N-30D 1 g02-0903.txt SCHNEIDER SMALL CAP VALUE FUND AR THE SCHNEIDER SMALL CAP VALUE FUND ANNUAL REPORT AUGUST 31, 2002 [LOGO] SCHNEIDER CAPITAL MANAGEMENT SCHNEIDER SMALL CAP VALUE FUND PRIVACY NOTICE The SCHNEIDER SMALL CAP VALUE FUND of The RBB Fund, Inc. (the "Fund") is committed to protecting the confidentiality and security of your private investment records and personal information. Our policies and procedures are designed to safeguard your information and to permit only appropriate and authorized access to and use of this information. In order to carry out the functions necessary to service your investment account, our service providers collect certain nonpublic personal information from you from the following sources: o Information we receive from you over the telephone, on applications, e-mails or other forms (e.g., your name, social security number and address); and o Information about your transactions with the Fund We restrict access to your personal and account information to those service providers and their employees who need to know that information to service your account. The Fund may also share all of the information (as described above) that we collect with companies that perform marketing services on our behalf or with other financial institutions with whom we have joint marketing agreements who may suggest additional Fund services or other investment products which may be of interest to you. We maintain physical, electronic, and procedural safeguards that comply with federal standards to guard your nonpublic personal information. You can be assured that the Fund considers your data to be private and confidential, and we will not disclose any nonpublic personal information about you to any unaffiliated third parties, except as permitted by law. If you decide to close your account(s) or become an inactive customer, we will adhere to the privacy policies and practices as described in this notice. If you have any questions or comments about our privacy practices, please call us at (888) 520-3277. October 2002 SCHNEIDER SMALL CAP VALUE FUND ANNUAL INVESTMENT ADVISER'S REPORT AUGUST 31, 2002 Dear Fellow Shareholder: We are pleased to provide you with the annual report for the Schneider Small Cap Value Fund for the year ended August 31, 2002. U.S. STOCK MARKET OVERVIEW The stock market continued to slide from its March 2000 peak. The Russell 3000 Index, which represents the broad U.S. market, dropped -17.27% during the twelve months ended August 31, 2002. The Russell 2000 Index of small cap stocks suffered a -15.43% decline. There was little to cheer investors during the period. The fiscal year began with the U.S. mired in recession and reeling from the unthinkable terror attacks. Investor confidence was later shaken by a string of accounting scandals and six of the ten largest bankruptcies in U.S. history. We believe that this painful 21/2-year bear market has largely deflated the stock market bubble that peaked in early 2000. Stock prices in the late 1990's had been based on wildly optimistic forecasts, and we believe overall market valuations are finally approaching a reasonable appraisal of corporate America's "real" earnings prospects. INVESTMENT REVIEW The performance of the Fund lagged behind the benchmark Russell 2000 Value Index over the twelve months ending August 31, 2002, returning -10.76% versus -5.60% for the benchmark. Since inception on September 2, 1998, we believe the Fund has performed exceedingly well in delivering a 22.08% annualized return versus 9.12% for the index. Fund investments in the health care sector contributed positively to performance during the fiscal year. Our holdings in select HMO stocks performed well. Most of these stocks reached our price targets and were sold during the period. Our performance in the financial services sector proved disappointing due to lagging returns in several specialty finance companies that cater primarily to sub-prime borrowers. Investors became concerned that consumers in this demographic were not recovering from the recession as well as had been expected. These stocks have been pushed to extremely low valuations based on their current and future earnings power, and we believe that they offer significant appreciation potential from current levels. OUTLOOK Accommodative monetary policy, a slow upturn in business investment, and unexpectedly strong consumer spending are expected to provide enough vigor to sustain the moderate economic recovery that began in early 2002. We believe substantial increases in government spending should also support the upswing. We expect the manufacturing sector to play a bigger role in the next stage of the U.S. economic expansion, and we have oriented the portfolio accordingly. Fueled by low rates, lower taxes and a robust housing market, consumer spending softened the blow from last year's recession and carried us into the early leg of the recovery. Manufacturing should bear their share of the load from here as depleted business inventories are restocked, capital spending purse strings are gradually loosened, and export sales accelerate due to the cheaper dollar. 