3,500 454,610
-----------
TOTAL FRENCH COMMON STOCK
(Cost $377,538) ................... 454,610
-----------
Par
(000) Value
------- -----------
CONVERTIBLE BONDS -- 1.1%
PAPER -- 1.1%
Asia Pulp & Paper Convertible
(B3, CCC+)
3.500%, 04/30/03 .................... $320 $ 209,280
-----------
TOTAL CONVERTIBLE BONDS
(Cost $168,763) ................... 209,280
-----------
SHORT-TERM INVESTMENTS -- 0.5%
Wilmington Fund Cash Sweep
6.230%, 09/01/00 .................... 86 86,256
-----------
TOTAL SHORT-TERM INVESTMENTS
(COST $86,256) .................... 86,256
-----------
TOTAL INVESTMENTS -- 100.2%
(Cost $17,806,809) ..................... 19,427,360
-----------
LIABILITIES IN EXCESS
OF OTHER ASSETS -- (0.2%) ........... (33,667)
-----------
NET ASSETS -- 100.0% .................... $19,393,693
===========
------------------
* Non-income producing.
ADR - American Depository Receipt
REIT - Real Estate Investment Trust
The Moody's Investor Service, Inc. and Standard and Poor's Ratings Group's
ratings indicated are the most recent ratings available at August 31, 2000 and
are unaudited.
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
SCHNEIDER
SMALL CAP VALUE FUND
PORTFOLIO OF INVESTMENTS (CONCLUDED)
AUGUST 31, 2000
ASSETS
Investments, at value (cost-- $17,806,809) .......... $19,427,360
Receivable for investments sold ..................... 319,335
Dividends and interest receivable ................... 15,722
Prepaid expenses and other assets ................... 117
-----------
Total Assets ...................................... 19,762,534
-----------
LIABILITIES
Payable for investments purchased ................... 344,191
Accrued expenses payable and other liabilities ...... 24,650
-----------
Total Liabilities ................................. 368,841
-----------
NET ASSETS
Capital stock, $0.001 par value ..................... 1,104
Additional Paid-in capital .......................... 15,110,324
Undistributed net investment income ................. 56,821
Accumulated net realized gain from investments
and foreign exchange transactions, if any ......... 2,604,893
Net unrealized appreciation on investments and
foreign exchange transactions, if any ............. 1,620,551
-----------
Net assets applicable to shares outstanding ......... $19,393,693
===========
Shares outstanding ..................................... 1,103,922
===========
Net asset value, offering and redemption price per share $17.57
===========
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
SCHNEIDER
SMALL CAP VALUE FUND
STATEMENT OF OPERATIONS
FOR THE
YEAR ENDED
AUGUST 31, 2000
---------------
Investment Income
Dividends .............................................. $ 221,853*
Interest ............................................... 19,727
----------
241,580
----------
Expenses
Advisory fees .......................................... 156,943
Administration fees .................................... 105,223
Transfer agent fees and expenses ....................... 26,395
Administrative service fees ............................ 23,541
Printing ............................................... 19,660
Custodian fees and expenses ............................ 19,426
Federal and state registration fees .................... 10,713
Audit and legal fees ................................... 9,340
Directors fees ......................................... 553
Other .................................................. 1,490
----------
Total expenses before waivers ........................ 373,284
Less: Waivers .......................................... (200,647)
----------
Total expenses after waivers ......................... 172,637
----------
Net investment income ..................................... 68,943
----------
Net realized and unrealized gain/(loss) on investments
and foreign exchange transactions:
Net realized gain from:
Investments .......................................... 2,907,534
Foreign currency transactions ........................ 33
Net change in unrealized appreciation/(depreciation) on:
Investments .......................................... (658,926)
Foreign currency transactions ........................ 6
----------
Net realized and unrealized gain on investments
and foreign exchange transactions ...................... 2,248,647
-----------
Net increase in net assets resulting from operations ...... $2,317,590
==========
----------
*Net of foreign withholding taxes of $7,783.