2 SCHNEIDER SMALL CAP VALUE FUND ANNUAL INVESTMENT ADVISER'S REPORT AUGUST 31, 2002 PORTFOLIO STRATEGY As a value manager, our goal is to capitalize on situations where investors have overreacted to a company's present problems and distress, while we look ahead and anticipate a reasonable opportunity for the firm to improve its fortunes and restore its profitability. We believe the portfolio is positioned to benefit from the continued global economic recovery. Many cyclical companies during the past recession were squeezed in the grip of a harsh downturn, and their stock prices came under severe pressure. However, the painful period of restructuring and industry consolidation that they endured has enhanced their future earnings growth potential. As a result, the fund has significant exposure to economically sensitive industries. Three areas of particular focus are U.S. natural gas, trucking and semiconductor-related stocks. During the past year, we trimmed our investments in financials when selected insurance and savings & loan issues met our return expectations and price targets. We appreciate the confidence you have placed in us as we work hard to uncover companies that we believe have temporarily fallen from favor but are near a turning point in their fortunes. We believe rewards can be considerable should these stocks eventually earn back the respect they once had among investors. /s/ ARNOLD C. SCHNEIDER III, CFA Arnold C. Schneider III, CFA Portfolio Manager Schneider Capital Management 3 SCHNEIDER SMALL CAP VALUE FUND ANNUAL INVESTMENT ADVISER'S REPORT AUGUST 31, 2002 Comparison of Change in Value of $10,000 Investment in Schneider Small Cap Value Fund (1)(2) vs. Russell 2000 Value Index [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC Schneider Small Cap Value Fund Russell 2000 Value Index 9/2/98 $10,000.00 $10,000.00 9/30/98 10,000.00 10,362.50 10/31/98 11,930.00 10,670.10 11/30/98 12,410.00 10,959.00 12/31/98 12,470.70 11,302.60 1/31/99 13,785.60 11,046.00 2/28/99 12,531.40 10,291.90 3/31/99 13,006.80 10,207.00 4/30/99 15,221.80 11,138.80 5/31/99 16,233.20 11,481.20 6/30/99 18,043.60 11,896.90 7/31/99 18,731.30 11,614.50 8/31/99 18,245.90 11,190.00 9/30/99 17,517.70 10,966.30 10/31/99 16,759.10 10,746.80 11/30/99 17,457.00 10,802.50 12/31/99 18,340.80 11,134.40 1/31/00 17,833.00 10,843.20 2/29/00 18,069.20 11,506.00 3/31/00 19,391.90 11,560.00 4/30/00 19,391.90 11,628.30 5/31/00 19,769.80 11,450.90 6/30/00 19,840.70 11,785.50 7/31/00 19,734.40 12,178.20 8/31/00 20,750.10 12,722.60 9/30/00 20,844.50 12,650.50 10/31/00 20,490.20 12,605.60 11/30/00 19,415.50 12,349.00 12/31/00 21,494.60 13,675.90 1/31/01 24,177.80 14,053.40 2/28/01 23,127.20 14,034.00 3/31/01 22,034.00 13,808.90 4/30/01 23,326.00 14,448.00 5/31/01 24,546.90 14,819.60 6/30/01 25,100.60 15,415.80 7/31/01 24,873.50 15,070.10 8/31/01 24,887.70 15,017.90 9/30/01 20,855.70 13,360.10 10/31/01 21,863.70 13,709.10 11/30/01 23,950.70 14,694.10 12/31/01 25,657.00 15,593.80 1/31/02 25,477.20 15,800.80 2/28/02 25,447.20 15,897.00 3/31/02 28,414.60 17,087.50 4/30/02 29,388.70 17,689.00 5/31/02 29,089.00 17,104.00 6/30/02 27,785.10 16,725.30 7/31/02 22,824.60 14,240.30 8/31/02 22,210.10 14,177.00 Total Returns Value on Year Ended August 31, 2002 August 31, 2002 Since Inception(3) --------------- --------------- ------------------ Schneider Small Cap Value $22,210 (10.76)% 22.08% Russell 2000 Value Index $14,177 (5.60)% 9.12% The Fund's total return is based on an increase in net asset value from $10.00 per share on September 2, 1998 to $14.82 per share on August 31, 2002, adjusted for dividends totaling $6.40 per share paid from net investment income and realized gains. ---------- (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 Russell 2000 Value Index is unmanaged, does not incur sales charges and/or expenses and is 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) Annualized return for the period September 2, 1998 (commencement of operations) through August 31, 2002. 4 SCHNEIDER SMALL CAP VALUE FUND PORTFOLIO OF INVESTMENTS AUGUST 31, 2002 SHARES VALUE ------ ----------- COMMON STOCKS -- 91.8% AEROSPACE & DEFENSE -- 1.2% BE Aerospace, Inc.* .............................. 33,100 $ 263,145 Orbital Sciences Corp.* .......................... 77,500 289,850 ----------- 552,995 ----------- AGRICULTURE -- 3.1% Corn Products International, Inc. ................ 50,800 1,422,400 ----------- ALUMINUM -- 0.1% Commonwealth Industries Corp. .................... 6,400 32,512 ----------- AUTOMOBILE PARTS & EQUIPMENT -- 2.8% ArvinMeritor, Inc. ............................... 31,600 739,124 Visteon Corp. .................................... 45,600 519,384 ----------- 1,258,508 ----------- AUTOMOBILE RENTALS -- 0.1% Dollar Thrifty Automotive Group, Inc.* ........... 2,200 38,610 ----------- BANKS -- 1.6% Provident Financial Group, Inc. .................. 20,200 584,992 Sun Bancorp, Inc.* ............................... 2,185 28,514 Vail Banks, Inc. ................................. 9,200 108,192 ----------- 721,698 ----------- CHEMICALS -- 6.4% Airgas, Inc.* .................................... 24,800 381,920 Georgia Gulf Corp. ............................... 25,400 647,700 IMC Global, Inc. ................................. 85,300 1,129,372 PolyOne Corp. .................................... 80,900 756,415 ----------- 2,915,407 ----------- CHEMICALS & PLASTIC -- 1.6% Wellman, Inc. .................................... 48,000 722,880 ----------- CHEMICALS - SPECIALTY -- 2.2% Celanese AG ...................................... 29,400 597,996 Olin Corp. ....................................... 20,200 383,800 ----------- 981,796 ----------- SHARES VALUE ------ ----------- COMPUTER COMPONENTS -- 2.1% SanDisk Corp.* ................................... 48,100 $ 779,701 Silicon Storage Technology, Inc.* ................ 31,400 169,874 ----------- 949,575 ----------- COMPUTER SOFTWARE -- 0.5% MSC. Software Corp. .............................. 21,400 224,700 ----------- ELECTRICAL EQUIPMENT -- 1.7% GraftTech International, Ltd.* ................... 45,200 391,432 Merix Corp.* ..................................... 43,300 364,153 ----------- 755,585 ----------- ENERGY & UTILITIES -- 1.1% Massey Energy Co. ................................ 60,500 493,075 ----------- FARM MACHINERY & EQUIPMENT -- 0.2% CNH Global N.V. .................................. 23,300 88,540 ----------- FERTILIZERS -- 1.0% LESCO, Inc. ...................................... 39,700 464,490 ----------- FINANCE -- 4.8% AmeriCredit Corp.* ............................... 54,900 788,364 Metris Companies, Inc. ........................... 114,500 458,000 Union Acceptance Corp.* .......................... 4,500 19,080 Westcorp, Inc. ................................... 45,570 923,704 ----------- 2,189,148 ----------- FOOD -- 3.0% Fleming Companies, Inc. .......................... 44,200 446,420 Tate & Lyle P.L.C. -- ADR ........................ 40,500 919,698 ----------- 1,366,118 ----------- FOOD-MEAT PROCESSING -- 1.1% Pilgrim's Pride Corp., Class A ................... 63,900 493,308 ----------- FOOTWEAR -- 1.3% Barry (R.G.) Corp.* .............................. 123,500 549,575 Finish Line, Inc., (The) Class A* ................ 1,900 16,910 ----------- 566,485 ----------- The accompanying notes are an integral part of the financial statements. 5 SCHNEIDER SMALL CAP VALUE FUND PORTFOLIO OF INVESTMENTS (CONTINUED) AUGUST 31, 2002 SHARES VALUE ------ ----------- HEALTHCARE -- 1.4% Angelica Corp. ................................... 38,000 $ 632,700 ----------- HEALTHCARE FACILITIES -- 0.4% Sunrise Assisted Living, Inc.* ................... 7,500 190,500 ----------- HOMEBUILDING -- 3.0% Champion Enterprises, Inc.* ...................... 140,500 376,540 Clayton Homes, Inc. .............................. 73,200 971,364 ----------- 1,347,904 ----------- HOTEL/RESTAURANTS -- 0.7% Triarc Co., Inc. ................................. 13,100 323,570 ----------- INSURANCE -- 1.6% ProAssurance Corp.* .............................. 30,100 486,115 Scottish Annuity & Life Holdings, Ltd. ........... 15,200 255,664 ----------- 741,779 ----------- INSURANCE - HEALTH & LIFE -- 1.4% FPIC Insurance Group, Inc.* ...................... 71,400 649,026 ----------- INSURANCE - PROPERTY & CASUALTY -- 3.4% American Financial Group, Inc. ................... 43,500 1,088,370 Danielson Holding Corp.* ......................... 43,800 181,332 Odyssey Re Holdings Corp. ........................ 14,800 255,448 State Auto Financial Corp. ....................... 2,200 33,440 ----------- 1,558,590 ----------- MACHINERY -- 0.3% Joy Global, Inc.* ................................ 6,200 80,476 UNOVA, Inc.* ..................................... 13,500 72,765 ----------- 153,241 ----------- MANUFACTURING -- 1.6% York International Corp. ......................... 22,600 720,940 ----------- MEDICAL & MEDICAL SERVICES -- 1.0% American Physicians Capital, Inc.* ............... 25,700 469,282 ----------- SHARES VALUE ------ ----------- METALS & MINING -- 5.6% Brush Engineered Materials, Inc.* ................ 41,000 $ 410,000 Century Aluminum Co. ............................. 67,900 617,211 Cleveland-Cliffs, Inc.* .......................... 27,100 713,272 Commercial Metals Co. ............................ 13,800 261,096 Southern Peru Copper Corp. ....................... 40,900 547,242 ----------- 2,548,821 ----------- METALS FABRICATING -- 0.0% Atchison Casting Corp.* .......................... 34,900 10,819 ----------- OFFICE FURNISHINGS -- 0.9% Interface, Inc. .................................. 78,100 388,157 ----------- OFFICE PRODUCTS -- 0.9% Moore Corp., Ltd.* ............................... 31,600 382,676 ----------- OIL & GAS EXPLORATION -- 4.2% Evergreen Resources, Inc.* ....................... 21,100 806,020 Grey Wolf, Inc.* ................................. 165,000 531,300 Patina Oil & Gas Corp. ........................... 19,475 542,379 ----------- 1,879,699 ----------- OIL & GAS FIELD SERVICES -- 2.3% Atwood Oceanics, Inc.* ........................... 2,600 79,118 Hanover Compressor Co.* .......................... 12,400 140,120 Newpark Resources, Inc.* ......................... 30,000 123,600 Smedvig ASA , Class B -- ADR ..................... 7,900 38,117 Trico Marine Services, Inc.* ..................... 10,000 35,500 Willbros Group, Inc.* ............................ 46,600 630,498 ----------- 1,046,953 ----------- OIL REFINING -- 1.4% Premcor, Inc.* ................................... 32,700 625,551 ----------- PAPER & FORESTRY PRODUCTS -- 2.1% Longview Fibre Co.* .............................. 45,500 316,680 Louisiana-Pacific Corp. .......................... 7,200 55,800 Mercer International, Inc. ....................... 15,500 108,157 Votorantim Celulose e Papel S.A. -- ADR .............................................. 27,200 461,040 ----------- 941,677 ----------- The accompanying notes are an integral part of the financial statements. 6 SCHNEIDER SMALL CAP VALUE FUND PORTFOLIO OF INVESTMENTS (CONTINUED) AUGUST 31, 2002 SHARES VALUE ------ ----------- PLASTIC PRODUCTS -- 0.4% Tupperware Corp. ................................. 10,400 $ 189,696 ----------- REAL ESTATE -- 3.5% American Real Estate Partners, L.P.* ............. 66,000 594,000 Boykin Lodging Co. ............................... 32,800 301,760 Equity Inns, Inc., REIT .......................... 2,400 15,864 FelCor Lodging Trust, Inc., REIT ................. 9,500 140,600 MeriStar Hospitality Corp., REIT ................. 28,900 325,125 Newhall Land & Farming Co. ....................... 7,900 220,805 ----------- 1,598,154 ----------- RETAIL MERCHANDISING -- 0.6% Dillard's Inc., Class A .......................... 6,800 167,008 Great Atlantic & Pacific Tea Co., Inc.* .......... 7,600 79,876 ----------- 246,884 ----------- SEMICONDUCTOR EQUIPMENT -- 7.0% Alliance Semiconductor Corp.* .................... 65,400 320,460 BE Semiconductor Industries N.V.* ................ 142,900 714,500 GlobespanVirata, Inc.* ........................... 94,400 332,288 Integrated Silicon Solution, Inc.* ............... 15,300 77,112 Kulicke and Soffa Industries, Inc.