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
SCHNEIDER
SMALL CAP VALUE FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE FOR THE PERIOD
YEAR ENDED SEPTEMBER 2, 1998*
AUGUST 31, 2000 THROUGH AUGUST 31, 1999
--------------- -----------------------
<S> <C> <C>
INCREASE/(DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment income/(loss) ........................................... $ 68,943 $ (12,155)
Net realized gain from investments and
foreign currency transactions, if any ................................ 2,907,567 1,815,110
Net change in unrealized appreciation/(depreciation) on investments and
foreign currency transactions, if any ................................ (658,920) 2,279,471
----------- -----------
Net increase in net assets resulting from operations .................. 2,317,590 4,082,426
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income .................................................. -- --
Net realized capital gains ............................................. (2,065,468) (52,283)
Total dividends and distributions to shareholders .................... (2,065,468) (52,283)
----------- -----------
INCREASE IN NET ASSETS DERIVED FROM CAPITAL SHARE TRANSACTIONS (SEE NOTE 4) 6,217,845 8,893,583
----------- -----------
Total increase in net assets ......................................... 6,469,967 12,923,726
NET ASSETS
Beginning of period .................................................... 12,923,726 --
----------- -----------
End of period .......................................................... $19,393,693 $12,923,726
=========== ===========
<FN>
----------
*Commencement of operations.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
SCHNEIDER
SMALL CAP VALUE FUND
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
Contained below is per share operating performance data for each share
outstanding, total investment return, ratios to
average net assets and other supplemental data for the period. This information
has been derived from information provided in the financial statements.
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE FOR THE PERIOD
YEAR ENDED SEPTEMBER 2, 1998*
AUGUST 31, 2000 THROUGH AUGUST 31, 1999
--------------- -----------------------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE**
Net asset value, beginning of period ......................... $ 18.04 $ 10.00
Net investment income/(loss)(1) .............................. 0.07 (0.02)
Net realized and unrealized gain on investments and
foreign exchange transactions, if any(2) .................. 1.94 8.19
------- -------
Net increase in net assets resulting from operations ......... 2.01 8.17
------- -------
Dividends and distributions to shareholders from:
Net realized capital gains ................................... (2.48) (0.13)
------- -------
Total dividends and distributions to shareholders ............ (2.48) (0.13)
------- -------
Net asset value, end of period ............................... $ 17.57 $ 18.04
======= =======
Total investment return(3) ................................... 13.72% 82.46%
======= =======
RATIO/SUPPLEMENTAL DATA
Net assets, end of period (000's omitted) .................... $19,394 $12,924
Ratio of expenses to average net assets(1) ................... 1.10% 1.10%(4)
Ratio of expense to average net assets without waivers and
expense reimbursements .................................... 2.37% 3.90%(4)
Ratio of net investment income/(loss) to average net assets(1) 0.44% (0.17)%(4)
Portfolio turnover rate ...................................... 84.93% 145.99%
----------
<FN>
* Commencement of operations.
** Calculated based on shares outstanding on the first and last day of the
respective 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 respective
period are not in accord with the changes in the aggregate gains and losses
on investments during the respective period because of the timing of sales
and repurchases of Fund shares in relation to fluctuating net asset value
during the respective period.
(3) Total investment return is calculated assuming a purchase of shares on the
first day and a sale of shares on the last day of each period reported and
includes reinvestments of dividends and distributions, if any. Total
investment returns are not annualized.
(4) Annualized.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
SCHNEIDER
SMALL CAP VALUE FUND
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 2000
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The RBB Fund, Inc. ("RBB") was incorporated under the laws of the State of
Maryland on February 29, 1988 and is registered under the Investment Company Act
of 1940, as amended, (the "Investment Company Act") as an open-end management
investment company. RBB is a "series fund", which is a mutual fund divided into
separate portfolios. Each portfolio is treated as a separate entity for certain
matters under the Investment Company Act, and for other purposes, and a
shareholder of one portfolio is not deemed to be a shareholder of any other
portfolio. Currently RBB has fourteen investment portfolios, including the
Schneider Small Cap Value Fund (the "Fund") which commenced investment
operations on September 2, 1998. As of the date hereof, the Fund offers the
Institutional Class.