* .............. 193,400 719,448 LTX Corp.* ....................................... 54,900 430,416 Ultratech Stepper, Inc.* ......................... 46,300 588,473 ----------- 3,182,697 ----------- STEEL -- 2.6% Maverick Tube Corp.* ............................. 72,500 822,875 NS Group, Inc.* .................................. 53,025 344,663 ----------- 1,167,538 ----------- TRANSPORTATION -- 6.6% Alexander & Baldwin, Inc. ........................ 18,700 428,043 Covenant Transport, Inc., Class A* ............... 57,900 1,043,937 Kirby Corp.* ..................................... 4,000 90,400 Ryder System, Inc. ............................... 17,800 465,292 Stelmar Shipping, Ltd.* .......................... 3,400 49,198 Stolt-Nielsen S.A. -- ADR ........................ 37,400 476,439 U.S. Xpress Enterprises, Inc., Class A* .......... 24,300 254,178 Werner Enterprises, Inc. ......................... 8,900 159,132 ----------- 2,966,619 ----------- SHARES VALUE ------ ----------- TRUCK TRAILERS -- 2.8% Wabash National Corp.* ........................... 244,600 $ 1,286,596 ----------- UTILITIES -- 0.2% Avista Corp. ..................................... 5,500 69,960 ----------- TOTAL COMMON STOCKS (Cost $44,277,085) .......................... 41,557,859 ----------- CANADIAN COMMON STOCK -- 1.1% Boardwalk Equities, Inc. ......................... 39,100 373,451 Canadian Hotel Income Properties, REIT ........... 18,261 108,745 ----------- TOTAL CANADIAN COMMON STOCK (Cost $429,182) ............................. 482,196 ----------- HONG KONG COMMON STOCK -- 1.5% ASM Pacific Technology, Ltd. ..................... 372,100 $ 675,029 ----------- TOTAL HONG KONG COMMON STOCK (Cost $750,329) ............................. 675,029 ----------- PAR (000) ------ CONVERTIBLE BONDS -- 3.1% American Retirement Corp. (N/R) 5.75%, 10/01/02 ............................... $ 206 169,950 Amkor Technologies, Inc. (B3, CCC+) 5.75%, 06/01/06 ............................... 1,728 570,240 Sunrise Assisted Living (B1, B-) 5.25%, 02/01/09 ............................... 710 672,725 ----------- TOTAL CONVERTIBLE BONDS (Cost $1,873,263) ........................... 1,412,915 ----------- The accompanying notes are an integral part of the financial statements. 7 SCHNEIDER SMALL CAP VALUE FUND PORTFOLIO OF INVESTMENTS (CONCLUDED) AUGUST 31, 2002 SHARES VALUE ------ ----------- EXCHANGE TRADED FUNDS -- 0.7% FINANCE -- 0.7% iShares Russell 2000 Value Index Fund .......................................... 2,700 $ 314,820 ----------- TOTAL EXCHANGE TRADED FUNDS (Cost $330,038) ............................. 314,820 ----------- SHORT-TERM INVESTMENTS -- 2.1% Wilmington Prime Money Market Portfolio 1.33%, 09/03/02 ............................... 925 925,238 ----------- TOTAL SHORT-TERM INVESTMENTS (Cost $925,238) ............................. 925,238 ----------- PREFERRED STOCKS -- 0.6% UTILITIES -- 0.6% Sierra Pacific Resources 9.00% ................... 7,700 285,208 ----------- TOTAL PREFERRED STOCKS (Cost $262,354) ............................. 285,208 ----------- TOTAL INVESTMENTS -- 100.9% (Cost $48,847,489) ............................ 45,653,265 ----------- LIABILITIES IN EXCESS OF OTHER ASSETS -- (0.9)% .............................. (384,867) ----------- NET ASSETS -- 100.0% ............................. $45,268,398 =========== ---------- *Non-income producing. ADR - American Depository Receipt REIT - Real Estate Investment Trust N/R - Not Rated The Moody's Investor Service, Inc. and Standard & Poor's Ratings Group ratings indicated are the most recent ratings available at August 31, 2002, and are unaudited. The accompanying notes are an integral part of the financial statements. 8 SCHNEIDER SMALL CAP VALUE FUND STATEMENT OF ASSETS AND LIABILITIES AUGUST 31, 2002 ASSETS Investments, at value (cost-- $48,847,489) .......... $45,653,265 Receivable for investments sold ..................... 50,532 Receivable for fund shares sold ..................... 447 Dividends and interest receivable ................... 92,845 Prepaid expenses and other assets ................... 5,321 ----------- Total Assets ...................................... 45,802,410 ----------- LIABILITIES Payable for investment purchased .................... 421,959 Payable for fund shares redeemed .................... 63,347 Accrued expenses payable and other liabilities ...... 48,706 ----------- Total Liabilities ................................. 534,012 ----------- NET ASSETS Capital stock, $0.001 par value ..................... 3,215 Additional Paid-in capital .......................... 49,216,382 Undistributed net investment income ................. 84,127 Accumulated net realized loss from investments and foreign exchange transactions, if any ......... (841,102) Net unrealized depreciation on investments and foreign exchange transactions, if any ............. (3,194,224) ----------- Net assets applicable to shares outstanding ......... $45,268,398 =========== Shares outstanding ..................................... 3,054,110 =========== Net asset value, offering and redemption price per share $14.82 =========== The accompanying notes are an integral part of the financial statements. 9 SCHNEIDER SMALL CAP VALUE FUND STATEMENT OF OPERATIONS FOR THE YEAR ENDED AUGUST 31, 2002 --------------- Investment Income Dividends .............................................. $ 570,160* Interest ............................................... 105,534 ----------- Investment Income .................................... 675,694 ----------- Expenses Advisory fees .......................................... 468,438 Administrative fees .................................... 105,749 Administration service fees ............................ 70,299 Custodian fees and expenses ............................ 51,620 Transfer agent fees and expenses ....................... 26,968 Printing ............................................... 18,733 Audit and legal fees ................................... 15,493 Federal and state registration fees .................... 9,865 Directors fees ......................................... 4,396 Miscellaneous fees ..................................... 2,099 Insurance .............................................. 536 ----------- Total expenses before waivers ........................ 774,196 Less: waivers .......................................... (259,435) ----------- Total expenses after waivers ......................... 514,761 ----------- Net investment income ..................................... 160,933 ----------- Net realized and unrealized gain/(loss) on investment and foreign exchange translations: Net realized loss from: Investments ......................................... (799,390) Foreign currency translations ....................... (317) Net change in unrealized appreciation/(depreciation) on: Investments .......................................... (6,627,906) Foreign currency translations ........................ 241 ----------- Net realized and unrealized loss on investments and foreign currency ..................................... (7,427,372) ----------- Net decrease in net assets resulting from operations ...... $(7,266,439) =========== ---------- *Net of foreign withholding taxes of $12,521. The accompanying notes are an integral part of the financial statements. 10 SCHNEIDER SMALL CAP VALUE FUND STATEMENT OF CHANGES IN NET ASSETS
FOR THE FOR THE YEAR ENDED YEAR ENDED AUGUST 31, 2002 AUGUST 31, 2001 --------------- --------------- INCREASE IN NET ASSETS RESULTING FROM OPERATIONS Net investment income ..................................... $ 160,933 $ 179,777 Net realized gain/(loss) from investments and foreign currency translations, if any ................... (799,707) 2,370,170 Net change in unrealized appreciation/(depreciation) on investments and foreign currency translations, if any ... (6,627,665) 1,812,884 ----------- ----------- Net increase/(decrease) in net assets resulting from operations .............................................. (7,266,439) 4,362,831 ----------- ----------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS FROM: Net investment income ..................................... (142,528) (93,529) Net realized capital gains ................................ (1,844,758) (3,249,041) ----------- ----------- Total dividends and distributions to shareholders ....... (1,987,286) (3,342,570) ----------- ----------- INCREASE IN NET ASSETS DERIVED FROM CAPITAL SHARE TRANSACTIONS (SEE NOTE 4) ............................................... 15,609,802 18,498,367 ----------- ----------- Total increase in net assets ............................ 6,356,077 19,518,628 NET ASSETS Beginning of year ......................................... 38,912,321 19,393,693 ----------- ----------- End of year* .............................................. $45,268,398 $38,912,321 =========== =========== ---------- * Includes undistributed net investment income of $84,127 and $143,036 for the fiscal years ended August 31, 2002 and 2001, respectively.
The accompanying notes are an integral part of the financial statements. 11 SCHNEIDER SMALL CAP VALUE FUND FINANCIAL HIGHLIGHTS -------------------------------------------------------------------------------- Contained below is per share operating performance data for each share outstanding, total investment return, ratios to average net assets and other supplemental data for the period. This information has been derived from information provided in the financial statements. --------------------------------------------------------------------------------
FOR THE FOR THE FOR THE FOR THE PERIOD YEAR ENDED YEAR ENDED YEAR ENDED SEPTEMBER 2, 1998* AUGUST 31, 2002 AUGUST 31, 2001 AUGUST 31, 2000 THROUGH AUGUST 31, 1999 --------------- --------------- --------------- ----------------------- PER SHARE OPERATING PERFORMANCE** Net asset value, beginning of period ............ $ 17.53 $ 17.57 $ 18.04 $ 10.00 Net investment income/(loss)(1) ................. 0.03 0.09 0.07 (0.02) Net realized and unrealized gain/(loss) on investments and foreign currency transactions, if any(2) ...................... (1.83) 2.75 1.94 8.19 ------- ------- ------- ------- Net increase/(decrease) in net assets resulting from operations .............................. (1.80) 2.84 2.01 8.17 ------- ------- ------- ------- Dividends and distributions to shareholders from: Net investment income ........................... (0.07) (0.08) -- -- Net realized capital gains ...................... (0.84) (2.80) (2.48) (0.13) ------- ------- ------- ------- Total dividends and distributions to shareholders ................................. (0.91) (2.88) (2.48) (0.13) ------- ------- ------- ------- Net asset value, end of period .................. $ 14.82 $ 17.53 $ 17.57 $ 18.04 ======= ======= ======= ======= Total investment return(3) ...................... (10.76)% 19.94% 13.72% 82.46% ======= ======= ======= ======= RATIO/SUPPLEMENTAL DATA Net assets, end of period (000's omitted) ....... $45,268 $38,912 $19,394 $12,924 Ratio of expenses to average net assets(1) ...... 1.10% 1.10% 1.10% 1.10%(4) Ratio of expenses to average net assets without waivers and expense reimbursements ............................... 1.65% 2.02% 2.37% 3.90%(4) Ratio of net investment income to average net assets(1) ................................ 0.34% 0.71% 0.44% (0.17)%(4) Portfolio turnover rate ......................... 102.46% 79.30% 84.93% 145.99% ----------- * 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.