RBB has authorized capital of thirty billion shares of common stock of
which 19.88 billion are currently classified into ninety-seven classes. Each
class represents an interest in one of fourteen investment portfolios of RBB.
The classes have been grouped into fourteen separate "families", nine of which
have begun investment operations, including the Schneider Small Cap Value Fund.
PORTFOLIO VALUATION -- The net asset value of the Fund is determined as of
4:00 p.m. Eastern Standard Time on each business day. The Fund's securities are
valued at the last reported sales price on the national securities exchange or
national securities market on which such shares are primarily traded. If no
sales are reported, as in the case of some securities traded over-the-counter,
portfolio securities are valued at the mean between the last reported bid and
asked prices. Securities for which market quotations are not readily available
are valued at fair market value as determined in good faith by or under the
direction of RBB's Board of Directors. With the approval of the RBB's Board of
Directors, the Fund may use a pricing service, bank or broker-dealer experienced
in such matters to value its securities. Short-term obligations with maturities
of 60 days or less are valued at amortized cost, which approximates market
value. Expenses and fees, including investment advisory and administration fees
are accrued daily and taken into account for the purpose of determining the net
asset value of the Fund.
USE OF ESTIMATES -- The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of America,
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the period. Actual results could differ from those
estimates.
REPURCHASE AGREEMENTS -- The Fund has agreed to purchase securities from
financial institutions subject to the seller's agreement to repurchase them at
an agreed-upon time and price ("repurchase agreements"). The financial
institutions with whom the Fund enters into repurchase agreements are banks and
broker/dealers which Schneider Capital Management, LP (the Fund's investment
adviser or "SCM") considers creditworthy. The seller under a repurchase
agreement will be required to maintain the value of the securities as
collateral, subject to the agreement at not less than the repurchase price plus
accrued interest. SCM marks to market daily the value of the collateral, and, if
necessary, requires the seller to maintain additional securities, to ensure that
the value is not less than the repurchase price. Default by or bankruptcy of the
seller would, however, expose the Fund to possible loss because of adverse
market action or delays in connection with the disposition of the underlying
securities.
11
<PAGE>
SCHNEIDER
SMALL CAP VALUE FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
AUGUST 31, 2000
INVESTMENT TRANSACTIONS AND INVESTMENT INCOME -- Transactions are accounted
for on the trade date. The cost of investments sold is determined by use of the
specific identification method for both financial reporting and income tax
purposes in determining realized gains and losses on investments. Interest
income is recorded on the accrual basis.
Dividend income is recorded on the ex-dividend date.
FOREIGN CURRENCY TRANSLATION -- Foreign securities, other assets and
liabilities are valued using the foreign currency exchange rate effective at the
end of the reporting period. Cost of investments is translated at the currency
exchange rate effective at the trade date. The gain or loss resulting from a
change in currency exchange rates between the trade and settlement dates of a
portfolio transaction is treated as a gain or loss on foreign currency.
Likewise, the gain or loss resulting from a change in currency exchange rates,
between the date income is accrued and paid, is treated as a gain or loss on
foreign currency. The Fund does not separate that portion of the results of
operations arising from changes in exchange rates and that portion arising from
changes in the market prices of securities.
DIVIDENDS AND DISTRIBUTIONS -- Dividends from net investment income, if
any, are declared and paid at least annually to shareholders. Distributions from
net realized capital gains, if any, are distributed at least annually. Income
and capital gain distributions are determined in accordance with U.S. federal
income tax regulations, which may differ from generally accepted accounting
principles. These differences include the treatment of non-taxable dividends,
expiring capital loss carryforwards, foreign currency gain/loss, partnerships,
and losses deferred due to wash sales and excise tax regulations. Permanent book
and tax basis differences relating to shareholder distributions will result in
reclassifications to paid in capital.
U.S. FEDERAL TAX STATUS -- No provision is made for U.S. federal income
taxes as it is the Fund's intention to continue to qualify for and elect the tax
treatment applicable to regulated investment companies under Subchapter M of the
Internal Revenue Code of 1986, as amended, and make the requisite distributions
to its shareholders which will be sufficient to relieve it from U.S. federal
income and excise taxes.
2. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
SCM serves as the Fund's investment adviser. For its advisory services, SCM
is entitled to receive 1.00% of the Fund's average daily net assets, computed
daily and payable monthly.
The adviser has agreed to limit the Fund's total operating expenses for the
current fiscal year to the extent that such expenses exceeded 1.10% of the
Fund's average daily net assets. As necessary, this limitation is effected in
waivers of advisory fees and reimbursements of other fund expenses. For the year
ended August 31, 2000, investment advisory fees and waivers of expenses were as
follows:
GROSS ADVISORY WAIVERS NET ADVISORY
-------------- ---------- ------------
Schneider Small Cap Value Fund $156,943 $(119,814) $37,129
The Fund will not pay SCM at a later time for any amounts it may waive or
any amounts that SCM has assumed.
12
<PAGE>
SCHNEIDER
SMALL CAP VALUE FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
AUGUST 31, 2000
PFPC Trust Co. serves as custodian of the Fund. PFPC Inc. ("PFPC"),
serves as administrator for the Fund. Both PFPC Trust Co. and PFPC are wholly-
owned subsidiaries of PFPC Worldwide, Inc., an indirect majority-owned
subsidiary of the PNC Financial Services Group, Inc. For providing
administrative services PFPC is entitled to receive a monthly fee equal to an
annual rate of 0.125% of the Fund's average daily net assets, subject to a
minimum monthly fee of $8,333 per Fund plus out of pocket expenses.
For the year ended August 31, 2000, PFPC, at its discretion, voluntarily
agreed to waive a portion of its administration fees for the Fund. During this
period, PFPC's administration fees and related waivers were as follows:
GROSS
ADMINISTRATION NET ADMINISTRATION
FEES WAIVERS FEES
-------------- ---------- ------------------
Schneider Small Cap Value Fund $105,223 $(50,000) $55,223
In addition, PFPC serves as the Fund's transfer and disbursing agent. PFPC,
at its discretion, voluntarily agreed to waive a portion of its transfer agency
fees for the Fund. During the year ended August 31, 2000, transfer agency fees
and waivers were as follows:
GROSS TRANSFER NET TRANSFER
AGENCY FEES WAIVERS AGENCY FEES
-------------- --------- --------------
Schneider Small Cap Value Fund $26,395 $(12,000) $14,395
Provident Distributors, Inc. (PDI) provides certain administrative services
to the Fund. As compensation for such administrative services, PDI is entitled
to receive a monthly fee equal to an annual rate of 0.15% of the Fund's average
daily net assets.
For the year ended August 31, 2000, PDI has, at its discretion, voluntarily
agreed to waive a portion of its administrative services fees for the Fund.
During this period, administrative services fees and waivers were as follows:
GROSS
ADMINISTRATIVE NET ADMINISTRATIVE
SERVICES FEES WAIVERS SERVICES FEES
-------------- --------- ------------------
Schneider Small Cap Value Fund $23,541 $(18,833) $4,708
These fees are accrued daily and paid monthly.
3. INVESTMENT IN SECURITIES
For U.S.federal income tax purposes, the cost of securities owned at August
31, 2000 was $17,808,430. Accordingly, the net unrealized appreciation/
(depreciation) of investments was as follows:
NET APPRECIATION/
APPRECIATION DEPRECIATION (DEPRECIATION)
------------ ------------ -----------------
Schneider Small Cap Value Fund $3,269,340 $(1,650,410) $1,618,930
13
<PAGE>
SCHNEIDER
SMALL CAP VALUE FUND
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
AUGUST 31, 2000
For the year ended August 31, 2000, aggregate purchases and sales of
investment securities (excluding short-term investments) were as follows:
PURCHASES SALES
----------------- --------------
Schneider Small Cap Value Fund $17,625,819 $13,298,838
4. CAPITAL SHARE TRANSACTIONS
As of August 31, 2000 the Fund has 100,000,000 shares of $0.001 par value
common stock authorized.