The accompanying notes are an integral part of the financial statements. 12 SCHNEIDER SMALL CAP VALUE FUND NOTES TO FINANCIAL STATEMENTS AUGUST 31, 2002 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 thirteen 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 21.073 billion are currently classified into ninety-five classes of Common Stock. Each class represents an interest in an active or inactive RBB investment portfolio. The active classes have been grouped into six separate "families", all 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, and 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. Debt securities held by the Fund generally are valued based on the mean of the bid and asked prices. If the Fund holds foreign equities securities, the calculation of the Fund's NAV will not occur at the same time as the determination of the value of the foreign equities securities in the Fund's portfolio, since these securities are traded on foreign exchanges. 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. 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 may 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 deposit additional securities by the next Fund business day. 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. 13 SCHNEIDER SMALL CAP VALUE FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) AUGUST 31, 2002 INVESTMENT TRANSACTIONS, INVESTMENT INCOME, AND EXPENSES -- Transactions are accounted for on the trade date. The cost of investments sold is determined by use of the specific identification method for both financial reporting and income tax purposes in determining realized gains and losses on investments. Interest income is accrued as earned. Dividend income is recorded on the ex-dividend date. Expenses incurred on behalf of a specific class, fund or fund family are charged directly to the class, fund or fund family (in proportion to net assets). Expenses incurred for all of the RBB families (such as trustee or professional fees) are charged to all funds in proportion to their net assets of the RBB funds. 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. 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. The books and records of the Fund are maintained in U.S. dollars. 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. DISTRIBUTIONS TO SHAREHOLDERS -- Distributions from net investment income and from net realized capital gains, if any, are declared, recorded on ex-date and paid at least annually to shareholders. 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. As of August 31, 2002, the Fund recorded the following reclassifications to increase/(decrease) the accounts listed below:
ACCUMULATED UNDISTRIBUTED NET REALIZED ADDITIONAL NET INVESTMENT GAIN/(LOSS) PAID-IN INCOME (LOSS) ON INVESTMENTS CAPITAL -------------- -------------- ---------- Schneider Small Cap Value Fund $(77,314) $77,314) --
U.S. TAX STATUS -- No provision is made for U.S. 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. 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. 14 SCHNEIDER SMALL CAP VALUE FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) AUGUST 31, 2002 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, 2002, investment advisory fees and waivers of expenses were as follows:
GROSS ADVISORY WAIVERS NET ADVISORY -------------- ---------- ------------ Schneider Small Cap Value Fund $468,438 $(197,903) $270,535
The Fund will not pay SCM at a later time for any amounts it may waive or any amounts that SCM has assumed. 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 custodial services, PFPC Trust Co. is entitled to receive a monthly fee equal to an annual rate of .015% of the funds average daily gross assets. 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, 2002, 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 $105,749 $(2,917) $102,832
In addition, PFPC serves as the Fund's transfer and disbursing agent. For providing transfer agency services, PFPC is entitled to receive a monthly fee based on 1/12th equal to an annual fee, subject to a minimum monthly fee of $2,000 per Fund plus out of pocket expenses. For the year ended August 31, 2002, transfer agency fees for the Fund were $26,968. PFPC Distributors, Inc., ("PFPC Distributors"), a wholly-owned subsidiary of PFPC Worldwide, Inc. and an indirect majority-owned subsidiary of the PNC Financial Services Group, Inc., provided certain administrative services to the Fund. As compensation for such administrative services, PFPC Distributors receives 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, 2002, PFPC Distributors, at its discretion, voluntarily agreed to waive a portion of its administrative services fees for the Fund. During this period, administrative services fees were as follows:
GROSS ADMINISTRATIVE NET ADMINISTRATIVE SERVICES FEES WAIVERS SERVICES FEES -------------- --------- ------------------ Schneider Small Cap Value Fund $70,299 $(58,615) $11,684
15 SCHNEIDER SMALL CAP VALUE FUND NOTES TO FINANCIAL STATEMENTS (CONTINUED) AUGUST 31, 2002 3. INVESTMENT IN SECURITIES For the year ended August 31, 2002, aggregate purchases and sales of investment securities (excluding short-term investments) were as follows: PURCHASES SALES ----------- ----------- Schneider Small Cap Value Fund $61,396,347 $47,782,971 4. CAPITAL SHARE TRANSACTIONS As of August 31, 2002 the Fund has 100,000,000 shares of $0.001 par value common stock authorized. Transactions in capital shares for the years ended August 31, 2002 and 2001 were as follows:
SCHNEIDER SMALL CAP VALUE FUND ------------------------------------------------------------ FOR THE FISCAL YEAR ENDED FOR THE FISCAL YEAR ENDED -------------------------- --------------------------- AUGUST 31, 2002 AUGUST 31, 2001 -------------------------- --------------------------- SHARES AMOUNT SHARES AMOUNT --------- ----------- --------- ----------- Sales ........... 1,197,528 $21,714,637 1,032,808 $17,623,713 Reinvest ........ 118,377 1,935,470 230,776 3,288,554 Repurchases ..... (481,084) (8,040,305) (148,216) (2,413,900) --------- ----------- --------- ----------- Net increase .... 834,821 $15,609,802 1,115,368 $18,498,367 ========= =========== ========= ===========
On August 31, 2002, two shareholders held approximately 13% of the outstanding shares of the Schneider Small Cap Value Fund. One of the shareholders, an officer of the advisor, owns approximately 6% of the outstanding shares. 5. FEDERAL INCOME TAX INFORMATION At August 31, 2002 Federal tax cost, aggregate gross unrealized appreciation and depreciation of securities held by the Fund was as follows:
NET UNREALIZED FEDERAL TAX UNREALIZED UNREALIZED APPRECIATION/ COST APPRECIATION DEPRECIATION DEPRECIATION ------------ ------------ ------------ -------------- Schneider Small Cap Value Fund ......... $49,912,946 $3,250,791 $(7,510,472) $(4,259,681)
As of August 31, 2002, the components of distributable earnings on a tax basis were as follows: UNDISTRIBUTED UNDISTRIBUTED ORDINARY LONG-TERM INCOME GAINS ------------- ------------- Schneider Small Cap Value Fund $84,298 $224,355 16 SCHNEIDER SMALL CAP VALUE FUND NOTES TO FINANCIAL STATEMENTS (CONCLUDED) AUGUST 31, 2002 At August 31, 2002, the Fund had no capital loss carryforwards available to offset future capital gains. Under Federal tax law, foreign currency and capital losses realized after October 31 may be deferred and treated as having arisen on the first day of the following fiscal year. For the year ended August 31, 2002, the Schneider Small Cap Value Fund incurred no post-October currency and capital losses. The differences between the book and tax basis components of distributable earnings relate principally to the timing of recognition of income and gains for federal income tax purposes. Short-term and foreign currency gains are reported as ordinary income for federal tax purposes. The tax character of dividends and distributions paid during the last two fiscal years were as follows:
ORDINARY LONG-TERM INCOME GAINS TOTAL ---------- ---------- ----------- Schneider Small Cap Value Fund 2002 $ 474,587 $1,512,699 $1,987,286 2001 2,562,656 779,914 3,342,570
17 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 the Schneider Small Cap Value Fund, a separately managed portfolio of The RBB Fund, Inc. (the "Fund"), at August 31, 2002, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended and the financial highlights for each of the periods indicated, 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, 2002, by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. PricewaterhouseCoopers LLP Philadelphia, Pennsylvania October 16, 2002 18 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, 2002) as of 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, 2002, the following dividends and distributions per share were paid by each of the Funds:
NET INVESTMENT INCOME SHORT-TERM GAINS LONG-TERM GAINS --------------------- ---------------- --------------- Schneider Small Cap Value Fund $.0652 $.6920 $.1519
The percentage of total ordinary income dividends qualifying for the corporate dividends received deduction is 15.65%. These amounts were reported to shareholders as income in 2001. Because each Fund's fiscal year is not the calendar year, another notification will be sent with respect to calendar year 2002. 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 2003. 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. 19 SCHNEIDER SMALL CAP VALUE FUND FUND MANAGEMENT (UNAUDITED) Information pertaining to the Directors and Officers of the Fund is set forth below. The statement of additional information (SAI) includes additional information about the Directors and is available without charge, upon request, by calling (888) 520-3277.
------------------------------------------------------------------------------------------------------------------------------------ NUMBER OF TERM OF OFFICE PORTFOLIOS IN OTHER NAME, ADDRESS, POSITION(S) HELD AND LENGTH OF PRINCIPAL OCCUPATION(S) FUND COMPLEX DIRECTORSHIPS AND AGE WITH FUND TIME SERVED DURING PAST 5 YEARS OVERSEEN BY HELD BY DIRECTOR DIRECTOR ------------------------------------------------------------------------------------------------------------------------------------ INDEPENDENT DIRECTORS ------------------------------------------------------------------------------------------------------------------------------------ Julian A. Brodsky - 69 Director - Until successor is Director and Vice Chairman, 13 Director, Comcast Corporation elected and Comcast Corporation (cable Comcast 1500 Market Street, qualified or until television and communications) Corporation; 35th Fl. his death, since 1969. Director, Philadelphia, PA 19102 resignation or NDS Group,PLC removal. (provider of systems and - 1988 to present applications for digital pay TV). ------------------------------------------------------------------------------------------------------------------------------------ Francis J. McKay - 66 Director - Until successor is Executive Vice President, Fox 13 None Fox Chase Cancer Center elected and Chase Cancer Center 7701 Burholme Avenue qualified or until (biomedical research and Philadelphia, PA 19111 his death, medical care) since 1963. resignation or removal. - 1988 to present ------------------------------------------------------------------------------------------------------------------------------------ Arnold M. Reichman - 54 Director - Until successor is Director, Gabelli Partners, 13 None 106 Pierreport Street elected and L.P. (an investment Brooklyn, NY 11201 qualified or until partnership) since December his death, 2000; Chief Operating Officer resignation or and member of the Board of removal. Directors of Outercurve Technologies (wireless - 1991 to present enabling services) until April 2001; Chief Operating Officer and member of the Executive Operating Committee of Warburg Pincus Asset Management, Inc.; Executive Officer and Director of Credit Suisse Asset Management Securities, Inc. (formerly Counsellors Securities, Inc.) and Director/Trustee of various investment companies advised by Warburg Pincus Asset Management, Inc. until September 15, 1999; Managing Director of Warburg Pincus Asset Management, Inc. until 1997. ------------------------------------------------------------------------------------------------------------------------------------ Marvin E. Sternberg - 68 Director - Until successor is Chairman, Director and 13 Chairman Moyco Technologies, Inc. elected and President, Moyco Technologies, and Director, 200 Commerce Drive qualified or until Inc. (manufacturer of Moyco Inc. Montgomeryville, PA 18936 his death, precision coated and Technologies, resignation or industrial abrasives) since Inc. removal. 