Transactions in capital shares for the year ended August 31, 2000 were as
follows:
SCHNEIDER SMALL CAP
VALUE FUND
--------------------------
SHARES AMOUNT
----------- -------------
Sales 415,055 $ 6,766,242
Reinvest 136,509 2,018,967
Repurchases (163,983) (2,567,364)
-------- -----------
Net increase 387,581 $ 6,217,845
======= ===========
On August 31, 2000, three shareholders held approximately 28% of the
outstanding shares of the Schneider Small Cap Value Fund. One of the
shareholders, an officer of the advisor, owns approximately 10% of the
outstanding shares.
14
<PAGE>
SCHNEIDER
SMALL CAP VALUE FUND
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS OF THE RBB FUND, INC.:
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Schneider Small Cap Value Fund, a
separately managed portfolio of The RBB Fund, Inc. (the "Fund"), at August 31,
2000, the results of its operations for the year then ended, and the changes in
its net assets and the financial highlights for the year then ended and for the
period September 2, 1998 (commencement of operations) through August 31, 1999,
in conformity with accounting principles generally accepted in the United States
of America. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the Fund's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with auditing standards generally accepted in the
United States of America, which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at August 31, 2000 by
correspondence with the custodian and brokers, provide a reasonable basis for
our opinion.
/S/SIGNATURE
PricewaterhouseCoopersLLP
PricewaterhouseCoopers LLP
Two Commerce Square
Philadelphia, Pennsylvania
October 20, 2000
15
<PAGE>
SCHNEIDER
SMALL CAP VALUE FUND
SHAREHOLDER TAX INFORMATION
(UNAUDITED)
Each Fund is required by Subchapter M of the Internal Revenue Code of 1986,
as amended, to advise its shareholders within 60 days of each Fund's fiscal year
end (August 31, 2000) as to the U.S. federal tax status of distributions
received by each Fund's shareholders in respect of such fiscal year. During the
fiscal year ended August 31, 2000, the following dividends and distributions per
share were paid by each of the Funds:
SHORT-TERM GAINS LONG-TERM GAINS
-------------------- --------------------
Schneider Small Cap Value Fund $2.42 $0.06
These amounts were reported to shareholders as income in 1999. Because each
Fund's fiscal year is not the calendar year, another notification will be sent
with respect to calendar year 2000. The second notification, which will reflect
the amount, if any, to be used by calendar year taxpayers on their U.S. federal
income tax returns, will be made in conjunction with Form 1099-DIV and will be
mailed in January 2001.
Foreign shareholders will generally be subject to U.S. withholding tax on
the amount of their dividend. They will generally not be entitled to a foreign
tax credit or deduction for the withholding taxes paid by the Funds, if any.
In general, dividends received by tax-exempt recipients (e.g., IRAs and
Keoghs) need not be reported as taxable income for U.S. federal income tax
purposes. However, some retirement trusts (e.g., corporate, Keogh and 403(b)(7)
plans) may need this information for their annual information reporting.
Shareholders are advised to consult their own tax advisers with respect to
the tax consequences of their investment in the Funds.
16
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INVESTMENT ADVISER
Schneider Capital Management
460 E. Swedesford Road
Wayne, PA 19087
ADMINISTRATOR/TRANSFER AGENT
PFPC Inc.
400 Bellevue Parkway
Wilmington, DE 19809
DISTRIBUTOR
Provident Distributors, Inc.
3200 Horizon Dr.
King of Prussia, PA 19046
CUSTODIAN
PFPC Trust Company
8800 Tinicum Blvd.
Suite 200
Philadelphia, PA 19153
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
Two Commerce Square, Suite 1700
2001 Market Street
Philadelphia, PA 19103-7042
COUNSEL
Drinker Biddle & Reath LLP
One Logan Square
18th and Cherry Streets
Philadelphia, PA 19103-6996
This report is submitted for the general information of the shareholders of the
Fund. It is not authorized for the distribution to prospective investors in the
Fund unless it is preceded or accompanied by a current prospectus which includes
details regarding the Fund's objectives, policies and other information. Total
investment return is based on historical results and is not intended to indicate
future performance. The investment return and principal value of an investment
in the Fund will fluctuate, so that an investor's shares, when redeemed, may be
worth more or less than original cost.