1974; Director, Pennsylvania Business Bank since 1999. - 1988 to present ------------------------------------------------------------------------------------------------------------------------------------ 20 SCHNEIDER SMALL CAP VALUE FUND FUND MANAGEMENT (CONTINUED) (UNAUDITED) ------------------------------------------------------------------------------------------------------------------------------------ NUMBER OF TERM OF OFFICE PORTFOLIOS IN OTHER NAME, ADDRESS, POSITION(S) HELD AND LENGTH OF PRINCIPAL OCCUPATION(S) FUND COMPLEX DIRECTORSHIPS AND AGE WITH FUND TIME SERVED DURING PAST 5 YEARS OVERSEEN BY HELD BY DIRECTOR DIRECTOR ------------------------------------------------------------------------------------------------------------------------------------ INTERESTED DIRECTORS ------------------------------------------------------------------------------------------------------------------------------------ Robert Sablowsky** - 64 Director - Until successor is Senior Vice President of 13 None Fahnestock & Company, Inc. elected and Fahnestock & Co., Inc. 125 Broad Street qualified or until (financial services) since New York, NY 10004 his death, 2002 and employed by resignation or Fahnestock & Co., Inc. for removal. greater than 5 years. - 1991 to present ------------------------------------------------------------------------------------------------------------------------------------ J. Richard Carnall** - 64 Director and - Until successor is Director of PFPC Inc. 13 None 86 New Freedom Road Chairman of elected and (financial services) since Medford, NJ 08055 the Board qualified or until 1987; Chairman and Chief his death, Executive Officer of PFPC Inc. resignation or from 1987 to 2002; Executive removal. Vice President of PNC Bank, National Association from 1981 - August 2002 to to 2002; Director of PFPC present International Ltd. (financial services) from 1993 to 2002; Director of PFPC International (Cayman) Ltd. (financial services) from 1996 to 2002; Director of International Dollar Reserve Fund, Ltd. (Cayman Mutual Fund Company) from 1993 to 2002; Governor of the Investment Company Institute (investment company industry trade organization) from 1996 to 2002; Director of PNC Asset Management, Inc. (investment advisory) from 1994 to 1998; Director of PNC National Bank from 1995 to 1997; Director of Haydon Bolts, Inc. (bolt manufacturer) and Parkway Real Estate Company (subsidiary of Haydon Bolts, Inc.) since 1984. Mr. Carnall provides consulting services from time to time to PFPC Inc. ------------------------------------------------------------------------------------------------------------------------------------ ** Mr. Carnall is considered an "interested Director" of the Company because he owns shares of The PNC Financial Services Group, Inc. The investment adviser to the Company's Money Market Portfolio, BlackRock Institutional Management Corporation, and the Company's principal underwriter, PFPC Distributors, Inc., are indirect subsidiaries of the PNC Financial Services Group, Inc. Mr. Carnall also owns shares of PFPC Inc., the Company's administrator. Mr. Sablowsky is considered an "interested Director" of the Company by virtue of his position as an officer of a registered broker-dealer. 21 SCHNEIDER SMALL CAP VALUE FUND FUND MANAGEMENT (CONCLUDED) (UNAUDITED) ------------------------------------------------------------------------------------------------------------------------------------ NUMBER OF TERM OF OFFICE PORTFOLIOS IN OTHER NAME, ADDRESS, POSITION(S) HELD AND LENGTH OF PRINCIPAL OCCUPATION(S) FUND COMPLEX DIRECTORSHIPS AND AGE WITH FUND TIME SERVED DURING PAST 5 YEARS OVERSEEN BY HELD BY DIRECTOR DIRECTOR ------------------------------------------------------------------------------------------------------------------------------------ OFFICER(S) WHO ARE NOT DIRECTORS ------------------------------------------------------------------------------------------------------------------------------------ Edward J. Roach - 78 President and - Until successor is Certified Public Accountant; N/A N/A 400 Bellevue Parkway Treasurer elected by the Vice Chairman of the Board, 4th Floor board. Fox Chase Cancer Center Wilmington, DE 19809 (biomedical research and - 1991 and 1988 medical care); Trustee respectively Emeritus, Pennsylvania School for the Deaf; Trustee Emeritus, Immaculata University; President or Vice President and Treasurer of various investment companies advised by subsidiaries of PNC Bank Corp. from 1981 to 1997; Managing General Partner and President of Chestnut Street Exchange Fund; Director of the Bradford Funds, Inc. from 1996 to 2000. ------------------------------------------------------------------------------------------------------------------------------------ Timothy K. Biedrzycki - 54 Secretary and - Until successor is Director and Vice President, N/A N/A 400 Bellevue Parkway Assistant elected by the Fund Accounting and 4th Floor Treasurer board. Administration of PFPC Inc. Wilmington, DE 19809 since 1998; Director and Vice - 2000 and 1998 President, Fund Accounting and respectively Administration of Federated Services Company (financial services) from 1994 to 1997. ------------------------------------------------------------------------------------------------------------------------------------
22 SCHNEIDER SMALL CAP VALUE FUND SHAREHOLDER VOTING RESULTS (UNAUDITED) On August 30, 2002 a meeting of shareholders of The RBB Fund, Inc. (the "Fund") was held. The purpose of the meeting was to elect the following individuals as directors of the Fund: Julian A. Brodsky J. Richard Carnall Francis J. McKay Arnold M. Reichman Robert Sablowsky Marvin E. Sternberg The results were as follows:
SHARES VOTED SHARES VOTED SHARES TOTAL SHARE DIRECTOR: IN FAVOR: AGAINST: ABSTAINED: VOTES: ------------------- --------------- ------------ ----------- --------------- Julian A. Brodsky 211,501,409.867 0 498,490.822 211,999,900.689 J. Richard Carnall 211,476,781.686 0 523,119.003 211,999,900.689 Francis J. McKay 211,582,965.318 0 416,935.371 211,999,900.689 Arnold M. Reichman 211,544,328.943 0 455,571.746 211,999,900.689 Robert Sablowsky 211,574,208.446 0 425,692.243 211,999,900.689 Marvin E. Sternberg 211,510,809.394 0 489,091.295 211,999,900.689
23 INVESTMENT ADVISER Schneider Capital Management 460 E. Swedesford Road Wayne, PA 19087 ADMINISTRATOR/TRANSFER AGENT PFPC Inc. 400 Bellevue Parkway Wilmington, DE 19809 DISTRIBUTOR PFPC Distributors, Inc. 3200 Horizon Dr. King of Prussia, PA 19406 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.